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Hernandez v. IGE CaptionEarlier this year, a class action lawsuit was filed in the Southern District of Florida on behalf of nearly every World of Warcraft (“WoW”) player, naming one of the largest virtual property companies, Internet Gaming Entertainment (“IGE”), as defendant. WoW player Antonio Hernandez is named plaintiff. The class has not yet been certified.

Plaintiffs’ core claims read as if they come straight out of Richard Bartle’s Pitfalls of Virtual Property (.pdf). Plaintiffs allege that IGE, by running a gold farming operation, camping spawns, devaluing gold, spamming chat, and generally making gameplay less satisfying, has intentionally breached the World of Warcraft Terms of Use (“ToU”) and End User License Agreement (“EULA”). IGE’s employees must, of course, agree to the ToU and EULA in order to use World of Warcraft to accumulate and transfer WoW gold and other virtual property, and to level WoW accounts for sale. The complaint alleges that the plaintiffs were intended “third party beneficiaries” of the ToU and EULA between IGE and Blizzard, and suffered harm as a result of IGE’s breach of these agreements. The amended complaint is here (.pdf, via Justia).

IGE LogoGenerally, third-party beneficiary contract claims are hard to win because the third-party (here, your average World of Warcarft player) has to be the “intended beneficiary” (as opposed to the “incidental beneficiary”) of the contract, and many standard contracts include language stating that there are no third-party beneficiaries. However, the World of Warcraft Terms of Use and EULA, somewhat surprisingly, do not include such a provision. Moreover, Blizzard has publicly stated that it supports the goals of the lawsuit, which implies that Blizzard might be willing to file a declaration to the effect that plaintiffs were the intended beneficiaries of at least the contract provisions prohibiting gold farming, when and if a motion is eventually filed on those grounds. The suit has widespread support from players in the official forums.

Not much has happened in the case up to now, but since motion practice is starting to heat up and class certification is potentially on the horizon, VB will begin paying closer attention to filings.

As we kick off coverage of another lawsuit, please keep two things in mind. First, understand that for professional reasons, VB doesn’t comment on active filings, though we do run key excerpts and point out things that are so anomalous that most litigators would notice them. And second, remember that the filings, because they’re advocacy documents, tend to put everything in a light most favorable to the party that filed them.

The most recent filing in this case is a motion (.pdf via Justia) to stay the case in favor of arbitration, allegedly as required by defendant’s contracts with Blizzard (of which plaintiffs say they were the intended beneficiaries). In the alternate, defendants ask that the case be dismissed in favor of jurisdiction in California. A response was supposed to be filed by now, but plaintiffs received a fairly routine, unopposed, ten-day extension of time to respond. VB will run excerpts from the response as soon as it is filed.

Excerpts from Defendant’s motion to stay or dismiss the case follow.

Plaintiff alleges that he, and the members of the alleged classes, are parties to the ToU and EULA with Blizzard. Am. Comp., ¶¶ 14-15. Thus, Plaintiff, and the purported class members, have already specifically agreed to the dispute resolution and arbitration provisions in the ToU and EULA agreements, albeit with Blizzard.

For this reason, even a non-signatory third-party beneficiary is bound by the terms of a contract containing an arbitration clause. See id. (where a contract contains an arbitration clause, a third-party beneficiary is bound by the arbitration provision to the same extent as one of the signatories); see also E.I. Dupont de Nemours and Co. v. Rhone Poulenc Fiber and Resin Intermediates, S.A.S., 269 F.3d 187, 195 (3d Cir. 2001) (“[W]hether seeking to avoid or compel arbitration, a third-party beneficiary has been bound by contract terms where its claim arises out of the underlying contract to which it was an intended third-party beneficiary.”).

The ToU and EULA both provide that “[a]ny Dispute not subject to arbitration (other than claims proceeding in any small claims court), or where no election to arbitrate has been made, shall be decided by a court of competent jurisdiction within the County of Los Angeles, State of California, United States of America, and you and Blizzard agree to submit to personal jurisdiction of that court.” See ToU, ¶ 16E, EULA, ¶ 14E. Because it uses the word “shall,” the forum selection clause in this case is mandatory, and dictates that the County of Los Angeles is the exclusive forum. See Global Satellite Communication Co., 378 F.3d at 1272 (holding forum selection clause providing that “[v]enue shall be in Broward County,” is most reasonably interpreted to mandate venue in Broward County alone because it uses the imperative “shall”).

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One Response to “Hernandez v. IGE Class Action Litigation Update: Motion to Dismiss or Stay Lawsuit Filed”

  1. [...] Less Money, Mo’ Problems 12Nov07 Virtually Blind has posted paperwork and some commentary from the ongoing Hernandez v. IGE [...]

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