Facebook Game Dispute Kicked to Arbitration

     (CN) – A class action over “special offers” from Zynga’s online Facebook games will head to arbitration, a federal judge ruled.



     Rebecca Swift filed the 2009 lawsuit on behalf of players of YoVille game Zynga created for Facebook users. In addition to Zynga, Swift sued several entities that developed “special offers” that she said are fraudulent and meant to drive up profit.
     When the case was first filed, Zynga and its co-defendants could not pursue arbitration provisions from their service contracts because of a doctrine in California law that held certain class waivers in consumer arbitration agreements as unconscionable.
     In April 2011, however, the U.S. Supreme Court decided in AT&T Mobility LLC v. Concepcion that federal arbitration law pre-empts the state law.
     Zynga moved to compel arbitration and stay litigation, saying Concepcion now requires courts to defer to contracts and enforce bilateral arbitration.
     Swift countered that Zynga could not enforce its terms of service agreement, saying she did not give proper consent since she agreed by clicking a button beneath a block of text to access the game.
     But U.S. District Judge Elizabeth LaPorte rejected this argument on the grounds that a reasonable internet user would know he was entering into a legal contract under those circumstances and could easily access the text of the terms of service.
     LaPorte also found that Zynga had not waived its right to compel arbitration by raising the argument earlier. The law did not allow Zynga to elect arbitration before Concepcion and the “failure to reserve” argument is based on a misconstruction of the contract’s language and purpose, the 17-page decision states.
     Swift furthermore is not exempt from the arbitration clause as a victim of theft because she failed to argue that her claims met the definition of theft, LaPorte ruled.
     The judge also held that Zynga’s terms of service agreement was not unconscionable and therefore unenforceable. The legal definition of unconscionable requires both procedural and substantive unconscionablity, and Swift could not demonstrate procedural unconscionablity.
     After granting Zynga’s motion, the judge disagreed that the companies behind the “special offers” have standing to enforce arbitration as agents of Zynga.
     A third-party liabilities section of the terms of service agreement created a distinction between Zynga and those companies, LaPorte said, adding that the companies acted as contractors, not agents
     Though they cannot participate in the arbitration, LaPorte agreed to stay the litigation involving them until Zynga and Swift sort out their dispute.
     Because of these findings, the judge denied competing discovery motions as moot.

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