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If Sony PS3 users blindly click through the console's terms of service, they sign away their right to bring class action suits against Sony or join existing class actions.  (Source: Simpsons/Matt Groening/20th Century Fox)
Updates terms of service state that the customer is guaranteeing if it sues Sony it can't be a class action

Uh oh, Japan's Sony Corp. (TYO:6758) is back at it again.  The company who installed malicious rootkits on users computers via music CD, banished OtherOS from the PS3, and legally harassed/tried to sue into bankruptcy hardware enthusiasts who modified the firmware of the Playstations they legally purchased, has come back with another controversial policy.

In an update to its popular PS3 gaming console Sony writes in the Terms of Service (TOS) that the user guarantees:
ANY DISPUTE RESOLUTION PROCEEDINGS, WHETHER IN ARBITRATION OR COURT, WILL BE CONDUCTED ONLY ON AN INDIVIDUAL BASIS AND NOT IN A CLASS OR REPRESENTATIVE ACTION OR AS A NAMED OR UNNAMED MEMBER IN A CLASS, CONSOLIDATED, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL LEGAL ACTION, UNLESS BOTH YOU AND THE SONY ENTITY WITH WHICH YOU HAVE A DISPUTE SPECIFICALLY AGREE TO DO SO IN WRITING FOLLOWING INITIATION OF THE ARBITRATION. THIS PROVISION DOES NOT PRECLUDE YOUR PARTICIPATION AS A MEMBER IN A CLASS ACTION FILED ON OR BEFORE AUGUST 20, 2011.
The contract is similar to the one presented by some employers.  Since a 1984 U.S. Supreme Court ruling, binding arbitration has been increasingly used by corporations to escape lawsuits when behaving abusively.  

Here's how binding arbitration works.  The signer waives their rights to join or bring class action lawsuits.  Instead, they can present their case to an "arbitrator" appointed by the company.  This is essentially equivalent to a dismissal, as the company's "unbiased" private arbitrator nearly almost always dismisses the case.  The only alternative allowed is an individual suit against Sony, which again, will likely be a lost cause given that Sony has high powered attorneys on retainer, which will seek to quickly have your claims dismissed without the power of a class.

Unfortunately even if you don't sign such contracts, just receiving them is enough to partially nullify your right to due process, according to recent rulings.

Fortunately Sony has offered customers an opt out.  The TOS states:
IF YOU DO NOT WISH TO BE BOUND BY THE BINDING ARBITRATION AND CLASS ACTION WAIVER IN THIS SECTION 15, YOU MUST NOTIFY SNEI IN WRITING WITHIN 30 DAYS OF THE DATE THAT YOU ACCEPT THIS AGREEMENT. YOUR WRITTEN NOTIFICATION MUST BE MAILED TO 6080 CENTER DRIVE, 10TH FLOOR, LOS ANGELES, CA 90045, ATTN: LEGAL DEPARTMENT/ARBITRATION AND MUST INCLUDE: (1) YOUR NAME, (2) YOUR ADDRESS, (3) YOUR PSN ACCOUNT NUMBER, IF YOU HAVE ONE, AND (4) A CLEAR STATEMENT THAT YOU DO NOT WISH TO RESOLVE DISPUTES WITH ANY SONY ENTITY THROUGH ARBITRATION.
In other words Sony provides no electronic opt out, you must write it a letter.  And of course Sony could claim not to have received that letter, unless you pay extra for tracking and signature on delivery.

Why all the legal gymnastics in the terms of service?  Well, several lawsuits are pending class action status against Sony.  Most involve the company's failure to protect PS3 users' private data, including credit cards, from hackers.  Sony was hacked dozens of times [1][2][3][4][5][6][7] in recent months thanks to woefully lacking security.  

Granted the change may not exempt Sony from some of these lawsuits, which were filed before August 20.  It does, however, prevent users from participating in future class actions should Sony conduct itself in an abusive or negligent manner.

Of course, should the Supreme Court overturn such "opt in" contracts, Sony ability to pressure users into signing away their rights could vanish.  However, there's little guarantee that will happen anytime soon.


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RE: What about Canada?
By Galcobar on 9/17/2011 3:08:21 AM , Rating: 3
As long as duress is not involved, there's few instances where laws prevent you from signing an agreement that does not violate some other law (as in, you cannot be held to a contract agreeing to rob a bank) in either Canada or the U.S.

The test is generally the 'reasonable person' standard. Would a reasonable person understand what they're agreeing to by signing this contract? Would they read such a contract before signing it? Keep in mind 'reasonable' does not mean 'average.' The average person might not read the EULA/TOS, but a reasonable person would, precisely because they contain important clauses such as this.

However, Canada does have such laws in some provinces. Ontario, Quebec and Alberta have legislation which prohibits arbitration clauses which limit class-action lawsuits. B.C. does not have such legislation, but this March a B.C. woman won the right at the Supreme Court of Canada (5-4) to pursue a class-action lawsuit against Telus for deceptive business practices (using an unadvertised definition of "airtime" to hike fees charged to customers). The arbitration-only clause in a business contract is only affected by deceptive business practices however, since the case relied on a violation of B.C.'s Business Practices and Consumer Protection Act

This overturns, somewhat, prior SCC decisions such as Rogers Wireless Inc. v. Muroff which upheld arbitration clauses in private contracts. I haven't read the Seidel v Telus decision, but I expect the difference is that Muroff was a private dispute, while Seidel alleged illegal behaviour by Telus.


RE: What about Canada?
By Taft12 on 9/19/2011 2:07:08 PM , Rating: 2
You seem to know a lot about Canadian law, but I was under the impression that click-through licenses had never really been tested in court in Canada OR the US and that they would be unlikely to hold up if they were.


"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il














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