Evans v. Linden Research, Inc.
2011 U.S. Dist. LEXIS 11106
E.D. Pa.2011Background
- Plaintiffs Evans and others allege contract and tort claims arising from Linden's Second Life virtual world and claimed confiscation of virtual property.
- Defendants Linden Research, Inc. and Rosedale moved to dismiss or transfer based on a forum selection clause in the Terms of Service (TOS).
- Plaintiffs opened accounts under various TOS versions; Defendants argued the March 2010 TOS with a California forum clause applied to all Plaintiffs.
- Defendants also moved to dismiss Count I under CLRA venue affidavit requirements and to transfer under 28 U.S.C. § 1404(a) or §1406 if necessary.
- The court ordered briefing and supplemental submissions to determine account-by-account which TOS governed each Plaintiff.
- The court ultimately held the forum selection clause enforceable and transferred the case to the Northern District of California.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the forum selection clause is enforceable | Plaintiffs contend the clause is unconscionable or inapplicable to some accounts. | Linden argues the clause is valid and requires California venue for all Plaintiffs. | Enforceable as to all Plaintiffs; case transferred to California. |
| Procedural unconscionability of TOS | TOS presented on take-it-or-leave-it basis; procedural unconsc. argued. | Take-it-or-leave-it not per se unconscionable; terms were disclosed and accepted purposefully. | Procedural unconscionability found to exist at least minimally, but not enough to invalidate clause; not dispositive. |
| Substantive unconscionability and arbitration options in TOS | Arbitration provision in Bragg was unconscionable and should render clause invalid. | Current arbitration clause is more flexible (claims under $10,000 can arbitrate remotely; others proceed in court) and not unconscionable. | Arbitration terms not unconscionable; clause remains enforceable alongside forum clause. |
| Application of the forum clause to each Plaintiff | Some accounts may not be governed by March 2010 TOS. | All Plaintiffs signed or agreed to March 2010 TOS governing the accounts in question. | Forum clause applies to all Plaintiffs' claims. |
| Proper procedural vehicle for relief (dismissal vs. transfer) | Suit should proceed in this district if forum clause not enforceable. | If forum clause enforceable, dismissal is appropriate or transfer to California is proper. | Motion to dismiss granted in part but case transferred to Northern District of California under § 1406. |
Key Cases Cited
- Foster v. Chesapeake Ins. Co., 933 F.2d 1207 (3d Cir.1991) (forum clause enforceability standard; gravely difficult or fraud implications)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (U.S. 1972) (foundation for strict forum-selection clause validity)
- Bragg v. Linden Lab, 487 F. Supp. 2d 593 (E.D. Pa. 2007) (unconscionability of arbitration clause; Bragg analysis)
- Olinick v. BMG Entm't, 138 Cal. App. 4th 1286 (Cal. App. 2006) (California unconscionability standards for forum clauses)
- Feldman v. Google, Inc., 513 F. Supp. 2d 229 (E.D. Pa. 2007) (application of California unconscionability to terms)
- Nagrampa v. MailCoups, Inc., 469 F.3d 1257 (9th Cir. 2006) (procedural unconscionability factors in adhesion contracts)
- Hanna v. Plumer, 380 U.S. 460 (U.S. 1965) (Erie twin aims and conflict with state rules)