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Tuesday, July 19, 2016

Pokemon Go Players: Beware of Binding Arbitration!

Unless you've been living under a rock or avoiding the outdoors for the past several weeks, you have probably heard of Pokemon Go, a smartphone app developed by Niantic. Pokemon Go compels 20-somethings to wander through my neighborhood at night, collide with trees, and enslave small creatures for the purpose of battling other players' small creatures. Players meander along sidewalks, streets, and beaches until they come across a Pokemon, which is superimposed on the surrounding environment through a phone's camera. For example, here is an Onix in my apartment perched on a (signed) copy of Justice Antonin Scalia and Bryan Garner's Reading Law:



What a time to be alive!

Players cavort through neighborhoods collecting items at "Poke Stops" and battling other Pokemon at Gyms. Sometimes they are mugged. The New York Times has this discussion of the history of Pokemon and the future of augmented reality games and the Wall Street Journal notes that the game is turning people into injury-prone zombies.

Legal commentary as varied as the creatures themselves is emerging as the game gains momentum. Commentators note interesting questions of property the game raises, the potential for players to injure themselves, and the risk of criminals stealing phones.

In this post, I'll focus on another line of commentary noting that those who sign up to play Pokemon Go forfeit their right to trial, agreeing instead to submit any claims to binding arbitration. Commentators note, and criticize, this portion of Niantic's Terms of Service here, here, here, and here.



Here is the language from Niantic's Terms of Service that is causing all the commotion:
Agreement to Arbitrate 
You and Niantic agree that any dispute, claim, or controversy arising out of or relating to these Terms or the breach, termination, enforcement, interpretation, or validity thereof or the use of the Services or Content (collectively, “Disputes”) will be settled by binding arbitration, except that each party retains the right: (a) to bring an individual action in small claims court and (b) to seek injunctive or other equitable relief in a court of competent jurisdiction to prevent the actual or threatened infringement, misappropriation, or violation of a party’s copyrights, trademarks, trade secrets, patents, or other intellectual property rights (the action described in this clause (b), an “IP Protection Action”). Without limiting the preceding sentence, you will also have the right to litigate any other Dispute if you provide Niantic with written notice of your desire to do so by email or regular mail at termsofservice@nianticlabs.com or 2 Bryant St., Ste. 220, San Francisco, CA 94105 within thirty (30) days following the date you first accept these Terms (such notice, an “Arbitration Opt-out Notice”). If you don’t provide Niantic with an Arbitration Opt-out Notice within the thirty (30) day period, you will be deemed to have knowingly and intentionally waived your right to litigate any Dispute except as expressly set forth in clauses (a) and (b) above. The exclusive jurisdiction and venue of any IP Protection Action or, if you timely provide Niantic with an Arbitration Opt-out Notice, will be the state and federal courts located in the Northern District of California, and each of the parties hereto waives any objection to jurisdiction and venue in such courts. Unless you timely provide Niantic with an Arbitration Opt-out Notice, you acknowledge and agree that you and Niantic are each waiving the right to a trial by jury or to participate as a plaintiff or class member in any purported class action or representative proceeding. Further, unless both you and Niantic otherwise agree in writing, the arbitrator may not consolidate more than one person’s claims, and may not otherwise preside over any form of any class or representative proceeding. If this specific paragraph is held unenforceable, then the entirety of this “Dispute Resolution” section will be deemed void. Except as provided in the preceding sentence, this “Dispute Resolution” section will survive any termination of these Terms.
In short, by checking the box and agreeing to the terms of service, players waive their right to trial and the right to file a class action proceeding against Niantic and instead are required to arbitrate any disputes, UNLESS they mail or email notice that they are opting out of this term to the addresses listed above within 30 days of agreeing to the Terms of Service. Users who fail to do so may try to argue that they are entitled to file a lawsuit, but a court will most likely find that such a claim is not very effective...

Niantic, in an abysmal failing of creativity, lays out the rules for arbitration:
The arbitration will be administered by the American Arbitration Association (“AAA”) in accordance with the Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes (the “AAA Rules”) then in effect, except as modified by this “Dispute Resolution” section. (The AAA Rules are available at www.adr.org/arb_med or by calling the AAA at 1-800-778-7879.) The Federal Arbitration Act will govern the interpretation and enforcement of this Section.
Arbitration terms like the one above are increasingly common and powerful in light of Supreme Court case law that favors arbitration agreements. Critics attack arbitration clauses for favoring businesses over consumers and surprising those who may think they can file a lawsuit without understanding the power that's inside terms of use and other contracts. I see the appeal of these arguments in the case of Pokemon Go. It is only a matter of time before I wander into the street in pursuit of a Pikachu. When I sue the hapless driver who collides with me, I want to do so in open court before a jury of my peers.

Additionally, regular readers should know why I'm so upset about Niantic's arbitration rules. Pokemon Go presents the perfect scenario for an Arbitration by Combat agreement, in which users agree to arbitrate disputes through some form of trial by combat. I can't think of any other service in which users employ the service for the sole purpose of capturing and training potential champions who can be sent to do battle on the user's behalf.

For those readers who gotta catch 'em all, make sure you email your opt-out notices to Niantic within 30 days of downloading the app. And when you send that email, it would warm my heart if you asked Niantic to change its rules for arbitration from the AAA's rules to something more akin to a tournament (or even Elite Four!) style of adjudication, in which claimants use their Pokemon to battle their way to justice.

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