The videogame industry's a big business -- and sometimes, companies don't see eye-to-eye. And what happens when a dispute goes to court, and gamers get their grubby hands on fancy-sounding legal documents? Why, wild, inane, forum-fueled speculation, of course. That's where California-based corporate attorney and GameSpy freelancer Eric Neigher comes in. Objection! is your one-stop destination to learn what all that legalese means in plain English, straight from someone who knows the twisty-turny language of the law.
Intro
"Hey man, did you hear that PlayStation Network is down? OMG -- it's been soooooo long since I could play against my friends online, bro. I know! What's that you say, dude? They also got hacked and lost a whole bunch of confidential information, (possibly) including my credit card digits? Big bummer! I know -- let's sue those bastards and get more money for weed and surfboard wax! Wyld Stallyns!"
This is how I like to imagine the inception of the recent lawsuit against Sony Computer Entertainment, because believing that California surfer/stoner types are behind this whole fiasco makes it a bit more palatable to my sense of justice. Or at least, my faith in humanity.
You've no doubt heard that the PlayStation Network has been compromised and is completely down. Zilch-o, amigos. You haven't been able to play so much as a game of Lumines with anyone outside of your own house for the last three weeks -- and as of this writing, it's still down. Nothing drives us gamers crazier than the Internet going down, and since all the PlayStation 3 fanboys have been subject to the ridicule of the Xbox 360 set for the better part of a month now, they just went ahead and sued.
Well, to be more accurate, a group of attorneys has put together a class-action lawsuit on behalf of the entire PS3 gaming community. Or, even more accurately, a bunch of people have filed suit against Sony for negligence (specifically, for failing to use reasonable care and maintain proper security oversight of their user data) and are seeking class status. What does "class status" even mean, right? OK, let's go over what went down first, then we'll tackle the legal jargon and how this whole thing is gonna play out.
Facts
Any way you slice it, this outage and the hacking that led to it are disasters for Sony, both directly to their bottom line and user base, but also indirectly for PR purposes. I won't get into the details of the network penetration that went on -- partly because I don't know them, and partly because they don't really matter -- but suffice it to say that hackers (whatever that means) broke into Sony's proprietary network and stole, corrupted, and/or generally messed up a bunch of stuff. This includes, of course, users' PSN usernames and such, but could also go as far as credit card information. Sony has stated that it sees "no evidence" that credit card data was stolen -- but with no absolute guarantee.
The people who get screwed over by this (besides Sony itself) are the average Joes like you and me. Not only has Sony taken down its network -- preventing any gaming from going on -- but it's also promised gamers complimentary identity theft protection to compensate. But, at the end of the day, the real question that the plaintiffs in the various lawsuits are going to ask is: How did this happen, and could it have been prevented? Or, really: Should it have been prevented? That is, should Sony have had defenses and remedial measures in place that weren't there?
Now, that deals with negligence question -- and I'll talk more about that in a second -- but gamers are bringing some other complaints as well. First of all, they're saying the outage itself, as well as the breach, are violations of Sony's contract with them (that is, the contract they made when they signed up for PSN). This is a very interesting claim because, as you recall, Sony recently sued code-cracker George Hotz for violating the terms of this agreement by disseminating proprietary information about the PS3's internal workings. So, in a sense, the shoe is on the other foot here: Gamers are saying, "Look, if you can sue somebody for violating the contract, that somebody can turn around and sue you for the same thing." So we've got a breach of contract claim here as well.
Piggybacking on this, some of the lawsuits allege that Sony breached a duty of care to its customers by not alerting them of the hack until April 26th, 2011, when records show that the company knew of it at least as early as April 19th, if not earlier.
Analysis
We need to define some terms before we delve into the meat of the claims against Sony here. First and foremost, it's important to understand what a class-action lawsuit is, and how it works. Most people think a "class action" means a big lawsuit involving multiple plaintiffs, and that's partially true -- but some things need to be true about most class-action cases, in addition to involving a lot of plaintiffs. First of all, you need to have a lot of money potentially at stake -- it's $5,000,000 for Federal Court, although different states have different rules for their own internal class-action procedures. This is why lawyers can make a killing on class-action lawsuits, if they take them on contingency. The plaintiffs themselves, though... not so much killing going on.
An important thing to know about class-actions is that dissension in the ranks is a huge problem. Just because you've joined a class with a bunch of other people doesn't mean that you sacrifice your rights to settle with the defendant(s). Indeed, often subclasses of people will form -- some settling out of court on their own, others (the diehards) refusing to give up their day in court. Thing is, a class has to have a certain core size of members at all times. If the class gets too small (say, because of dissenters settling and reducing its size), courts may dissolve the class and make plaintiffs pursue individually or as co-claimants. This generally means much smaller returns for the law firm involved, and as such, the law firm will generally drop the plaintiffs on their proverbial asses (at least, to the degree that legal ethics allow them to). So you see why the divide-and-conquer strategy is so key for defendants in these big class-action suits. And you also see why lawyers are kinda scumbags. Sorry to say it about my own kind.