Sony Changes PlayStation Rules to Limit Class Action Lawsuits

Sony Corporation has been troubled by class action lawsuits over issues like rootkits on CDs and hacks of its PlayStation. The company is now determined to put an end to the mass litigation by amending the terms of its licensing agreement with consumers to explicitly bar class action lawsuits in favor of binding arbitration. Will it work?

Sony made the change to its end user licensing agreement this week, adding a new section that states the following:

"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 action"

The new language comes in the wake of a Supreme Court ruling in April in the case, AT&T Mobility v. Concepcion, where a narrow 5-4 majority ruled that companies were permitted to foreclose class actions by having customers sign contracts compelling arbitration.

The ruling was seen as a huge blow to the future of class action lawsuits, and many companies began quickly following its lead.

However, it's not entirely clear whether the era of class action lawsuits is over.

One federal judge in Miami recently ruled in a case involving banks and overdraft fees that arbitration agreements should be reviewed on a case-by-case basis. He rejected the banks' motion to compel arbitration on "unconscionable" arbitration agreements.

Also, some class action lawyers have rebelled against the Supreme Court ruling by doing a little legal jujitsu. For example, there's one law firm currently fighting AT&T that has filed thousands of individual arbitration claims in hopes of swamping the company in paperwork and finding an arbitrator who will be sympathetic to claims. AT&T is fighting back by accusing this particular firm of "extortion" and making "thousands of bites at the same apple."

Sony is currently contending with potential claims involving the breach of private information from some 70 million users of its PlayStation Network. A new paragraph in the licensing agreement looks to head off similar future legal troubles, but it's still too soon to determine whether it's game over for class action lawyers.

E-mail: eriqgardner@yahoo.com

Twitter: @eriqgardner

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