Playstation Network users may no longer file class action lawsuits against Sony, under a new user agreement that players must agree to before signing into the network. Now, PS3 and PSP owners will have to sue individually or seek arbitration for issues like security breaches or the removal of advertised features.
And guess what? The policy change is probably legal thanks to the Supreme Court.
Back in April, the Supreme Court ruled that AT&T–and any company, for that matter–can use service contracts to block class action lawsuits and force customers into binding arbitration. Lower courts had argued that such clauses were “unconscionable” under state consumer protection laws, but the Supreme Court overturned those decisions in a 5-4 ruling. The Federal Arbitration Act was designed to promote arbitration over costly and lengthy lawsuits, the court’s majority argued, so allowing class action lawsuits to proceed would be at odds with what the federal law is trying to accomplish.
As Ars Technica’s Chris Foresman noted at the time, the ruling allows AT&T and other companies to “quietly settle a few individual claims instead of being faced with larger class-action settlements which might include punitive awards designed to discourage future bad practices.”
But what’s wrong with arbitration? As GamePolitics points out:
Generally these third parties are hired from companies that specialize in corporate arbitration and – most of the time – side with the company that used their services because they want the repeat business.
Granted, class action lawsuits aren’t so great either. They’re costly, they can take years to resolve, and they rarely result in big monetary awards for the plaintiffs. But they can also prompt changes in company policy, such as Skype eliminating expiration dates on calling credits or Verizon Wireless pro-rating early termination fees.
In Sony’s case, Playstation 3 users have sued to restore “Other OS” functionality to the system. That lawsuit that will continue because it began before the policy change, but if Sony ever wrongs Playstation Network users again, their options are now limited.