Steam’s Sub Agreement Prohibits Class-Action Lawsuits

By RPS on August 1st, 2012 at 12:00 pm.

Legally binding agreements that rule out class-action lawsuits are nothing new on our little slice of the technological frontier. In fact, last year it basically became the thing all the cool kids were doing, with Microsoft, Sony, and EA each sneaking similar clauses into those George R. R. Martin-length novels people scroll past when they start new games. Valve, however, is taking an intriguingly different approach. The company who’s been known to show up to parties with a nametag that reads “Hello, my name is ‘PC gaming’” put out an announcement detailing the exact reasoning behind the change, and it promises this is just as much about customers’ best interests as it is Valve’s.

For the uninitiated, a class-action lawsuit involves a large group of people issuing a single, collective suit. Valve, however, argues that this rarely helps anyone in the long run, so it’s offering a different solution – in which it foots the bill for your court fees, no less.

“On Steam, whenever a customer is unhappy with any transaction, our first goal is to resolve things as quickly as possible through the normal customer support process. However in those instances in which we can’t resolve a dispute, we’ve outlined a new required process whereby we agree to use arbitration or small claims court to resolve the dispute. In the arbitration process, Valve will reimburse your costs of the arbitration for claims under [$10,000]. Reimbursement by Valve is provided regardless of the arbitrator’s decision, provided that the arbitrator does not determine the claim to be frivolous or the costs unreasonable.”

“Most significant to the new dispute resolution terms is that customers may now only bring individual claims, not class action claims. We considered this change very carefully. It’s clear to us that in some situations, class actions have real benefits to customers. In far too many cases however, class actions don’t provide any real benefit to users and instead impose unnecessary expense and delay, and are often designed to benefit the class action lawyers who craft and litigate these claims. We think this new dispute resolution process is faster and better for you and Valve while avoiding unnecessary costs, and that it will therefore benefit the community as a whole.”

So it certainly sounds altruistic, and – this being Valve – there could very well be nothing but good intentions driving it. Intentions, however, only go so far, and this still leaves the door open for some potentially less-than-scrupulous dealings. For instance, as Ars Technica points out, this new Subscriber Agreement grants Valve the power to scatter the pitchforks and torches of movements related to widespread bans – even in cases where players have already paid for their games. Honestly, we wouldn’t care even if we were dealing with Gandhi And His Best Friend, A Baby Hedgehog Who Can Only Communicate With Hugs, Corp. We’d still be worried about a company possessing complete legal immunity from these sorts of things.

At this point, then, we have a couple options: 1) watch and wait or 2) click the big, bad “disagree” button when Valve’s latest proclamation descends from on-high. As of writing, however, we’re not exactly sure where the second option will leave your games. But, if you’re locked out of Steam, well, the implication’s not great. So that’s problematic.

With this in mind, we spoke to lawyer Alex Chapman of Sheridans to ask if this could really stand up. It is, as you’d expect, complicated.

Chapman explains that as a business move, it makes sense. In the US, the legal system does not require a losing party to pay the costs of the other side in such cases. So no matter how dubious a case brought against Valve, they’ll always be required to pay their legal fees to defend themselves. This, Chapman tells us, is why there’s such a culture of trademark and patent “trolls” over there. And that’s not something Valve wants to be batting away. “Valve will be worried about class actions because most claims that Valve face will be for relatively small amounts and would not normally even go near a lawyer, let alone a court,” he tells us. “However in a class action, plaintiffs, who might individually have a very small claim, may combine to have a claim that is worth suing over.”

And as such, it’s in Valve’s interests to create conditions where this can’t happen. But how effective is that likely to be? Can you just rule yourself out of legal processes?

“In some jurisdictions this provision would not be enforceable,” explains the legal eagle, “since generally speaking the law that applies in consumer related cases is the local law where the consumer is located.” Each country’s laws could completely contradict Valve’s attempts to prevent class action suits, and possibly even individual State laws within the US. “In the UK,” Chapman continues, “it may be considered to be an unfair contract term.”

Further, this attempt to prevent class action lawsuits by Valve won’t be taken seriously until – funnily enough – someone attempts a class action lawsuit against Valve. Chapman explains, “Perhaps most significantly is that if there is any possibility that this term could be challenged then the first thing a litigator would do is to bring a class action to challenge the validity and enforceability of the contract term (or to do so as part of the class action itself). The effect is the same, namely that a claim would be brought against the party relying on the terms and that party would have to defend the claim or settle it. It would just so happen that the first part of the claim would deal with enforceability.”

So in the end, like most of what’s written in a EULA, it’s more about what the company hopes will be law, rather than what actually is. And as ever, until such inclusions are legally challenged, no one has any idea if they’re at all enforceable. Which in Valve’s case will take a group starting a class action lawsuit against them. Law, eh?

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200 Comments »

  1. Aatch says:

    Ok, so there’s quite a lot of misinformation going around this story. Basically, the agreement states that you have to go to arbitration and unless the arbitrator thinks you are being frivolous, you have your fees paid, even if you lose.

    What it does not say, is that you aren’t allowed to sue, and that you can’t take further action against them.

    What this boils down to is this: if Steam close your account, without warning, then you take them to arbitration (they won’t pay court fees). Even if you lose, the fees are paid by Valve, you lose nothing except a bit of time and your games, unless the arbitrator rules that your claim is frivolous. While unlikely in this case, you can dispute this ruling and take them to a court.

    If Valve pull shit, then you can still sue them, either because they committed a criminal act (unlikely), or broke their side of the agreement.

    You also need to remember that words in legalese don’t have the same meaning as everyday use. The word “reasonable” comes up a lot in civil law, but since ambiguity is (mostly) incompatible with law, “reasonable” is decided through a combination of case law and the ruling of the judge. Similarly, the word “frivolous” isn’t actually up to Valve, at least not entirely. The have to take into account previous legal uses of the word, even though they aren’t in court (arbitration still has law covering it). They put this clause in so they don’t have to fit the bill for arbitration on “Steam killed my cat”, or “I was evicted because I spent all my rent money on Steam games”. Don’t think of frivolity like maidens skipping in a meadow (fine), think of frivolity as the toff that buys a cock-ring made of endangered species and gold dust for $100,000,000 (idiotic).

    As for the rest of the agreement, software is a bloody complicated beast, especially in legal settings. It is unique in the fact that while it takes a monumental effort to produce software, it takes almost none to reproduce. This is like spending millions designing and building a new car, then mass-producing it at $2.50 per car, and being able to produce 10,000,000 per day, and they are assembled by a team of 4 guys that they found drunk in a pub, and each car is a perfect replica of all the others. For a physical good, not only does reproduction of the good require the materials, it also requires the skills to build said good.

    With software, I can spend months, nay years, building a product, drawing on almost a decade of experience and study. Then, once I’m done, a 2 year old can come along and make a perfect replica of my finished product, indistinguishable from the original, and it takes mere seconds.

    So if you think that the agreement is harsh, then remember that these people are trying to protect billions of dollars of time and effort in an environment that allows for perfect replicas. So forgive me if I’m not sympathetic with your potential loss of a couple thousand dollars worth of games. Most of the provisions are there because the alternative would allow for incredible amounts of abuse and/or an incredible amount of resources from every party involved.

    If you decide to close your Steam account, and get refunded for all your games, well that isn’t fair because you have played these games and got what you purchased, most games stores don’t accept returns on games, unless they are still packaged (Which Steam actually has a similar provision for anyway). The same goes for if they close your account. And being able to retain access to these games outside of Steam is a nightmare, since it means that every developer involved has to provide a way to move games from inside Steam to outside.

  2. Hmm-Hmm. says:

    Good intentions? Bah. Have you read the bloody thing? And it’s not as if we have much choice in the matter unless you haven’t purchased anything through Steam.

    Fuck ‘em. Not buying things through Steam anymore. I don’t care if the EULA isn’t enforcable in the EU.. Valve would certainly like it to be.

  3. roris says:

    All of this signing away your god given rights to be treated fairly in a business transaction that is never above the basic rule of law, ie the States and the Constitution here in the USA, will cease someday. It’s barbaric to think that Corporations can have their own private bubble of their own rules and laws in how they treat their customers.

    Also this was pulled very sneakily by Valve, just right after the summer sale where a lot of people – probably the most so far yet – have obviously invested a lot in steam.

    I don’t like where you’re going Valve…

  4. Ateius says:

    While there are definite ramifications with what’s going on here (if it proves to be an enforceable clause) which are far too weighty to consider at 2 in the morning, I do want to applaud Valve for being forthright and open about what they’re doing (if not necessarily about the motives behind it) rather than trying to quietly sneak it into the EULA and hoping none of us notice.

    Now, if only we had a genuine choice about accepting it. I personally am not keen on losing access to nearly a hundred games.

  5. locke says:

    The ‘Legal Expert’ is talking utter rubbish, considering Class Action lawsuits don’t exist in the UK and the Government has no plans to introduce them. Also his point about the UCTA can also (possibly) be circumvented by claiming that the provision is a ‘core term’ even if Class Actions did exist.

    Any lawschool graduate knows that.

  6. belgand says:

    One of the big problems with this is that paying your legal fees for arbitration is also sort of a cop-out. Arbitration almost always tends to side with corporations rather than plaintiffs and this is one of the reasons why so many companies have released EULAs and the like that require you to give up your right to properly seek suit and instead only go through arbitration: because they’re more likely to win that way.

    Small-claims is roughly the same sort of thing. I can’t speak to other jurisdictions, but my girlfriend just finished a suit there in San Francisco where the limit is $10,000. In her case this was insufficient as the medical bills she was seeking suit to cover were $18,000. Restricting you to small claims means that the total that they might ever have to pay out is inherently lessened, regardless of the quantity that the defendant may actually be liable for. So you’re more inclined to go with the arbitration that favors them.