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Friday, January 15, 2021

Legal Legion saves arbitration

Patreon tried to destroy consumer arbitration in America. The Legal Legion stopped them.

This is a little complicated, and obviously I'm not a lawyer, but I'll try to explain what I am reliably informed by multiple sources has been taking place over the last two months in the Bears vs Patreon arbitrations. Keep in mind that these arbitrations are entirely separate matters from the Patreon vs Bears lawsuit, which has been underway since May in the San Francisco Superior Court.

Like all corporations that mandate arbitration but forbid group action in their terms of use, Patreon blanched at the cost of actually paying for all the arbitrations that its contract with its users requires it to pay. This is normal, and every company that has been hit by mass arbitrations from employees or consumers, from Uber to Doordash, has desperately - and unsuccessfully - tried to get out of paying for the costs that its own lawyers required it to pay when they wrote the contract that was forced upon its users or employees. I've written in some detail about the irony of these entirely predictable reactions in Corporate Cancer.

Patreon behaved like all the other corporations before it in trying to evade these obligatory expenses, which is why it filed the lawsuit against the Bears in order to try to stop the arbitrations. That lawsuit is doomed to fail, just like all the other previous corporations' lawsuits have, which is presumably why Patreon's lawyers came up with a clever, and very nasty, little legal trick that is based on a little-known California law called 998. It's complicated, I'd never even heard of it, and I'm still not sure I understand it completely despite reading through it several times, but basically it works like this:

  1. One party makes an offer to declare the second party the winner. This offer is monetary and may or may not include an offer to pay the second party's legal fees.
  2. If the second party accepts the offer, it's over. 
  3. If the second party does not accept the offer, the first party has the right to have all of its legal fees and legal costs paid by the second party if the second party does not win an award that is greater than the amount offered by the first party.

It's a sort of legal ju-jitsu, in which one party's victory in court or arbitration can be transformed into a massively expensive defeat by a properly calibrated 998 offer. Fortunately, the Legal Legion immediately recognized that the way these offers put the Bears in potential danger of being forced to pay Patreon's legal costs was an obvious violation of the JAMS rules as well as the California consumer protection laws. So, they objected to the offers and pointed out how the offers were a violation of JAMS policy as well as the law. JAMS agreed and banned the offers, but Patreon objected to the ban, so JAMS said its version of the Supreme Court, which interprets the JAMS rules and sets its official policies, would permit all of the interested parties to make their points about the pros and cons of the ban.

Patreon made its arguments, the Legal Legion presented its arguments, and I'm told that yesterday, the JAMS Supreme Court affirmed the JAMS ban on 998 offers in consumer arbitration, which means that Patreon's most recent attempt to escape its growing arbitration and legal costs is as dead as all of the previous attempts made by every other corporation that requires arbitration when actually faced with it.

But this victory is arguably more important than the others, because I'm told that Patreon's 998 tactic, if successful, would have completely eliminated consumer arbitration in California, which is where most US technology corporations are headquartered. So this is not only good news for the Bears, it is good news for America. It is probably not, however, good news for DLive....

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44 Comments:

Blogger Salt January 15, 2021 8:09 AM  

California law 998 is unconscionable. Good it finally got tested, and failed.

Blogger Stilicho January 15, 2021 8:09 AM  

Section 998 sounds like California's version of an offer of judgement which is fairly common across the US. The costs to be taxed to the losing side, however, vary widely from nominal to significant depending on which state you are in.

Blogger Dole January 15, 2021 8:11 AM  

I love the Patreon Saga, never gets old.

Blogger Swamp Fox January 15, 2021 8:15 AM  

In 5 years I went from watching Fox News and being confused by Jordan Peterson to reading Vox Day’s blog about consumer arbitration cases...and enjoying it.

This is great news for all. Keep crushing.

Blogger Wayne January 15, 2021 8:15 AM  

Just as with the GE, winning is not an accident or based on luck.

Blogger szook January 15, 2021 8:21 AM  

And I was just wondering about DLive.....tortious little Nietzscheans that they are. Here is a raised glass to the Bears and the LoL. Good job and tally ho!

Blogger M In The 517 January 15, 2021 8:27 AM  

TOP KEK!!!!!

Blogger FALPhil January 15, 2021 8:27 AM  

This is indeed good news. Thanks for the report.

Screw with the Legal Legion, learn what hurt means.

Blogger Daniele Grech Pereira January 15, 2021 8:40 AM  

The lawyer's equivalent of ippon seoi nage.

Blogger Matthew T January 15, 2021 8:40 AM  

"probably not, however, good news for DLive."

Oooh baby, please keep us updated on that. A friend of mine (making it very personal for me), one of Canada's best alt-streamers, was deplatformed from DLive last week. We may need to do our homework digging through the blog archives, or need a concise refresher, on how to bring a case against DLive.

Blogger RobertDWood January 15, 2021 8:46 AM  

...and justice for all.

Well done Bears.

Blogger Fellow Traveler January 15, 2021 8:54 AM  

+1

California, man. Anything to drive a stake a little deeper into the heart of that vampire is a fine thing

Blogger Canada78Bear January 15, 2021 8:58 AM  

998 allows for the winner to be stuck paying for the loosers legal bills.

Sounds about right for California thinking.

Blogger Br1cht January 15, 2021 8:59 AM  

Legio Lege Victrix.

Blogger Carlen January 15, 2021 9:00 AM  

Praise Be! Thank you, LLOE.

Blogger Delaware Blue Hen January 15, 2021 9:12 AM  

You would think at some point someone at Patreon would just pay the two dollars.

https://www.youtube.com/watch?v=ZKT8QoboD1g

I never thought when I saw the above routine that I would see it played out in real life.

Blogger JohnAltGalt January 15, 2021 9:21 AM  

Good job. This is good stuff. Impressive.

Blogger Shimshon January 15, 2021 9:30 AM  

If this was escalated to a JAMS Supreme Court, does that mean that this sets a precedent for all future arbitrations?

Blogger VD January 15, 2021 9:33 AM  

does that mean that this sets a precedent for all future arbitrations?

Yes, I'm told that it's now official policy for all current and future arbitrations at JAMS.

Blogger B-Rex January 15, 2021 9:39 AM  

More (legal) skulls for the skull throne!

Blogger Silent Draco January 15, 2021 9:41 AM  

Title or Section (?) 998 is now worth a detailed reading. LLoE must have a fine-print grade edge on their katanas.

Blogger 1683Bear January 15, 2021 9:44 AM  

Make Dlive PAY! Make an example of them! But don't kill the Dgoose that is laying DOwen's golden ( insert grabblely sounds) Deggs. I wasn't really trying to be funny, more trying to make a point.

Blogger Balkan Yankee January 15, 2021 9:44 AM  

998 bottles of tears on the wall.

998 bottles of tears. . .

Blogger Opus January 15, 2021 9:47 AM  

As Marty McFly might have said: 'that's an oldie where I come from' - and without any knowledge of Californian law my response would be 'but 998 applies to actions; this is an arbitration. Not the same thing at all when it comes to costs'.

Blogger VFM Bear January 15, 2021 9:49 AM  

998 skulls on the wall, 998 skulls,
Take one down, pass it around,
997 skulls on the wall.

997 skulls on the wall....

Blogger Jab Burrwalky January 15, 2021 9:51 AM  

Wisconsin has a very similar law. They are all based on the "public policy" of reducing litigation. Which has always seemed to me to be a disingenuous and unjust "policy".

Blogger d January 15, 2021 9:51 AM  

Precedence Law! Well done.
It's heartening to witness a "deplorable" making the worms wiggle.

Blogger Arasaka January 15, 2021 10:02 AM  

Sounds like the Calderbank Offer as I know of it in Australian Law. It's used in Family Law at least, in which I have a passing familiarity unfortunately.

Blogger Opus January 15, 2021 10:35 AM  

Calderbank is an English case. At least I am more than familiar with the name. An admission and payment-in places the Plaintiff with a dilemma especially where the payment-in will be close to what the Plaintiff hopes or expects to receive. Should he fight on and fall short then he will end up picking up all the costs from the time of the payment-in. As I say, however, that applies to actions and not arbitrations - where costs are not awarded and where the rules of evidence and the requirements as to legal qualification of those presenting the case are relaxed. California may be different of course but that does not appear to be the case. I can only presume that all common-law jurisdictions at least have similar arrangements.

Blogger Unknown January 15, 2021 11:38 AM  

We have a court rule in our state, called the offer of judgment, which is very similar. There is a back and forth game with offers and counter offers, sort of like the federal rule, but in my state attorney fees are included which ups the ante a lot.

It gets so complex our supreme court mostly farmed out the process in civil cases to a three attorney panel in a weird creation called case evaluation, which helps to force settlements because of the attorney fee provisions-- while taking the time suck part of the process off the judge and court staff.

The civil court process is time consuming, and thus costly to the clients, which in my state is another reason arbitration is so popular. In civil cases you end up formally writing up and presenting the case three times, soon after it is filed, at the case eval, and again at a final motion to dismiss, and then having the trial (if it happens, most don't), plus the long and costly discovery.

With arbitration, there is almost no real discovery and you present the case once.

Blogger Phelps January 15, 2021 11:58 AM  

Just read through CA Code of Civil Procedure Sec 998. It is indeed CA's Offer in Judgment law. For the people who aren't familiar, here is how Offer in Judgment laws are supposed to work:

You're being sued for $1MM. You say, "this case is only worth $2,000. I'll pay you the $2,000 now to go away." You reject the offer and go for $1MM with the jury. The jury comes back and says, "Plaintiff wins -- you owe him $1,500." $1,500 is less than you were offered to go away, and therefore they "lost" in relationship to the Offer, so they should pay your fees for wasting your time and money when you offered to settle the case for what it was actually worth.

That's the theory. How it works out in real life involves lawyers, so there you go. It's supposed to goad plaintiffs into taking reasonable settlement offers instead of playing "lawsuit lottery" and rolling the dice that a jury will just give them a ton of money.

Blogger rcocean January 15, 2021 12:18 PM  

will dopey Z-man read this, and retract his moronic statements?

Blogger Balam January 15, 2021 12:26 PM  

Maybe the Oakland law firm got outside advice if they did something actually dangerous for once.

Blogger VD January 15, 2021 12:30 PM  

will dopey Z-man read this, and retract his moronic statements?

Of course not. He's a clueless poseur who never hesitates to opine in ignorance.

Blogger RobertDWood January 15, 2021 1:04 PM  

Award winning cruelty art.

Blogger Azure Amaranthine January 15, 2021 1:16 PM  

The point of it is to punish people who go to arbitration frivolously. The problem is it doesn't hinge on justice or winning or importance... it hinges on how good both parties are at guessing the financial value of a legal judgement. It's like a game of pick-a-number between 1 and X, and whoever has the better lawyers wins regardless of justice.

Blogger Darren January 15, 2021 1:16 PM  

LOL @ Patreon email I just noticed from January 13th... Timing is coincidence I am sure!

"We’re making some changes to our policies, including our Privacy Policy and Terms of Use, that may apply to you.

...We are updating our dispute resolution clause so *you are not required to use arbitration* for disputes with Patreon."

IANAL, but these do not sound like the kind of ToS changes that a Winner would be making.

Blogger NoobishTitan January 15, 2021 1:38 PM  

Thank God for this precedence! This is why understanding conditional acceptance is huge though people

Blogger VD January 15, 2021 1:44 PM  

e are updating our dispute resolution clause so *you are not required to use arbitration* for disputes with Patreon."

They always lie. You are no longer PERMITTED to use arbitration to resolve disputes with Patreon.

The good news is that class action litigation and trial-by-jury are back on the table.

Blogger tdcommenter January 15, 2021 2:00 PM  

Well done, Legal Legion!

Blogger macus poker blog January 15, 2021 2:42 PM  

David Knight (the former Alex Jones host) has just been demonetized by DLive. Whatever is going behind the scenes they surly haven't got the memo yet.

Blogger Bernard Korzeniewicz January 15, 2021 4:40 PM  

I must post this to my company legal team.
"Boys, any "small man" you pissed yesterday can have a connection to that one immigrant living in Italy. If you own goats, beware!"

Blogger Jill in StL January 16, 2021 12:45 AM  

It's not just David Knight who was demonetized on DLive - any content provider who uses the x-tag was demonetized - it just seems to be those providers who discuss politics and plandemics, however. Everyone is demonetized "until further notice".....or I guess until all the content providers become sheeple and go safely back into their pens to speak truth no more. Literally, every single content provider I follow has been demonetized, every single one. Basically, I have lemons to make lemonade, but no glass pitcher to make it in. I'm not shocked at all by this - on to the next platform for most of the "wrong-thinkers", I guess.

Blogger Tomato bear January 17, 2021 3:13 AM  

Thanks Vox and the legal legion.

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