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Patreon Faces New Legal Peril Under California Law

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Patreon has lost several high profile creators including Sam Harris, Dave Rubin, and Jordan Peterson due to Patreon’s decision to begin censoring creators for ideological reasons.

The belief is that Patreon can ban anyone they want to. Is this true under California law?

Private companies can do whatever they want,” is an old canard repeated by people who aren’t lawyers or aren’t very good lawyers. But a new legal remedy is available under California’s arbitration law, especially with the adoption of SB-707.

There’s an economic relationship between Creators and their Backers.

Patreon, by banning a Creator, disrupts the economic relationship between Creator and Backer. In legal terms this is called tortious interference with a business relationship.

Backers can demand to have the disruption of this relationship sent to arbitration.

Patreon, under California law, must pay the arbitration fees in advance. These fees can be upward of $10,000 per case.

If 500 backers demanded arbitration, Patreon would need to put up five million dollars in advance in filing fees alone. Legal fees will ramp those fees up by a factor of ten.

And judges are enforcing the law strictly:

DoorDash Ordered to Pay $9.5M to Arbitrate 5,000 Labor Disputes:

SAN FRANCISCO (CN) – Rejecting claims that the legal process it forced on workers is unfair, a federal judge Monday ordered food-delivery service DoorDash to pay $9.5 million in arbitration fees for 5,010 delivery drivers’ labor demands against the company.

“You’re going to pay that money,” U.S. District Judge William Alsup said in court. “You don’t want to pay millions of dollars, but that’s what you bargained to do and you’re going to do it.”

Patreon has tried writing itself out of this legal requirement with amended Terms of Service, which took effect on January 3, 2020:

You may not bring a claim against us for suspending or terminating another person’s account, and you agree you will not bring such a claim. If you try to bring such a claim, you are responsible for the damages caused, including attorneys fees and costs.

This provision is unlawful and unenforceable, because Patreon demands all users abide by JAMS Streamlined Arbitration Rules and Procedures:

If a dispute does arise out of these terms or related to your use of Patreon, and it cannot be resolved after you talk with us, then it must be resolved by arbitration. This arbitration must be administered by JAMS under the JAMS Streamlined Arbitration Rules and Procedures, except as expressly provided below. Judgment on the arbitration entered in any court with jurisdiction. Arbitrations may only take place on an individual basis. No class arbitrations or other other grouping of parties is allowed. By agreeing to these terms you are waiving your right to trial by jury or to participate in a class action or representative proceeding; we are also waiving these rights.

Under California law, a consumer cannot be forced to pay costs and fees under a mandatory arbitration clause. California law is clear:

For matters involving consumers, the consumer is only required to pay $250. See JAMS Policy on Consumer Arbitrations Pursuant to Pre-Dispute Clauses. For matters based on a clause or agreement that is required as a condition of employment, the employee is only required to pay $400. See JAMS Policy on Employment Arbitrations, Minimum Standards of Fairness.

In other words, if Patreon bans a Creator, and the Backers want to file arbitration claims, Patreon will have to be millions of dollars of fees.

As one law firm specialization in arbitration law notes:

SB 707 applies to employment or consumer arbitration agreements and requires that the drafting party pay any fees and costs that might be due before the arbitration can proceed within 30 days after the due date. The failure by the drafting party to pay will mean that the drafting party is in material breach of the arbitration agreement, is in default of the arbitration and will waive its right to compel arbitration

There is no exception to this law, and Patreon cannot draft its way out of California law with a Terms of Service update. Again, California law provides:

With respect to the cost of the arbitration, when a consumer initiates arbitration against the company, the only fee required to be paid by the consumer is $250, which is approximately equivalent to current Court filing fees. All other costs must be borne by the company, including any remaining JAMS Case Management Fee and all professional fees for the arbitrator’s services. When the company is the claiming party initiating an arbitration against the consumer, the company will be required to pay all costs associated with the arbitration.

Patreon may win on the grounds that its Terms of Service as of January 2020 apply to all creators banned in 2020 or beyond. It’s unlikely they will, because courts look unfavorably on parties who demand arbitration while seeking to opt-out of rules they don’t like.

My best guess is that if a Creator or Backer sued Patreon to have the fee-shifting provision struck from the Terms of Service, then that party would prevail.

Any Patreon creator banned before 2020 will have favorable procedural rules, and Backers bringing claims will not be required to pay more than $250.

The same rules would also apply to PayPal and other companies with mandatory arbitration provisions.

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Culture

Is “Kung Flu” the latest Media Hoax?

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Several White House reporters confronted Trump regarding his decision to call the coronavirus (or COVID-19) the China Virus.  One reporter asked him about a White House administration official who is alleged to have called the coronavirus Kung Flu.

When the reporter was asked the name of the official, the reporter said she didn’t know.

The original claim regarding Kung Flu comes from CBS reporter Weijia Jiang. On March 17th, she Tweeted:

This morning a White House official referred to #Coronavirus as the “Kung-Flu” to my face. Makes me wonder what they’re calling it behind my back.

Ms. Jiang has not identified the official.

One reason could be because this official does not even exist.

Under American defamation law, you can lie all you like.

You can’t lie about a person by name.

If no White House official called the coronavirus Kung Flu, or if there is some important context missing, then Jiang could be sued.

You can watch the Kung Flu exchange in this video here:

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The Stafford Act Text Message Announcing an Emergency Quarantine is a Hoax

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By now you or someone you know has received a hoax text announcing martial law. With some minor variations, the texts all read the same:

  • In 48 to 72 hours the president will evoke what is called the Stafford act. Just got off the phone with some of my military friends in DC who just got out of a two hour briefing. The president will order a two week mandatory quarantine for the nation. Stock up on whatever you guys need to make sure you have a two week supply of everything. Please forward.

 

The National Security Council issued a rare public statement warning the public that the Stafford act text was a hoax.

How can you tell the Stafford Act Text is a Hoax?

Even if you refuse to accept the NSC’s word on the matter, the text message has some telltale signs of a hoax.

First, the text promises secret insider knowledge. “Just got off the phone with some of my military friends in DC who just got out of a two hour briefing.” This is a vague enough proclamation that it sounds plausible.

Second, no specifics of these friends are given. Who are these friends? Why did they call this specific person?

Third, the hoaxers ask you to spread the message. Why would anyone acting in good faith want to incite a panic?

If an emergency quarantine were able to be declared, the plan would be Top Secret. No one’s friends would just get out of a briefing and start alerting people. THEY WOULD GO TO PRISON FOR LEAKING CLASSIFIED INFORMATION.

If such an emergency plan were in the works and higher command wanted the story to get out, they’d leak it to a credible outlet. Not share chain-letter style text messages.

There’s also tradecraft involved in sharing classified information.

None of the telltale signs (and no I won’t share how to leak classified secrets here) were present in that alert.

UPDATE: Other outlets are now reporting that the Stafford Act text is a foreign disinformation campaign:

The Trump administration is alleging that a foreign disinformation campaign is underway aimed at spreading fear in the country amid the coronavirus pandemic, three U.S. officials said Monday. On Sunday, federal officials began confronting what they said was a deliberate effort by a foreign entity to sow fears of a nationwide quarantine amid the virus outbreak.

Agencies took coordinated action Sunday evening to deny that any such plans were put in place, as they tried to calm a nation already on edge by disruptions to daily life caused by the virus.

 

——-

Read More about Mike Cernovich here.

Who is Mike Cernovich?

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Culture

How Trump Drafted Google into the War Against Coronavirus

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Elvis Presley served in the Army after he was drafted, and in American history it was common for celebrities to serve their country during times of national crisis. Noblesse oblige, or the duty the noble and rich owed to society, arouse perhaps out of morality or maybe simple self-preservation. If you’re getting while the getting is good, giving something back goes a long way to avoid class resentment.

Those thoughts were perhaps on Trump’s mind (or more likely his instinct) when he announced that Google was taking massive action to help America fight the coronavirus.

Google at first pushed back at the suggestion that it, a nearly trillion dollar mega-corporation, actually doing something to help the users it profits from.

Why should Google help save lives? Why should Google do anything other than operate as an amoral, blood-sucking corporation that violates user privacy and exploits children?

The media bros were quick to rush to save Google. Poor Google! They were being bullied by the ORANGE MAN BAD.

Google’s media errand boys like Jake Tapper and others were quick to publish stories attacking Trump for suggesting that Google actually do something.

Some like your humble correspondent Mike Cernovich saw right away was Trump was doing.

Trump was drafting Google into the war against coronavirus.

Google, whatever its motivations, answered the draft.

Public pressure must intensify.

The corporations make billions of dollars a day by spying on users.

The least they can do is use that data to find out where coronavirus hot spots are, share that information with the CDC, and get information shared with the sick.

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