Minors Continue Challenging Facebook Credits in Federal Court

I've never been one to participate in the variety of silly game apps offered by Facebook; particularly the ones for which you must pay.  Most kids, on the other hand, are eager participants.

In Michigan, when a company contracts with a minor, that contract is voidable.  The Internet has taken voidable contracts with minors to another level with the emergence of digital currency.

A lawsuit filed against the mighty Facebook by a pair of minors has been grinding along out in Northern California for the past few years.  Here at the Law Blogger, we've been following developments in the case courtesy of Eric Goldman's Technology and Marketing Law Blog.

The minors filed suit against FB in federal court alleging a variety of claims stemming from their purchase of Facebook Credits; the minors used parental credit cards without authorization.  Facebook Credits are units of credit that are purchased in a user's local currency such as the dollar, pound, drachma, mark, or yen [no bit coins please] for use in say, the Ninja Saga game.

Facebook keeps bringing motions for summary judgment in the case, slowing stripping away some of the claims advanced in the lawsuit.

Last week, the federal judge dismissed the minors' claims for violation of California's unfair competition statute on the basis the minors' did not use their own money, so they did not have standing to make this claim.  Goldman is rightly troubled by the fact that no one seems to have standing to bring a claim under the state consumer protection statute; neither the minors nor their parents.

The court also granted Facebook's motion as to the federal Electronic Funds Transfer Act claims, ruling that the EFTA does not apply to FB because it is not a "financial institution" under the definition of the Act. Goldman characterizes this portion of the opinion as an "oddity" to the extent that Facebook Credits are a form of digital currency.

Arguably the most significant portion of the lawsuit  -the voidability of contracts with minors- survived FB's most recent procedural attack, so the case marches onward.  You can expect to see more of this type of litigation in the future as minors become increasingly active with the various forms of digital currency.

When discovery finally ends in this case, the presiding federal judge will likely be asked to decide yet another round of dispositive motions brought by both David and Goliath.  Stay tuned for those developments as the outcome could have a significant impact on both FB and how business with minors is conducted.

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Posted in: bit coins,Electronic Funds Transfer Act,Eric Goldman,Facebook,Facebook Credits,federal court,Northern California

SCOTUS Opens Term with First Amendment Case from Michigan

The church can fire its priest, but can it fire the altar boy?

The case of Hosanna-Tabor Evangelical Lutheran Church and School v EEOC is one of the first cases to be argued in the 2011-2012 SCOTUS term that opens today in Washington D.C. This First Amendment freedom of religion case arises from an employment dispute at a now-defunct church in Redford, MI.

The issue in the case is the scope of the long-recognized exception to the federal employment discrimination laws when it comes to hiring or firing the clergy for a church, synagogue, or mosque.  This so-called "ministerial exception" has been recognized by all 12 federal appellate courts with the authority to hear such cases, as well as the supreme courts of 10 states.

The rationale behind the exception is that religious organizations, under the freedom of religion, should be allowed to make their own decisions about hiring and firing clergy, without concern of the normal anti-bias laws.  The question to be argued before SCOTUS on Wednesday morning is how deep into the staff and the payroll this ministerial exception goes.

Most religious institutions want the freedom to make all staffing decisions without concern for federal employment law; not just decisions relating to the pastor, the priest, the rabbi or the imam.  They are pushing for a flat-out ban on all anti-bias laws for any staffing decisions.

The Solicitor General asserts that, to the extent it is recognized, the church's interpretation of the exception is too broad.  Church staff members, the federal government will argue, are protected by federal and state employment laws.

The Hosanna-Tabor Church case involves a parochial school teacher who was fired allegedly because of her numerous disability-related complaints; the claim is that her firing by the church-school was retaliatory.  If the High Court considers her to be the equivalent of a clergy member, then she cannot seek the shelter of the Americans with Disabilities Act; if she is deemed to be a mere staffer, then she is entitled to protection under the applicable laws.

SCOTUS has seen disputes akin to this in prior petitions.  One of the reasons the Redford, MI church's petition may have been selected is because it was prepared and filed by University of Virginia Law School's Professor Douglas Laycock; one of the nation's leading experts on church-state law.

Our First Amendment jurisprudence continues to grow ever richer.  Stay tuned for the result.

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Posted in: ADA,Americans with Disabilities Act,church,EEOC,Equal Employment Opportunity Commission,federal court,First Amendment,lawyer,mosque,priest,SCOTUS,synagogue

Internet Gambling Stung by Feds

Like the "war on drugs", there has been much federal focus on eradicating those ubiquitous illegal gaming sites.  Yesterday, the feds moved against the owners of two of the biggest sites on the web.

Indictments were unsealed by the U.S. Attorney in Manhattan against the owners of PokerStars and Full Tilt Poker.  The feds have seized all their holdings in the United States.

You may recall that back in 2006, Congress passed the Unlawful Internet Gambling Enforcement Act, an anti-gaming law prohibiting banks from processing winnings from internet gambling sites.  PokerStars and Full Tilt Poker, among other sites, developed ways around the law, disguising gamblers' payments as sales for jewlery, flowers and other goods.

The U.S. Attorney alleges the schemes amount to bank fraud and money laundering.  The case is complicated by the foreign residence of the primary defendants.  Two of the gambling sites, for example, are located in Ireland.

At least 3 arrests were made, however, in Las Vegas and Utah, while the FBI coordinates with Interpol to secure nearly a dozen other named defendants.

The Internet domains of the main sites have been seized by the FBI with a notice posted on the home pages warning would-be Internet gamblers of possible crimes they could be committing under the United States Code.  Approximately 15-million Americans visit gambling sites on any given day.

Well, looks like this could be the end of Internet gambling in the U.S.

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Posted in: FBI,federal,federal court,Full Tilt Poker,internet gambling,interpol,Las Vegas,PokerStars,U. S. Attorney

Home Run King Faces Federal Perjury Charges in San Fransisco

Barry Bonds
Associated Press

Barry Bonds, formerly of the Pittsburgh Pirates and San Fransisco Giants, is the defendant in a federal perjury case that began today; the case was charged back in 2007.

Bonds holds several major league baseball records, including most home runs in a career (762), and in a single season (73).  He is the son of former all-star Bobby Bonds.  Son Barry has been named league MVP more than any other player, taking that award 4 straight years at the height of his career.

Unfortunately, he ended his career under the cloud of the federal indictment that is now unfolding in a San Fransisco trial.  The charges allege Bonds testified falsely to a federal grand jury on the subject of his use and sources of steroids.

Earlier, Bonds had been offered immunity in exchange for truthful testimony.  Bonds insisted he was unsure of what the substance(s) were, claiming he was "juicing" with flaxseed oil and arthritis cream for all he knew.

It's in the hands of the attorneys and jurors now.  On the first day of trial, however, Bonds received a bit of good news when his former trainer, Greg Anderson, chose a holding cell over live trial testimony.

This does not have the makings of a quick trial. 

Not the best lead into Opening Day.  Let's just hope its all done by the playoffs.

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Posted in: Barry Bonds,Bobby Bonds,federal court,grand jury,Greg Anderson,indictment,MVP,Pittsburgh,San Fransisco