NotCommunist336 et al. v Black Diamond Casino 2025 Civ 11
NotCommunist336 et al. v Black Diamond Casino [2025] Civ 11
| Date of judgment | 23rd June 2025 |
| Judge | Judge Average787enjoyer |
| Grounds | Breach of Contract (Article 24 of the Civil Code) |
| Verdict | Defendant (Black Diamond Casino, Antimuggy through piercing of Corporate Veil) held liable for Breach of Contract |
| Result | 67,590 tau plus legal fees, to be distributed equally among the plaintiffs. |
| Applicable persuasive precedent |
|
JUDGMENT by Judge Average787enjoyer
Facts of the Case
[1] Between February 22 and March 25th, 2025, over 37196 “chips” with a value equal to 1 tau per chip were deducted from Plaintiffs' accounts by Black Diamond Casino or employees thereof with neither cause nor notice.
[2] Despite attempts by Plaintiffs to recover their losses, Defendant attempted to force arbitration in accordance with a clause in their contract.
[3] The contract in question applies retroactively in the March 25 version but not in the original version, the March 25th version further allows for the casino to remove access to account control features at will, including some that would cause assumed continued acceptance of the contract, and allows them to withhold withdrawals or change balances at will in the case of “breach of contract” as determined unilaterally by the Casino or through the arbitration outlined above.
[4] Additionally, the original version of the contract and a version from sometime in-between March 5th and March 25th considered the act of joining the casino’s Discord server at least 3 times to be agreement to the contract.
[5] Discord user Antimuggy operated as sole owner of the Casino during this time.
[6] The casino had a total of approximately 4500 tau in its Treasury account.
Allegations
[7] Plantiffs allege that by withdrawing chips without notice or cause and ignoring requests for restitution, the contract was breached.
[8] Plaintiffs further allege that the arbitration clause is sufficiently one-sided to be considered unconscionable and therefore unenforceable under contract doctrine, and the principles of good faith and fair dealing.
[9] Plaintiffs further allege that the corporate veil between Black Diamond Casino should be pierced due to Antimuggy’s sole owenership of the Casino [5], the undercapitalization of the Casino’s accounts, as represented in the disparity between the tau in the Treasury account [6] and the amount deducted from Plantiffs’ accounts [1], and the alleged lack of potential remedy in an amount proportional to the amount deducted solely through the use of Casino accounts.
[10] Defendant alleges that Plantiffs have failed to meet their burden of proof and that there was no evidence presented of intent to defraud Plantiffs by Defendant.
[11] Defendant further alleges that the Casino maintains “platform integrity controls” to “monitor for…potentially exploitative conduct,” and that it is “pursuant to standard risk protocols.”
[12] Defendant further cites Defendant’s ongoing SDSC Writ of Prohibition regarding alleged lack of standing to sue for class members mbh292 and guava.
Regarding the enforceability of contracts
[13] The plaintiffs mention the alleged “unconscionability” of the arbitration clause of the contract, stating that because it is so one-sided towards the casino, it is unconscionable under contract doctrine and principles of good faith and fair dealing.
[14] Although not well established in SimDemocracy’s precedent (there has, to the court’s knowledge, never been such a contract dispute before), SimDemocracy is a common law jurisdiction (Dick_head68 (Appellant) v NovaSM (Respondent) [2019] SDCA 1), so the well-established common law principles of good faith and fair dealing should apply in some capacity. The Plaintiffs introduce an argument for unconscionability under good faith and fair dealing as well as contract doctrine, which I shall cover later.
[15] The court finds that for the purposes of contract law in SimDemocracy, “contract doctrine” is an umbrella term for a variety of implied rights and obligations in contracts in jurisdictions under common law, including but not limited to good faith and fair dealing.
[16] For the purpose of determining the presence of issues of good faith and fair dealing under common law, it is the opinion of the court that 2 factors should be considered: process and outcome. Regarding process first, a contract may present an issue of good faith and fair dealing if the process of determining the contract’s contents was unilateral, say, in the form of non-negotiable terms of service for a service. It should also be noted that this criterion is rather similar to Civil Code Article 11 S3.3 and Article 12 S2.1 and 4.3 alone.
[17] The court, however, does not intend to render such contracts in violation of these common law principles by virtue of their existing as a ToS-style agreement, so it proposes a second criterion which must be met to be considered good faith and fair dealing: an unfair outcome. This particular criterion should be applied very conservatively, as fairness is generally a matter of opinion. However, if a contract is so egregiously unfair to either party that it shocks the court’s conscience, it may be considered a violation of good faith and fair dealing principles under common law. It should be noted further that these criteria are essentially identical to those which should be applied when determining a violation of Civil Code Article 12 S4.4.
[18] For the purposes of this verdict, the court will only consider principles of good faith and fair dealing under contract doctrine due to their being the bulk of argumentation for this point under contract doctrine presented, but this should not be construed as a reason for later cases to limit the scope of contract doctrine to these principles, as the court believes that there are likely other principles which should fall under this umbrella.
Regarding the enforceability of this particular contract
[19] Using these criteria to determine the presence of a breach of contract doctrine, the court will now examine the arbitration clause more closely.
- First of all, the contract restricts the client to arbitration in all disputes, including those arising from torts that are usually excluded in contracts, such as damages committed by gross negligence,
- Secondly, the Casino has the sole ability to appoint an arbitrator and to decide the time and place of the arbitration (as the option for the casino’s sole selection essentially nullifies selection through mutual agreement),
- Finally, the arbitration is final and unappealable, and while the arbitrator must provide reasoning it could be anything.
Taken together, these could theoretically allow the Casino to appoint one of its own employees, with a clear conflict of interest, as the arbitrator, who could then deny the claimant any damages under any reasoning, which they would have incentive to do as an employee, and further saddle the claimant with all of the costs and fees of arbitration. Taken together in addition to the fact that these are non-negotiable terms of service which may be changed unilaterally without notice by the Casino, the court finds that this arbitration clause violates the principles of good faith and fair dealing under contract doctrine, and so should be nullified as unfair terms established unequally under Article 12 S4.4 and under common law.
[20] Passive actions used to agree to the contract were also a point of argumentation, and the evidence shows that before the 25th, one method of acceptance of the contract was joining and leaving the official Discord server at least 3 times. This, additionally, constitutes a fairly textbook breach of Article 12 Section 2.1 of the Civil Code, as a user could have theoretically joined the casino server 3 times without ever seeing the terms of service and still been bound by the contract, even in circumstances unrelated to usage of the casino should a dispute have arisen unrelated to it. In fact, this particular form of acceptance could even occur due to technical errors on Discord’s part too. While all 3 users interacted with the casino, making this irrelevant to acceptance in their cases, it constitutes a second unenforceable part of the contract and lends credence to an allegation of bad-faith dealing with regard to the contract on the part of the Casino.
[21] As the arbitration clause was found unenforceable in [19], the court finds that this case should be allowed to be heard before it, in accordance with the court’s normal jurisdiction under Article 10 S1 of the Constitution.
Regarding the corporate veil
[22] Both parties brought up the common law principle of the corporate veil in their argumentation, which is another aspect of contract law which is, to the court’s knowledge, entirely unused in SimDemocracy until this point. However, because the corporate veil is a principle very well established in common law and SimDemocracy is a common law jurisdiction, the court finds that the corporate veil should apply to SimDemocracy corporations in some capacity, a point to which the court shall come back later.
[23] As the court has looked to common law in the establishment of the corporate veil, the court shall also look to it in the establishment of the action of and reasons to lift or pierce it.
- Under common law, piercing the corporate veil is defined as the recovery of debts or damages owed by a company from a stakeholder, director, or associate of said company or another legal entity associated with that company, as limited later in this verdict, essentially removing the artificial personhood of the corporation entirely for the purposes of acquiring damages.
- Lifting the corporate veil, on the other hand, is limited to an examination of a corporation’s internal structure as a means to the end of determining the true nature of some aspect of a company, without holding individuals liable for anything by virtue of the corporate veil’s being lifted.
[24] Despite certain subpoenas acting in a manner amounting to lifting the corporate veil and the intermittent indistinguishability of the Black Diamond Casino and Discord user Antimuggy (notably regarding representation of the same during pre-trial), the court is not inclined to define rules for the acceptability of lifting the corporate veil as it was never mentioned during argumentation and does not extensively apply to this trial. Instead, the court will simply acknowledge its existence under common law.
[25] The piercing of the corporate veil, however, proved instrumental to the case at hand, so the court shall define a non-exhaustive list of factors which, depending on severity and number, can constitute piercing of the corporate veil under common law:
- Intermingling of corporation and shareholder assets, for example the use of corporation funds or assets by major shareholders for personal expenses,
- Undercapitalization of the corporation, for example if there is a large disparity between the corporation and the owner’s funds, as it is a common criterion in piercing the corporate veil and could feasibly be used to shield the company from paying large sums in damages in the absence of the corporate veil being pierced,
- Use of the corporation as an alter ego or for personal dealings, which is also well established in common law as a potential reason to pierce the corporate veil,
- Fraudulent acts perpetrated by the corporation or its owners on the corporation’s behalf with the purpose of depriving claimants of potential funds in a dispute which relies on the corporate veil.
[26] Not only are the reasons for piercing the corporate veil under common law regulated, but the targets often are too. For example, it is not likely that one could pierce the corporate veil of SimMacDonald’s to target a single fast food worker or other low level employee, even disregarding the franchise-based structure of IRL MacDonalds, as they are likely neither related to the case at hand, nor also a major shareholder or controller of the corporation, nor the reason for piercing the corporate veil in the first place.
[27] Therefore, the court would like to suggest another non-exhaustive list of potential targets of the piercing of the corporate veil (people potentially liable for damages due to its piercing):
- The chief executive or another prominent member of a corporation’s management, for example a CFO (this might apply especially in a case of undercapitalization),
- Shareholders with a large stake in the corporation,
- A sole owner or proprietor, especially in the case of an alter ego corporation, but also applicable elsewhere.
[28] The court notes the defense’s argument that the corporate veil is not established in SimDemocracy, but finds that that is not a valid argument, as SimDemocracy is a common law jurisdiction, the corporate veil is a clearly established principle under common law, and other common law precedent is often used to create new precedent in SimDemocracy where none otherwise exists (take, for example, SD v Dick_head68 [2019] Crim 8).
Piercing of the Corporate Veil in the case at hand
[29] The Plantiffs’ counsel argued that the corporate veil should be pierced in this case because the business was severely undercapitalized, solely controlled by Antimuggy, and misrepresented its Terms of Service among other, similar acts, in order to deprive the plaintiffs from value while shielding the casino and its owners from liability. While the court roughly recognized all 3 actions as potential reasons to pierce the corporate veil, it has varying opinions on the applicability of each in this case. The defense declined to respond to this during the trial.
[30] First of all, the undercapitalization of the business is easily proved by SimDemocracy Stock Exchange records in evidence in the absence of conflicting records from the defense. They state that the company’s total cash assets as of March 10, 2025 were roughly 4,500 tau, but the Plantiffs’ winnings exceeded 35000 tau combined, or nearly 8 times the assets of the company. Additionally, Antimuggy was recognized as the sole owner of the casino, having complete control over its operations and a large personal stake in it. These two factors combined, in the court’s opinion, constitute sufficient reason for the court to pierce the corporate veil and find Antimuggy personally liable for any damages incurred due to this case.
[31] Although the court concurs with the plantiffs regarding the act of changing the Terms of Service being fraudulent on the balance of probabilities, it does not find that this action is sufficient to be considered in the piercing of the corporate veil for the purposes of this case. However, that does not diminish the presence or notability of either of the other factors mentioned.
[32] It is also worth noting that on its Terms of Service, the Black Diamond Casino claims to be a limited liability corporation. As there is no basis in law regarding the establishment or regulation of such corporations and because the court finds that the corporate veil should be pierced no matter the type of corporation, it disregarded that marker, but it recommends that the Senate pass legislation clarifying the existence, regulation, etc. of Limited Liability and other special types of corporations
Regarding the legitimacy of withdrawal of chips with neither knowledge or consent
[33] The Terms of Service of Black Diamond Casino, according to every revision except for the one on March 25th, allow customers but not explicitly the casino at will to withdraw chips from customer accounts, in order (for customers) to exchange them for tau at a 1:1 fixed rate, saying that “consumers may freely exchange [chips] at any time.”
[34] The court finds that a reasonable person (as established in SD v Kamray23 [2020] Crim 5), seeing this contract, would assume that they have control over the assets in their account, and that they could not be arbitrarily removed by the casino absent a change to the Terms of Service.
[35] Additionally, the court finds that in the absence of a right to withdraw chips by the casino at the time that the withdrawals occurred, the casino violated the plaintiffs’ implied contractual right to the security of their assets, which it finds exists as an implied right due to the nature and intention of the contract (to regulate the use and management of the casino), and is well established under common law due to the contract’s purpose,. The casino’s only stated right to “adjust balances” is found in evidence on the 25th, after the withdrawals occurred.
Verdict
[36] Due to the violation of the implied contractual right to security of assets and the subversion of reasonable expectations of the terms of the contract, the court finds that the Casino violated the contract between themselves and the plaintiffs.
[37] The court finds that the corporate veil may be breached in this case to find the sole owner and manager of the casino, Anti-Muggy, liable for damages, as expounded upon in [30].
[38] Due to the stay on any potential damages, none can be officially awarded at this time. However, if the Supreme Court finds that the claims by mbh and guava should be dismissed, the court recommends that 30,000 tau should be awarded to NotCommunist366, in accordance with their request for redress. Should the Supreme Court instead find that the claims should not be dismissed, the court recommends a redress of 67,590 tau plus legal fees, to be distributed equally among the plaintiffs.
Addenda
[39] The court reaffirms Judge Terak’s judgement that the ToS should not apply to NotCom based on their continued subscription, because the notification of a party to a contract that they continue to be a party to said contract does not give the party the ability to exercise their power to remove themselves from the contract, as continued to be kept from them despite their ability to see their subscription.
[40] Given that Anti-Muggy is on a Self-Exclusion Order, any potential redress would have to be paid upon their return should the Supreme Court rule upon the Writ of Prohibition before they return.
Citations
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