SMALLWOOD v. NCSOFT CORPORATION

ti 1993) (finding that two sophisticated entities had agreed to waive certain rights under a contract and that the waiver provision absolving one party of all liability sounding in products liability and gross negligence did not offend public policy).

The Texas Supreme Court has not explicitly resolved this conflict but has at least implicitly supported the Smith decision. See Memorial Medical Center of East Texas v. Keszler, M.D., 943 S.W.2d 433 (Tex. 1997). In Memorial Medical Center, the Texas Supreme Court explained:

The remaining question is whether claims for gross negligence can ever be released. The court of appeals held that such a release is against public policy. 931 S.W.2d at 63 (citing Smith v. Golden Triangle Raceway, 708 S.W.2d 574, 576 (Tex. App.-Beaumont 1986, no writ)). However, the court of appeals failed to distinguish a pre-accident waiver of liability from a post-injury release made in settlement of claims. In Golden Triangle, the issue was whether a pre-injury release could effectively dispense with a claim of gross negligence. Golden Triangle, 708 S.W.2d at 576. The court found a pre-injury release of gross negligence invalid as against public policy. Id. We have never held post-injury releases of gross negligence claims invalid. There is no logic in prohibiting people from settling existing claims. Significantly, such a rule would preclude settlement of many such claims.

Id.

Thus, in light of the foregoing authority, it appears that one cannot pre-emptively waive a gross negligence claim but that one can settle a claim for gross negligence after the claim has arisen. Accordingly, the Court finds that the waiver and limitation of liability in the User Agreement is not valid as to the gross negligence claim.

Under Texas law, a party also may not waive its right to bring a fraud claim. See Lone Star Fund V. (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 390 (5th Cir. 2010) ("Under federal and Texas securities laws and Texas common law, a party cannot waive its rights to bring fraud claims by contract or otherwise"). Accordingly, if Plaintiff's fraud claim is valid, such a claim would not be limited by the User Agreement.

The Court observes that there is no conflict between Texas and Hawai'i law on these issues. Hawai'i courts permit a party to waive liability in certain circumstances, but not in situations of intentional or reckless conduct. See Laeroc Waikiki Parkside, Llc v. K.S.K. (Oahu) Limited Partnership, 115 Hawai'i 201, 224, 166 P.3d 961, 984 (2007) (holding that "a nonrecourse provision that expressly protects a party from tort liability would be permissible as long as the agreement was not unconscionable and it was knowingly and willingly made, and, adopting the majority view of the states, such a provision is valid to the extent it does not waive liability in situations of intentional or reckless conduct") (citing Wheelock v. Sport Kites, Inc., 839 F. Supp. 730, 736 (D. Haw. 1993) (explaining that "Hawaii courts permit a waiver of negligence claims")).
The Wheelock court found, however, that public policy weighed against allowing a party to disclaim liability for gross negligence and strict liability. Wheelock, 839 F. Supp. at 736;see also Laeroc Waikiki Parkside, 115 Hawai'i at 224, 166 P. 3d at 984 (citing Alack v. Vic Tanny Int'l of Missouri, Inc., 923 S.W.2d 330, 337 (Mo. 1996) (explaining that "there is no question that one may never exonerate oneself from future liability for intentional torts or for gross negligence, or for activities involving the public interest"); S. Williston, Williston on Contracts § 19:23 at 291-97 (4th Ed. 1998) ("An attempted exemption from liability for a future intentional tort or crime or for a future willful or grossly negligent act is generally held void, although a release exculpating a party from liability for negligence may also cover gross negligence where the jurisdiction has abolished the distinction between degrees of negligence and treats all negligence alike."). Because Hawai'i has not abolished the distinction between negligence and gross negligence, the parties could not waive liability for gross negligence under Hawai'i law. See Cape Flattery Ltd. v. Titan Maritime LLC, 607 F. Supp. 2d 1179, 1189 (D. Haw. 2009) (explaining various definitions of gross negligence).

Plaintiff, however, argues that the waiver is entirely prohibited by the Texas Deceptive Trade Practices and Consumer Protection statute (the "Texas Act"). The Court disagrees. The Act does not prohibit the waiver in the User Agreement. As Defendants argue, "the anti-waiver provision of the Act only prevents consumers from unknowingly waiving provisions provided by the Act itself." See Defendant's Supplemental Mem. at 3 (emphasis in original); Tex Bus. Com. Code Ann § 17.42 (Vernon 1995) (permitting a waiver "of the provisions of this subchapter" provided that it is in writing and signed by the consumer, the consumer is not in a significantly disparate bargaining position, and the consumer is represented by legal counsel in acquiring the goods and services); Arthur's Garage, Inc. v. Racal-chubb Sec. Systems, Inc., 997 S.W. 2d, 803, 811 (Tex. App. 1999) ("this `no-waiver' provision applies to rights created by the DTPA. Therefore, a limitation of liability clause is invalid insofar as it purports to waive liability for an act defined as `deceptive' under the laundry list of DTPA violations contained in section 17.46, which includes material misrepresentations.")

Here, Plaintiff has alleged claims for (I) Misrepresentation/Deceit; (II) Unfair and Deceptive Trade Practices; (III) Defamation/Libel/Slander; (IV) Negligence; (V) Gross Negligence; (VI) Intentional Infliction of Emotional Distress; (VII) Negligent Infliction of Emotional Distress; and (VIII) Punitive Damages. As discussed infra, Plaintiff's Misrepresentation claim may be based upon either fraudulent misrepresentation or negligent misrepresentation. Thus, Plaintiff's recovery for any claim for Negligent Misrepresentation, Negligence, and Negligent Infliction of Emotional Distress is limited and these claims cannot form the basis of Plaintiff's damages for purposes of jurisdiction. However, because liability for willful or fraudulent behavior or gross negligence cannot be waived, the Court must examine whether Plaintiff states a claim based on any of the foregoing. As discussed infra, because this Court finds that Plaintiff states a claim for gross negligence, and because claims for gross negligence cannot be waived or limited under Texas law, Defendants' motion to dismiss for lack of subject matter jurisdiction is denied.

To the extent that Plaintiff attempts to create an issue regarding a conflict between NCsoft and NC Interactive, Inc., the Court rejects such an argument. See Opposition at 12 n. 4. The User Agreement (and the waiver contained therein) limits NC Interactive Inc.'s liability as well as that of its shareholders and affiliates. See Esber Declaration Exhibit 1 (User Declaration ¶ 12). Because NC Interactive Inc. is a wholly-owned subsidiary of NCsoft, the Court finds that NCsoft would qualify both as a shareholder and an affiliate. See Compl. ¶ 3 (alleging that NC Interactive Inc is a wholly owned subsidiary of NCsoft Corp.). Black's Law Dictionary defines an affiliate as a "corporation that is related to another corporation by shareholdings or other means of control; a subsidiary, parent, or sibling corporation" Black's Law Dictionary 63 (8th Ed. 2004) Accordingly, there is no conflict between NCsoft and NC Interactive Inc.

III. Analysis of Each Count Under Rules 9(b) and 12(b)(6)

A. Count I — Misrepresentation/Deceit

1. Fraudulent Misrepresentation

Plaintiff's first count is Misrepresentation/Deceit. Defendant argues "It is well settled in the Ninth Circuit that misrepresentation claims are a species of fraud, which must meet Rule 9(b)'s particularity requirement." Motion at 10 (citingMeridian Project Systems, Inc. v. Hardin Const. Co., LLC, 404 F. Supp. 2d 1214, 1219 (E.D. Cal 2005) (citing Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1141 (C.D. Cal. 2003)). In Hawai'i the elements of fraud are: 1) false representations made by the defendant, 2) with knowledge of their falsity (or without knowledge of their truth or falsity), 3) in contemplation of plaintiff's reliance upon them, and 4) plaintiff's detrimental reliance. Fisher v. Grove Farm Co., Inc., 123 Hawai'i 82, 103, 230 P.3d 382, 403 (App. 2009) (citing Hawaii's Thousand Friends v. Anderson, 70 Haw. 276, 286, 768 P.2d 1293, 1301 (1989); see also Shoppe v. Gucci America, Inc., 94 Hawai'i 368, 386, 14 P.3d 1049, 1067 (2000).

Rule 9(b) requires allegations of fraud to be pled with particularity and requires the pleading to provide an "account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." See Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007).

Plaintiff here has not pled fraudulent misrepresentation with the required specificity. Plaintiff alleges that Defendant falsely related that the three-month automatic payment plan was for Plaintiff's benefit, when it was a means to retain Plaintiff's money after he was banned. Second Am. Compl. ¶ 66(a). Plaintiff, however, does not state when such alleged misrepresentation was made, the specific content of the misrepresentation, where the misrepresentation was made, and who made the misrepresentation. See Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (the pleading much provide an "account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations"); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) ("Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged.").

Plaintiff also asserts that Defendants falsely represented that Lineage II was a fair game. Second Am. Compl. ¶ 66(b). Plaintiff similarly fails to specify who made such a misrepresentation, where it was made, or when it was made.

Next, Plaintiff alleges that Defendants falsely related that Lineage II was a safe product. This allegation suffers similar infirmities. Plaintiff asserts in a conclusory fashion that there was "inadequate advice to plaintiff as to `taking breaks' from play, but not disclosing that lengthy breaks in play were necessary to avoid addition to the game." Second Am Compl. ¶ 66(c). Plaintiff, however, undercuts his own claim here, as he alleges that Defendants did suggest "taking breaks" and does not assert that there was any affirmative statement that Lineage II was a safe product. Furthermore, Plaintiff alleges that "the phenomena of psychological dependence and addiction to playing computer games was recognized by and known to defendants and other members of the industry," but he fails to specify who from the Defendants knew about it and when they allegedly knew it. Second Am. Compl. ¶ 17.

Finally, Plaintiff alleges Defendants falsely related that "botting was not allowed, when in fact, it was rampantly obvious during plaintiff's game play but nothing was done about it until defendants banned players for purposes of their profits and not to provide a fair playing field to plaintiff and other game players." Second Am. Compl. ¶ 66(d). Plaintiff does not allege who told him botting was not allowed, when such a misrepresentation was made, or even how he could have relied on such an alleged misrepresentation if it was "obvious" to him that botting taking place.

Plaintiff does specifically allege that Defendants' reason for banning him from the game was "phony and fraudulent," and he is very detailed in this allegation. See ¶¶ 35-37. However, for this allegation of fraud, any allegation of reliance appears to be missing. Plaintiff has alleged that he relied on Defendants' actions to his detriment by investing his time and money playing the game, which would have gone elsewhere had he known about Defendants misrepresentations. See Second Am. Compl. ¶ 63. Thus, because his sole alleged reliance was playing the game, he cannot have relied on playing the game once he was banned from playing.

In sum, Plaintiff has not provided the requisite, who, what, when, and how necessary to establish an intentional misrepresentation claim and provide defendants with adequate notice. The Court has already granted Plaintiff leave to amend his fraud claim once. In his Second Amended Complaint, even with counsel's assistance, he has been unable to successfully plead a claim. Therefore, in light of the foregoing and because any further amendment would likely be futile, the Court dismisses Plaintiff's intentional misrepresentation claim with prejudice.See Flowers v. First Hawaiian Bank, 295 F.3d 966, 976 (9th Cir. 2002) (citing Cook, Perkiss Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990) (per curiam));Eldridge, 832 F.2d at 1135-36.

2. Negligent Misrepresentation

Hawai'i, however, also has a cause of action for negligent misrepresentation. In a negligent misrepresentation claim, Hawai'i law requires that 1) false information be supplied as a result of the failure to exercise reasonable care or competence in communicating the information; (2) the person for whose benefit the information is supplied suffered the loss; and (3) the recipient relies upon the misrepresentation." Blair v. Ing, 95 Hawai'i 247, 21 P.3d 452, 474 (Haw. 2001) (citing Restatement (Second) of Torts § 552); see also Peace Software, Inc. v. Hawaiian Electric Company, Inc., No. 09-00408, 2009 WL 3923350 at *6 (D. Haw. Nov. 17, 2009) (analyzing the Hawai'i standard for negligent misrepresentation in-depth and concluding that the three elements set forth in Blair are the standard). A negligent misrepresentation claim does not require intent, and accordingly is not subject to Rule 9(b). See Peace Software, 2009 WL 3923350 at *8; see also Bush v. Rewald, 619 F. Supp. 585, 608 (D. Haw. 1985) (holding that "[s]ince the common-law negligent misrepresentation count need not be pled with particularity under Rule 9(b), defendants' motion to dismiss [was] denied"); contra Baltimore County v. Cigna Healthcare, 238 Fed. Appx. 914, 925 (4th Cir. 2007) ("in light of the similarities between fraud and its close cousin negligent misrepresentation, it is hardly surprising that a number of our sister circuits espouse the view that Rule 9(b) does indeed apply to claims of negligent misrepresentation").

The Court is also aware that there are cases in this Circuit asserting that "in the Ninth Circuit, negligent misrepresentation claims are subject to heightened pleading requirements under Rule 9(b)." See Wolph v. Acer America Corp., No. C 09-01314 JSW, 2009 WL 2969467 at *5 (N.D. Cal. Sept. 14, 2009). However, as Judge Mollway explained in Peace Software, those cases all appear to be based on California law, in which the elements for a negligent misrepresentation claim are similar to the elements for fraud.Peace Software, 2009 WL 3923350 at *6. Based upon a review of Hawai'i case law, Judge Mollway concluded that "the Hawaii Supreme Court does not appear to have been equating negligent misrepresentation with fraud." Id. This Court agrees.

Although it has a different standard, Plaintiff has not alleged a negligent misrepresentation claim because Plaintiff's allegations in this regard all sound in fraud. Defendants assert that Vess v. Ciba-Geigy Corp. USA, applies to Plaintiff's claims.See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003) (holding "[w]hen an entire complaint, or an entire claim within a complaint, is grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district court may dismiss the complaint or claim."). As the Ninth Circuit in Vess explains, "where fraud is not an essential element of a claim, only allegations ("averments") of fraudulent conduct must satisfy the heightened pleading requirements of Rule 9(b). Allegations of non-fraudulent conduct need satisfy only the ordinary notice pleading standards of 8(a)." Vess, 317 F.3d 1104-1105. Furthermore, as explained in Marolda, the heightened pleading standard "does not apply, of course, to pleadings in the alternative or to claims that do not actually rest on the allegedly fraudulent event." See Marolda, 672 F. Supp. 2d at 998;see also Fed.R.Civ.P. 8(d) (permitting alternative and inconsistent statements of a claim)

Plaintiff alleges that he "would not have opened the Lineage II accounts and persisted in play, had he not been misled and deceived by defendants in the manner described herein" and that he "did rely upon defendants' deceptions and invested his time and money that would have gone elsewhere had plaintiff known of the deception." Second Am. Compl. ¶¶ 68, 70. Thus, the Court finds that Plaintiff's allegations he was "deceived" are the only possible basis for his negligent misrepresentation claim.

Accordingly, because these allegations are grounded in fraud and not pled with specificity, any purported claim for negligent misrepresentation is dismissed with prejudice.

B. Unfair and Deceptive Trade Practices

Defendants assert that Plaintiff's claim for unfair and deceptive trade practices under H.R.S. § 480-2 and 480-13 should be dismissed because it is established law that Rule 9(b)'s particularity requirement applies to state law causes of action. Motion at 14.

In Kearns v. Ford Motor Co., the Ninth Circuit ruled that a plaintiff's claims under California's Consumers Legal Remedies Act and Unfair Competition Law were required to be plead with particularity pursuant to Fed.R.Civ.P. 9(b). Kearns v. Ford Motor Co., 567 F.3d 1120, 1122 (9th Cir. 2009). The California Consumers Legal Remedies Act prohibits "unfair methods of competition and unfair and deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale . . . of goods or services to any consumer."Id. Similarly, Hawaii's Unfair and Deceptive Trade Practices ("UDAP") statute provides "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful." H.R.S. § 480-2. Because this language is similar to California's statute, and since Plaintiff appears to base his claim on "fraudulent concealment" (Second Am. Compl. ¶ 76) the Court finds that Plaintiff is required to plead his UDAP claim with specificity. Plaintiff does not add any new factual allegations in his UDAP claim, thus the Court finds that this claim fails for the same reasons as the Misrepresentation claim. See Second Am. Compl. ¶ 76 (alleging (a) "fraudulent concealment of the reason for the 3-month automatic payment plan;" (b) "fraudulent concealment that the Game Masters would not act fair and square to all players;" (c) "fraudulent concealment of the addictive quality of Lineage II;" (d) "fraudulent concealment respecting policies toward botting and banning;" and (e) "unfair and deceptive policies respecting automatic payment plans, complaint and refund procedures, botting, and banning.")

C. Defamation/Libel/Slander

Defendants argue that all of Plaintiff's claims are dependent on a common factual theme of fraud and misrepresentation and thus, they all must be plead with particularity under Rule 9(b). Motion at 2. Defendant cites Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). Defendants assert that Plaintiff's defamation fails because it is not pled with particularity. Motion at 16. The Court rejects this argument. Plaintiff's defamation claim is not based on the same facts that he does often repeat throughout his complaint, but rather the defamation claim is based upon alleged false and defamatory statements that defendant made on October 5, 2009, which were published to other players. Second Am. Compl. ¶¶ 84-85.

To prove defamation under Hawai'i law, Plaintiff must establish four elements: (1) a false and defamatory statement concerning another; (2) an unprivileged publication to a third party; (3) the publisher was negligent; and (4) either actionability of the statement irrespective of special harm, or the existence of special harm caused by the publication. Wilson v. Freitas, 121 Haw. 120, 128 (App. 2009). "A communication is defamatory when it tends to harm the reputation of another as to lower him in the estimation of the community or deter third persons from associating or dealing with him." Fernandes v. Tenbruggencate, 65 Haw. 226, 228, 649 P.2d 1144, 1147 (Haw. 1982) (citing Restatement (Second) Torts § 559 (1977). The Fernandes court further explained that "[w]hether a communication is defamatory `depends, among other factors, upon the temper of the times, the current of contemporary public opinion, with the result that words, harmless in one age, in one community, may be highly damaging to reputation at another time or in a different place.'"Id. A person who publishes a false defamatory communication is subject to liability only if he (a) knows that the statement is false and that it defames the other, (b) acts in reckless disregard of these matters, or (c) acts negligently in failing to ascertain them. Restatement (Second) Torts § 580B.

The Court finds that, at the pleading stage, Plaintiff has now pled all of the elements of defamation. As discussed above, on a Rule 12(b)(6) motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Fed'n of African Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir. 1996). Furthermore, as the Ninth Circuit has stated, "[t]he issue is not whether a plaintiff's success on the merits is likely but rather whether the claimant is entitled to proceed beyond the threshold in attempting to establish his claims." De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir.), cert. denied, 441 U.S. 965 (1979). The court must determine whether or not it appears to a certainty under existing law that no relief can be granted under any set of facts that might be proved in support of a plaintiff's claims.Id. Based on Plaintiff's allegations that he was falsely accused of being involved in real money transfers, that those statements were published to other players, that Defendants were negligent in their investigation and in publishing that accusation, and that Plaintiff has suffered injuries, the Court finds that Plaintiff has stated a claim.

However, because Plaintiff's claim for defamation is based upon negligence, Plaintiff's damages for such a claim are limited under the User Agreement.

D. Negligence and Gross Negligence

Defendants also argue that Plaintiff's negligence and gross negligence claims are grounded on the same claims of fraudulent conduct that Plaintiff alleges throughout his Complaint, i.e. Defendants' misrepresentation of (1) the addictive nature of Lineage II, (2) its fair game policy, (3) its billing methods, and (4) its anti-botting policy. Second Am. Compl. ¶¶ 89-90, 94-95. Thus, Defendants argue that under Vess and Kearns Plaintiff's negligence and gross negligence claims must be dismissed because they are grounded in fraud and are not plead with particularity. See Vess, 317 F.3d at 1107; Kearns, 567 F.3d at 1125. The Court rejects this argument.

In order to succeed on a claim for negligence, a party must show:

1. A duty, or obligation, recognized by the law, requiring the actor to conform to a certain standard of conduct for the protection of others against unreasonable risks.

2. A failure on [the actor's part] to conform to the standard required . . .

3. A reasonable close causal connection between the conduct and the resulting injury . . .

4. Actual loss or damage resulting to the interests of another . . .

White v. Sabatino, 415 F. Supp. 2d 1163, 1173 (D. Haw. 2006) (citing Ono v. Applegate, 62 Haw. 131, 137, 612 P.2d 533, 538 (1980)). In order to succeed on a claim for gross negligence a party must show "that there has been an `entire want of care'" which raises a presumption of "conscious indifference to consequences." Mullaney v. Hilton Hotels Corp., 634 F. Supp. 2d 1130, 1154 (D. Haw. 2009); see also Cape Flattery Ltd. v. Titan Maritime LLC, 607 F. Supp. 2d 1179, 1189 (D. Haw. 2009); see also Royal Ins. Co. of Am. v. Sw. Marine, 194 F.3d 1009, 1015 (9th Cir. 1999) (quoting Black's Law Dictionary 1185 (4th ed. 1968));Pancakes of Haw., Inc. v. Pomare Props. Corp., 85 Hawai'i 286, 293, 944 P.2d 83, 90 (Haw. App. 1997) (noting that gross negligence has been defined as "[i]ndifference to a present legal duty and utter forgetfulness of legal obligations so far as other persons may be affected" (internal citation and quotation omitted)). Gross negligence "is simply a point on a continuum or probability, and its presence depends on the particular circumstances of each case." Royal Ins. Co. of Am., 194 F.3d at 1015 (internal citation and quotation omitted); Pancakes of Hawai'i, Inc., 85 Hawai'i at 293, 944 P.2d 83 ("The element of culpability that characterizes all negligence is in gross negligence magnified to a high degree as compared with that present in ordinary negligence." (internal citation and quotation omitted).

Plaintiff alleges that "defendants acted with negligence [or gross negligence] in designing, developing, manufacturing, inspecting, testing, marketing, advertising, promoting, selling, distributing, maintaining, revising, servicing, administrating, and overseeing Lineage II." Second Am. Comp. ¶¶ 90(a), 95(a). In addition, Plaintiff alleges failure to warn and defective product claims are separate and distinct from Plaintiff's fraud allegations. Second Am. Compl. ¶¶ 90(b) ("[D]efendants acted negligently in failing to warn or instruct or adequately warn or instruct plaintiff and other players of LineageII of its dangerous and defective characteristics, and of the safe and proper method of using the game"), 90(c), 95(b), 95(c). In light of Plaintiff's allegations, the Court finds that Plaintiff has stated a claim for both negligence and gross negligence. Additionally, although Plaintiff's damages claim may be limited for the negligence claim, Plaintiff is not so limited with respect to the gross negligence claim as discussed supra.

E. Intentional Infliction of Emotional Distress and Negligent Infliction of Emotional Distress

Defendants also allege that Plaintiff's IIED and NIED claims must be dismissed for failure to plead with particularity. Motion at 17. The Court disagrees and finds that these claims are not grounded in fraud such that they must be dismissed for lack of particularity.

However, Plaintiff has failed to state a claim for IIED. In order to prove the tort of intentional infliction of emotion distress under Hawai'i law, Plaintiff must show: (1) the act that caused the harm was intentional or reckless; (2) the act was outrageous; and (3) the act caused extreme emotional distress to another. Young v. Allstate Ins. Co., 119 Hawai'i 403, 429 (2008).

Plaintiff has not pled facts sufficient to establish the second element, an act that was outrageous. The Supreme Court of Hawai'i, has held that the tort of intentional infliction of emotional distress "requires conduct exceeding all bounds usually tolerated by decent society and which is of a nature especially calculated to cause, and does cause, mental distress of a very serious kind." Hac v. Univ. of Hawai'i, 102 Hawai'i 92, 106 (2003) (citing Tibke v. McDougall, 479 N.W.2d 898, 907 (S.D. 1992)). This Court cannot say that upon reading Plaintiff's complaint, "average members of our community might indeed exclaim, `Outrageous.'" See Young v. Allstate Ins. Co., 119 Hawai'i 403, 429-30 (2008).

As discussed infra, however, Plaintiff does have a negligence claim and the Court finds that he has pled an NIED claim as well. The Hawai'i Supreme Court has held:

A plaintiff may recover for [NIED], absent any physical manifestation of his or her psychological injury or actual physical presence within a zone of danger, where a reasonable person, normally constituted, would be unable to adequately cope with the mental stress engendered by the circumstances of the case. . . . Thus, an NIED claim is nothing more than a negligence claim in which the alleged actual injury is wholly psychic and is analyzed utilizing ordinary negligence principles.

Further, this court has `consistently held, as a general matter, that the plaintiff must establish some predicate injury either to property or to another person in order himself or herself to recover for [NIED].'

Kaho`ohanohano v. Dep't of Human Serv., 117 Hawai`i 262, 306-07, 178 P.3d 538, 582-83 (2008) (citing Doe Parents No. 1 v. Dept. of Educ., 100 Hawai'i 34, 69, 58 P.3d 545, 580 (2002)) (alteration in original) (internal citations omitted).

Although the general rule is that there must be a physical injury to someone, the Hawai'i Supreme Court has carved out exceptions to that general rule in certain cases that present "unique circumstances, which provide the requisite assurance that plaintiff's psychological distress is trustworthy and genuine."Doe Parents No. 1, 100 Hawai'i at 69-70, 58 P. 2d at 580-81 (explaining "the law as it currently stands in Hawai'i is that an NIED claimant must establish, incident to his or her burden of proving actual injury (i.e., the fourth element of a generic negligence claim), that someone was physically injured by the defendant's conduct, be it the plaintiff himself or herself or someone else.") (internal citations omitted, emphasis in original); see also Kaho'ohanohano, 117 Hawai'i at 308, 178 P.3d at 538 (holding that "to recover for NIED, [plaintiff] was required to establish some predicate injury to property or to another person; his physical presence and witnessing of [that] injury is not required.")

Here, Plaintiff alleges "[a]s a direct result of using LineageII and defendants' acts and omissions, plaintiff has suffered extreme and serious emotional distress and depression, and has been unable to function independently in usual daily activities such as getting up, getting dressed, bathing, or communicating with family and friends." Second Am. Compl. ¶ 59. Plaintiff has further alleged that he was hospitalized for three weeks and requires treatment and therapy three times a week because of the Defendants' actions. See Second Am. Compl. ¶¶ 60-61. Accordingly, Plaintiff has adequately pled a "physical injury" as well as the remaining elements of the claim. See supra Section III.D. If Plaintiff establishes an NIED claim solely based upon negligence, then damages will be limited by the User Agreement. If, however, Plaintiff can establish gross negligence, and Plaintiff's NIED claim is based on the gross negligence, then Plaintiff's damages will not be limited.

G. Punitive Damages

Because Plaintiff has adequately pled a claim for gross negligence, he may have a derivative right to recover punitive damages. See Ditto v. McCurdy, 98 Hawai'i 123, 44 P.3d 274, (2002) ("the proper measurement of punitive damages is the degree of the defendant's malice, oppression, or gross negligence that forms the basis for liability for punitive damages"); see also Durham v. County of Maui, 692 F. Supp. 2d 1256, 1262 (D. Haw. 2010) ("the standard for punitive damages encompasses gross negligence, which is the `entire want of care [raising] the presumption of indifference to consequences") (alteration in original). Furthermore, as discussed in greater detail supra, a claim for gross negligence cannot be waived or subject any limitation of liability. See Smith v. Golden Triangle, 708 S.W.2d 574, 576 (Tex. App. 1986) (holding that "a term in a release attempting to exempt one from liability or damages occasioned by gross negligence is against public policy.") Accordingly, because punitive damages are a derivative type of recovery based on a gross negligence claim, punitive damages based on such a claim can not be limited by the User Agreement.

Punitive damages, however, cannot form an independent claim and accordingly, the Court dismisses Count VIII. See Ross v. Stouffer Hotel Co., 76 Hawai'i 454, 466, 879 P.2d 1037, 1049 (1994) ("[A] claim for punitive damages is not an independent tort, but is purely incidental to a separate cause of action."); Television Events Mktg., Inc. v. AMCON Distrib. Co., 488 F. Supp. 2d 1071, 1083 (D. Haw. 2006) (dismissing a count alleging "willful, malicious, reckless, and wanton" conduct on the ground that it asserted an independent claim for punitive damages).

CONCLUSION

For the foregoing reasons, the Court: (1) DENIES Defendants' motion to dismiss for lack of subject matter jurisdiction; (2) GRANTS in part and denies in part Defendants' Motion to Dismiss the Second Amended Complaint, and (3) DISMISSES Counts I (Misrepresentation/Deceit), II (Unfair and Deceptive Trade Practices), VI (Intentional Infliction of Emotional Distress) and VIII (Punitive Damages) of the Second Amended Complaint with prejudice. Counts III (Defamation/Libel/Slander), IV (Negligence), V (Gross Negligence), and VII (Negligent Infliction of Emotional Distress) of the Second Amended Complaint remain viable.

IT IS SO ORDERED.

DATED: Honolulu, Hawai'i, August 4, 2010.