Ball v. Skillz Inc.

District Court, D. Nevada·Decided November 12, 2020·No. 2:20-cv-00888·Unknown

Opinion

3 Alyssa Ball, et al. Case No.: 2:20-cv-00888-JAD-BNW

4 Plaintiffs Order Granting Motion to Compel Arbitration, Denying Motions to Dismiss 5 v. and for a Preliminary Injunction, and Overruling Objection 6 Skillz Inc., [ECF Nos. 21, 22, 23, 40] 7 Defendant

8 Defendant Skillz Inc. operates a mobile gaming platform, hosting several games in which 9 users compete for money and prizes. The plaintiffs in this case are all former users of Skillz’s 10 “21 Blitz” game. They raise a host of claims arising out of their use of Skillz’s mobile app, 11 including allegations that Skillz operates an illegal online casino.1 Skillz moves to compel 12 arbitration of the plaintiffs’ claims according to their game’s Terms of Service and to dismiss the 13 plaintiffs’ declaratory-judgment claims.2 One plaintiff moves for a preliminary injunction, 14 requesting that I enjoin Skillz from advertising in her home state.3 Because (1) the plaintiffs 15 agreed to the Terms of Service by creating accounts in Skillz’s app and (2) the arbitration 16 agreement in the Terms of Service is valid and enforceable, I grant Skillz’s motion to compel 17 arbitration and deny as moot its motion to dismiss. I also deny the motion for a preliminary 18 injunction because the moving plaintiff has not shown that an injunction is necessary to preserve 19 her arbitrable claims. 20 21 22 1 See ECF No. 11. 23 2 ECF Nos. 22, 23. 3 ECF No. 21. 1 Background 2 Skillz operates several mobile phone games, including 21 Blitz, a solitaire-style game that borrows rules from blackjack.* Skillz’s platform allows users to play this game in head-to- head matches against other users for cash prizes. If users want to join these competitions, they are required to register and save an account.*> When saving their accounts, users encounter this 6]] screen: 7 8 9 10 11 12 13 Enter Your Date of Birth 5/19/1991 i . A 18 The text directly below the “Next” button reads, “By tapping ‘Next,’ I agree to the Terms of Service and the Privacy Policy” and is hyperlinked to bring users to the full text of Skillz’s 21 22 ECF No. 11 at 5-7. > ECF No. 22-2 at 2.

1 Terms of Service and Privacy Policy.6 The first provision of the Terms of Service states, in all 2 capital letters, that all claims “arising out of or relating to” Skillz’s Terms of Service or its 3 software must be resolved through arbitration.7 This opening provision references Section 14 of 4 the Terms, which provides details about resolving disputes via arbitration.8 All three plaintiffs 5 registered accounts on Skillz’s platform, and therefore were required to view the screen

6 described above.9 7 The plaintiffs all played 21 Blitz with varying levels of success.10 Alyssa Ball and John 8 Prignano were quite successful, both competing for and winning significant sums of money. 9 After accusing other players of cheating, Ball and Prignano were locked out of their Skillz 10 accounts. They sued Skillz under several fraud theories, alleging that Skillz violated its anti- 11 cheating policy by not reimbursing money lost against known cheaters and not paying out certain 12 prizes that were promised.11 After seeing news coverage of Ball and Prignano’s complaint, 13 plaintiff Jane Roe12 contacted Ball and Prignano’s counsel, asking to be added to the lawsuit. 14 Roe had seen advertisements for 21 Blitz that touted the game as an easy way to make extra

15 money.13 She started playing the game, and in seven months she had lost more than $60,000.14 16 6 ECF No. 11 at 19–20; ECF No. 22-2 at 3. 17 7 ECF No. 22-5 at 2. 18 8 Id. at 16–18. 9 ECF No. 11 at 19–20; ECF No. 22-2 at 4–5. 19 10 ECF No. 11 at 8–13, 17–19. 20 11 ECF No. 1. 21 12 Jane Roe moved to proceed under a fictitious name, ECF No. 10, but that motion has been denied, ECF No. 39. But because the order denying her motion did not require her to reveal her 22 true name until after the court resolved the pending motion to dismiss, I refer to that plaintiff in this order by her fictitious name. 23 13 ECF No. 11 at 17. 14 Id. 1 She alleges that 21 Blitz triggered a gambling addiction that eventually led to her losing her life 2 savings and becoming suicidal.15 The plaintiffs’ amended complaint added Roe as a plaintiff, 3 along with consumer-protection counts alleging that Skillz’s advertisements fraudulently 4 concealed the possibility that users would lose money playing its games.16 5 After the plaintiffs filed their amended complaint, Roe individually moved for a

6 preliminary injunction.17 She requests that the court enjoin Skillz’s advertising in her home state 7 of Colorado because the trauma she suffered as a result of losing so much money playing 21 8 Blitz is re-triggered every time she sees one of Skillz’s ads. For its part, Skillz moves to compel 9 arbitration under the Terms of Service18 and to dismiss the plaintiffs’ claims for declaratory 10 judgments.19 11 Discussion 12 A. Skillz’s Motion to Compel Arbitration [ECF No. 22] 13 The Federal Arbitration Act (FAA) states that “[a] written provision in any . . . contract 14 evidencing a transaction involving commerce to settle by arbitration a controversy” arising out of

15 the contract or transaction “shall be valid, irrevocable, and enforceable save upon such grounds 16 as exist at law or in equity for the revocation of any contract.”20 The FAA permits any party 17 “aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written 18 19

20 15 Id. at 17–18. 21 16 Id. at 18–19. 17 ECF No. 21. 22 18 ECF No. 22. 23 19 ECF No. 23. 20 9 U.S.C. § 2. 1 agreement for arbitration” to petition any federal district court for an order compelling arbitration 2 in the manner provided for in the arbitration agreement.21 3 Congress enacted the FAA nearly 100 years ago “to ‘reverse centuries of judicial hostility 4 to arbitration agreements . . . by placing arbitration agreements ‘upon the same footing as other 5 contracts.’”22 The FAA “establishes a federal policy favoring arbitration, requiring that [courts]

6 rigorously enforce agreements to arbitrate”23 and provides “‘that where [a] contract contains an 7 arbitration clause, there is a presumption of arbitrability.’”24 “By its terms, the Act ‘leaves no 8 place for the exercise of discretion by a district court, but instead mandates that district courts 9 shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement 10 has been signed.’”25 11 The district court’s role under the FAA is “limited to determining (1) whether a valid 12 agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute 13 at issue.”26 In answering these questions, the court must “interpret the contract by applying 14 general state-law principles of contract interpretation, while giving due regard to the federal

15 policy in favor of arbitration by resolving ambiguities as to the scope of arbitration in favor of 16 arbitration.”27 The party seeking to compel arbitration has the burden to show that both of these 17

18 21 Id. at § 4. 22 Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 225–26 (1987) (quoting Scherk v. 19 Alberto-Culver Co., 417 U.S. 506, 510 (1974)) (internal citation and alteration marks omitted). 20 23 Id. at 226 (internal quotation marks omitted). 24 Comedy Club, Inc. v. Improv West Assocs., 553 F.3d 1277, 1284 (9th Cir. 2009) (quoting 21 AT&T Techs, Inc v. Commc’ns Workers of Am., 475 U.S. 643

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