1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 S.T.G., S.B.G., and S.J.G., minors, by Case No.: 24-cv-517-RSH-AHG and through their guardian SAMUEL 12 GARCIA; I.H. and E.H., minors, by and ORDER (1) GRANTING IN PART 13 through their guardian ARNOLD AND DENYING IN PART HERNANDEZ; and M.A. and E.V.A., DEFENDANT’S MOTION TO 14 minors, by and through their guardian COMPEL ARBITRATION; AND (2) 15 STEPHANIE ALLEN; individually and DENYING DEFENDANT’S MOTION on behalf of all others similarly situated; TO FILE SUPPLEMENTAL 16 AUTHORITY Plaintiffs, 17 v. 18 [ECF Nos. 12, 15] EPIC GAMES, INC., 19 Defendant. 20 21 22 Before the Court is a motion to compel arbitration or in the alternative to transfer 23 venue, filed by defendant Epic Games, Inc, ECF No. 12, as well as Defendant’s motion for 24 leave to file supplemental authority, ECF No. 15. Pursuant to Civil Local Rule 7.1(d)(1), 25 the Court finds the motions appropriate for resolution without oral argument. As set forth 26 below, the Court grants in part and denies in part Defendant’s motion to compel, and denies 27 as moot Defendant’s motion for leave to file supplemental authority. 1 I. BACKGROUND 2 Plaintiffs filed this putative class action on March 18, 2024, against the maker of the 3 popular videogame Fortnite. ECF No. 1. Plaintiffs are seven minors who played Fortnite 4 while under the age of 13, who claim that without their parents’ consent, the videogame 5 unlawfully collected sensitive data protected under the Children’s Online Privacy 6 Protection Act (“COPPA”), 15 U.S.C. §§ 6501-6506, which Defendant exploited for 7 commercial gain. Id. at ¶¶ 11-12. Plaintiffs are suing through their guardians ad litem. 8 Although COPPA itself does not provide a private right of action, Plaintiffs bring state law 9 claims for violation of privacy, unfair competition, and unjust enrichment based on 10 Defendant’s conduct that is alleged to violate COPPA. Id. at ¶¶ 1, 52. The Complaint does 11 not specify when Plaintiffs played Fortnite, but asserts that they bring their claims “on 12 behalf of themselves and all similarly situated children under the age of 13 who have been 13 injured by Defendant’s conduct from July 21, 2017 through February 20, 2023 (the ‘Class 14 Period’).” Id. at ¶ 1. 15 On May 20, 2024, Defendant filed this motion to compel arbitration. ECF No. 12. 16 The motion has been fully briefed. ECF Nos. 13, 14. Thereafter, Defendant filed a motion 17 for leave to file supplemental authority, which Plaintiffs oppose. ECF Nos. 15, 17. 18 Defendant’s motion to compel is based on an arbitration provision in the End User 19 License Agreement (“EULA”) that a user must accept to download Fortnite after first 20 creating an Epic Games account. ECF No. 12 at 2. Since March 15, 2019, the EULA has 21 required Fortnite users to arbitrate their disputes with Defendant. ECF No. 12-2 at ¶ 5. New 22 and existing Epic Games account holders who accessed Fortnite for the first time after 23 March 15, 2019, would see a scroll box displaying the EULA, with an all-bolded, all- 24 capitalized statement that the EULA contains a binding arbitration agreement, and that the 25 user has a time-limited right to opt out. Id. In order to play Fortnite, the user must click 26 inside a box confirming that the user has read and agrees with the EULA, and then must 27 click an “Accept” button. Id. at ¶ 3. 1 The EULA requires “Disputes” to be “settled by binding individual arbitration 2 conducted by Judicial Arbitration and Mediation Services, Inc. (‘JAMS’) subject to the 3 U.S. Federal Arbitration Act and federal arbitration law and according to the JAMS 4 Streamlined Rules and Procedures effective July 1, 2014 (the ‘JAMS Rules’) as modified 5 by [the EULA].” ECF No. 12-2 at Ex. A § 12.3. The term “Disputes” is defined to include 6 “any dispute, claim, or controversy . . . between You and Epic that relates to your use or 7 attempted use of Epic’s products or services and Epic’s products and services generally, 8 including with limitation the validity, enforceability, or scope of this Binding Individual 9 Arbitration section.” Id. at Ex. A § 12.3.1. The EULA also tells users that they “have the 10 right to opt out of and not be bound by” the arbitration agreement, provided the user 11 exercises that right “within 30 days of the date on which you first accepted this 12 Agreement.” Id. at Ex. A § 12.6. 13 The EULA further states that in order to agree to it, “you must be an adult” and “you 14 affirm that you have reached the legal age of majority [and] understand and accept this 15 Agreement (including its dispute resolution terms).” Id. at § 3. The EULA also states “[i]f 16 you are under the legal age of majority, your parent or legal guardian must consent to this 17 Agreement.” Id. The EULA provides that upon acceptance, “you are legally and financially 18 responsible for all actions using or accessing our software, including the actions of anyone 19 you allow to access your account.” Id. 20 Defendant states that Plaintiffs have declined to identify the Epic Games accounts 21 that they used, but that Defendant has identified accounts that appear to be associated with 22 Plaintiffs. ECF No. 12 at 5-6. Each of these accounts accepted the EULA. ECF No. 12-2 23 at ¶¶ 10-18. Defendant asserts that each of the Plaintiffs is therefore bound by the 24 arbitration agreement contained in the EULA, including the provision requiring users to 25 arbitrate disputes about the “validity, enforceability, or scope” of the arbitration agreement 26 itself, a so-called “delegation clause” that delegates to the arbitrator the ability to determine 27 questions of arbitrability. ECF No. 12 at 12. 1 Plaintiffs assert that six of the seven plaintiffs became parties to the EULA through 2 their respective Epic Games accounts, but subsequently disaffirmed the EULA, ECF No. 3 13 at 10-12; and that the remaining plaintiff (E.V.A.) was never a party to the EULA 4 because she used an Epic Games account created by her mother, rather than creating her 5 own account, id. at 18-19. 6 II. LEGAL STANDARD 7 A. Motion to Compel Arbitration 8 The Federal Arbitration Act (“FAA”) governs arbitration agreements. 9 U.S.C. § 2. 9 The FAA “was enacted . . . in response to widespread judicial hostility to arbitration 10 agreements.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). It “reflect[s] 11 both a ‘liberal federal policy favoring arbitration,’ and the ‘fundamental principle that 12 arbitration is a matter of contract[.]’” Id. (citations omitted) (quoting Moses H. Cone Mem’l 13 Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983); and then quoting Rent-A-Center, 14 W., Inc. v. Jackson, 561 U.S. 63, 67 (2010)). The FAA provides that “[a] written provision 15 in . . . a contract evidencing a transaction involving commerce to settle by arbitration a 16 controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and 17 enforceable, save upon such grounds as exist at law or in equity for the revocation of any 18 contract[.]” 9 U.S.C. § 2. The FAA “requires courts rigorously to enforce arbitration 19 agreements according to their terms, including terms that specify with whom the parties 20 choose to arbitrate their disputes and the rules under which that arbitration will be 21 conducted.” Epic Sys. Corp. v. Lewis, 584 U.S. 497, 506 (2018) (citations omitted). 22 Under the FAA, a party may seek a court order compelling arbitration where another 23 party refuses to arbitrate. 9 U.S.C. § 4. A federal court “must compel arbitration if (1) a 24 valid agreement to arbitrate exists and (2) the dispute falls within the scope of that 25 agreement.” Geier v. m-Qube Inc., 824 F.3d 797, 799 (9th Cir. 2016). Because 26 “[a]rbitration is a product of contract,” a court applies ordinary state law principles to 27 1 determine whether a valid contract to arbitrate exists. Davis v. Nordstrom, Inc., 755 F.3d 2 1089, 1092-93 (9th Cir. 2014). 3 The party seeking to compel arbitration bears the burden of proving by a 4 preponderance of the evidence the existence of an agreement to arbitrate. See Ashbey v. 5 Archstone Prop. Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015) (citing Cox v. Ocean 6 View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008)). “[T]he party resisting arbitration 7 bears the burden[] of proving that the claims at issue are unsuitable for arbitration.” Munro 8 v. Univ. of S. Cal., 896 F.3d 1088, 1091 (9th Cir. 2018) (citing Green Tree Fin. Corp.-Ala. 9 v. Randolph, 531 U.S. 79, 91 (2000)). “[A]ny doubts concerning the scope of arbitrable 10 issues should be resolved in favor of arbitration.” Simula v. Autoliv, Inc., 175 F.3d 716, 11 719 (9th Cir. 1999) (citing Moses H. Cone, 460 U.S. at 24-25). In resolving a motion to 12 compel arbitration, “[t]he summary judgment standard [of Federal Rule of Civil Procedure 13 56] is appropriate because the district court’s order compelling arbitration ‘is in effect a 14 summary disposition of the issue of whether or not there had been a meeting of the minds 15 on the agreement to arbitrate.’” Hansen v. LMB Mortg. Servs., Inc., 1 F.4th 667, 670 (9th 16 Cir. 2021) (quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n.9 17 (3d Cir. 1980)). 18 The court, “upon being satisfied that the issue involved . . . is referable to arbitration, 19 . . . shall on application of one of the parties stay the trial of the action until such arbitration 20 has been had in accordance with the terms of the agreement . . . .” 9 U.S.C. § 3. 21 B. Disputes About Arbitrability 22 “In general, courts may resolve challenges directed specifically to the validity of the 23 arbitration provision itself.” Caremark, LLC v. Chickasaw Nation, 43 F.4th 1021, 1029 24 (9th Cir. 2022). However, the presence of a “delegation clause” – that is, “a clause within 25 an arbitration provision that delegates to the arbitrator gateway questions of arbitrability” 26 – serves to “limit[] the issues that a court may decide.” Id.; see First Options of Chi., Inc. 27 v. Kaplan, 514 U.S. 938, 943 (1995) (“Just as the arbitrability of the merits of a dispute 1 depends upon whether the parties agreed to arbitrate that dispute, so the question ‘who has 2 the primary power to decide arbitrability’ turns upon what the parties agreed about that 3 matter.” (emphasis and citations omitted)). Delegation of arbitrability deprives a court of 4 authority to decide whether the arbitration agreement applies to a particular dispute. Henry 5 Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 68 (2019) (“When the parties’ 6 contract delegates the arbitrability question to an arbitrator, . . . a court possesses no power 7 to decide the arbitrability issue. That is true even if the court thinks that the argument that 8 the arbitration agreement applies to a particular dispute is wholly groundless.”); cf. Meeks 9 v. Experian Info. Servs., Inc., No. 21-17023, 2022 WL 17958634, at *2 n.3 (9th Cir. Dec. 10 27, 2022) (“We do not address the plaintiffs’ argument that Experian cannot enforce the 11 provision because the dispute does not arise out of the agreement. The agreement delegates 12 issues of scope to the arbitrator to decide.” (citing Henry Schein, 586 U.S. at 67)). A 13 delegation clause is “essentially a mini-arbitration agreement, nested within a larger one.” 14 Caremark, 43 F.4th at 1029; accord Holley-Gallegly v. TA Operating LLC, 74 F.4th 997, 15 1001 (9th Cir. 2023). 16 To enforce a delegation clause, a movant must show that the parties “clearly and 17 unmistakably” intended to delegate the question of arbitrability to the arbitrator. Howsam 18 v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002) (quoting AT&T Techs., Inc. v. 19 Commc’ns Workers of Am., 475 U.S. 643, 649 (1986)) (holding arbitrability is “an issue 20 for judicial determination unless the parties clearly and unmistakably provide otherwise.”). 21 If a delegation clause is clear and unmistakable, “then even arbitrability challenges based 22 on the unconscionability of the arbitration agreement as a whole must be decided by the 23 arbitrator.” NewcombeDierl v. Amgen, No. 22-cv-2155, 2022 WL 3012211, at *3 (C.D. 24 Cal. May 26, 2022) (citing Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 72 (2010)); cf. 25 Jackson v. Airbnb, Inc., No. 22-cv-3084, 2022 WL 16752071, at *3 (C.D. Cal. Nov. 4, 26 2022) (“Where an arbitration agreement clearly delegates the question of arbitrability to 27 1 the arbitrator there is no exception that allows the Court to address questions of 2 arbitrability.” (citing Henry Schein, 586 U.S. at 65)). 3 III. ANALYSIS 4 Two disputes are central to resolving this motion. First, for the six of seven plaintiffs 5 who were parties to the EULA, and who contend that they subsequently disaffirmed the 6 EULA and its arbitration agreement, the Parties dispute whether the EULA’s “delegation 7 clause” requires the issue of disaffirmance to be heard in the first instance by the Court or 8 by an arbitrator. Second, the Parties dispute whether the seventh plaintiff, E.V.A., can be 9 bound by the arbitration agreement contained in the EULA where E.V.A.’s mother, and 10 not E.V.A., created an Epic Games account and agreed to the terms of the EULA. The 11 Court addresses these issues in turn. 12 A. Compelling Arbitration as to Plaintiffs Who Disaffirmed the EULA 13 California Family Code section 6700 states that “a minor may make a contract in the 14 same manner as an adult, subject to the power of disaffirmance” set forth in Family Code 15 section 6710. Cal. Fam. Code § 6700.1 Section 6710 states: “Except as otherwise provided 16 by statute, a contract of a minor may be disaffirmed by the minor before majority or within 17 a reasonable time afterwards ….” Cal. Fam. Code § 6710. Under California law, “[n]o 18 specific language is required to communicate an intent to disaffirm. A contract (or 19 conveyance) of a minor may be avoided by any act or declaration disclosing an unequivocal 20 intent to repudiate its binding force and effect.” Berg v. Traylor, 148 Cal. App. 4th 809, 21 22
23 24 1 Plaintiffs argue that California law governs the disaffirmance defense raised here, ECF No. 13 at 9, and adds, “there is no conflict between the laws of California, Washington 25 and North Carolina with respect to the power to disaffirm, and, absent a conflict, no choice 26 of law analysis is required, and the law of the forum applies,” id. at 10 (citing Knapke v. PeopleConnect, Inc., 38 F.4th 824, 832 (9th Cir. 2022) (“Absent [an actual conflict], the 27 1 820 (Ct. App. 2007) (citation omitted). The filing of a lawsuit may constitute an act of 2 disaffirmance. Coughenour v. Del Taco, LLC, 57 Cal. App. 5th 740, 748 (Ct. App. 2020). 3 Here, the Parties do not dispute that all seven Plaintiffs are minors. Plaintiffs contend 4 that they disaffirmed the EULA by filing this lawsuit, and three of the seven have submitted 5 declarations stating that he or she disaffirmed the EULA “in its entirety.” ECF No. 13 at 6 12; ECF No. 13-2 at ¶ 10 (declaration of S.B.G.); ECF No. 13-3 at ¶ 9 (declaration of 7 S.J.G.); ECF No. 13-4 at ¶ 10 (declaration of S.T.G.). Defendant responds that under the 8 delegation clause contained in the EULA, disaffirmance is a question for the arbitrator 9 rather than the Court. 10 Two Supreme Court decisions frame the question, in the context of an arbitration 11 agreement containing a delegation clause, of which issues regarding arbitrability are for 12 the courts and which are for an arbitrator. First, in Rent-A-Center, West, Inc. v. Jackson, 13 561 U.S. 63 (2010), the Supreme Court held that unless the plaintiff “challenged the 14 delegation provision specifically, we must treat it as valid under § 2, and must enforce it 15 under §§ 3 and 4, leaving any challenge to the validity of the Agreement as a whole for the 16 arbitrator.” Id. at 72 (emphasis added). In making the distinction between challenges 17 “specific” to a provision, and those applicable to the agreement “as a whole,” the Court 18 explained that the latter category includes challenges “on a ground that directly affects the 19 entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the 20 illegality of one of the contract’s provisions renders the whole contract invalid.” Id. at 70 21 (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 (2006)). The Court 22 concluded that the plaintiff’s unconscionability argument was properly considered a 23 challenge to the arbitration agreement “as a whole” rather than as a challenge “specific” to 24 the delegation clause. Id. at 73-74.2 25 26 2 In order to further illustrate the distinction, the Court gave examples of how the 27 1 Second, just days after Rent-A-Center, the Supreme Court decided Granite Rock Co. 2 v. International Brotherhood of Teamsters, 561 U.S. 287 (2010), addressing a question not 3 presented in Rent-A-Center, whether challenges to contract formation (rather than 4 challenges to contract validity) are subject to delegation. The Court held that the issues 5 reserved to the courts “always include” whether an arbitration agreement was formed. 6 Granite Rock, 561 U.S. at 297. 7 8 9 provided examples of different arguments, not made by the plaintiff (Jackson), that might 10 have required determination by a court. These examples reflect that whether a challenge is specifically directed to a delegation clause depends on the substance of the challenge, not 11 merely how the plaintiff chooses to label it: 12 Jackson’s other two substantive unconscionability arguments assailed 13 arbitration procedures called for by the contract—the fee-splitting 14 arrangement and the limitations on discovery—procedures that were to be used during arbitration under both the agreement to arbitrate 15 employment-related disputes and the delegation provision. It may be 16 that had Jackson challenged the delegation provision by arguing that these common procedures as applied to the delegation provision 17 rendered that provision unconscionable, the challenge should have been 18 considered by the court. To make such a claim based on the discovery procedures, Jackson would have had to argue that the limitation upon 19 the number of depositions causes the arbitration of his claim that the 20 Agreement is unenforceable to be unconscionable. That would be, of course, a much more difficult argument to sustain than the argument 21 that the same limitation renders arbitration of his factbound 22 employment-discrimination claim unconscionable. Likewise, the unfairness of the fee-splitting arrangement may be more difficult to 23 establish for the arbitration of enforceability than for arbitration of more 24 complex and fact-related aspects of the alleged employment discrimination. Jackson, however, did not make any arguments specific 25 to the delegation provision; he argued that the fee-sharing and 26 discovery procedures rendered the entire Agreement invalid.
27 1 In light of these two decisions, the Ninth Circuit has synthesized Supreme Court 2 caselaw as follows: 3 First, a court must resolve any challenge that an agreement to arbitrate was never formed, even in the presence of a delegation clause. Next, a court 4 must also resolve any challenge directed specifically to the enforceability 5 of the delegation clause before compelling arbitration of any remaining gateway issues of arbitrability. Finally, if the parties did form an agreement 6 to arbitrate containing an enforceable delegation clause, all arguments 7 going to the scope or enforceability of the arbitration provision are for the arbitrator to decide in the first instance. 8
9 Caremark, 43 F.4th at 1030. 10 Using this framework, the Court first addresses whether Plaintiffs’ disaffirmance 11 defense is a “challenge that an agreement to arbitrate was never formed.” Caremark, 43 12 F.4th at 1030. The Court concludes that it is not. Plaintiffs do not argue that disaffirmance 13 means they never entered into the EULA; instead, their position is that after this lawsuit 14 was filed, the EULA became “void ab initio” and a “nullity.” ECF No. 13 at 17. 15 Second, the Court addresses whether the disaffirmance defense is “directed 16 specifically to the enforceability of the delegation clause.” Caremark, 43 F.4th at 1030. 17 Here as well, the Court concludes that it is not. Plaintiff’s disaffirmance defense is based 18 on two theories: (1) for all Plaintiffs except E.V.A., based on filing of this lawsuit; and (2) 19 for plaintiffs S.B.G., S.T.G., and S.J.G., additionally, based on their sworn declarations 20 disaffirming the EULA in its entirety. Neither the Complaint nor the declarations mention 21 the delegation clause, let alone specifically challenge its enforceability. Plaintiffs’ 22 disaffirmance defense is, in the language used as well as in substance, a challenge to the 23 EULA as a whole rather than a challenge specific to the delegation clause. ECF No. 13 at 24 12-13 (“[T]he 2019 EULA, upon which Epic relies for all aspects of its Motion, is 25 disaffirmed and void ab initio ….”) (emphasis added). It is “a ground that directly affects 26 27 1 the entire agreement (e.g., the agreement was fraudulently induced).” Rent-A-Center, 561 2 U.S. at 70.3 3 The Ninth Circuit has not specifically addressed whether, in a case involving a 4 delegation clause, a minor’s disaffirmance defense is a question for the court or for the 5 arbitrator. But other U.S. Courts of Appeals have concluded that such a defense is subject 6 to an arbitrator’s determination. 7 In K.F.C. v. Snap Inc., 29 F.4th 835 (7th Cir. 2022), the Seventh Circuit determined 8 that a minor’s disaffirmance defense was for the arbitrator to resolve. Id. at 837-38. The 9 Seventh Circuit determined that under both California and Illinois law, contracts entered 10 into by children are voidable; but that does not mean “that they must be ignored, no matter 11 what.” Id. at 837. Instead, such contracts may be ratified. Id. The court held that “[a]s long 12 as state law permits a child to ratify a contract, youth must be a defense rather than an 13 obstacle to a contract’s formation, and as a defense it goes to the arbitrator.” Id. at 838. 14 The preceding year, in I.C. v. StockX, LLC, 19 F.4th 873 (6th Cir. 2021), the Sixth 15 Circuit concluded that the plaintiffs’ infancy defense under Michigan law was not an 16 argument that a contract was never formed: 17 18 3 The Ninth Circuit’s decision in Caremark provides two more examples of such 19 challenges to the “contract as a whole” that are referrable to the arbitrator. In that case, the 20 Chickasaw Nation, a sovereign and federally recognized Indian tribe, brought a lawsuit against Caremark, its pharmacy benefit manager, alleging violations of a provision of the 21 Indian Health Care Improvement Act. Id. at 1027. The Chickasaw Nation had signed 22 provider agreements with Caremark incorporating an arbitration agreement with a delegation clause. Id.at 1025-26. The Ninth Circuit affirmed the district court’s order 23 compelling arbitration, holding that the Chickasaw Nation’s defenses to arbitrability— 24 including sovereign immunity, and an argument that another provision of the Indian Health Care Improvement Act precluded the Nation from being compelled to arbitrate at all— 25 were matters for the arbitrator to decide in the first instance. Id. at 1034 (“[T]he Nation’s 26 argument here does not call into question the district court’s authority to enforce the delegation clause—rather, it challenges the enforceability of the arbitration provision as a 27 1 Here, plaintiffs’ infancy argument does not concern the formation or existence of a contract. It makes no difference whether infancy under 2 state law renders a contract void or voidable. … Instead, the relevant 3 inquiry is whether the minor plaintiffs’ infancy defense amounts to an argument that the agreement “was [n]ever concluded.” 4
5 Id. at 883 (quoting Granite Rock, 561 U.S. at 301). The Sixth Circuit also determined that 6 the infancy defense was directed to the contract as a whole, rather than being specific to 7 the delegation clause. Id. at 884-86. The plaintiffs in that case argued that “the infancy 8 doctrine is applicable to the contract as a whole; but it is also applicable to each arbitration 9 clause and delegation clause when viewed separately.” Id. at 884-85. After analyzing at 10 length the Supreme Court’s decision in Rent-A-Center, the Sixth Circuit concluded as 11 follows: 12 [C]ontrary to plaintiffs’ view, the requirement that a litigant must “specifically” challenge the delegation provision is not a mere pleading 13 requirement. …. [A] party’s mere statement that it is challenging the 14 delegation provision is not enough; courts must look to the substance of the challenge. Here, plaintiffs’ infancy defense affects the validity or 15 enforceability of “the whole contract,” as well as the agreement to 16 arbitrate and its delegation provision, which are “part of that contract.” See Rent-A-Center, 561 U.S. at 71. As such, plaintiffs were required to 17 show that “the basis of [their] challenge [is] directed specifically” to the 18 “delegation provision.” Id. at 71-72 (emphasis added). They have failed to do so as they have simply recycled the same arguments that pertain 19 to the enforceability of the agreement as a whole. Therefore, plaintiffs’ 20 infancy defense is for an arbitrator to decide.
21 I.C., 19 F.4th at 885-86. 22 The Court is also persuaded by district courts that have employed similar reasoning. 23 See N.A. v. Nintendo of Am., No. 23-cv-2424, 2023 WL 8587628, at *5 (N.D. Cal. Dec. 11, 24 2023) (“In sum, N.A. does not argue that the contract to arbitrate was not formed. He asserts 25 that it is voidable because N.A. was a minor when he entered into it. Through that contract, 26 N.A. and Nintendo agreed to arbitrate issues of enforceability, which includes N.A.’s 27 1 disaffirmation defense. Therefore, the question of disaffirmation must be decided in 2 arbitration.”); A.C. v. Nintendo of Am., No. C20-1694, 2021 WL 1840835, at *2 (W.D. 3 Wash. Apr. 29, 2021) (“Minors … have the capacity to enter into contracts subject to 4 disaffirmance under both California and Washington law. … A.C. contends that even if the 5 parties formed an agreement to arbitrate, that agreement is not valid because he now 6 disaffirms it. The Court does not reach this issue, however, because, as it does not relate to 7 contract formation, the Court determines that the parties agreed to have an arbitrator decide 8 it.”). 9 In opposing arbitration, Plaintiffs rely on language in the Supreme Court’s recent 10 decision in Coinbase v. Suski, 144 S. Ct. 1186 (2024). But Coinbase does not support 11 Plaintiffs’ position. In Coinbase, the parties executed two contracts: the first containing an 12 arbitration provision with a delegation clause, and the second containing a forum selection 13 clause providing that all disputes related to that contract be decided in California courts. 14 Id. at 1190-91. The defendant argued the first contract’s delegation clause “established the 15 terms by which all subsequent disputes were to be resolved[.]” Id. at 1191. The plaintiffs 16 maintained—and the Ninth Circuit held—that “the second contract’s forum selection 17 clause superseded that prior agreement.” Id. The Supreme Court “granted certiorari to 18 answer the question of who—a judge or an arbitrator—should decide whether a subsequent 19 contract supersedes an earlier arbitration agreement that contains a delegation clause.” Id. 20 at 1192. In answering this question, Coinbase held that “a court, not an arbitrator, must 21 decide whether the parties’ first agreement was superseded by their second.” Id. at 1195. 22 The Coinbase decision is a narrow one. It holds only that where “parties have agreed 23 to two contracts—one sending arbitrability disputes to arbitration, and the other either 24 explicitly or implicitly sending arbitrability disputes to the courts—a court must decide 25 which contract governs.” Id. at 1194. Here, Plaintiffs rely on the following passage in 26 Coinbase: 27 1 [W]here a challenge applies “equally” to the whole contract and to an arbitration or delegation provision, a court must address that challenge. 2 Rent-A-Center, 561 U.S. at 71. Again, basic principles of contract and 3 consent require that result. Arbitration and delegation agreements are simply contracts, and, normally, if a party says that a contract is invalid, 4 the court must address that argument before deciding the merits of the 5 contract dispute. So too here. “If a party challenges the validity ... of the precise agreement to arbitrate at issue, the federal court must 6 consider the challenge before ordering compliance with that 7 [arbitration] agreement.” Id. (emphasis added).
8 144 S. Ct. at 1194; see also ECF No. 13 at 17. But this passage merely quotes and reiterates 9 the holding of Rent-A-Center, without purporting to modify the earlier decision. The first 10 sentence in the passage above quotes the following statement from Rent-A-Center: 11 “[W]here the alleged fraud that induced the whole contract equally induced the agreement 12 to arbitrate which was part of that contract—we nonetheless require the basis of challenge 13 to be directed specifically to the agreement to arbitrate before the court will intervene.” 14 Rent-A-Center, 561 U.S. at 71 (emphasis added). Applying that standard here results in 15 referring Plaintiffs’ disaffirmance defense to the arbitrator, because Plaintiffs’ 16 disaffirmance defense is not directed specifically to the delegation clause. 17 Plaintiffs also rely on a recent decision of the California Court of Appeal, J.R. v. 18 Electronic Arts Inc., 98 Cal. App. 5th 1107 (Ct. App. 2024), affirming a trial court’s denial 19 of a motion to compel arbitration of the plaintiff’s disaffirmance defense. In that case, the 20 minor plaintiff filed a declaration stating that he “disaffirm[s] the entirety of any … 21 contract or agreement that was accepted through my EA account.” Id. at 1112. The 22 defendant videogame company argued that the plaintiff’s disaffirmation did not 23 specifically encompass the delegation clause and was therefore not effective to disaffirm 24 that clause. Id. at 1113. The Court of Appeal disagreed. Relying on the dictionary definition 25 of the term “any,” the court determined that the plaintiff’s declaration by its terms included 26 disaffirmation of the delegation clause. Id. at 1116. The court concluded that the plaintiff’s 27 1 “disaffirmance of the delegation provision is unambiguous and unequivocal. Nothing more 2 is required.” Id. at 1117. The Court of Appeal also briefly addressed the defendant’s 3 argument that if the plaintiff’s “disaffirmance of ‘any … contract or agreement’ is 4 sufficient, then ‘the severability rule laid down in Prima Paint and Rent-A-Center means 5 nothing.’” Id. The court described this argument as “baseless,” and stated that “if a defense 6 does go to all three severable agreements [i.e., the user agreement, the arbitration 7 agreement, and the delegation clause], then that defense is sufficient to defeat the 8 delegation clause ….” Id. 9 The Court acknowledges that the Court of Appeal decision in J.R. (declining to 10 compel arbitration of the disaffirmance defense) appears to be in tension with the decisions 11 of the Sixth and Seventh Circuits (compelling arbitration of the disaffirmance defense). 12 Unlike the latter decisions, J.R. does not analyze the language in Rent-A-Center addressing 13 the distinction between a challenge to an agreement “as a whole” and a challenge “specific” 14 to a delegation clause; most of the J.R. opinion focuses instead on the language the plaintiff 15 used in his disaffirmance (which, unlike the declarations filed by three Plaintiffs here, 16 effected disaffirmance of “any … contract or agreement” and therefore encompassed the 17 delegation clause in addition to the user agreement more generally). In any case, this Court 18 does not consider J.R. to be binding precedent interpreting the U.S. Supreme Court’s 19 decision in Rent-A-Center, which in turn was interpreting Section 2 of the Federal 20 Arbitration Act. 21 Plaintiffs also cite a host of district court decisions that the Court finds 22 distinguishable because they did not address a delegation clause. See Doe v. Epic Games, 23 435 F. Supp.3d 1024, 1034-38 (N.D. Cal. 2020); R.A. v. Epic Games, No. CV 19-1488- 24 GW-Ex, 2019 WL 6792801, at *4-*7 (C.D. Cal. July 30, 2019); Y.H v. Blizzard 25 Entertainment, No. 8:22-cv-998-SSS-ADSx, 2022 WL 17491821, at *3 (C.D. Cal. Nov. 26 29, 2022), vacated, No. 22-56145, 2023 WL 7015280 (9th Cir. Oct. 25, 2023); T.K. v. 27 Adobe Systems, Inc., No. 17-CV04595, 2018 WL 1812200, at *4-6 (N.D. Cal. April 17, 1 2018); Lopez v. Kmart Corp., No. 15-cv-1089-JSC, 2015 WL 2062606, at *4-5, *7 (N.D. 2 Cal. May 4, 2015). 3 The Court concludes that the EULA clearly and unmistakably delegates to the 4 arbitrator questions of the “validity, enforceability, or scope” of the EULA; and that 5 Plaintiffs’ claims as well as their disaffirmance defense fall within 6 the scope of the EULA’s arbitration agreement. Accordingly, the claims of S.T.G., S.B.G., 7 S.J.G., I.H., E.H., and M.A. are referred to arbitration.4 8 B. Compelling Arbitration as to a Nonparty to the EULA 9 Apart from the disaffirmance question, Plaintiffs contend that E.V.A. is not bound 10 by the arbitration provision in the EULA because she never created an Epic Games account 11 and therefore is not a party to the EULA. ECF No. 13 at 18-19. Plaintiffs submit a 12 declaration from E.V.A.’s mother and guardian ad litem, Stephanie Allen, who states that 13 her child E.V.A. “has played Fortnite using an account that I set up with my email address.” 14 ECF No. 13-5 ¶ 3. 15 Defendant responds that it would be unfair to allow E.V.A. to avoid the arbitration 16 agreement that her mother agreed to, where E.V.A. played—and continues to play— 17 Fortnite on that account. ECF No. 14 at 9-11. Defendant submits a declaration with its 18 reply brief reflecting that Ms. Allen has two Epic Games accounts, and that both accounts 19 have had active gameplay not only since the filing of this lawsuit, but even since the filing 20 of Defendant’s motion to compel. ECF No. 14-1 ¶ 6. Defendant argues that “E.V.A.’s 21 purposeful availment of Ms. Allen’s contract precludes her from evading the contract’s 22 dispute resolution terms.” ECF No. 14 at 10. Defendant does not invoke a specific doctrine 23 for compelling E.V.A. to arbitrate, but argues, “[t]hat children are bound to contracts 24
25 26 4 Because the Court grants Defendant’s motion to compel arbitration as to these Plaintiffs, it does not address the alternative relief that Defendant seeks of transferring 27 1 executed by their parents sometimes is decided on principles of agency and otherwise as a 2 matter of equitable estoppel.” ECF No. 14 at 8. Neither party expresses a view on which 3 jurisdiction’s law governs this question as to E.V.A., a resident of Washington; and 4 Defendant, the moving party, does not cite controlling authority from any jurisdiction 5 compelling arbitration of the tort claims of minors based on arbitration provisions in 6 parents’ contracts. 7 The Court concludes that Defendant has not at this time established an adequate 8 basis for compelling E.V.A. to arbitrate under the EULA. Defendant relies in part on the 9 declaration submitted with its reply brief, to which Plaintiffs have not had an opportunity 10 to respond; and while that declaration addresses ongoing gameplay in Ms. Allen’s account, 11 it cannot ascribe that gameplay to E.V.A. The only fact in the record specific to E.V.A.’s 12 gameplay is that E.V.A. “has played Fortnite” using an account set up by Ms. Allen. The 13 Court acknowledges that Defendant, prior to discovery, is in possession of little 14 information regarding when a particular minor is playing on a shared Epic Games account, 15 much less other facts that may be relevant to doctrines of equitable estoppel or agency. 16 Accordingly, the Court denies Defendant’s motion as to plaintiff E.V.A. without prejudice 17 to Defendant renewing such a motion based on a more complete factual record.5 18 C. Motion for Leave to File Supplemental Authority 19 Based on the disposition above, the Court denies as moot Defendant’s motion for 20 leave to file supplemental authority. In ordering S.T.G., S.B.G., S.J.G., I.H., E.H., and 21 M.A. to proceed to arbitration, the Court does not rely on Defendant’s supplemental 22 authority. Nor would that supplemental authority, even if relied upon by the Court, warrant 23 compelling E.V.A. to arbitrate at this time. 24
25 26 5 For the same reasons, the Court declines to transfer E.V.A.’s case to the Eastern District of North Carolina based on a forum selection clause contained in the EULA to 27 1 |}IV. CONCLUSION 2 For the foregoing reasons, Defendant’s motion to compel arbitration is GRANTED 3 ||as to plaintiffs S.T.G., S.B.G., S.J.G., I.H., E.H., and M.A., and DENIED WITHOUT 4 || PREJUDICE as to plaintiff E.V.A. The Court ORDERS plaintiffs S.T.G., $.B.G., S.J.G., 5 ||I.H., E.H., and M.A. to proceed to arbitration, and their clatms—but not the claims of 6 E.V.A.—are STAYED pending the completion of arbitration proceedings pursuant to 9 7 ||U.S.C. § 3. The Parties are further ORDERED to file a status update on their arbitration 8 proceedings every ninety (90) days and within seven (7) days of completion of 9 || arbitration. 10 IT IS SO ORDERED. feke 7 ¢ Lone 11 Dated: October 2, 2024 Hon. Robert S. Huie United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18