J.R. v. Elec. Arts

317 Cal.Rptr.3d 367

J.R., Plaintiff and Respondent,

v.ELECTRONIC ARTS INC., Defendant and Appellant.

E080414

Court of Appeal,

Fourth District, Division 2.

Filed January 17, 2024

APPEAL from the Superior Court of Riverside County. Craig Riemer, Judge. Affirmed. (Super.Ct.No. CVRI2200642)

Keker, Van Nest & Peters, R. James Slaughter, San Francisco, R. Adam Lauridsen, Taylor Reeves, and Reaghan E. Braun, San Francisco, for Defendant and Appellant.

McGuire Law and Eugene Y. Turin for Plaintiff and Respondent.

OPINION

MENETREZ, J.

Electronic Arts Inc. (EA). appeals from the trial court’s denial of its motion to compel arbitration of claims brought by J.R. II, a minor. The trial court denied the motion to compel on the ground that J.R. II had exercised his power under Family Code section 6710 to disaffirm all of his contracts with EA, including the arbitration agreement and the delegation provision within it. On appeal, EA argues that because of the delegation provision, an arbitrator rather than a court should decide issues of arbitrability, including J.R. II’s disaffirmance defense. We reject EA’s arguments and affirm.

BACKGROUND

EA owns and produces Apex Legends, a video game. Apex Legends can be down-loaded for free on various gaming consoles, including Xbox.

On February 14, 2022, J.R. II filed a putative class action against EA, alleging causes of action for unlawful and unfair business practices in violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), violation of the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.), and unjust enrichment.¹ J.R. II alleged that EA deceptively induced players of Apex Legends, "especially impressionable minors," to purchase digital game-specific currency in order "to purchase cosmetic items, characters, lootboxes, and other items within the Apex Legends virtual world."

EA moved to stay the action and to compel arbitration under Code of Civil Procedure sections 1281.2 and 1281.4, arguing that J.R. II’s claims are covered by an arbitration agreement contained within EA’s user agreement, which J.R. II agreed to in order to play Apex Legends. EA also argued that to the extent that J.R. II "challenge[d] the validity, enforceability, or scope of the arbitration provision," the delegation provision within the arbitration agreement " ‘clearly’ and ‘unmistakably’ provide[d] that those issues must be decided by an arbitrator, not the Court."

In a declaration in support of the motion, Anand Nair, EA’s director of product management, explained that when a user creates an EA account online, the user must affirmatively agree to the EA user agreement. Users also must affirmatively assent to the latest terms of the user agreement when playing Apex Legends online or when accessing certain online features of the game. "Each time a user is presented with and asked to assent to the latest terms of the User Agreement, the user is able to access and scroll through the entire User Agreement, including its arbitration provision and class action waiver, and is required to check a box or click a button to affirmatively indicate their assent to the terms,"

EA’s business records confirmed that J.R. II owns Apex Legends and that he last logged into his account to play Apex Legends on February 27, 2022. According to EA, J.R. II affirmatively accepted the user agreement once in August 2020 and again in August 2021. J.R. II last assented to the August 25, 2021, version of the user agreement.

That version of the user agreement provides: "This agreement governs your access and use of products, content and services offered by EA and its subsidiaries (‘EA’), such as game software and related updates, upgrades and features, and all online and mobile services, platforms, websites, and live events hosted by or associated with EA (collectively ‘EA Services’)."

Section 15 of the user agreement is entitled "Dispute Resolutions by Binding Arbitration" and specifies that the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) "governs the interpretation and enforcement of this Section 15 and any arbitration carried out under this Section." The agreement provides that "[a]ll disputes, claims or controversies arising out of or relating to this Agreement, any EA Service and its marketing, or the, relationship between you and EA, including the validity, enforceability, and scope of this Section 15 (‘Disputes’), shall be determined exclusively by binding arbitration." The agreement further specifies that the parties may bring claims only in their individual capacity "and not as a plaintiff or class member in any purported class or representative proceeding as to all disputes." (Capitalization and boldfacing omitted.) The agreement further provides that any party’s election to arbitrate "shall be final and binding on the other" and that the arbitration shall be administered by the American Arbitration Association under its rules for consumer arbitration.

EA argued in its motion to compel that because J.R. II had assented to the user agreement, the FAA required the court to compel J.R. II to arbitrate his dispute with EA on an individual basis. EA further argued that to the extent that J.R. II challenged the validity of the arbitration agreement, that issue would need to be decided by an arbitrator because of the delegation provision contained, within the arbitration agreement. (A delegation provision is an agreement to arbitrate " ‘gateway’ questions of ‘arbitrability,’ " (Rent-A-Center, West, Inc. v., Jackson (2010) 561 U.S. 63, 68-69, 130 S.Ct. 2772, 177 L.Ed.2d 403 (Renl A-Center).))

J.R. II opposed the motion, arguing that he was not bound by the user agreement because he, as a minor, disaffirmed the entire user agreement under Family Code section 6710. He concluded that the disaffirmance "render[ed] any alleged contract between [EA] and [him] invalid."

In a declaration filed in support of the opposition and signed on August 17, 2022, J.R. II stated that he had not played Apex Legends since the commencement of the lawsuit. He downloaded and installed Apex Legends on his Xbox in July 2020. He used his email address to register for an account with EA. J.R. II clicked through the user agreement when he installed Apex Legends. He could not recall clicking through any subsequent user agreement, but he was the only person who accessed that account. J.R. II also stated: "I do not consent to arbitrate any of the claims in this action and disaffirm the entirety of any [user agreement], contract or agreement that was accepted through my EA account."

EA argued in its reply that J.R. II had not successfully disaffirmed the user agreement. E.A. also argued that because of the delegation provision, the determination of whether the contract had been rendered void by disaffirmance must be made by an arbitrator, not by the court. Nair submitted a declaration in support of the reply and stated that, according to EA’s records, J.R. II had logged in to his online EA account after February 14, 2022, and had last logged in to play Apex Legends on February 27, 2022.

The trial court allowed J.R. II to file a surreply. J.R. II argued in the surreply that the evidence EA had submitted about J.R. II’s last login did not undermine his disaffirmance of the user agreement, because the last login occurred before he disaffirmed the agreement.

At the hearing on the motion, EA argued that enforceability of the delegation provision was not properly before the court because J.R. II did not make "a contractual challenge that is specific to that delegation clause." J.R. II’s counsel countered that J.R. II had specifically argued that he disaffirmed the entire user agreement "and specifically the delegation clause, therein, has been disaffirmed," In response to questions by the court, EA’s counsel contended that if J.R. II said " ‘the contract as a whole, including the delegation clause, has been disaffirmed,’ " "then the Court decides the issue," but if J.R. II said " ‘the contract in its entirety has been disaffirmed and is, therefore, unenforceable,’ " then "the arbitrator decides the issue." The court disagreed, reasoning that EA’s position elevated "form over substance" and that it made "no sense" to claim that if J.R. II added the four words " ‘and the delegation provision,’ " then "it changes who it is that decides whether this contract and all of its subparts have been disaffirmed,"

The trial court found that the language of the delegation provision "is clear and unmistakable," but the court nevertheless found the provision to be ineffective because the contract was revocable pursuant to Family Code section 6710. The court further found that J.R. II "unequivocally disaffirmed his agreement, both by discontinuing his use of [EA’s] service shortly after the complaint was filed, and by expressly disaffirming the contract in his declaration filed [August 17, 2022], Therefore, there is no arbitration agreement to enforce." The court accordingly denied EA’s motion to compel as to J.R. II.

DISCUSSION

EA argues that the trial court was not authorized to resolve the dispute concerning whether J.R. II had disaffirmed the arbitration agreement, because J.R. II did not specifically challenge the validity of the delegation provision. We disagree.

A. The FAA

[1, 2] The user agreement is governed by the FAA, which embodies a " ‘liberal policy favoring arbitration,’ " (AT&T Mo- bility LLC v. Concepcion (2011) 563 U.S. 333, 346, 131 S.Ct. 1740, 179 L.Ed.2d 742.) The FAA provides that a written agreement to arbitrate disputes arising out of a transaction involving interstate commerce "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (9 U.S.C. § 2.) The federal statute "places arbitration agreements on an equal footing with other contracts, [citation], and requires courts to enforce them according to their terms, [citation]." (Rent-A-Center, supra, 561...