Reed v. Sci. Games Corp.

DONNA REED, individually and on behalf of all others similarly situated, Plaintiff, v. SCIENTIFIC GAMES CORP., Defendant.

Cause No. C18-0565RSL

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

June 17, 2021

ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION OR TRANSFER VENUE

This matter comes before the Court on "Defendant Scientific Games' Motion to Compel Arbitration or, in the Alternative, Transfer Venue." Dkt. # 82. This lawsuit was filed in April 2018, alleging that defendant makes and distributes electronic casino games that violate Washington's gambling laws and seeking relief on behalf of a class of Washington players who purchased and lost chips in defendant's games. More than a year after suit was filed, defendant rolled out new Terms of Service. The new terms and conditions included an agreement to arbitrate "any and all claims (regardless of the date of accrual of such claim) arising out of or in connection with" its games, a class action and jury waiver applicable in both arbitration and in court, a choice of Nevada law provision, and a venue provision requiring that all disputes be heard in Clark County, Nevada. Dkt. # 83-4 at 14 and 17. Between August and November 2019, defendant caused a pop-up to open immediately and automatically when a new or existing customer opened one of its games. The version of the pop-up presented to existing customers, including class representative Donna Reed, displayed as follows:

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The user could not access the game until he or she pushed the "Accept!" button. The Terms of Service could be accessed by pushing the red "Terms of Service" button.

When the new Terms of Service were rolled out, Ms. Reed was a putative class member. She had started playing defendant's Jackpot Party Casino in 2013 and found it immediately addictive. She played the game "7 days a week for probably 5 to 6 hours a day" and estimates that she spent over $30,000 in the game. Dkt. # 90 at ¶¶ 1-2. She has no recollection of seeing or accepting the above pop-up, but reports that pop-ups were common: "When I played Jackpot Party Casino, I would get tons of pop-up messages, often as soon as I opened the game. I neverpaid attention to these pop-ups and just clicked through them so I could get started playing the slots as soon as possible." Id. at ¶ 3. Plaintiff has provided two recent examples of these pop-ups:

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After plaintiff presumably clicked on the "Accept!" button in 2019, she proceeded to theJackpot Party Casino game screen where the Terms of Service could be accessed through a hyperlink at the bottom of the page. Dkt. # 83 at ¶ 16. The Terms of Service were also accessible through the URL https://www.sciplay.com/terms-of-service/. Dkt. # 83 at ¶ 15. The Terms of Service provided that use of defendant's games "constitutes agreement to the Terms." Dkt. # 83-1 at 2; Dkt. # 83-4 at 2. Plaintiff asserts that she was unaware that there were any terms or conditions governing her use of the game until her counsel notified her of defendant's motion to compel arbitration. Dkt. # 90 at ¶ 6.

Defendant seeks to compel arbitration, arguing that plaintiff agreed to arbitrate (and agreed to allow the arbitrator to decide "gateway" questions related to arbitrability) both when she clicked the "Accept!" button and when she continued to play Jackpot Party Casino. If arbitration is not compelled, defendant requests that the case be transferred to the District of Nevada pursuant to the venue selection clause of the Terms of Service.

Plaintiff argues that, in the context in which the Terms of Service pop-up was presented, neither clicking the "Accept!" button nor continuing to play can be considered an objective manifestation of assent. If, in the alternative, the pop-up gave actual or constructive notice of the game's terms as a matter of contract law, plaintiff argues that remedial action under Fed. R. Civ. P. 23(d) is necessary to effectively manage communications with the class and ensure the fair administration of this representative action. Plaintiff argues that, either way, the Terms of Service cannot be enforced against plaintiff or the absent class members.

Having reviewed the memoranda, declarations, and exhibits submitted by the parties and having heard the arguments of counsel, the Court finds as follows:

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A. Contract Formation - Mutual Assent

The Federal Arbitration Act ("FAA") makes agreements to arbitrate disputes "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. A party "'aggrieved by the alleged ... refusal of another to arbitrate' [may] petition any federal district court for an order compelling arbitration in the manner provided for in the agreement." Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (quoting 9 U.S.C. § 4). The goal of the FAA was to place arbitration agreements "upon the same footing as other contracts," Scherk v. Alberto-Culver Co., 417 U.S. 506, 511 (1974) (internal quotation marks omitted), and to counteract a perceived judicial hostility toward arbitration that sometimes overrode the parties' intent in contracting, Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 270-72 (1995). A court's role is generally "limited to determining (1) whether a valid agreement to arbitrate exists¹ and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp., 207 F.3d at 1130 (citation omitted).

Determining whether parties have agreed to submit to arbitration requires application of "ordinary state-law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). "As the party seeking to compel arbitration, [defendant] bears 'the burden of proving the existence of an agreement to arbitrate by apreponderance of the evidence.'" Norcia v. Samsung Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) (quoting Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014)). The parties agree that Washington law applies to issues of contract formation. See Dkt. # 82 at 14; Dkt. # 88 at 9. "Washington follows the objective manifestation test for contracts. . . . Accordingly, for a contract to form, the parties must objectively manifest their mutual assent . . . ." Keystone Land & Dev. Co. v. Xerox Corp., 152 Wn.2d 171, 177 (2004) (citations omitted). "The apparent mutual assent of the parties, essential to the formation of a contract, must be gathered from their outward expressions and acts, and not from an unexpressed intention." Wash Shoe Mfg. Co. v. Duke, 126 Wash. 510, 516 (1923). "We impute an intention corresponding to the reasonable meaning of a person's words and acts. . . . If the offeror, judged by a reasonable standard, manifests an intention to agree in regard to the matter in question, that agreement is established." City of Everett v. Sumstad's Est., 95 Wn.2d 853, 855-56 (1981).

In this case, plaintiff was notified that (a) there were new Terms of Service, including a dispute resolution provision, that would govern her use of Jackpot Party Casino and (b) clicking the big green button with the word "Accept!" on it would constitute her agreement to the Terms of Service. She clicked the big green button. Judged by a reasonable standard, plaintiff's objective conduct manifested an intention to agree to the terms and conditions offered by defendant. She argues, however, that she did not subjectively intend to bind herself to the new Terms of Service. Rather, she was simply clicking whatever buttons she needed to click to get to the game she wanted to play.

In certain situations, an objective manifestation of assent will not form a contract. In Knutson, 771 F.3d at 566, for example, the court noted that despite apparent indications of assent, an offeree "is not bound by inconspicuous contractual provisions of which he wasunaware, contained in a document whose contractual nature was not obvious." In Burnett v. Pagliacci Pizza, Inc., 196 Wn.2d 38, 49 (2020), and Hastings v. Unikrn, Inc., 12 Wn. App 2d 1072, 2020 WL 1640250, at * 7 (2020), the offerees were deprived of the opportunity to read the contracts at the time they purportedly agreed and were therefore not bound. Neither of those situations is relevant here. The pop-up plaintiff saw was very conspicuous - unavoidable, even - and it clearly notified plaintiff that new terms and conditions would govern further use of Jackpot Party Casino if she clicked the "Accept!" button. The pop-up asked plaintiff to check out the updated versions of the policies, providing big red buttons labeled "Terms of Service" and "Privacy Policy" for her immediate and timely review. Even if the only thing plaintiff looked for when the pop-up appeared was the button that would get her into the casino as fast as possible, that button let her know that she was accepting something.² She simply chose not to read whatever it was she was accepting, which is not a defense to contract formation in Washington. Yakima Cty. (W. Valley) Fire Prot. Dist. No. 12 v. City of Yakima, 122 Wn.2d 371, 389 (1993) ("Where a party has signed a contract without reading it, that party cannot successfully argue that mutual assent was lacking as long as the party was not deprived of the opportunity to read the contract, the contract was plain and unambiguous, the party was capable of understanding the contract, and no fraud, deceit, or coercion occurred.") (internal quotation marks and citation omitted). Defendant has demonstrated mutual assent to the Terms of Service as between itself and Ms. Reed.

B. Federal Rule of Civil Procedure 23(d)

In the alternative, plaintiff argues that the Terms of Service are unenforceable even if she assented to the terms because defendant's communication impermissibly interfered with the Court's management of this class action...