Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 1 of 18
`
`
`
`
`
`MATTHEW J. ADLER (SBN 273147)
`Matthew.Adler@faegredrinker.com
`FAEGRE DRINKER BIDDLE & REATH LLP
`Four Embarcadero Center, 27th Floor
`San Francisco, California 94111-4180
`Telephone:
`415-591-7500
`Facsimile:
`415-591-7510
`
`JEFFREY S. JACOBSON (pro hac vice)
`Jeffrey.Jacobson@faegredrinker.com
`FAEGRE DRINKER BIDDLE & REATH LLP
`1177 Avenue of the Americas, 41st Floor
`New York, New York 10036-2714
`Telephone:
`212-248-3140
`Facsimile:
`212-248-3141
`
`Attorneys for Defendant
`EPIC GAMES, INC.
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`SAN FRANCISCO DIVISION
`
`K.W., a minor and through K.W.’s guardian,
`Jillian Williams, and JILLIAN WILLIAMS,
`individually, on behalf of themselves and all
`others similarly situated,
`
`Plaintiffs,
`
`v.
`
`EPIC GAMES, INC.,
`
`Defendant.
`
`
`
`Case No. 3:21-cv-00976-CRB
`
`DEFENDANT EPIC GAMES, INC.’S
`NOTICE OF MOTION AND
`MOTION TO STAY ACTION;
`MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT
`
`April 2, 2021
`10:00 a.m.
`6 – 17th Floor
`Hon. Charles R. Breyer
`
`Date:
`Time:
`Ctrm:
`Judge:
`
`Action Filed: February 8, 2021
`Trial Date:
`None set
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`
`
`CASE NO. 3:21-CV-00976-CRB
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 2 of 18
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`NOTICE OF MOTION AND MOTION – SUMMARY OF ARGUMENT
`TO THE COURT AND ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
`PLEASE TAKE NOTICE that on April 2, 2021 at 10:00 a.m., or as soon thereafter as the
`matter may be heard, in Courtroom 6, 17th Floor of the above Court, located at 450 Golden Gate
`Avenue, San Francisco, California, 94102, Defendant Epic Games, Inc. (“Epic Games”) will and
`hereby does move for an order staying all further proceedings in this action pending the outcome
`of nationwide class action settlement approval proceedings in Zanca, et al. v. Epic Games, Inc.,
`No. 21-CVS-534 (N.C. Super. Ct., Wake County).
`Plaintiffs in this case, according to the facts pleaded in their Complaint and the claims they
`assert, are members of the putative settlement class in Zanca. Under North Carolina state court
`rules, which mirror Fed. R. Civ. P. 23 in all relevant respects, Plaintiffs in this case have the
`opportunity to opt out of the Zanca settlement, but may not purport to exercise anyone else’s right
`to do so. Alternatively, they may participate in the Zanca settlement and/or raise objections to it.
`While the class action settlement approval process is underway in Zanca, Epic Games
`respectfully seeks a stay of this action, for three reasons. First, the Zanca court’s Preliminary
`Approval Order enjoins all members of the putative settlement class, including Plaintiffs, from
`pursuing separate litigation while the settlement approval process is underway. This Court should
`give effect to that order. Second, even without regard to that order, this Court should allow the
`settlement process to proceed without interference as a matter of comity. Third, it is most
`appropriate for the Zanca court to resolve, in the context of an objection or opt-out request, whether
`K.W. and Ms. Williams have a claim. This is because neither K.W. nor Ms. Williams made a
`purchase from Epic Games, but Epic Games nevertheless already has honored K.W.’s
`disaffirmation request and thereby mooted whatever claims he might once have had.
`The Motion is based on the Memorandum of Points and Authorities, the Declaration of
`Jeffrey S. Jacobson and exhibits thereto, as well as all papers and pleadings on file herein, and such
`argument as properly may be presented at a hearing.
`//
`//
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`CASE NO. 3:21-CV-00976-CRB
`
`- 1 -
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 3 of 18
`
`Dated: February 26, 2021
`
`
`FAEGRE DRINKER BIDDLE & REATH LLP
`
`
`By: /s/ Jeffrey S. Jacobson
`Jeffrey S. Jacobson (pro hac vice)
`Matthew J. Adler
`
`Attorneys for Defendant
`EPIC GAMES, INC.
`
`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`- 2 -
`
`CASE NO. 3:21-CV-00976-CRB
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 4 of 18
`
`TABLE OF CONTENTS
`
`
`Page
`
`
`
`INTRODUCTION........................................................................................................................... 1
`FACTUAL AND PROCEDURAL BACKGROUND .................................................................... 3
`LEGAL STANDARD ..................................................................................................................... 6
`ARGUMENT .................................................................................................................................. 7
`I.
`This Court Should Stay this Action Pending the Outcome of the Zanca
`Settlement Approval Proceedings ........................................................................... 7
`A.
`The Zanca Order Enjoins Further Prosecution of this Action .................... 7
`B.
`Even had the Zanca court not expressly enjoined Plaintiffs from
`litigating this case, a stay still would be appropriate .................................. 8
`1.
`A stay will not prejudice plaintiffs .................................................. 8
`2.
`Epic Games would be prejudiced without a stay ............................ 9
`3.
`The conservation of judicial resources strongly favors a stay ...... 10
`Separately, a stay is warranted because K.W.’s claims are moot ............. 10
`C.
`CONCLUSION ............................................................................................................................. 12
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`- i -
`
`CASE NO. 3:21-CV-00976-CRB
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 5 of 18
`
`
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`
`CASES
`Alter v. The Walt Disney Co.,
`No. 16-cv-06644 SJO (Ex), 2016 WL 9455627 (C.D. Cal. Oct. 31, 2016) ................................8
`Annunziato v. eMachines Inc.,
`2006 WL 5014567 (C.D. Cal. July 24, 2006) .........................................................................7, 9
`C.W. v. Epic Games, Inc.,
`No. 19-cv-3629-YGR, 2020 WL 5257572 (N.D. Cal. Sept. 3, 2020) ................................3, 4, 5
`Christensen v. CLP Resources, Inc.,
`2015 WL 13764185 (C.D. Cal. 2015) .......................................................................................10
`Clowers Comm’ns, LLC v. SkyCom USA, LLC,
`No. 1:14-CV-0291-ODE, 2014 WL 12629947 (N.D. Ga. Oct. 7, 2014) ....................................6
`Ellison Framing, Inc. v. Zurich American Ins. Co.,
`805 F. Supp. 2d 1006 (E.D. Cal. 2011) .......................................................................................6
`Heidbreder v. Epic Games, Inc.,
`438 F. Supp. 3d 591 (E.D.N.C. 2020) .........................................................................................3
`In re JP Morgan Chase LPI Hazard Litig.,
`2013 WL 3829271.........................................................................................................7, 8, 9, 10
`Krohm v. Epic Games, Inc.,
`408 F. Supp. 3d 717 (E.D.N.C. 2019) ...............................................................................3, 9, 12
`Landis v. N. Am. Co.,
`299 U.S. 248 (1936) ................................................................................................................7, 8
`Leyva v. Certified Grocers of Cal., Ltd.,
`593 F.2d 857 (9th Cir. 1979) .......................................................................................................6
`Lindley v. Life Investors Ins. Co. of Am.,
`2009 WL 3296498 (N.D. Okla. Oct. 9, 2009).......................................................................9, 10
`Meints v. Regis Corp.,
`2010 WL 3058300 (S.D. Cal. Aug. 2, 2010) ............................................................................10
`Moore v. Morgan Stanley & Co., Inc.,
`2007 WL 4354987 (N.D. Ill. Dec. 6, 2007) ................................................................................9
`Nesbit v. Fornaro,
`2011 WL 1869917 (D. Nev. Mar. 31, 2011) ...............................................................................7
`Pieterson v. Wells Fargo Bank, N.A.,
`2019 WL 1466963 (N.D. Cal. 2019).....................................................................................8, 10
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`- ii -
`
`CASE NO. 3:21-CV-00976-CRB
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 6 of 18
`
`
`
`R.A. v. Epic Games, Inc.,
`No. 5:19-cv-325-BO, 2020 WL 865420 (E.D.N.C. Feb. 20, 2020) ............................2, 3, 11, 12
`United States v. Kiewit Pac. Co.,
`2014 WL 1997151 (N.D. Cal. May 14, 2014) ....................................................................2, 7, 8
`STATUTES, RULES & REGULATIONS
`Cal. Bus. & Prof. Code § 17200, et seq. ...........................................................................................5
`Cal. Family Code § 6710 ..............................................................................................................3, 5
`Fed. R. Civ. P. 26(f) ..........................................................................................................................9
`N.C.G.S. § 48A .................................................................................................................................5
`OTHER AUTHORITIES
`5 C. Wright & Miller, Federal Practice and Procedure § 1360 (3d ed. and 2010
`supp.) ...........................................................................................................................................6
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`- iii -
`
`CASE NO. 3:21-CV-00976-CRB
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 7 of 18
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`INTRODUCTION
`Defendant Epic Games, Inc. (“Epic Games”) and plaintiffs in an earlier-filed, parallel action
`have received preliminary approval for a nationwide class action settlement that resolves the exact
`claims that Plaintiffs K.W. and his mother, Jillian Williams allege in this case. That settlement
`class includes K.W. and Ms. Williams. Class counsel in the parallel case include a former partner
`of the firm that now represents K.W. and Ms. Williams, against whom that firm had filed an
`“attorneys’ lien” for fees. The instant case appears to be little (if any) more than an attempt to gain
`leverage in that fee fight among Plaintiffs’ counsel. Regardless of the motivations behind the
`instant case, however, this Court should stay it during the class action settlement approval process.
`The settlement is in the matter of Zanca, et al. v. Epic Games, Inc., No. 21-CVS-534 (N.C.
`Super. Ct., Wake County). Wake County is where Epic Games is headquartered and where the End
`User License Agreement that all players of the relevant video game, including Plaintiffs, requires
`non-arbitrable claims to be litigated. The Zanca court granted preliminary approval to a nationwide
`class action settlement on February 22, 2021, with a formal order issued on February 26, 2021. See
`Preliminary Approval Order, attached as Exhibit B to the Declaration of Jeffrey S. Jacobson
`(“Jacobson Decl.”). It is beyond any possible dispute that Plaintiffs are members of the putative
`class in Zanca and that all claims they assert in this case would be released by the settlement.
`The Court should stay this case for any or all of three reasons.
`First, the Preliminary Approval Order in Zanca enjoins “Settlement Class Members” from
`“commenc[ing], continu[ing], or prosecut[ing]” against Epic Games “any action or proceeding in
`any court or tribunal asserting any of the matters, claims, or causes of action that are to be released
`upon Final Approval pursuant to the Settlement.” Jacobson Decl. Ex. B ¶ 29. That injunction
`applies to Plaintiffs’ claims, which the Zanca settlement would extinguish.
`Second, even had the Zanca court not explicitly enjoined Plaintiffs from prosecuting this
`action, courts have the discretion to stay parallel proceedings while other jurists consider whether
`to approve class action settlements. Courts apply considerations of the “potential prejudice to the
`non-moving party; the hardship or inequity to the moving party if the action is not stayed; and the
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`CASE NO. 3:21-CV-00976-CRB
`
`- 1 -
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 8 of 18
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`judicial resources that would be saved by simplifying the case or avoiding duplicative litigation if
`the case before the court is stayed.” United States v. Kiewit Pac. Co., 2014 WL 1997151, at *13
`(N.D. Cal. May 14, 2014) (citation omitted). All three factors favor a stay in this case. Plaintiffs
`would not be prejudiced by a stay, but Epic Games would be prejudiced by having to litigate this
`case while moving forward with the proposed Zanca settlement. Most significantly, a stay would
`avoid the unnecessary waste of judicial resources addressing substantive motion practice in a
`putative class action case that the Zanca settlement would resolve.
`Third, the Zanca court should resolve, in the context of an objection or opt-out request,
`whether K.W. and Ms. Williams have a claim. Epic Games’ records reflect that neither K.W. nor
`Ms. Williams ever made any purchases from the company. See Jacobson Decl. ¶ 17. As soon as
`Plaintiffs provided K.W.’s full name and Fortnite screen name to Epic Games, the company
`determined that it was a third party—not K.W. or Ms. Williams—who made two purchases from
`Epic Games in this account totaling less than $20. See id.
`Although K.W. did not make these purchases, and has no legal right to “disaffirm” contracts
`to which he was not a party, Epic Games promptly notified Plaintiffs’ counsel that it would honor
`K.W’s disaffirmation and refund the money for these in-game purchases. See id. ¶ 18. That refund
`check already has been provided to Plaintiffs through their counsel. See id. ¶ 19. Thus, if Plaintiffs
`ever had any claims, they now are moot. K.W. cannot disaffirm purchases and also maintain a
`lawsuit about them. See R.A. v. Epic Games, Inc., No. 5:19-cv-325-BO, 2020 WL 865420, at *2
`(E.D.N.C. Feb. 20, 2020). K.W.’s “voiding [of] the in-game purchases,” and Epic Games’ honoring
`that contractual disaffirmation, “erases the entire basis for his claims.” Id. “Plaintiff cannot void
`the transactions with defendant and receive his refund while simultaneously maintaining causes of
`action that arise solely from those transactions.” Id. The Zanca court is best positioned to resolve
`these issues, should Plaintiffs attempt to opt out of or object to the settlement in order to be able to
`sue separately.
`For these reasons, as explained further below, Epic Games respectfully requests a stay of
`this action pending the outcome of the Zanca settlement approval proceedings. Epic Games further
`proposes that the parties file a joint status report within 10 days of the Zanca Final Approval
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`CASE NO. 3:21-CV-00976-CRB
`
`- 2 -
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 9 of 18
`
`
`
`Hearing, which currently is set to occur on May 6, 2021. The joint status report would advise the
`Court if the parties have any further business requiring the Court’s attention.
`
`FACTUAL AND PROCEDURAL BACKGROUND
`Epic Games’ Fortnite, launched in late 2017, quickly became one of the most successful
`video games of all time with hundreds of millions of players around the world. Beginning in early
`2019, a handful of Fortnite players brought speculative class action lawsuits against the company
`alleging various claims, mostly under state consumer fraud laws. See Jacobson Decl. ¶ 2. A court
`dismissed the R.A. case, referenced above, after Epic Games accepted the minor plaintiff’s request
`to disaffirm purchases, as Epic Games also just did with K.W. See id. ¶ 3. In another case,
`Heidbreder v. Epic Games, Inc., 438 F. Supp. 3d 591 (E.D.N.C. 2020), a court enforced the
`mandatory arbitration requirement of the Fortnite End User License Agreement and compelled
`putative class action claims regarding in-game purchases into individual arbitration.
`As of November 2020, two cases remained pending. In Krohm v. Epic Games, Inc., 408 F.
`Supp. 3d 717 (E.D.N.C. 2019), a district judge dismissed the plaintiff’s Fortnite-related claims at
`the pleading stage for lack of Article III standing, but the plaintiff was in the process of appealing
`that dismissal. Counsel in the Krohm case advised Epic Games of their intention to resolve their
`standing problem by asserting broader claims, including claims similar to those that had been
`dismissed in R.A. And, in C.W. v. Epic Games, Inc., No. 19-cv-3629-YGR, 2020 WL 5257572
`(N.D. Cal. Sept. 3, 2020), this Court (Gonzalez Rogers, J.) dismissed many of a minor plaintiff’s
`claims at the pleading stage. The C.W. court, however, permitted the plaintiff to pursue a theory
`that California Family Code § 6710, which allows minors to disaffirm “contracts,” may allow him
`to obtain refunds for his Fortnite in-game purchases under Epic Games’ then-existing purchasing
`procedures, which Epic Games subsequently changed.
`In November 2020, Epic Games and opposing counsel—first Krohm counsel, and then
`ultimately C.W. counsel, too—began discussing a global resolution of all alleged matters. They
`engaged a highly experienced mediator, the Hon. Wayne Andersen (Retired), a former United
`States District Judge for the Northern District of Illinois. See Jacobson Decl. ¶ 6. The negotiations
`were contentious, and at several points it appeared unlikely that the parties would agree to a
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`CASE NO. 3:21-CV-00976-CRB
`
`- 3 -
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 10 of 18
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`settlement. See id. After multiple days of mediated discussions, however, the parties reached a
`tentative agreement and then proceeded to draft a full-form settlement agreement, to engage a
`settlement administrator, and to take all other steps necessary to implement a nationwide class
`action settlement with tens of millions of putative class members. See id. The C.W. plaintiffs
`dismissed their case on January 8, 2021 (see C.W. Dkt. No. 97), on the same day that all of the
`parties in Zanca executed the Settlement Agreement in that case. See Jacobson Decl. ¶ 7. The
`Zanca parties notified the court on January 25 that they would be presenting a motion for
`preliminary approval of this nationwide class action settlement. See id. ¶ 9.
`Prior to the C.W. case’s dismissal, it had a complicated history on plaintiffs’ side of the “v.”
`Lead counsel in C.W., Deepali Brahmbhatt, filed the case while a partner at the OneLLP firm. See
`C.W. Dkt. No. 1; Jacobson Decl. ¶ 5. On November 2, 2020, Ms. Brahmbhatt joined a different
`firm and filed a notice with the C.W. court stating that OneLLP no longer was involved with the
`case. See Jacobson Decl. ¶ 5. Ms. Brahmbhatt also notified Epic Games that it no longer should
`communicate with OneLLP about the case. See id. Ms. Brahmbhatt subsequently joined the Zanca
`negotiations that led to the global settlement, and she is co-counsel for the Zanca class.
`On January 6, 2021—basically the eve of the Zanca settlement agreement being signed—
`OneLLP served on all C.W. parties a “Notice of Attorneys’ Lien.” Jacobson Decl. ¶ 8. The lien
`putatively was “against any settlement proceeds, fees awarded, or Judgement which arises from or
`relates to” C.W. Id. According to the lien, “the Engagement Agreement signed by [the C.W.]
`Plaintiff[s] and OneLLP provides that should the Client/Plaintiff terminate the services of OneLLP
`prior to resolution of the case, OneLLP will hold a lien to secure payment of all sums due for legal
`services rendered and costs advanced pursuant to the Agreement.” Id. Ms. Brahmbhatt and
`OneLLP thus may have unfinished business, but Epic Games has no dog in that fight.
`On February 8, 2021—two weeks after the Zanca plaintiffs (including Ms. Brahmbhatt)
`notified the Zanca court of their upcoming motion for preliminary approval of the settlement,
`OneLLP filed the instant Complaint (“Compl.” Dkt. No. 1) on behalf of K.W. and Ms. Williams.
`Epic Games believes that the existence of Zanca, and of its impending settlement, were known to
`Plaintiffs’ counsel at the time they filed their Complaint. See Jacobson Decl. ¶ 11. The Complaint
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`CASE NO. 3:21-CV-00976-CRB
`
`- 4 -
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 11 of 18
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`self-evidently is an attempt by former counsel in C.W. to interfere with their former partner’s
`advocacy for a global resolution, in Zanca, of the claims asserted in C.W.
`K.W. allegedly played Fortnite, and he alleges (falsely, according to Epic Games’ records)
`that he “made multiple purchases” from Epic Games while playing Fortnite, some with his own
`money, and “at least one purchase” using Ms. Williams’ credit card, assertedly without Ms.
`Williams’ permission. Compl. ¶¶ 44-45. Like the former plaintiff in C.W., Plaintiffs claim that
`Family Code § 6710 allows K.W. to obtain refunds from Epic Games for his alleged in-game
`purchases, even after he has enjoyed the benefits of them. See id. ¶¶ 60-71. Plaintiffs also assert
`related claims pursuant to Cal. Bus. & Prof. Code § 17200, et seq. (see id. ¶¶ 72-88), and for
`“negligent misrepresentation” (id. ¶¶ 89-93).
`The earlier-filed complaint in Zanca similarly alleges that Epic Games engages in
`“deceptive and misleading trade practices . . . in marketing and selling ‘loot boxes’ and other in-
`game items” for Fortnite and another popular game (Rocket League) “that were often purchased by
`minors, who also were unable to exercise their unrestricted rights under state laws to rescind
`contracts into which they entered.” Jacobson Decl. Ex. A (Zanca complaint) ¶ 1. The named
`plaintiffs in Zanca include minors who, among other things, generally allege that they played
`Fortnite and/or Rocket League and made purchases of V-Bucks with their “own money” and/or
`their parents’ payment methods, which they wish to disaffirm. Id. ¶¶ 70, 73, 83, 84, 100, 101, 111,
`112. The Zanca Complaint asserts five claims for relief: a claim for alleged violations of consumer
`protection laws in North Carolina and other identified states (Counts I, II); for unjust enrichment
`(Count III); for a declaratory judgment that minors’ purchases in Fortnite may be disaffirmed under
`North Carolina law (N.C.G.S. § 48A), California law (Cal. Family Code § 6710) and equivalent
`laws in most states (Count IV); and for negligent misrepresentation (Count V).
`As reflected in the Zanca court’s Preliminary Approval Order, the Settlement Class in
`Zanca comprises “[a]ll persons in the United States who, at any time [since] July 1, 2015 . . . had a
`Fortnite or Rocket League account that they used to play either game on any device and in any
`mode, and (a) exchanged in-game virtual currency for any in-game benefit, or (b) made a purchase
`of virtual currency or other in-game benefit for use within Fortnite or Rocket League.” Jacobson
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`CASE NO. 3:21-CV-00976-CRB
`
`- 5 -
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 12 of 18
`
`
`
`Decl., Ex. B ¶ 3. The settlement already has received wide-ranging publicity and a program of
`direct notice to Settlement Class Members is underway. See Jacobson Decl. ¶ 13. Details about the
`settlement and its benefits are posted on the settlement website, www.epiclootboxsettlement.com.
`Id. ¶ 13. Among the available settlement benefits is a specific provision addressing minors’ right
`to disaffirm purchases, the claim pleaded by Plaintiffs here. Such persons may claim benefits in
`the settlement of up to $50 in cash.
`The Zanca court issued its order granting preliminary approval to the settlement on
`February 26, 2021. See Jacobson Decl., Ex. B. The court found the Settlement is “preliminarily
`approved as describing a settlement that is within the range of settlements that the Court would find
`to be fair, reasonable and adequate.” Id. ¶ 7. The Court set a Final Approval Hearing for May 6,
`2021 to, among other things, “consider any objections presented by the Settlement Class Members
`and the parties’ responses to any such objections.” Id. ¶ 11. The Preliminary Approval Order
`further stated:
`Pending Final Approval, no Settlement Class Member, either directly,
`representatively, or in any other capacity (other than a Settlement Class Member
`who validly and timely elects to be excluded from the Settlement Class, who may
`thereafter pursue his or her individual claims only), shall commence, continue or
`prosecute against any or all Released Parties any action or proceeding in any
`court or tribunal asserting any of the matters, claims or causes of action that
`are to be released upon Final Approval pursuant to the Settlement, and are
`hereby enjoined from so proceeding.
`Id. ¶ 29 (emphasis added).
`
`LEGAL STANDARD
`
`“A trial court may, with propriety, find it is efficient for its own docket and the fairest course
`for the parties to enter a stay of an action before it, pending resolution of independent proceedings
`which bear upon the case.” Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir.
`1979). In such cases, the court “may order a stay of the action pursuant to its power to control its
`docket and calendar and to provide for a just determination of the cases pending before it.” Id.1
`
`1 The Court may properly hear “certain pre-answer motions that are not expressly provided for by
`the [Federal] rules,” including motions to stay. Ellison Framing, Inc. v. Zurich American Ins. Co.,
`805 F. Supp. 2d 1006, 1012-13 (E.D. Cal. 2011) (collecting cases permitting motions to stay in lieu
`of an answer). Such authority lies in the “inherent power of the court to regulate actions pending
`before it.” Id. at 1012, quoting 5 C. Wright & Miller, Federal Practice and Procedure § 1360 (3d
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`- 6 -
`CASE NO. 3:21-CV-00976-CRB
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 13 of 18
`
`
`
`The decision to grant a stay is an “exercise of judgment” that requires a court to “weigh
`competing interests and maintain an even balance.” Landis v. N. Am. Co., 299 U.S. 248, 254-55
`(1936). In determining whether to enter such a stay, the relevant considerations are the “potential
`prejudice to the non-moving party; the hardship or inequity to the moving party if the action is not
`stayed; and the judicial resources that would be saved by simplifying the case or avoiding
`duplicative litigation if the case before the court is stayed.” United States v. Kiewit Pac. Co., 2014
`WL 1997151, at *13 (N.D. Cal. May 14, 2014) (citation omitted).
`
`I.
`
`ARGUMENT
`This Court Should Stay this Action Pending the Outcome of the Zanca Settlement
`Approval Proceedings
`The Zanca Order Enjoins Further Prosecution of this Action
`A.
`
`The Court should stay this action because the Zanca Preliminary Approval Order enjoins
`Plaintiffs from prosecuting the case while the settlement process in Zanca is underway. The
`allegations in Plaintiffs’ Complaint confirm that they are members of the Zanca “Settlement Class.”
`According to Plaintiffs’ Complaint, K.W. and Ms. Williams are “persons in the United States who,
`at any time between July 1, 2015, and the date of Preliminary Approval, had a Fortnite or Rocket
`League account that they used to play either game on any device and in any mode, and (a)
`exchanged in-game virtual currency for any in-game benefit, or (b) made a purchase of virtual
`currency or other in-game benefit for use within Fortnite or Rocket League.” Jacobson Decl., Ex.
`B ¶ 3. Plaintiffs’ claims are identical to those being pursued, and resolved, in Zanca. Proceeding
`with this case, therefore, would require violating the Zanca injunction.
`If Plaintiffs object to the Zanca settlement, they may present their objection to the Zanca
`court. See In re JP Morgan Chase LPI Hazard Litig., 2013 WL 3829271, at *4; Nesbit v. Fornaro,
`2011 WL 1869917, at *3 (D. Nev. Mar. 31, 2011) (recommending district court grant stay in favor
`of previously filed class action in which parties had reached proposed settlement and stating that
`plaintiff in the stayed action should raise any objection to settlement in the court overseeing the
`
`ed. and 2010 supp.). Indeed, a motion to stay that raises issues of judicial resources and efficiency
`is the “quintessential candidate for pre-answer consideration.” Clowers Comm’ns, LLC v. SkyCom
`USA, LLC, No. 1:14-CV-0291-ODE, 2014 WL 12629947, at *3 (N.D. Ga. Oct. 7, 2014).
`EPIC GAMES, INC.’S NOTICE OF MOTION AND
`- 7 -
`CASE NO. 3:21-CV-00976-CRB
`MOTION TO STAY; MEMORANDUM IN SUPPORT
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`FAEGRE DRINKER
`BIDDLE & REATH LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
`
`

`

`Case 3:21-cv-00976-CRB Document 18 Filed 02/26/21 Page 14 of 18
`
`
`
`settlement); Annunziato v. eMachines Inc., 2006 WL 5014567, at *5 n.5 (C.D. Cal. July 24, 2006)
`(staying class action pending settlement and noting objection to settlement properly raised before
`court overseeing settlement). The Zanca court can determine, if presented with an objection,
`whether Plaintiffs have standing. Plaintiffs have no right to collaterally attack the Settlement in
`this Court or otherwise prosecute a separate action, in violation of the Preliminary Approval Order.
`
`B.
`
`Even had the Zanca court not expressly enjoined Plaintiffs from litigating this
`case, a stay still would be appropriate
`
`Even apart from the express injunctive language in the Zanca