Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 1 of 22
`
`
`
`HON. THOMAS S. ZILLY
`
`
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`
`
`
`
`
`UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
`
`A.C., a minor by and through his guardian,
`MARIA CARBAJAL,
`Plaintiffs,
`
`v.
`NINTENDO OF AMERICA, INC.,
`Defendant.
`
`NO. 2:20-1694-TSZ
`
`PLAINTIFF’S OPPOSITION TO
`NINTENDO’S MOTION TO
`COMPEL ARBITRATION
`
`NOTE FOR MOTION CALENDAR:
`March 22, 2021
`Oral Argument Requested
`
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`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ)
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 2 of 22
`
`TABLE OF CONTENTS
`INTRODUCTION .......................................................................................................... 1
`FACTUAL BACKGROUND ........................................................................................ 2
`ARGUMENT ................................................................................................................. 4
`
`Plaintiff’s Challenge to the Existence of an Arbitration Agreement
`is Properly Before this Court .............................................................................. 4
`
`A.
`
`
`
`
`
`I.
`II.
`III.
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`There is Not “Clear and Unmistakable” Evidence that the Parties
`Agreed to Delegate the Arbitrability Question to the Arbitrator ............ 5
`
`1.
`
`
`Even if a Clear and Unmistakable Delegation Provision Exists,
`2.
`the Delegation Provision is Unconscionable ........................................ 10
`
`California law applies to A.C.’s disaffirmance of the EULA .......................... 11
`B.
`Minors are Incapable of Contracting Under California Law ............................ 13
`C.
`Even if there is a Contract, Plaintiff, as a Minor, May also Disaffirm it ......... 14
`D.
`CONCLUSION ........................................................................................................................ 16
`
`
`
`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - i
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 3 of 22
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`CASES
`
`TABLE OF AUTHORITIES
`
`A.D. v. Credit One Bank, N.A.,
`885 F.3d 1054 (7th Cir. 2018) ...............................................................................................14
`
`Ajamian v. CantorCO2e, L.P.,
`203 Cal. App. 4th 771, 137 Cal. Rptr. 3d 773 (2012) .........................................................6, 7
`
`In re Apple In-App Purchase Litig.,
`855 F. Supp. 2d 1030 (N.D. Cal. 2012) ...........................................................................13, 16
`
`Baker v. Osborne Development Corp.,
`159 Cal. App. 4th 884, 71 Cal. Rptr. 3d 854 (2008) ...............................................................7
`
`Berg v. Traylor,
`148 Cal. App. 4th 809 (2007) ................................................................................................15
`
`Brennan v. Opus Bank,
`796 F.3d 1125 (9th Cir. 2015) .................................................................................................8
`
`Burgoon v. Narconon of N. Cal.,
`125 F. Supp. 3d 974 (N.D. Cal. 2015) .....................................................................................5
`
`Carideo v. Dell, Inc.,
`706 F. Supp. 2d 1122 (W.D. Wash. 2010) ......................................................................11, 12
`
`Chen v. Sierra Trading Post, Inc.,
`2019 U.S. Dist. LEXIS 131756 (W.D. Wash. Aug. 6, 2019) ................................................10
`
`Cobarruviaz v. Maplebear, Inc.,
`143 F. Supp. 3d 930 (N.D. Cal. 2015) .............................................................................5, 6, 7
`
`Deck v. Spartz, Inc.,
`No. No. 2:11–CV–01123–JAM–DAD, 2011 WL 7775067 (E.D. Cal. Sept.
`27, 2011) ..........................................................................................................................12, 15
`
`Diaz v. Nintendo of America Inc,
`2019 U.S. Dist. LEXIS 163288 (W.D. Wash. Mar. 2, 2020) ..................................................9
`
`Doe v. Epic Games, Inc.,
`No. 19-cv-03629-YGR, 2020 U.S. Dist. LEXIS 11473 (N.D. Cal. Jan. 23,
`2020) ......................................................................................................................................14
`
`Eiess v. USAA Fed. Savings Bank,
`404 F. Supp. 3d 1240 (N.D. Cal. 2019) ...................................................................................4
`
`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - ii
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 4 of 22
`
`
`I.B. ex rel. Fife v. Facebook, Inc.,
`905 F.Supp.2d 989 (N.D. Cal. 2012) .....................................................................................15
`
`G.G. v. Valve Corp.,
`No. C16-1941-JCC, 2017 WL 1210220 (W.D. Wash. Apr. 3, 2017), vacated
`on other grounds by 799 F. App’x 557 (9th Cir. 2020) ........................................................12
`
`Galen v. Redfin Corp.,
`No. 14-cv-05229-TEH, 2015 U.S. Dist. LEXIS 161111 (N.D. Cal. Dec. 1,
`2015) ......................................................................................................................................10
`
`Henry Schein, Inc. v. Archer & White Sales, Inc.,
`139 S. Ct. 524 (2019) ..............................................................................................................4
`
`Hurley v. S. Cal. Edison Co.,
`183 F.2d 125 (9th Cir. 1950) .................................................................................................14
`
`Lopez v. Kmart Corp.,
`No. 15-cv-01089-JSC, 2015 U.S. Dist. LEXIS 58328 (N.D. Cal. May 4,
`2015) ........................................................................................................................................4
`
`Meadows v. Dickey's Barbecue Restaurants (Dickey's),
`144 F. Supp. 3d 1069 (N.D. Cal. Nov. 11, 2015) ....................................................................8
`
`Mikhak v. Univ. of Phx.,
`No. C16-00901 CRB, 2016 U.S. Dist. LEXIS 80705 (N.D. Cal. June 21,
`2016) ............................................................................................................................4, 5, 8, 9
`
`Norcia v. Samsung Telecomms. Am., LLC,
`845 F.3d 1279 (9th Cir. 2017) .................................................................................................4
`
`O'Connor v. Uber Techs., Inc.,
`150 F. Supp. 3d 1095 (N.D. Cal. 2015) .................................................................................11
`
`Oracle Am., Inc. v. Myriad Grp., A.G.,
`724 F.3d 1069 (9th Cir. 2013) .............................................................................................8, 9
`
`People v. Lara,
`67 Cal. 3d 365 (1967) ............................................................................................................13
`
`R.A. v. Epic Games, Inc.,
`Case No. 2:19-cv-014488, 2019 U.S. Dist. LEXIS 217426 (C.D. Cal. July
`30, 2019) ................................................................................................................................14
`
`R.A. v. Epic Games, Inc.,
`No. CV 19-1488-GW-Ex, 2019 WL 6792801 (C.D. Cal. July 30, 2019) .......................11, 12
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`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - iii
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 5 of 22
`
`
`Rent-a-Cntr., W., Inc. v. Jackson,
`561 U.S. 63 (2010) ..................................................................................................................5
`
`Revitch v. DIRECTV, LLC,
`977 F.3d 713 (9th Cir. 2020) ...................................................................................................4
`
`Rittmann v. Amazon.com, Inc.,
`383 F. Supp. 3d 1196 (W.D. Wash. 2019) ............................................................................12
`
`Sparks v. Sparks,
`101 Cal.App.2d 129, 225 P.2d 238 (1950) ............................................................................14
`
`T.K. v. Adobe Sys., Inc.,
`No. 17-CV-04595-LHK, 2018 WL 1812200 (N.D. Cal. Apr. 17, 2018) ........................12, 14
`
`Tompkins v. 23andMe, Inc.,
`No. 5:13-CV-05682-LHK, 2014 U.S. Dist. LEXIS 88068 (N.D. Cal. June
`25, 2014) ..................................................................................................................................9
`
`Vargas v. Delivery Outsourcing, LLC,
`No. 15-cv-03408-JST, 2016 U.S. Dist. LEXIS 32634 (N.D. Cal. Mar. 14,
`2016) ........................................................................................................................................7
`
`
`
`STATUTES
`
`9 U.S.C. §§ 1–16 ...........................................................................................................................4
`
`Cal. Civ. Code § 1556 .................................................................................................................13
`
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`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - iv
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 6 of 22
`
`
`I.
`
`INTRODUCTION
`Nintendo has known for years that its Joy-Con controllers, which are an integral part of
`its Switch and Switch Lite videogame systems, are defective. Specifically, the controllers contain
`a uniform design defect that causes the joystick to drift without manual input, thereby interfering
`significantly with gameplay. Instead of publicly engaging on the merits of Plaintiff’s allegations
`that Nintendo knowingly sold defective Switch Controllers, Nintendo tries to compel his claims
`to confidential arbitration proceedings. Yet Nintendo’s motion ignores that Plaintiff has
`exercised his black letter law right to void the purported arbitration agreement with Nintendo.
`More fundamentally, Nintendo has failed to establish the existence of a valid and enforceable
`agreement to arbitrate, as Plaintiff A.C. was only 12—thus, under the age of majority—when he
`purportedly acknowledged the End User License Agreement (“EULA”). Because the EULA is
`legally void and a nullity, Plaintiff properly brings his claims before this Court and cannot be
`compelled to arbitration. Even if the EULA is somehow enforceable, Plaintiff has disaffirmed
`the contract, and thus cannot be bound by the arbitration provision. Accordingly, for the reasons
`set forth herein, Nintendo’s motion should be denied.
`II.
`FACTUAL BACKGROUND
`Plaintiff alleges that the Joy-Con controllers in the Nintendo Switch and Switch Lite
`gaming systems contain a material defect: characters or items on the screen move on their own
`during gameplay—referred to as “drift” or “drifting” (“Drifting” or the “Drift Defect”). Compl.,
`ECF No. 1 ¶¶ 3–9. Though Nintendo was aware of the existence of the Drift Defect for years, it
`failed to disclose that Defect to consumers.
`The Switch is a console gaming system manufactured, marketed, and sold by Nintendo.
`Id. ¶ 2. Nintendo released the original Switch for purchase in the United States on March 3, 2017.
`Id. ¶ 2. Each Switch console comes with two Joy-Con controllers that control gameplay. Id. ¶ 30.
`Additional Joy-Cons are available for purchase for $79.99 for a pair, or $49.99 for an individual
`(i.e., left or right) Joy-Con. Id. ¶ 31.
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`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - 1
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 7 of 22
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`The original Switch is a hybrid video game console. Gamers can attach the detachable
`Joy-Cons to the Switch gaming console and play the Switch as a portable handheld gaming
`system, similar to the popular Game Boy. Id. ¶ 26. Alternatively, gamers can dock the Switch in
`a Switch docking station (connected to a television by an HDMI cable) and play the Switch on a
`television screen like a traditional gaming console, similar to a PlayStation or Xbox. Id. The
`detachable Joy-Con controllers are wireless and consist of a left paddle and a right paddle.
`Released in September 2019, the Switch Lite is the purely handheld version of the original
`Switch and is similar to the Switch except that its Joy-Con controllers are built in and not
`detachable. Id. ¶¶ 35–36. The Switch Lite appears to come equipped with the same joystick
`hardware and technology as the regular Switch. Id. ¶¶ 37–38. But unlike the original Switch,
`there is no ability to remove the Joy-Cons from the Switch Lite console if the Drift Defect
`manifests—the controllers are built into the gaming system, such that if the Switch Lite joysticks
`fail, the whole system fails. Id. ¶ 40. Like the Switch, the Switch Lite is reportedly plagued by
`the Drift Defect. Id. ¶ 37–39. Around the same time, Nintendo also released an updated version
`(Version 2) of the original Switch, which also still suffers from the Drift Defect. Id. ¶ 34.
`As noted above, the Drift Defect significantly interferes with Switch gameplay and, thus,
`compromises the Switch and Joy-Con controller’s core functionality. Id. ¶¶ 3, 33. Plaintiff’s
`investigation to date indicates that a principal cause of the Drift Defect is extensive wear on the
`pad surface on the interior of the Joy-Cons. Id. ¶ 45. As steel brushes inside the Joy-Cons move
`back and forth during Joy-Con use, they rub away a soft carbon material that makes up the pad.
`Id. As this material is removed and compromised, the Joy-Cons experience a change in the
`electrical resistance of the pads, which are substantially likely to result in drifting. Id. Regular
`use and normal motion of the Joy-Cons also causes particles to accumulate on the interior of the
`Joy-Cons, causing abrasions and wear that is also substantially likely to lead to drifting. Id.
`Plaintiff alleges that Nintendo knew about the Drift Defect yet decided to continue to sell
`defective products to consumers. Id. ¶¶ 8, 51–68. It even equipped the newer Switch Lites with
`
`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - 2
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

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`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 8 of 22
`
`
`the defective Joy-Cons without first fixing or disclosing the Defect that plagued the original
`Switch. Id. ¶¶ 37, 67. As a result of these alleged unfair, deceptive, and fraudulent business
`practices, Plaintiff has alleged that he and other owners of Switches and Joy-Con controllers have
`suffered an ascertainable loss and injury in fact, and that they have otherwise been harmed by
`Nintendo’s conduct. Id. ¶ 10.
`Plaintiff is, and was, a minor at the time he purchased his Nintendo Switch from
`Amazon.com. Id. ¶¶ 15, 17. Plaintiff has disaffirmed the EULA. Id. ¶¶ 15, 24. Plaintiff has
`experienced Drift on multiple Joy-Cons, including on one Nintendo previously repaired. Id.
`¶¶ 18–21.
`In March 2017, Plaintiff bought a Version 1 Switch console from Amazon.com using his
`own money. Id. ¶ 10. Approximately three months after purchasing his first console, both Joy-
`Cons that came with console began drifting. Id. ¶ 18. Plaintiff contacted Nintendo which repaired
`these Joy-Cons under warranty. Id. ¶ 18. The repaired Joy-Cons began drifting again within a
`few months and Plaintiff was charged $40 by Nintendo for a second repair. Id. ¶ 19. The
`controllers again began drifting after the second repair. Id. ¶ 19. Accordingly, Plaintiff purchased
`a set of standalone Joy-Cons from GameStop. Id. ¶ 20. These also began drifting within a few
`months. Id. ¶ 20. Plaintiff then purchased a Version 2 Switch console from Amazon.com. Id. ¶
`21. The Joy-Con controllers that came with this second console also began drifting within a few
`months. Id. ¶ 21. Plaintiff finally gave up on Joy-Cons and purchased a Nintendo Pro Controller1
`from eBay for use with his second Switch console. Id. ¶ 23. Plaintiff now plays only his Version
`2 Switch with the Pro Controller. Id. ¶¶ 21–23.
`
`
`
`
`1 The Pro controllers are more expensive controllers for the Switch that resemble the larger, less
`mobile controllers on an Xbox or PlayStation.
`
`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - 3
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 9 of 22
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`III. ARGUMENT
`
`A.
`
`Plaintiff’s Challenge to the Existence of an Arbitration Agreement is
`Properly Before this Court
`The Federal Arbitration Act (“FAA”) recognizes the fundamental principle that
`arbitration is a matter of contract. 9 U.S.C. §§ 1–16; see also Norcia v. Samsung Telecomms.
`Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) (quoting AT&T Techs., Inc. v. Commc’ns Workers
`of Am., 475 U.S. 643, 648 (1986)) (“[A]rbitration is a matter of contract and a party cannot be
`required to submit to arbitration any dispute which he has not agreed so to submit.”) (internal
`quotation marks omitted). Under sections 2 and 4 of the FAA, the Court is to “determine (1)
`whether a valid arbitration agreement exists and (2) whether the agreement encompasses the
`dispute at issue.” Revitch v. DIRECTV, LLC, 977 F.3d 713, 719 (9th Cir. 2020) (internal citations
`and quotations omitted). Here, Nintendo fails to carry its burden of establishing a valid agreement
`exists.
`
`This Court must first decide the threshold issues of whether Plaintiff’s claims are subject
`to a valid arbitration agreement and, if so, whether the claims arise out of the agreement. See
`Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 530 (2019) (“To be sure, before
`referring a dispute to an arbitrator, the court determines whether a valid arbitration agreement
`exists.”); see also Eiess v. USAA Fed. Savings Bank, 404 F. Supp. 3d 1240, 1248 (N.D. Cal.
`2019) (“The issue of contract formation . . . is not a delegable gateway issue.”). “The ‘gateway’
`question of arbitrability refers to whether the parties have submitted a particular dispute to
`arbitration.” Mikhak v. Univ. of Phx., No. C16-00901 CRB, 2016 U.S. Dist. LEXIS 80705, at *7
`(N.D. Cal. June 21, 2016) (quotations omitted).
`First, as discussed below, Plaintiff was a minor at the time he purportedly “agreed” to the
`EULA, and thus he lacked capacity to form a valid agreement. See Section D infra. As such, any
`disputes over disaffirmation of the EULA cannot be decided unless and until the Court first
`determines whether a valid contract ever existed in the first place (which it does not). See Lopez
`v. Kmart Corp., No. 15-cv-01089-JSC, 2015 U.S. Dist. LEXIS 58328, at *20 (N.D. Cal. May 4,
`
`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - 4
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 10 of 22
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`2015) (finding that the plaintiff “has exercised his statutory right of disaffirmance, thereby
`rescinding the contract and rendering it a nullity; as a result, there is no valid agreement to
`arbitrate.”) (internal citations omitted). Challenges to the formation of a contract, i.e. whether
`there could even exist a contract between Nintendo and Plaintiff, as a minor, are thus for the
`Court to decide. Rent-a-Cntr., W., Inc. v. Jackson, 561 U.S. 63, 68 (2010); Burgoon v. Narconon
`
`of N. Cal., 125 F. Supp. 3d 974, 983 (N.D. Cal. 2015) (“Contrary to what Defendants suggest []
`mental incapacity [is an] issue concerning contract formation.”).
`Second, even if there were a valid agreement (there is not), the issue of whether Plaintiff
`disaffirmed the EULA should be decided by the Court, not an arbitrator. “Under the Federal
`Arbitration Act (FAA), the enforceability of an arbitration agreement is normally determined by
`the court.” Rent-A-Center, 561 U.S. at 70 n.1. “[T]he federal policy in favor of arbitration does
`not extend to deciding questions of arbitrability.” Mikhak v. Univ. of Phx., No. C16-00901 CRB,
`2016 U.S. Dist. LEXIS 80705, at *7 (N.D. Cal. June 21, 2016) (citing Oracle Am., Inc. v. Myriad
`Grp., A.G., 724 F.3d 1069, 1072 (9th Cir. 2013)). “Courts should not necessarily resolve
`ambiguities regarding the delegation of arbitrability in favor of arbitration, [ ], nor should they
`apply ‘ordinary state-law principles that govern the formation of contracts’ as they normally
`would.” Id. “Courts should presume that they determine arbitrability absent ‘clea[r] and
`unmistakabl[e] evidence’ that the parties agreed to delegate that question to an arbitrator.” Id.
`1.
`There is Not “Clear and Unmistakable” Evidence that the Parties
`Agreed to Delegate the Arbitrability Question to the Arbitrator
`The “clear and unmistakable” requirement imposes a “heightened standard.” Cobarruviaz
`v. Maplebear, Inc., 143 F. Supp. 3d 930, 939 (N.D. Cal. 2015) (citing Rent-A-Center, 561 U.S.
`at 70 n.1). This is because “[a] party often might not focus upon that question or upon the
`significance of having arbitrators decide the scope of their own powers.” Id. Accordingly,
`“whether the parties have submitted a particular dispute to arbitration, i.e., the ‘question of
`arbitrability,’ is an issue for judicial determination unless the parties clearly and unmistakably
`provide otherwise.” Id. (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002))
`
`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - 5
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 11 of 22
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`(internal quotations omitted) (emphasis in original). “Even broad arbitration clauses
`that expressly delegate the enforceability decision to arbitrators may not meet the clear and
`unmistakable test, where other language in the agreement creates an uncertainty in that regard.”
`Ajamian v. CantorCO2e, L.P., 203 Cal. App. 4th 771, 792, 137 Cal. Rptr. 3d 773, 790 (2012)
`(emphasis in original).
`Here, the delegation language in the EULA is not “clear and unmistakable.” The EULA
`states that “all disputes or claims arising out of or relating to this Agreement, including its
`formation, enforceability, performance, or breach, . . . shall be finally settled by binding
`arbitration administered by the American Arbitration Association in accordance with the
`provisions of its Commercial Arbitration Rules and the supplementary procedures for consumer-
`related disputes of the American Arbitration Association (the “AAA”), excluding any rules or
`procedures governing or permitting class actions.” EULA, at § 7(A). Later in that same
`paragraph, the EULA requires that “[a]ny such arbitration shall be conducted by the parties in
`their individual capacities only and not as a class action or other representative action, and the
`parties waive their right to file a class action or seek relief on a class basis.” Id. See also Def. Br.,
`at 5 (quoting same provision). Yet the very next sentence states that “[i]f any court or arbitrator
`determines that the class-action waiver set forth in the preceding sentence is void or
`unenforceable. . . then the arbitration provision set forth in this Section 7 shall be deemed null
`and void in its entirety and the parties shall be deemed to have not agreed to arbitrate Claims.”
`Id. (emphasis added). The EULA thus does not “clearly and unmistakably” reserve to the
`arbitrator the issue of whether the class waiver provision of the arbitration agreement—what
`Nintendo seeks to enforce against Plaintiff and the putative class he seeks to represent here—is
`enforceable.
`The Northern District of California reached the same conclusion when analyzing a similar
`provision in Cobarruviaz, 143 F. Supp. 3d at 940. There, the court found that the language of the
`purported delegation clause in an arbitration agreement was not “clear and unmistakable.” Id.
`
`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - 6
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 12 of 22
`
`
`The clause stated that “any controversy, dispute, or claim arising out of or related to . . . this
`Agreement, the breach, termination, interpretation, enforcement, validity, scope and applicability
`of any such agreement . . . shall be submitted to and determined exclusively by binding
`arbitration.” Id. The court found that “[w]hile in isolation this language may appear to be clear,
`it is inconsistent with the severability clause in section 10, which states that ‘any arbitrator or
`court’ could declare or determine that a provision of the Agreement is invalid or unenforceable.”
`Id. (emphasis in original). “Thus, given the absence of clear and unmistakable language
`delegating the question of arbitrability to the arbitrator,” the court concluded that it must
`adjudicate the plaintiffs’ argument that the arbitration clause was unconscionable and
`unenforceable. Id. at 941. See also Vargas v. Delivery Outsourcing, LLC, No. 15-cv-03408-JST,
`2016 U.S. Dist. LEXIS 32634, at *19 (N.D. Cal. Mar. 14, 2016) (“[D]espite clear
`language delegating arbitrability to the arbitrator, the issue of delegation is made ambiguous by
`the language of the arbitration provision that permits modification of the [ ] Agreement should
`‘a court of law or equity’ hold any provision of the Agreement unenforceable. The Agreement
`cannot be read as a providing a ‘clear and unmistakable’ delegation to arbitrator.”); Baker v.
`Osborne Development Corp., 159 Cal. App. 4th 884, 888–89, 71 Cal. Rptr. 3d 854 (2008)
`(finding that “although one provision of the arbitration agreement stated that issues of
`enforceability or voidability were to be decided by the arbitrator, another provision indicated that
`the court might find a provision unenforceable” and thus since “the arbitration agreement did not
`‘clearly and unmistakably’ reserve to the arbitrator the issue of whether the arbitration agreement
`was enforceable,” the court should adjudicate unconscionability); Ajamian, 203 Cal. App. 4th at
`792 (“As a general matter, where one contractual provision indicates that the enforceability of an
`arbitration provision is to be decided by the arbitrator, but another provision indicates that
`the court might also find provisions in the contract unenforceable, there is no clear and
`unmistakable delegation of authority to the arbitrator.”).
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`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - 7
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 13 of 22
`
`
`
`The fact that Nintendo’s arbitration provision incorporates the AAA rules is not
`dispositive. In Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015), the Ninth Circuit
`“left open the circumstances of unsophisticated parties [ ] and said that it would not … decide
`here the effect if any of incorporating AAA rules … into contracts of any nature between
`unsophisticated parties.” Mikhak, 2016 U.S. Dist. LEXIS 80705, at *9. The Brennan court
`“limited its holding to an arbitration clause between two ‘sophisticated parties’ in that case, an
`experienced attorney and businessman . . . who executed an executive-level employment contract
`and a sophisticated, regional financial institution.” Id. (citing Brennan, 796 F.3d at 1131)
`(quotations omitted). The issue of whether unsophisticated parties “can possess the clear and
`unmistakable evidence of intent to arbitrate” is yet unresolved within the Ninth Circuit, though
`district courts have held that where, as here, there is a lack of sophistication between the parties,
`courts should not presume that the parties clearly and unmistakably delegated arbitrability. Id.
`For example, in Meadows v. Dickey's Barbecue Restaurants (Dickey's), 144 F. Supp. 3d
`1069, 1074 (N.D. Cal. 2015), Dickey’s moved to compel arbitration based on a franchise
`agreement that encompassed “all disputes . . . arising out of or relating to this agreement” and
`“incorporate[d] by reference the commercial rules of the AAA.” The court concluded that it was
`unreasonable to expect that an “inexperienced individual, untrained in the law,” would
`understand that the language of an arbitration agreement provided clear and unmistakable
`evidence of arbitrability. Id. at 1078. The court found that the individual plaintiffs were “each far
`less sophisticated than Dickey’s,” and had to agree to a “complicated, 60-page agreement drafted
`by Dickey’s;” they apparently had no “legal training or experience dealing with complicated
`contracts.” Id. Because these parties were not sophisticated, the court held that the Brennan (and
`Oracle America, Inc. v. Myriad Group A.G., 724 F.3d 1069 (9th Cir. 2013)) rules did not apply
`in this context, and the court reserved the question of arbitrability rather than delegating it to an
`arbitrator. Id. at 1079.
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`OPPOSITION TO NINTENDO’S MOTION
`TO COMPEL ARBITRATION (2:20-cv-1694-TSZ) - 8
` 
`
`TOUSLEY BRAIN STEPHENS PLLC
`1700 Seventh Avenue, Suite 2200
`Seattle, Washington 98101
`TEL. 206.682.5600  FAX 206.682.2992
`
`

`

`Case 2:20-cv-01694-TSZ Document 18 Filed 03/01/21 Page 14 of 22
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`Similarly, in Mikhak v. University of Phoenix, the district court deemed the parties’
`sophistication “critical” to its analysis of whether the delegation clause “clearly and
`unmistakably” demonstrated the parties’ intent to arbitrate arbitrability. 2016 U.S. Dist. LEXIS
`80705, at *13 (N.D. Cal. June 21, 2016). While there was little question that the defendant
`university qualified as a “sophisticated party,” the sophistication of the plaintiff—a professor
`who was a former researcher with multiple graduate degrees, but who lacked experience
`reviewing legal documents or negotiating employment contracts—was “subject to dispute,” it
`was “not certain that [plaintiff] clearly and unmistakably delegated arbitrability.” Id. at *13–15.
`“Absent that evidence, courts should not presume delegation of arbitrability.” Id. at *15. See also
`Tompkins v. 23andMe, Inc.,