Case 2:20-cv-01694-TSZ Document 21 Filed 04/29/21 Page 1 of 9
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`A.C., a minor by and through his
`guardian, MARIA CARBAJAL,
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`Plaintiff,
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`NINTENDO OF AMERICA INC.,
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`C20-1694 TSZ
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`ORDER
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`Defendant.
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`THIS MATTER comes before the Court on the Motion to Compel Arbitration
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`(”Motion”), docket no. 16, brought by Defendant Nintendo of America Inc. (“Nintendo”).
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`Having reviewed all papers filed in support of, and in opposition to, the Motion, the
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`Court enters the following order GRANTING the Motion.
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`Background
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`In March 2017, Nintendo made a new videogame console, the Nintendo Switch
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`(“Switch”), available for purchase. Kiel Decl. at ¶ 2 (docket no. 17). The standard
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`packaging on the Switch informs purchasers of Nintendo’s End-User License Agreement
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`(“EULA”). Id. at ¶ 7. Specifically, the package contains language stating that “[b]y
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`using the Nintendo Switch system, you accept the license agreement available at
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`Case 2:20-cv-01694-TSZ Document 21 Filed 04/29/21 Page 2 of 9
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`support.nintendo.com/Switch/license.” Id. Users are also informed of the EULA on the
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`Switch itself when they power it on for the first time. Id. at ¶ 9; Ex. B to Kiel Decl.
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`(docket no. 17 at 10–11). This screen states that “[b]y selecting the Accept button, you
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`acknowledge that you have read and agree to be bound by the End-User License
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`Agreement. If you do not agree, stop using this system.” Id. at 10. The screen also
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`contains a hyperlink to the EULA. Id. Users must select the Accept button to advance to
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`the next screen and use the Switch for gaming. Kiel Decl. at ¶ 19. If a User does not
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`want to accept the EULA in its entirety, he or she can return the Switch for a full refund.
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`Ex. A to Kiel Decl. (“EULA”), docket no. 17 at 7.
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`The EULA contains an arbitration provision that, in relevant part, provides as
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`follows:
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`7. Dispute Resolution; Binding Individual Arbitration; Class Action
`Waiver.
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` . . 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”).
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`Id. Users may opt out of the arbitration provision by providing written notice to
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`Nintendo within 30 days of purchase. Id. at 8.
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`In March 2017, Plaintiff A.C., a minor, purchased a Switch using his own money.
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`Complaint at ¶ 17 (docket no. 1). After a few months, A.C. alleges that the Joy-Con
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`controllers that came with his Switch began displaying a defect known as “drifting.” Id.
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`at ¶ 18. The “drifting” defect occurs when the characters or items move without user
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`ORDER - 2
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`Case 2:20-cv-01694-TSZ Document 21 Filed 04/29/21 Page 3 of 9
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`command or manual operation of the Joy-Con controller. Id. at 3. Based on this defect,
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`A.C. filed a putative class action complaint against Nintendo. Nintendo then moved to
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`compel arbitration based on the EULA’s arbitration provision.
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`Discussion
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`A. Federal Arbitration Law
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`The parties agree that the Federal Arbitration Act (“FAA”) applies. Motion at 7;
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`Response (docket no. 18 at 3). Under the FAA, “before referring a dispute to an
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`arbitrator, the court determines whether a valid arbitration agreement exists.” Henry
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`Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 530 (2019). If the parties
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`entered into a valid agreement to arbitrate, and the agreement delegates threshold
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`arbitrability questions to an arbitrator by “clear and unmistakable” evidence, all other
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`arbitrability issues, including whether the agreement covers a particular controversy,
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`must be determined by an arbitrator. Id. at 529–30.
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`B. Capacity to Contract
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`A.C. asserts that the parties never formed a valid arbitration agreement because he, a
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`minor, lacked the capacity to contract. Minors, however, have the capacity to enter into
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`contracts subject to disaffirmance under both California and Washington law.1 Cal. Fam.
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`Code § 6700 (“[A] minor may make a contract in the same manner as an adult, subject to
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`1 A.C. contends that California law applies to the issue of contract formation because he was a
`resident of California at the time of the purchase. Response (docket no. 18 at 11–14). The
`Court, however, need not decide this issue because the laws of both California and Washington
`(where Nintendo’s headquarters is located) provide that a minor may enter into contracts subject
`to disaffirmance.
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`ORDER - 3
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`Case 2:20-cv-01694-TSZ Document 21 Filed 04/29/21 Page 4 of 9
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`the power of disaffirmance.”); RCW 26.28.030 (“A minor is bound, not only by contracts
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`for necessaries, but also by his or her other contracts, unless he or she disaffirms them
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`within a reasonable time after he or she attains his or her majority.”).
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`A.C. cites section 1556 of the California Civil Code to argue that minors lack the
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`capacity to form contracts under California law. Response at 13. The Civil Code,
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`however, makes clear that “[t]he capacity of a minor to contract is governed by Division
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`11 (commencing with Section 6500) of the Family Code.” Cal. Civ. Code § 1557.
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`Moreover, California case law, including the cases cited by A.C., confirms that minors
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`may enter into contracts on most topics subject to disaffirmance. Berg v. Traylor,
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`148 Cal. App. 4th 809, 818 (2007) (citing Ballard v. Anderson, 4 Cal. 3d 873, 878
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`(1971)); Lopez v. Kmart Corp., No. 15-cv-01089-JSC, 2015 WL 2062606, at *4 (N.D.
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`Cal. May 4, 2015) (“California law plainly provides that a minor has the capacity to
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`contract, with the exception of those contracts specifically prohibited.”). The Court
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`concludes that A.C. had the capacity to form a contract under both California and
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`Washington law.
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`C. Disaffirmance
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`A.C. contends that even if the parties formed an agreement to arbitrate, that
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`agreement is not valid because he now disaffirms it. The Court does not reach this issue,
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`however, because, as it does not relate to contract formation, the Court determines that
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`the parties agreed to have an arbitrator decide it. See Three Valleys Mun. Water Dist. v.
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`E.F. Hutton & Co., Inc., 925 F.2d 1136, 1140 (9th Cir. 1991) (noting that where there is a
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`delegation provision, issues relating to whether a contract is voidable, such as infancy of
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`ORDER - 4
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`Case 2:20-cv-01694-TSZ Document 21 Filed 04/29/21 Page 5 of 9
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`a party, are decided by an arbitrator); Prima Paint Corp. v. Flood & Conklin Mfg. Co.
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`388 U.S. 395, 403–04 (1967).
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`If a court determines that the parties formed a valid arbitration agreement, it then
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`turns to the question of whether the arbitration agreement contains a provision delegating
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`all other arbitration-related issues, including the scope of the arbitration agreement, to an
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`arbitrator. See Schein, 139 S. Ct. at 529–30. If an arbitration provision contains a
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`delegation provision assigning arbitrability questions to an arbitrator by “clear and
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`unmistakable” evidence, the court’s inquiry ends. Chiron Corp. v. Ortho Diagnostic Sys.,
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`207 F.3d 1126, 1130 (9th Cir. 2000) (concluding that the FAA mandates “that district
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`courts shall direct the parties to proceed to arbitration on issues as to which an arbitration
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`agreement has been signed”). The American Arbitration Association (“AAA”) rules state
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`that an arbitrator has the power to determine the scope of the arbitration agreement and
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`the arbitrability of any claim or counterclaim. See Brennan v. Opus Bank,
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`796 F.3d 1125, 1130 (9th Cir. 2015); Willis v. Fitbit, Inc., No. 19-cv-01377-DMS, 2020
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`WL 417943, at *3 (S.D. Cal. Jan. 27, 2020). Reference to the AAA rules in an arbitration
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`agreement constitutes “clear and unmistakable evidence” that the parties agreed to
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`delegate all other issues to the arbitrator. Brennan , 796 F.3d at 1130; see also Three
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`Valleys Mun. Water Dist., 925 F.2d at 1140.
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`A.C. asserts that Brennan’s holding does not apply here because A.C. is not a
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`“sophisticated party.” Response at 8–9. In Brennan, the Ninth Circuit stated that
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`although its holding was limited to disputes involving sophisticated parties, it “should not
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`be interpreted to require that the contracting parties be sophisticated” and “does not
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`ORDER - 5
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`Case 2:20-cv-01694-TSZ Document 21 Filed 04/29/21 Page 6 of 9
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`foreclose the possibility that this rule could also apply to unsophisticated parties.” 796
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`F.3d at 1130. Since Brennan, “the greater weight of authority . . . concludes that
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`Brennan’s holding also applies to disputes involving non-sophisticated parties.” Chen v.
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`Sierra Trading Post, Inc., No. 2:18-cv-1581-RAJ, 2019 WL 3564659, at *4 (W.D. Wash.
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`Aug. 6, 2019) (summarizing cases); cf. G.G. v. Valve Corp., 799 F. App’x 557, 558 (9th
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`Cir. 2020) (determining that, under Washington law, sophistication of teenage plaintiffs
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`did not change conclusion that they had clearly and unmistakably agreed to arbitrate
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`questions of arbitrability because the arbitration agreement incorporated the AAA rules).
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`D. Unconscionability of the Delegation Provision
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`Finally, A.C. argues that the delegation provision is unconscionable. “Because a
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`court must enforce an agreement that . . . clearly and unmistakably delegates arbitrability
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`questions to the arbitrator, the only remaining question is whether the particular
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`agreement to delegate arbitrability . . . is itself unconscionable.” Brennan, 796 F.3d at
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`1132 (citing Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010)).
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`The parties dispute whether California or Washington law applies to the analysis
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`of whether the delegation provision is unconscionable. “When parties dispute choice of
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`law, there must be an actual conflict between the laws or interests of Washington and the
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`laws or interests of another state before Washington courts will engage in a conflict of
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`laws analysis.” Seizer v. Sessions, 940 P.2d 261, 264 (1997). An actual conflict exists
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`“[w]hen the result of the issues is different under the law of the two states.” Id. Here, no
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`actual conflict exists because the Court would reach the same result—namely that the
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`delegation provision is not unconscionable—under both California and Washington law.
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`ORDER - 6
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`Case 2:20-cv-01694-TSZ Document 21 Filed 04/29/21 Page 7 of 9
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`See Wiseley v. Amazon.com, Inc., 709 F. App’x. 862, 863 (9th Cir. 2017) (noting that
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`“Washington’s and California’s . . . protections against unconscionable contracts appear
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`to be substantially similar”). Therefore, the Court applies Washington law to the
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`unconscionability analysis.
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`Under Washington law, a contract can be procedurally or substantively
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`unconscionable. Adler v. Fred Lind Manor, 103 P.3d 773, 781 (2004). A contract is
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`procedurally unconscionable when there is a lack of a meaningful choice under all the
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`circumstances. Id. A contractual clause is substantively unconscionable when it is “one-
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`sided or overly harsh.” Adler, 153 Wn.2d at 344 (citation omitted).
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`A.C. asserts that the delegation provision is procedurally unconscionable because
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`Nintendo presented it on a “take-it-or-leave-it basis” and did not attach the AAA rules.
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`Response (docket no. 18 at 10). The adhesive nature of a contract, however, does not
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`render it procedurally unconscionable under Washington law. Zuver v. Airtouch
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`Commc’n, Inc., 153 Wn.2d 293, 304–05 (2004). Here, A.C. had a meaningful choice to
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`accept the delegation provision, to opt out of the arbitration clause (including the
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`delegation provision), or to reject the entire EULA and return his Nintendo Switch. See
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`EULA at 7–8. Further, failure to attach the AAA rules did not deprive A.C. of a
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`meaningful choice because the following clause provided the website for accessing the
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`AAA rules and contact information. See id.
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`A.C. also argues that the delegation provision is substantively unconscionable
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`because the AAA Commercial Arbitration rules put him at a disadvantage; A.C. also
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`argues that the intellectual property carve-out clause lacks mutuality because Nintendo is
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`ORDER - 7
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`more likely to bring intellectual property claims. Response at 10–11. Regarding the
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`AAA Commercial Arbitration rules, A.C. does not explain how those rules disadvantage
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`him and, even so, the AAA Consumer Rules apply here. See EULA at 7. Further,
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`whether Nintendo is more likely to bring intellectual property claims is immaterial
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`because, under Washington law, a provision giving only one party the option of requiring
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`arbitration is not substantively unconscionable. Satomi Owners Ass’n v. Satomi, LLC,
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`167 Wn.2d 781, 815–16 (2009).2 The Court concludes that the delegation provision is
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`not unconscionable.
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`Conclusion
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`For the foregoing reasons, the Court ORDERS:
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`(1) Defendant’s Motion, docket no. 16, is GRANTED;
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`(2)
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`The Court STAYS the proceedings pending the outcome of arbitration
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`pursuant to 9 U.S.C. § 3. See Ekin v. Amazon Servs., LLC, No. C14-0244-JCC, 2015
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`WL 11233144, at *1 (W.D. Wash. Feb. 10, 2015);
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`2 As previously stated, the Court would reach the same conclusion under California law. Under
`California law, the adhesive nature of a contract “would give rise to a low degree of procedural
`unconscionability at most.” Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1261–62 (9th Cir.
`2017). California law also does not require a party to attach the AAA rules to a contract that
`incorporates them by reference. Id. at 1262. Regarding substantive unconscionability, Nintendo
`being more likely to bring intellectual property claims is not unconscionable because California
`law gives Nintendo “an extra ‘margin of safety’ based on legitimate business needs.” See
`Tompkins v. 23andMe, Inc., 840 F.3d 1016, 1031 (9th Cir. 2016); see also Wiseley, 709 F.
`App’x. at 865.
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`ORDER - 8
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`Case 2:20-cv-01694-TSZ Document 21 Filed 04/29/21 Page 9 of 9
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`(3)
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`The parties are DIRECTED to file a Joint Status Report within fourteen
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`(14) days after the completion of arbitration or by December 31, 2021, whichever occurs
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`earlier; and
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`(4)
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`The Clerk is directed to send a copy of this Order to all counsel of record.
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`IT IS SO ORDERED.
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`Dated this 29th day of April, 2021.
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`A
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`Thomas S. Zilly
`United States District Judge
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`ORDER - 9
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