Bassett v. Elec. Arts, Inc.

• Decision Date: 23 March 2015
• Docket Number: No. 13–CV–4208 MKB.,13–CV–4208 MKB.
• Citation: 93 F.Supp.3d 95
• Parties: Justin T. BASSETT, on behalf of himself and all others similarly situated, Plaintiff, v. ELECTRONIC ARTS, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

93 F.Supp.3d 95

Justin T. BASSETT, on behalf of himself and all others similarly situated, Plaintiff

v.ELECTRONIC ARTS, INC., Defendant.

No. 13–CV–4208 MKB.

United States District Court, E.D. New York.

Signed March 23, 2015.

Clayton Halunen, Melissa W. Wolchansky, Susan M. Coler, Halunen & Associates, Minneapolis, MN, Kim Richman, Michael Robert Reese, Reese Richman LLP, New York, NY, for Plaintiff.

Kenneth M. Dreifach, Zwillgen, New York, NY, Michele D. Floyd, Sacks Ricketts & Case LLP, San Francisco, CA, for Defendant.

MEMORANDUM & ORDER

MARGO K. BRODIE, District Judge.

Plaintiff Justin T. Bassett filed a complaint on July 24, 2013, against Defendant Electronic Arts, Inc. (“EA”), seeking to certify a nationwide class and a New York sub-class of similarly-situated individuals who purchased certain video games manufactured, advertised, and sold by EA. Plaintiff alleges that EA mislead consumers as to the ability to use EA's online platform to play certain games with other consumers via the Internet, bringing claims for violations of: California's Consumers Legal Remedies Act, California Civil Code § 1750 et seq.; California's False Advertising Law, California Business and Professions Code § 17500 et seq.; California's Unfair Competition Law, California Business and Professions Code § 17200 et seq.; and for breach of express warranty, breach of implied warranty of merchantability, and breach of implied warranty of fitness for a particular purpose. (Compl. ¶¶ 1, 41–89.) Plaintiff, on behalf of the putative New York sub-class, also alleges a violation of New York General Business Law section 249, and unjust enrichment. (Compl. ¶¶ 90–99.) EA moved to compel arbitration and dismiss the action under Section 2 of the Federal Arbitration Act, (“FAA”), 9 U.S.C. § 2, and Rule 12(b)(1) of the Federal Rules of Civil Procedure or, alternatively, to transfer venue to the Northern District of California pursuant to 28 U.S.C. § 1404(a). (Docket Entry No. 27.) The parties conducted relevant discovery prior to filing the motion. (Docket Entry Nos. 8, 17.) The motion was referred to Magistrate Judge Steven M. Gold for a report and recommendation.

By Report and Recommendation (“R & R”) dated February 9, 2015, Judge Gold recommended that the Court: (1) grant EA's motion to compel arbitration; (2) stay this action pending arbitration pursuant to Section 3 of the FAA; and (3) deny EA's motion to transfer venue without prejudice to renewal if there is to be further litigation following arbitration. (Docket Entry No. 35.) On March 5, 2015, Plaintiff filed objections. (Docket Entry No. 39.) On March 19, 2015, Defendant filed a response to Plaintiff's objections, arguing that the Court should adopt the R & R. (Docket Entry No. 40.) No other objections were filed. For the reasons set forth below, the Court adopts the R & R in its entirety.

I. Background

The following facts are taken from the Complaint, the Declaration of Dan Windrem, Producer of EA Tech and Global Online Services at EA, filed in support of EA's motion, (“Windrem Decl.,” annexed to Def. Mot. to Compel, Docket Entry No. 27–3), and the exhibits annexed thereto.¹ Only the facts necessary to decide the instant motion are included below.

EA is in the business of manufacturing, advertising, and distributing video games in the form of discs compatible with gaming console systems such as Xbox, PlayStation and Wii. (Compl. ¶¶ 15–21.) EA also offers additional services with certain of its video games, which allow video game consumers to interact and play the games with one another via the Internet (“EA Online”). (Id. ¶ 1.)

Plaintiff was a resident of Brooklyn, New York and a consumer of EA's video games. (Id. ¶ 14.) Prior to the commencement of the instant action, Plaintiff purchased several video games at retail prices. (Id. ) Plaintiff alleges that he “relied upon the representation that these EA games were enabled for online play in deciding to purchase the Products.” (Id. ) On the back of each box for the various games Plaintiff alleged he purchased, in small but bolded font, was a notice that access to EA Online required registration and a subscription. (See Copies of game packaging, annexed to Windrem Decl. as Exs. 1–8.)² The box further indicated that terms and conditions of use for EA Online products could be found at www.ea. com. (Exs. 1–8) For at least some of the games, a similar notice was included inside the packaging as well. (E.g., Ex. 1 at 11; Ex. 2 at 11; Ex. 3 at 7; Ex. 4 at 7; Ex. 5 at 7; Ex. 6 at 6; Ex. 7 at 7.)

On at least two occasions, on September 27, 2011 and November 21, 2012, Plaintiff activated EA Online services for FIFA 12 and FIFA 13, two of EA's video games. (Windrem Decl. ¶ 29; Account Notes for justintbasset@gmail.com, annexed to Windrem Decl. as Ex. 19.) In order to activate EA Online, Plaintiff would have had to go through the following process. First, he had to register for an EA account. (Windrem Decl. ¶ 24.) The registration process required Plaintiff to affirmatively assent to EA's terms of service (“Terms of Service”) and privacy policy. (Id. ¶ 25.) Registrants are typically presented with a screen prompting them to read the Terms of Service and privacy policy carefully, noting that the documents may affect their rights, and presenting links by which a registrant may access the full text of each agreement. (Id.; see also Registration Flow Screenshot, annexed to Windrem Decl. as Ex. 18 (providing screen shots from registration process for Madden NFL 13, another EA video game).) Plaintiff would have been presented with four buttons, two of which are the links to the terms of service and privacy policy, one which reads “I Do Not Accept,” and one which reads “I Have Read And Accept Both Documents.” (Windrem Decl. ¶ 25.) If the registrant, Plaintiff in this case, does not click the button reading “I ... Accept ...” (hereinafter, “I Accept”), the registration process stops and the online features cannot be activated. (Id. ¶ 26.) Plaintiff clicked “I Accept,” and activated the online service.

When the Terms of Service were updated, Plaintiff was presented with the updated version and again asked to assent. (Id. ¶¶ 27, 30.) In a similar process to the initial registration, consumers who already have access to EA Online are typically presented with the new version of the policy and must click another “I Accept”-type button. (Id. ¶ 27.) Consumers cannot continue to use EA Online after the Terms of Service have been updated without affirmatively consenting to the new version. (Id. ) Records produced by EA indicate that Plaintiff had affirmatively accepted both the version dated August 25, 2011, and the current operative version of the Terms of Service. (Id. ¶ 30; Account Management Tool for justintbassett@gmail.com, annexed to Windrem Decl. as Ex. 20 (showing “legal documents accepted”).)

The two versions of Terms of Service at issue are substantially similar, in relevant part. (See generally Terms of Service for Xbox users, effective September 4, 2012 (“Sept.2012 Terms”), annexed to Windrem Decl. as Ex. 12); Terms of Service for Xbox users, dated August 25, 2011 (“Aug.2011 Terms”), annexed to Windrem Decl. as Ex. 14; Windrem Decl. ¶¶ 18, 20, 30 (identifying relevant versions of Terms of Service, noting Sept. 2012 Terms are currently effective for Xbox users, and Aug. 2011 Terms were effective until November 28, 2011 version implemented). Both contain dispute resolution procedures to which both the consumer and EA agree to be bound. (Sept.2012 Terms § 20; Aug.2011 Terms § 20.) The section cautions readers to “PLEASE READ THIS CAREFULLY. IT AFFECTS YOUR RIGHTS.” (Sept.2012 Terms § 20; Aug.2011 Terms § 20.) It begins by explaining that the agreement covers all consumers, and binds both parties, “to the fullest extent allowable by law,” with exceptions for certain consumers residing in other countries. (Sept.2012 Terms § 20; Aug.2011 Terms § 20.) The process provides that a consumer and EA will first attempt to negotiate any dispute informally, following a written notice of dispute from one party to the other. (Sept.2012 Terms § 20A; Aug.2011 Terms § 20A.) To the extent such informal negotiation is unsuccessful:

either [party] may elect to have the [d]ispute finally and exclusively resolved by binding arbitration. Any election to arbitrate by one party shall be final and binding on the other. YOU UNDERSTAND THAT BY THIS PROVISION, YOU AND EA ARE FOREGOING THE RIGHT TO SUE IN COURT AND HAVE A JURY TRIAL.... You and EA may litigate in court to compel arbitration, to stay proceeding pending arbitration, or to confirm, modify, vacate or enter judgment on the award entered by the arbitrator.

(Sept.2012 Terms § 20B; Aug.2011 Terms § 20B (capitalization in originals).) The agreements define the scope of arbitration broadly, covering “any and all disputes” except claims to enforce or protect intellectual property rights, claims relating to allegations of theft, piracy, or unauthorized use, and small claims actions. (Sept.2012 Terms § 20; Aug.2011 Terms § 20.) The arbitration provision also contains the following clause:

Notwithstanding any provision in this Agreement to the contrary, we agree that if EA makes any future change to this arbitration provision ... you may reject any such change by sending us written notice within 30 days of the change to the Arbitration Notice Address provided above. By rejecting any future change, you are agreeing that you will arbitrate any dispute between us in accordance with the language of this provision.

(Sept.2012 Terms § 20G; Aug.2011 Terms § 20G.) In an earlier provision in the introduction of the document, the Terms of Service provide that:

You agree to check terms.ea.com periodically for new information and terms that govern your use of EA Services. EA may modify the Terms of Service at any time. Revisions to terms affecting existing EA Services shall be effective thirty (30) days after posting at terms.ea.com. Terms for new EA Services

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