Hastings v. Unikrn, Inc.

• Decision Date: 30 March 2020
• Docket Number: No. 79499-0-I,79499-0-I
• Parties: JOHN HASTINGS, individually and on behalf of all others similarly situated, Respondent, v. UNIKRN, INC., a Delaware corporation; UNIKRN BERMUDA, LTD., a Bermuda corporation; RAHUL SOOD, an individual, KARL FLORES, an individual; and DOES 1-10, Appellants.
• Court: Washington Court of Appeals

JOHN HASTINGS, individually and on behalf of all others similarly situated, Respondent, v. UNIKRN, INC., a Delaware corporation; UNIKRN BERMUDA, LTD.,

a Bermuda corporation; RAHUL SOOD, an individual, KARL FLORES,

an individual; and DOES 1-10, Appellants.

No. 79499-0-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

March 30, 2020

UNPUBLISHED OPINION

DWYER, J. — This is a correction of error case. As such, it results in an unpublished opinion. In a correction of error case, we confine our analysis to the issues actually raised and briefed by the parties. In circumstances in which we are not confident that the parties have raised and briefed all pertinent issues, resolution by an unpublished opinion is warranted. This is one such case. Trial courts should exercise great care if asked to apply the result reached herein to any other dispute.

John Hastings filed a putative class action lawsuit against Unikrn, Inc., Unikrn Bermuda, Ltd. and certain Unikrn, Inc. employees in their individual capacities (collectively Unikrn) alleging that they violated federal securities law when selling him and other investors digital tokens called UnikoinGold Tokens. In response, Unikrn moved to compel arbitration, asserting that Hastings and all other purchasers had agreed to terms and conditions when purchasing UnikoinGold Tokens that required arbitration of any dispute arising from the sale. Unikrn now appeals from the denial of its motion, asserting that the trial court erred when it concluded that Hastings and those similarly situated did not ever agree to arbitrate any dispute arising out of the sale of the UnikoinGold Tokens. Because Unikrn fails to establish error in the trial court's ruling, we affirm.

I

Unikrn, Inc., a Delaware corporation with its principal place of business in Seattle, runs an online "esports" entertainment and gambling platform. Unikrn, Inc. is the sole owner and shareholder of its subsidiary, Unikrn Bermuda, Ltd., a Bermuda corporation with its principal place of business in Seattle. Unikrn Bermuda, Ltd. has no employees of its own, and all its business has been conducted through Unikrn, Inc.'s officers, directors, and agents, including Unikrn, Inc.'s chief executive officer Rahul Sood and chief marketing officer Karl Flores.

In 2017, Unikrn Bermuda, Ltd. conducted an online public sale of digital tokens, known as UnikoinGold Tokens, that could be used on Unikrn's websites for playing, wagering on, and watching esports. Unikrn Bermuda, Ltd., through Unikrn, Inc.'s employees, established a website where users could register for the token sale and purchase UnikoinGold Tokens. This website contained several web pages requiring potential users to establish a personal account, enter personal information, and verify their contact information. One of the web pages (the "address verification web page") required users to type in a physical street address. The address verification web page displayed a checkbox locatednext to an affirmation statement underneath the fields requiring users to type in their address. The affirmation statement read "I have read and understood Unikrn Token sale Terms of Service and the Privacy Policy, and hereby agree to them."¹ The phrase "Terms of Service" contained an embedded hyperlink to a document entitled "UNIKRN BERMUDA LTD TERMS OF TOKEN SALE." The first section of this document explicitly stated the following: "PLEASE READ THESE TERMS OF TOKEN SALE CAREFULLY. NOTE THAT SECTION 15 CONTAINS A BINDING ARBITRATION CLAUSE AND CLASS ACTION WAIVER, WHICH, IF APPLICABLE TO YOU, AFFECT YOUR LEGAL RIGHTS. IF YOU DO NOT AGREE TO THESE TERMS OF SALE, DO NOT PURCHASE TOKENS."

Users were required to fill in their address and to check the box next to the affirmation statement before the web page would permit users to click the "SAVE YOUR PROFILE" button to proceed with registering for the token sale. If a user did not check the box next to the affirmation statement but nevertheless attempted to proceed with the sale, the user was prevented from doing so and a new line of text would appear above the "SAVE YOUR PROFILE" button stating, "You must agree with Terms of service before creating your account."²

On September 23, 2017, John Hastings, a resident of the state of Nevada, accessed Unikrn Bermuda, Ltd.'s token sale website and purchased UnikoinGold Tokens. Then, approximately a year later, Hastings filed a putative class action lawsuit against Unikrn, Inc., Unikrn Bermuda, Ltd., and Unikrn, Inc. employeesincluding Rahul Sood and Karl Flores, in King County Superior Court, alleging multiple violations of federal securities laws.

Unikrn subsequently moved to compel arbitration and stay judicial proceedings pursuant to the terms of the "UNIKRN BERMUDA LTD TERMS OF TOKEN SALE" arbitration provision. In response, Hastings disputed whether he had ever agreed to the terms of the "UNIKRN BERMUDA LTD TERMS OF TOKEN SALE."

The trial court concluded that it could not rule, as a matter of law, for either party due to the presence of genuine disputes of material fact about whether Hastings ever agreed to the "UNIKRN BERMUDA LTD TERMS OF TOKEN SALE." Thereafter, the trial court conducted an expedited evidentiary hearing to determine whether Hastings ever agreed to be bound by the terms of the "UNIKRN BERMUDA LTD TERMS OF TOKEN SALE," issued findings of fact and conclusions of law, and denied Unikrn's motion to compel arbitration. After Unikrn filed a motion to reconsider, the trial court issued amended findings of fact and conclusions of law, but did not vacate its order denying Unikrn's motion to compel arbitration.

Unikrn appealed, and a commissioner of this court granted Unikrn's subsequent motion to stay proceedings in the trial court pending the outcome of this appeal.

II

Unikrn first contends that we should review the trial court's order deferring its ruling on Unikrn's motion to compel arbitration until after it conducted anevidentiary hearing. Because such an order was not appealable prior to the completion of the evidentiary hearing and is not reviewable now that the evidentiary hearing has been completed, we decline to consider Unikrn's contentions regarding this order.

RAP 2.2(a) sets forth the superior court decisions from which a party may appeal as a matter of right. Johnson v. Rothstein, 52 Wn. App. 303, 305, 759 P.2d 471 (1988). Of the decisions included in this rule, only two could be thought to apply to the circumstances of this case:

(1) Final Judgment. The final judgment entered in any action or proceeding, regardless of whether the judgment reserves for future determination an award of attorney fees or costs.

. . . .

(3) Decision Determining Action. Any written decision affecting a substantial right in a civil case that in effect determines the action and prevents a final judgment or discontinues the action.

RAP 2.2(a).

Plainly, the order deferring the court's ruling on Unikrn's motion to compel arbitration was neither a final judgment nor a decision determining the action, as it required an evidentiary hearing and did not grant or deny the motion. Thus, the trial court's order deferring its ruling pending an evidentiary hearing was not appealable. However, once the trial court held an evidentiary hearing and denied the motion to compel arbitration, Unikrn had an order from which it could appeal. Hill v. Garda CL Nw., Inc., 179 Wn.2d 47, 54, 308 P.3d 635 (2013). The question then becomes whether, as part of the appeal from the denial of its motion to compel arbitration, the order deferring the superior court's ruling on the motion and requiring an evidentiary hearing is reviewable.

The answer is no. Unikrn seeks, following an evidentiary hearing resolving disputed questions of fact, to have us review a decision that determined that such a hearing was required. This request is nothing more than a repackaging of an argument long ago rejected in Washington: that an appellate court should, when considering an appeal following a trial, review the denial of a pretrial summary judgment motion that was premised on the trial court's determination of the presence of material disputed questions of fact. See Adcox v. Children's Orthopedic Hosp. & Med. Ctr., 123 Wn.2d 15, 35 n.9, 864 P.2d 921 (1993) ("When a trial court denies summary judgment due to factual disputes, as here, and a trial is subsequently held on the issue, the losing party must appeal from the sufficiency of the evidence presented at trial, not from the denial of summary judgment." (citing Johnson v. Rothstein, 52 Wn. App. 303, 759 P.2d 471 (1988))); Johnson, 52 Wn. App. at 306 ("[A]n order denying summary judgment, based upon the presence of material, disputed facts, will not be reviewed when raised after a trial on the merits."). We therefore decline to review the trial court's order herein deferring its ruling on the motion to compel arbitration, as it was premised on the court's ruling that disputed questions of fact were in need of resolution.

III

Unikrn's primary contention on appeal is that the trial court erred when it denied the motion to compel arbitration by finding that Hastings never assented to the terms of the "UNIKRN BERMUDA LTD TERMS OF TOKEN SALE." This is so, Unikrn asserts, because the record establishes that Hastings was oninquiry notice of the "UNIKRN BERMUDA LTD TERMS OF TOKEN SALE" and agreed to that document's stated terms by checking the box on the address verification web page affirming that he had "read and understood Unikrn Token sale Terms of Service and the Privacy Policy, and hereby agree[d] to them." In response, Hastings contends that the trial court's ruling is supported by three findings of fact that are all supported by substantial evidence: (1) that a reasonable Internet user would not have understood that the phrase "Terms of Service" was hyperlinked to a contract requiring review and assent (Finding of Fact 19), (2) that the affirmation statement on the website did not require...