Noel v. Roblox Corporation

Background

Raymond and Laura Noel brought a proposed class action against Roblox Corporation on behalf of themselves and others. The opinion states that their minor children regularly use Roblox. The complaint alleges six claims: violations of California’s Consumer Legal Remedies Act, California’s Unfair Competition Law, California’s False Advertising Law, fraudulent concealment, fraudulent misrepresentation, and unjust enrichment.

The complaint alleges that Roblox’s platform encourages children to spend extended periods playing, represents the platform as safe and educational, and advertises game development as a meaningful money-making opportunity. It also alleges that children can earn Robux, Roblox’s digital currency, but face restrictions on converting earned Robux into U.S. dollars. The Noels allege that they spent money on Robux for their children and would not have done so had they known about the alleged exploitation and other conditions on the platform.

Motions

Roblox moved to compel arbitration and, alternatively, to dismiss the complaint. Roblox also moved to seal certain information. The Noels moved for leave to file an amended complaint.

Roblox relied on arbitration language in its Terms of Use and on language appearing on certain Robux gift cards and the gift-card redemption webpage. The arbitration provision stated that covered disputes would be resolved through individual binding arbitration rather than in court and that users would waive participation in class actions or class arbitrations.

The Noels stated that they had never seen, agreed to, or consented to the Roblox Terms of Use. They said their children received several gift cards as gifts and that they did not recall whether they purchased the particular cards Roblox identified as having been redeemed on December 22, 2023, January 14, 2024, and February 14, 2024. The Noels also stated that their children generally entered the gift-card codes themselves, although the children sometimes requested assistance.

Analysis of Arbitration

The court explained that arbitration depends on an agreement between the parties. Under the Federal Arbitration Act, when the formation of an arbitration agreement is disputed, the court must resolve that factual issue before compelling arbitration. The court applied the summary-judgment standard, meaning Roblox had to show that no genuine dispute existed about whether an arbitration agreement was formed, while the evidence was viewed in the Noels’ favor.

Applying California contract law, the court held that Roblox had not shown as a matter of law that the Noels mutually assented to the Terms of Use or the arbitration agreement. Roblox had not established as an undisputed fact that the Noels purchased the specific gift cards containing the relevant language. The court also found that the record did not establish when or how the Noels assisted their children with gift-card redemption, or that the Noels themselves accepted the arbitration provision through those redemptions.

Because factual disputes remained about whether an arbitration agreement was formed, the court denied Roblox’s motion to compel arbitration without prejudice. The court stated that the case would move to discovery. After discovery, the parties may brief whether the evidence establishes formation of an arbitration agreement as a matter of law. If a genuine factual dispute remains, the court stated that it would proceed to a trial on whether an arbitration agreement was made.

Other Rulings

The court found good cause and compelling reasons to seal the minor children’s Roblox usernames and account numbers, and it granted Roblox’s motion to seal.

The court denied Roblox’s motion to dismiss without prejudice pending resolution of whether Roblox had an enforceable arbitration agreement with the Noels. The court also denied the Noels’ motion for leave to amend without prejudice, for the reasons stated at oral argument.

Disposition

Judge Jacquelyn Corley granted Roblox’s motion to seal. She denied Roblox’s motion to compel arbitration and motion to dismiss without prejudice, and denied the Noels’ motion for leave to amend without prejudice. The order stated that discovery would address the formation of any arbitration agreement and resolved docket entries 25, 26, 28, and 39.