Franks v. SidePrize LLC

Background

Justin Franks and Jack Bacigalupi brought a class action against SidePrize LLC, which does business as PrizePicks. The complaint alleges that sports betting is illegal in California and that PrizePicks’ representations that its contests were legal and available in California induced the plaintiffs to gamble on its platform. The plaintiffs alleged claims under California’s Unfair Competition Law and Consumer Legal Remedies Act, seeking only equitable relief.

To participate, users had to create an account and agree to PrizePicks’ Terms of Service. The terms included a forum-selection clause requiring “any action at law or in equity arising out of or relating to these Terms, or your use or non-use of the Services” to be filed only in state or federal courts located in Fulton County, Georgia. Users also agreed to personal jurisdiction in those courts. The plaintiffs acknowledged creating accounts and agreeing to the terms, although they said they did not review them or know what they were agreeing to at the time.

SidePrize moved to transfer the case to the Northern District of Georgia under 28 U.S.C. § 1404(a), and separately moved to dismiss. SidePrize asked the court to decide the transfer motion first.

Forum-Selection Clause

The court held that the forum-selection clause was valid. The plaintiffs argued that the entire Terms of Service were illegal and void because California law criminalizes betting or wagering on sports contests. The court rejected that argument at this stage because the validity of the contract as a whole is different from the validity of the forum-selection clause. The plaintiffs had not specifically shown that the forum-selection clause itself was invalid.

The plaintiffs also argued that enforcing the clause could violate the Consumer Legal Remedies Act’s rule against waiving consumer rights. They pointed to the Terms of Service’s Georgia choice-of-law provision and argued that Georgia consumer-protection law could limit class relief and reduce their potential recovery. The court concluded that relying on the choice-of-law provision alone did not establish that the forum-selection clause was invalid. A federal court in Georgia would apply the choice-of-law rules of the state from which the case was transferred, and the plaintiffs could present their choice-of-law arguments there.

The court also rejected the plaintiffs’ argument that California public policy required the case to remain in California. It distinguished California cases involving transfers between state courts, explaining that a transfer between federal courts did not create the same concern because the transferee federal court could conduct the relevant choice-of-law analysis. The court further found that the California statute allowing certain consumer actions to be filed where a transaction occurred did not create a special right to litigate in the Northern District of California.

Public-Interest Factors

Because the forum-selection clause was valid, the court disregarded the plaintiffs’ choice of forum and private convenience considerations and considered only public-interest factors.

The court found that California had a heightened interest because the case could concern whether a major business venture was operating illegally in California. This factor therefore weighed slightly against transfer. The court found the governing-law factor roughly neutral because federal courts outside California are capable of applying California law, even though no court had yet addressed the legality of sports betting in California.

The parties agreed that the jury-burden factor was at most neutral because the plaintiffs sought only equitable relief. The court found that court congestion slightly favored transfer because the Northern District of California was more congested than the Northern District of Georgia. The factor concerning the costs of resolving disputes unrelated to the forum was mostly neutral, including because relevant evidence for SidePrize’s online business was likely available in either district.

The court concluded that the public-interest factors did not overwhelmingly disfavor transfer.

Disposition

Judge Charles R. Breyer granted PrizePicks’ motion to transfer the case to the Northern District of Georgia. The opinion does not state a ruling on SidePrize’s separate motion to dismiss.