Ramirez v. Electronic Arts, Inc.

Background

Kevin Ramirez brought a proposed class action against Electronic Arts Inc. (EA). He alleged that EA’s Ultimate Team Packs feature, which appears in several EA games, qualifies as an illegal slot machine or device under California Penal Code § 330(d). His complaint asserted three claims: violation of California’s Unfair Competition Law, violation of the California Consumer Legal Remedies Act, and unjust enrichment. He also sought relief that would require EA to modify its games to prevent users from gambling through Ultimate Team Packs or similar features.

Ramirez had owned and played EA’s FIFA game since 2011 and Madden NFL since 2013. To access the games’ full features, including Ultimate Team Packs, he had to affirmatively accept EA’s User Agreement. The agreement included an arbitration provision covering disputes arising from or relating to the agreement, EA’s services and marketing, or the relationship between the user and EA. It also required claims to be brought only individually and not as part of a class or representative action.

Arbitration agreement

The court found that EA provided sufficient evidence that Ramirez knowingly accepted the User Agreement. Before proceeding, users received a notice stating that using EA services meant agreeing to the arbitration agreement and class-action waiver. Users could scroll through the agreement, including the arbitration provision, before clicking the acceptance button. Ramirez did not dispute that he accepted the User Agreement or that the arbitration provision covered his claims.

The agreement incorporated the rules of the American Arbitration Association (AAA). Those rules give an arbitrator authority to decide questions about the existence, scope, and validity of an arbitration agreement. The court held that incorporating the AAA rules was clear and unmistakable evidence that the parties delegated questions about arbitrability to the arbitrator.

Public-injunction argument

Ramirez argued that the arbitration provision was unenforceable under McGill v. Citibank, N.A. because its class-action waiver and limits on relief prevented him from seeking a public injunction. The agreement stated that injunctive relief could be awarded only for the individual party seeking relief and only as necessary to address that party’s individual claim. It also stated that if this restriction were unenforceable, the entire arbitration agreement would be null and void.

The court did not decide whether the provision violated McGill. Instead, it held that the question whether the arbitration provision was invalid because it limited public injunctive relief was a question about the provision’s validity. Because the parties had delegated such questions through the AAA rules, the court ruled that the arbitrator—not the court—must decide that issue.

Disposition

EA asked the court to dismiss Ramirez’s claims after compelling arbitration. The court explained that Ninth Circuit courts may stay or dismiss claims subject to arbitration, but that dismissal should occur only after determining that all claims will remain subject to arbitration. Because the arbitrator still had to decide whether the arbitration provision was enforceable against Ramirez’s claims, the court held that dismissal was not appropriate.

The court therefore granted EA’s motion to compel arbitration and stayed the case pending the outcome of arbitration. It terminated EA’s separate motion to dismiss, while allowing EA to re-notice that motion if the case returns to court. The parties were ordered to report on the initiation of arbitration within 60 days and on its completion within 10 days. The court did not decide whether Ultimate Team Packs violate California gambling law.