Doe v. Roblox Corporation

Background

Jane Doe, who was 12 when the opinion was issued, alleges that Roblox encouraged its mostly minor user base to purchase virtual items using Robux, an in-game currency bought with real money. She alleges that Roblox approved items for sale, took a percentage of sales, and then deleted some purchased items without warning or explanation. According to Doe, Roblox did this even when items did not appear to violate its policies, causing users to repurchase items or similar items.

Doe brought claims under California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA), along with claims for fraud, conversion, unjust enrichment, and breach of the implied covenant of good faith and fair dealing. She sought to represent a proposed class of Roblox users whose purchased content was later deleted, including a proposed subclass of minors.

Roblox’s Terms of Use stated that content could be removed, that Roblox would not be liable for resulting losses or refunds, and that users agreed to individual arbitration and waived class proceedings. The terms also included a requirement that users try to resolve complaints informally for 60 days before filing suit or arbitration.

Jurisdiction and contract formation

The court rejected Roblox’s argument that the case was not ripe because Doe had not completed the informal dispute-resolution process. Applying California contract law, the court held at this stage that Roblox had not shown that Doe assented to the Terms of Use. Doe was 10 when she created her account. The sign-up process required her to enter information and click a large “Sign Up” button, while the notice referring to the hyperlinked terms appeared above the button and did not require a separate checkbox. The court concluded that a child in these circumstances would not reasonably understand that clicking the button manifested assent to complicated legal terms.

Because Roblox had not shown that the Terms of Use bound Doe, the court also rejected its reliance on the terms’ class-action waiver and other provisions. The court therefore did not strike the class allegations on that basis.

The court also rejected Roblox’s mootness argument. Roblox submitted a declaration stating that it had credited, or offered to credit, Robux to affected users and offered to reimburse certain attorney fees. The court found that the parties disputed whether Doe had actually received a credit, that the voluntary program’s scope was not fully known, and that Roblox’s offered promise to maintain the policy was not an accepted and legally binding resolution. The court held that both damages and requested injunctive relief remained potentially available.

Communications Decency Act

The court rejected Roblox’s argument that Section 230 of the Communications Decency Act barred Doe’s claims. Section 230 generally protects an interactive computer service from liability when a claim treats it as the publisher or speaker of information supplied by another user. The court concluded that Doe was not seeking to hold Roblox liable for publishing or removing user-generated content. Instead, her theory was that Roblox failed to disclose that it could delete purchased virtual items and operated its marketplace in a misleading way. The court treated that alleged conduct as Roblox’s own conduct as a seller of virtual merchandise, not as protected publishing activity.

California consumer-protection and related claims

The court held that Doe adequately alleged economic injury for purposes of UCL standing because she alleged that she bought Robux without adequate warning that she might spend them on items Roblox would later delete. The court also held that the alleged Roblox service and Robux transactions could qualify as a “service” under the CLRA, which covers deceptive practices in transactions involving goods or services.

The court dismissed the UCL claim only to the extent it relied on the statute’s “unfair” prong. Doe did not explain how that theory differed from her fraud-based theories, and the court assumed for purposes of the motion that an unfair-prong claim could not entirely overlap with fraud claims. The dismissal was with leave to amend.

The court otherwise held that Doe adequately pleaded her CLRA, UCL fraudulent-prong, and fraud claims. It found that Roblox’s alleged course of conduct could plausibly mislead reasonable consumers into believing that purchased items would not be deleted for the alleged purposes. The allegations also satisfied the heightened fraud-pleading requirement because they identified who allegedly acted, what conduct was misleading, when and where it occurred, and how the alleged scheme worked.

The court rejected Roblox’s argument that the Terms of Use adequately disclosed the alleged deletion practice, reasoning that whether the disclosure was sufficient was a factual question and that the terms were not shown to have bound Doe. It also rejected Roblox’s narrow arguments against the conversion and unjust-enrichment claims because those arguments depended on the Terms of Use being binding.

Disposition

The court granted the motion to dismiss with leave to amend as to the UCL claim to the extent it alleged a violation of the unfair prong. It otherwise denied the motion to dismiss and strike. Any amended complaint was due within 21 days. Because this was a partial ruling on a motion to dismiss, the classification is procedural rather than a final decision on the underlying allegations.