Sanchez v. Nintendo of America Inc.

Background

The plaintiffs—Luz Sanchez, Dolly Vierra, M.S., a minor, and A.D., a minor—brought a proposed nationwide class action concerning an allegedly defective Nintendo Switch console and its Joy-Con controllers. The amended complaint alleged that the controllers caused on-screen characters to move without direction and that the problem worsened over time.

The amended complaint asserted claims under California’s Unfair Competition Law, the California Consumers Legal Remedies Act, the Song-Beverly Consumer Warranty Act for breach of the implied warranty of merchantability, and unjust enrichment. It also sought a declaratory judgment concerning whether the minor plaintiffs could disaffirm the End User License Agreement on behalf of minors in the proposed class.

Nintendo had previously sought to transfer the case to arbitration based on the agreement’s arbitration and forum-selection provisions. An arbitration panel determined that the claims of Sanchez and Vierra had to proceed in arbitration, while M.S. and A.D. were not bound by the agreement. The parents’ claims therefore remained subject to arbitration, and the minors returned to court.

Issues and analysis

The court addressed Nintendo’s motion to dismiss the minors’ claims for lack of standing. Standing is the requirement that a plaintiff show a concrete, particularized, actual or imminent injury that is fairly traceable to the defendant and could be redressed by a favorable decision.

The court treated Nintendo’s challenge as a facial challenge to jurisdiction, meaning it was limited to the amended complaint, materials incorporated into or relied on by that complaint, and materials subject to judicial notice. It therefore did not consider declarations submitted by the parents and minors.

The plaintiffs argued that the parents had transferred ownership of the consoles to M.S. and A.D. The court rejected that argument based on the pleading. It explained that a gift requires, among other things, a voluntary intent to make a gift and complete loss of control by the donor. The amended complaint did not describe the consoles as gifts or allege a transfer. Instead, it described the parents as the people who purchased the consoles and as the primary victims of the alleged defect.

The court also reasoned that the minors’ use of the consoles did not make them owners. Because the complaint did not allege that the minors had a right to sell the consoles or otherwise owned them, it did not adequately allege an injury such as reduced resale value. The court expressly did not decide whether the minors would have constitutional or statutory standing if the complaint adequately alleged a gift.

The court declined to accept, by declaration, counsel’s proposed change to the allegation that the parents bought the console for “personal, family, and household use.” The proposed change would replace “and” with “or,” and the court viewed that as a substantive amendment to the pleading.

Disposition

The court stayed the action as to Sanchez and Vierra because the arbitration panel had found their claims subject to arbitration. It denied as moot any motion to dismiss the minors’ declaratory-judgment claims because the arbitration panel had determined that the minors were not parties to or bound by the agreement.

The court granted Nintendo’s motion to dismiss the minors’ remaining claims for lack of standing. It denied the plaintiffs’ one-line motion for leave to amend because they supplied neither argument nor a proposed amendment. The court nevertheless allowed the plaintiffs to seek leave again by September 29, 2022, at noon, through a motion noticed on a regular 35-day calendar and accompanied by a redlined proposed amendment.