SpinX Games, Ltd. v. Viel

Background

SpinX Games, Ltd. operates mobile “social casino” games modeled after slot machines. Players may purchase virtual coins, which the opinion says have no value and cannot be redeemed for cash or prizes. Thomas Viel, Carrisa Pyles, Britney Ross, Joshua Bennefield, and Sharon King were SpinX customers who each filed an arbitration demand through the American Arbitration Association in the state identified for that customer: Massachusetts, Kentucky, Ohio, Georgia, and New Jersey, respectively.

The parties’ Terms of Service contain an arbitration agreement. They agreed that the agreement is valid and governs their substantive disputes. The agreement includes a venue provision allowing arbitration in San Francisco or in the federal judicial district connected to the address provided in a customer’s pre-arbitration notice. It also allows SpinX to transfer an arbitration to San Francisco if the customer selects the other location. A separate, broad delegation clause says that any and all disputes—including disputes about the agreement’s interpretation, applicability, or formation—are to be decided by the arbitrator.

After the customers filed their demands, SpinX tried to transfer the arbitrations to San Francisco. The American Arbitration Association’s consumer filing desk denied the requests and declined to designate arbitrators unless SpinX waived its venue provision and agreed to proceed in the states where the demands were filed. SpinX then asked the customers to tell the American Arbitration Association that they consented to San Francisco arbitration; they declined. The parties represented that they were willing to proceed by videoconference or telephone, but neither had asked the American Arbitration Association whether it would permit remote proceedings.

The parties’ requests

SpinX filed a petition to compel arbitration in the Northern District of California for each customer. The customers filed cross-petitions to compel arbitration. The parties agreed that the dispute would be moot if they could proceed remotely, but they had not resolved whether the American Arbitration Association or JAMS would allow that arrangement.

Court’s analysis

The court applied the Federal Arbitration Act, which generally requires courts to enforce valid arbitration agreements according to their terms. Because the agreement contains a broad delegation clause, the court concluded that the venue dispute should generally be addressed first by an arbitrator. SpinX could seek to enforce the venue provision in an arbitration in each state where a demand was filed, allowing the arbitrator to interpret the agreement. Alternatively, if SpinX believed arbitration could not properly proceed, it could seek relief in courts having jurisdiction over those arbitrations.

The court also relied on the Federal Arbitration Act’s provision stating that a court may compel arbitration only within its own district. Because the arbitration demands had been filed in other states, the Northern District of California was not the proper court to compel the American Arbitration Association to act. The court did not decide the customers’ underlying claims under state gambling laws.

Disposition

Judge William H. Orrick denied SpinX’s petitioners’ and the customers’ respondents’ cross-petitions to compel arbitration. The opinion did not describe either denial as being with or without prejudice. It suggested that the parties first pursue a remote proceeding through the arbitration organizations or seek relief from courts with jurisdiction over the relevant arbitrations.