N.A. v. Nintendo of America Inc.

Background

N.A., a minor represented by his guardian, Bruce Alls, filed a putative class action against Nintendo of America Inc. The claims arose from purchases made while playing Nintendo’s Mario Kart Tour. The complaint alleged that players used real-world currency to buy virtual currency called rubies, which could be used to activate randomized rewards called “Spotlight Pipes.” N.A. alleged that Nintendo did not disclose the contents or odds of particular Spotlight Pipes, encouraged purchases, made game progress difficult without purchases, and refused refunds to minors.

N.A. alleged that he played the game from 2021 to 2022 and spent more than $170 on purchases using his father’s linked credit card, many without his father’s permission. The complaint asserted claims for declaratory judgment, violation of Washington’s Consumer Protection Act, violation of California Business and Professions Code section 17200 and following, and unjust enrichment. N.A. sought to represent a nationwide class and a California subclass of minors who used real-world currency to activate Spotlight Pipes.

Arbitration Agreement

Nintendo submitted evidence that users had to create a Nintendo Account, accept the Nintendo Account User Agreement, and link the account to the Mario Kart Tour application. The agreement required users under 18, or under the applicable age of majority, to have a parent or legal guardian read and accept it. Its arbitration provision required disputes relating to the Nintendo Account services or the agreement—including disputes about formation, enforceability, performance, or breach—to be resolved by binding arbitration administered by the American Arbitration Association. It also waived jury trials and class or representative actions. The agreement allowed users to opt out of arbitration by sending written notice within 30 days after creating the account.

N.A. alleged that he and his guardian did not see, read, or agree to Nintendo’s terms. He also stated that he disaffirmed the agreement and did not consent to arbitration. Nintendo asserted that neither N.A. nor anyone with the relevant identifying information provided an arbitration opt-out notice. Nintendo moved to compel arbitration or, alternatively, to transfer the case to the Western District of Washington.

Court’s Analysis

The Federal Arbitration Act generally requires courts to enforce written arbitration agreements according to their terms, subject to generally applicable contract defenses. In deciding whether to compel arbitration, a court ordinarily asks whether a valid arbitration agreement exists and whether it covers the dispute. The agreement may also clearly and unmistakably delegate questions of arbitrability—meaning questions about whether a dispute must be arbitrated—to the arbitrator.

N.A. argued that he had disaffirmed the User Agreement under California Family Code sections 6700 and 6710, which allow a minor to disaffirm a contract before reaching adulthood or within a reasonable time afterward. The court did not decide whether N.A.’s alleged disaffirmance was effective. It held that disaffirmance concerned whether the agreement was enforceable, rather than whether an arbitration agreement had been formed. The User Agreement expressly assigned disputes about enforceability to the arbitrator.

The court distinguished or declined to follow the authorities N.A. cited because, in the court’s view, they did not address the delegation of the disaffirmance question in the same way. The court concluded that N.A. did not challenge formation of the arbitration contract; instead, he argued that the contract was voidable because he was a minor. The court therefore held that the arbitration agreement was valid for purposes of compelling arbitration and covered the parties’ dispute, while leaving the disaffirmance defense for the arbitrator.

Disposition

Judge Ryu granted Nintendo’s motion to compel arbitration. The court stayed the action in its entirety pending final resolution of the arbitration and administratively closed the case. The parties may reopen the case by filing a joint status report within two weeks after arbitration is completed. The opinion does not separately state a disposition on Nintendo’s alternative request to transfer the case.