Caccuri v. Sony Interactive Entertainment LLC

Background

Agustin Caccuri, Adrian Cendejas, and Allen Neumark brought a proposed class action alleging that Sony Interactive Entertainment LLC engaged in anticompetitive conduct by discontinuing the sale of digital PlayStation game download cards to third-party retailers. The proposed class covered people in the United States, excluding specified Sony-related persons and court personnel, who purchased digital video game content directly from the PlayStation Store from April 1, 2019, through the present.

Sony moved to deny class certification based on arbitration provisions and class-action waivers in several agreements: the PlayStation system software license agreement, the software product license agreement, and the PlayStation Network terms of service and user agreement. The plaintiffs argued that those agreements did not cover their claims and that Sony had waived its right to enforce the provisions.

Class-Action Waivers

The court agreed that the system software license and software product license agreements appeared to cover digital games. It reasoned that digital games are software and that the proposed class members used the PlayStation Store and other Sony software to purchase and download them.

But the court found that Sony had not shown which agreements governed the relevant transactions. Sony did not provide effective dates for the relevant system software and product license agreements. The court also found significant differences among the versions of the terms of service. In particular, the April 2019 version referred to dispute proceedings in “arbitration or court,” while the October 2020 version referred only to arbitration. The parties had not adequately addressed how the terms of service should be reconciled with the agreements incorporated into them. The court therefore could not determine which class-action waiver, if any, prevented the plaintiffs from pursuing their claims as a class. Sony could renew those arguments in opposition to a future motion for class certification.

Arbitration Waiver

The court assumed, without deciding, that the arbitration clauses were enforceable because it found the plaintiffs’ waiver argument dispositive at this stage. Under the applicable test, waiver required knowledge of an existing arbitration right and intentional acts inconsistent with that right.

The court found the knowledge requirement satisfied. Sony had stated in an earlier case-management stipulation that it intended to move to compel arbitration, and Sony had drafted the agreements containing the arbitration provisions. The court also found that Sony acted inconsistently with its arbitration rights. Sony allowed a court-approved deadline for moving to compel arbitration to pass, filed two motions to dismiss addressing the merits, continued participating in discovery and case-management proceedings, sought extensions, and represented that the litigation could proceed on a proposed schedule. Sony never sought relief from the obligations of litigating in federal court.

The court rejected Sony’s arguments that the motion’s label—one seeking to deny class certification rather than compel arbitration—avoided waiver, that its litigation activities were merely routine, and that it could not waive arbitration rights as to absent class members before class certification. The court held that Sony waived its arbitration rights as to the putative class members and could not rely on those rights to support its motion.

Disposition

Judge Araceli Martinez-Olguin denied Sony’s motion to deny class certification. The order did not decide whether the arbitration clauses were enforceable, and it did not finally certify the proposed class. It held only that Sony had not established that the class-action waivers barred the claims at this stage and that Sony had waived its arbitration rights as to the putative class members.