Nintendo Wins Another Motion to Compel Arbitration in Class-Action Joy-Con Suit

BIG PICTURE

Back in April, we wrote about Nintendo’s motion to compel arbitration in another Joy-Con lawsuit in the Western District of Washington.

This class-action lawsuit against Nintendo of America was brought in Alabama federal court, on behalf of Alabama residents who purchased a Nintendo Switch console or Joy-Con controllers for an alleged defect known as “drifting.” Nintendo moved to dismiss or, in the alternative, to stay the action and compel arbitration. The court stayed the case and compelled arbitration, noting that Nintendo could raise its motion to dismiss again in the arbitration. This ruling shows, yet again, the importance of a well-drafted EULA.

THE ALLEGED “DRIFTING” PROBLEM

Joy-Con are the main game controllers for the Switch console and are used to direct gameplay on the console. When a controller “drifts,” it registers movement in gameplay without the player telling it to move.

Detached gray Joy-Con

THE EULA UX

When you first power on your new Switch, you are asked to select a language and region and then to accept the terms of the EULA. The EULA screen displays a short message: “By selecting the Accept button, you acknowledge that you have read and agree to be bound by the End-User License Agreement. If you do not agree, stop using this system.” Beneath that message is a hyperlinked button, rendered in a box of bright and pulsating blue, that reads “View End-User License Agreement” and providers players with instant access to the full EULA. Beneath that button is the word “Accept” and a small white box. You can’t advance to the next screen without clicking accept, which activates a grayed-out “Next” button allowing the user to transition to the next screen.

THE EULA CONTENT

The EULA contains a mandatory individual arbitration provision and a class-action waiver, a provision that can be opted out of. The EULA’s preamble explains that it:

CONTAINS A BINDING ARBITRATION AND CLASS ACTION WAIVER PROVISION IN SECTION 7 THAT AFFECTS YOUR RIGHTS UNDER THIS AGREEMENT AND WITH RESPECT TO ANY ‘CLAIM’ ... BETWEEN YOU AND NINTENDO. YOU HAVE THE RIGHT TO OPT OUT OF THE PROVISION AS DESCRIBED IN SECTION 7.

The court observes that there was “no direct evidence to prove Plaintiff’s assent to the EULA” but also observes that “Plaintiff admits that she clicked this button to create her user account” and that Nintendo introduced evidence that “a new Switch cannot be used unless a purchaser clicks ‘Accept’ and selects the ‘Next’ button to advance….” (This is great news for Nintendo because we’ve seen at least one recent example of a defendant having a hard time with its EULA enforceability because it couldn’t prove the user actually accepted. A best practice here is to ensure that you are tracking acceptance of the EULA at the account level, including date/time of acceptance, if possible.)

ANALYSIS

The plaintiff raised four objections to the validity of the EULA including: (1) lack of mutual assent; (2) failure of consideration; (3) that the Switch couldn’t be returned as described in the EULA; and (4) that internal inconsistencies rendered the contract unenforceable. None of these arguments are novel and the court rejected all of them. They merit no further review.

CONCLUSION

Nintendo avoids a class-action dispute in federal court because of its well-drafted EULA.