76 Cal.App.5th 931
Cal. Ct. App.2022Background
- B.D., a minor, played Blizzard’s online game Overwatch and purchased about $10 worth of randomized “Loot Boxes”; plaintiffs (B.D. and his father) sued under California’s Unfair Competition Law seeking injunctive relief and fees.
- Blizzard moved to compel arbitration based on its End User License Agreement and a separate Blizzard Entertainment Dispute Resolution Policy (which contains a binding arbitration clause and a class/collective-action waiver).
- Blizzard presented successive license versions (2015, 2017, 2018); the operative 2018 pop-up displayed the entire license in a scrollable box, included a visible notice that the “Dispute Resolution” section contains arbitration and a class waiver, and required clicking “Continue” to proceed; Blizzard’s records show B.D. clicked Continue.
- The trial court denied Blizzard’s motion, concluding a reasonably prudent user would not have inquiry notice of the arbitration terms and that the pop-up language was confusing.
- The Dispute Resolution Policy contains (1) a JAMS arbitration clause, (2) a class/collective-action waiver, and (3) a delegation clause stating the arbitrator decides scope and enforceability; plaintiffs also argued the agreement violates McGill by waiving public injunctive relief in all fora.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs formed a binding arbitration agreement by clicking Blizzard’s 2018 pop-up "Continue" | No — plaintiffs had no actual notice and the arbitration term was not conspicuous or required reading | Yes — the 2018 pop-up contained the full license in a scrollable box, explicitly warned the Dispute Resolution section contains arbitration and a class waiver, and user clicked Continue | Court: The 2018 pop-up was sufficiently conspicuous; clicking Continue manifested assent and bound plaintiffs to arbitration |
| Whether the Dispute Resolution Policy (containing the arbitration clause) was validly incorporated by reference | No — incorporation required extra steps (clicking secondary links) so users lacked constructive notice | Yes — the license contained a clear, hyperlinked reference to the Dispute Resolution Policy; the full license was directly available in the pop-up, making the policy easily accessible | Court: Incorporation by reference was valid; the policy was easily available and clearly referenced |
| Whether the class/collective-action waiver and arbitration clause are unenforceable under McGill (public injunctive relief) | McGill bars contractual waivers that prevent seeking public injunctive relief in all fora, so the waiver is invalid | The arbitration agreement delegates arbitrability (including McGill challenges) to the arbitrator; alternatively, the waiver is enforceable | Court: Delegation clause clearly and unmistakably delegates arbitrability (including McGill issues) to the arbitrator; arbitrator decides the McGill challenge |
| Whether the trial court properly denied the motion to compel arbitration | Trial court: denied because of insufficient conspicuous notice | Blizzard: denial was error because 2018 pop-up provided inquiry notice and delegation clause applies | Court: Reversed; directed trial court to grant motion to compel arbitration |
Key Cases Cited
- McGill v. Citibank, N.A., 2 Cal.5th 945 (2017) (contract terms cannot waive the statutory right to seek public injunctive relief under the UCL in all fora)
- Sellers v. JustAnswer LLC, 73 Cal.App.5th 444 (2021) (overview and framework for evaluating online "wrap" agreements and conspicuousness/inquiry notice)
- Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC, 55 Cal.4th 223 (2012) (general contract principles govern whether parties agreed to arbitrate)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (parties may delegate gateway arbitrability questions to arbitrators)
- Aanderud v. Superior Court, 13 Cal.App.5th 880 (2017) (clarifies "clear and unmistakable" delegation standard and treatment of court references in agreements)
- DVD Copy Control Assn. v. Kaleidescape, Inc., 176 Cal.App.4th 697 (2009) (elements for valid incorporation by reference)
- Sanchez v. Valencia Holding Co., LLC, 61 Cal.4th 899 (2015) (no special requirement to highlight an arbitration clause beyond ordinary incorporation)