Mendoza v. Microsoft, Inc.
1 F. Supp. 3d 533
W.D. Tex.2014Background
- Microsoft operates Xbox LIVE; subscribers accept online Terms of Use that include an exclusive forum-selection clause requiring disputes against Microsoft Corporation be litigated in King County, Washington.
- Six former Xbox LIVE subscribers from various states sued Microsoft alleging post-cancellation retention and disclosure/sale of personal data and challenging the clarity/location of Microsoft’s privacy policy.
- Plaintiffs brought claims under the Video Privacy Protection Act and state consumer protection statutes; they admit they clicked “ACCEPT” to the Terms of Use when subscribing.
- Microsoft moved to dismiss for improper venue or, alternatively, to transfer under 28 U.S.C. § 1404(a); after Atlantic Marine, Microsoft withdrew its dismissal request and sought transfer only.
- Plaintiffs moved to strike Microsoft’s notices of supplemental authority (invoking Atlantic Marine); the court denied those motions and considered whether the forum-selection clause is enforceable and covers the claims.
- The court concluded the forum-selection clause is valid, covers disputes “relating to” the contract or service, and — applying Atlantic Marine — granted Microsoft’s motion to transfer to the Western District of Washington; dismissal was denied as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Microsoft’s forum-selection clause | Clause was not reasonably communicated; buried, tiny font; ambiguous | Clause is part of the click-to-accept Terms of Use, explicitly presented as a contract; not procured by fraud or overreaching | Enforceable under federal law; plaintiffs failed to meet heavy burden to show unreasonableness |
| Scope: whether plaintiffs’ statutory/non-contract claims fall within clause | Non-contractual and federal claims fall outside a clause limited to contract disputes | Clause covers “all disputes relating to this contract or the Service,” which is broad and includes the asserted claims | Clause encompasses plaintiffs’ claims because they relate to the contract/Service |
| Proper procedural vehicle after Atlantic Marine | (Implied) dismiss under §1406(a) / Rule 12(b)(3) or resist transfer | Atlantic Marine requires enforcement via §1404(a) transfer, not dismissal under §1406(a) | Microsoft’s dismissal motion denied as moot; transfer under §1404(a) is appropriate |
| Whether public-interest or statutory (CAFA) considerations defeat transfer | CAFA or public interests (local interests, court capability) should prevent transfer | Atlantic Marine limits consideration to public-interest factors; CAFA does not override valid forum-selection clauses | Plaintiffs did not show extraordinary public-interest reasons; CAFA does not preempt clause; transfer granted |
Key Cases Cited
- Atlantic Marine Constr. Co. v. United States Dist. Ct., 134 S. Ct. 568 (U.S. 2013) (when parties agree to a valid forum-selection clause, courts should enforce it via § 1404(a) and give it controlling weight absent extraordinary public-interest reasons)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (U.S. 1972) (forum-selection clauses are prima facie valid and enforceable unless shown unreasonable)
- Haynsworth v. The Corporation, 121 F.3d 956 (5th Cir. 1997) (lists factors for unreasonableness: fraud/overreaching, grave inconvenience, fundamental unfairness of chosen law, contravention of strong public policy)
- In re Volkswagen AG, 371 F.3d 201 (5th Cir. 2004) (standard private and public factors applied in § 1404(a) transfer analysis)
- Ginter ex rel. Ballard v. Belcher, Prendergast & Laporte, 536 F.3d 439 (5th Cir. 2008) (federal law governs enforceability of forum-selection clauses)