Wilson v. HUUUGE, Inc.
3:18-cv-05276
| W.D. Wash. | Mar 1, 2019Background
- Plaintiff Sean Wilson filed a putative class action alleging Huuuge’s mobile casino-style games constitute illegal gambling under Washington law; players purchase virtual chips after initial free chips.
- Huuuge moved to compel arbitration based on an arbitration clause in its online Terms of Use; the district court found users were not given adequate actual or constructive notice of those Terms via the App Store listing or in-app placement of a URL.
- The court denied Huuuge’s motion to compel arbitration, concluding the Terms’ location and presentation fell short of the Ninth Circuit’s browsewrap standards (Nguyen v. Barnes & Noble).
- Huuuge appealed the denial to the Ninth Circuit and concurrently moved in district court for a stay of proceedings pending appeal, arguing serious legal questions and irreparable harm if forced to litigate now.
- The parties agreed to an informal stay of discovery pending appeal; the district court weighed the four-factor stay test (Leiva-Perez/Nken framework) and granted Huuuge’s motion to stay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Huuuge raised a "serious legal question" on appeal about contract assent for browsewrap terms via mobile apps and repetitive use | Nguyen and settled browsewrap law control; Huuuge’s arguments are not novel | Ninth Circuit lacks precedent squarely addressing whether repetitive use or App Store download establishes constructive notice; issue at least minimally serious | Court: Huuuge met the minimal threshold for a serious legal question (minimally) |
| Whether Huuuge would suffer irreparable harm without a stay | Money damages and delay harm plaintiffs; evidence decay and potential corporate changes | Risk that arbitration rights (and cost/speed benefits) will be lost if district litigation proceeds and appeal later succeeds; potential mootness of arbitration | Court: Irreparable harm to Huuuge likely because forcing class litigation could moot arbitration; factor favors stay |
| Whether the balance of harms favors a stay | Plaintiff: delay harms (evidence decay, loss of remedy) outweigh defendant’s speculative arbitration harm | Defendant: greater harm if forced to litigate class claims and arbitration becomes unavailable; little discovery has occurred | Court: Balance tilts to Huuuge; risk to arbitration outweighs plaintiff’s injury |
| Whether a stay is in the public interest | Plaintiff: addressing alleged illegal gambling serves public interest | Defendant: judicial economy and federal policy favoring arbitration counsel for stay | Court: Public interest favors granting a stay to avoid duplicative proceedings and respect arbitration policy |
Key Cases Cited
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (interlocutory appeals and stays related to arbitration motions explained)
- Nken v. Holder, 556 U.S. 418 (2009) (stay factors and burden for issuance of a stay)
- Leiva-Perez v. Holder, 640 F.3d 962 (9th Cir. 2011) (four-factor test for stays pending appeal; serious-question standard)
- Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014) (standard for browsewrap notice and constructive assent online)
- Britton v. Co-op Banking Group, 916 F.2d 1405 (9th Cir. 1990) (denial of arbitration motions does not automatically trigger a stay)
- Alascom, Inc. v. ITT North Elec., Inc., 727 F.2d 1419 (9th Cir. 1984) (arbitration provides inexpensive and expeditious dispute resolution; loss can be harmful)