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Day v. Microsoft Corporation

United States District Court, Ninth Circuit

January 22, 2014

ROY A. DAY, Plaintiff,
v.
MICROSOFT CORPORATION, et al., Defendants.

ORDER GRANTING MOTION TO COMPEL ARBITRATION

RICARDO S. MARTINEZ, District Judge.

This matter comes before the Court on Defendants' Motion to Compel Arbitration and Stay Claims (Dkt. # 18). For the reasons that follow, the motion shall be granted.

I. BACKGROUND

Pro se Plaintiff Roy Day brought this contract and tort dispute against Microsoft Corp. ("Microsoft"), Mr. Steven Ballmer, and Mr. William Gates, III. Mr. Day alleges that after he purchased Microsoft's Windows 8 Pro, he experienced installation problems, and was denied a full refund for over ninety days. In addition, he alleges that he experienced spam issues with his Hotmail.com account. He alleges that he "has suffered great mental pain and suffering with fright, chagrin, embarrassment, anger, nausea, nightmares, difficulty sleeping and his social life destroyed in the SUM of Twenty Million Dollars ($20, 000, 000.00), and will continue to suffer." Dkt # 3, ¶ 19. He further alleges that Defendants engaged in a "PREMEDITATED AND PREARRANGED[, ] CUNNING, DECEPTIVE AND MISLEADING, policy to conceal and cover-up the scams being orchestrated on Windows 8 Pro money refunds...." Id. at ¶ 21(g) (internal quotations omitted).

II. DISCUSSION

Defendants bring this motion seeking to compel arbitration in this matter. They contend that Mr. Day expressly agreed to arbitrate his claims when he accepted the End-User License Agreement for Windows 8 Pro and the Services Agreement for Hotmail.

The Windows 8 Pro End-User License Agreement ("EULA") states: "By accepting this agreement or using the software, you agree to all of these terms." Dkt. # 20, Copeland Decl. ¶¶ 2-3, Ex. C & Ex. D (also citing additional ways for consumers to access the EULA). To begin the installation process, the customer must check an "I accept the license terms" box and click an "Accept" button, both of which appear just below this bolded statement, on a page entitled "License terms." Id., Ex. C. The entire Windows 8 EULA appears on this "License terms" page. Id. at ¶ 2.

The Microsoft Services Agreement ("MSA"), which governs Hotmail accounts, states: "By using or accessing these services, or by agreeing to these terms where the option is made available to you in the user interface, you agree to abide by this agreement without modification by you." Dkt. # 19, Liffick Decl. ¶ 2, Ex. B ¶ 1.3 (emphasis added). To set up a Hotmail account, customers must click on an "I accept" button, which appears directly below the statement: "Click I accept to agree to the Microsoft services agreement." Id. at ¶ 2, Ex. A. The "I accept" statement contains a hyperlink to the Hotmail MSA. Id. Hotmail customers can also find the Hotmail MSA by clicking on the "Terms" hyperlink on the Hotmail (now Outlook.com) website. Id.

The Windows 8 Pro EULA and Hotmail agreements both contain binding arbitration clauses that state "all disputes will be resolved before a neutral arbitrator, " and "[a]ny arbitration will be conducted by the American Arbitration Association (the AAA') under its Commercial Arbitration Rules." Dkt. # 19-2, Liffick Decl., Ex. B ¶¶ 10.3 & 10.5; see also Dkt. # 20-2, Copeland Decl., Ex. D ¶¶ 2d & 2f.

Defendants contend that the Court should compel arbitration because (1) the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA") requires arbitration when there is both a valid agreement to arbitrate and the dispute falls within that agreement; (2) Defendants Ballmer and Gates may invoke the arbitration clauses under agency and equitable estoppel principles; and (3) the two contracts create enforceable agreements to arbitrate under the FAA. Dkt. # 18, p. 7. Plaintiff filed a response to the motion and contends that Defendants have lost the right to arbitrate because they ignored his requests to arbitrate "on four separate occasions. " Dkt. # 21, p. 4 (emphasis original).

A. The FAA

Section 2 of the FAA provides that contractual arbitration clauses "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. "Under the FAA, a party may challenge the validity or applicability of the arbitration provision by raising the same defenses available to a party seeking to avoid the enforcement of any contract.'" Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1121 (9th Cir. 2008) (quoting Brown v. Dillard's, Inc., 430 F.3d 1004, 1010 (9th Cir. 2005)).

Plaintiff does not challenge the existence of a valid agreement to arbitrate, nor does he contest that he agreed to be bound by the terms of the arbitration agreement.[1] Dkt. # 21, p. 3 (admitting that "I entered into a legal agreement with [Microsoft] in reference to Windows 8 Pro and the Hotmail.com account"). Moreover, Plaintiff states that he "attempted to consummate the arbitration ' agreement" when he submitted Notice of Dispute forms. Id. at 3-4. Plaintiff contends that Defendants have waived the right to compel arbitration by failing to respond to his requests to ...


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