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Mendoza v. Microsoft, Inc.

United States District Court, W.D. Washington, Seattle

September 11, 2014

MANUEL MENDOZA, et. al. Plaintiffs,
v.
MICROSOFT INC., Defendant.

ORDER COMPELLING ARBITRATION

MARSHA J. PECHMAN, Chief District Judge.

This matter comes before the Court on the motion of Microsoft Corporation to compel Plaintiffs Dezra Guthrie and Mathew Mendoza to arbitrate their claims. (Dkt. No. 44.) Having reviewed the motion, Plaintiffs' response (Dkt. No. 52), the reply (Dkt. No. 53), and all related papers, the Court GRANTS the motion and compels arbitration of Ms. Guthrie and Mr. Mendoza's claims.

Background

This case concerns Xbox LIVE, an online service provided by Defendant Microsoft, which allows, among other things, users to play online games using the Xbox console. Plaintiffs- Manuel Mendoza, Mathew Mendoza, Kaleb McKibben, Dezra Guthrie, Frank Ortega, and John Sweeney-are former Xbox LIVE Service subscribers who claim Defendant Microsoft Corporation illegally retains and discloses personally identifiable information. (Dkt. No. 1 at 1-2.) Microsoft moves to compel arbitration of Ms. Guthrie and Mr. Mendoza's claims on the grounds the Terms of Use (TOUs) require them to arbitrate this dispute. (Dkt. No. 44 at 6.)

A. Xbox LIVE Service Membership and Terms of Use

Microsoft Xbox LIVE offers two types of membership accounts: (1) Xbox LIVE Silver, a free account; and (2) Xbox LIVE Gold, a paid account providing subscribers with additional features and services. (Dkt. No. 45 at 2.) If a Gold account expires or a subscriber fails to pay, the account is automatically converted to an Xbox LIVE Silver account. (Id.) All subscribers regardless of the kind of account must agree to the Xbox LIVE Terms of Use ("TOUs"). (Id. at 2-3.) Two TOUs matter for this motion. Each is discussed below.

In October 2012, Microsoft revised the Xbox LIVE TOUs. (Dkt. No. 45-2 at 2.) The first sentence of 2012 TOUs states: "If you live in the United States, section 4 contains a binding arbitration clause and class action waiver. It affects your rights about how to resolve any dispute with Microsoft. Please read it." (Id.) Indeed, the section 4 arbitration and class action waiver provision required:

If you and Microsoft do not resolve any dispute by informal negotiation or in small claims court, any effort to resolve the dispute will be conducted by binding arbitration. You are giving up the right to litigate (or participate as a party or class member) all disputes in court before a judge or jury.

(Id. at 10) The October 2012 TOUs also contained a class action waiver:

4.4. CLASS ACTION WAIVER. Any proceedings to resolve or litigate any dispute in any forum will be conducted solely on an individual basis. Neither you nor Microsoft will seek to have any dispute heard as a class action, private attorney general action, or in any other proceeding in which either party acts or proposes to act in a representative capacity. No arbitration or proceeding will be combined with another without the prior written consent of all parties to all affected arbitrations or proceedings.

(Id. at 11.)

The October 2012 TOUs broadly defined the term "dispute":

Dispute means any dispute, action, or other controversy between you and Microsoft concerning the Services (including their price) or this agreement, whether in contract, warranty, tort, statute, regulation, ordinance, or any other legal or equitable basis. "Dispute" will be given the broadest possible meaning allowable under law.

(Id. at 10). The only claims excluded from the arbitration provision are "DISPUTES RELATING TO THE ENFORCEMENT OR VALIDITY" of the subscriber's, Microsoft's, or either of their ...


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