CHICAGO — Lawyers and plaintiffs trying to make Nintendo pay out for producing allegedly defective game controllers shouldn't be able to land their class action in front of a jury, a judge has ruled, saying Nintendo's user license agreement dictates the claims should go to arbitration.
Zachary Vergara originally sued Nintendo in Cook County Circuit Court last August. Represented by attorney Eugene Y. Turin, of McGuire Law PC, of Chicago, Vergara said the analog joystick on his Switch has “a defect that causes the joystick to activate or drift on its own without the user actually manipulating the joystick.” He further claimed Nintendo knew of this defect and failed to correct it despite selling millions of units since the product launched in March 2017.
Nintendo removed the complaint to federal court, then asked District Judge Gary Feinerman to compel arbitration. In an opinion issued May 21, Feinerman said Vergara asked to file an amended complaint, and although he granted the motion to compel, Feinerman said Vergara may still pursue his lawsuit if the claims are deemed unsuitable for arbitration.
The dispute hinges on Nintendo’s end user license agreement, which customers like Vergara enter when beginning to use a product like the Switch console. While Vergara didn’t dispute the validity of that agreement, he maintained his lawsuit falls within an exception in the contract for disputes that could have gone to small claims court.
Nintendo said its end user agreement incorporates the commercial arbitration rules of the American Arbitration Association, which “expressly delegates to the arbitrator the parties’ disputes concerning the arbitrability of particular claims,” Feinerman wrote, adding Vergara forfeited that point by not responding. Regardless, he continued, “Nintendo is correct on the merits.”
Although the U.S. Seventh Circuit Court of Appeals hasn’t decided whether incorporation of AAA rules constitutes a “clear and unmistakable” agreement to let an arbitrator decide whether a dispute is subject to arbitration, Feinerman wrote, the question has come up in eight other federal appeals circuits elsewhere around the country, and all answered affirmatively.
“Vergara correctly observes that a party cannot be required to arbitrate a dispute that he has not agreed to submit to arbitration,” Feinerman wrote in his opinion. “That principle, however, does not mandate that the court, rather than the arbitrator, decide whether his claims must be arbitrated.”
With the motion to compel arbitration granted, Feinerman stayed Vergara’s suit pending resolution of the arbitration. That means Feinerman could reopen the class action if the arbitrator decides the joystick dispute is better suited for circuit court. Since anything Vergara would add to his initial complaint wouldn’t change the decision to move to arbitration at this point, his request for leave to amend the complaint was denied without prejudice, meaning he can refile his complaint later.
If Feinerman does get the case back, he would consider Vergara’s request to create a class including anyone who bought the Switch controllers in the U.S., while a special subclass would include anyone who purchased it in Illinois.
The class action alleges violations of consumer protection law, the Illinois Consumer and Fraud Deceptive Business Practices Act, breach of express warranty, breach of implied warranty and unjust enrichment.
Vergara said people who bought the controllers in question lost money by purchasing devices that do not work. Buyers have to either return the controllers, if possible, or pay to repair the defect. Vergara said he paid $20 for a third party to replace the controller with another one that also experienced problems, so he ultimately paid another $15 to install two new joysticks.
Nintendo is repesented in the action by attorneys with the firm of Perkins Coie LLP, of Chicago and Seattle.