G.G. v. Valve Corporation ( 2020 )

FILED
NOT FOR PUBLICATION
APR 3 2020
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
G.G.; et al., No. 19-35345
Plaintiffs-Appellants, D.C. No. 2:16-cv-01941-JCC
v.
MEMORANDUM*
VALVE CORPORATION, a Washington
corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Washington
John C. Coughenour, District Judge, Presiding
Argued and Submitted March 6, 2020
Seattle, Washington
Before: IKUTA and R. NELSON, Circuit Judges, and OLIVER,** District Judge.
The plaintiffs (parents and their teenage children) appeal from the district
court’s final judgment in favor of Valve Corporation. We have jurisdiction under
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Solomon Oliver, Jr., United States District Judge for
the Northern District of Ohio, sitting by designation.
9 U.S.C. § 16(a)(1)(D) and 28 U.S.C. § 1291, and we affirm in part and vacate in
part.
To the extent the parents allege claims in their individual capacities, the
district court erred in compelling the parents to arbitrate those claims. The parents
are not signatories to the Subscriber Agreement, and they are not bound by it based
on equitable estoppel because they did not seek to exploit it by enforcing it. See
Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1045–46 (9th Cir. 2009). First,
rather than seeking to enforce the Subscriber Agreement, the parents sought to
have it declared “invalid as to all minors under the age of 18 and all Valve users
under the age of 21 who first entered into the Subscriber Agreement when they
were under the age of 18.” Second, the parents did not pursue claims based on
provisions of the Subscriber Agreement but rather brought claims sounding in tort
or based on statutory violations. Cf. Townsend v. Quadrant Corp., 268 P.3d 917,
922 (Wash. 2012) (en banc). Because the parents are not bound by the arbitration
agreement, and a district court can confirm an arbitral award only against parties
who “have agreed that a judgment of the court shall be entered upon the award
made pursuant to arbitration,” 9 U.S.C. § 9, the district court erred when it entered
judgment on the claims that the parents brought in their individual capacities.
Those claims, to the extent they are viable, must proceed in court.
2
The district court did not err in entering judgment on the claims the parents
brought on behalf of their teenage children. The plaintiffs failed to show that the
arbitration agreement itself is unenforceable based on waiver, see Mike M.
Johnson, Inc. v. Cty. of Spokane, 78 P.3d 161, 166 (Wash. 2003), equitable
estoppel, see Mundi, 555 F.3d at 1045–46, or public-policy grounds, see Tjart v.
Smith Barney, Inc., 28 P.3d 823, 831 (Wash. Ct. App. 2001). And the teenagers
clearly and unmistakably agreed to arbitrate questions of arbitrability because the
arbitration agreement incorporates AAA rules. See Galilea, LLC v. AGCS Marine
Ins. Co., 879 F.3d 1052, 1062 (9th Cir. 2018); Brennan v. Opus Bank, 796 F.3d
1125, 1130 (9th Cir. 2015).1 The parties’ degree of sophistication does not change
this conclusion because, under Washington law, “[c]ourts presume that parties to
an agreement have read all parts of the entire contract and intend what is stated in
its objective terms,” W. Coast Stationary Eng’rs Welfare Fund v. City of
Kennewick, 694 P.2d 1101, 1104 (Wash. Ct. App. 1985), and “[c]ontractual
language must . . . be interpreted in light of existing . . . rules of law,” Tanner Elec.
1
To the extent the district court’s earlier holding that the teenagers’ claims
fell “within the scope of the SSA arbitration agreement” conflicts with its later
holding that the parties agreed to arbitrate questions of arbitrability, the district
court appropriately revised its earlier holding before the entry of final judgment.
See Fed. R. Civ. P. 54(b); Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.
Ct. 524, 530 (2019).
3
Co-op. v. Puget Sound Power & Light Co., 911 P.2d 1301, 1310 (Wash. 1996) (en
banc).2 Therefore, the district court did not err in reviewing the arbitrators’ rulings
under 9 U.S.C. § 10(a)(4), see Oxford Health Plans LLC v. Sutter, 569 U.S. 564,
568 (2013), and upholding their rulings both as to the scope of the arbitration
agreement and the merits of the teenagers’ claims, see Comedy Club, Inc. v. Improv
W. Assocs., 553 F.3d 1277, 1290 (9th Cir. 2009) (citation omitted). Finally,
because the arbitrators did not order any relief but merely denied the teenagers’
claims, we reject the plaintiffs’ argument that the arbitrators ordered relief that is
contrary to Washington public policy. Cf. Stead Motors v. Auto. Machinists Lodge
No. 1173, 886 F.2d 1200, 1212–13 (9th Cir. 1989). Accordingly, we affirm the
judgment to the extent it dismissed the claims the parents brought on behalf of
their teenagers.
AFFIRMED IN PART; VACATED IN PART.3
2
The plaintiffs’ argument that it is difficult to find the relevant AAA rules
may support a claim of procedural unconscionability, see Zuver v. Airtouch
Commc’ns, Inc., 103 P.3d 753, 760 (Wash. 2004) (en banc), but it is not relevant to
determining the scope of a contract under Washington law. And because the
plaintiffs abandoned their procedural unconscionability claim on appeal, we do not
address the claim. See Fed. R. App. P. 28(a)(8)(A); United States v. Anderson, 472
F.3d 662, 668 (9th Cir. 2006).
3
Each party shall bear its own costs on appeal.
4