(CN) — A group of children who played Epic Games’ “Fortnite” while they were younger than 13 will have to convince an arbitrator that they aren’t by bound the arbitration agreement they accepted in order to play the popular video game.
U.S. District Judge Robert Huie in San Diego on Wednesday granted Epic’s request to compel arbitration for six of the seven children who brought the lawsuit through their parents. They accuse Epic of violations of privacy, unfair competition and unjust enrichment by illegally collecting sensitive data without their parents’ consent.
As to the seventh child, who was playing “Fortnite” through an account created by her mother, the judge denied Epic’s motion but said the company could try again once it has more a complete record of that child’s use of the account.
Under California law, a minor may make a contract in the same manner as an adult, “subject to the power of disaffirmance,” according to the judge’s decision. In this case, the six children who signed on to Epic’s end user license agreement, which contains the arbitration clause, claim that by filing the lawsuit they have disaffirmed the agreement and that they are no longer bound by it.
The question the judge had to decide was whether, under the arbitration agreement’s so-called delegation clause, the court or the arbitrator has to review whether the purported disaffirmation of the agreement is valid.
Relying on U.S. Supreme Court guidance and decisions from federal appeals courts, Huie agreed that disaffirmation is an issue for the arbitrator to decide, notwithstanding a recent California appellate court decision that sided with a minor plaintiff on this question in a lawsuit against Electronic Arts.
“The Court acknowledges that the Court of Appeal decision in J.R. (declining to compel arbitration of the disaffirmance defense) appears to be in tension with the decisions of the Sixth and Seventh Circuits (compelling arbitration of the disaffirmance defense),” Huie said, referring to the state court case against Electronic Arts.
“In any case, this Court does not consider J.R. to be binding precedent interpreting the U.S. Supreme Court’s decision in Rent-A-Center, which in turn was interpreting Section 2 of the Federal Arbitration Act,” he said, referring to the Supreme Court’s 2010 decision in Rent-A-Center, West, Inc. v. Jackson, which held that unless a plaintiff specifically challenges the delegation clause of an arbitration agreement, courts must enforce and let the arbitrator decide the validity of the agreement as a whole.
An attorney representing the children and their parents did not immediately respond to a request for comment on the ruling.
The minors’ lawsuit, in which they seek to represent all children under 13 who were similarly harmed by Epic during an almost six-year period, echoes the claims by the U.S. Federal Trade Commission that Epic settled two years ago.
In December 2022, Epic agreed to pay $520 million to settle the FTC’s claims that it violated the Children’s Online Privacy Protection Act and deployed design tricks to dupe millions of players into making unintentional purchases.
Under the settlement, Epic paid a $275 million penalty for violating the prohibition on collecting personal information from children under 13 who played “Fortnite” without notifying their parents or obtaining their parents’ verifiable consent. It was the largest penalty ever for violating an FTC rule, according to the commission.
Separately, Epic agreed to pay $245 million to refund consumers for its so-called dark patterns and billing practices through what the FTC called a counterintuitive, inconsistent, and confusing button configuration that led players to incur unwanted charges based on the press of a single button. That was the largest refund secured by the FTC in a gaming case.
The company said at the time that it had accepted the settlement, because it wanted to be at the forefront of consumer protection and provide the best experience for its players.