COURTRIGHT v. EPIC GAMES INC (2025)

ORDER

Before the Court are Defendants Epic Games, Inc., VRChat, Inc., and Meta Platforms, Inc., and Rec Room, Inc.’s motions to compel arbitration (Docs. #115, #123, #130, #175). The Court, being duly advised of the premises, grants said motions.

BACKGROUND

I. Factual History

This case raises the issue of whether video games cause addiction in users due to the way the games are designed. Plaintiff Carey Courtright is the mother of K.C.,¹ a minor who was twelve years old at the time this suit was filed. (Doc. #1). Plaintiff alleges there is a global epidemic of minors suffering from an addiction or disordered compulsion to use addictive and unreasonably dangerous video game products. (Doc. #138). Plaintiff brought this cause of action individually and on behalf of her minor child K.C. against multiple video game developers alleging they designed, marketed, and sold their products in a way that creates and sustains addiction to the products.

Defendant Epic Games, Inc. (“Epic”) is the developer and publisher behind the video game Fortnite. (Docs. #116 at 6, #116-1 at 2). Fortnite launched in July 2017 and is available to play on Microsoft Xbox, Sony PlayStation, Nintendo Switch, personal computers, and mobile devices. (Doc. #116-1 at 2). Plaintiff Carey Courtright alleges that K.C., her minor child (who was twelve years old at the time of filing of the original complaint), began playing Fortnite around eight years old and continues to play to the present. (Doc. #138 at 171).

Defendant VRChat, Inc. (“VRChat”) develops and publishes a gaming platform named VRChat (the “Platform”). The Platform was launched in January 2014. (Doc. #124-1 at 2). It is available for use with or without virtual reality headsets, and it can be downloaded through third-party platforms. Id. Plaintiff alleges K.C. began using the Platform around ten years old and continues to use the Platform. (Doc. #138 at 171).

Defendant Meta Platforms, Inc. (“Meta”) designs and manufacturers virtual reality and augmented reality devices as part of its virtual reality platform Meta Quest, previously known as Oculus prior to its 2022 rebranding. (Doc. #131-1 at 3). Users can download video games and other content on the Meta Horizon Store. Id. Plaintiff alleges K.C. began using Meta Quest at ten years old to use or play VRChat, Rec Room, Gorilla Tag, and Campuchin. (Doc. #138 at 171).

Defendant Rec Room, Inc. (“RRI”) was founded in 2016, the same year it released Rec Room, a multi-player social online game and game creation platform. (Docs. #176 at 6, #176-1 at 2). Rec Room can be played on mobile devices, personal computers, gaming consoles, virtual reality headsets, and more. (Doc. #116-1 at 2). Plaintiff alleges K.C. began playing Rec Room on an Xbox device at around eight years old, began playing it on a Meta Quest virtual reality device at around ten years old, and continues to play the game to the present. (Doc. #138 at 171).

II. Procedural History

On April 10, 2024, Plaintiff, individually and on behalf of her minor child K.C., filed a complaint against Defendants Epic Games, Inc., Roblox Corporation, Mojang Studios, Microsoft Corp., Meta Platforms, Inc., Google LLC, Another Axiom, Inc., Rec Room, Inc., VRChat Inc., Banana Analytics, LLC, InnerSloth, LLC, PlayEveryWare, Inc., and Jane & John Doe I-XX. (Doc. #1). Plaintiff subsequently filed three notices of voluntary dismissal pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i), dismissing without prejudice Defendants PlayEveryWare, Inc., InnerSloth, LLC, Microsoft Corp., and Mojang Studios from the above-captioned action. (Docs. #104, #137, #165).

On July 31, 2024, the Court entered an Order setting a consolidated briefing schedule for Defendants’ anticipated motions to compel arbitration. (Doc. #99). Consistent with the Court's Order, on August 29, 2024, Defendants Epic, VRChat, and Meta filed motions to compel arbitration (Docs. #115, #123, #130). On the same date, Defendant RRI filed a motion for an extension of time, asking for 14 days beyond the date Plaintiff discloses relevant account information to file its motion to compel arbitration. (Doc. #117).

On September 19, 2024, Plaintiff filed an Amended Complaint pursuant to Federal Rule of Civil Procedure 15(a)(1)(B). (Doc. #138). In response, the parties met and conferred and agreed the Amended Complaint is the operative complaint in this matter and the opposing and reply suggestions responsive to the motions to compel would reference the Amended Complaint, and an extension of deadlines was not necessary. (Doc. #143). The Court left the briefing schedule for the motions to compel arbitration unchanged. (Doc. #145). On October 14, 2024, Plaintiff filed opposition suggestions to each motion to compel. (Docs. #154, #155, #156). On November 4, 2024, Defendants Epic, VRChat, and Meta filed reply suggestions. (Docs. #163, #161, #164).

On November 12, 2024, after reviewing the Amended Complaint, RRI filed a supplemental notice to its motion to compel arbitration, telling the Court it now had a sufficient evidentiary basis to support its motion without requiring Plaintiff to disclose account information. (Doc. #166). The Court granted RRI an extension and directed it to file within 14 days of the Order. (Doc. #168). On November 27, 2024, RRI filed its motion to compel arbitration. (Doc. #175). Plaintiff filed opposition suggestions (Doc. #177), and RRI filed reply suggestions (Doc. #179).

LEGAL STANDARD

When reviewing a motion to compel arbitration, a district court asks only (1) whether a valid agreement to arbitrate exists between the parties and (2) whether the specific dispute falls within the scope of that agreement. Robinson v. EOR-ARK, LLC, 841 F.3d 781, 783–84 (8th Cir. 2016); Donaldson Co., Inc. v. Borroughs Diesel, Inc., 581 F.3d 726, 729 (8th Cir. 2009) (“A court must grant a motion to compel arbitration if a valid arbitration clause exists which encompasses the dispute between the parties.”) (citations omitted). The contract law of the state where the contract was formed governs whether the parties have entered into a valid arbitration agreement.² Robinson, 841 F.3d at 784. Donaldson, 581 F.3d at 731. In Missouri, a valid contract requires an offer, acceptance, and consideration. Baker v. Bristol Care, Inc., 450 S.W.3d 770, 774 (Mo. 2014).

The party seeking to compel arbitration bears the burden of proving the existence of such an agreement. Ballou v. Asset Mktg. Servs., LLC, 46 F.4th 844, 851 (8th Cir. 2022); Duncan v. TitleMax of Missouri, Inc., 607 S.W.3d 243, 249 (Mo. Ct. App. 2020). “The party resisting arbitration bears the burden of showing either that the arbitration provision is invalid or that it does not encompass the claims at issue.” Triplet v. Menard, Inc., 42 F.4th 868, 870 (8th Cir. 2022). Under the Federal Arbitration Act (“FAA”), any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. Lyster v. Ryan's Fam. Steak Houses, Inc., 239 F.3d 943, 945 (8th Cir. 2001).

When a motion to compel arbitration is accompanied by matters outside the pleadings, a court will evaluate the motion under a summary-judgment-like standard, viewing facts in the light most favorable to the non-moving party and drawing all reasonable inferences in their favor. Nebraska Mach. Co. v. Cargotec Sols., LLC, 762 F.3d 737, 742–43 (8th Cir. 2014). Under the FAA, if the record reveals a material issue of fact as to whether the parties agreed to arbitrate, the court shall proceed summarily to trial on that issue. Id.; 9 U.S.C. § 4. However, if a trial by jury is not demanded by the party opposing arbitration, “the court shall hear and determine such issue.” 9 U.S.C. § 4.

ANALYSIS

The Court grants Defendants’ motions to compel arbitration. The facts regarding the motions are particular to each Defendant; therefore, the Court analyzes each in turn.

I. Claims Against Epic Must Proceed to Arbitration.

Epic argues that Plaintiff is required to submit her claims to arbitration because Plaintiff and K.C. agreed to binding arbitration clauses in Fortnite's End User License Agreement (“EULA”) and Epic's Terms of Service (“TOS”), respectively. (Doc. #116). To support its argument, Epic provides a sworn declaration—submitted under penalty of perjury—from a Product Management Director (“PMD”) at Epic. (Doc. #116-1). The PMD states that the Fortnite EULA has contained a binding arbitration agreement since March 2019, and all users must agree to the Fortnite EULA before they can begin playing the game. Id. at 4. Section 12.3.1 of the Fortnite EULA states the following:

You and Epic agree to submit all Disputes between You and Epic to individual binding arbitration. “Dispute” means any dispute, claim, or controversy (except those specifically exempted below) between You and Epic that relates to your use or attempted use of Epic's products or services and Epic's products and services generally, including without limitation the validity, enforceability, or scope of this Binding Individual Arbitration section.

You and Epic agree to arbitrate all Disputes regardless of whether the Dispute is based in contract, statute, regulation, ordinance, tort (including fraud, misrepresentation, fraudulent inducement, or negligence), or any other legal or equitable theory.

․

You and Epic agree that whether a dispute is subject to arbitration under this Agreement will be determined by the arbitrator rather than a court.

(Doc. #116-2 at 11–12). The PMD also states that the EULA has been updated at least seven times since Fortnite launched, most recently on November 17, 2023; and with each update, users are required to accept the agreement before they can continue playing. (Doc. #116-1 at 6).

Epic's TOS contains the following provision in Section 3.1:

You and Epic agree to submit all Disputes between You and Epic to individual binding arbitration. “Dispute” means any dispute, claim, or controversy (except those specifically exempted below) between You and Epic that relates to your use or attempted use of Epic's products or services and Epic's products and services generally, including without limitation the validity, enforceability, or scope of this Binding Individual Arbitration section.

(Doc. #116-7 at 7). The PMD asserts that Epic's TOS has included a binding arbitration clause since March 2020. (Doc. #116-1 at 12).

Epic proffers that when a user provides a birthdate indicating they are under 13 years old, like K.C., the user is required to provide a parent or guardian's email address to complete the account setup process. (Doc. #116 at 14). Epic contends that in providing parental consent, the parent must agree to Epic's TOS, which contains a binding arbitration clause similar to its EULA provision. Epic submits that K.C. agreed to Fortnite's EULA five times and Plaintiff agreed to Epic's TOS three times.

Plaintiff argues that no valid, enforceable arbitration agreement exists between her and Epic or K.C. and Epic, and Epic has failed to meet its burden to prove otherwise. (Doc. #154). Plaintiff states that she has no recollection of ever seeing or assenting to an arbitration agreement, and K.C.—as “a minor with cognitive difficulties”—lacked the capacity to consent to such an agreement. Id. at 4. Plaintiff also contends that K.C. used her email to create or verify Epic Games accounts without Plaintiff's knowledge or permission.

Epic further states that its EULA contains an opt-out provision, but K.C. did not opt out and is therefore bound to arbitrate. (Doc. #116 at 12). Plaintiff does not contradict the fact that K.C. did not opt-out but argues K.C. is not bound to arbitrate because there is no valid agreement.

A. Valid Agreements to Arbitrate Exist Between Epic and K.C., and Epic and Plaintiff.

Epic has provided evidence that valid agreements to arbitrate exist between Epic and K.C. and Epic and Plaintiff. Epic identified two accounts as belonging to K.C. based on name, date, and IP address. (Doc. #116-1 at 6–7). Viewing the records for those accounts, Epic reports that the user of said accounts affirmatively agreed (by clicking the “accept” button) to the Fortnite EULA at least five times between 2021 and 2023.³ Id. at 7–9. Epic additionally identified three accounts as belonging to Plaintiff, one Epic Games account and two parental accounts associated with K.C.’s accounts. Id. at 10, 16. In total, Epic's records show that Plaintiff agreed to Epic's TOS through these accounts on at least three occasions between 2020 and 2022. Id. at 12, 16. These records satisfy Epic's burden to demonstrate the existence of a valid arbitration agreement; Plaintiff's arguments to the contrary are unavailing.

Plaintiff's lack of recall regarding the arbitration agreement is not a defense to its existence. “A party capable of reading and understanding a document is charged with the knowledge of its contents if he or she signs it, even if the party fails to review it.” Repair Masters Const., Inc. v. Gary, 277 S.W.3d 854, 858 (Mo. Ct. App. 2009); see Sanger v. Yellow Cab Co., 486 S.W.2d 477, 481 (Mo. 1972). Moreover, Plaintiff's assertions that she's unaware of any parental accounts in her name and that K.C. uses her email to create or verify Epic Games accounts without her knowledge is contradicted by Plaintiff's admission that she assisted K.C. the first time they created an Epic Games account. (Doc. #153-1 at 10). Plaintiff also fails to deny Epic's allegation that she created her own personal use Epic Games account, and Plaintiff fails to specifically address Epic's TOS—as opposed to Fortnite's EULA, which Plaintiff discusses repeatedly in her declaration. (Doc. #153-1). Plaintiff's failure to address these arguments in her opposition suggestions waives any challenge to it. See Paskert v. Kemna-ASA Auto Plaza, Inc., 950 F.3d 535, 540 (8th Cir. 2020).

Plaintiff also raises several arguments that any arbitration agreement is unenforceable, but these arguments ultimately fall flat because they are either unpersuasive or must be handled in arbitration. While the party seeking to compel arbitration must show that a valid agreement to arbitrate exists, they are not required to show that it will eventually be enforced—questions of enforceability may be delegated to the arbitrator. Theroff v. Dollar Tree Stores, Inc., 591 S.W.3d 432, 439 (Mo. 2020), aff'd (Jan. 14, 2020); Duncan, 607 S.W.3d at 249. Here, both the EULA and TOS contain a delegation provision covering the “validity, enforceability, or scope” of the agreement. (Docs. #116-2 at 11–12, #116-6 at 7). Where the parties include a delegation provision, a district court will not consider enforceability arguments that go to the contract as a whole. Rent-A-Ctr., West, Inc. v. Jackson, 561 U.S. 63, 68–71 (2010). Yet, if the party opposing arbitration challenges the arbitration and delegation provisions specifically, the court will consider the challenge. Id.

Plaintiff raises affirmative defenses regarding lack of capacity that go to the contract as a whole, so they must proceed to arbitration. Plaintiff first raises K.C.’s status as a minor, and the defense of disaffirmance. (Doc. #154 at 5). As admitted by Plaintiff, lack of capacity due to minority status does not render a contract absolutely void, but simply voidable. Windisch v. Farrow, 159 S.W.2d 392, 394 (Mo. App. 1942); Restatement (Second) of Contracts § 14 cmt. b (1981). It is therefore encompassed by the delegation provision. Plaintiff's second contention, that K.C. could not manifest assent due to K.C.’s addiction, is again a question of enforceability. Affirmative defenses, like these, which would render an otherwise valid contract unenforceable must be raised before the arbitrator when the contract includes a valid delegation clause. Theroff, 591 S.W.3d at 439.

Plaintiff also argues the arbitration and delegation provisions are substantively and procedurally unconscionable. (Doc. #154 at 9). Plaintiff directs this argument to the arbitration provision, not the contract as a whole; therefore, the Court will address it. Plaintiff argues first that the bargaining power between Epic, a multi-billion dollar company, and K.C., a minor, was grossly unequal. Second, Plaintiff argues acceptance of the agreement occurs without full disclosure of the addictive nature of the product. Third, Plaintiff argues the arbitration provision is a contract of adhesion. For these reasons, Plaintiff contends the arbitration provisions are unconscionable.

Under Missouri law, an arbitration agreement is invalid if it is both procedurally and substantively unconscionable. Bridgecrest Acceptance Corp. v. Donaldson, 648 S.W.3d 745, 754 (Mo. 2022), as modified (Aug. 30, 2022); Cicle v. Chase Bank USA, 583 F.3d 549, 554 (8th Cir. 2009). “Unconscionability doctrine guards against one-sided contracts, oppression, and unfair surprise.” Eaton v. CMH Homes, Inc., 461 S.W.3d 426, 432 (Mo. 2015). Procedural unconscionability relates to the “formalities of the making of the contract,” while substantive unconscionability relates to “the specific contract terms.” Bracey v. Monsanto Co., 823 S.W.2d 946, 950 (Mo. 1992).

The bargaining power between Plaintiff and K.C. and Epic is notably disparate. Yet, Plaintiff and K.C. were not without any power, especially under Fortnite's arbitration clause, which contains an opt-out provision. (Doc. #116-2 at 14). Additionally, the terms of the arbitration clauses were not hidden in small print or written such that a reasonable person could not understand them. And Plaintiff fails to prove at this stage that Epic was required to issue certain warnings to users under either state or federal law.

Plaintiff's argument that the arbitration provisions are unconscionable as contracts of adhesion is also unpersuasive. An adhesion contract—a contract that is not negotiated but merely presented on a take-it-or-leave-it basis to a consumer—is unenforceable only if it is found to be procedurally unconscionable. Swain v. Auto Servs., Inc., 128 S.W.3d 103, 107 (Mo. Ct. App. 2003). The arbitration provision in Epic's TOS is presented without opportunity to negotiate and must be accepted to use the product, so it is a contract of adhesion. However, while Fortnite's EULA is presented on a take-it-or-leave-it basis, the arbitration provision is not. The Fortnite EULA contains a 30-day opt-out provision, so it is not a contract of adhesion. Volpe v. Advance Am., No. 4:15-CV-1119 JMB, 2015 WL 5124202, at *4 (E.D. Mo. Sept. 1, 2015). And both agreements contained prominent, capitalized notices that binding arbitration provisions were contained therein. (Docs. #116-2 at 2, #116-7 at 2). “[A] court should not invalidate an arbitration agreement in a consumer contract simply because it is contained in a contract of adhesion or because the parties had unequal bargaining power, as these are hallmarks of modern consumer contracts generally.” Robinson v. Title Lenders, Inc., 364 S.W.3d 505, 515 (Mo. 2012) (citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 347, 131 S. Ct. 1740, 1750 (2011)). On this evidence, the Court finds that the arbitration provisions are not unconscionable. Therefore, Epic has satisfied its burden to show that a valid agreement to arbitrate exists.

B. Whether Plaintiff's Claims Fall Within the Scope of the Epic Arbitration Agreement is a Question Delegated to the Arbitrator.

Plaintiff argues that even if a valid arbitration agreement exists, the claims asserted in the Amended Complaint are outside the scope of the arbitration clause. (Doc. #154 at 6). Plaintiff argues that her tort claims, under Missouri law, are not subject to arbitration because their resolution is not dependent on any portion of the parties’ contract. Epic argues, to the contrary, that the arbitration clause explicitly covers tort claims, but the Court should refrain from reaching this issue because it was delegated to the arbitrator. (Doc. #163 at 7–8).

The Supreme Court has held that parties may agree to delegate “gateway questions of arbitrability,” including “whether their agreement covers a particular controversy.” Rent-A-Ctr., 561 U.S. at 68–69 (internal quotations omitted). In such instances, the arbitrator has exclusive jurisdiction over threshold questions of arbitrability, and the Court must not decide the matter. Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019). However, a court should not find that parties agreed to arbitrate the question of scope unless they “clearly and unmistakably provide otherwise.” Fallo v. High-Tech Inst., 559 F.3d 874, 877 (8th Cir. 2009).

The Fortnite EULA and the Epic TOS state the “validity, enforceability, or scope” of the agreement must be submitted to binding arbitration. (Docs. #116-2 at 11–12, #116-6 at 7) (emphasis added). The text of the agreements demonstrates that the parties explicitly agreed to delegate the question of scope to the arbitrator. Therefore, the question of whether Plaintiff's claims fall within the scope of the arbitration agreement must be determined by the arbitrator and not by this Court.

C. Claims Against Epic Are Stayed Pending Resolution of the Arbitration.

Under Section 3 of the FAA, if a court finds that an issue is referable to arbitration, then the court “shall ․ stay the trial of the action until such arbitration has been had.” 9 U.S.C. § 3. Here, the Court finds that arbitration is required under the parties’ agreement. Therefore, proceedings against Epic are stayed pending resolution of the arbitration. Id.; Smith v. Spizzirri, 601 U.S. 472 (2024).

II. K.C.’s Claims Against VRChat Must Proceed to Arbitration and Proceedings Related to Plaintiff's Claims are Stayed Pending Resolution of the Arbitration.

VRChat argues that it is impossible for an individual to use the Platform without first agreeing to VRChat's Terms of Service (“TOS”), which has contained a binding arbitration clause since May 2017. (Doc. #124). Because Plaintiff states that K.C. has used and continues to use the Platform, VRChat argues that, as a result, K.C. must have agreed to its TOS and Plaintiff is bound to arbitrate K.C.’s claims. However, VRChat has not moved to compel arbitration of Plaintiff's individual claims at this time, stating it has no information regarding whether Plaintiff herself created a user account. Id. at 19 n.14.

VRChat contends that users can create an account in one of two ways (signing up on the VRChat website or utilizing third-party platform credentials)⁴ and both require users to affirmatively agree to VRChat's TOS by checking a box or clicking an “Agree” button. VRChat additionally argues that users are presented with a pop-up alert each time its TOS is updated, and users must again agree to its terms or they cannot access the Platform. The arbitration clause in VRChat's current TOS, updated November 22, 2023, states the following:

27.1 Generally. In the interest of resolving disputes between you and VRChat in the most expedient and cost-effective manner, you and VRChat agree that every dispute arising in connection with these Terms, the Platform, and communications from us will be resolved by binding confidential arbitration in English․ This agreement to arbitrate disputes includes all claims arising out of or relating to any aspect of these Terms, the Platform, and communications from us, whether based in contract, tort, statute, fraud, misrepresentation, or any other legal theory, and regardless of whether a claim arises during or after the termination of these Terms. YOU UNDERSTAND AND AGREE THAT, BY ENTERING INTO THESE TERMS, YOU AND VRCHAT ARE EACH WAIVING THE RIGHT TO A TRIAL BY JURY OR TO PARTICIPATE IN A CLASS ACTION.

․

27.4. Arbitrator. Any arbitration between you and VRChat will: (a) be settled under the Federal Arbitration Act; (b) be governed by the Commercial Dispute Resolution Procedures and the Supplementary Procedures for Consumer Related Disputes (collectively, “AAA Rules”) of the American Arbitration Association (“AAA”), as modified by this; (c) be administered by the AAA; and (d) if an arbitration hearing is held, take place at a mutually-agreed location in San Francisco County, California. The AAA Rules and filing forms are available online at www.adr.org, by calling the AAA at 1-800-778-7879, or by contacting VRChat. The arbitrator has exclusive authority to resolve any dispute relating to the interpretation, applicability, or enforceability of this binding arbitration agreement.

(Doc. #124-1 at 26). VRChat supports its arguments with a supporting declaration—submitted under penalty of perjury—from a Client Engineer – Networking at VRChat. (Doc. #124-1).

Plaintiff argues that no valid arbitration agreement exists between either Plaintiff or K.C. and VRChat, so the Court should deny its motion to compel arbitration. (Doc. #155). Plaintiff submits that VRChat has presented no evidence of the method Plaintiff or K.C. used to create an account or which TOS was presented to them (if at all) because VRChat has not determined when either of them created an account. Plaintiff argues that VRChat cannot blame this failure on her counsel's refusal to engage in early discovery because VRChat was not required to move to compel arbitration at this stage and could have done so after discovery. Lastly, Plaintiff argues that even if an agreement exists, K.C. lacked capacity and the arbitration clause in VRChat's TOS is unconscionable and should not be enforced.

A. A Valid Agreement to Arbitrate Exists Between the VRChat and K.C.

Evidence that a company's TOS consistently includes an arbitration clause is insufficient on its own to establish the existence of a valid agreement. Wallrich v. Samsung Elecs. Am., Inc., 106 F.4th 609, 618–19 (7th Cir. 2024) (declining to find an arbitration agreement where the moving party failed to link a generic Samsung arbitration agreement to the relevant consumers); see also Bazemore v. Jefferson Cap. Sys., LLC, 827 F.3d 1325, 1333 (11th Cir. 2016). The party seeking to compel arbitration must link said agreement to the parties. Id. Otherwise, the party has failed to demonstrate acceptance, an element required to have a valid contract under Missouri law. Baker, 450 S.W.3d at 774.

Here, VRChat satisfies its burden to produce evidence of an arbitration agreement and link it to K.C. VRChat correctly notes that Plaintiff acknowledged in her Amended Complaint that K.C. uses VRChat. (Doc. #138 at 171–72). Specifically, Plaintiff claims K.C. “began using VRChat ․ via [a Meta] Quest at approximately ten (10) years of age.” Id. VRChat has also provided evidence of the procedures a user must go through to use VRChat through a third-party platform, like Meta Quest. (Doc. #124-1). These procedures include creating an account and agreeing to VRChat's TOS. Id. at 4. Plaintiff refuses to confirm or deny the existence of any accounts. Plaintiff instead states she cannot recall ever creating an account, but she also proffers that it is possible K.C. created an account without her knowledge. (Doc. #153-1 at 9). And Plaintiff provides no alternative argument as to how K.C. could have accessed the Platform other than by creating an account. Therefore, since Plaintiff admits that K.C. uses VRChat, Plaintiff has effectively conceded that K.C. must have created an account. Because VRChat has demonstrated that a user cannot create an account without agreeing to its TOS, VRChat has linked the TOS and its binding arbitration clause to K.C.

Issues of arbitrability, or enforceability, are delegated to arbitration by the parties’ agreement. When an arbitration agreement incorporates the American Arbitration Association (“AAA”) rules, a court accepts it as “a clear and unmistakable expression of the parties’ intent to leave the question of arbitrability to an arbitrator,” because the AAA rules provide that an arbitrator has power to decide such issues. Fallo, 559 F.3d at 878. VRChat's TOS states that “every dispute” will be resolved by arbitration consistent with American Arbitration Association (“AAA”) Rules.” (Doc. #124-1 at 26). Therefore, the Court finds that the parties delegated threshold questions of arbitrability to the arbitrator.

Plaintiff challenges the validity of the arbitration agreement, raising the same arguments it made against Epic related to lack of capacity and unconscionability. (Doc. #155). For the same reasons the Court explained at length above, these arguments are unpersuasive or delegated to the arbitrator. Plaintiff's lack of capacity defenses call enforceability into question, not facial validity, and those questions are delegated to arbitration. Theroff v. Dollar Tree Stores, Inc., 591 S.W.3d 432, 439 (Mo. 2020), aff'd (Jan. 14, 2020). And Plaintiff fails to show that the arbitration provision in VRChat's TOS is unconscionable. The bargaining power between the parties is unequal, but the arbitration terms are flagged at the beginning of the TOS in bold, the terms are clear, and users may opt-out of arbitration. (Doc. #124-1). Lastly, as previously discussed, Plaintiff's inability to remember reviewing an arbitration agreement is not a defense to its existence. Gary, 277 S.W.3d at 858.

B. Whether K.C.’s Claims Fall Within the Scope of the VRChat Arbitration Agreement is a Question Delegated to the Arbitrator.

A court should not find that parties agreed to arbitrate the question of scope unless they “clearly and unmistakably provide otherwise.” Fallo, 559 F.3d at 877. When an arbitration agreement incorporates AAA Rules, thereby delegating all questions of arbitrability to the arbitrator, said delegation includes whether a plaintiff's claims fall within the scope of the agreement. Id. at 877–80. Here, the arbitration agreement incorporates AAA Rules, so the question of scope is delegated to the arbitrator.

VRChat's TOS also explicitly delegates the question of scope to the arbitrator. The arbitration provision of the TOS states, “The arbitrator has exclusive authority to resolve any dispute relating to the interpretation, applicability, or enforceability of this binding arbitration agreement.” (Doc. #124-1 at 26). The text of the agreement demonstrates that the parties “clearly and unmistakably” agreed to delegate the question of scope to the arbitrator. Consequently, the Court will not decide the issue.

C. All Claims Against VRChat Are Stayed Pending Resolution of Arbitration.

For the reasons explained above, Plaintiff must proceed with K.C.’s claims to arbitration. Therefore, proceedings related to K.C.’s claims are stayed. 9 U.S.C. § 3. However, since VRChat has not moved to compel arbitration of Plaintiff's individual claims, those claims remain before this Court. VRChat may bring a motion to compel arbitration in the future as it relates to those claims, assuming a basis for such motion arises.

In the meantime, because Plaintiff's individual claims are derivative of K.C.’s claims, VRChat requests a stay of Plaintiff's individual claims as well. In addition to authorization by the FAA, a district court has “the inherent power to grant the stay in order to control its docket, conserve judicial resources, and provide for a just determination of the cases pending before it.” Contracting Nw., Inc. v. City of Fredericksburg, Iowa, 713 F.2d 382, 387 (8th Cir. 1983). A stay between non-arbitrating parties is within the Court's discretion to grant, and it is warranted where the stay will ensure consistency and avoid confusion. See City of Bismarck v. Toltz, King, Duvall, Anderson & Assocs., Inc., 767 F.2d 429, 432 (8th Cir. 1985).

Here, since Plaintiff's individual claims depend on whether VRChat has caused K.C. to suffer from gaming addiction—an issue delegated to arbitration—the Court stays Plaintiff's claims pending resolution of the arbitration. A stay of all claims against VRChat will prevent inconsistent outcomes between the above-captioned matter and arbitration as well as conserve judicial resources.

III. Claims Against Meta Must Proceed to Arbitration.

Meta argues that Plaintiff agreed to arbitrate all claims arising out of K.C.’s use of a Meta Quest virtual reality headset device. (Doc. #131). Meta argues that use of a Meta Quest device and access to the Meta Horizon Store require a Meta account. To set up a Meta account, Meta contends that users must agree to Meta's Supplemental Terms of Service (“STOS”), which contains a binding arbitration clause. Meta contends that Plaintiff created two Meta accounts and agreed to Meta's STOS in the process, so Plaintiff is bound to arbitrate this matter. To support its argument, Meta provides a sworn declaration—submitted under penalty of perjury—from an e-Discovery/Litigation Case Manager at Meta. (Doc. #131-1).

Meta identified two accounts it believes belong to Plaintiff based on name and date. Id. at 12. Account 1 was created on January 5, 2022, when the relevant STOS (effective October 11, 2020)⁵ contained the following provision:

In the event that you have any dispute with us that is connected to these Oculus Terms or use of Oculus Products or related services, you may contact us and we will endeavor to resolve this dispute. Except as provided below, you and Facebook agree that any cause of action, legal claim, or dispute that you have against us arising out of or related to these Oculus Terms, Oculus Products or related services (“claim(s)”) must be resolved by arbitration on an individual basis․

․ The American Arbitration Association (“AAA”) will administer all arbitrations under its Consumer Arbitration Rules, as amended by these Oculus Terms. YOU EXPRESSLY WAIVE THE RIGHT TO A TRIAL BY JURY.

․ In addition, disputes relating to the scope and enforceability of this arbitration provision or the interpretation of the prohibition of class and representative actions are for a court to decide, in the jurisdictions specified below.

․

For any claim that is not arbitrated or resolved in small claims court or an appeal thereof or not subject to arbitration hereunder, you and Meta agree that such claim will be resolved exclusively in the U.S. District Court for the Northern District of California or a state court located in San Mateo County. You also agree to submit to the personal jurisdiction of either of these courts for the purpose of litigating any such claim.

(Doc. #131-9 at 13–15). Account 2 was created on October 15, 2022, linked through a Facebook account, when the relevant STOS (effective August 23, 2022) contained the following provision:

In the event that you have any dispute with us that is connected to these Supplemental Terms or personal use of MPT Products, you may contact us and we will endeavor to resolve this dispute. Except as provided below, you and Meta agree that any cause of action, legal claim, or dispute that you have against us arising out of or related to these Supplemental Terms, or personal use of MPT Products (“User Claim(s)”) must be resolved by arbitration on an individual basis․

․ The American Arbitration Association (“AAA”) will administer all arbitrations under its Consumer Arbitration Rules, as amended by these Supplemental Terms. YOU EXPRESSLY WAIVE THE RIGHT TO A TRIAL BY JURY.

․ In addition, disputes relating to the scope and enforceability of this arbitration provision or the interpretation of the prohibition of class and representative actions are for a court to decide, in the jurisdictions specified below.

․

For any claim that is not arbitrated or resolved in small claims court or an appeal thereof or not subject to arbitration hereunder, you and Meta agree that such claim will be resolved exclusively in the U.S. District Court for the Northern District of California or a state court located in San Mateo County. You also agree to submit to the personal jurisdiction of either of these courts for the purpose of litigating any such claim.

(Doc. #131-8 at 8–9).

In opposition, Plaintiff argues there is no valid agreement to arbitrate. (Doc. #156). Plaintiff does not confirm or deny whether the accounts identified by Meta belong to her but argues that Meta fails to provide evidence that either account accepted the STOS or to identify the exact version of Meta's STOS that each account would have agreed to. For this reason, Plaintiff argues Meta has not met its burden to show the existence of an arbitration agreement. Additionally, Plaintiff argues that even if an agreement exists, K.C. lacked capacity and the arbitration clause in Meta's STOS is unconscionable and unenforceable. Plaintiff also contends she can't recall ever seeing Meta's STOS.

A. An Agreement to Arbitrate Exists Between Meta and Plaintiff.

Meta has satisfied its burden to show that a valid agreement to arbitrate exists between the parties, despite Plaintiff's objections. Plaintiff is correct that Meta has not furnished direct evidence of STOS-acceptance by either Meta account. However, a party may offer any relevant, admissible evidence, including circumstantial, to establish the existence of an agreement. See Gannon Int'l, Ltd. v. Blocker, 684 F.3d 785, 792 (8th Cir. 2012) (discussing permissible evidence in the context of a motion for summary judgment); Barrows v. Brinker Rest. Corp., 36 F.4th 45, 50 (2d Cir. 2022) (stating that the same evidence permissible to consider with a motion for summary judgment is permissible for a motion to compel arbitration).

Here, Meta provides evidence that a user cannot create a Meta account without first agreeing to its STOS and the arbitration clause contained therein. (Doc. #131-1 at 5). Meta also offers evidence of two accounts that it believes belong to Plaintiff. Id. at 10–11. Plaintiff directly admits in her sworn declaration that one of the email addresses (the address associated with Account 2) belongs to her, and Plaintiff does not deny that the other email address (the address associated with Account 1) belongs to her. (Doc. #153-1 at 6). With this evidence, and Plaintiff's response, Meta has linked the creation of those Meta accounts to Plaintiff. Plaintiff also states “the [Meta Quest] account is now tied to an account created by K.C.,” therefore conceding that K.C. also created an account. Id. at 8 (emphasis added). Plaintiff's inability to recall seeing the STOS does not rebut the existence of the arbitration agreement. Gary, 277 S.W.3d at 858. The evidence presented to the Court establishes that there are agreements to arbitrate between Meta and K.C. and Meta and Plaintiff.

1. The Arbitration Agreement is Valid, and K.C. Did Not Appropriately Disaffirm.

Plaintiff raises multiple arguments related to the validity of the arbitration agreement, including lack of capacity, disaffirmance, and unconscionability. The Court may consider Plaintiff's arguments in determining validity when there is no delegation clause, and a court will not assume that issues of arbitrability are delegated to arbitration absent “clear and unmistakable” evidence. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Plaintiff postulates the existence of a delegation provision, arguing in her opposition suggestions that it is unconscionable. (Doc. #156 at 9). However, Meta does not argue that the STOS includes a delegation clause. Furthermore, both versions of the STOS recited above state that “disputes relating to the scope and enforceability of the arbitration provision or the interpretation of the prohibition of class and representative actions are for a court to decide, in the jurisdictions specified below.” (Docs. #131-8 at 9, #131-9 at 14–15). No jurisdictions are specified until the end of the section, but eventually it states the following:

For any claim that is not arbitrated or resolved in small claims court or an appeal thereof or not subject to arbitration hereunder, you and Meta agree that such claim will be resolved exclusively in the U.S. District Court for the Northern District of California or a state court located in San Mateo County.

The jurisdictions specified do not include this Court; however, it is ambiguous whether these jurisdictions apply to the clause at issue. The paragraph that specifies jurisdictions makes no reference to the clause on scope and enforceability. It is unclear whether these jurisdictions are meant to apply to that clause or simply to “any claim that is not arbitrated or resolved in small claims court.” Ultimately, threshold questions of arbitrability are not clearly delegated to arbitration or another court, so this Court will consider Plaintiff's arguments. Kaplan, 514 U.S. at 944.

Plaintiff argues K.C. was not competent to enter into a contract with Meta because K.C. is a minor who lacks capacity. (Doc. #156). Plaintiff also argues that K.C.’s gaming addiction has caused cognitive and learning abilities, so K.C.’s ability to comprehend the terms of the STOS was compromised. These arguments do not apply to Plaintiff's competency, which hasn't been challenged. Also, as part of this defense, Plaintiff argues K.C. disaffirmed any contracts entered into by filing this lawsuit. Meta argues, however, that Plaintiff's infancy defense must fail because it merely renders a contract voidable, not void, and K.C. cannot disaffirm while continuing to use the Meta Quest device. (Doc. #131).

As previously discussed, lack of capacity due to minority status does not render a contract absolutely void, but simply voidable. Windisch v. Farrow, 159 S.W.2d 392, 394 (Mo. App. 1942); Restatement (Second) of Contracts § 14 cmt. b (1981). An individual who enters a contract as a minor may disaffirm the contract before reaching the age of majority or within a reasonable time thereafter. Windisch, 159 S.W.2d at 394; Y.W. By & Through Smith v. Nat'l Super Markets, Inc., 876 S.W.2d 785, 787 (Mo. Ct. App. 1994). Filing an action in court is an acceptable method of disaffirmance. Parrish v. Treadway, 267 Mo. 91, 183 S.W. 580, 582 (Mo. 1916). However, a proper disaffirmance requires repudiation of the entire contract; a minor cannot continue to receive the benefits and disaffirm only the burdens. Sassenrath v. Lewis Motor Co., 246 S.W.2d 520, 522 (Mo. App. 1952); Lamb v. Midwest Mut. Ins. Co., 296 F. Supp. 131, 133 (W.D. Ark. 1969), aff'd, 421 F.2d 179 (8th Cir. 1970).

Here, Plaintiff alleges that K.C. began using a Meta Quest device at 10 years old and continues to the present. (Doc. #138 at 171). K.C. cannot disaffirm the contract with Meta while continuing to use a Meta Quest device and actively reap the benefits of the STOS. Sassenrath, 246 S.W.2d at 522. Since no proper disaffirmance has occurred, and a contract with a minor is not automatically void, Plaintiff's minority defense fails.

Plaintiff's mental incapacity defense purportedly created by K.C.’s gaming addiction also fails. Plaintiff cites no case law for this argument, and the limited conclusory statements provided are inadequate to rebut Meta's evidence of a valid agreement. To form a valid contract, the parties to the agreement must have the legal capacity to contract. Tague v. Missouri Priv. Sector Individual Self-Insurers Guar. Corp., 186 S.W.3d 469, 475 (Mo. Ct. App. 2006). “Under Missouri law, a person is incompetent to contract if he does not have sufficient mental capacity to understand the nature and effect of the particular transaction.” Brown v. United Missouri Bank, N.A., 78 F.3d 382, 386 (8th Cir. 1996) (internal quotation omitted). A person who suffers from addiction is not automatically incapable of contracting; “the burden of proving lack of mental capacity to contract rests upon the party making that allegation.” Christian Health Care of Springfield W. Park, Inc. v. Little, 145 S.W.3d 44, 52 (Mo. Ct. App. 2004).

In the end, Plaintiff fails to demonstrate that at the time K.C. agreed to Meta's STOS they were completely unable to understand the nature and effect of their actions. Plaintiff argues K.C. suffers from gaming addiction and had to accept Meta's STOS to avoid “intense and harmful withdrawal symptoms.” (Doc. #156 at 10). In Plaintiff's Amended Complaint, Plaintiff states that K.C. has been diagnosed with “gaming disorder,” and describes symptoms including impulsive behavior, loss of cognitive function, comprehension problems, anger, and more. (Doc. #138 at 174). However, Plaintiff fails to allege any specific facts or details or provide any medical opinions or testimony describing how the alleged condition would interfere with K.C.’s ability to contract. Plaintiff fails to show that K.C. lacked the mental capacity required to enter into a valid arbitration agreement. See Rivera-Flores v. Bristol-Myers Squibb Caribbean, 112 F.3d 9, 13 (1st Cir. 1997) (“Mere evidence of diagnostic labels without content tying them to capacity to give valid consent is inadequate to create an issue as to the consequences of the disorders on an individual's capacity to give valid consent.”); Est. of Curtis by & through Dircksen v. Five Star Quality Care-Ne, LLC, No. 8:21CV198, 2021 WL 7618537, at *2 (D. Neb. Oct. 20, 2021), report and recommendation adopted, No. 8:21CV198, 2022 WL 406316 (D. Neb. Feb. 10, 2022) (“Self-serving and conclusory allegations of lack of capacity are insufficient.”).

Additionally, Plaintiff argues Meta's STOS is unenforceable because it is substantively and procedurally unconscionable. (Doc. #156 at 9). Plaintiff argues K.C. is a minor who cannot understand the terms in Meta's STOS, and K.C.’s addiction to the gaming products gave them no real choice when faced with a notice to accept the STOS or stop using the product. Plaintiff contends, conversely, that Meta is a multi-billion-dollar, international corporation, and this gross disparity in the parties’ bargaining power renders the contract unconscionable. Plaintiff argues Meta's STOS is substantively unconscionable because it has hundreds of terms, and it requires users to consent to arbitration of harms caused by Meta's unreasonably defective products without disclosure to users that Meta Quest was specifically designed to be addictive. (Doc. #156 at 10–11). Plaintiff also argues that Meta's STOS is a contract of adhesion and is, consequently, unenforceable as against public policy.

Meta argues its STOS is not procedurally or substantively unconscionable. (Docs. #131 at 18, #164 at 12–14). Meta argues there were no high-pressure sales tactics, and the terms were presented with conspicuous hyperlinks. Meta also argues that Plaintiff had a meaningful choice because users are given the opportunity to opt out of the arbitration provision. Meta contends that Plaintiff fails to identify any unfairly one-sided provisions, and the agreement is valid.

As discussed above, under Missouri law, an arbitration agreement is invalid if it is both procedurally and substantively unconscionable. Bridgecrest Acceptance Corp. v. Donaldson, 648 S.W.3d 745, 754 (Mo. 2022), as modified (Aug. 30, 2022); Cicle v. Chase Bank USA, 583 F.3d 549, 554 (8th Cir. 2009). An adhesion contract is unenforceable only if it is found to be procedurally unconscionable. Swain v. Auto Servs., Inc., 128 S.W.3d 103, 107 (Mo. Ct. App. 2003). Meta's STOS, as a whole, is presented in a take-it-or-leave-it manner, without opportunity for negotiation, so it is an adhesion contract.

However, the Court disagrees with Plaintiff's argument that Meta's STOS is an unconscionable adhesion contract. All of Plaintiff's procedural unconscionability arguments are about K.C., not Plaintiff. The bargaining power between K.C., a minor, and Meta, a very large, powerful corporation is markedly unequal. However, K.C. was not without any bargaining power; Meta's STOS provides all users with the ability to opt-out of the arbitration provision within 30 days of agreeing to the terms. (Doc. #131-1 at 9). The ability to opt out limits the one-sided nature of an adhesion contract. The terms of Meta's STOS are presented by blue, underlined hyperlinks on the sign-up page, which, if clicked, immediately inform users in capitalized, bold font that the agreement contains a binding arbitration clause. For example, the clause presented to Plaintiff when Account 2 was created stated the following:

ARBITRATION NOTICE: YOU AGREE THAT CERTAIN DISPUTES ARISING OUT OF OR RELATED TO THESE SUPPLEMENTAL TERMS OR YOUR USE OF MPT PRODUCTS WILL BE RESOLVED BY BINDING, INDIVIDUAL ARBITRATION AND YOU WAIVE YOUR RIGHTS TO A JURY TRIAL AND TO PARTICIPATE IN A CLASS ACTION LAWSUIT OR CLASS-WIDE ARBITRATION, AS FURTHER STATED BELOW, TO THE FULLEST EXTENT PERMITTED BY THE LAW. WE EXPLAIN SOME EXCEPTIONS AND HOW YOU CAN OPT OUT OF ARBITRATION BELOW.

(Docs. #131-8 at 3). This notice undercuts any risk of unfair surprise. Moreover, arbitration is a valid forum for conflict-resolution, and any doubts as to arbitrability are to be resolved in favor of arbitration. Cicle, 583 F.3d at 554. Examining the totality of the circumstances, Meta's STOS—and in particular its arbitration provision—is not unconscionable.

The agreements to arbitrate between Meta and K.C. and Meta and Plaintiff are valid and enforceable. Therefore, the Court next considers whether Plaintiff's claims fall within the scope of the arbitration agreement.

B. Claims Against Meta Fall Within the Scope of the Arbitration Agreement.

Plaintiff argues the claims alleged in her Amended Complaint are outside the scope of the arbitration agreement. (Doc. #156 at 6). Plaintiff argues that under Missouri law, a tort claim is not subject to arbitration unless its resolution requires reference to the agreement, and none of Plaintiff's claims will require any reference to Meta's STOS. Meta argues that federal law applies to the question of scope, but even if Missouri law applied, Plaintiff's claims depend on matters covered by the STOS and would require reference to the agreement. (Doc. #164 at 11–12). Meta argues that its arbitration provision encompasses all claims alleged in the Amended Complaint, because all of the claims arise out of and relate to K.C.’s use of a Meta Quest device. (Doc. #131 at 15–16).

“[W]here the contract contains an arbitration clause, there is a presumption of arbitrability.” AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986). The Court must compel arbitration of a plaintiff's claims, “unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” H&T Fair Hills, Ltd. v. All. Pipeline LP, 76 F.4th 1093, 1099 (8th Cir. 2023). “Moreover, the question of scope asks only whether the parties have agreed to arbitrate a particular claim and does not reach the potential merits of the claim.” MedCam, Inc. v. MCNC, 414 F.3d 972, 975 (8th Cir. 2005).

Meta's STOS includes a broad arbitration clause, which bolsters the presumption in favor of arbitrability. The arbitration provision states that “any cause of action, legal claim, or dispute” that “aris[es] out of or relate[s] to” the STOS or Meta's gaming products must be arbitrated. (Docs. #131-8 at 8, #131-9 at 13). First, “any cause of action” includes actions sounded in tort. Second, there can be no dispute that Plaintiff's claims “relate to” K.C.’s use of a Meta Quest device. Therefore, the claims explicitly fall within the text of the arbitration clause.

Plaintiff's argument that tort claims are not subject to arbitration unless their resolution requires reference to the agreement is misplaced. Plaintiff cites to Missouri law in Mackey v. Schooler's Constr., L.L.C., 640 S.W.3d 792, 795 (Mo. Ct. App. 2022), for this proposition. In Mackey, the plaintiff's argument relied on the Missouri Uniform Arbitration Act; but here, the FAA is controlling. This alone is sufficient to reject Plaintiff's argument. See King v. Wyndham Vacation Ownership, Inc., No. 6:18-CV-03319-MDH, 2019 WL 13207486, at *2 (W.D. Mo. Apr. 24, 2019) (rejecting an argument under the Missouri Uniform Arbitration Act where the FAA applied). Whether a particular dispute falls within the scope of an arbitration clause is governed by federal law pursuant to the FAA, Id. at *1–2; see Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), and there is no federal prohibition against arbitrating tort claims. CD Partners, LLC v. Grizzle, 424 F.3d 795, 800 (8th Cir. 2005) (“Broadly worded arbitration clauses ․ are generally construed to cover tort suits arising from the same set of operative facts covered by a contract between the parties to the agreement.”)

Under the FAA, a broadly worded arbitration provision will be interpreted to encompass a dispute “as long as the underlying factual allegations simply touch matters covered by the arbitration provision.” 3M Co. v. Amtex Sec., Inc., 542 F.3d 1193, 1199 (8th Cir. 2008) (internal quotations omitted). Contrary to Plaintiff's argument, her tort claims do not have to depend on reference to or interpretation of the arbitration agreement, but they do have to touch on matters covered by the agreement. As stated above, the arbitration provision in Meta's STOS includes all disputes that may relate to the use of one of Meta's gaming products. As a result, Plaintiff's and K.C.’s claims necessarily “touch matters” covered by the arbitration provision because all claims relate to K.C.’s use of a Meta Quest device. Therefore, Plaintiff's claims are within the scope of the arbitration agreement.

C. Claims Against Meta Are Stayed Pending Resolution of Arbitration.

Under Section 3 of the FAA, if a court finds that an issue is referable to arbitration, then the court “shall ․ stay the trial of the action until such arbitration has been had.” 9 U.S.C. § 3. Since all claims against Meta must be compelled to arbitration, the Court must also impose a stay on the litigation against Meta in the above-captioned matter.

IV. K.C.’s Claims Against RRI Must Proceed to Arbitration and Proceedings Related to Plaintiff's Claims are Stayed Pending Resolution of the Arbitration.

RRI argues Plaintiff agreed to arbitrate this dispute by assenting to RRI's Terms of Service (“TOS”). (Doc. #176). RRI contends that since Rec Room launched, its TOS has always included a binding arbitration clause. RRI states that the TOS was provided to users as a hyperlink on the log-in screen and with a bright blue button on the side of a main account screen (known as the “Dorm Room” page, where users see a menu of gaming options). Id. at 7–8. Additionally, since November 13, 2024, RRI states that a Rec Room update directed users to a new log-in screen where they were presented with a hyperlink to the TOS and were required to click an “I accept” button to proceed playing. Id. at 8. RRI supports its arguments with two sworn declarations—submitted under penalty of perjury—from the CEO and Founder of RRI and the Trust and Safety Lead at RRI. (Docs. #176-1, #176-2). The current version of RRI's TOS states the following:

You and Rec Room Inc. agree that any dispute, claim or controversy between you and Rec Room, including but not limited to any dispute, claim, or controversy arising out of or relating to these Terms or the breach, termination, enforcement, interpretation or validity thereof or the Services or Content (collectively, “Disputes”), whether such Disputes arose before, on, or subsequent to you entering these Terms, shall be exclusively resolved by individual, binding arbitration in accordance with this Arbitration Agreement. The arbitrator shall also be responsible for determining all threshold arbitrability issues, including issues relating to whether these Terms are unconscionable or illusory, in whole or in part, and any defense to arbitration, including waiver, delay, laches, or estoppel.

(Doc. #176-1 at 141).

RRI also argues that a condition of use for children under 13 years old is having parental authorization, including parental agreement to the TOS. (Doc. #176 at 10). Therefore, RRI argues because K.C. began playing Rec Room at eight years old, Plaintiff is the individual who had to agree to the TOS and is bound to arbitrate. RRI additionally contends that K.C. is also bound to arbitrate both as a non-signatory who Plaintiff contracted on behalf of, as a third-party beneficiary, and under Missouri's direct benefits estoppel theory. Id. at 17–18.

Plaintiff argues no agreement to arbitrate exists with RRI, and this is demonstrated by the factual circumstances and RRI's actions in this case—namely, delaying the filing of its motion to compel arbitration until after RRI updated the terms of its TOS. (Doc. #177). Plaintiff argues that even if an agreement to arbitrate was created under the RRI TOS, it is unenforceable because it is unconscionable, a contract of adhesion, and K.C. lacks capacity or otherwise disaffirms any contract. Plaintiff states that she has no recollection of viewing RRI's TOS, and she did not know the TOS existed because users were not required to view the TOS to play Rec Room prior to November 13, 2024. Id. at 8.

A. A Valid Agreement to Arbitrate Exists Between RRI and K.C. and RRI and Plaintiff.

1. The Agreement Between RRI and K.C.

RRI has demonstrated the existence of a valid agreement to arbitrate with K.C. RRI identified a Rec Room account (the “Identified Account”) associated with an email originally identified by Meta as belonging to Plaintiff and tied to Meta Account 2. (Doc. #176-1 at 6). Plaintiff admits this email address belongs to her but states she did not use it to create the Identified Account. (Doc. #177-1 at 4). Plaintiff does not deny that the account belongs to K.C. but merely states that if K.C. used her email address to create the Identified Account, then it was without her permission. Id. Plaintiff also states that K.C. has created several Rec Room accounts, but all without her knowledge, permission, or assistance. Id. at 5. Moreover, Rec Room found in its records that over a dozen purchases were made on the Identified Account; the most recent purchase being on October 25, 2024, under the name Carey Courtright, with a zip code corresponding to Plaintiff and K.C.’s county of residence in Missouri. (Doc. #176-1 at 6). Plaintiff admits K.C. has used her credit card with and without her permission to make game-related purchases on Rec Room. (Doc. #177-1 at 5). Altogether, the evidence in the record supports a finding that the Identified Account belongs to K.C., not Plaintiff.

The Identified Account has played Rec Room as recently as November 24, 2024. (Doc. #176-1 at 6). The user of this account, K.C., clicked “I accept” to the TOS on November 14, 2024, after the Rec Room update was implemented. (Doc. #176-1 at 3–4). The current version of RRI's TOS (effective November 19, 2024) was not in effect on November 14, 2024, but the terms in effect at that time explicitly notified users that the TOS may be modified and users would be bound by all future modifications with continued game play. (Doc. #176-1 at 103). Since K.C.’s account continued to be used past the most recent TOS update, K.C. is bound by the current version of the TOS. Furthermore, RRI's TOS includes an opt-out provision, but Plaintiff has not opted-out. (Doc. #176 at 12 n.3). Based on this evidence, RRI has demonstrated an agreement to arbitrate exists between it and K.C. through affirmative assent.

Even if K.C. was not bound by the November 2024 clickwrap agreement with RRI, K.C. would still be bound by RRI's prior browsewrap agreement. A clickwrap agreement is an online agreement created by having users click an “I agree” button or check an “I agree” box (or something similar) before the user is granted access to the site. Foster v. Walmart, Inc., 15 F.4th 860, 863 (8th Cir. 2021). A browsewrap agreement never asks users to affirmatively agree to terms but “imputes assent through the user's performance of some specific act,” like “using or accessing” the digital product or website. Id. “[T]he validity of a browsewrap agreement often depends on whether there is adequate notice to create ‘actual or constructive knowledge of [the] website's terms and conditions.’ ” Id. (quoting Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1176 (9th Cir. 2014)); Major v. McCallister, 302 S.W.3d 227, 230 (Mo. Ct. App. 2009). There are two types of notice. Actual notice exists where an individual is actually aware of the terms, which can occur if they click a hyperlink and review the terms. Foster, 15 F.4th at 863–64. Inquiry notice exists where the platform puts a reasonably prudent user on notice of the terms, taking into account the platform's overall design and content. Id.

Here, RRI provided adequate inquiry notice to users sufficient to create a binding browsewrap agreement. There is no dispute as to whether K.C. used or accessed Rec Room; Plaintiff admits K.C. did so repeatedly. (Doc. #177-1). RRI provides evidence that when users access Rec Room they are presented with the TOS as a hyperlink on the login screen and game-selection screen (the “Dorm Room” page). (Doc. #176 at 7–8). The hyperlinked terms on the Dorm Room page are notably apparent, presented in a bright blue button with yellow font and a yellow backlight. Id. at 8. Considering the overall design of Rec Room, the TOS is “reasonably conspicuous” to a user such that they are on inquiry notice to its terms. Foster, 15 F.4th at 864 (quoting Nicosia v. Amazon.com, Inc., 834 F.3d 220, 233 (2d Cir. 2016)). Where inquiry notice exists, “the user is deemed to have notice of all facts that reasonable inquiry would disclose.” Foster, 15 F.4th at 864 (internal quotation omitted). Reasonable inquiry in this case would reveal a binding arbitration agreement. Therefore, K.C. is bound to arbitrate based on both RRI's new clickwrap agreement and its prior browsewrap agreement.

Relatedly, the existence of a binding agreement based on the prior browsewrap version of RRI's TOS quells Plaintiff's argument that RRI delayed filing its motion until it could create the clickwrap version of its TOS. Additionally, the basis for the delay is available in the record. RRI explained to the Court that it required Plaintiff's account information to support its motion to compel arbitration, which then became available through subsequent filings by the parties in this case. (Doc. #166). The Court is unpersuaded by the notion that RRI delayed filing to “create the ‘proof’ RRI needed to file its motion.” (Doc. #177 at 16).

Plaintiff argues even if an arbitration agreement exists, it is invalid because K.C. lacked capacity, disaffirms any agreements, and said agreements are unconscionable. (Doc. #177). These arguments are substantially similar to those raised against the other Defendants, which the Court finds to be either unpersuasive or delegated to the arbitrator. Here, RRI's TOS includes a delegation clause that states, “The arbitrator shall also be responsible for determining all threshold arbitrability issues․” (Doc. #176-1 at 141). RRI's TOS also incorporates the JAMS Rules, which provide the arbitrator with the power to decide issues of arbitrability.⁶ Fallo, 559 F.3d at 877–80 (holding incorporation of arbitration rules that delegate arbitrability to the arbitrator serves as a valid delegation provision). As explained above, issues regarding K.C.’s capacity to contract are therefore delegated to the arbitrator.

Plaintiff's unconscionability arguments similarly fail. There is a gap in bargaining power between K.C. and RRI, and the TOS is presented as an adhesion contract. However, the effects of these factors are counteracted by a 30-day opt-out provision. And RRI's TOS presents a bold, capitalized notice on the first page informing users that any dispute related to Rec Room would be subject to binding arbitration. (Doc. #176-1 at 125). Moreover, Plaintiff's argument that an addiction warning was required is unpersuasive. Reviewing all factors, the Court finds that the arbitration provision is not unconscionable, and the arbitration agreement with K.C. is valid.

2. An Arbitration Agreement Was Created Between RRI and Plaintiff Through Apparent Authority.

RRI argues Plaintiff is bound to arbitrate directly through the activity of the Identified Account and because she granted K.C. actual and apparent authority to play Rec Room. (Docs. #176 at 13–17, #179 at 6). As to the first argument, RRI has not met its burden to show that an arbitration agreement exists with Plaintiff through affirmative assent. The party seeking to compel arbitration bears the burden of proving the existence of an agreement. Ballou v. Asset Mktg. Servs., LLC, 46 F.4th 844, 851 (8th Cir. 2022). In Missouri, a valid contract requires mutual assent. Baker v. Bristol Care, Inc., 450 S.W.3d 770, 774 (Mo. 2014). Mutual assent does not exist where one party is entirely unaware of the terms of a contract. L.B. v. State Comm. of Psychologists, 912 S.W.2d 611, 617 (Mo. Ct. App. 1995) (“[A] contract is not complete until the proposition of one is presented to the other and accepted as presented.”).

Here, Plaintiff argues she cannot recall ever seeing RRI's TOS. As explained previously in this Order, Plaintiff's inability to remember reviewing an arbitration agreement, alone, is not a defense to its existence. Gary, 277 S.W.3d at 858. However, Plaintiff also argues she never created a Rec Room account, never used Rec Room, and never gave K.C. permission to create an account with Plaintiff's personal information or on Plaintiff's behalf. (Doc. #177 at 12–13). RRI fails to provide evidence to the contrary. RRI's evidence and arguments all relate to the activity of the Identified Account, which belongs to K.C. There is no evidence that Plaintiff was ever presented with any TOS terms. Consequently, an agreement to arbitrate was not formed with Plaintiff directly through use of the Identified Account.

However, RRI has met its burden to show the existence of an agreement through apparent—but not actual—authority. “Under Missouri law, apparent authority is created by the conduct of the principal which causes a third person reasonably to believe that the purported agent has the authority to act for the principal, and to reasonably and in good faith rely on the authority held out by the principal.” GP3 II, LLC v. Litong Cap., LLC, 35 F.4th 1124, 1127 (8th Cir. 2022) (quoting Essco Geometric v. Harvard Indus., 46 F.3d 718, 726 (8th Cir. 1995)). “Actual authority is different from apparent authority in that while apparent authority is created by the principal's manifestations to a third party, actual authority is created by a principal's manifestations to his agent.” United Missouri Bank, N.A. v. Beard, 877 S.W.2d 237, 241 (Mo. Ct. App. 1994) (emphasis in original). Actual authority can be express or implied. Id.; Essco Geometric, 46 F.3d at 724. Express authority exists where the principal tells the agent what to do or knowingly acquiesces to the agent's conduct. Essco Geometric, 46 F.3d at 724. Implied authority “flows from express authority,” encompassing actions incidental to and necessary to carry out the express authority. Id.

RRI argues actual authority exists because Plaintiff authorized K.C.’s use of Rec Room, including with her credit card, after she became aware of the terms of the TOS. (Doc. #179). RRI contends that even if Plaintiff had no knowledge of the TOS before filing this lawsuit in April 2024, Plaintiff concedes to having knowledge of the TOS after filing and she allowed K.C. to continue to play Rec Room. However, Plaintiff asserts in her affidavit that K.C. had no authority to act on her behalf, she never gave K.C. permission to create an account with Plaintiff's personal information or to otherwise create any account. (Doc. #177 at 12–13). And RRI offers no evidence that any authorized credit card charges occurred after Plaintiff became aware of the TOS. Any permitted credit card use prior to Plaintiff's awareness of the TOS would not convey the level of actual authority necessary to bind Plaintiff to arbitrate—because she was unaware of the binding effect and therefore did not truly assent.

Nonetheless, the Court is persuaded by RRI's argument that apparent authority requires Plaintiff to arbitrate. K.C. used Plaintiff's email address to create the Identified Account. (Doc. #176-1 at 6). K.C. also used a credit card (at times with and at without Plaintiff's consent) under the name Carey Courtright with a zip code corresponding to Plaintiff's county of residence in Missouri. Id. As K.C. was under the age of 13 at the time the account was created, RRI required parental authorization and believed it received such authorization from Plaintiff. (Doc. #176 at 17). Under these facts, it was reasonable for RRI to believe that K.C. was authorized to accept the TOS on Plaintiff's behalf—RRI had no reason to believe K.C. was acting without Plaintiff's consent. Dunn v. Activision Blizzard, Inc., No. 3:23CV00224 JM, 2024 WL 4265256, at *4 (E.D. Ark. Sept. 23, 2024); Heidbreder v. Epic Games, Inc., 438 F. Supp. 3d 591, 597 (E.D.N.C. 2020). Because no genuine issue of fact exists as to K.C.’s apparent authority, Plaintiff is bound to arbitrate her claims.

B. Whether Plaintiff and K.C.’s Claims Fall Within the Scope of the RRI Arbitration Agreement is a Question Delegated to the Arbitrator.

Plaintiff argues her and K.C.’s claims fall outside the scope of RRI's TOS because a tort claim is not subject to arbitration under Missouri law unless its resolution depends upon interpretation of the contract. (Doc. #177 at 16). RRI argues the scope of the arbitration agreement includes all claims but questions of arbitrability are reserved for the arbitrator so the Court should not reach the Missouri law issue. (Doc. #176 at 18–20).

A court should not find that parties agreed to arbitrate the question of scope unless they “clearly and unmistakably provide otherwise.” Fallo, 559 F.3d at 877. Incorporating arbitration rules that give the arbitrator power to decide all questions of arbitrability necessarily delegates the question of scope to the arbitrator. Id. at 877–80. Here, the arbitration agreement incorporates JAMS Rules, so the question of scope is delegated. Additionally, the delegation clause explicitly delegates “all threshold arbitrability issues” to the arbitrator, providing clear and unmistakable evidence the parties agreed to delegate the question of scope to the arbitrator.

C. Claims Against RRI Are Stayed Pending Resolution of the Arbitration.

Under Section 3 of the FAA, if a court finds that an issue is referable to arbitration, then the court “shall ․ stay the trial of the action until such arbitration has been had.” 9 U.S.C. § 3. All claims against RRI must be arbitrated, so proceedings related to the claims against RRI must be stayed pending resolution of the arbitration.

CONCLUSION

For the reasons set forth in this Order, it is hereby

ORDERED Defendants Epic Games, Inc., VRChat, Inc., Meta Platforms, Inc., and Rec Room, Inc.’s motions to compel arbitration (Docs. #115, #123, #130, #175) are GRANTED and all claims against Epic Games, Inc., VRChat, Inc., Meta Platforms, Inc., and Rec Room, Inc. are STAYED pending resolution of arbitration.

IT IS SO ORDERED.

FOOTNOTES

1.   Due to K.C.’s minority status, this Order refers to K.C. by their initials and uses plural pronouns to conceal their gender.

2.   Defendants Epic and VRChat note that their contracts contain choice-of-law provisions designating the law of states other than Missouri as controlling for the interpretation of their contracts. (Docs. #116 at 7 n.2, #124 at 11 n.12) At the same time, these Defendants acknowledge that the law in each relevant state regarding the issues presented is consistent with the law in Missouri. Therefore, a conflict of laws analysis is not required, and the Court applies Missouri law in its Order.

3.   Epic states that K.C. Account #1 was created on October 10, 2020, after Epic began to include an arbitration agreement in its EULA in March 2019. (Doc. #116 at 13). However, Epic does not report this date as one of the instances where K.C. agreed to Fortnite's EULA and arbitration. Plaintiff argues this demonstrates that a user can create an Epic Games account without consenting to the arbitration agreement, contrary to Epic's contention that this is impossible. It is not necessary for the Court to decide this issue because Epic has provided evidence of five other valid agreements between Epic and K.C.

4.   VRChat states that it believes K.C. created an account using third-party platform credentials, but it offers no evidence of a specific account tied to K.C. or Plaintiff. (Doc. #124 at 6–7 n.3). VRChat reports that Plaintiff's counsel has refused to provide account information that would allow VRChat to identify the relevant accounts and agreements. Id. at 10.

5.   Meta provides the Court with copies of additional, more recently issued versions of the STOS. (Docs. #131-2, #131-4, #131-5). While every version of the STOS submitted as an exhibit contains an arbitration provision, each provision has slightly different language. Meta offers no evidence or argument that Plaintiff was required to agree to any updated terms periodically. Meta argues only that the STOS must be agreed to at the time a user creates an account. Therefore, the Court considers the versions of the STOS in effect at the time Plaintiff created the accounts identified by Meta, as it is those agreements that may be binding on Plaintiff.

6.   The Court quotes from the current version of RRI's TOS but notes that all prior versions also contain delegation clauses and incorporate the JAMS Rules. (Doc. #176-1 at 18, 42, 66, 92, 117).

BRIAN C. WIMES, UNITED STATES DISTRICT JUDGE