Rebecca Swift v. Adknowledge, Inc., et al

Filing 6

Filed (ECF) Appellants Adknowledge, Inc. and KITN Media USA, Inc. response to order to show cause dated 09/15/2011. Date of service: 09/26/2011. [7906855] (DL)

Case3:09-cv-05443-EDL Document57

1
2
3
4
5
6
7

Filed05/18/11 Page1 of 6

Derek A. Newman, State Bar No. 190467
[e-mail]
Derek Linke (pro hac vice)
[e-mail]
NEWMAN DU WORS LLP
1201 Third Avenue, Suite 1600
Seattle, WA 98101
Telephone: [phone]
Facsimile: [phone]
Attorneys for Defendants
ADKNOWLEDGE, INC. and
KITN MEDIA USA, INC.

8
9

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

10
11
12

REBECCA SWIFT, on behalf of herself and
all other similarly situated,
Plaintiff,

13
14
15
16
17
18

v.
ZYNGA GAME NETWORK, INC.;
ADKNOWLEDGE, INC., D/B/A SUPER
REWARDS; KITN MEDIA USA, INC.
D/B/A SUPER REWARDS,

NO. 4:09-CV-05443 EDL
JOINDER OF DEFENDANTS
ADKNOWLEDGE, INC. AND
KITN MEDIA USA TO
DEFENDANT ZYNGA INC.’S
MOTION TO COMPEL
ARBITRATION AND MOTION
TO STAY LITIGATION

Defendants.

19
I.

20
21

INTRODUCTION

Defendants Adknowledge, Inc. (“Adknowledge”) and KITN Media USA, Inc.

22

(“KITN”) hereby join the motion of Defendant Zynga, Inc. (Dkt. No. 54) to compel

23

arbitration and stay litigation in the above-captioned lawsuit. Plaintiff Rebecca Swift

24

claims Adknowledge and KITN are agents, employees, or distributors of Zynga’s, or are

25

otherwise affiliated with Zynga. Swift agreed to terms of service which mandate

26

arbitration of all claims against Zynga and its affiliates. Principles of agency law support

27

arbitration of all claims Swift alleges in this lawsuit, including those against

28

Adknowledge and KITN.
-1JOINDER OF ADKNOWLEDGE AND KITN IN MOTION TO COMPEL ARBITRATION

Case3:09-cv-05443-EDL Document57

Filed05/18/11 Page2 of 6

1

Moreover, the Federal Arbitration Act—which as Zynga’s motion noted, is now

2

the controlling law—requires any doubts concerning the scope of arbitrable issues to be

3

resolved in favor of arbitration. This Court should stay the litigation and require all of

4

Swift’s claims, including those against Adknowledge and KITN, to proceed to

5

arbitration.

6
7

II.

FACTS

Swift alleges she participated in certain “Integrated Special Offer Transactions”

8

(“ISOTs”) “created and developed” by Defendants. (First Amended Complaint (“FAC”),

9

(Dkt. No. 13) at ¶ 6.) All of her alleged damages result from her claimed participation in

10

ISOTs she accessed through Zynga’s “YoVille” game application. (Id. at ¶¶ 37-38.)

11

To launch the YoVille application, Swift was required to accept Zynga’s YoVille

12

Terms of Service (“YoVille TOS”) that were in effect when she first played the game in

13

April 2009. (Declaration of Sean Hanley in Support of Petition to Compel Arbitration

14

(“Hanley Decl.”) (Dkt. No. 55) at ¶¶ 2-4, Ex. A.) The YoVille TOS were amended in

15

May 2009. (Id. at ¶ 5, Ex. B.) Both versions of the TOS indicate Adknowledge and KITN

16

are third parties whose actions are subject to the TOS:

17
18
19
20
21
22
23
24
25
26

YOU EXPRESSLY AGREE THAT USE OF THE SERVICES IS AT
YOUR SOLE RISK AND IS PROVIDED ON AN “AS IS” BASIS . . . .
NEITHER ZYNGA NOR ITS AFFILIATES OR SUBSIDIARIES, OR
ANY OF THEIR DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS,
THIRD-PARTY
CONTENT
PROVIDERS,
DISTRIBUTORS,
LICENSEES OR LICENSORS (COLLECTIVELY, “ZYNGA PARTIES”)
WARRANT THAT THE SERVICES WILL BE UNINTERRUPTED OR
ERROR-FREE . . . .
ALL COMMUNICATION EXPRESSED OR MADE AVAILABLE BY
THIRD PARTIES WHATSOEVER . . . . IS SOLELY MADE BY THE
RESPECTIVE AUTHOR(S) OR DISTRIBUTOR(S), AND THE ZYNGA
PARTIES
DO
NOT
GUARANTEE
THE
ACCURACY,
COMPLETENESS OR USEFULNESS THEREOF . . . . NOR DO THEY
MAKE ANY GUARANTEE, ENDORSEMENT OR WARRANTY WITH
RESPECT THERETO . . . .

27
28
-2JOINDER OF ADKNOWLEDGE AND KITN IN MOTION TO COMPEL ARBITRATION

Case3:09-cv-05443-EDL Document57

Filed05/18/11 Page3 of 6

1

(Id., Ex. A at 14-15; Id., Ex. B at 15; capitalization original.) Swift’s FAC alleges that

2

Adknowledge and KITN are agents, employees, or distributors of Zynga’s, or are

3

otherwise affiliated with Zynga. (FAC ¶ 30.) Both versions of the TOS provide that the

4

“Zynga Parties” “shall not be liable” for damages “arising out of” Swift’s use of the

5

YoVille services. (Hanley Decl., Ex. A at 14-15; Id., Ex. B at 15.) Both versions required

6

Swift to agree that she would not “seek to hold the Zynga Parties liable[] for the conduct

7

of third parties.” (Id.)
And both versions of the TOS required Swift to agree “that any suit, action or

8
9

proceeding arising out of or relating to these Terms of Use . . . shall be resolved solely by

10

binding arbitration before a sole arbitrator under the rules and regulations of the

11

American Arbitration Association (“AAA”).” (Hanley Decl., Ex. A at 17; Id., Ex. B at

12

17.)

13
14
15
16

III.
A.

DISCUSSION

Adknowledge is an alleged agent of Zynga with standing to enforce Zynga’s
arbitration clause.
Both versions of the YoVille TOS expressly limit the liability of all “Zynga

17

Parties”, which includes agents of Zynga as well as its distributors and other affiliates.

18

Both versions require arbitration of all claims “arising out of or relating to these Terms of

19

Use”. Swift’s FAC alleges that Adknowledge and KITN are agents, employees, or

20

distributors of Zynga’s, or are otherwise affiliated with Zynga. Thus, Adknowledge and

21

KITN are “Zynga Parties” whose actions fall within the ambit of the YoVille TOS.

22

This Court has held that non-signatories to an arbitration agreement—such as

23

Adknowledge and KITN—may nevertheless enforce that agreement “under ordinary

24

contract and agency principles.” Amisil Holdings Ltd. v. Clarium Capital Mgmt. LLC,

25

622 F. Supp. 2d 825, 830 (N.D. Cal. 2007) (citing Comer v. Micor, Inc., 436 F.3d 1098,

26

1101 (9th Cir. 2006)). In Amisil, the defendants sought to enforce an arbitration

27

agreement they had not signed against a party that had signed the agreement. Id. The

28

Amisil court analyzed the two chief Ninth Circuit cases, Letizia v. Prudential Bache
-3JOINDER OF ADKNOWLEDGE AND KITN IN MOTION TO COMPEL ARBITRATION

Case3:09-cv-05443-EDL Document57

Filed05/18/11 Page4 of 6

1

Secs., Inc., 802 F.2d 1185 (9th Cir, 1986) and Britton v. Co-op Banking Group, 4 F.3d

2

742 (9th Cir, 1993). Amisil concluded as follows:

3

Taken together, Letizia and Britton establish that agents of a signatory can
compel the other signatory to arbitrate so long as (1) the wrongful acts of
the agents for which they are sued relate to their behavior as agents or in
their capacities as agents (Letizia) and (2) the claims against the agents
arise out of or relate to the contract containing the arbitration clause
(Britton) (consistent with the language of the arbitration clause).

4
5
6
7
8

Amisil, 622 F. Supp. 2d at 832. The court concluded that “under agency principles,

9

the claims against the individual defendants should be arbitrated.” Id. at 839.
The analysis in this case leads to an identical result. Adknowledge and KITN are

10
11

being sued in their capacities as Zynga’s alleged agents or affiliates. And Swift’s decision

12

to launch the YoVille application required her to agree to the YoVille TOS—a contract

13

which is related to all claims against “Zynga Parties” and contains a mandatory

14

arbitration clause. This Court should follow Amisil and hold that all claims against

15

Adknowledge and KITN should be arbitrated.

16
17
18

Because Swift’s claims are closely related to the contractual relationship
formed by Zynga’s Terms of Service, the arbitration clause should apply to
all parties to this dispute.

19

The Ninth Circuit has held that “Under the Federal Arbitration Act[,] 9 U.S.C. §§

20

1-15, any doubts concerning the scope of arbitrable issues should be resolved in favor of

21

arbitration.” Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1139

22

(9th Cir. 1991), overruled in part on other grounds, L & M Creations, Inc. v. CRC Info.

23

Sys., 2011 U.S. Dist. LEXIS 36269 (D. Nev. Mar. 23, 2011). Application of that principle

24

to the YoVille TOS indicates that this matter must be submitted to mandatory arbitration.

25

B.

In Hopkins & Carley, ALC v. Thomson Elite, 2011 U.S. Dist. LEXIS 38396, *9

26

(N.D. Cal. Apr. 6, 2011), this Court reviewed an agreement with a clause providing that

27

“[t]he parties shall submit any dispute arising under the Agreement [that could not be

28

resolved by a specific alternative procedure] to binding arbitration in accordance with the
-4JOINDER OF ADKNOWLEDGE AND KITN IN MOTION TO COMPEL ARBITRATION

Case3:09-cv-05443-EDL Document57

Filed05/18/11 Page5 of 6

1

then prevailing Commercial Arbitration Rules of the American Arbitration Association”.

2

Id. This is nearly identical to the YoVille TOS Swift executed, which requires arbitration

3

of disputes “arising out of or relating to these Terms of Use”. Hopkins noted the plaintiff

4

had “identified no meaningful distinction” between the phrases “arising under” and

5

“arising from or out of”. Id. at *16.
The Hopkins court determined that all of the plaintiff’s claims, “whether based on

6
7

contract or tort, directly relate[d] to the parties’ contractual relationship.” Id. at *16-17.

8

The court noted that the Federal Arbitration Act required any ambiguity to be resolved in

9

favor of arbitration, and held that all of the plaintiff’s “claims [fell] within the scope of

10

the arbitration clause, regardless of whether Ninth Circuit or California law [was]

11

applied.” Id. at *22-23.

12

As in Hopkins, this Court should hold that all of Swift’s causes of action are

13

closely related to the YoVille TOS. She agreed to those terms and they govern her use of

14

Zynga’s YoVille services, as well as all actions of “Zynga Parties” such as Adknowledge

15

and KITN. All of Swift’s claimed damages result from her decision to launch the YoVille

16

application and to become bound by the related terms of service. And the YoVille TOS

17

require arbitration of all claims “arising out of or relating to these Terms of Use”.

18
19

C.

This Court should exercise its discretion to stay the lawsuit pending
arbitration.

20

The Federal Arbitration Act, at 9 U.S.C. § 3, compels courts to stay litigation of

21

arbitrable issues regardless of whether those issues intertwine with nonarbitrable issues

22

and regardless of whether “piecemeal litigation” will result. The decision whether to stay

23

non-arbitrable issues pending arbitration rests with the sound discretion of the district

24

court. See, e.g., Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20-

25

21, 74 L.Ed.2d 765, 103 S.Ct. 927 and n. 23 (1983) (in context of staying claims of

26

nonarbitrating parties).

27
28

As discussed above, all of Swift’s claims are subject to mandatory arbitration. But
in the event this Court decides otherwise, it should still exercise its discretion to stay
-5JOINDER OF ADKNOWLEDGE AND KITN IN MOTION TO COMPEL ARBITRATION

Case3:09-cv-05443-EDL Document57

Filed05/18/11 Page6 of 6

1

litigation of the non-arbitrable issues until the arbitration has concluded. The arbitrator’s

2

decision regarding Zynga’s liability may affect the outcome of any non-arbitrable claims.

3

Judicial economy favors a stay, so this Court will have the benefit of the arbitrator’s

4

analysis without having to duplicate the arbitrator’s efforts.

5
6

IV.

CONCLUSION

Swift agreed to the YoVille TOS, which mandates arbitration of her claims. The

7

YoVille TOS applies to all claims against Adknowledge and KITN, as well as the claims

8

against Zynga. And federal law supports the resolution of all doubts in favor of

9

arbitration. Consequently, Adknowledge and KITN respectfully join in Zynga’s motion

10

to compel arbitration and stay litigation in the above-captioned lawsuit.

11
12

DATED this 18th day of May, 2011.

13
NEWMAN DU WORS LLP

14
15
16
17
18
19

By:

/s/ Derek Linke
Derek A. Newman, State Bar No. 190467
Derek Linke, (pro hac vice)
Attorneys for Defendants
ADKNOWLEDGE, INC. and
KITN MEDIA USA, INC.

20
21
22
23
24
25
26
27
28
-6JOINDER OF ADKNOWLEDGE AND KITN IN MOTION TO COMPEL ARBITRATION