Opinion
A148989
04-02-2018
AARON VAN FLEET et al., Plaintiffs and Respondents, v. TRION WORLDS, INC., Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Mateo County Super. Ct. No. CIV535304)
We consider whether the parties agreed to arbitrate their dispute relating to a computer game called ArcheAge. Aaron Van Fleet, Paul Ovberg, and James Longfield (collectively, plaintiffs) sued Trion Worlds, Inc. (Trion) asserting causes of action based on alleged misrepresentations regarding discounts that would be available within ArcheAge, and alleging other aspects of ArcheAge constitute an illegal lottery. Trion petitioned to compel arbitration of the dispute, but the ArcheAge End User License Agreement (EULA) does not contain an arbitration clause. Instead, it calls for any state law cause of action relating to the agreement to be litigated in San Mateo Superior Court. Trion's Terms of Use does contain an arbitration clause, but it also provides it is "in addition to, and does not replace or supplant" the ArcheAge EULA, and, in the event of a conflict or inconsistency, the ArcheAge EULA "shall supersede" it. Based on this provision in the Terms of Use, we conclude the parties did not agree to arbitrate their dispute, and we affirm the trial court's order denying the petition to compel arbitration.
FACTUAL AND PROCEDURAL HISTORY
Trion is the publisher of ArcheAge, "a massively multi-player online role-playing game . . . that allows players to assume the role of virtual characters which can interact with the game's immersive virtual world as well as with other players." Plaintiffs set up Trion accounts and began playing ArcheAge between approximately April and June 2014.
A. The Complaint
Plaintiffs assert Trion violates California's Consumer Legal Remedies Act, Civil Code section 1770, its false advertising and unfair competition laws, Business and Professions Code section 17500 et seq., and they also allege negligent misrepresentation. The complaint alleges that, although ArcheAge is free to play, Trion makes money by selling "Patron" status subscriptions, which give players certain in-game benefits, and by selling virtual goods and property through "an in-game Marketplace." Trion sold Patron status subscriptions both individually and as part of "Founder's Packs." Plaintiffs allege they each purchased a founder's pack. Plaintiffs purport to assert their claims on behalf of themselves and two classes of similarly situated players.
The complaint alleges that "to induce players to purchase subscriptions before the launch of ArcheAge . . . , Trion represented that players with Patron status would receive a '10% Discount on Marketplace purchases (available after launch).' " Trion allegedly reneged on this promise, later telling players that " 'available after launch' " did not mean " 'at launch,' " but instead meant the discount would be available at " 'some indeterminate point after launch.' " In response to player complaints, Trion offered a 10% bonus on purchases of "credit packs," which plaintiffs complain "is the equivalent of a 9.1% discount."
The complaint also alleges plaintiffs purchased "supply crates" within ArcheAge. "Trion describes the supply crates as a 'random selection' of items and entices players to buy the crates by offering players a 'chance' to get a valuable virtual item in randomly selected supply crates (the 'Rare Prize'). [¶] . . . [¶] The Rare Prize is usually a coveted virtual item that is tremendously powerful within the game, allowing the player to progress more quickly." Plaintiffs contend Trion's sale of supply crates constitutes an illegal lottery.
B. Trion's Terms of Use
To access Trion's games, including ArcheAge, players must first register with Trion and create an account. The account registration process presents the user with a text box containing the statement: "I have read and agree to Trion's Terms of Use and Privacy Policy." To view the Terms of Use, the user must click on the hyperlinked phrase "Terms of Use." To complete registration and activate an online account, the user must check a box affirming he or she has read the Terms of Use.
The Terms of Use, effective as of August 1, 2012, provides "[y]our use of the Site, Account, Game(s), Game Client(s) and/or Service is subject to this Terms of Use and Trion's Privacy Policy, incorporated herein by this reference. Your use of a Game and/or Game Client (including any Game-related Virtual Items which may be offered in connection with such Game) is further subject to such Game's EULA. You must accept the applicable EULA, the Privacy Policy and this Terms of Use Agreement . . . prior to playing a Game."
Toward the end of the Terms of Use, section 26 contains an arbitration clause. It provides in part as follows:
"A. Informal Negotiations. To expedite resolution and control the cost of any dispute, controversy or claim related to this Agreement ('Dispute'), you and Trion agree to first attempt to negotiate any Dispute (except those Disputes expressly provided below) informally for at least thirty (30) days before initiating any arbitration or court proceedings. . . .
"B. Binding Arbitration. If you and Trion are unable to resolve a Dispute through informal negotiations, either you or Trion may elect to have the Dispute (except those Disputes expressly excluded below) finally and exclusively resolved by binding arbitration. Any election to arbitrate by one party shall be final and binding on the other. YOU UNDERSTAND THAT ABSENT THIS PROVISION, YOU WOULD HAVE THE RIGHT TO SUE IN COURT AND HAVE A JURY TRIAL. . . . The determination of whether a Dispute is subject to arbitration shall be governed by the Federal Arbitration Act and determined by a court rather than an arbitrator. . . . Except as otherwise provided in this Agreement, you and Trion may litigate in court to compel arbitration, stay proceedings pending arbitration, or to confirm, modify, vacate or enter judgment on the award entered by the arbitrator.
"C. Restrictions. You and Trion agree that any arbitration shall be limited to the Dispute between Trion and you individually. To the full extent permitted by law, (1) no arbitration shall be joined with any other; (2) there is no right or authority for any Dispute to be arbitrated on a class-action basis or to utilize class action procedures; and (3) there is no right or authority for any Dispute to be brought in a purported representative capacity on behalf of the general public or any other persons.
"D. Exceptions to Informal Negotiations and Arbitration. You and Trion agree that the following Disputes are not subject to the above provisions concerning informal negotiations and binding arbitration: (1) any Disputes seeking to enforce or protect, or concerning the validity of, any of your or Trion's intellectual property rights; (2) any Dispute related to, or arising from, allegations of theft, piracy, invasion of privacy or unauthorized use; and (3) any claim for injunctive relief.
"E. Location. The Site is controlled and operated by Trion from its offices within the State of California, United States of America. . . . If you are a resident of the United States, any arbitration will take place at any reasonable location within the United States convenient for you. . . . Any Dispute not subject to arbitration (other than claims proceeding in any small claims court), or where no election to arbitrate has been made, shall be decided by a court of competent jurisdiction within the County of San Francisco, State of California, United States of America, and you and Trion agree to submit to the personal jurisdiction of that court."
In section 27 of the Terms of Use, there is an integration clause and a provision addressing conflicts or inconsistencies between the Terms of Use and a game's EULA. It states: "This Terms of Use Agreement is the complete and exclusive statement of the agreement between you and Trion concerning the Service, and this Agreement supersedes any prior or contemporaneous agreement, either oral or written, and any other communications with regard thereto between you and Trion; provided, however that this Agreement is in addition to, and does not replace or supplant, any applicable Game EULA or Trion's Privacy Policy. In the event of a conflict or inconsistency between the terms and conditions of this Agreement and a Game EULA, the terms and conditions of the Game EULA shall supersede any such terms and conditions of this Agreement. . . ."
C. The ArcheAge EULA
While users must agree to the Terms of Use to create a Trion account, users who wish to play a Trion game are presented with, and must agree to, the end-user license agreement for that game. Updated September 12, 2014, the ArcheAge EULA provides, in all capital letters, that it is "AN AGREEMENT BETWEEN YOU AND TRION . . . . THAT GOVERNS YOUR USE OF THE SOFTWARE PROGRAM, INCLUDING, WITHOUT LIMITATION, ANY AND ALL UPDATES AND UPGRADES THERETO (COLLECTIVELY, THE 'GAME CLIENT')." The ArcheAge EULA notes that "[y]ou may register for an Account . . . and commence using many Game features free of charge. However, certain aspects of the Game may be available . . . for a fee or other charge. The Game (including any Premium Content) is distributed solely for use by authorized end users according to the terms of this Agreement."
Unlike the Terms of Use, the ArcheAge EULA does not contain an arbitration clause. Instead, in section 16, it provides: "Governing Law; Venue. This Agreement is governed in all respects by the laws of the State of California and of the United States of America as such laws are applied to agreements entered into and to be performed entirely within California between California residents. . . . Both parties submit to personal jurisdiction in California and further agree that any cause of action relating to this Agreement shall be brought in the County of San Mateo, State of California (if under State law) or the Northern District of California (if under federal law)." In section 18, the ArcheAge EULA provides "[t]his Agreement sets forth the entire understanding and agreement between Trion and you with respect the subject matter hereof."
D. Removal to Federal Court and Remand to State Court
After plaintiffs filed their complaint in San Mateo Superior Court, Trion removed the case to federal court, pursuant to the diversity jurisdiction provisions of the Class Action Fairness Act of 2005, title 28 United States Code section 1332(d) (CAFA). In federal court, Trion moved to compel arbitration, and plaintiffs moved to remand the case to state court. The District Court for the Northern District of California granted the motion to remand, and declined to rule on Trion's motion to compel arbitration. The court determined "plaintiffs' claims, which relate to their respective purchases of virtual items in the ArcheAge in-game marketplace, are subject to both the Terms of Use and the EULA." The federal court noted the ArcheAge EULA contains a forum-selection clause providing that any state law cause of action related to this Agreement shall be brought in San Mateo County. According to the federal court, this forum-selection clause is "mandatory," so it trumped Trion's right to removal under CAFA. Therefore, the federal court remanded the case to San Mateo Superior Court.
The federal court added "the arbitrability of this dispute must be resolved in the parties' chosen venue for state-law claims subject to the EULA — San Mateo Superior Court. Trion fails to address the possibility that . . . both agreements apply, requiring any determination of arbitrability to occur in the forum designated in the EULA. [¶] . . . To be clear, this order does not address whether the forum-selection clause in the EULA supersedes the arbitration provision altogether. Which claims, if not all, should be arbitrated is for the state court to decide."
E. The Order Denying the Petition to Compel Arbitration
Upon remand, Trion petitioned the trial court to compel arbitration, arguing the parties entered into a valid arbitration agreement, and the asserted claims fell within its scope. Plaintiffs opposed the petition, arguing they did not agree to arbitrate their claims and, if the arbitration clause did apply, it was unconscionable.
The court denied the petition finding "[t]here is no existing agreement to arbitration between these parties, as it was superseded by an agreement to adjudicate all causes of action in court. Alternatively, the arbitration provision in conjunction with agreement terms is procedurally . . . and substantively unconscionable . . . ." Trion appeals the order denying its petition to compel arbitration.
DISCUSSION
On appeal, Trion faults the trial court for framing "its analysis as one of 'existence' rather than 'harmonization.' " Trion contends there is "no dispute as to the existence of the Terms of Use and its arbitration provision, but rather a question of how that arbitration provision can be harmonized with the EULA's venue-selection clause - a harmonization question that must acknowledge (as the parties did) that the EULA incorporates the Terms of Use." Trion contends the court failed to give deference to the presumption in favor of arbitration, and the court also erred in its alternative holdings of unconscionability. We do not reach the question of whether the arbitration provision in the Terms of Use is unconscionable because we hold the parties did not agree to arbitrate their dispute.
I.
Standard of Review and Governing Law
Both the California Arbitration Act (Code Civ. Proc., § 1280 et seq.) and the Federal Arbitration Act (9 U.S.C. § 1 et seq.) recognize " ' "a strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution" ' and are intended ' "to encourage persons who wish to avoid delays incident to a civil action to obtain an adjustment of their differences by a tribunal of their own choosing." ' " (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1204; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) The fundamental policy underlying both acts "is to ensure that arbitration agreements will be enforced in accordance with their terms." (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 836, fn. 10; see also AT&T Mobility, at p. 344.)
" 'When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally . . . should apply ordinary state-law principles that govern the formation of contracts.' " (Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 244 (Sandquist).) "Arbitration is therefore a matter of contract. . . . [¶] . . . [¶] . . . [W]e apply general California contract law to determine whether the parties formed a valid agreement to arbitrate their dispute." (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59-60 (Avery).)
"A petition to compel arbitration is simply a suit in equity seeking specific performance of a contract. [Citation.] The party seeking to compel arbitration bears the burden of proving the existence of an arbitration agreement, while the party opposing the petition bears the burden of establishing a defense to the agreement's enforcement. [Citation.] [¶] When conflicting extrinsic evidence was not offered below, we apply a de novo, or independent, standard of review on appeal from a trial court's determination of whether an arbitration agreement applies to a particular controversy. [Citations.] Since the parties did not introduce conflicting evidence, the trial court's ruling on arbitrability is a conclusion of law, and we independently interpret the contract. [Citations.]" (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 890 (Aanderud).)
II.
Trion Fails to Establish the Parties Agreed to Arbitrate Their Dispute
We start, as we must, with the clear and explicit language of the applicable agreements. It is dispositive of the parties' contentions.
A. The ArcheAge EULA Supersedes the Terms of Use
"Under 'both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate.' " (Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396.) We look to California principles of contract interpretation to decide this threshold question. (Sandquist, supra, 1 Cal.5th at p. 244.)
Under California law, "[t]he language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity." (Civ. Code, § 1638.) "When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible . . . ." (Id., § 1639.) "Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together." (Id., § 1642) "The words of a contract are to be understood in their ordinary and popular sense . . . ." (Id., § 1644.)
In arguing the parties' agreed to arbitrate their dispute, Trion relies upon both the Terms of Use and the ArcheAge EULA, and attempts to harmonize their provisions. But the Terms of Use provides it is "in addition to, and does not replace or supplant, any applicable Game EULA . . . [and, i]n the event of a conflict or inconsistency between the terms and conditions of this Agreement and a Game EULA, the terms and conditions of the Game EULA shall supersede any such terms and conditions of this Agreement." There is a conflict, or at least an inconsistency, between the Terms of Use and the ArcheAge EULA because the Terms of Use includes an arbitration provision, but the ArcheAge EULA does not. Under this circumstance, the parties agreed the terms and conditions of the ArcheAge EULA "shall supersede" the terms and conditions of the Terms of Use.
Thus, when addressing the threshold question of whether the parties agreed to arbitrate their dispute, which relates to purchases associated with the ArcheAge game, the Terms of Use provides we must start with the ArcheAge EULA. It does not provide for arbitration. Based on the clear language of the applicable agreements, the agreement to litigate any state law cause of action relating to the ArcheAge EULA in San Mateo County supersedes the agreement to arbitrate other kinds of disputes. Trion cannot satisfy its burden of proving the existence of a valid agreement to arbitrate this dispute. (Avery, supra, 218 Cal.App.4th at pp. 59-60.)
B. The ArcheAge EULA Incorporates by Reference the Terms of Use, but the Terms of Use Does Not Incorporate by Reference the ArcheAge EULA
In arguing otherwise, Trion's first argument is that "the EULA 'incorporate[s] by reference' the Terms of Use, and the Terms of Use incorporates by reference the EULA." Accordingly, Trion contends these "documents must be read together." Plaintiffs contend Trion waived this argument by failing to raise it below, and, even if the two agreements should be read together, it "would have no impact on the central legal question in this appeal: how to resolve conflicting forum selection clauses."
With regard to the incorporation-by-reference arguments, we agree in part with Trion and in part with plaintiffs. " ' " 'It is, of course, the law that the parties may incorporate by reference into their contract the terms of some other document. [Citations.] But each case must turn on its facts. [Citation.] For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.' " ' " (Wolschlager v. Fidelity National Title Ins. Co. (2003) 111 Cal.App.4th 784, 790.)
Trion's incorporation-by-reference argument is not waived because Trion did claim below that the Terms of Use "specifically incorporates the applicable game's EULA." Considering Trion's argument on its merits, we find the ArcheAge EULA incorporates by reference the Terms of Use, but the Terms of Use does not incorporate by reference the ArcheAge EULA.
The ArcheAge EULA expressly provides that "[t]o play the Game, you must (a) download a valid copy of the Game Client (subject to Trion's Terms of Use and Privacy Policy agreements, incorporated by reference herein) . . . and . . . register an account with Trion." Moreover, a player cannot play ArcheAge without setting up a Trion account, which requires the player to check a box affirming he or she has read and agrees to the Terms of Use. Thus, the ArcheAge EULA incorporates by reference the Terms of Use.
However, the Terms of Use provides that "[y]our use of the Site, Account, Game(s), Game Client(s) and/or Service is subject to this Terms of Use and Trion's Privacy Policy, incorporated herein by this reference. Your use of a Game and/or Game Client (including any Game-related Virtual Items which may be offered in connection with such Game) is further subject to such Game's EULA. You must accept the applicable EULA, the Privacy Policy and this Terms of Use Agreement . . . prior to playing a Game." Thus, while the Terms of Use refers to an applicable game's EULA, it does not incorporate by reference the terms of any particular game's EULA.
Trion is alleged to be the publisher of a number of online games, including ArcheAge. A player can register an account with Trion and be subject to Trion's Terms of Use without playing a particular game and therefore without being subject to the game's EULA. But if a player wants to play ArcheAge, he or she must both register an account with Trion and download the ArcheAge software, making this player subject to both the ArcheAge EULA and the Terms of Use.
Here, plaintiffs allege they each set up Trion accounts and played ArcheAge. Accordingly, plaintiffs acknowledge they agreed to both the ArcheAge EULA and the Terms of Use. Nonetheless, the key to resolving this petition to compel arbitration is the parties' agreement that in the event of a conflict or inconsistency, the ArcheAge EULA supersedes the Terms of Use. (See Aanderud, supra, 13 Cal.App.5th at p. 890 [" 'If contractual language is clear and explicit, it governs. (Civ. Code, § 1638.)' "].) Based on this explicit language, we cannot conclude there was an agreement to arbitrate this dispute.
C. The Trial Court Did Not Err in Finding There Was No Agreement to Arbitrate This Dispute
Trion's main argument is that the trial court "erred in its understanding of its task." Citing Civil Code provisions regarding the interpretation of contracts, Trion contends that instead of asking whether there was an agreement to arbitrate, the trial court should have asked "whether the arbitration agreement applied - a question of harmonization, not of existence." Trion starts with the premise that both federal and California law favor enforcement of arbitration agreements, and, therefore, if there is an arbitration provision (in section 26 of the Terms of Use), then the trial court was required to "harmonize" it with the ArcheAge EULA, even though the ArcheAge EULA does not contain an arbitration clause.
According to Trion, "the Terms of Use provides for permissible arbitration of claims for damages or restitution (the very claims asserted here) while leaving injunctive relief claims for the courts. . . . The EULA specifies a venue for claims not subject to arbitration or for the resolution of a dispute if neither party elects arbitration. . . . Thus, one agreement (the Terms of Use) specifies when arbitration is required (if either party, as here, elects arbitration of non-injunctive claims) and the other agreement (the EULA) specifies - for those claims that are not subject to arbitration or for which the parties have not elected arbitration - a court where those claims can be brought. The venue-selection clause also dictates where an action to enforce the arbitration award (if any) should be filed."
Trion's attempt at harmonization fails because Trion would have us interpret the ArcheAge EULA "against the backdrop" of the Terms of Use, and as identifying a court where the parties may bring claims not subject to arbitration. This interpretation ignores the clear language of the Terms of Use's integration clause, which provides the Terms of Use is "in addition to, and does not replace or supplant, any applicable Game EULA . . . ." We agree with plaintiffs that Trion's attempt at harmonization renders superfluous the provision in section 16 of the ArcheAge EULA providing that state law causes of action relating to the ArcheAge EULA shall be litigated in San Mateo County.
Relying on UBS Financial Services, Inc. v. Carilion Clinic (4th Cir. 2013) 706 F.3d 319, 329 (UBS) and Century Indemnity v. Underwriters, Lloyd's, London (3d Cir. 2009) 584 F.3d 513, 554, Trion argues, in reply, that having a trial court in San Mateo County rule on its petition to compel arbitration of plaintiff's claims "shows that the EULA's forum-selection clause can be given effect," and plaintiffs' claims for injunctive relief can also be resolved in San Mateo Superior Court. We are not persuaded. If, as Trion contends, the trial court should have granted its petition to compel arbitration, such an outcome does not "give effect" to the clause in the ArcheAge EULA providing that "any cause of action relating to this Agreement shall be brought in the County of San Mateo."
Similarly, in arguing that plaintiffs' injunctive relief claims can be litigated in San Mateo County, Trion makes no attempt to reconcile section 16 of the ArcheAge EULA with section 26(E) of the Terms of Use, which provides disputes not subject to arbitration "shall be decided by a court of competent jurisdiction within the County of San Francisco." Its failure to do so casts doubt upon the validity of its proposed harmonization of these two agreements.
More fundamentally, Trion's proposed harmonization fails because it starts with the Terms of Use, and reads the ArcheAge EULA "against [its] backdrop." This strained interpretation ignores the clear and explicit language of the Terms of Use, which provides it is "in addition to, and does not replace or supplant, any applicable Game EULA . . . ." Since the ArcheAge EULA does not provide for arbitration, we cannot avoid the conclusion there is a conflict or inconsistency between it and the Terms of Use. "In the event of a conflict or inconsistency . . . ., the terms and conditions of the Game EULA shall supersede any such terms and conditions of" the Terms of Use. The trial court considered the correct question, and correctly concluded that no agreement to arbitrate this dispute exists.
D. Federal Authorities Do Not Support an Agreement to Arbitrate
In seeking arbitration, Trion relies on UBS, supra, 706 F.3d at p. 330, a Fourth Circuit Court of Appeals decision, where the court held a forum selection clause in broker-dealer agreements did not supersede or displace the parties' default obligation, as members of the Financial Industry Regulatory Authority, Inc. (FINRA), to arbitrate disputes arising out of the provision of financial services. The court noted the forum selection clause was silent regarding arbitration, and stated "one would reasonably expect that a clause designed to supersede, displace, or waive arbitration would mention arbitration." (Id. at p. 329.) Similarly here, Trion contends "that where there is an earlier arbitration provision, a later venue-selection clause should not be read to create a conflict where it fails to expressly waive arbitration."
UBS is distinguishable. In UBS, the court considered a forum selection clause against the backdrop of a default obligation to arbitrate under the FINRA rules. (UBS, supra, 706 F.3d at pp. 328-330.) But here, the Terms of Use expressly provides it is "in addition to, and does not replace or supplant" the ArcheAge EULA, so the starting point for our analysis is an agreement to litigate any cause of action relating to the ArcheAge EULA. Starting from the ArcheAge EULA, its silence regarding arbitration cannot be read as supporting an agreement to arbitrate.
In its attempt at harmonization, Trion cites Personal Security & Safety Systems Inc. v. Motorola Inc. (5th Cir. 2002) 297 F.3d 388. In that decision, from the Fifth Circuit Court of Appeals, the court held claims arising under a stock purchase agreement, which did not contain an arbitration clause, fell within the scope of the arbitration provision in the parties' product development agreement. (Id. at pp. 392-395.) But, in Personal Security, the language of the agreements at issue differed markedly from the language at issue here. In Personal Security, there was no language in the agreement containing the arbitration provision providing that it was "in addition to" and did not replace or supplant the agreement without an arbitration provision, and that, in the event of a conflict or inconsistency, the terms of the agreement without the arbitration provision superseded it. Personal Security is inapposite.
Trion relies on another case from the Fifth Circuit Court of Appeals, Sharpe v. AmeriPlan Corp. (5th Cir. 2014) 769 F.3d 909. In this case, the court held that one former sales director was required to arbitrate her claims against AmeriPlan Corporation (AmeriPlan), but three other former sales directors were not. (Id. at pp. 916-918.) Sharpe clarifies that, under federal law, the question of whether two agreements can be harmonized concerns the validity or existence, not the scope, of an agreement to arbitrate, and this question must be decided based on state law contract principles. (Id. at pp. 914-915.) Applying this approach, where the Terms of Use provides it is "in addition to" the ArcheAge EULA, and where, in the event of a conflict or inconsistency, the ArcheAge EULA "shall supersede" the Terms of Use, then plaintiffs did not agree to arbitrate their state law causes of action relating to the ArcheAge EULA.
The situation here is more like the one in Applied Energetics v. NewOak Capital Markets, LLC (2d Cir. 2011) 645 F.3d 522 (Applied Energetics), a case upon which plaintiffs rely. In Applied Energetics, the Second Circuit Court of Appeals concluded that a later agreement's adjudication clause "displace[d]" an earlier agreement's arbitration clause based in part on the later agreement's merger clause. (Id. at pp. 525- 526, fn. 2.) Similarly here, based on the Terms of Use's integration clause, which provides it is in addition to the ArcheAge EULA and superseded by it, we conclude the parties did not agree to arbitrate their dispute.
Trion does not address this case in its reply brief. --------
E. The Presumption in Favor of Arbitration Does Not Apply
Trion argues the trial court erred by failing to apply the presumption in favor of arbitration. We disagree. Under federal law, the presumption applies to arguments regarding the scope, not the existence, of an agreement to arbitrate. (UBS, supra, 706 F.3d at p. 324, fn. 2.) For example, in Goldman, Sachs & Co. v. City of Reno (9th Cir. 2014) 747 F.3d 733, the Ninth Circuit Court of Appeals determined the question of whether forum selection clauses superseded a default FINRA obligation to arbitrate concerned the existence, not the scope, of an agreement to arbitrate, and it declined to apply the presumption. (Id. at pp. 742-743.) Similarly, the Second Circuit Court of Appeals has stated that "while doubts concerning the scope of an arbitration clause should be resolved in favor of arbitration, the presumption does not apply to disputes concerning whether an agreement to arbitrate has been made." (Applied Energetics, supra, 645 F.3d at p. 526.)
Here too, where the question is whether the ArcheAge EULA supersedes the arbitration provision in the Terms of Use, we address whether an agreement to arbitrate exists, not its scope. Therefore the federal presumption in favor of arbitration does not apply. In addition, under California law, "[t]here is no public policy . . . that favors the arbitration of disputes the parties did not agree to arbitrate." (Aanderud, supra, 13 Cal.App.5th at p. 890.) We agree with the trial court that Trion failed to establish the parties agreed to arbitrate their dispute.
Trion's final argument is that the trial court erred by finding the arbitration provision in the Terms of Use unconscionable. The parties did not agree to arbitrate their dispute, so we do not address this argument. (See Grey v. American Management Services (2012) 204 Cal.App.4th 803, 809 [declining to consider whether provisions of an agreement were unconscionable where court found the agreement was superseded].)
DISPOSITION
We affirm the order denying Trion's petition to compel arbitration. Plaintiffs are entitled to costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
/s/_________
Jones, P. J. We concur: /s/_________
Needham, J. /s/_________
Bruiniers, J.