## Facts

- McDonald’s ran a 2001 “Who Wants to Be a Millionaire” promotional game to encourage purchases of its food products.
- Linda James obtained a game card with an order of french fries at a McDonald’s restaurant in Franklin, Kentucky and believed it was a one-million-dollar grand-prize winner.
- James mailed the original game card to McDonald’s redemption center.
- The redemption center responded that security codes showed the card was a low-level prize game card eligible only for minor food or small cash prizes.
- After federal authorities arrested Simon Marketing employees for stealing winning game pieces from McDonald’s promotions, James sued McDonald’s and related entities asserting state-law contract and tort claims tied to the promotion.
- The action was transferred to the Northern District of Illinois as part of an MDL proceeding.
- McDonald’s moved to compel arbitration under an arbitration clause contained in the promotion’s official rules; the district court compelled arbitration and stayed the case.
- James did not initiate arbitration for nearly a year, later sought reconsideration of the arbitration order, and the district court denied reconsideration and dismissed the case for failure to prosecute.

## Issues

1. Whether a promotional game participant is bound by the contest’s official rules, including an arbitration clause, when the rules were publicly available but not read or signed by the participant.
2. Whether the district court abused its discretion by dismissing the action sua sponte for failure to prosecute under Federal Rule of Civil Procedure 41(b) after the plaintiff failed to initiate compelled arbitration.

## Decision

- The Seventh Circuit affirmed the order compelling arbitration.
- The court held that participation in the promotion bound James to the official rules, including the arbitration provision, because the rules were made available to participants and governed participation.
- The Seventh Circuit affirmed the dismissal for failure to prosecute.
- The court held the district court acted within its authority under Rule 41(b) and its inherent power to manage its docket when James failed for an extended period to pursue arbitration or otherwise move the case forward.

## Legal Principles

- A promotional contest can create a unilateral contract in which the sponsor’s official rules define the terms of participation and redemption.
- A participant may be bound to publicly available contest rules, including dispute-resolution terms such as arbitration clauses, even if the participant did not read or sign the rules, so long as the rules were reasonably communicated and participation occurred under those terms.
- When a court compels arbitration and stays litigation, a plaintiff’s prolonged failure to initiate arbitration may constitute failure to prosecute.
- A district court may dismiss an action sua sponte for failure to prosecute under Rule 41(b) and inherent docket-management authority; appellate review is for abuse of discretion.

## Conclusion

The Seventh Circuit held that James’s participation in McDonald’s promotional game subjected her to the official rules’ arbitration requirement and that the district court did not abuse its discretion in dismissing the stayed action when she failed for nearly a year to initiate arbitration or otherwise prosecute her claims.


James v. McDonald's Corp., 417 F.3d 672 (7th Cir. 2005)