## Facts

- Zachary Vergara purchased a Nintendo Switch console and alleged the included Joy-Con controllers were defective.
- The purchase relationship was governed by an End-User License Agreement (EULA) between Vergara and Nintendo of America Inc.
- The EULA’s arbitration clause required binding arbitration administered by the American Arbitration Association (AAA) and incorporated the AAA Commercial Arbitration Rules and consumer procedures.
- The EULA also included a small-claims carve-out stating the arbitration clause does not apply to a claim “that may be brought in small-claims court.”
- Vergara filed a putative class action asserting state-law claims based on the alleged controller defect; Nintendo sought to compel arbitration under the Federal Arbitration Act (FAA).
- After the motion to compel arbitration was fully briefed, Vergara moved for leave to file an amended complaint.

## Issues

1. Whether the EULA’s incorporation of the AAA rules is “clear and unmistakable” evidence that the parties delegated gateway questions of arbitrability (including application of the small-claims carve-out) to the arbitrator.
2. Whether leave to amend should be granted after the court compels arbitration.

## Decision

- The court granted Nintendo’s motion to compel arbitration.
- The court held that incorporation of the AAA Commercial Arbitration Rules constituted clear and unmistakable delegation of arbitrability to the arbitrator.
- The court declined to decide whether the small-claims carve-out applied, treating that question as one for the arbitrator under the delegation provision.
- The court denied Vergara’s motion for leave to amend without prejudice as moot, given that the dispute was compelled to arbitration.
- The court stated Vergara could pursue his claims in federal court if the arbitrator determined the claims were not arbitrable.

## Legal Principles

- Under the FAA, a court compels arbitration when there is (1) an enforceable written arbitration agreement, (2) a dispute within its scope, and (3) a refusal to arbitrate.
- Parties may delegate gateway arbitrability questions to the arbitrator if there is clear and unmistakable evidence of that agreement.
- Incorporation of AAA rules granting the arbitrator authority to decide jurisdiction and arbitrability is sufficient evidence of delegation.
- When arbitrability is delegated, the court’s role is limited to enforcing the delegation; interpretive disputes about carve-outs and scope are for the arbitrator in the first instance.
- When arbitration is compelled on a threshold delegation ground, a pending motion to amend may be denied as moot without prejudice where amendment would not affect the delegation ruling.

## Conclusion

The court enforced the EULA’s delegation of arbitrability through incorporation of AAA rules, compelled arbitration without construing the small-claims exception, and denied the plaintiff’s post-briefing request to amend as moot while allowing a return to court if the arbitrator found the claims non-arbitrable.


Vergara v. Nintendo of Am. Inc., No. 19 C 6374, 2020 U.S. Dist. LEXIS 89412 (N.D. Ill. May 21, 2020)