The Ninth Circuit recently ruled that a gaming platform company forfeited its right to compel arbitration after spending nearly a year litigating in federal court, including filing a motion to dismiss on the merits. The decision examines when litigation conduct becomes inconsistent with preserving arbitration rights and highlights the risks companies face when they delay invoking arbitration provisions while actively pursuing other defense strategies.
United StatesLitigation, Mediation & Arbitration
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Duane Morris Takeaway: This week’s episode features Duane Morris partner Jerry Maatman, senior associate Kat Alphonso, and associate Caitlin Capriotti with their analysis of a ruling from the Ninth Circuit rejecting a game platform’s motion to compel arbitration, finding the defendant’s delay in seeking arbitration over nearly a year of litigation waived any right to arbitrate.
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Jerry Maatman: Hello everyone, and thank you for being here again for the next episode of the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today are my colleagues Kat Alphonso and Caitlin Capriotti. Thanks so much for both of you being on the podcast.
Kat Alphonso: Glad to be here, Jerry.
Caitlin Capriotti: Thanks for having me, Jerry.
Jerry: Today, we’re discussing a recent Ninth Circuit decision that addresses an issue we hear about frequently in the context of class action litigation, that being arbitration, and more specifically, when a company can lose the right to compel arbitration by litigating in court too long. The case is Uhl, et al. v. Roblox Corporation from the U.S. Court of Appeals for the Ninth Circuit in San Francisco. The ruling arose out of litigation against the company involving allegations that children using the company’s gaming platform were targeted by adult predators. Kat, can you start us off with some background about the case?
Kat: Absolutely. So, the lawsuit was brought by a parent, Damien Uhl, who alleged that his daughter was exposed to inappropriate communications from an adult posing as a friend on the Roblox platform. The complaint was one of several actions alleging that Roblox failed to adequately protect minors despite representing that it had safeguards in place for younger users. Instead of immediately moving to compel arbitration, Roblox removed the case to federal court and filed a motion to dismiss the complaint on the merits. The company litigated for nearly a year before eventually seeking to compel arbitration based on arbitration provisions contained in its terms of service. The district court denied the motion to compel, concluding that Roblox had waived any right that it had to arbitrate, and Roblox appealed the ruling to the Ninth Circuit.
Jerry: Caitlin, how did the Ninth Circuit approach these issues on appeal, and why did it ultimately affirm the district court’s decision that denied the motion to compel arbitration?
Caitlin: The majority focused on the Ninth Circuit’s two-part waiver test. Under prior circuit precedent. A party waives its right to arbitrate when it knows of its right to compel arbitration, and then engages in conduct that is inconsistent with the exercise of that right. The Ninth Circuit found both elements satisfied. First, the panel concluded that Roblox knew it had a right to arbitrate from the outset. The company acknowledged that all versions of its terms of service during the relevant period contained arbitration provisions because the complaint alleged that the plaintiff’s daughter had used Roblox since 2017, and that purchases were regularly made on that platform, the court found Roblox possessed enough information to know that an arbitration provision potentially applied. Second, the court found that Roblox acted inconsistently with that right. Rather than moving to compel arbitration and seeking limited discovery if necessary, Roblox chose to litigate the case in court. It removed the action from state court, briefed jurisdictional issues, pursued a merits-based motion to dismiss, and waited approximately 11 months before filing its arbitration motion. The panel characterized those actions as inconsistent with a party seeking to arbitrate.
Jerry: One fact that seemed particularly important to the Ninth Circuit was an internal litigation email that surfaced during the proceedings. Kat, could you explain to our listeners why that email became a significant piece of evidence in the court’s analysis?
Kat: Yes, this email was actually really central to the outcome. Roblox argued that it could not originally move to compel arbitration because it lacked the username necessary to determine which version of the arbitration agreement governed the dispute. But the court pointed to an August 2024 email in which Roblox told plaintiffs’ counsel that it did indeed intend to seek arbitration, even though it still did not have a username, and would pursue targeted discovery later to determine which terms applied. The majority viewed that communication as highly damaging to Roblox’s position. According to the court, the email essentially demonstrated that Roblox knew it could seek arbitration without first obtaining the username, and as a result, the court concluded that Roblox could have filed its motion much earlier instead of spending almost a year litigating in court.
Jerry: That’s a very interesting, analysis. The majority also seem to be troubled by the sequence of events. How did that play in the Ninth Circuit’s ultimate decision?
Caitlin: The Ninth Circuit stated that Roblox pursued dismissal on the merits first, and then only turned to arbitration after the District Court rejected its attempt to dispose of the claims in court. The opinion contains some fairly strong language on that point. The court explained that a party cannot ask a district court to dismiss a complaint on the merits while simultaneously holding arbitration in reserve as a backup strategy in case the judicial approach does not work out. According to the majority, that type of litigation tactic is inconsistent with a genuine intent to arbitrate.
Jerry: Well, the Ninth Circuit’s decision was not unanimous. What did the dissent have to say on these issues?
Kat: So, Judge Bumatay dissented and took a very different view of the record. He argued that the Ninth Circuit had never previously held that a party must file a motion to compel arbitration and seek discovery simultaneously in order to preserve arbitration rights. In his view, Roblox lacked sufficient information and identified the specific arbitration agreement at issue, and should have not been penalized for waiting until it could determine that information. Judge Bumatay also criticized the majority for relying on Roblox’s motion to dismiss and removal efforts, noting that the Ninth Circuit precedent had never held that filing a non-jurisdictional motion to dismiss automatically results in waiver, and he argued that removing a case through federal court may actually be consistent with invoking protections under the Federal Arbitration Act. Ultimately, he viewed Roblox conduct as a forfeiture resulting from delay, rather than an intentional waiver of a known right.
Jerry: Well, let’s retreat to a 100,000-foot view and discuss and examine the practical implications of this ruling. Caitlin, what are the lessons learned for companies, that have, arbitration programs with class action waivers in terms of when and how to invoke those provisions to defend themselves in litigation?
Caitlin: So, there are several important takeaways. First, companies that intend to rely on arbitration agreements need to evaluate that strategy immediately upon receiving a complaint. This decision demonstrates that courts are increasingly willing to scrutinize litigation conduct and timing when determining whether arbitration rights have been waived. Defendants should be cautious about pursuing merits-based motions before addressing arbitration. Here, the Ninth Circuit repeatedly stated that Roblox sought dismissal with prejudice before moving to compel arbitration. That sequencing played a substantial role in the court’s waiver analysis. Finally, if a court believes additional information is needed to establish the applicability of an arbitration agreement, it should consider promptly moving to compel arbitration and requesting limited discovery rather than waiting months to raise the issue.
Kat: I would also add, Jerry, that the ruling illustrates a broader trend we’re seeing following the Supreme Court’s decision in Morgan v. Sundance. Courts are becoming more willing to find waiver without requiring plaintiffs to prove prejudice. That means defendants face greater risk when they actively litigate before invoking arbitration. For companies with online terms of service, consumer arbitration agreements, or even employee arbitration programs, early case assessment is more important than ever. Delays that might have once been excused can now create a significant risk that arbitration rights will be lost altogether.
Jerry: Well, well said. Those are excellent takeaways. Certainly, to me, the decision underscores and is a valuable reminder that arbitration is simply not a defense to keep in one’s back pocket or in reserve. Companies and litigants who want the benefits of arbitration must act consistently, promptly, and pretty quick from that choice at the beginning of litigation. Once a defendant chooses to litigate substantive issues, beware, because they are going to be subject to an argument from plaintiffs’ counsel in these class actions that the defendant has waived the right to compel arbitration.
Well, Kat and Caitlin, thank you so much for being our guest today and providing your insights on this most significant Ninth Circuit ruling, and thank you to our listeners for tuning in for another episode of the Class Action Weekly Wired. We look forward to bringing you more updates on important developments in the class action world. Until next time, thanks so much for tuning in and listening.
Caitlin: Thanks for having me, Jerry, and thanks, listeners.
Kat: Thank you, everyone, for listening.
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