You are on page 1of 25

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 1 of 25

UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF FLORIDA
Case No: 15-CV-20353-Gayles/Turnoff
JOSE AGUIRRE,
Plaintiff, on Behalf of a Putative Class,
vs.

CLASS ACTION

DRAFTKINGS, INC.
Defendant.
______________________/

PLAINTIFFS RESPONSE AND MEMORANDUM OF LAW IN OPPOSITION TO


MOTION TO COMPEL ARBITRATION

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 2 of 25

Table of Contents
Page
I.

Summary of Plaintiffs Argument ..............................................................................1

II.

Argument ......................................................................................................................2
A.

B.

MR. AGUIRRE DID NOT AGREE TO ARBITRATE CLAIMS ................................2


1.

Policy Favoring Arbitration is Inapplicable to ContractFormation Issues Raised by Plaintiff .................................................2

2.

Ambiguities as to the Existence of an Agreement to


Arbitrate Must Be Strictly Construed Against
DraftKings ............................................................................................3

3.

The Terms of Use Inconsistently Calls for (1) Litigation


and (2) Arbitration of Mr. Aguirres Claim ......................................4

4.

DraftKings Promise to Arbitrate is Illusory ....................................7


a)

DraftKings Unilateral Right Amend Any Term at


Any Time for Any Reason and Without Any Notice
Renders the Terms of Use Per Se Unenforceable ......................7

b)

The Arising-Prior and Survival Clauses Cannot


Save the Arbitration Agreement ..............................................11

c)

DraftKings Disclaims the Accuracy of its


Supposedly Binding Terms of Use ..........................................12

d)

DraftKings Disclaims its Promise to be Bound by


an Arbitrator .............................................................................13

THE ARBITRATION PROVISION IS UNENFORCEABLE AS


UNCONSCIONABLE ...........................................................................................14
1.

The Arbitration Agreement Violates Florida Law by


Waiving Punitive-Damages Liability for Fraud .............................14

2.

The Arbitration Agreement Violates Florida Law by


Denying Consumers Injunctive ReliefWhile
Preserving DraftKings Right to an Injunction ..............................15

3.

The Arbitration Agreement Shocks the Conscience by


(1) Reserving for DraftKings the Right to All Damages
Available Under the Law While (2) Completely
Insulating DraftKings from All Liability for Any Act ....................16

4.

Offending Terms Cannot be Severed ...............................................19

III.

Conclusion ..................................................................................................................20

IV.

Request for Hearing ...................................................................................................20

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 3 of 25

PLAINTIFFS RESPONSE AND MEMORANDUM OF LAW IN OPPOSITION TO


MOTION TO COMPEL ARBITRATION
Plaintiff, Jose Aguirre, as representative of a putative class, respectfully requests that this
Court deny DraftKings, Inc.s (DraftKings) motion to compel arbitration, and submits this
supporting memorandum of law:
I.

Summary of Plaintiffs Argument

Preoccupied with salvaging an unconscionable arbitration clause, DraftKings forgets that


the parties never agreed to arbitrate in the first place. The Terms of Use, cited by DraftKings to
compel arbitration, actually contains a compulsory litigation clause. The provision mandates that
all claims arising from customers use of DraftKings websitea category that indisputably
includes Mr. Aguirres claimbe litigated in a court of competent jurisdiction. Yet on the same
page of its Terms of Use, DraftKings purports to mandate that those claims be submitted to an
arbitrator. DraftKings apparent solution to this contradictionignore the litigation clause and
enforce the arbitration clausedefies basic principles of contract formation. Because these
clauses cannot be reconciled, there was no meeting of the minds as to a form of dispute
resolution, and thus necessarily no agreement to arbitrate.
This Court need not even reach the conclusion above, however, because the Terms of Use
containing the arbitration clause is not a valid contract. In the document, DraftKings reserves the
right to, at any time, revoke, alter, and amend any of its obligations under the Terms of Use, at its
sole discretion and without notice to its customers. Because this reservation renders DraftKings
promises illusory, it robs the agreement of consideration, preventing the formation of a valid
contract. Because arbitration is solely a creature of contract, it cannot be imposed here.
Even assuming this Court deciphers an actual agreement to arbitrate, that agreement is
unenforceable as unconscionable. Among other infirmities, the agreement (1) in one portion
1

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 4 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
precludes Mr. Aguirre from filing suit in court,1 while explicitly affording DraftKings that right;
(2) limits Mr. Aguirres recovery in arbitration to (depending on the portion of the Terms of Use)
either $100 or $0, while allowing DraftKings to recover ad infinitum; (3) preserves DraftKings
right to obtain injunctive relief, while usurping consumers; and (4) insulates DraftKings from
punitive damages for fraud, in violation of Florida law. In tandem, these terms are so one-sided
and oppressive as to shock the conscience and necessitate denial of Defendants motion.

II.

Argument

Absent a valid delegation to an arbitrator, the federal district courts are tasked with
determining (A) whether parties agreed to arbitrate and (B) if so, whether the agreement is
enforceable. Granite Rock Co. v. Intl Bhd. Of Teamsters, 561 U.S. 287, 299 (2010). As the
Terms of Use does not contain a delegation clause, these issues are properly before the Court.
A.

MR. AGUIRRE DID NOT AGREE TO ARBITRATE CLAIMS

DraftKings spends nearly its entire motion attempting to fortify the arbitration clause
against arguments of unconscionability. The court need not consider this issue to deny
Defendants motion, as the parties never reached an arbitration agreement.
1.

Policy Favoring Arbitration is Inapplicable to Contract-Formation


Issues Raised by Plaintiff

DraftKings notes that the Federal Arbitration Act (FAA) embodies a strong public
policy in favor of arbitration. This presumption, however, is applicable only in determining
whether and how to enforce an arbitration provision to which parties have agreednot in
determining the threshold matter whether an agreement to arbitrate exists. The courts uniformly
hold that while doubts concerning the scope of an arbitration clause should be resolved in favor
1

In stark contrast, of course, with the portion of the agreement mandating that Mr. Aguirre file suit in court, not
arbitrate.

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 5 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
of arbitration, the presumption does not apply to disputes concerning whether an agreement to
arbitrate has been made. Goldman, Sachs & Co. v. Golden Empire Sch. Fin. Auth., 764 F.3d
210, 215 (2nd Cir. 2014). Accordingly, the presumption favoring arbitrability does not apply to
Plaintiffs argument that Mr. Aguirre did not agree to arbitrate the claims.
2.

Ambiguities as to the Existence of an Agreement to Arbitrate Must Be


Strictly Construed Against DraftKings

An arbitration agreement must be enforceable under ordinary state-law contract


principles in order for the Court to find that the agreement is valid. Collado v. J. & G. Transp.,
Inc., 2015 WL 1478609, at *3 (S.D. Fla. 2015) (internal quotations omitted). Pursuant to Florida
law,2 not only should arbitration contract-formation issues not be interpreted in favor of
arbitrability, any ambiguities should be interpreted against DraftKings as the documents author.
DSL Internet Corp. v. TigerDirect, Inc., 907 So. 2d 1203, 1205 (Fla. 3d DCA 2005) (Florida
law requires that a contract be interpreted against the drafter when the contract contains
ambiguous terms.). Moreover, because the Terms of Use is a contract of adhesion, this Court
should not just merely construe, but rather strictly construe, any ambiguity against DraftKings.
Baker v. Securitas Sec. Services USA, Inc., 432 F. Supp. 2d 120, 124 (D. Me. 2006) (rule that
ambiguities are to be interpreted against the drafter is heightened in cases where the parties to
the contract are in unequal bargaining positions) (internal quotations omitted); Mulcahy v.
Nabors Well Services Co., 2010 WL 1881846, at *2 (D. Mont. 2010) (ambiguity in arbitration
agreement should be construed most strongly against drafter). This rule is of particular import
to the inconsistent-provisions issue raised directly below.

Since, as argued below, there was no meeting of the minds regarding the entire Terms of Use, the Massachusetts
choice-of-law clause was never agreed to. See Note 5, infra. Regardless, given the similarities in Florida and
Massachusetts law, it does not matter which states contract-formation principles govern; the same result would lie.

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 6 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
3.

The Terms of Use Inconsistently Call for (1) Litigation and (2)
Arbitration of Mr. Aguirres Claim

The Terms of Use provides:


Any claim or dispute between you and DraftKings that arises in whole or in part
from the Terms of Use, the Website or any Contest shall be decided exclusively
by a court of competent jurisdiction located in Suffolk County Massachusetts.
Terms of Use (TOU) at 8.3 This provision signals to customers that any legal dispute
involving DraftKings website, like the claim of Mr. Aguirre and the putative class, must be
litigated in court. The civil action must, according to the contract drafted by DraftKings, be filed
in Suffolk County, Massachusetts.4 An aggrieved customer reading this clause would know that
arbitration is not an option. After all, any claim or dispute between [the customer] and
DraftKings that arises in whole or in part from the Terms of Use, the Website or any Contest
shall be decided exclusively by a court of competent jurisdiction TOU at 8 (emphasis added).
Nonetheless, on the same page as this litigation clause, the Terms of Use provide for
arbitration:
[a]ny and all disputes, claims or controversies arising out of or relating to this
Agreement, the breach thereof or any use of the Websiteexcept for claims filed
in a small claims court shall be settled by binding arbitration before a single
arbitrator appointed by the American Arbitration Association ("AAA") in
accordance with its then governing rules and procedures, including the
Supplementary Procedures for Consumer-Related Disputes, where applicable. In
agreeing to arbitrate all Claims, you and DraftKings waive all rights to a trial by
jury in any action or proceeding involving any Claim.
TOU at 8.
DraftKings cannot reasonably dispute that the same contract simultaneously calls, as to
3

A copy of the Terms of Use is attached hereto as Exhibit A.

Plaintiff makes note of the venue clause not because it is binding, but because it is completely inconsistent with
arbitration in that it requires the use of a court for dispute resolution. As elaborated upon extensively elsewhere in
this response, because the two dispute-resolution provisionsof which this venue clause is partare irreconcilable,
both are void. Accordingly, Mr. Aguirre filed suit in the Southern District, where venue is proper in lieu of a valid
contractual provision.

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 7 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
all disputes stemming from Mr. Aguirres use of the website, for (1) trial in a court of law and
(2) arbitration. The contradictory provisions doom DraftKings motion to compel, as [b]efore a
party to a lawsuit can be ordered to arbitrate and thus be deprived of a day in court, there should
be an express, unequivocal agreement to that effect. Samson v. NAMA Holdings, LLC, 637 F.3d
915, 923 (9th Cir. 2011) (emphasis added) (citation omitted). A provision that (1) tells a
consumer to litigate then (2) tells her to arbitrate is the opposite of unequivocal.
The Florida Supreme Courts decision in Basulto v. Hialeah Automotive, 141 So.3d 1145
(Fla. 2014) is determinative. In Basulto, one clause mandated a bench, rather than jury, trial;
another mandated arbitration with three arbiters; and a third clause mandated arbitration with a
sole arbiter. Id. at 1150. The Florida Supreme Court agreed with the trial court that each of the
competing dispute resolution provisionscontemplates the enforcement of a different remedy
whose terms and conditions are irreconcilable... Id. The Florida Supreme Court affirmed the
trial courts finding as a matter of law that there was no meeting of the minds with respect to the
terms by which [the dealership] intended the parties to be bound. There is accordingly no valid
agreement for this Court to enforce. Id.
The federal courts are in line with Floridas high court. See, e.g., Stephens v. TES
Franchising, 2002 WL 1608281, at *3 (D. Conn. 2002) (denying motion to compel arbitration
where one provision stated that all claims must be brought before a court and another indicated
that all trademark disputes are subject to binding arbitration); Mulcahy, 2010 WL 1881846, at *2
(motion to compel arbitration denied where clause ambiguous as to arbitration because it is
susceptible to at least two reasonable but conflicting interpretations: (1) that it preserves a party's
constitutional right to a jury trial and access to the Courts and (2), that it restricts that right by
mandating binding arbitration.); Lea Tai Textile Co., Ltd. v. Manning Fabrics, Inc., 411 F.
5

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 8 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
Supp. 1404, 1407 (S.D.N.Y. 1975) (finding no agreement to arbitrate where two provisions are
in hopeless conflict). Inescapably, and fatally, the Terms of Use call for the simultaneous
litigation and arbitration of the same claimsincluding Mr. Aguirres claims. This destroys
DraftKings attempt to force arbitration.
Additional inconsistencies as to dispute resolution abound. For example, the Terms of
Use state:
ANY ATTEMPT BY AN ENTRANT OR ANY OTHER INDIVIDUAL TO
DELIBERATLY DAMAGE THE WEBSITE OR UNDERMINE THE
LEGITIMATE OPERATION OF ANY CONTEST IS A VIOLATION OF
CRIMINAL AND/OR CIVIL LAWS AND SHOULD SUCH AN ATTEMPT BE
MADE, DRAFTKINGS RESERVES THE RIGHT TO SEEK DAMAGES AND
OTHER REMEDIES FROM ANY SUCH PERSON TO THE FULLEST EXTENT
PERMITTED BY LAW.
TOU at 3 (emphasis added). This provision contrasts starkly with the arbitration clause.
A dispute arising from ones attemptto deliberately damage the website or undermine the
legitimate operation of any contest on the website unmistakably is a disputearising out
ofany use of the Website and, per the arbitration clause DraftKings itself wrote, necessarily
shall be settled by binding arbitration before a single arbitrator. TOU at 8. Yet DraftKings
reserves the right to seek damages and other remedies from any such person to the fullest extent
permitted by lawa right that by definition includes suit in court.
Elsewhere, the Terms of Use provide that [t]he Company, at its sole discretion, may
disqualify any entrant from a Contest, refuse to award benefits or prizes and require the return of
any prizes, if the entrant engages in conduct the Company deems to be improper [or] unfair...,
and that [u]sers further acknowledge that the forfeiture and/or return of any prize shall in no
way prevent DraftKings from pursuing criminal or civil proceedings in connection with such
conduct. TOU at 2. A dispute concerning any improper [or] unfair conduct an entrant might
6

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 9 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
engage in regarding an online contest is, by definition, a disputearising out ofany use of the
Website, TOU at 8, and supposedly subject to mandatory arbitration. Yet, contrary to its own
arbitration clause, DraftKings reserves, for itself only, the right to pursue civil court proceedings
in connection with such conduct. This unilateral prerogative to commence court proceedings
squarely defies DraftKings argument that the parties mutually agreed to arbitrate all
disagreements.
4.

DraftKings Promise to Arbitrate is Illusory


a)

DraftKings Unilateral Right to Amend Any Term at Any Time for


Any Reason and Without Any Notice Renders the Terms of Use
Per Se Unenforceable

A basic tenet of contract law [is] that in order for a promise to be enforceable against the
promisor, the promisee must have given some consideration for the promise. Gibson v.
Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir. 1997). Where a promisor
may perform or not, solely on the condition of his whim, his promise will not serve as
consideration. Johnson Enterprises of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290,
1311 (11th Cir. 1998) (citations omitted). Most pertinent here, [w]here a promisor retains an
unlimited right to decide later the nature or extent of his performance, the promise is too
indefinite for legal enforcement. The unlimited choice in effect destroys the promise and makes
it merely illusory, and the contract fails for lack of consideration. Floss v. Ryan's Steak Houses,
211 F.3d 306, 316 (6th Cir. 2000) (citation omitted).
These axioms apply to arbitration clauses. An arbitration agreement allowing one party
the unfettered right to alter the arbitration agreements existence or its scope is illusory and thus
unenforceable. Dumais v. Am. Golf Corp., 299 F.3d 1216, 1219 (10th Cir. 2002). Here, the
arbitration clause was part of the Terms of Use, which DraftKings could amend any time,
7

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 10 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
unilaterally and without notice:
DraftKings reserves the right to amend these Terms of Use at any time and
without notice, and it is your responsibility to review these Terms of Use for any
changes. If you continue to use the Services after we change the Terms of Use,
you accept all changes.
TOU at 9. Accordingly, at any timeeven while a potential litigant is playing the fantasy
sports contest that forms the basis of a disputeDraftKings could change its obligations under
the contract. Even after Mr. Aguirre had been aggrieved, DraftKings could impose additional
obligations upon Mr. Aguirre, relieve itself of any of its obligations, or bothall without
notifying Mr. Aguirre.
If Plaintiff wished to compel arbitration, DraftKings could simply remove the provision
from the Terms of Use upon Mr. Aguirres selection of that remedy, or alter the arbitration
clause so that it does not cover Mr. Aguirres claim. Because DraftKings can at any time change
or relieve itself of the arbitration agreement, it did not actually agree to anything. See In re
Zappos.com, Inc., Sec. Breach Litig., 893 F. Supp. 2d 1058, 1066 (D. Nev. 2012) (deeming
contract illusory, and refusing to compel arbitration, where, if a consumer sought to invoke
arbitration pursuant to the Terms of Use, nothing would prevent Zappos from unilaterally
changing the Terms and making those changes applicable to that pending dispute if it determined
that arbitration was no longer in its interest.). DraftKings unlimited choice regarding whether
to be bound or not, and by which terms, destroys the promise and makes it merely illusory,
causing the contract to fail for lack of consideration. Floss, 211 F.3d at 316.
Dumais v. American Golf Corp, 299 F.3d 1216 (10th Cir. 2002) is instructive. Dumais
had filed an EEOC complaint against her former employer. Id. at 1218. The employer moved to
compel arbitration, citing a handbook provision that contained an arbitration clause but also

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 11 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
reserved American Golfs right to amend, supplement, or revise everything in the [h]andbook
with the exception of the employees at-will status. Id. at 1217. The district court constru[ed]
the [h]andbook against the drafter (American Golf) and found that the agreement was invalid
because it was illusory, lacked mutuality, and was not supported by consideration, reasoning
that the agreement binds [Dumais] but allows [American Golf] free rein to renege. This
lopsided agreement is illusory because it allows [American Golf] to unilaterally modify the terms
at any time. Id. at 1218. The Tenth Circuit affirmed, holding that an arbitration agreement
allowing one party the unfettered right to alter the arbitration agreements existence or its scope
is illusory. Id. at 1219. DraftKings reservation of the right to amend the[] Terms of Use at any
time and without notice, TOU at 9, is indistinguishable from American Golfs right to amend,
supplement, or revise everything in the handbook.
Further guidance is provided by Douglas v. Johnson Real Estate Investors, LLC, 470 F.
Appx 823 (11th Cir. 2012) (applying Massachusetts law).5 The Plaintiff in Douglas filed an
employment age-discrimination claim. Id. at 824. The defendant argued that a clause in the
employee handbook demanded binding arbitration. Id. Douglas argued that the agreement to
arbitrate was illusory, as Johnson reserved the right to at any time, change, revise, supplement,
discontinue, or rescind any or all of such conditions, policies, benefits and procedures or any
other provision of this Handbook from time to time, as it deems necessary or appropriate in its
sole discretion, with or without notice to employees. Id. The Eleventh Circuit found that
5

DraftKings cites to the choice-of-law provision in the Terms of Use to allege that the document should be
construed pursuant to the substantive law of Massachusetts. Because the entire contract is illusory, there is no
contract and thus no choice-of-law provision. In absence of an agreement, Florida substantive law should be used to
construe the contract. See Grupo Televisa, S.A. v. Telemundo Communications Group, Inc., 485 F.3d 1233, 124041 (11th Cir. 2007). If, arguendo, this Court finds the Terms of Use enforceable generally, Massachusetts law
would, by contract, be used to determine whether the arbitration and litigation clauses conflict, as alleged in Section
II.A.3, supra, of this response, and whether the arbitration clause is unconscionable, as alleged in Section II.B.,
infra. The same resultdenial of forced arbitrationwould result whether Florida or Massachusetts principles
applied, as the laws are substantially similar.

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 12 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
because Johnson could modify the [agreement] unilaterallythat is, without Douglass
agreement or knowledgeits promise to arbitrate was illusory, and refused to compel
arbitration. Id at 826.
In re Zappos.com, Inc., Sec. Breach Litig., 893 F. Supp. 2d 1058 (D. Nev. 2012)
demonstrates that the holdings of Dumais and Douglas are the rule, not the exception. In that
case, the terms of use purportedly [bound] any user of the Zappos.com website to mandatory
arbitration, but if a consumer sought to invoke arbitration pursuant to the Terms of Use,
nothing would prevent Zappos from unilaterally changing the Terms and making those changes
applicable to that pending dispute if it determined that arbitration was no longer in its interest.
Id. at 1066. The Court noted that, [i]n effect, the agreement allows Zappos to hold its customers
and users to the promise to arbitrate while reserving its own escape hatch [, leaving]
Zapposfree at any time to require a consumer to arbitrate and/or litigate anywhere it sees fit.
Id. The court joined those other federal courts that find such arbitration agreements illusory and
therefore unenforceable. Id. (surveying case law). This case demands the same result.
If this Court were to find that customers had otherwise retained their right to force
DraftKings to arbitrate, that right is quickly dashed by this termination clause: In addition to
any other legal or equitable remedy, DraftKings may, without prior notice, immediately revoke
any or all of your rights granted hereunder. TOU at 5. Were Mr. Aguirre to elect arbitration to
settle this claim, this clause would afford DraftKings the ability to say, Sorry. We are
immediately revok[ing] any or all of your rights granted by the Terms of Use, including your
right to compel arbitration. Because the termination clause ensures that DraftKings, as the
promisor, may perform or not, solely on the condition of [its] whim, [its] promise [can]not serve
as consideration. Johnson Enterprises of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290,
10

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 13 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
1311 (11th Cir. 1998) (internal citations omitted).
For multiple reasons, then, the arbitration agreement, as part of the Terms of Use, is
devoid of consideration and void ab initio.
b)

The Arising-Prior and Survival Clauses Cannot Not Save the


Arbitration Agreement

The termination clause above is part of the Termination and Effect of Termination
section of the Terms of Use, which more fully provides:
In addition to any other legal or equitable remedy, DraftKings may, without prior
notice, immediately revoke any or all of your rights granted hereunder. In such
event, you will immediately cease all access to and use of the DraftKings
Website. DraftKings may revoke any password(s) and/or account identification
issued to you and deny you access to and use of the Website. Any such action
shall not affect any rights and obligations arising prior thereto. All provisions of
the Terms of Use which by their nature should survive termination shall survive
termination, including, without limitation, ownership provisions, warranty
disclaimers, indemnity and limitations of liability.
TOU at 5. The notification that revocation of rights shall not affect any rights and
obligations arising prior, TOU at 5 (the arising-prior clause), does not save this illusory
contract because DraftKings is not bound by the provision. Nor is it bound by the survival
clauses, which allege that the provisions of the Terms of Use which by their nature should
survive termination shall survive termination, TOU at 5, and that the arbitration provision shall
survive termination of this agreement. TOU at 8.
DraftKings omnipotent amendment clause assures those provisions do not bind the
company by reserving for DraftKings the right to amend these Terms of Use at any time and
without notice TOU at 9. Wielding this power, DraftKings can obliterate any customers
rights at any time, without notice, in two steps: (1) utilize the amendment clause to remove the
arising-prior and survival clauses so that the consumers rights can no longer be grandfathered

11

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 14 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
in, then b) delete any right it wishes from the Terms of Use. Armed with this option, DraftKings
retains an unlimited right to decide later the nature or extent of its performance, which
destroys the promise and makes it merely illusory. Floss, 211 F.3d at 316.
c)

DraftKings Disclaims the Accuracy of Its Supposedly Binding


Terms of Use

Customers view DraftKings Terms of Use by accessing its website. Problematically,


DraftKings expressly disclaims all content that appears on the site:
THE COMPANY DOES NOT WARRANT THAT THE WEBSITE, ANY OF
THE WEBSITES FUNCTIONS OR ANY CONTENT CONTAINED THEREIN
WILL BE UNINTERRUPTED OR ERROR-FREE [OR] THAT DEFECTS
WILL BE CORRECTED THE COMPANY SHALL NOT BE LIABLE FOR
THE USE OF THE WEBSITE INCLUDING, WITHOUT LIMITATION, THE
CONTENT AND ANY ERRORS CONTAINED THEREIN.
TOU

at

5-6.

Elsewhere,

DraftKings

provides

that

it

is

not

responsible

foranyinability to access the Website, or web pages that are part of or related to the
Website[or] typographicalor other errors. TOU at 3.
The Terms of Use are part of the website and certainly qualify as site content. In
disclaiming the accuracy of any content appearing on the site, DraftKings necessarily disclaims
the accuracy of the Terms of Use, telling customers it is not to be relied upon.6 By design, then,
DraftKings shields itself from consumers wishing to pursue their rights thereunder. This creation
of a self-serving escape hatch deprives the contract of consideration. See Hirschi v. Newcastle
Properties, Inc., 2006 WL 2927493, at *1 (D. Colo. 2006) (putative arbitration agreement
deemed unenforceable and illusory where companys handbook containing arbitration clause

This is sound advice, as the Terms of Use is riddled with verifiably false statements. The document proclaims, for
example, that [n]o professional or amateur sports league or any team associated with any professional or amateur
sports league is associated with DraftKings or in any way affiliated or associated with the Contests. TOU at 9. In
fact, DraftKings isto give merely a partial listthe official fantasy sports website of Major League Baseball and
the National Hockey League and has signed exclusive deals with the New England Patriots and Denver Broncos.

12

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 15 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
provided that handbook was not a contract and impose[d] no legal obligation upon
company); In re Zappos.com, 893 F.Supp.2d at 1066 (refusing to enforce agreement [that]
allow[ed] Zappos to hold its customers and users to the promise to arbitrate while reserving its
own escape hatch, leaving the company free at any time to require a consumer to arbitrate
and/or litigate anywhere it sees fit.).
d)

DraftKings Disclaims its Promise to be Bound by an Arbitrator

DraftKings promises to submit to an arbitral process whereby its customers can obtain all
legal and equitable relief available in the courts of the Commonwealth of Massachusetts. TOU
at 8. But it then tells the consumer:
UNDER NO CIRCUMSTANCES SHALL THE COMPANYBE LIABLE TO
YOU FOR DAMAGES OF ANY KIND (INCLUDING, WITHOUT
LIMITATION, FOR ANY SPECIAL, DIRECT, INDIRECT, INCIDENTAL,
EXEMPLARY,
ECONOMIC,
PUNITIVE,
OR
CONSEQUENTIAL
DAMAGES) THAT ARE DIRECTLY OR INDIRECTLY RELATED TO (1) THE
WEBSITE, THE CONTENT(2) THE USE OF, INABILITY TO USE, OR
PERFORMANCE OF THE WEBSITE[OR] (5) ANY ERRORS OR
OMISSIONS IN THE WEBSITES TECHNICAL OPERATION, EVEN IF
FORESEEABLE OR EVEN IF THE COMPANYHAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES WHETHER IN AN ACTION OF
CONTRACT, NEGLIGENCE, STRICT LIABILITY [, OR] TORT[AND] IN
NO EVENT WILL THE COMPANY ENTITIES AND INDIVIDUALS BE
LIABLE TO YOU OR ANYONE ELSE FOR LOSS OR INJURYBY
ACCESSING THE WEBSITE, YOU UNDERSTAND THAT YOU MAY BE
WAIVING RIGHTS WITH RESPECT TO CLAIMS THAT ARE AT THIS
TIME UNKNOWN OR UNSUSPECTED. ACCORDINGLY, YOU AGREE TO
WAIVE THE BENEFIT OF ANY LAWTHAT OTHERWISE MIGHT LIMIT
YOUR WAIVER OF SUCH CLAIMS.
TOU at 6 (emphasis added). In other words, DraftKings submits to arbitration, but
UNDER NO CIRCUMSTANCES SHALL THE COMPANYBE LIABLE TO YOU FOR
DAMAGES OF ANY KIND that are awarded in that arbitration. TOU at 6. A promise could
not be more illusory. See Johnson Enterprises of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d

13

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 16 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
1290, 1311 (11th Cir. 1998) (if a promise[] appears on its face to be so insubstantial as to
impose no obligation at all on the promisorwho says, in effect, I will if I want tothen that
promiseisillusory i.e., a promise in form but not in substance.) (internal quotations
omitted). DraftKings promise to submit claims to an arbitrator possessing the authority to award
damages, TOU at 8, is thus not backed by consideration because DraftKings Terms of Use
ensure the company is not liable for satisfying any adverse judgment.
In sum, because DraftKings is not actually bound by the Terms of Use or arbitration
clause therein, there is no arbitral agreement for this Court to enforce. DraftKings motion must
therefore be denied without consideration of whether the putative agreement is unconscionable.
B.

THE ARBITRATION PROVISION IS UNENFORCEABLE AS UNCONSCIONABLE

Because the parties never agreed to arbitrate, this Courts inquiry should end here.
However, assuming that Mr. Aguirre agreed to arbitrate, the agreement cannot be enforced
because it epitomizes unconscionability. Lying amid a nine-page, nearly 6,000-word document
consisting of single-spaced, size-9 font, the adhesive, form arbitration agreement cobbles
together nearly every draconian contract provision existent in American and English law,
notwithstanding that many of these terms contradict others in the same document. It strips the
consumer of all reasonable, legal remedies while illegally insulating DraftKings from all
liability. The provision so shocks the conscience that it cannot be enforced.
1.

The Arbitration Agreement Violates Florida Law by Waiving


Punitive-Damages Liability for Fraud

In Florida, an arbitration agreement cannot validly waive ones right to punitive damages
for fraud. Before Basulto v. Hialeah Automotive reached the Florida Supreme Court, the Third
District Court of Appeal considered this precise issue. 22 So. 3d 586, 590 (Fla. 3d DCA 2009),

14

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 17 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
revd on other grounds, 141 So. 3d 1145 (Fla. 2014). Below, the trial court [had] found that the
[arbitration] [a]greement was substantively unconscionable because it contained a waiver of right
to seek punitive damages. Basulto, 22 So. 3d at 590. The Third DCA affirmed that ruling,
noting that, like Mr. Aguirres complaint, the complaint contains a claim for fraud, and punitive
damages are available in judicial proceedings where there is a fraud claim. Id. The court
agree[d] with the trial court that it is unconscionable to employ an arbitration agreement to
obtain a waiver of rights to which the signatory would otherwise be entitled under common law
or statutory law. Id. Like the car dealer in Basulto, DraftKings here provided that that the
arbitrator shall not have authority to award punitive damages. TOU at 8. Hence, like that in
Basulto, the waiver here is substantively unconscionable as violative of Florida public policy.
2.

The Arbitration Agreement Violates Florida Law by Denying


Consumers Injunctive ReliefWhile Preserving DraftKings Right to
an Injunction

DraftKings arbitration clause reserves for itself the right to all legal and equitable relief
available in the courts of the Commonwealth of Massachusetts, TOU at 8, including,
necessarily, an injunction. But the corporation tells consumers, IN THE EVENT YOU INCUR
ANY DAMAGES, LOSSES, OR INJURIES THAT ARISE OUT OF THE COMPANYS ACTS
OR OMISSIONS, THE DAMAGES, IF ANY, CAUSED TO YOU ARE NOT IRREPARABLE
OR SUFFICIENT TO ENTITLE YOU TO AN INJUNCTION PREVENTING ANY
EXPLOITATION OF ANY WEBSITE OR OTHER PROPERTY OWNED OR CONTROLLED
BY THE COMPANY TOU at 6 (emphasis added). Aside from affording DraftKings the
power to defraud broad swaths of Floridians with impunity, the clause would abrogate the
injunctive relief that the Florida Deceptive and Unfair Trade Practices Act (FDUTPA)
explicitly allows. Fla. Stat. 501.211(1). Such is repugnant to Florida law. See Powertel, Inc. v.
15

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 18 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
Bexley, 743 So.2d 570, 576-77 (Fla. 1st DCA 1999) (clause forcing customers to waive
important statutory remedies, including injunctive or declaratory relief under FDUTPA, deemed
void as violative of public policy); see also Gessa v. Manor Care of Florida, Inc., 86 So. 3d 484,
493 (Fla. 2011) (parties cannot, by contract, directly undermine specific statutory remedies
created by the Legislature).
3.

The Arbitration Agreement Shocks the Conscience by (1) Reserving for


DraftKings the Right to All Damages Available Under the Law While
(2) Completely Insulating DraftKings from All Liability for Any Act

An unconscionable contract is [a]n agreement that no promisor with any sense, and
not under a delusion, would make, and that no honest and fair promisee would accept. Hollins v.
Debt Relief of Am., 479 F. Supp. 2d 1099, 1106 (D. Neb. 2007) (citing Black's Law Dictionary,
p. 75 (8th ed. 2004)). To establish unconscionability, a plaintiff must demonstrate both
procedural unconscionabilitya lack of meaningful choice about whether to accept the
provision in questionand substantive unconscionability, wherein the disputed provisions
[are] so one-sided as to be oppressive. Skirchak v. Dynamics Research Corp., Inc., 432
F.Supp.2d 175, 179 (D. Mass. 2006).
Here, the issue of procedural unconscionability can be dispatched with ease. Procedural
unconscionability generally takes the form of an adhesion contract, which, imposed and drafted
by the party of superior bargaining strength, relegates to the subscribing party only the
opportunity to adhere to the contract or reject it. Heflebower v. JPMorgan Chase Bank, NA,
2013 WL 5476806, at *12 (E.D. Cal. 2013) (citations omitted). The arbitration clause was
written by DraftKings and, as indicated in the explanation in Defendants own motion of how
DraftKings users register, Mr. Aguirre had no bargaining power and only the opportunity to
adhere to the contract or reject it. Id.
16

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 19 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
Substantive unconscionability is no closer of an issue. Oppressive terms so pervade the
Terms of Use that they overwhelm even the strong public policy favoring arbitration and
mandate denial of Defendants motion. In one part of the agreement, for example, consumers are
told that [i]n no event shall [DraftKings and its officers] total liability to you for all damages,
losses, or causes of action exceed one hundred dollars ($100). TOU at 6. Meanwhile,
DraftKings can recover all of its damages stemming from a dispute. TOU at 8 (affording
arbitrator power to award all legal and equitable relief available in the courts of the
Commonwealth of Massachusetts.). This provision violates Basulto v. Hialeah Automotive.
Therein, the Third DCA considered a clause that limited consumers, but not the car dealers,
recovery to $5,000. 22 So.3d 586, 591 (Fla. 3d DCA 2009). Interpreting the clause in light of the
FAA, the Third DCA found not only that the one-sided nature of the clause rendered it
substantively unconscionable, but that it could not be severed from the remainder of the
agreement, thereby defeating arbitration altogether. Basulto, 22 So.3d at 191.
Because the $100 cap is termed in absolutes[i]n no event shall [DraftKings]total
liabilityexceed$100that sum must be interpreted to include all attorneys fees and costs.
So, the most Mr. Aguirre could ever recoup is $100 total. Laughably, that is $100 less than the
mandatory $200 consumer filing fee under the AAA Rules that purportedly govern. See Motion
to Compel Arbitration, Attachment 1, at p. 34. Incredibly, because of the liability cap imposed by
DraftKings, consumers such as Mr. Aguirre could never do better in arbitration than netting a
$100 losseven if they are 100-percent victorious in the eyes of the arbiter. 7

The Terms of Use do provide that customers can litigate in small-claims court in Suffolk County, Massachusetts,
TOU at 8, but this is of no practical value to Florida consumers. Assuming the small-claims court would award costs
and fees, the total of any judgment, including costs and fees, still could, per the Terms of Use, not exceed $100 (or
$0, see infra). To even step foot in a Boston small-claims court, Mr. Aguirre would have to purchase a round-trip
flight from Miami to Boston and a hotel room, which would probably exceed $500 total. If he won, Mr. Aguirre

17

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 20 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
While the $100 cap is plainly unconscionable, it gets worse. The Terms of Use elsewhere
states that by entering into a Contest or accepting any prize, entrantsagree to indemnify,
release and to hold harmless DraftKingsfrom any and all liability, claims, or actions of any
kind whatsoever, including but not limited to injuries, damages, or losses to persons and property
which may be sustained in connection with participation. TOU at 2 (emphasis added). Its
customers are further warned:
UNDER NO CIRCUMSTANCES SHALL THE COMPANYBE LIABLE TO
YOU FOR DAMAGES OF ANY KIND (INCLUDING, WITHOUT
LIMITATION, FOR ANY SPECIAL, DIRECT, INDIRECT, INCIDENTAL,
EXEMPLARY,
ECONOMIC,
PUNITIVE,
OR
CONSEQUENTIAL
DAMAGES) THAT ARE DIRECTLY OR INDIRECTLY RELATED TO (1) THE
WEBSITE, THE CONTENT(2) THE USE OF, INABILITY TO USE, OR
PERFORMANCE OF THE WEBSITE[OR] (5) ANY ERRORS OR
OMISSIONS IN THE WEBSITES TECHNICAL OPERATION, EVEN IF
FORESEEABLE OR EVEN IF THE COMPANYHAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES WHETHER IN AN ACTION OF
CONTRACT, NEGLIGENCE, STRICT LIABILITY [, OR] TORT[AND] IN
NO EVENT WILL THE COMPANYBE LIABLE TO YOU OR ANYONE
ELSE FOR LOSS OR INJURY . BY ACCESSING THE WEBSITE, YOU
UNDERSTAND THAT YOU MAY BE WAIVING RIGHTS WITH RESPECT
TO CLAIMS THAT ARE AT THIS TIME UNKNOWN OR UNSUSPECTED.
ACCORDINGLY, YOU AGREE TO WAIVE THE BENEFIT OF ANY
LAWTHAT OTHERWISE MIGHT LIMIT YOUR WAIVER OF SUCH
CLAIMS.
TOU at 6. This provision is nothing short of absurd. Under the companys dispute
resolution regime, the consumer can be held liable for any and all damages recognized under
Massachusetts law. TOU at 8. Meanwhile, by seeking harbor of the provision above, DraftKings
remains free to harm consumers without consequence. More than perhaps any other clause, this

would be awarded his $25 back, plus costs and fees. However, because [i]n no event shall [DraftKings and its
officers] total liability to [the consumer] for all damages, losses, or causes of action exceed one hundred dollars
($100), the costs and fees would be capped at $75, making the total recovery $100. Even assuming Mr. Aguirre
proceeded pro se and had no attorneys fees, he would, by winning, actually lose $400. Accordingly, it makes no
economic sense for him to attempt to recoup the $25 out of which DraftKings defrauded him in small-claims court.
This is exactly what the corporation wants, and exactly why its scheme is unconscionable.

18

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 21 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
all-encompassing liability waiver impales DraftKings claim that it forged a fair and enforceable
deal with Mr. Aguirre to arbitrate all disputes. The alleged agreement is one that no promisor
with any sense, and not under a delusion, would make, and that no honest and fair promisee
would accept. It shocks the conscience and cannot be enforced by an American court.
4.

Offending Terms Cannot be Severed

If illegality pervades the arbitration agreement such that only a disintegrated fragment
would remain after hacking away the unenforceable parts, the judicial effort begins to look more
like rewriting the contract than fulfilling the intent of the parties. Booker v. Robert Half Intern.,
Inc., 413 F.3d 77, 84-85 (D.C. Cir. 2005). The more a party overreaches, the less likely a court
will be able to sever the provisions and enforce the clause. Id. at 85. Given the infirmities in the
arbitration agreement, which permeate nearly every one of the nine Terms of Use pages,
severance would essentially place this Court in the position of re-drafting from scratch.
Among other fatal shortcomings, the arbitration agreement: (1) is devoid of consideration
from DraftKings, which expressly provides it is not bound, TOU at 3, 6, 9; (2) hopelessly
conflicts with a litigation clause in the same contract, TOU at 8; (3) precludes Mr. Aguirre
from filing suit in a court of general jurisdiction, while explicitly affording DraftKings that right,
TOU at 2, 3; (4) preserves DraftKings right to obtain injunctive relief, while usurping
Plaintiffs, TOU at 6, 8; (5) waives consumers right to punitive damages in violation of Florida
law, TOU at 8; and (6) limits Mr. Aguirres recovery to, depending on the clause, either $100 or
$0, while allowing DraftKings to recover ad infinitum, TOU at 2, 6. These provisions go to the
heart of the contract and, if removed, would render the document an empty shell. The entire
arbitration agreement should be declared void and defendants motion denied.

19

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 22 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff
III.

Conclusion

As demonstrated above, the parties never agreed to the Terms of Use, and thus never
agreed to arbitrate. The Courts inquiry can end there. However, assuming the parties did agree,
that agreement cannot be enforced because it is unconscionable. Accordingly, Plaintiff
respectfully requests that this court deny Defendants attempt to compel arbitration, deny
Defendants attempt to dismiss this class action, and deny Defendants attempt to obtain
attorneys fees from Mr. Aguirre.

IV.

Unopposed Request for Hearing

Plaintiff, pursuant to Local Rule 7.1(b), respectfully requests that this Court hold a
hearing on DraftKings motion. Plaintiff submits that entertaining oral argument would help the
court obtain clarity on any issue that, due to page limits and the complexity of the issues, could
not be exhaustively briefed. Plaintiff anticipates that a 30-minute hearing would suffice. Plaintiff
has, pursuant to Local Rule 7.1(a)(3), conferred with Defendant and confirmed that Defendant is
not opposed to a hearing on this matter.

20

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 23 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff

Respectfully submitted,
MASE LARA, P.A.
Attorneys for Plaintiff
2601 South Bayshore Drive, Suite 800
Miami, Florida 33133
Telephone: (305) 377-3770
Facsimile: (305) 377-0080
By:

21

/s/ Mason Kerns


RICHARD D. LARA
Florida Bar No.: 987492
rlara@maselara.com
CHRISTOPHER G. LYONS
Florida Bar No.: 985457
clyons@maselara.com
MASON KERNS
Florida Bar No.: 91754
mkerns@maselara.com
filing@maselara.com
mnorona@maselara.com

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 24 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff

CERTIFICATE OF SERVICE
I hereby certify that on June 19, 2015, I served the foregoing document with the Clerk to
the Court using CM/ECF. I also certify that the foregoing document is being served this day on
all counsel of record identified on the attached Service List via transmission of Notices of
Electronic Filing generated by CM/ECF.
/s/ Mason Kerns
MASON KERNS

22

Case 1:15-cv-20353-DPG Document 33 Entered on FLSD Docket 06/19/2015 Page 25 of 25


CASE NO. 15-CV-20353-Gayles/Turnoff

SERVICE LIST
JORGE A. MESTRE, ESQUIRE
KADIAN BLANSON, ESQUIRE
CHARLIE WHARTON, ESQUIRE
RIVERO MESTRE, LLP
Attorneys for DraftKings, Inc.
2525 Ponce de Leon Boulevard, Suite 1000
Miami, Florida 33134
Telephone: (305) 445-2500
Fax: (305) 445-2505
jmestre@riveromestre.com
kblanson@riveromestre.com
cwhorton@riveromestre.com
npuentes@riveromestre.com
evonderosten@riveromestre.com
receptionist@riveromestre.com
TIMOTHY W. LOOSE, ESQUIRE
JAMES P. FOGELMAN, ESQUIRE
AUSTIN SCHWING, ESQUIRE
GIBSON, DUNN & CRUTCHER, LLP
Of Counsel for DraftKings, Inc.
333 South Grand Avenue, Suite 5400
Los Angeles, California, 90071
Telephone: (213) 229-7000
Fax: (213) 229-6234
tloose@gibsondunn.com
jfogelman@gibsondunn.com
aschwing@gibsondunn.com
18776//42v3

23