K.F.C. v. Snap Inc. ( 2022 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 21-2247
K.F.C., a minor, by her guardian Erin Clark,
Plaintiff-Appellant,
v.
SNAP INC.,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Southern District of Illinois.
No. 3:21-cv-9-DWD — David W. Dugan, Judge.
____________________
ARGUED JANUARY 7, 2022 — DECIDED MARCH 24, 2022
____________________
Before EASTERBROOK, ST. EVE, and KIRSCH, Circuit Judges.
EASTERBROOK, Circuit Judge. When she was 11 years old,
K.F.C. signed up for a Snapchat account. The enrollment
terms specify that a person must be at least 13 to have an ac-
count, but K.F.C. lied about her age. A few years later, she
filed this suit under the diversity jurisdiction. (She is a citizen
of Illinois, while Snap, which operates the Snapchat service, is
incorporated in Delaware and has its principal place of busi-
ness in California.) Contending that some of Snapchat’s
2 No. 21-2247
features amount to facial recognition, which Illinois treats as
a kind of biometric data, K.F.C. argues that the service vio-
lates the Illinois Biometric Privacy Act, 740 ILCS §§ 14/1 to
14/99, because it did not obtain her consent and does not fol-
low the statute’s purpose, disclosure, and retention rules.
In order to open a Snapchat account, a person must agree
to Snap’s terms and conditions. One of these is arbitration of
disputes. K.F.C. acknowledges that she accepted these terms
but denies that the arbitration clause (or any other part of the
agreement) binds her. She concedes that she continued using
Snapchat after turning 13 but maintains that this is irrelevant,
because she was (and still is) under 18. The district court was
not persuaded, ordered the parties to arbitrate, and dismissed
the suit. 2021 U.S. Dist. LEXIS 108695 (S.D. Ill. June 10, 2021).
The judge held that the arbitrator, not a court, must decide
whether K.F.C.’s youth is a defense to the contract’s enforce-
ment. Because the judge dismissed the suit outright, 9 U.S.C.
§16(a)(3) allows her to appeal, see Green Tree Financial Corp. v.
Randolph, 531 U.S. 79 (2000), and she did so.
K.F.C.’s argument starts with the proposition that, be-
cause arbitration is a maaer of contract, judges must decide
that a contract has been formed before they may order arbi-
tration. So the Supreme Court held in AT&T Technologies, Inc.
v. Communications Workers, 475 U.S. 643 (1986). Even the most
sweeping delegation cannot send the contract-formation issue
to the arbitrator, because, until the court rules that a contract
exists, there is simply no agreement to arbitrate. Any poten-
tially contrary language in Janiga v. Questar Capital Corp., 615
F.3d 735, 738, 741–43 (7th Cir. 2010), must be understood in
the light of AT&T Technologies, which emphasizes that the ar-
bitrator cannot resolve any issues until the court has
No. 21-2247 3
ascertained that there is an actual agreement; the breadth of a
delegation is irrelevant if the parties did not enter into a con-
tract. But, if there is a contract, then an arbitration clause may
delegate all other issues, including defenses, to the arbitrator,
see Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010)—and
Snapchat’s terms include a broad delegation clause.
To the major premise from AT&T Technologies, K.F.C. adds
the minor premise that a child cannot form a contract. This
produces the conclusion that Snap does not hold any right to
arbitrate with her, which means that the suit must proceed in
court.
The problem with this syllogism lies in the minor premise.
State law governs the power to form a contract. The parties
agree that either California or Illinois supplies that law—and
they also agree that the two bodies of law are materially iden-
tical, so we mention only Illinois law from here on. Illinois
does not think that agreements between adults and children
are void—that they must be ignored, no maaer what. Illinois
treats such agreements as voidable, which means that chil-
dren may elect how to proceed once they come of age. See,
e.g., Fletcher v. Marshall, 260 Ill. App. 3d 673 (2d Dist. 1994).
The difference may be subtle, but it is important. A voidable
agreement, unlike a void one, may be ratified. In other words,
a child may choose to accept the agreement and claim its ben-
efits, while also being bound by any detriments. Because a
voidable agreement may or may not end up being applied,
Illinois treats the age of the contracting parties as a potential
defense to enforcement. See, e.g., National Bank of Dixon v.
Neal, 5 Ill. 2d 328 (1955). That allows children to claim the ben-
efits of their agreements. It means in turn that the potential
4 No. 21-2247
defense goes to the arbitrator—that Rent-A-Center rather than
AT&T Technologies supplies the controlling rule.
None of the Illinois decisions that treats a child’s contract
as voidable concerns arbitration. Other states seem equally si-
lent. But we have found one (and only one) federal appellate
decision on the subject. I.C. v. StockX, LLC, 19 F.4th 873 (6th
Cir. 2021), is all but identical to our case. A minor agreed to
terms that included arbitration, then filed a federal suit and
argued that, by virtue of his youth, the case must stay in court.
The majority of the Sixth Circuit held that the claim must be
arbitrated, because youth is a defense rather than an impedi-
ment to contractual formation under Michigan law (which ap-
pears to be identical in this respect to Illinois law). The dis-
senting judge argued that a child cannot form a contract at all,
so a purported agreement is void. At oral argument Snap
asked us to follow the majority in StockX, while K.F.C. pre-
dictably favored the dissent. We think that the majority has
the beaer of the argument. As long as state law permits a child
to ratify a contract, youth must be a defense rather than an
obstacle to a contract’s formation, and as a defense it goes to
the arbitrator.
K.F.C. advances several other arguments in opposition to
arbitration, but they boil down to a contention that at age 11
she was too young to form a contract. For example, she con-
tends that there can’t be a contract because Snap can’t show
offer and acceptance; it can’t show offer, the argument goes,
because she was 11 and the terms stated that only people 13
and up may have accounts. Yet this variant on the “too
young” argument was not presented to the district court—at
least, not presented except in passing, and certainly not de-
veloped. Under the circumstances it has been forfeited.
No. 21-2247 5
K.F.C. also contends that it would be against the public
policy of Illinois to enforce any part of any agreement be-
tween a child and a commercial Internet service. That kind of
argument, however, lays out a defense to enforcement of the
agreement, and Buckeye Check Cashing, Inc. v. Cardegna, 546
U.S. 440 (2006), holds that arguments about the validity of a
whole agreement go to the arbitrator. “[A] challenge to the
validity of the contract as a whole, and not specifically to the
arbitration clause, must go to the arbitrator.” Id. at 449.
Buckeye relied on Prima Paint Corp. v. Flood & Conklin Mfg.
Co., 388 U.S. 395 (1967), for the conclusion that a state cannot
reallocate functions between court and arbitrator by calling an
agreement void. 546 U.S. at 446. The dissenting judge in
StockX concluded that this must make the distinction between
void and voidable contracts irrelevant for all purposes. Like
the majority in StockX, we do not read Buckeye that way. After
all, the Federal Arbitration Act itself says that arbitration is
enforceable to the extent any promise is enforceable as a mat-
ter of state law. 9 U.S.C. §2. The Court’s point was that federal
rather than state law determines who (judge or arbitrator)
plays which role in resolving a dispute. The holding of Buck-
eye is that a challenge to the validity (as opposed to the exist-
ence) of a contract always goes to the arbitrator, no maaer
how states characterize their views about enforceability.
K.F.C.’s arguments about her youth and public policy concern
the contract’s validity, not its existence.
Snap contends that K.F.C. has ratified the agreement by
continuing to use the Snapchat service, that its service does
not come within the scope of the Biometric Privacy Act, and
that for other reasons it is not liable. K.F.C. contends that her
6 No. 21-2247
age, and public policy, are defenses to enforcement. All of
these maaers are for the arbitrator.
AFFIRMED