James K. Bredar, United States District Judge.
Mia Mason ("Plaintiff") filed a Class Action Complaint against Machine Zone, Inc.
On the surface, Plaintiff charges that Defendant trampled real and important rights and interests of hers, wrongfully and unlawfully, in an alternative, virtual world created by an electronic game. But a careful probe beneath the surface reveals a hodgepodge of hollow claims lacking allegations of real-world harms or injuries. Perceived unfairness in the operation and outcome of a game, where there are no real-world losses, harms, or injuries, does not and cannot give rise to the award of a private
Defendant, a Delaware corporation headquartered in California, operates GoW, a "massively multiplayer" online game
GoW is entirely free to play. (ECF No. 1 ¶ 19.) However, some players, impatient for conquest, exercise an option to purchase virtual "gold" to "improve their virtual towns and hasten their advancement in the game." (Id. ¶ 2.) Defendant maintains a digital "gold store" through which these players acquire "gold" with real money at rates ranging from $4.99 for 1200 pieces to $99.99 for 20,000 pieces. (Id. ¶ 24.) Flush with simulated cash, some of these players then proceed to the in-game "Casino," where they purchase virtual "chips" to wager on a virtual spinning wheel. (Id. ¶¶ 21-23.)
Crucially, there is no real-dollar value attached to "gold," chips, or any Casino prizes. On the contrary, Defendant's Terms of Service ("ToS") — appended to Plaintiff's Complaint — provide that "Virtual Currency and Virtual Goods may never be redeemed for `real world' money, goods or other items of monetary value from [Defendant] or any other person"; that players receive a nontransferable "revocable license to use the Virtual Goods and Virtual Currency" solely for personal entertainment purposes; and that, aside from the foregoing license, players have "no right, title, or interest in or to any such Virtual Goods or Virtual Currency." (ECF No. 1-2 at 9.)
Although the ToS expressly bar players from "buy[ing] or sell[ing] any Virtual Currency or Virtual Goods outside the Services or in exchange for `real world' money or items of value" (id. at 10), Plaintiff alleges that "players have created secondary markets to buy and sell Game of War accounts" (ECF No 1 ¶ 37). Plaintiff does not allege that Defendant hosts or sanctions these secondary markets, nor does she allege that she has ever sold or attempted to sell an account — nor even that she intends to do so in the future.
Plaintiff downloaded GoW in early 2014; she began playing in the Casino shortly after downloading the game. (Id. ¶ 43.) Plaintiff alleges that, over the course of about one year, she "lost more than $100 wagering at Defendant's Casino." (Id.) A citizen of Maryland, Plaintiff brought this action in diversity, purporting to represent a nationwide class of players and a subclass of Maryland players. Plaintiff alleges that the Casino is an unlawful "slot machine or device" under Cal. Penal Code § 330b; that Defendant has violated California's UCL by owning and operating this unlawful device, proximately causing Plaintiff and her class economic damages; that Plaintiff and her class have conferred a benefit upon Defendant that Defendant should not be permitted to retain; and that Plaintiff and her subclass are entitled to restitution under Maryland law.
Defendant moved to dismiss the Class Action Complaint on June 29, 2015. (ECF No. 7.) Plaintiff filed a response in opposition on August 13, 2015 (ECF No. 18), and Defendant replied on September 10, 2015 (ECF No. 24).
II. Legal Standard
A complaint must contain "sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Facial plausibility exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937. An inference of a mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679, 129 S.Ct. 1937. As the Twombly opinion noted, "Factual allegations must be enough to raise a right to relief above the speculative level." 550 U.S. at 555, 127 S.Ct. 1955. "A pleading that offers `labels and conclusions' or `a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders `naked assertion[s]' devoid of `further factual enhancement.'" Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (alteration in original) (quoting Twombly, 550 U.S. at 555, 557, 127 S.Ct. 1955).
A. Cal. Penal Code § 330b (Count I)
In her Complaint, Plaintiff accuses Defendant of violating a California statute criminalizing, inter alia, the manufacture, ownership, or possession of a "slot machine or device." (ECF No. 1 ¶ 53.) As Defendant correctly observes in the memorandum accompanying its Motion to Dismiss, the California Penal Code "does not provide a private right of action entitling Plaintiff to sue under it." (ECF No. 7-1 at 12.) And in her opposition memorandum, Plaintiff clarifies that she does not intend to raise Count I as a distinct theory of recovery. (ECF No. 18 at 13.) Thus, the Court has no difficulty dismissing Count I for failure to state a claim.
Such dismissal does not, however, end the Court's inquiry. Plaintiff's Count II (her California UCL claim) is derivative of Count I: she bases her theory of UCL recovery on the premise that GoW's Casino function is an unlawful "slot machine or device." Thus, in order to properly interrogate Plaintiff's UCL theory, the Court must consider the antecedent question whether the Casino function violates California state law.
1. The Rule
California law defines a "slot machine or device" as a "machine, apparatus, or device" that is operated by insertion of a coin or other object "or by any other means" and that "by reason of any element of hazard or chance" grants the user any of the following: (1) a "thing of value," (2) an "additional chance or right to use the slot machine or device," or (3) a token that may be exchanged for a "thing of value." Cal. Penal Code § 330b(d) (emphasis added).
The Casino function appears to satisfy most of these elements. While not operated by insertion of a physical coin, it is certainly operated "by any other means," and there is no dispute that — from the player's vantage point — the spinning wheel involves chance rather than skill. Moreover, while the virtual prizes that Casino players may win have no real-world economic value,
Defendant does, however, vigorously dispute Plaintiff's assertion that the Casino function is a "machine, apparatus, or device." Rather, Defendant urges, it is "software downloaded to an individual's Apple or Android device," and there is "no cognizable reading of Section 330b that would reach a software developer whose software was only installed onto the devices of others." (ECF No. 7-1 at 15-16.)
Indeed, the most natural reading of the phrase "machine, apparatus, or device"
Without California precedent directing the Court to construe "machine, apparatus, or device" as encompassing software in and of itself, and guided by the principle that "unless there is some ambiguity in the language of a statute, a court's analysis must end with the statute's plain language," Hillman v. IRS, 263 F.3d 338, 342 (4th Cir.2001), the Court concludes that Defendant's interpretation is correct: GoW's Casino function is not a "slot machine or device."
2. The Exception
Even were the Court to embrace Plaintiff's expansive understanding of "slot machine or device," the Court would still find that Defendant has not violated section 330b. This is because, while the penal statute broadly proscribes the manufacture and ownership of such devices, it carves out an important exception: "Pinball and other amusement machines or devices, which are predominantly games of skill, whether affording the opportunity of additional chances or free plays or not, are not included within the [proscribed category]." Cal. Penal Code § 330b(f) (emphasis added). Here, Defendant argues, "Plaintiff's pleading and indisputable facts show that there is no dispute that GoW, as a whole, is a game of skill, not chance." (ECF No. 7-1 at 18.) Plaintiff does not refute this point directly; instead, she complains that "[u]nder Defendant's logic, any game of chance normally violating § 330b ... can be transformed into a legal game by surrounding it with games of skill." (ECF No. 18 at 23.)
Defendant's logic would lead to no such result. The game at issue here is not "Casino"; the game is GoW. Plaintiff proffers no authority for the proposition that the Court may excise one particular aspect of an integrated strategy game and evaluate that aspect in isolation. On the contrary, applying Plaintiff's logic, one could excise the free replay and similar chance-based functions of any number of skill-based games — including pinball — and, viewing those aspects in isolation, find the games to violate section 330b. In essence, Plaintiff invites the Court to read the subsection (f) exclusion out of the statute. The Court declines Plaintiff's invitation.
B. California UCL (Count II)
Under the UCL, any person who engages in "unfair competition," defined to include "unlawful, unfair or fraudulent business act[s] or practice[s]," Cal. Bus. & Prof. Code § 17200, may be enjoined from such acts/practices and required to relinquish any money or property acquired unfairly, § 17203. To advance a UCL claim, a private-party plaintiff must "(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice ... that is the gravamen of the claim." Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 120 Cal.Rptr.3d 741, 246 P.3d 877, 885 (2011) (emphasis in original). A plaintiff who has received the benefit of his bargain has "no standing under the UCL." Johnson v. Mitsubishi Dig. Elecs. Am., Inc., 365 Fed.Appx. 830, 832 (9th Cir.2010). Moreover, "hypothetical or conjectural damages without more are insufficient to support a claim under the UCL." Mashiri v. Vital Recovery Servs., Inc., No. 14-cv-00231-BAS (BLM), 2014 WL 4249800, at *5 (S.D.Cal. Aug. 27, 2014).
As a preliminary matter, it appears that Plaintiff lacks standing to assert a claim under the UCL. Tidenberg v. BIDZ.com, Inc., No. CV 08-5553 PSG (FMOx), 2009 WL 605249 (C.D.Cal. Mar. 4, 2009), is instructive. The Tidenberg court explained that a Texas resident with a claim of Internet-based misrepresentation could proceed under the UCL only if (1) her injury occurred in California or (2) the defendant's alleged misconduct transpired in California. Id. at *4. As for prong one, Tidenberg presumably accessed the defendant's website from her home in Texas; as for prong two, Tidenberg's allegation that the defendant had its principal place of business in California was insufficient for the court to presume that the misrepresentation emanated from that state. Id.; see also Cannon v. Wells Fargo Bank N.A., 917 F.Supp.2d 1025, 1056 (N.D.Cal.2013) (explaining that the mere fact defendant was headquartered in California did not establish that its alleged misconduct — kickbacks and backdating — emanated from California).
Plaintiff's UCL claim is rooted in similarly shaky ground. Plaintiff is not a California resident; she does not allege that she downloaded or played GoW in California; and the sole connection she has drawn between Defendant and California is the fact that Defendant is headquartered there.
Thus, on the face of her Complaint, it does not appear that Plaintiff has alleged adequate factual content to satisfy the UCL's standing requirements.
2. Economic Injury
Even if Plaintiff could show that she has standing to bring a UCL claim, that claim would still fail because she has not alleged an economic injury attributable to Defendant's purported misconduct.
Plaintiff argues that there is "no question that [she] suffered an economic injury by wagering in the Casino" because she "lost $100 between early 2014 and January 2015," typically "$0.60 per spin." (ECF No. 18 at 18.) But of course Plaintiff was not wagering with dollars; she was playing with virtual gold. Plaintiff acquired that "gold" in the "gold store," where she exchanged her real-world currency for a nontransferable, revocable license to use virtual currency for entertainment purposes. (ECF No. 1-2 at 9.) At the moment of that antecedent transaction, Plaintiff's "loss," if any, was complete: then and there she had swapped something of value (real money) for something of whimsy (pretend "gold").
Plaintiff could spend her "gold" as she pleased within the bounds of Defendant's ToS: she could acquire resources to "hasten [her] advancement in the game" (ECF No. 1 ¶ 2), or she could exchange her "gold" for chips to spin the Casino wheel (id. ¶ 21).
Plaintiff separately argues that she was deprived of the benefit of her bargain because, "in purchasing Gold and thereafter wagering Chips, Plaintiff entered into a bargain for the opportunity to play what she believed was a legal video game," but what she received instead was "the opportunity to unknowingly utilize an `illegal game of chance.'" (ECF No. 18 at 27 (emphasis in original).)
Plaintiff is begging the question. The legality of GoW is precisely what this Court has been asked to determine, and as discussed in Part III.A, supra, the Court has concluded that the game does not violate
Having failed to allege a concrete economic injury, Plaintiff cannot state a claim under the UCL.
3. Public Policy
Finally, even had Plaintiff alleged a cognizable injury — which she has not — the Court would still be inclined to dismiss her claim on public policy grounds. California maintains a "broad, strong policy against judicial resolution of civil claims arising out of gambling contracts or transactions." Kelly v. First Astri Corp., 72 Cal.App.4th 462, 84 Cal.Rptr.2d 810, 826-27 (Ct.App. 1999); see also Jamgotchian v. Sci. Games Corp., 371 Fed.Appx. 812, 813 (9th Cir. 2010) (applying Kelly in finding that plaintiff's action to unwind certain betting transactions and recover related losses violated public policy). Thus, per Plaintiff's own theory of the case — i.e., that GoW's Casino function is an unlawful "slot machine or device" and that Plaintiff suffered monetary losses by wagering on such device — she is barred from recovering as a matter of California public policy.
Because Plaintiff has not plausibly alleged an actual economic loss stemming from unlawful, unfair, or fraudulent business acts or practices, Count II must be dismissed.
C. Unjust Enrichment (Count III)
In Count III, Plaintiff alleges that she "conferred a benefit upon Defendant in the form of the money Defendant received" through her in-game purchases and that under "principles of equity and good conscience, Defendant should not be permitted to retain the money ... which Defendant has unjustly obtained as a result of its unlawful operation of [the Casino]." (ECF No. 1 ¶¶ 70, 73.) Plaintiff does not indicate whether her unjust enrichment claim arises under Maryland or California law, although per the choice-of-law provision in Defendant's ToS, the claim is properly construed under California law.
Assuming arguendo that unjust enrichment is cognizable in California, Plaintiff has failed to state a claim for essentially the same reason that she failed to articulate a loss under the UCL: Plaintiff paid for the privilege of playing with Defendant's in-game currency, and she got precisely what she bargained for.
D. Md. Code Ann., Crim. Law § 12-110 (Count IV)
Finally, Plaintiff seeks to recover under Md. Code Ann., Crim. Law § 12-110, a loss-recovery statute. Section 12-110(a) provides that a person who "loses money" at a prohibited "gaming device" may "recover the money as if it were a common debt." A separate provision defines "gaming device" to include a "game
Plaintiff insists that real-world casinos operate by converting cash into chips. (ECF No. 18 at 34.) True enough. But casinos also convert chips back into cash. It would be the rare gambler indeed who would enter a casino, bent on "chance and reward," only to purchase chips that he could never redeem.
Plaintiff presents two additional arguments in footnotes: neither is availing. First, Plaintiff states that the "Chips and Gold [she] lost had actual real world value by merit of their ability to be sold and exchanged" (id. at 35 (emphasis in original)), ostensibly on the secondary market. However, as is clear from the face of Plaintiff's Complaint, there is no secondary market for chips and "gold" per se; rather, players may (in breach of contract with Defendant) list their accounts for sale or trade (ECF No. 1 ¶¶ 37-42). Even assuming that Casino activity may theoretically diminish the secondary value of a player's account,
Second, Plaintiff posits that every time she wagered chips, she "took on the risk that [she] would receive something of lesser value." (ECF No. 18 at 35 n.19.) But
At the outset of her Complaint, Plaintiff alleges that with free-to-play games of chance, "developers have begun exploiting the same psychological triggers as casino operators." (ECF No. 1 ¶ 12.) The Court does not doubt that gambling addiction is a real phenomenon and that the allure of an elusive jackpot can be powerful. Similarly powerful, the Court suspects, is the remorse a buyer may feel when she realizes that she has wittingly swapped her hard-earned cash for simulated gold. The Court does not sit in judgment of the entertainment choices that Plaintiff and others like her have made — but it will not allow Plaintiff to foist the consequences of those choices onto an entertainment purveyor that, at least on the face of this Complaint, appears to have done nothing wrong.
Plaintiff thinks that this case is about recovering modest payments she and fellow putative class members were improperly persuaded to make while playing an illegal online game. The allegations do not withstand scrutiny. Instead, the case ends up being more about the need to draw clear and distinct lines between real and virtual worlds, particularly when it comes to the serious business of going to court and litigating real claims and interests. Even in the Internet age, there is a crucial distinction between that which is pretend and that which is real and true.
The Court is keenly aware that evolving technologies generate novel questions and that these questions sometimes give rise to thorny cases. This case, however, is at bottom a simple one. The laws of California and Maryland do not trifle with play money, and so Plaintiff's Complaint must be dismissed. Accordingly, an Order shall enter GRANTING IN PART and DENYING IN PART Defendant's Request for Judicial Notice (ECF No. 8), GRANTING Defendant's Motion to Dismiss (ECF No. 7), and DENYING AS MOOT Plaintiff's Motion for Class Certification (ECF No. 2).
For the reasons stated in the foregoing Memorandum, it is ORDERED: