Dismissal with Prejudice
We represented Finnish game developer Supercell in a putative class action challenging the legality of “loot boxes” as featured in its popular mobile games Clash Royale and Brawl Stars. This case, filed in the Northern District of California, was among a wave of similar class action lawsuits filed against other game publishers and distributors, including Electronic Arts, Apple, and Google. In this case, the would-be class representatives alleged that loot boxes constitute a form of illegal gambling in violation of Section 330b of the California Penal Code and asserted claims under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA). We successfully defeated all claims, with prejudice, at the pleading stage – before any discovery took place. On appeal, the Ninth Circuit concluded that the Plaintiff lacked standing in the first instance. Peter Mai v. Supercell Oy, 2021 WL 4267487 (N.D. Cal. 2021); Peter Mai v. Supercell Oy, 648 F.Supp.3d 1130 (2023).
Highlights:
On September 20, 2021, the court granted our initial motion to dismiss, adopting our arguments that the alleged loot box features in Supercell’s games did not constitute illegal slot machines under California law for at least three reasons: (1) Supercell’s games are predominately games of skill, not chance; (2) the items within loot boxes are not “things of value” because they can only be used within the games and have no real-world value; and (3) the games are not a “machine, apparatus or device” as required to constitute a slot machine. Plaintiff was given leave to amend. That ruling can be viewed here.
Following the plaintiff’s filing of an amended complaint, we again moved to dismiss, this time obtaining a dismissal of all claims with prejudice. In its order dismissing the case, the Court reiterated that loot boxes are not illegal slot machines under California law. The court further held that plaintiffs lacked standing because: (1) they got exactly what they paid for when purchasing loot boxes and therefore did not suffer any economic injury; and (2) Supercell’s virtual currency is not a good or service under the CLRA. That ruling can be viewed here. Press coverage can be viewed here and here.
Tyz Law founder Ryan Tyz defended our win before the Ninth Circuit during oral argument held on April 2, 2024. See a recording of the oral argument on YouTube. The Ninth Circuit ruled in Supercell’s favor on May 9, 2024. The Firm’s press release regarding this development can be viewed here.