Mai v. Supercell Oy

District Court, N.D. California·Decided January 3, 2023·No. 5:20-cv-05573·Unknown

Opinion

PETER MAI, et al., Case No. 20-cv-05573-EJD

Plaintiffs, ORDER GRANTING MOTION TO DISMISS FIRST AMENDED v. COMPLAINT

Re: ECF No. 52 Defendant.

Before the Court is Defendant Supercell Oy’s (“Supercell”) Motion to Dismiss First Amended Complaint (“FAC”). See Motion to Dismiss First Amended Complaint, ECF No. 52 (“Motion”). The Court finds the Motion appropriate for decision without oral argument pursuant to Civil Local Rule 7-1(b). ECF No. 60. For the reasons discussed below, the Court GRANTS the motion to dismiss without leave to amend and dismisses the action with prejudice. Plaintiffs Peter Mai (“Mai”) and Diego Niño1 (“Niño,” and collectively, “Plaintiffs”) allege that Supercell, a Finnish mobile video game development company, has engaged in unlawful and unfair conduct via the development, promotion, and sale of “loot boxes” in two of its games, Clash Royale and Brawl Stars. First Amended Class Action Complaint, ECF No. 47 (“FAC”) ¶¶ 1-2, 9, 12. A loot box is a randomized chance within a game to win prizes, such as new or better characters, coins, spells, and buildings. Id. ¶¶ 40, 50. The loot boxes in Clash Royale and Brawl

1 Mai did not seek the Court’s leave to add Niño to this suit, as required by Federal Rule of Civil Procedure 15(a). Nonetheless, the Court will consider Mr. Niño as a plaintiff pursuant to its authority under Federal Rule of Civil Procedure 21. Stars are available for purchase with either real-world currency or in-game virtual currency, called “gems.” Id. ¶ 36. Loot boxes in both games may be purchased in varying amounts and prices. Id. ¶ 42; see id. ¶ 36. The loot box prizes contain randomized items, which are labeled with words such as “Common,” “Rare,” and “Legendary” to indicate scarcity. Id. ¶¶ 34, 50. The rarest items (such as “Legendary” characters, spells, and buildings in Clash Royale) are the most desirable to players, as rarer items increase the chances of winning in the game. Id. ¶¶ 39, 50. A player purchasing a loot box does not know what item they will receive until the box is opened. Id. ¶ 1. Plaintiffs are California residents. FAC ¶ 10. Mai downloaded Clash Royale onto his Apple iPhone and estimates that he has spent over $150 in the game to purchase loot boxes. Id. ¶ 10. Niño downloaded Clash Royale and Brawl Stars onto his Android phone and estimates that he has spent over $1,100 to purchase loot boxes in the games. Id. ¶ 11. Both Clash Royale and Brawl Stars are free to download and play, but Plaintiffs allege they were each “induced” to spend money to purchase in-game loot boxes. Id. ¶¶ 2, 10–11. The crux of the FAC is that Supercell’s loot boxes in its Clash Royale and Brawl Stars games are themselves illegal gambling games under California law. Id. ¶ 5. Plaintiffs further allege that loot boxes are inherently unfair because they exploit the same cognitive traps as gambling, particularly for adolescents and other vulnerable populations. E.g., id. ¶¶ 60, 64-65, 76, 88-90, 101-103, 112, 117, 124. Mai’s original complaint asserted claims for violation of California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq., violation of California's Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq., and unjust enrichment. See Class Action Complaint, ECF No. 1 (“Compl.”) ¶¶ 97-125. The predicate offenses constituting the unlawful conduct were alleged violations of California Business & Professions Code §§ 19800, et seq., California Penal Code §§ 330, et seq., the Illegal Gambling Business Act (18 U.S.C. § 1955), and the Unlawful Internet Gambling Enforcement Act of 2006 (31 U.S.C. §§ 5361-5367). Id. ¶ 102. On September 20, 2021, the Court granted Supercell’s motion to dismiss the complaint with leave to amend. See Order Granting Motion to Dismiss (ECF No. 43) (“Prior Order”). The FAC reasserts the UCL, CLRA, and unjust enrichment claims with additional predicate offenses for the alleged violation of California Penal Code § 337j. FAC ¶¶ 177–229. A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The factual allegations must “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A complaint that falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted tests the legal sufficiency of a claim.” Conservation Force v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quotation marks and citation omitted). When evaluating a Rule 12(b)(6) motion, the district court is limited to the allegations of the complaint, documents incorporated into the complaint by reference, and matters which are subject to judicial notice. See Louisiana Mun. Police Emps.’ Ret. Sys. v. Wynn, 829 F.3d 1048, 1063 (9th Cir. 2016) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). The Court must also construe the alleged facts in the light most favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989). The Court first addresses the threshold issue of Plaintiffs’ standing to bring their UCL and CLRA claims before considering whether Plaintiffs have asserted cognizable claims. A. Standing Under the UCL Claims 1 and 2 assert violations of, respectively, the unlawful and unfair prongs of California's UCL, which prohibits an individual or entity from engaging in any “unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200, et seq. A private person has statutory standing under the UCL only if he or she “has suffered injury in fact and has lost money or property as a result of the unfair competition.” Id. § 17204; see also Hawkins v. Kroger Co., 906 F.3d 763, 768 (9th Cir. 2018). “A plaintiff is required to show some form of economic injury as a result of his transactions with the defendant.” Hawkins, 906 F.3d at 768; Kwikset Corp. v. Sup. Ct. (Benson), 5

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