Wilson v. Playtika, Ltd.
Wilson v. Playtika, Ltd.
Opinion of the Court
INTRODUCTION
THIS MATTER is before the Court on Defendants Playtika, Ltd., Playtika Holding Corp., and Ceasars Interactive Entertainment, LLC.'s (collectively "Playtika") Motion to Dismiss and Strike. Dkt. # 40. The underlying dispute is a class action to recover money lost playing electronic gambling games available through different platforms, including Facebook and mobile. Playtika argues that the Complaint should be dismissed for lack of personal jurisdiction, forum non conveniens , and failure to state a claim. Playtika also argues in the alternative that allegations related to Vegas Downtown Slots should be stricken from the Complaint because Wilson has not alleged that he actually played that game.
BACKGROUND
Playtika Ltd. is an Israeli company that markets a number of apps that allow players to partake in popular gambling games, such as slot machine, via Facebook and mobile. Complaint, Dkt. # 1, at 2, 6. Playtika's apps include Slotomania, House of Fun, Caesars Slots, and Vegas Downtown Slots, the first three of which Wilson has *1033personally played. Id. at 6, 10. All of these apps allow users to play gambling games with virtual "coins" that may be purchased in the apps after users run out of the initial free allotment. Id. at 7-8. Despite the fact that these coins cannot be redeemed for actual money, Wilson alleges that they are nonetheless valuable because they can be used to continue playing. Id. at 7-8, 14. Therefore, Wilson alleges that Playtika's apps constitute gambling as defined by RCW § 9.46.0285 in violation of RCW § 4.24.070. Wilson also alleges two derivative claims for violation of the Washington Consumer Protection Act, RCW § 19.86.010, and unjust enrichment. Id. at 15-18.
DISCUSSION
I. Personal Jurisdiction
a. Legal Standard
When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate. Schwarzenegger v. Fred Martin Motor Co.,
b. Application
Playtika contends that Wilson lacks personal jurisdiction to sue in Washington both because Playtika is not headquartered or incorporated in the state and because it merely placed its app in the stream of commerce and did not direct its activities at Washington. Wilson concedes that general jurisdiction is lacking, but argues that specific jurisdiction is satisfied because Playtika entered into numerous contracts with consumers in Washington who had downloaded their app. Essentially, the parties quarrel over whether the "purposeful direction" or "purposeful availment" test for jurisdiction applies.
A court's personal jurisdiction analysis begins with the "long-arm" statute of the state in which the court sits. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co.,
Personal jurisdiction exists in two forms, generaland specific. Dole Food Co. v. Watts,
For the first prong, the "purposeful direction" analysis is most often applied in tort cases and "usually consists of evidence of the defendant's actions outside the forum state that are directed at the forum, such as the distribution in the forum state of goods originating elsewhere."
In Mavrix Photo, Inc. v. Brand Technologies, Inc. , the Ninth Circuit applied the purposeful direction analysis in a copyright infringement suit where the plaintiff alleged that the defendant unlawfully posted its photos on its website.
While the purposeful direction analysis tends to focus on the website itself, purposeful availment applies in cases mainly related to specific transactions carried out online through a website or other platform. Boschetto ,
This case presents a difficult middle ground between the discrete categories *1035of contract and tort. On the one hand, Wilson's claims sounds in contract since he is essentially trying to recover for numerous transactions that he now argues were illegal. On the other hand, Wilson's claims also rest on the design of Playtika's app as a whole, since he can only succeed if this novel form of online gaming constitutes "gambling" under Washington law. In this way, Wilson's suit resembles a product liability action in which Playtika allegedly designed a dangerous product that allows people to gamble online.
However, while the design of Playtika's apps may be integral to determining whether the transactions Wilson entered into were illegal, the transactions themselves are at the heart of this case. In other words, Playtika's apps can only be illegal insofar as they facilitate illegal gambling, which is transactional or contractual in nature. As Wilson explains, the common law treats parties to a wagering contract as in pari delicto , leading courts to traditionally refuse to rescind such contracts. 7 Williston on Contracts § 13:23 (4th ed. 2018). To counter this, states have passed laws like RCW § 4.24.070 to provide a means of restoring parties to their original positions. See 38 Am. Jur. 2d Gambling § 161 ; see also, e.g., In re Armstrong ,
Under that framework, Playtika has purposefully availed itself of the privilege of doing business in Washington. Unlike cases involving lone or limited transactions, the record shows that Playtika has used its apps to sell many coins to many users located in Washington. See Opp'n, Dkt # 57-2, Ex. 2, at 5-10. In addition, similar to Helicopter Transport Services , Playtika's sales to its users are part of ongoing relationships.
Even if the purposeful direction analysis were applied, Playtika would still be subject to personal jurisdiction.
Playtika does not argue the remaining prongs of the personal jurisdiction analysis, which are satisfied here. The second prong is easily met, since Wilson's claims arise out of his purchase and use of coins from apps Playtika makes available in Washington State. See Schwarzenegger ,
II. Forum Selection Clause
Playtika argues that the Court must enforce the forum selection clause found in its Terms of Service, which identifies Israel as the proper forum for all disputes. However, to enforce this provision, Wilson must have agreed to be bound by Playtika's Terms of Service. Wilson argues that he never manifested such agreement because he never had notice of the Terms, which take the form of "browsewrap."
Unlike clickwrap agreements, which require a consumer to affirmatively click a box manifesting their assent to a website's terms, browsewrap agreements may sometimes be formed simply by using a website containing a hyperlink to its terms. The Ninth Circuit has stated that "the validity of [a] browsewrap contract depends on whether the user has actual or constructive knowledge of a website's terms and conditions." Nguyen v. Barnes & Noble Inc. ,
*1037
In Nguyen , the Ninth Circuit held that a browsewrap agreement was not formed despite the fact that the hyperlinks to the website's terms of use were either visible without scrolling or located so close to the "checkout" button that a user would necessarily see them. Id. at 1178. The court distinguished PDC Labs., Inc. v. Hach Co. , where the website's hyperlinks were similarly conspicuous but users were also prompted to "review terms" before placing their final order. Id. (quoting No. 09-1110,
In contrast, in Meyer v. Uber Technologies, Inc. , the Second Circuit held that a browsewrap agreement was formed where the notification and hyperlink regarding terms of use were "spatially ... [and] temporally coupled" with the mechanism for manifesting assent.
Courts have also recognized that the labels of "clickwrap" and "browsewrap" do not encompass every type of online consumer contract. The defining features that makes clickwrap agreements regularly valid are the forced confrontation with the terms and the forced decision to accept or reject them by clicking a button. See Fteja v. Facebook, Inc. ,
Here, there is no such notification. Instead, when the user clicks to play Playtika's games on Facebook, they are presented with a screen with information about data sharing practices with Facebook and a large, blue "Continue" button. At the very bottom of the screen, in grey text, is a link that says "App Terms." This does not inform the user that clicking the "Continue" button doubles as a manifestation of their assent to Playtika's Terms. In addition, the link's distance from the "Continue" button and its lack of an accompanying notification makes this insufficient inquiry notice to form a browsewrap agreement under Nguyen .
The "Terms of Service" link at the bottom of the gameplay screen within the Facebook apps also does not put a user on inquiry notice. The link is very small, can only be viewed after scrolling down, and is not accompanied by any notification advising a user that the Terms are binding and should be read. Such an inconspicuous link does not put a user on inquiry notice under Nguyen .
Playtika's argument that Wilson was an especially sophisticated app user who should be charged with knowledge of the Terms of Service is unpersuasive. Although Wilson may have downloaded and played multiple gaming apps, this does not make him more likely to have knowledge of terms that are equally inconspicuous on each app. The cases cited by Playtika involving repeated website use do not support a contrary result. See Domain Name Comm'n Ltd. v. DomainTools, LLC , No. C18-0874RSL,
Playtika argues that Wilson is trying to have his cake and eat it too by claiming that there was a gambling contract for purposes of personal jurisdiction but no contract to be bound by the Terms of Service. However, this misses the point that parties may agree to a contract without agreeing to a separate set of additional terms. In Carnival Cruise Lines, Inc. v. Shute , a case that Playtika cites, no one was arguing that the parties never contracted to purchase a cruise ticket.
III. Forum Non Conveniens
In the absence of an enforceable forum selection clause, Playtika still argues that Wilson's complaint should be dismissed under the doctrine of forum non conveniens . "The first requirement for a forum non conveniens dismissal is that an adequate alternative forum is available to the plaintiff." Lueck v. Sundstrand Corp. ,
Here, these requirements are met. Playtika has assented to jurisdiction in Israel and is therefore amenable to service of process. See Motion, Dkt. # 40, at 12. Playtika has also demonstrated that Wilson could obtain some redress for his claims under Israeli law, and Wilson does not argue otherwise. See Opp'n, Dkt. # 48, at 15-16.
The second step of the forum non conveniens analysis requires analyzing the private and public factors for and against dismissal. "Ordinarily, a plaintiff's choice of forum will not be disturbed unless [these] factors strongly favor trial in a foreign country." Contact Lumber Co. v. P.T. Moges Shipping Co. ,
Here, "the private interests point in both directions," and perhaps favor Israel slightly because more of the relevant evidence is likely in the hands of Playtika. Piper Aircraft ,
The public factors, on the other hand, strongly support allowing Wilson to bring his suit in Washington. Wilson has sued under Washington's gambling statute, which the state clearly has an interest in enforcing. Furthermore, Washington has a more general interest in ensuring that its residents are protected against the dangers of apps such as Playtika's, which may be designed thousands of miles away but are as accessible in Washington as any local product. The private and public factors are therefore not strong enough to defeat the presumption in favor of the Plaintiff's chosen forum.
*1040IV. Failure to State a Claim
a. Legal Standard
Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't ,
On a 12(b)(6) motion, "a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Cook, Perkiss & Liehe v. N. Cal. Collection Serv. ,
b. Whether Playtika's Virtual Coins are a "Thing of Value" under Washington Law
In Kater v. Churchill Downs Incorporated , the Ninth Circuit reversed a district court's dismissal of a complaint substantially similar to Wilson's; indeed, both were filed by the same firm.
Having identified this chink in Wilson's stare decisis armor, Playtika attacks it by attempting to distinguish the Complaint here from the one in Kater . Playtika first points to the Complaint's allegation that "Playtika provides visitors of its online slot machines a bundle of free 'coins' that can be used to wager on its games," but this refers to the same "initial allotment" of coins that was also alleged in Kater . Dkt. # 1, at ¶ 2. However, Playtika also identifies two screenshots in the Complaint that *1041demonstrate players' ability to gain additional free coins. See
Although Wilson's allegations do not describe these aspects of the screenshots, the Complaint does locate the screenshots within the overall gameplay and explains what they generally depict. The Court can infer from these images that players can obtain some additional free coins after the initial allotment. The screenshots do not indicate how often such coins are available, how many can be obtained, or what exactly can be done with them. The Court can therefore only consider whether some additional free coin allotments, however small or infrequent, remove Playtika's virtual coins from the statutory "thing of value" definition in RCW § 9.46.0285.
They do not. The Ninth Circuit reasoned that virtual coins are valuable because they "extend the privilege of playing" that is lost when a player runs out of free coins. Kater ,
Bullseye Distributing LLC v. State Gambling Commission , the case the Ninth Circuit mainly relied on in Kater , supports this conclusion.
In addition to the Complaint, Playtika also submits documentation with its Motion to Dismiss, including declarations, the Terms of Use, and several public records documents. These documents may only be considered if they fall within the exceptions to the "general rule [that] 'a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.' " Lee v. City of Los Angeles ,
Playtika asks the Court to consider the statement in its Terms that "[t]here is never any requirement to make any purchase of any kind to use the Service." Motion, Dkt. # 40, at 17. The Court can take judicial notice of the Terms because they derive from a "publically accessible website." See Perkins v. LinkedIn Corp. ,
Playtika also refers to an SEC filing from 2016, which states that only 4.6 percent of Playtika players bought coins in 2016. Dkt. # 41-1. While the Court would not normally be able to take judicial notice of the truth of this figure, Wilson does not dispute it.
Although not referenced in its argument, Playtika also submits the declaration of its Chief Financial Officer, which states, "The purchase of additional coins allows players to unlock additional, 'higher' levels of play with enhanced graphics, music or other virtual accoutrements or to progress faster through the game." Dkt. # 41, at ¶ 15. While Wilson's Complaint does rely on Playtika's games as they existed before this suit began, it does not rely on a one-sided description of those games by the defendants themselves. The Court cannot therefore consider any such declarations at *1043this stage. See Cooper v. Pickett ,
Finally, Playtika argues that the Court should disregard the Ninth Circuit's ruling in Kater as contrary the Washington Gambling Commission's statements regarding "social gaming," as well as other district court cases addressing the matter. To support its position, Playtika asks the Court to take judicial notice of a pamphlet released by the Commission in 2014 and a recent statement by the Commissioner regarding the Ninth Circuit's holding in Kater . These are both public records that the Court can properly take judicial notice of, as Wilson concedes. See Opp'n, Dkt. # 52, at 20.
However, they do not support the conclusions that Playtika hopes for. While the pamphlet offered by Playtika does state that social gaming is not gambling if there is no prize, it also purports to provide only "general guidance" to consumers. Dkt. # 43-1. The Ninth Circuit already declined to defer to this pamphlet, and the Court does the same here. See Kater ,
Finally, to the extent that Playtika cites out-of-circuit cases holding that virtual coins are not a "thing of value," these merely persuasive authorities must be rejected in light of the Ninth Circuit's holding. In fact, the Ninth Circuit already rejected these cases itself, stating that they involve "different state statutes, state definitions, and games." Kater ,
c. Whether Players "Lose" such that Recovery is Possible
Just as it rehashes the "thing of value" issue decided in Kater , Playtika also re-argues that Wilson cannot recover "the value of the thing ... lost" under RCW § 4.24.070 because he did not "lose" anything. However, this argument rises or falls on the strength of Playtika's prior argument that its coins are not valuable because they are periodically given out for free. Because this argument has failed, it follows that Wilson did in fact lose something of value by playing Playtika's games and may now recover its value. See Kater ,
d. Whether Playtika's Games are "Bona Fide Business Transactions"
Playtika also argues that its games are exempt from the statutory prohibition on gambling because they fall within the "bona fide business transaction" exception. This exception reads as follows:
Tabular or graphic material set at this point is not displayable.
RCW § 9.46.0237. According to Playtika, its games involve "bona fide business transactions" because players merely pay for the privilege of entertainment. The fact that players do not know how much entertainment they will receive does not make their games any different from buying tickets to a baseball game, which could go into extra innings or end relatively quickly.
Wilson responds that § 9.46.0237 contains a non-exhaustive list after "bona fide business transactions valid under the law of contracts" that identifies the purchase of securities and insurance as two examples. Wilson contends that, applying Washington principles of statutory interpretation, the exception should be limited to *1044transactions similar to insurance and securities.
When construing a state statute, a federal court must apply that state's principles of statutory interpretation. Planned Parenthood of Idaho, Inc. v. Wasden ,
Here, the list clearly contemplates excluding purchases of securities or other investments and insurance. Buying virtual coins is not "similar in nature" to either of these transactions because the buyer is not protecting themselves against a fortuitous risk or obtaining a stake in a company.
Playtika argues that "bona fide business transactions valid under the law of contracts" is a broad category that unambiguously includes the sale of credits used for amusement games. In support of this, Playtika points to RCW § 9.46.010, which states that the Washington Gambling Act seeks to "avoid restricting participation by individuals in activities and social pastimes." However, the rest of this sentence limits the types of social pastimes to those that are "more for amusement rather than for profit, do not maliciously affect the public, and do not breach the peace." RCW § 9.46.010. While the wording is ambiguous regarding whose profit is at issue, Playtika certainly profits from its games and Wilson would argue that they have a malicious effect on the public.
In any case, Playtika misconstrues the "transaction" that is at issue in this case. Whereas traditional gambling consists of a single transaction (money for a chance to win), Playtika's games divvy up this process between two transactions. The first is the purchase of virtual coins using real money, and the second is exchanging these coins for an opportunity to win more of them. This second transaction is what Wilson alleges is gambling, which is defined as "staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the person's control or influence." RCW § 9.46.0237. Consequently, regardless of whether purchasing coins from Playtika is similar to buying tickets to a baseball game, using those coins to play Playtika's games is not a "bona fide business transaction."
e. Whether Playtika Holding Company should be Dismissed
Playtika argues that Playtika Holding Company (PHC) should be dismissed from the case because it does not own, offer or operate any games. Playtika supports this proposition with a statement from the declaration of PHC's Chief Financial Officer. Dkt. # 41, ¶ 4. However, the Court cannot consider this declaration at the dismissal stage, and Playtika has alleged that PHC owns and operates the games at issue. See Complaint, Dkt. # 1, ¶ 24. If PHC truly does not own, operate, or benefit from Playtika's games, it should be easy to dismiss them on summary judgment. However, the allegations in the Complaint are sufficient to keep them in the case for now.
V. Exclusion of House of Fun and Vegas Downtown Slots Claims
Playtika asks the Court to strike all claims related to Vegas Downtown *1045Slots because Wilson does not allege that he ever played that particular game. Wilson responds that the Complaint states that the proposed class includes people who played all of Playtika's games, and that material differences between the games can be addressed at class certification.
"Motions to strike are not favored and 'should not be granted unless it is clear that the matter to be stricken could have no possible bearing on the subject matter of the litigation.' " Luken v. Christensen Grp. Inc. , No. C16-5214-RBL,
Wilson could certainly not assert a claim based on the VDS game if he never played it because he could not possibly be "entitled to relief" for a non-existent injury. See Fed. R. Civ. P. 8(a)(2). The question, then, is whether the class allegations change this outcome. They do. The defining feature of class actions is the plaintiff's ability to assert claims on behalf of themselves and those similarly situated. It necessarily follows from this that the plaintiff will claim damages for harms that they themselves did not suffer, with the operative issue being whether those other harms are sufficiently similar to theirs.
Here, Wilson alleges that all of Playtika's games "function[ ] in a substantially similar fashion" by allowing players to buy and spend virtual coins for a chance to win more coins. See Complaint, Dkt. # 1, at 7. As previously noted, the heart of this case sounds in contract, so whether or not Wilson's specific harm is "typical" of the class will turn on how the transactions he entered into with Playtika compare with the rest of the class. It will not necessarily turn on which specific games Wilson played, except to the extent the games function differently such that Wilson entered into different types of transactions than some of the class members. In any case, that question should be addressed at the class certification stage, since there is no indication at this point that VDS functions so uniquely that the allegations related to that game are "immaterial." See Fed. R. Civ. P. 12(f).
Finally, Playtika argues that all claims related to House of Fun should be stricken because no Defendant owns, offers, or operates that game. However, because Playtika relies on declarations that cannot be considered at this stage of the litigation, the Court must credit Wilson's allegations that House of Fun is operated by Defendants.
CONCLUSION
Defendant Playtika's Motion to Dismiss and Strike (Dkt. # 40) is DENIED. Defendant Playtika's Request for Judicial Notice (Dkt. # 43) is GRANTED.
IT IS SO ORDERED.
While the Ninth Circuit has held that it applies different analyses for tort and contract claims, the Court is not aware of any case mandating the application of one approach or the other in hybrid cases such as this. Ziegler v. Indian River Cty. ,
It is also worth pointing out that a "short" period of time can still cost a gambler a lot of money. Even if Playtika's apps award free coins every few hours, if those coins are only enough for a few minutes of gaming, filling the intervening time could be very expensive.
Some courts have foregone such notice where the motion to dismiss alternatively requests conversion to summary judgment and both parties rely on the same documentary evidence. See, e.g., Silk v. Metro. Life Ins. Co. ,
In fact, the Complaint quotes an article explaining that "[m]any new mobile and social titles target small, susceptible populations for large percentages of their revenue." Dkt. # 1, at 4.
Reference
- Full Case Name
- Sean WILSON, Individually and on Behalf of All Others Similarly Situated v. PLAYTIKA, LTD., an Israeli Limited Company, Playtika Holding Corp., a Delaware Corporation, and Ceasars Interactive Entertainment, LLC, a Delaware Limited Liability Company
- Cited By
- 9 cases
- Status
- Published