Loot Box Litigation Snapshot - March 7, 2021

BIG PICTURE

There has been a ton of class-action activity related to loot boxes in the past 12 months, not to mention increased regulatory interest. (In December, I wrote about the Italian Antitrust Authority’s recent actions.) Below, I’ve attempted to update our previous loot box litigation update post from August 2020. 

For some of the cases, I’ve made additional notes on areas of interest, such as a San Diego Superior Court denying Blizzard’s motion to compel arbitration based on its view that Blizzard’s user agreement didn’t fairly put players on notice of the arbitration provision. The biggest news, of course, is the Epic Games loot box settlement. In addition to a $26 million proposed fee cap, there is some maneuvering going on with plaintiffs’ counsel and an interesting backstory about a partner from One, LLP who left to join the Devlin law firm.

TRACKER

• Zanca v. Epic Games, Inc.

  • Date filed: February 15, 2019

  • Jurisdiction: Originally, Illinois state court, now North Carolina state court (Wake County)

  • Plaintiff’s firm: Whitfield Bryson LLP, McGuire Law, P.C., the Devlin Law Firm, and McMorrow Law., P.C.

  • History: 

    • The plaintiffs first filed this case in Cook County Illinois (Case No. 2019CH02032). 

    • On April 8, 2019, Epic removed the lawsuit to the N.D. Illinois (docket no. 1:19-cv-2353) and then obtained a transfer to E.D. Nor. Carolina (5:19-cv-173-BO). 

    • On October 1, 2019, the court dismissed the action without prejudice for lack of federal subject matter jurisdiction. so it could be re-filed in state court. 

    • In November and December 2020, the parties attended a JAMS mediation and reached a settlement.

    • In January 2021, the plaintiffs filed a new lawsuit in North Carolina “with the intention that the Action would be resolved pursuant to [the Settlement Agreement].” 

  • Disposition: 

    • The parties entered into a settlement agreement and the court issued a preliminary approval order on February 26, 2021. 

    • The settlement funds cap was set at $26,500,000.00 which includes $11,300,000.00 in attorney fees. 

    • A final hearing -- where any objections will be heard -- will be held on May 6, 2021. This settlement purports to resolve all claims nationwide.

• C.W. v. Epic Games,  Inc., (N.D.Cal. 4:19-CV-03629) a/k/a White v. Epic Games, Inc., No. 4:19-cv-3629-YGR (N.D. Cal.)

  • Date filed: July 21, 2019

  • Jurisdiction: N.D. Cal.

  • Plaintiff’s Firm: Previously, One LLP; Now, the Devlin Law Firm. Interestingly, in the recently filed K.W. case, the court makes the following observation about counsel: “Although One LLP represented the named plaintiff in the Prior Action [i.e., the C.W. case], it played no part in the decision to voluntarily dismiss it. That decision was made by the named plaintiff after a former partner of One LLP joined a different firm [i.e., the Devlin Law firm] and the named plaintiff became represented by that firm.”

  • History: Read our previous discussion of these cases here.

  • Disposition:

    • On January 12, 2021, the plaintiffs voluntarily dismissed the case in accordance with the settlement agreement reached by the same firm, discussed above.

• R.A. v. Epic Games, Inc., No. CV 19-1488-GW-EX, 2019 WL 6792801, at *1 (C.D. Cal. July 30, 2019)

  • Date filed: July 30, 2019

  • Plaintiff’s Firm: Pearson Simon and Warshaw, LLP

  • History:

    • Plaintiff filed a class-action complaint on July 30, 2019 alleging: (1) violation of the Consumer Legal Remedies Act, Cal Civ. Code §§ 1750 et seq. (“CLRA”); (2) unjust enrichment; and (3) violation of California's False Advertising Law, Cal. Bus. & Prof. Code §§ 17500, et seq. Plaintiff sought to represent a class consisting of: “All persons in California who, within the applicable statute of limitations, purchased a  Llama with V-Bucks that they bought with money in Fortnite Save the World.”

  • Disposition: 

    • The N.D. transferred the case to North Carolina. The case was then dismissed. The District Court in North Carolina reasoned: “By  voiding the in-game purchases, plaintiff erases the entire basis for his claims. Plaintiff cannot void the transactions with defendant and  receive his refund while simultaneously maintaining causes of action  that arise solely from those transactions. Because plaintiff’s  disaffirmance wipes out the entire basis for his claims, his amended  complaint must be dismissed.” R.A. by & through Altes v. Epic Games, Inc., No. 5:19-CV-325-BO, 2020 WL 865420, at *2 (E.D.N.C. Feb. 20, 2020)

• Crawford v. Sony Interactive Entertainment, LLC, 2020 WL 1190708 (N.D.Cal.)

  • Date filed: March 11, 2020

  • Plaintiff’s Firm: Excolo Law

  • History: We wrote about it previously, here.

  • Disposition:

    • Motion to compel arbitration hearing was set for September 24, 2020 at 10:00 AM.

    • On September 21, 2020, the court found the motion to compel suitable for decision without oral argument and took the matter under submission. There has been nothing further on the docket since.

• B.D. v. Activision-Blizzard

  • Date filed: March 16, 2020

  • Jurisdiction: California state court (San Diego)

  • Plaintiff’s firm: Blood Hurst & O’Reardon, LLP and Law Offices of Andrew J. Brown

  • History: 

    • Plaintiffs filed a Complaint in San Diego superior court (Case No. 37-2020-00020000-CU-BT-CTL) alleging Overwatch loot box issues.

  • Disposition: 

    • Activision-Blizzard brought a motion to compel arbitration. The court held a hearing on December 18, 2020 and denied the motion. On January 15, 2021, Activision-Blizzard filed a notice of appeal and notice of stay of proceedings.

Highlights from the court’s ruling:

In its order denying Blizzard’s motion to compel arbitration, the court found that there was “no evidence that [the plaintiff or his father] had actual notice of the arbitration agreement.” The court decided that the issue was thus “whether a reasonably prudent user would be on inquiry notice of the terms of the arbitration agreement.”

In evaluating this question, the court looked at several items: (1) the 2016 “Create an Account” page; (2) a 2017 pop-up that indicated that the agreement had been updated; and (3) a 2018 pop-up also indicating that an update had been made. 

For the 2016 page, the court found that a user had to scroll to page 15 before learning about the dispute resolution information and that it referred to -- but did not hyperlink to -- a separate dispute resolution policy. 

For the 2017 pop-up, the court found that a user could click “agree” without reviewing the license agreement and access the game; and that furthermore, a user would have to scroll to page 11 before coming to the dispute resolution section (although now there was a hyperlink to the dispute resolution policy).

For the 2018 pop-up, the court again faulted Blizzard for allowing users to click “continue” without reviewing the license agreement. 

Overall, the court found that “[t]he evidence demonstrates that a user is not required to review the License Agreement, let alone the arbitration agreement, in order to create an account and access the game.” Instead, “[t]he user is only required to click the ‘I accept’ button.” The court seems to fault Blizzard for keeping the arbitration agreement in a separate document that is hyperlinked rather than included in full in the main user agreement -- or at least that’s what the opinion seems to be saying. The court confusingly says that Blizzard doesn’t have a dispute resolution section, but then later talks about the dispute resolution section to criticize it. The court then faults Blizzard for not having a separate acknowledgement under the “continue” button for the arbitration agreement.

While it’s a no-brainer for Blizzard to appeal this decision, it is nevertheless a good reminder that every effort should be made to assiduously attend to user agreement UX flow details. More specifically, the best practice is to (a) tell users upfront that there is an arbitration provision and class-action waiver; (b) contain the full dispute resolution provision in the user agreement (not in a separate policy); and (c) require users to read the agreement before accepting it.

• Taylor v. Apple, Inc. (N.D. Cal. 3:20-cv-03906-RS) and Coffee et al. v. Google LLC (N.D. Cal. 5:20-cv-03901)

  • Date filed: June 12, 2020

  • Jurisdiction: N.D. Cal.

  • Plaintiff’s firm: Blood Hurst & O’Reardon, LLP and Law Offices of Andrew J. Brown

  • History: 

    • Read our previous discussion of these cases here. It’s a lot of the same allegations as in the EA case (discussed above). 

    • One additional note is that on October 13, 2020, the court denied Supercell’s administrative motion to relate the Coffee case to the Mai case (discussed below). Supercell also attempted to relate the Mai case to the Taylor case. 

  • Disposition: 

    • On February 10, 2021, the court dismissed the complaint against Google with leave to amend. 

    • On February 11, 2021, Apple filed a “notice of recent decision in support of its motion to dismiss.” The Taylor court has been sitting on Apple’s motion to dismiss since its December 17, 2020 hearing. There is a case management conference set for April 1, 2021, so there may be an order on the MTD on or before that date.

• Mai et al v. Supercell Oy, Case No. 20-cv-5573, N.D. Cal. 

  • Date filed August 11, 2020

  • Jurisdiction: N.D. Cal.

  • History: 

    • This is the same basic complaint filed against EA (discussed below) by the Blood Hurst & O’Reardon firm, except it obviously discusses Supercell’s games, Clash Royale and Brawl Stars.

  • Disposition:

    • Motion to dismiss pending. The court took the matter under submission on February 24, 2021 and has yet to rule.

• Ramirez v. Electronic Arts, Inc., (N.D. Cal 5:20-CV-05672)

  • Date filed: August 13, 2020

  • Jurisdiction: N.D. Cal. 

  • Plaintiff’s Firm: Blood Hurst & O’Reardon, LLP and Law Offices of Andrew J. Brown

  • History:

    • Plaintiff complains that EA’s “Ultimate Team Packs” in its sports franchise games are gambling. The complaint recycles a lot of its allegations from another lawsuit against Apple over loot boxes and once again draws a pretty ridiculous comparison to “Big Tobacco’s ‘Joe Camel’ advertising campaign.” The complaint also seeks to tie a “gray market” of third party websites where players can sell their items and accounts for real money as a basis for establishing a violation of California’s gambling law (California Penal Code § 330(b)(d). To further make the case, the plaintiff relies on the Belgium government’s examination of loot boxes, comments from British MP Damian Collins, and selected “psychologists” with negative opinions. What I find interesting about this complaint is that it dives into detail on the purchase flow and criticizes very detailed things like how EA discloses loot box odds.

  • Disposition:

    • EA filed a 12(b)(6) motion to dismiss and a motion to compel arbitration. The court heard oral argument on February 25, 2021 and took the matter under submission.

• K.W. v. Epic Games, Inc., Case No. 3:21-cv-00976 N.D. Cal.

  • Date filed: Feb. 8, 2021

  • Jurisdiction: N.D. Cal.

  • History:

    • On February 16, 2021, the plaintiffs filed an administrative motion to relate the case to the now-closed White v. Epic Games case (discussed above). 

    • On February 22, 2021, Epic filed an opposition to the motion to relate the case to the now-closed C.W. case. In its opposition, Epic argued that all of K.W.’s claims “will be resolved by a class action settlement that received preliminary approval” in the Zanca case -- “a settlement joined in and supported by the attorneys who had been lead counsel in White.” Epic notes that this case was filed by One LLP after the firm learned of the impending settlement and after it had served an “attorneys’ lien” for fees allegedly owing related to the White case. Epic contends that “[t]his new K.W. case is a blatant and knowing attempt to interfere with the Zanca settlement.” Epic talks about One LLP’s former attorney, Deepali Brahmbhatt, her transition to the Devlin law firm to be class counsel there, and alleges that One LLP’s filing of the K.W. suit is “nothing more than an attempt to gain leverage in a fee dispute among plaintiffs’ counsel.”

    • Disposition:

      • The court has not yet ruled on the motion to consider whether cases should be related.