Alerts

AD-ttorneys@law – December 16, 2020

Alerts / December 16, 2020

In This Issue:

Major Gaming Company Sued for Making Games Too Challenging

Loot Boxes plus in-game skill adjustments perpetuate addictive behavior?

Don’t Hate the Playa

When does a pastime become an addiction?

It’s one of the fundamental questions of contemporary life. Computer and console gaming—not to mention the games available on our phones—have become increasingly sophisticated and seem to be game-ifying many of our formerly quotidian experiences. And we’ve all heard the horror stories of people so mesmerized by their games that they expire in front of their screens or fail to feed their children.

(If you think we’re joking, go ahead and google around a bit. There are plenty of gruesome IRL stories, and quite a few fake ones, too.)

Borderline

We’ve covered the gambling side of gaming addiction for a while now—check out here, here, here, here and here—and we’ve charted how the Federal Trade Commission and regulators are approaching the topic. Whether you look at the issue from an ethical or a legal standpoint, the edges separating gaming, gambling and addiction are shifting and porous. The issues involved are serious.

Which is why when we initially heard about Zajonc v. Electronic Arts we found it … strange. The plaintiffs, a trio of gamers, argue that Electronic Arts, maker of iconic and monstrously successful gaming franchises like Madden NFL, FIFA and NHL, makes games that utilize “one or more artificial intelligence technologies that adjust game difficulty dynamically … some of these technologies use heuristic prediction and intervention to adaptively change the difficulty of matches, and influence or even dictate the outcomes, thereby keeping gamers more engaged.”

Much Ado About…

Uh, so what? Yes, in general, computer games get harder the better you become at playing them. Staying engaged—that’s a good thing, right?

Enter, almost inevitably, loot boxes. (Check out the links above for info on these controversial mainstays of online gaming).

In the Electronic Arts (EA) universe, they’re called “Player Packs.” As the plaintiffs explain, gamers buy the packs “to receive randomized ‘Player Cards,’ representing players with varying skill, summarized in a player rating. Once a gamer purchases a Player Pack and unlocks a Player Card, the gamer can use the unlocked player on his or her Ultimate Team.”

Seems simple enough, but this is where the lawsuit thickens.

The Takeaway

“Loot boxes are games of chance,” the plaintiffs argue, “and gamers who purchase Player Packs hope to get lucky ... so as to be more competitive” within the games. But because the games are adjusting their difficulty level to match the better characters in the packs, the designers, who have allegedly not disclosed the changes, are effectively profiting from the “direct correlation between heightened gamer engagement and in-game spending.”

EA, the plaintiffs claim, also deprives “gamers who purchase Player Packs of the benefit of their bargains because EA’s Difficulty Adjusting Mechanisms, rather than only the stated ranking of the gamers’ Ultimate Team players and the gamers’ relative skill, dictates, or at least highly influences the outcome of the match. This is a self-perpetuating cycle that benefits EA to the detriment of EA Sports gamers ... .”

So, there you have it—a new angle on the loot-box class action. If you’re a gaming company of any sort, heads up: Loot boxes may be turning other, more common gaming conventions into (alleged) partners in crime.

The case was filed in California’s Northern District early in November, so further developments have yet to drop.

DISH Throws TCPA Agency Hail Mary at the Supremes

If confirmed, case will set the tone for vicarious liability doctrine

Let’s Dish

Here’s a case we covered back in June that’s put on some big britches and headed off to Washington, D.C.

Back in 2009, satellite television provider DISH Network was sued under the Telephone Consumer Protection Act (TCPA) in the Central District of Illinois by the Federal Trade Commission and a number of states for flouting federal and state do-not-call laws. DISH lost a trial eight years later that found the company liable for the violations of telemarketing services in its employ. The company was hit with a $280 million penalty.

There was an appeal to the Seventh Circuit, which affirmed the lower court decision but vacated the penalty for recalculation.

Dangling by a Thread

In June, DISH petitioned the Seventh, requesting a rehearing of the appellate decision en banc—a rare move to “secure or maintain uniformity of the court’s decisions” when “the proceeding involves a question of exceptional importance.”

According to the petition, the Seventh Circuit’s opinion determined that “a single quality-control provision in a contract between two independent companies [is] sufficient to create an agency relationship” and “a principal [can] be found to have ratified an agent’s action based on imputed knowledge, rather than actual knowledge.”

The Takeaway

DISH argued that the circuit court’s interpretation of agency under the TCPA departed significantly from previous decisions in the Fourth and Ninth Circuits—and expanded vicarious liability in a ruling that effected “a seismic shift in the rules of agency and vicarious liability under federal law.”

Well, the petition failed, and now this endless slog of a case is headed for the Supremes. DISH filed a petition for a writ of certiorari with the Supreme Court just a little while ago, and the fundamental question has not changed: “Whether vicarious liability must be assessed in light of the four bedrock theories of common law agency, or whether a contractual term imposing performance standards on a service provider is alone a sufficient basis for imposing vicarious liability?”

Will the same arguments fare better in the highest court of the land?

Stay tuned, and keep your vendor contract review team well fed and rested.

Hostess Says Fake Flavoring Class Action Is Half-Baked

But did the company’s labeling choices leave it open to attack?

Smash Mouth

The Hostess Carrot Cake Donette is part of the grand American tradition of combining two perfectly good foods into a Frankenstein hybrid. Bored of carrot cake? Tired of donuts? Smash them together and BANG—a previously unclassified snack food has been whisked into existence.

Other examples are legion: The McGriddle. Lobster ice cream. Turducken. Sushi burritos. And, of course, the nonpareil—Jimmy Dean’s chocolate chip pancake and sausage on a stick.

To be fair, the Hostess Carrot Cake Donette sounds far more delicious than anything on that list.

Hello in There?!

But how much carrot is in the Hostess Carrot Cake Donette? How much should we expect to be in it? Frankly, since we’re American, how much do we even want to be in it? How healthy is it when all is said and done

According to one consumer, nowhere near enough.

San Franciscan plaintiff Elena Lauchung-Nacarino launched a class action against snack food giant Hostess, accusing the company of violating California’s Consumer Legal Remedies Act, Unfair Competition Law and False Advertising Law, among other charges. Hostess, “a sophisticated and well-established manufacturer and marketer of dessert products,” the complaint alleges, “prominently represented to consumers that the product consists of ‘Carrot Cake’ on the front label panel of all Product boxes, as well as the thin plastic wrappers that encase the Donettes.”

Nonetheless, she claims, Hostess fails to “disclose that the Product contains no real carrot cake, or that the carrot-like color and flavor of the Product is manufactured through an artificial process ... .”

The Takeaway

Hostess responded with a motion to dismiss that accused Lauchung-Nacarino’s complaint of being half-baked.

Hostess argues that the class action is flawed on several levels, but the main thrust is a lack of standing for failure to establish economic injury. “She does not allege that the donettes lacked a carrot-cake taste or flavor, and there is no claim that she (or any class members) did not enjoy the donettes or find them somehow unacceptable for that reason,” the complaint states. “And Plaintiff herself concedes that carrot is not identified in the statement of ingredients, while ‘natural and artificial flavor’ is identified.”

Worse yet—Hostess maintains that when Lauchung-Nacarino purchased the product, the packages were clearly labeled as “naturally and artificially flavored.” The case is in its early stages, with hearings on the motion to dismiss slated for February.

Ancestry.com Sued Over Yearbook Pic Database

Plaintiffs claim that decades of teen awkwardness posted without consent

Tap In

On some level, deep down in the recesses of your psyche, a tiny sliver of you would like to be followed around by the paparazzi.

(You’d be sure, of course, to always look fabulous, even as you feign aversion to the lens while tripping out of a hot club alongside Saweetie.)

The pleasure of looking at celebrity photos—and, presumably, appearing in them—is that they are more often than not pictures of the beautiful people. Sports stars, musicians, actors—people whose job is to be in the spotlight, to be admired. That’s why most right-to-publicity cases usually involve celebrities—who wants to look at the rest of us?

Well …

It turns out that monster genealogy site Ancestry.com does. According to a recent right-to-publicity class action brought before the Northern District of California, Ancestry has been amassing an enormous database of millions upon millions of personal photos of regular Americans.

Yearbook photos.

Freaks and Geeks

Yes, of the billions of records Ancestry has been scraping together, a significant subset comprises the most awkward, most reviled official photos Americans are ever forced to take—except for driver’s license pictures, of course.

What’s more, according to the class action, Ancestry has been accumulating these photos by soliciting donations of yearbooks from its user base. Our bespectacled, velour-clad younger selves feel betrayed!

Plaintiffs Lawrence Geoffrey Abraham and Meredith Callahan accuse Ancestry of “knowingly using the names, photographs, and likenesses of Plaintiffs and the class to advertise, sell, and solicit the purchase of its subscription products and services.”

If you don’t believe them, read the complaint. They’ve included their own yearbook photos, which were allegedly served up by Ancestry searches.

They claim they never consented to allow Ancestry to post the pictures.

The Takeaway

The pair accuse the company of violating California’s right-to-publicity statute, the California Unfair Competition Law, California’s protections against intrusion upon seclusion and the state’s Unjust Enrichment Law.

Any business that trades in publicly available images of individual people needs to be on high alert for possible conflicts like this. Ancestry’s alleged rush to post this information to draw in new users may land it in some real high-school drama.

Stay tuned to see what defenses are raised and how the case plays out.

Seasoning Upstart on the Grill Over False Reference Pricing

Class action says Flavor God brags on steep but nonexistent price cuts

Vanilla Spice

With COVID-19 dominating every aspect of our lives, it’s refreshing to encounter a good old-fashioned price reference dispute. A throwback to simpler days.

The dispute in question is Dylan Sullivan v. Flavorgod LLC, a class action filed in the Central District of California in late November. Sullivan, a Los Angelino, sued Flavor God, a modestly named spice and seasoning company based in New Jersey, for violations of California’s Unfair Competition Law, False Advertising Law and Consumer Legal Remedies Act.

Sullivan purchased Flavor God’s “Garlic Lover’s Seasoning” after reviewing the site. The purchase was allegedly listed at a final price of $6.26, marked down from a reference price of $19.99. He also allegedly observed that “all the seasonings offered had a Reference Price that was crossed out and a sale price,” which may have set off alarm bells for him.

Because, according to Sullivan, the seasoning “was not substantially marked down or discounted, or at the very least, any discount he was receiving had been grossly exaggerated. That is because the Garlic Lover’s seasoning Plaintiff bought had never been offered on Flavor God’s website for any reasonably substantial period of time—if ever—at the full Reference Price of $19.99.”

The Takeaway

This case is just getting off the ground, so we don’t have any information on what mighty thunderbolts Flavor God will hurl in response.

But even though the dispute itself is a throwback, it’s interesting to note that Flavor God is a distinctively modern company. The founder, Christopher Wallace, apparently began selling his seasonings and blends at farmers markets, but now exclusively sells them online through the company website, seemingly without a brick-and-mortar presence. Perhaps his definitions of what a markdown entails were shaped by not taking his first steps in IRL retail.

Stay tuned for more.

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