Coffee v. Google LLC

1

2

3

4 UNITED STATES DISTRICT COURT

5 NORTHERN DISTRICT OF CALIFORNIA

6 SAN JOSE DIVISION

7

JOHN COFFEE, MEI-LING MONTANEZ,

8 AND S.M., a minor by MEI-LING Case No. 20-cv-03901-BLF

MONTANEZ, S.M.’S parent and guardian,

9 on behalf of themselves and all others ORDER GRANTING MOTION TO

similarly situated, DISMISS FIRST AMENDED

10 COMPLAINT WITHOUT LEAVE TO

Plaintiffs, AMEND; AND DISMISSING ACTION

11 WITH PREJUDICE

v.

12

GOOGLE, LLC, [Re: ECF 66]

13

Defendant.

14

15

16

17 In this putative class action, Plaintiffs allege that Defendant Google, LLC violates state

18 consumer protection laws by distributing game applications (“apps”) containing “Loot Boxes”

19 through its Play Store. A Loot Box, which may be purchased in-app during play of some games,

20 offers the player a randomized chance to receive an item designed to enhance the gaming

21 experience, such as a better weapon, faster car, or more desirable player appearance. The player

22 does not know what specific item any given Loot Box contains at the time of purchase, so the

23 player runs the risk of being dissatisfied. Plaintiffs allege that Loot Boxes are illegal slot

24 machines1 under California law, and that Google is civilly liable to all persons in the United States

25 who purchased a Loot Box in an app downloaded from the Google Play Store.

26

27

1 The parties use the terms “slot machine,” “gambling device,” and “gambling machine”

1 Google moves to dismiss the first amended complaint (“FAC”) under Federal Rule of Civil

2 Procedure 12(b)(6). The Court has considered the parties’ written submissions as well as the oral

3 arguments of counsel presented at the hearing on October 19, 2021. For the reasons discussed

4 below, Google’s motion to dismiss is GRANTED WITHOUT LEAVE TO AMEND and the

5 action is DISMISSED WITH PREJUDICE.

6 I. BACKGROUND

7 Google’s Play Store features more than 2.9 million apps, most of which are free to

8 download. FAC ¶ 20. Plaintiffs claim that Google works “in concert with game developers” to

9 monetize free games through in-app purchases, specifically, Loot Boxes. Id. Google allegedly

10 prohibits apps containing other forms of gambling, but encourages developers to place Loot Boxes

11 in game apps. Id. ¶¶ 4-6. According to Plaintiffs, Loot Boxes foster compulsive and addictive

12 gambling behavior and constitute illegal slot machines under California law. Id. ¶¶ 3-5. In 2018,

13 Loot Boxes generated revenue in excess of $30 billion. Id. ¶ 45. Although Google itself does not

14 create the game apps available in the Play Store, or the Loot Boxes featured in some games,

15 Google allegedly has taken steps to ensure that it receives a cut of the profits generated by Loot

16 Boxes. Id. ¶ 9.

17 Plaintiffs allege that such steps include Google’s requirement that developers who wish to

18 distribute apps through the Play Store must enter into a “Developer Distribution Agreement” that

19 creates an agency relationship whereby Google acts as each developer’s “Merchant of Record” for

20 products sold or made available through the Play Store. FAC ¶¶ 22-27. Plaintiffs also point to

21 Google’s requirement that developers use Google’s Software Development Kit, containing code

22 written and developed by Google. Id. ¶ 33. The Software Development Kit is the means by which

23 developers access the Google Play payment processor. Id. Google processes all in-app purchases,

24 taking a 30% cut of every purchase before transferring the remainder of the funds to the developer.

25 Id. ¶ 9.

26 Plaintiffs also claim that “Google and its game developers have a revenue sharing

27 arrangement where Google receives 30% of all revenue from the sale of loot boxes.” FAC ¶ 29.

1 theory is set forth in the FAC, which alleges that a player uses money in the form of a credit card

2 or gift card to purchase virtual currency such as gems or coins through the Play Store, and then

3 uses the virtual gems or coins to make an in-game purchase of a Loot Box. Id. ¶ 44. The FAC

4 contains no facts suggesting that Google has any involvement in the second part of this two-step

5 transaction, the purchase of the Loot Box with virtual currency. Plaintiffs do not allege that

6 Google tracks how players spend their virtual currency or that Google derives greater profit if the

7 virtual currency is used to buy Loot Boxes rather than other in-game items. Plaintiffs gloss over

8 the difference between real dollars virtual currency, alleging that “[w]ether the purchase is viewed

9 as being made with fiat currency or with property in the form of virtual currency purchased with

10 money, a loot box play costs real money.” Id. Based on the FAC’s explanation of how Loot

11 Boxes are purchased, the Court understands the assertion that Google “receives 30% of all revenue

12 from the sale of loot boxes,” FAC ¶ 29, to mean that Google receives 30% of all revenue from the

13 sale of virtual currency, which players in turn use to purchase Loot Boxes.

14 A second theory regarding revenue sharing is offered in Plaintiffs’ opposition and post-

15 hearing submissions. In those filings, Plaintiffs assert that Loot Boxes may be purchased directly

16 from the Play Store with money. To the extent Google processes Loot Box sales made directly

17 through the Play Store and paid for with money, Google presumably retains 30% of the revenue

18 from Loot Box sales. See FAC ¶ 9 (alleging that Google handles “all of the transactions with

19 gamers, including taking a 30% cut of all money spent by players before transferring the

20 remainder to the developer”).

21 Plaintiffs assert that Google’s conduct in promoting and selling Loot Boxes renders

22 Google civilly liable to a nationwide class consisting of “[a]ll persons who paid to receive

23 randomized virtual items from a purchase (also known as “loot boxes”) within an app downloaded

24 from the Google Play Store.” FAC ¶ 170. The named Plaintiffs allege that they bought Loot

25 Boxes within apps downloaded from the Play Store in transactions described as follows.

26 Plaintiff John Coffee (“Coffee”) is a citizen and resident of California. FAC ¶ 11. Coffee

27 downloaded the game app Final Fantasy Brave Exvius (“Final Fantasy”) from the Play Store onto

1 players move their characters through a series of stages with the ultimate goal of confronting and

2 defeating the “boss.” Id. ¶ 70. Players of Final Fantasy may purchase a Loot Box called a

3 “Summons” using in-game virtual currency called “Lapis Crystals.” Id. ¶ 71. Lapis Crystals may

4 be earned through game play or may be purchased through the Play Store for money. Id. ¶¶ 71-72.

5 Plaintiffs allege that Coffee “purchased virtual coins with money to buy chances on loot boxes and

6 lost property in the form of the virtual coins he used to buy chances on loot boxes.” Id. ¶ 11.

7 Coffee allegedly spent more than $500 in the Play Store on virtual currency to purchase Loot

8 Boxes in a dozen game apps, including Final Fantasy. Id. Plaintiffs do not specify what portion

9 of Coffee’s virtual currency was spent on Loot Boxes in Final Fantasy. Id.

10 Plaintiffs Mei-Ling Montanez (“Montanez”), and Montanez’s minor son, S.M., are citizens

11 and residents of New York. FAC ¶¶ 12-13. S.M. downloaded the game app Dragon Ball Z

12 Dokkan Battle (“Dragon Ball Z”) from the Play Store onto a Samsung smartphone for free. Id. ¶¶

13 12-13, 75. Dragon Ball Z “is made up of levels that play like a board game, with spots dedicated

14 to items, power-ups, traps, and fights.” Id. ¶ 77. Players may purchase a Loot Box called a

15 “Summons” using in-game currency called “dragon stones.” Id. ¶ 76. Plaintiffs allege that “S.M.

16 purchased virtual coins to buy chances on loot boxes and lost property in the form of the virtual

17 coins when he used them to buy chances on loot boxes.” Id. ¶ 12. S.M. allegedly has spent more

18 than $100 in the Play Store, at least some of which was his parents’ money, on items that included

19 virtual currency to buy Loot Boxes. Id. ¶ 13. Plaintiffs do not specify how much virtual currency

20 S.M. spent on Loot Boxes in Dragon Ball Z.

21 Plaintiffs filed this suit against Google in June 2020, claiming that Google is civilly liable

22 to all persons who have purchased Loot Boxes in game apps downloaded from the Play Store.

23 Compl., ECF 1. Plaintiffs asserted claims for violation of California’s Unfair Competition Law

24 (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq., violation of California’s Consumers Legal

25 Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq., and unjust enrichment. See Compl.,

26 ECF 1. In a written order issued on February 10, 2021 (“Prior Dismissal Order”), the Court

27 granted Google’s motion to dismiss the complaint with leave to amend. See Prior Dismissal

1 that were downloaded from the Play Store by Plaintiffs. See id. at 2. Focusing on those two

2 games, the Court found meritorious Google’s arguments that it is immune from suit under Section

3 230 of the Communications Decency Act of 1996 (“CDA”), 47 U.S.C. § 230, and that Plaintiffs

4 had failed to state a claim. See id. at 7-21. The Court did not reach Google’s argument

5 challenging Plaintiffs’ characterization of Loot Boxes as illegal slot machines under California

6 law. See id. at 5.

7 Plaintiffs thereafter filed the operative FAC, reasserting their UCL, CLRA, and unjust

8 enrichment claims. See FAC, ECF 59. Plaintiffs again make allegations about numerous game

9 apps, but they allege that they themselves downloaded only two: Final Fantasy and Dragon Ball

10 Z. See id. ¶¶ 11-13. The FAC contains four claims against Google under California law: (1)

11 violation of the unlawful prong of California’s UCL; (2) violation of the unfair prong of

12 California’s UCL; (3) violation of California’s CLRA; and (4) unjust enrichment under California

13 law. See FAC, ECF 59. Plaintiffs seek to represent a nationwide class of “[a]ll persons who paid

14 to receive randomized virtual items from a purchase (also known as ‘loot boxes’) within an app

15 downloaded from the Google Play Store.” FAC ¶ 170. Plaintiffs seek restitution and

16 disgorgement of the revenues obtained from Google’s allegedly wrongful conduct, as well as

17 declaratory and injunctive relief. See FAC Prayer.

18 II. LEGAL STANDARD

19 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a

20 claim upon which relief can be granted tests the legal sufficiency of a claim.” Conservation Force

21 v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quotation marks and citation omitted). While

22 a complaint need not contain detailed factual allegations, it “must contain sufficient factual matter,

23 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556

24 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is

25 facially plausible when it “allows the court to draw the reasonable inference that the defendant is

26 liable for the misconduct alleged.” Id. When evaluating a Rule 12(b)(6) motion, the district court

27 is limited to the allegations of the complaint, documents incorporated into the complaint by

1 Ret. Sys. v. Wynn, 829 F.3d 1048, 1063 (9th Cir. 2016) (citing Tellabs, Inc. v. Makor Issues &

2 Rights, Ltd., 551 U.S. 308, 322 (2007)).

3 III. DISCUSSION

4 Google seeks dismissal of the FAC without leave to amend, arguing that Plaintiffs still

5 have not alleged a viable claim despite the Court’s guidance in the Prior Dismissal Order. First,

6 Google asserts that Plaintiffs have not alleged any facts that would cause the Court to reconsider

7 its conclusion that Google is immune from suit under Section 230 of the CDA. Second, Google

8 contends that Plaintiffs once again have failed to state a claim. Third, Google argues that as a

9 matter of law, Loot Boxes are not illegal slot machines under California law.

10 In opposition, Plaintiffs argue that Section 230 immunity does not apply, their claims are

11 adequately alleged, and Loot Boxes are illegal slot machines. Plaintiffs also argue that some

12 claims do not depend on the illegality of Loot Boxes, and may proceed even if Loot Boxes are not

13 illegal slot machines. Google responds to the latter argument in its reply.

14 The Court begins by addressing Google’s assertion of Section 230 immunity. Next, the

15 Court addresses whether Plaintiffs have stated a claim for relief. The Court then takes up the

16 question of whether Loot Boxes are illegal slot machines under California law. Finally, the Court

17 addresses Plaintiffs’ argument that some claims do not depend on the illegality of Loot Boxes.

18 A. Section 230 Immunity

19 Section 230 of the CDA “protects certain internet-based actors from certain kinds of

20 lawsuits.” Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1099 (9th Cir. 2009). As relevant here, Section

21 230(c)(1) provides that “[n]o provider or user of an interactive computer service shall be treated as

22 the publisher or speaker of any information provided by another information content provider.”

23 47 U.S.C. § 230(c)(1). “No cause of action may be brought and no liability may be imposed under

24 any State or local law that is inconsistent with this section.” 47 U.S.C. § 203(e)(3). “The majority

25 of federal circuits have interpreted the CDA to establish broad federal immunity to any cause of

26 action that would make service providers liable for information originating with a third-party user

27 of the service.” Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1118 (9th Cir. 2007) (quotation

1 “This grant of immunity applies only if the interactive computer service provider is not

2 also an ‘information content provider,’ which is defined as someone who is ‘responsible, in whole

3 or in part, for the creation or development of’ the offending content. Fair Hous. Council of San

4 Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157, 1162 (9th Cir. 2008) (quoting §

5 230(f)(3)). A website does not become responsible for development of the offending content

6 merely providing “neutral tools” that a third party utilizes to create illegal content. Id. at 1169. A

7 website falls within the exception to Section 230 immunity only “if it contributes materially to the

8 alleged illegality of the conduct.” Id. at 1168.

9 In Barnes, the Ninth Circuit created a three-prong test for Section 230 immunity. See

10 Dyroff v. Ultimate Software Grp., Inc., 934 F.3d 1093, 1097 (9th Cir. 2019) (discussing Barnes

11 test). “Immunity from liability exists for ‘(1) a provider or user of an interactive computer service

12 (2) whom a plaintiff seeks to treat, under a state law cause of action, as a publisher or speaker (3)

13 of information provided by another information content provider.’” Id. (quoting Barnes, 570 F.3d

14 at 1100-01). “When a plaintiff cannot allege enough facts to overcome Section 230 immunity, a

15 plaintiff’s claims should be dismissed.” Id.

16 1. Interactive Computer Service Provider

17 Under the first prong of the Barnes test, the Court must determine whether Plaintiffs’

18 allegations establish that Google is an interactive computer service provider. “The term

19 ‘interactive computer service’ means any information service, system, or access software provider

20 that provides or enables computer access by multiple users to a computer server, including

21 specifically a service or system that provides access to the Internet and such systems operated or

22 services offered by libraries or educational institutions.” 47 U.S.C. § 230(f)(2). “Websites are the

23 most common interactive computer services.” Dyroff, 934 F.3d at 1097; see also Roommates, 521

24 F.3d at 1162 n.6 (“[t]oday, the most common interactive computer services are websites”).

25 Plaintiffs allege that Google maintains the Play Store, which contains more than 2.9

26 million third-party apps on its virtual shelves. FAC ¶¶ 19-23. The Court previously found that

27 similar allegations in the original complaint were sufficient to satisfy the first prong of the Barnes

1 computer service provider in the first round of motion practice, and they do not dispute it here.

2 The Court once again finds that the first prong of the Barnes test is satisfied.

3 2. Seek to Treat as a Publisher or Speaker

4 Under the second prong of the test, the Court must determine whether Plaintiffs’

5 allegations show that Plaintiffs seek to treat Google as a publisher or speaker with respect to

6 content on the Google Play store. A website acts as a publisher when it decides whether or not to

7 post online material submitted for that purpose by a third party. See Roommates, 521 F.3d at

8 1170. “[A]ny activity that can be boiled down to deciding whether to exclude material that third

9 parties seek to post online is perforce immune under section 230.” See id. at 1170-71.

10 In its Prior Dismissal Order, the Court determined that “all of Plaintiffs’ claims are

11 grounded in video game apps intended for public consumption that Google chooses to place ‘on

12 the virtual shelves of its Google Play store.’” Prior Dismissal Order at 10. The Court found that

13 Plaintiffs were seeking to treat Google as publisher, as Plaintiffs wanted Google to screen all apps

14 submitted for inclusion in the Play Store and exclude those containing Loot Boxes. See id. The

15 Court rejected Plaintiffs’ argument that Section 230 does not apply to publication of apps rather

16 than traditional speech, relying on Evans v. Hewlett-Packard Co., No. C 13-02477 WHA, 2013

17 WL 4426359, at *2 (N.D. Cal. Aug. 15, 2013), in which the district court applied Section 230

18 where the published content was an app. See Prior Dismissal Order at 10-11. The Court also

19 found unpersuasive Plaintiffs’ argument that they did not seek to treat Google as a publisher of

20 another’s content, but rather sought to hold Google accountable for its own conduct in “permitting

21 and facilitating illegal gambling.” Id. at 12. The Court stated that it was unclear from the

22 complaint what conduct Plaintiffs meant, as neither the word “permitting” nor the word

23 “facilitating” appeared in the complaint. Id.

24 Plaintiffs tacitly seek reconsideration of the Court’s ruling, pointing out that another court

25 in this district declined to apply Section 230 in a similar Loot Box case, Rebecca Taylor, et al. v.

26 Apple, Inc., No. 20-cv-03906-RS. In an unpublished order, the Taylor court reasoned as follows:

27 Plaintiffs’ theory is that Apple is distributing games that are effectively slot

section 230, it is irrelevant whether or not the games actually violate the law.

1 Plaintiffs are seeking to hold Apple liable for selling allegedly illegal gaming

devices, not for publishing or speaking information.

2

3 Taylor Order at 6, ECF 46 in No. 20-cv-03906-RS. Plaintiffs in the present case argue that, as in

4 Taylor, they are seeking to hold an app store liable for its own conduct in promoting and selling

5 Loot Boxes, not for publishing or speaking information.

6 Plaintiffs also cite the Ninth Circuit’s recent decision in Gonzalez v. Google LLC, 2 F.4th

7 871 (9th Cir. 2021), for the proposition that Plaintiffs’ allegation of revenue sharing between

8 Google and app developers is sufficient to take this case outside of Section 230. In Gonzalez, the

9 families of victims killed by the terrorist group ISIS sued Google, Twitter, and Facebook under the

10 Anti-Terrorism Act (“ATA”), 18 U.S.C. § 2333, alleging that the “defendants’ social media

11 platforms allowed ISIS to post videos and other content to communicate the terrorist group’s

12 message, to radicalize new recruits, and to generally further its mission.” Gonzalez, 2 F.4th at

13 880. The plaintiffs also claimed “that Google placed paid advertisements in proximity to ISIS-

14 created content and shared the resulting ad revenue with ISIS.” Id. The Ninth Circuit found that

15 “[t]he Gonzalez Plaintiffs’ revenue-sharing theory is distinct from the other theories of liability

16 raised in the TAC.” Id. at 897. Specifically, the revenue sharing allegations were “not directed to

17 the publication of third-party information” but were “premised on Google providing ISIS with

18 material support by giving ISIS money.” Id. at 898. The Ninth Circuit explained that, “unlike the

19 Gonzalez Plaintiffs’ other allegations, the revenue-sharing theory does not depend on the

20 particular content ISIS places on YouTube; this theory is solely directed to Google’s unlawful

21 payments of money to ISIS.” Id. The Gonzalez court concluded that Section 230 did “not bar the

22 Gonzalez Plaintiffs’ claims premised on sharing revenue with ISIS,” but did bar the plaintiffs’

23 non-revenue sharing claims. Id. at 898-99.

24 To the extent Plaintiffs’ theory of liability is based on Google’s 30% cut of revenue from

25 the sale of virtual currency, this case is distinguishable from Taylor and Gonzalez. In Taylor, the

26 district court noted that Apple was alleged to be selling illegal gaming devices, and in Gonzalez,

27 Google was alleged to have provided resources to a terrorist organization in violation of an anti-

1 not alleged to be illegal. To the contrary, the FAC states that “[v]irtual currency is a type of

2 unregulated digital currency that is only available in electronic form.” FAC ¶ 11 & n.2 (emphasis

3 added). If indeed the sale of Loot Boxes is illegal, the facts alleged in the FAC indicate that such

4 illegality is committed by the developer who sells the Loot Box for virtual currency, not by

5 Google.

6 All of Google’s conduct identified by Plaintiffs in the FAC is lawful. Google’s 30% cut of

7 virtual currency sales is the same 30% cut that Google receives with respect to all transactions

8 processed through the Play Store. The Developer Distribution Agreement and Software

9 Development Kit are used across the Play Store with respect to all developers and contain no

10 provisions specific to Loot Boxes. Plaintiffs assert that because virtual currency is the only means

11 by which a player may purchase Loot Boxes, Google’s processing of virtual currency sales

12 facilitates Loot Box sales. FAC ¶¶ 7, 186. However, virtual currency may be used for multiple

13 types of in-app purchases, of which only Loot Boxes are alleged to be illegal. A website does not

14 become responsible for offending content merely by providing “neutral means by which third

15 parties can post information of their own independent choosing online,” or by providing “neutral

16 tools” to third party developers. Gonzalez, 2 F.4th at 893 (quotation marks and citation omitted);

17 see also Roommates, 521 F.3d at 1169.

18 The present case also is distinguishable from HomeAway.com, Inc. v. City of Santa

19 Monica, 918 F.3d 676, 681 (9th Cir. 2019), cited by Plaintiffs. In HomeAway, the City of Santa

20 Monica required short-term vacation rentals to be licensed and imposed liability on vacation rental

21 hosting platforms that facilitated unlicensed short-term vacation rentals. Id. at 680. The rental

22 hosting platforms filed suit against the city, arguing that they were entitled to immunity under

23 Section 230. Id. The plaintiffs argued that the ordinance implicitly required them to monitor the

24 contents of third-party listings and compare them against the City’s short-term rental registry. See

25 id. at 682. The Ninth Circuit rejected that argument, finding that the ordinance did not impose

26 liability for the content of listings on the plaintiffs’ websites, but rather imposed liability only if

27 the plaintiffs processed unlawful transactions for unregistered properties. See id. The Ninth

1 listings that the Platforms display on their websites.” Id. at 683. In contrast, Plaintiffs in the

2 present case seek to impose liability if Google processes lawful transactions for virtual currency

3 where such currency could be used to buy Loot Boxes in third-party apps downloaded from the

4 Play Store. The requested injunctive relief is grounded entirely in the content of the listings

5 Google displays on its website.

6 In short, when stripped of Plaintiffs’ speculation as to Google’s motives, the conduct

7 alleged in the FAC amounts to Google’s publication of third-party apps in the Play Store and

8 provision of neutral tools and services to all developers across the Google Play platform. This

9 alleged conduct falls squarely within the protection of § 230 and therefore Plaintiffs’ claims are

10 barred to the extent based on Google’s revenue sharing with respect to sales of virtual currency.

11 To the extent Plaintiffs’ theory of liability is based on direct sales of Loot Boxes through

12 the Play Store for money, however, Taylor and Gonzalez may apply to remove this case from the

13 scope of immunity provided by Section 230. Claims based on Google’s processing of Loot Box

14 sales, and retaining a 30% cut of those sales, would not be based solely on publication of third-

15 party apps and provision of neutral tools. Google objects to the Court’s consideration of this

16 theory, however, arguing correctly that the FAC itself does not allege direct sales of Loot Boxes

17 through the Play Store. Facts regarding such direct sales appear only in documents submitted with

18 Plaintiffs’ opposition and post-hearing filings. Those documents show that Loot Boxes may be

19 purchased directly through the Play Store, with money, for the games Brawl Stars, FIFA Soccer,

20 Puzzles and Dragons, and Clash Royale. See Brown Decl. ¶¶ 3-7, ECF 71-1; Proffer, ECF 77.

21 The Court cannot consider those facts in evaluating Google’s motion to dismiss, because the Court

22 is limited to allegations in the complaint documents incorporated by reference, and matters subject

23 to judicial notice. See Wynn, 829 F.3d at 1063.

24 The Court nonetheless denies Google’s motion to strike Plaintiffs’ evidence regarding

25 sales of Loot Boxes through the Play Store. The Court will treat that evidence as a proffer of

26 additional facts Plaintiffs could allege if granted leave to amend their pleading. Addition of those

27 factual allegations would not necessarily bring Plaintiffs’ claims within the rationales of Taylor

1 Store does not relate to Final Fantasy or Dragon Ball Z, the only games downloaded by Plaintiffs

2 in this suit. In order to take this case outside the protection of Section 230, Plaintiffs would have

3 to add additional allegations that they purchased Loot Boxes directly through the Play Store in

4 Final Fantasy or Dragon Ball Z, or that they downloaded other games from the Play Store and

5 purchased Loot Boxes in those games directly from the Play Store. It is unclear whether Plaintiffs

6 could add those necessary addition allegations. Even if Plaintiffs could do so, such amendment

7 would be futile because Plaintiffs’ claims are subject to dismissal without leave to amend on other

8 grounds, including the Court’s determination that Loot Boxes are not illegal slot machines.

9 Accordingly, as discussed more fully in section III.D., below, the Court will not grant leave to

10 amend to plead around the immunity afforded by Section 230.

11 Based on Google’s conduct as currently alleged in the operative FAC, the Court finds that

12 Plaintiffs seek to treat Google as a publisher of content on the Google Play store, and thus that the

13 second prong of the Barnes test is satisfied.

14 3. Information Provided by Another Content Provider

15 Under the third prong of the Barnes test, the Court must determine whether Plaintiffs’

16 allegations show that the published material – content on the Play Store – was provided by another

17 content provider. In its Prior Dismissal Order, the Court found that this prong was satisfied based

18 on Plaintiffs’ allegations that the two apps downloaded by Plaintiffs, Final Fantasy and Dragon

19 Ball Z, were created by third party developers and were downloaded by Plaintiffs for free. See

20 Prior Dismissal Order at 12. The Court determined that Plaintiffs had not alleged facts showing

21 that Google is a co-developer of the game apps. See Roommates, 521 F.3d at 1162 (a website

22 operator is immune only with respect to content created entirely by third parties).

23 Plaintiffs argue that their new allegations regarding the Developer Distribution Agreement

24 that Google enters into with game developers, and the Software Development Kit that Google

25 requires game developers to use, are sufficient to allege that Google is a co-developer. Section

26 230 does not apply if the interactive computer service provider is responsible, in whole or in part,

27 for the creation or development of the offending content. See Roommates, 521 F.3d at 1162. As

1 development tools in question relate to Loot Boxes specifically. In fact, all game developers must

2 use the code in Google’s Software Development Kit in every game app distributed through the

3 Play Store. Id. ¶¶ 32-33. A website falls within the co-developer exception to Section 230

4 immunity only if it “contributes materially to the alleged illegality of the conduct.” Roommates,

5 521 F.3d at 1168. Material contribution to the alleged illegality is not established where a website

6 merely provides “neutral tools” that a third party utilizes to create illegal content. Id. at 1169; see

7 also Gonzalez, 2 F.4th at 893-94. Because the facts alleged in the FAC establish that the game

8 apps and Loot Boxes downloaded by Plaintiffs were created by third parties, and that Google did

9 no more than provide neutral tools to all developers across the Play Store, the co-developer

10 exception to § 230 immunity does not apply.

11 It appears on the face of the FAC that the third prong of the Barnes test is satisfied.

12 4. Conclusion Re Section 230

13 Based on the facts in the FAC, Google is entitled to Section 230 immunity as to all of

14 Plaintiffs’ claims. The Court’s conclusion would be the same whether or not Loot Boxes

15 constitute illegal slot machines, as “even if a service provider knows that third parties are using

16 such tools to create illegal content, the service’s provider’s failure to intervene is immunized.”

17 Goddard v. Google, Inc., No. C 08-2738 JF (PVT), 2008 WL 5245490, at *3 (N.D. Cal. Dec. 17,

18 2008).

19 Google’s motion to dismiss all claims on the basis of Section 230 immunity is GRANTED.

20 B. Failure to State a Claim

21 Google argues that Plaintiffs have not alleged facts sufficient to state a claim. Plaintiffs

22 assert that their claims are adequately alleged. In its Prior Dismissal Order, the Court found that

23 the complaint did not allege facts showing statutory standing to proceed under the UCL or CLRA,

24 and did not state a claim for unjust enrichment.

25 1. Standing under the UCL

26 Claims 1 and 2 assert violations of California’s UCL, which in relevant part prohibits an

27 individual or entity from engaging in any “unlawful, unfair or fraudulent business act or practice.”

1 violation of the unfair prong.

2 A private person has statutory standing under the UCL only if he or she “has suffered

3 injury in fact and has lost money or property as a result of the unfair competition.” Cal. Bus. &

4 Prof. Code § 17204; see also Hawkins v. Kroger Co., 906 F.3d 763, 768 (9th Cir. 2018). “A

5 plaintiff is required to show some form of economic injury as a result of his transactions with the

6 defendant.” Hawkins, 906 F.3d at 768. Plaintiffs have alleged that they downloaded free games

7 from the Play Store, Final Fantasy (Coffee) and Dragon Ball Z (S.M.), and thereafter were

8 involved in one or more two-part transactions in which they first purchased virtual currency

9 through the Play Store using money, and then used the virtual currency to make in-game

10 purchases of Loot Boxes. See FAC ¶¶ 11-13. In the Prior Dismissal Order, the Court held that

11 Plaintiffs had not alleged how their purchase of virtual currency through the Play Store resulted in

12 the loss of money or property. See Prior Dismissal Order at 16-17. The Court noted that

13 “Plaintiffs do not allege that they received fewer Lapis Crystals (Final Fantasy) or dragon stones

14 (Dragon Ball Z) than the amount for which they paid.” Id. at 17. Based on the facts alleged in the

15 FAC, it still appears that Plaintiffs obtained exactly the virtual currency they paid for. Google

16 asks that the UCL claims once again be dismissed for lack of standing. The Court agrees that

17 dismissal for lack of standing is appropriate on this basis.

18 In opposition, Plaintiffs state that they “believe the Order was incorrectly decided in part

19 and respectfully ask that it be reconsidered.” Opp. at 9, ECF 71. Plaintiffs contend that the Court

20 should not limit its UCL analysis to the purchase of virtual currency through the Play Store, but

21 should consider the entire two-part transaction as a whole. According to Plaintiffs, Google is

22 engaged in a “predatory” scheme to promote and profit from illegal gambling in the form of Loot

23 Boxes. Plaintiffs cite academic research regarding the addictive nature of Loot Boxes and the

24 potentially negative effect that Loot Boxes may have on individuals, especially children. Id. ¶¶ 7-

25 8. Analogizing the Play Store to a physical casino, Plaintiffs allege that “Google permits,

26 promotes, facilitates, and profits off gambling.” FAC ¶ 7. Plaintiffs allege that, “[j]ust like

27 casinos, while Google may not manufacture the slot machines or design their random-chance

1 placed.” Id. A key part of this alleged scheme, Plaintiffs contend, is the disassociation of Loot

2 Boxes from their true monetary cost. Id. ¶¶ 88-92. Plaintiffs assert that players are more likely to

3 gamble using virtual currency than they would be if actual money were at stake. Id. In Plaintiffs’

4 view, all money spent on virtual currency that subsequently is used to purchase Loot Boxes

5 qualifies as economic injury for purposes of UCL standing.

6 Plaintiffs’ casino analogy is unpersuasive. The Play Store contains more than 2.9 million

7 third-party apps. FAC ¶¶ 19-23. That some of those apps are games offering Loot Boxes does not

8 render the Play Store a casino. Plaintiffs have not alleged facts to support their allegation that

9 Google “takes a cut off the top from every wager that is placed.” FAC ¶ 7. The facts alleged in

10 the FAC indicate that Google receives a 30% cut of all revenue from sales of virtual currency.

11 Setting aside all of Plaintiffs’ general commentary regarding gambling, and conclusory

12 characterizations of Google’s conduct, the FAC alleges that: Google distributes third-party apps

13 through its Play Store, Google enforces certain requirements and offers certain development tools

14 across the Play Store platform as a whole, and Google processes legal sales of virtual currency.

15 These allegations do not give rise to a plausible claim that Plaintiffs lost money or property as a

16 result of Google’s conduct. This ruling is in accord with the decisions of two other courts in this

17 district, in which UCL claims premised on in-app purchases of Loot Boxes were dismissed for

18 lack of statutory standing. See Taylor, 2022 WL 35601, at *2; Mai v. Supercell Oy, No. 5:20-CV-

19 05573-EJD, 2021 WL 4267487, at *3 (N.D. Cal. Sept. 20, 2021).

20 As discussed above, Plaintiffs have proffered facts extrinsic to the pleadings indicating that

21 they might be able to allege they bought Loot Boxes directly through the Play Store in Final

22 Fantasy or Dragon Ball Z, or that they downloaded other games from the Play Store and bought

23 Loot Boxes in those games directly through the Play Store. If made, such allegations could affect

24 the Court’s determination that Plaintiffs lack statutory standing under the UCL. However, leave to

25 amend to add such allegations would be futile in light of the Court’s conclusion that Loot Boxes

26 are not illegal slot machines, as discussed below.

27 Based on the allegations currently alleged in the FAC, Google’s motion to dismiss Claims

1 2. Standing under the CLRA

2 Claim 3 asserts violations of the CLRA, which makes unlawful “unfair methods of

3 competition and unfair or deceptive acts or practices undertaken by any person in a transaction

4 intended to result or which results in the sale or lease of goods or services to any consumer.” Cal.

5 Civ. Code § 1770(a); see also Meyer v. Sprint Spectrum L.P., 45 Cal. 4th 634, 639 (2009). “Any

6 consumer who suffers any damage as a result of the use or employment by any person of a

7 method, act, or practice declared to be unlawful” under the CLRA may bring suit. Cal. Civ. Code

8 § 1780(a). Thus, “in order to bring a CLRA action, not only must a consumer be exposed to an

9 unlawful practice, but some kind of damage must result.” Meyer, 45 Cal. 4th at 641.

10 In the Prior Dismissal Order, this Court held that:

11 It appears from the complaint that the only transactions between Plaintiffs and

Google were the free downloads of the games Final Fantasy and Dragon Ball Z,

12 and purchases of virtual currency through the Google Play store. Plaintiffs do not

allege that the free download of video games qualifies as “the sale or lease of goods

13 or services” under the CLRA. Moreover, courts in this district have held that

virtual currency is not a good or service for purposes of the CLRA. See, e.g, Doe v.

14 Epic Games, Inc., 435 F. Supp. 3d 1024, 1046 (N.D. Cal. 2020) (“Plaintiff’s CLRA

claim therefore fails because the virtual currency at issue is not a good or

15 service.”); I.B. ex rel. Fife v. Facebook, Inc., 905 F. Supp. 2d 989, 1008 (N.D. Cal.

2012) (holding that Facebook Credits, a virtual currency, are not covered by the

16 CLRA).

17 Prior Dismissal Order at 20.

18 In the FAC, Plaintiffs allege that they lost money when purchasing virtual currency, and

19 lost property in the form of virtual currency whey they used the virtual currency to buy Loot

20 Boxes. FAC ¶¶ 11-13. To the extent Plaintiffs are asking the Court to reconsider its conclusion

21 that the purchase of virtual currency does not qualify as the purchase of a good or service under

22 the CLRA, the Court declines to do so. Even if the purchase of virtual currency did qualify as the

23 purchase of a good or service, Plaintiffs do not allege facts showing that they suffered damage as a

24 result of buying virtual currency through the Play Store. Plaintiffs received exactly what they paid

25 for. To the extent Plaintiffs complain that they lost property when they used the virtual currency

26 to buy Loot Boxes during game play, it appears that those transactions were between Plaintiffs and

27 the third-party app developers. The Court therefore concludes that Plaintiffs have failed to allege

1 conclusion on similar facts. See Taylor, 2022 WL 35601, at *2 & n.1.

2 This analysis might be affected if Plaintiffs were able to amend to add allegations that they

3 bought Loot Boxes directly through the Play Store in Final Fantasy or Dragon Ball Z, or that they

4 downloaded other games from the Play Store and bought Loot Boxes in those games directly

5 through the Play Store. However, leave to amend to add such allegations would be futile for the

6 reasons discussed herein.

7 Based on the facts alleged in the FAC, Google’s motion to dismiss Claim 3 for lack of

8 statutory standing is GRANTED.

9 3. Unjust Enrichment

10 Claim 4 is for unjust enrichment. The Court previously dismissed Plaintiffs’ unjust

11 enrichment claim on the basis that Plaintiffs had not specified which state’s law they sought to

12 apply. See Prior Dismissal Order at 20-21. Plaintiffs have cured that defect and now specify that

13 their claim is brought under California law. FAC ¶ 225.

14 Under California law, “[t]he elements of an unjust enrichment claim are the receipt of a

15 benefit and [the] unjust retention of the benefit at the expense of another.” Peterson v. Cellco

16 P’ship, 164 Cal. App. 4th 1583, 1593 (2008) (internal quotation marks and citation omitted).

17 Plaintiffs allege that “Google was unjustly enriched as a result of the compensation it received

18 from facilitating, marketing, promoting and selling the unlawful and unfair loot boxes to Plaintiffs

19 and the Class and the virtual currency it reasonably and foreseeably knew was being purchased to

20 wager on loot boxes.” FAC ¶ 226. Plaintiffs also allege that “[b]ecause of Google’s conduct, the

21 Google Play Store has become a gateway to problem gambling behavior and its well-established,

22 associated financial, social, and mental harms. Google has received hundreds of millions of

23 dollars off its conduct which promotes and legitimizes addictive gambling as a form of

24 entertainment for children and families.” Id. ¶ 227. Plaintiffs seek “seek restitution from Google

25 and seek an order of this Court disgorging all profits, benefits, and other compensation obtained

26 by Google from its wrongful conduct.” Id. ¶ 228.

27 Google argues that the facts alleged show that Plaintiffs received exactly the amount of

1 also argues that Plaintiffs have not alleged facts showing that Google was involved in or profited

2 from subsequent transactions in which players used virtual currency to purchase Loot Boxes. The

3 Court agrees with both arguments, and therefore it concludes that Plaintiffs have failed to state a

4 claim for unjust enrichment. Having determined that the unjust enrichment claim is subject to

5 dismissal on this basis, the Court need not and does not reach Google’s additional arguments that

6 the unjust enrichment claim is barred by Google’s Terms of Service and is duplicative of the UCL

7 and CLRA claims.

8 Google’s motion to dismiss Claim 4 for failure to state a claim is GRANTED.

9 C. Alleged Illegality of Loot Boxes

10 Google argues that all of Plaintiffs’ claims fail for the additional reason that they depend

11 on Plaintiffs’ characterization of Loot Boxes as illegal slot machines under California law when,

12 in fact, Loot Boxes are not illegal slot machines. Plaintiffs allege that Loot Boxes are illegal under

13 nine statutes: California’s Gambling Control Act, Cal. Bus. & Prof. Code § 19800 et seq.;

14 California Penal Code § 330a; California Penal Code § 330b; California Penal Code § 330.1 et

15 seq.; California Penal Code § 337j(a)(1); California Penal Code § 337j(a)(2); California Penal

16 Code § 337j(a)(3); Illegal Gambling Business Act of 1970, 18 U.S.C. § 1955; and Unlawful

17 Internet Gambling Enforcement Act of 2006, 31 U.S.C. §§ 5361-5367.

18 Seven of these statutes do not themselves define gambling or slot machines, but rather

19 adopt definitions contained in other statutes. For example, California’s Gambling Control Act sets

20 forth licensing requirements for gambling operations as defined in the California Penal Code. See

21 Cal. Bus. & Prof. Code § 19850. California Penal Code §§ 337j(a)(1)-(3) prohibit certain

22 gambling conduct and gambling-related conduct without a license. The federal Illegal Gambling

23 Business Act imposes fines and/or imprisonment on persons who conduct a gambling business in

24 violation of the law of the state in which it is conducted. See 18 U.S.C. § 1955. The federal

25 Unlawful Internet Gambling Enforcement Act prohibits certain conduct related to unlawful

26 Internet gambling as defined by federal law or state law. See 31 U.S.C. §§ 5362-5363.

27 Three of the enumerated statutes do define illegal slot machines, making clear that a slot

1 “hazard or chance.” See Cal. Pen. Code §§ 330a(a) (making it unlawful to possess or permit a slot

2 machine or other device in which “money or any other thing of value, is won or lost . . . upon

3 hazard or chance”); 330b(d) (defining a slot machine as a device in which “by reason of any

4 element of hazard or chance . . . the user may receive any piece of money, credit, allowance, or

5 thing of value”); 330.1 (making it unlawful to permit the operation of “any slot machine or

6 device” in which “the user thereof, as a result of any element of hazard or chance, may become

7 entitled to receive anything of value”). In addition, California Penal Code § 337j(e)(1) defines the

8 term “controlled game” as used in enumerated §§ 337j(a)(1)-(3) to mean “any game of chance,

9 including any gambling device, played for currency, check, credit, or any other thing of value.”

10 Google argues that Loot Boxes are not slot machines because they do not dispense a thing

11 of value. Google also argues that Loot Boxes fall within a statutory exclusion providing that

12 “[p]inball and other amusement machines or devices, which are predominantly games of skill,

13 whether affording the opportunity of additional chances or free plays or not, are not included

14 within the term slot machine or device.” Cal. Pen. Code § 330b(f). In Google’s view, this

15 exclusion applies because Loot Boxes are incorporated into games of skill.

16 In opposition, Plaintiffs concede that Loot Boxes must offer a chance to win a thing of

17 value in order to qualify as slot machines under California law, but they argue that whether Loot

18 Boxes satisfy this requirement is a factual question that cannot be determined on a motion to

19 dismiss. Alternatively, Plaintiffs argue that Loot Boxes offer a chance to win a thing of value.

20 With respect to Google’s argument based on the exclusion set forth in § 330b(f), Plaintiffs assert

21 that the exclusion does not apply to California Penal Code §§ 330a, 330.1, or 337j. In any event,

22 Plaintiffs contend, Loot Boxes do not fall within the exception. Finally, Plaintiffs contend that

23 some of their claims may proceed whether or not Loot Boxes are illegal slot machines, specifically

24 their UCL unfair prong claim and their unjust enrichment claim.

25 The Court first addresses Plaintiffs’ claims that are grounded in the theory that Loot Boxes

26 are illegal slot machines, and then it addresses Plaintiffs’ contention that they have asserted claims

27 that are not dependent on the illegality of Loot Boxes.

1 1. Claims Grounded in the Alleged Illegality of Loot Boxes

2 All of Plaintiffs’ claims are grounded in the alleged illegality of Loot Boxes. Claim 1

3 asserts that Google violates the unlawful prong of the UCL by distributing and promoting games

4 containing Loot Boxes in violation of various gambling statutes. FAC ¶¶ 182-85. Claim 2 asserts

5 that Google violates the unfair prong of the UCL by “by conducting illegal and unlicensed

6 gambling business.” FAC ¶ 193. Claim 3 asserts that Google “violated the CLRA by representing

7 to or omitting from Plaintiffs and Class members that the transactions involving loot boxes confer

8 or involve rights to potentially valuable prizes, when in fact these transactions constitute unlawful

9 gambling transactions that are prohibited by law.” FAC ¶ 216. Claim 4 asserts that “Google was

10 unjustly enriched as a result of the compensation it received from facilitating, marketing,

11 promoting and selling the unlawful and unfair loot boxes to Plaintiffs and the Class and the virtual

12 currency it reasonably and foreseeably knew was being purchased to wager on loot boxes.” FAC

13 ¶ 226.

14 Google contends that all of these claims fail because Loot Boxes do not offer a chance to

15 win a thing of value and thus are not illegal slot machines under California law.

16 Loot Boxes offer a chance to win a virtual “in-game item or feature designed or perceived to

17 enhance gameplay or provide competitive advantage.” FAC ¶ 1. Google correctly points out that

18 no court has found such in-game items to satisfy the thing of value requirement under California

19 law. Two courts in this district have recently held that Loot Boxes do not offer a chance to win a

20 thing of value. In Taylor, the district court held as follows:

21 Finally, the allegations of the complaint further fail to show that the games violate

the Penal Code because the loot boxes do not offer players a chance to win “a thing

22 of value.” Plaintiffs insist that the loot boxes contain items that are of significant

subjective value to those who play the games and purchase them. While that

23 undoubtedly is true, the lack of any real-world transferable value to the items takes

them outside the meaning of the statute.

24

25 Taylor Order at 6, 11, ECF 46 in No. 20-cv-03906-RS. The Taylor court ultimately dismissed the

26 plaintiffs’ claims without leave to amend on this basis as well as for lack of standing. See Taylor,

27 2022 WL 35601 at *2. Similarly, the district court in Mai determined that “any items obtained

1 can be cashed out for real-world money to be spent elsewhere – i.e., ‘things of value.’” Mai, 2021

2 WL 4267487, at *4. District courts in other jurisdictions have concluded the same. See, e.g., Soto

3 v. Sky Union, LLC, 159 F. Supp. 3d 871, 880 (N.D. Ill. 2016) (finding that Loot Box prizes such

4 as hero characters or talents did not constitute things of value under the California Penal Code).

5 “Added enjoyment simply does not have measurable worth, and it cannot be a ‘thing of value’

6 under [California Penal Code] section 330b(d).” Id.

7 Plaintiffs allege that Loot Box prizes have subjective value to gamers that may not be

8 understood by non-gamers, citing academic research. FAC ¶¶ 146-48. However, absent any case

9 holding that a player’s subjective enjoyment in a virtual game item renders that virtual game item

10 a “thing of value” under California gambling laws, and in the face of several cases holding to the

11 contrary, the Court finds Plaintiffs’ theory to be untenable.

12 Plaintiffs allege that Loot Box prizes have monetary value because they can be traded in

13 legitimate digital markets or in “gray markets.” FAC ¶¶ 156-59. However, Plaintiffs do not allege

14 that either of the two games they downloaded from the Play Store – Final Fantasy and Dragon Ball

15 Z – allow transfer or sale of Loot Box items. Moreover, the Court takes judicial notice of the

16 Google Play Terms of Service prohibiting the sale or transfer of any in-app content, including

17 Loot Box items. The Ninth Circuit has held that a virtual item cannot constitute a thing of value

18 where its sale would violate applicable terms of use. See Kater v. Churchill Downs Inc., 886 F.3d

19 784, 788 n. 2 (9th Cir. 2018) (“[T]he sale of virtual chips for cash on a secondary market violates

20 the Terms of Use. The virtual chips cannot constitute a ‘thing of value’ based on this prohibited

21 use.”). Plaintiffs attempt to distinguish Kater on the basis that it addressed a Washington statute

22 defining “thing of value” differently that the California statutes at issue here. However, this Court

23 concludes that differences in the underlying criminal statutes do not preclude application of

24 Kater’s holding that a virtual item cannot be considered a thing of value based on its alleged

25 market value where the terms of use preclude transfer of the item.

26 Based on the relevant case law holding that Loot Box prizes are not things of value under

27 California gambling laws, and absent any case law holding to the contrary, the Court concludes

1 conclusion, the Court need not and does not address Google’s argument that Loot Boxes are not

2 illegal slot machines because they are incorporated into games of skill. All of Plaintiffs’ claims

3 are subject to dismissal to the extent they are grounded in the alleged illegality of Loot Boxes.

4 2. Plaintiffs’ Theory of Liability Based on Immorality of Loot Boxes

5 Plaintiffs contend that they may proceed on their UCL unfair prong claim (Claim 2) and

6 their unjust enrichment claim (Claim 4) whether or not Loot Boxes are illegal slot machines. They

7 point to allegations in the UCL unfair prong claim characterizing the sale of Loot Boxes as

8 “illegal,” but also, alternatively, “immoral.” FAC ¶ 192. The unjust enrichment claim alleges that

9 Google promoted “unlawful and unfair” Loot Boxes. FAC ¶ 226.

10 As Google points out, “courts in this district have held that where the unfair business

11 practices alleged under the unfair prong of the UCL overlap entirely with the business practices

12 addressed in the fraudulent and unlawful prongs of the UCL, the unfair prong of the UCL cannot

13 survive if the claims under the other two prongs of the UCL do not survive.” Hadley v. Kellogg

14 Sales Co., 243 F. Supp. 3d 1074, 1104-05 (N.D. Cal. 2017). From its inception, this suit has been

15 premised on Plaintiffs’ assertions that Loot Boxes are illegal slot machines and the Play Store is

16 analogous to a physical casino. In the original complaint, Plaintiffs’ claims under both the

17 unlawful and unfair prongs of the UCL were expressly premised on Google’s alleged promotion

18 of illegal gambling. Compl. ¶¶ 110-122. In the FAC, Plaintiffs’ claims under both prongs once

19 again expressly rely on Google’s alleged promotion of illegal gambling. FAC ¶¶ 178-206.

20 Perhaps because of recent cases rejecting Plaintiffs’ illegal slot machine theory, however,

21 Plaintiffs have added allegations to support an alternative theory that even if Loot Boxes are not

22 illegal slot machines, Google’s promotion of them is an unfair business practice because “Loot

23 boxes develop compulsive and addictive behaviors as with gambling” and “are similar to slot

24 machines.” FAC ¶ 192. Plaintiffs contend that Google’s conduct is “immoral and unscrupulous,”

25 because “Google has prioritized profit over ethics” and “Google makes loot boxes available to

26 purchase by children and families at all hours, in any place, and without any spending limitation

27 whatsoever.” Id. There is complete overlap between Plaintiffs’ unlawful prong claim and their

1 of Loot Boxes as illegal or merely immoral.

2 Moreover, “courts may not use the unfair competition law to condemn actions the

3 Legislature permits.” Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163,

4 184 (1999). As discussed herein, Loot Boxes are not illegal slot machines under California law.

5 The Court acknowledges that the FAC raises serious concerns regarding the potential effects of

6 Loot Boxes. However, it is not this Court’s role to “apply purely subjective notions of fairness”

7 under the UCL. Cel-Tech, 20 Cal. 4th at 184. “If plaintiffs’ allegations regarding the harmful

8 [e]ffects of loot boxes are accurate, the public interest likely lies in seeking legislative remedies.”

9 Taylor, 2022 WL 35601, at *3. “Plaintiffs’ attempt to stretch the ‘unfair’ prong of the UCL to

10 reach the alleged conduct is unavailing.” Id.

11 Accordingly, Plaintiffs’ UCL claim under the unfair prong is subject to dismissal to the

12 extent it is based on Plaintiffs’ subjective view that Loot Boxes are harmful. Plaintiffs’ unjust

13 enrichment claim likewise is subject to dismissal to the extent it is based on the same alleged

14 wrongful conduct.

15 The motion to dismiss all claims is GRANTED based on the Court’s determinations that

16 Loot Boxes are not illegal slot machines and that Plaintiffs cannot state a claim based on their

17 subjective view that Loot Boxes are harmful and immoral.

18 D. Leave to Amend

19 Having determined that Plaintiffs’ claims are subject to dismissal, the Court must decide

20 whether leave to amend is warranted. Leave ordinarily must be granted unless one or more of the

21 following factors is present: (1) undue delay, (2) bad faith or dilatory motive, (3) repeated failure

22 to cure deficiencies by amendment, (4) undue prejudice to the opposing party, and (5) futility of

23 amendment. Foman v. Davis, 371 U.S. 178, 182 (1962); see also Eminence Capital, LLC v.

24 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (discussing Foman factors).

25 The Court finds no undue delay (factor 1) or bad faith (factor 2). However, despite the

26 Court’s prior order dismissing the original complaint with guidance regarding amendment,

27 Plaintiff still has not alleged a viable claim (factor 3). Granting further opportunity to amend

1 to state a viable claim. However, the Court concludes that further amendment would be futile

2 (factor 5).

3 Plaintiffs have demonstrated that they could allege facts showing that Loot Boxes may be

4 || purchased directly from Google, using money, for the games Brawl Stars, FIFA Soccer, Puzzles

5 and Dragons, and Clash Royale. Such allegations would not advance Plaintiffs’ claims as

6 || currently framed, however, because they do not relate to either Final Fantasy or Dragon Ball Z,

7 which are the only games alleged to have been downloaded from the Play Store by Plaintiffs.

8 Plaintiffs would have to add additional allegations that they purchased Loot Boxes directly

9 through the Play Store in Final Fantasy or Dragon Ball Z, or that they downloaded other games

10 || from the Play Store and purchased Loot Boxes in those games directly from the Play Store. It is

11 unclear whether Plaintiffs could add those necessary addition allegations. Even if Plaintiffs could

12 || do so, such amendment would be futile in light of the Court’s determinations that Loot Boxes are

5 13 || not illegal slot machines and that Plaintiffs cannot state a claim based on their subjective view that

14 || Loot Boxes are harmful and immoral.

3 15 Accordingly, leave to amend is not warranted here.

a 16 V. ORDER

3 17 (1) Google’s motion to dismiss the first amended complaint is GRANTED WITHOUT

LEAVE TO AMEND.

19 (2) The action is DISMISSED WITH PREJUDICE.

20 (3) This order terminates ECF 66.

21

22 || Dated: January 10, 2022 kop Lh | aman

BETH LABSON FREEMAN

23 United States District Judge

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