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Google Video Game Loot Box Suit Dismissal Adds to Defense Wins

Jan. 11, 2022, 4:20 PM

Google LLC became the latest company to fend off litigation alleging it encourages gambling through purchases of loot boxes in downloaded video games, following a California federal court ruling.

The plaintiff’s claims failed because loot boxes are legal under state law, and even if they weren’t, the Communications Decency Act shields Google under the alleged facts, Judge Beth Labson Freeman of the U.S. District Court for the Northern District of California said. Section 230 of the law immunizes internet platforms from liability for publishing content created by others.

Last week, Judge Richard Seeborg of the Northern District of California dismissed a similar suit against Apple Inc. The Western District of Washington threw out a similar suit against Valve Corp.

John Coffee, Mei-Ling Montanez, and Montanez’s minor child alleged that Google facilitates gambling and other addictive behavior through loot boxes—virtual grab-bags acquired with virtual currency that’s either collected during game play or purchased with real money.

They alleged they downloaded Final Fantasy and Dragon Ball games from the Play Store, bought virtual currency, and used the virtual currency to acquire loot boxes.

Google takes a 30% cut of the revenue from the sales of virtual currency, they alleged.

The court Monday stood by its earlier decision that the plaintiffs lacked standing because they obtained exactly the virtual currency they paid for, incurring no harm.

Turning to the merits, the court said loot boxes aren’t illegal slot machines under California gambling laws because they don’t offer a chance to win a thing of value.

The plaintiffs’ theory that loot box prizes have subjective value to gamers is untenable, the court said.

The court also rebuffed the plaintiffs’ argument that the CDA doesn’t apply because they seek to hold Google liable for its own conduct in promoting and selling loot boxes.

The alleged improper conduct amounts to Google’s publication of third-party apps in its Play Store and the provision of neutral tools and services to all developers across the Google Play platform, the court said.

This falls squarely within the protection of Section 230 and therefore the plaintiffs’ claims are barred to the extent they’re based on Google’s revenue sharing in sales of virtual currency, it said.

To take this case outside the protection of Section 230, the plaintiffs would have to add allegations that they purchased loot boxes directly through the Play Store, the court said. But even if they could, any amendment would be futile in light of the ruling that loot boxes are legal, it said.

Blood Hurst & O’Reardon LLP and Andrew Brown of San Diego represented the plaintiffs. Baker & McKenzie LLP represented Google.

The case is Coffee v. Google LLC, 2022 BL 8498, N.D. Cal., No. 20-CV-03901-BLF, 1/10/22.

To contact the reporter on this story: Julie Steinberg in Washington at jsteinberg@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com