Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 1 of 36
`
`
`
`
`
`BLOOD HURST & O’REARDON, LLP
`TIMOTHY G. BLOOD (149343)
`THOMAS J. O’REARDON II (247952)
`501 West Broadway, Suite 1490
`San Diego, CA 92101
`Tel: 619/338-1100
`619/338-1101 (fax)
`tblood@bholaw.com
`toreardon@bholaw.com
`
`THE LAW OFFICES OF ANDREW J. BROWN
`ANDREW J. BROWN (160562)
`501 West Broadway, Suite 1490
`San Diego, CA 92101
`Tel: 619/501-6550
`andrewb@thebrownlawfirm.com
`
`Attorneys for Plaintiffs
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA – SAN JOSE DIVISION
`
`Plaintiffs,
`
`
`
`v.
`
`JOHN COFFEE, MEI-LING MONTANEZ,
`and S.M., a minor by MEI-LING
`MONTANEZ, S.M.’s parent and guardian, on
`behalf of themselves and all others similarly
`situated,
`
`
`
`
`
`GOOGLE LLC,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Defendant.
`
`Case No. 5:20-cv-03901-BLF
`
`PLAINTIFFS’ OPPOSITION TO
`DEFENDANT’S MOTION TO DISMISS
`PLAINTIFFS’ FIRST AMENDED
`COMPLAINT
`
`CLASS ACTION
`
`Date:
`Time:
`
`District Judge Beth Labson Freeman
`Courtroom 3, 5th Floor, San Jose
`Magistrate Judge Susan van Keulen
`Courtroom 6, 4th Floor, San Jose
`
`Complaint Filed:
`Trial Date:
`
`
`JURY TRIAL DEMANDED
`
`October 21, 2021
`9:00 a.m.
`
`June 12, 2020
`Not Set
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`
`
`I.
`
`II.
`
`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 2 of 36
`
`TABLE OF CONTENTS
`
`Page
`
`INTRODUCTION ..................................................................................................................1
`
`STATEMENT OF THE CASE ..............................................................................................2
`
`A.
`
`B.
`
`The Two Theories of Liability Alleged ......................................................................2
`
`The Facts Underlying the Claims ...............................................................................3
`
`1.
`
`2.
`
`3.
`
`The Loot Box .................................................................................................3
`
`Google Helps Create, Market, and Sell Predatory Loot Boxes ......................4
`
`A Loot Box Is Predatory and Constitutes an Illegal Gambling Device
` ........................................................................................................................5
`
`a.
`
`b.
`
`c.
`
`Consideration Is Paid to Obtain a Chance on a Loot Boxes ..............6
`
`Loot Boxes Are a Game of Chance ....................................................6
`
`Loot Boxes Offer Prizes That Are “Things of Value” .......................6
`
`III.
`
`ARGUMENT .........................................................................................................................7
`
`A.
`
`Section 230 Immunity Does Not Apply .....................................................................7
`
`1.
`
`2.
`
`Plaintiffs Allege Google Shares Revenue ......................................................7
`
`Additionally, Google Is Not Simply Providing “Content-Neutral
`Tools” .............................................................................................................8
`
`B.
`
`Plaintiffs Have Standing .............................................................................................9
`
`1.
`
`2.
`
`UCL Standing Is Properly Alleged ................................................................9
`
`Standing for the CLRA and Unjust Enrichment Is Properly Alleged ..........14
`
`C.
`
`The UCL “Unlawful” and CLRA Claims Are Well Plead .......................................14
`
`1.
`
`In Pari Delicto and Public Policy Does Not Bar Plaintiffs’ Claims ............15
`
`a.
`
`b.
`
`There Is No Skill Exception Under Sections 330a, 337j, and
`the California Gambling Control Act ...............................................17
`
`Sections 330b and 330.1 Have No Applicable Skill Exception
` ..........................................................................................................17
`
`2.
`
`Loot Boxes Offer the Hope of Things of Value ...........................................19
`
`D.
`
`Plaintiffs Allege Violations of All Three UCL “Unfair” Tests ................................22
`
`1.
`
`Balancing Test ..............................................................................................22
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`i
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 3 of 36
`
`
`
`2.
`
`3.
`
`Tethering Test ..............................................................................................23
`
`The FTC Act Test .........................................................................................24
`
`The CLRA Claim Is Adequately Alleged ................................................................24
`
`Unjust Enrichment Is Properly Alleged ...................................................................25
`
`E.
`
`F.
`
`IV.
`
`CONCLUSION ....................................................................................................................25
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`ii
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 4 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Allergan U.S. v. Imprimis Pharm., Inc.,
`No. 8:17-cv-01551-DOC-JDE, 2019 U.S. Dist. LEXIS 163228
`(C.D. Cal. Mar. 27, 2019) ....................................................................................................... 13
`
`Aron v. U-Haul Co. of Cal.,
`143 Cal. App. 4th 796 (2006) .................................................................................................. 14
`
`Asdourian v. Araj,
`38 Cal. 3d 276 (1985) .............................................................................................................. 15
`
`Barnes v. Yahoo!, Inc.,
`570 F.3d 1096 (9th Cir. 2009) ................................................................................................... 9
`
`Bell Gardens Bicycle Club v. Dep’t of Justice,
`36 Cal. App. 4th 717 (1995) .................................................................................................... 18
`
`Cal. Soc. of Anesthesiologists v. Brown,
`204 Cal. App. 4th 390 (2012) .................................................................................................. 18
`
`Carafano v. Metrosplash.com, Inc.,
`339 F.3d 1119 (9th Cir. 2003) ................................................................................................... 8
`
`Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.,
`20 Cal. 4th 163 (1999) ................................................................................................. 10, 14, 23
`
`City & Cty. of San Francisco v. Purdue Pharma L.P.,
`491 F. Supp. 3d 610 (N.D. Cal. 2020) .................................................................................... 10
`
`Clayworth v. Pfizer, Inc.,
`49 Cal. 4th 758 (2010) ............................................................................................................. 10
`
`Colby v. Title Ins. & Trust Co.,
`160 Cal. 632 (1911) ................................................................................................................. 15
`
`Couch v. Telescope, Inc.,
`No. CV 07-3916 FMC (PLAx), 2007 U.S. Dist. LEXIS 104142
`(C.D. Cal. Nov. 30, 2007) ....................................................................................................... 16
`
`Cty. of Kern v. T.C.E.F., Inc.,
`246 Cal. App. 4th 301 (2016) ............................................................................................ 11, 12
`
`Daro v. Super. Ct.,
`151 Cal. App. 4th 1079 (2007) ................................................................................................ 12
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`ii
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 5 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Debernardis v. IQ Formulations, LLC,
`942 F.3d 1076 (11th Cir. 2019) ............................................................................................... 13
`
`Doe v. Epic Games, Inc.,
`435 F. Supp. 3d 1024 (N.D. Cal. 2020) .................................................................................. 25
`
`Drum v. San Fernando Valley Bar Ass’n,
`182 Cal. App. 4th 247 (2010) ...................................................................................... 22, 23, 24
`
`Evans v. Hewlett-Packard Co.,
`No. C 13-02477 WHA, 2013 U.S. Dist. LEXIS 146989
`(N.D. Cal Oct. 10, 2013) ........................................................................................................... 9
`
`In re Facebook Inc. Internet Tracking Litig.,
`956 F.3d 589 (9th Cir. 2020) ..................................................................................................... 9
`
`Ferrington v. McAfee, Inc.,
`No. 10-CV-01455-LHK, 2010 U.S. Dist. LEXIS 106600
`(N.D. Cal. Oct. 5, 2010) .......................................................................................................... 10
`
`Franz v. Beiersdorf, Inc.,
`745 Fed. Appx. 47 (9th Cir. 2018) .......................................................................................... 13
`
`FTC v. R.F. Keppel & Bros., Inc.,
`291 U.S. 304 (1934) ................................................................................................................ 24
`
`Ghazarian v. Magellan Health, Inc.,
`53 Cal. App. 5th 171 (2020) .................................................................................................... 10
`
`Gonzalez v. Google LLC,
`No. 18-16700, __ F.3d __, 2021 U.S. App. LEXIS 18515
`(9th Cir. June 22, 2021) ..................................................................................................... 7, 8, 9
`
`Green v. Grewal,
`61 Cal. 4th 544 (2015) ............................................................................................................. 20
`
`Hall v. Time,
`158 Cal. App. 4th 847 (2008) .................................................................................................. 10
`
`HomeAway.com v. Santa Monica,
`918 F.3d 676 (9th Cir. 2018) ................................................................................................. 7, 9
`
`I.B. v. Facebook, Inc.,
`905 F. Supp. 2d 989 (N.D. Cal. 2012) .............................................................................. 24, 25
`
`Johnson v. Mitsubishi Digital Elecs. Am., Inc.,
`365 Fed. Appx. 830 (9th Cir. 2010) (Order at 17) .................................................................. 13
`
`Kater v. Churchill Downs Inc.,
`886 F.3d 784 (9th Cir. 2018) ................................................................................................... 21
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`iii
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 6 of 36
`
`
`
`Kelly v. Astri Corp.,
`72 Cal. App. 4th 462 (1999) .................................................................................................... 16
`
`Korea Supply Co. v. Lockheed Martin Corp.,
`29 Cal. 4th 1134 (2003) ........................................................................................................... 23
`
`Kwikset Corp. v. Super. Ct.,
`51 Cal. 4th 310 (2011) ................................................................................................. 10, 11, 13
`
`Kyablue v. Watkins,
`210 Cal. App. 4th 1288 (2012) .......................................................................................... 15, 16
`
`Law Offices of Mathew Higbee v. Expungement Assistance Servs.,
`214 Cal. App. 4th 544 (2013) .................................................................................................. 10
`
`Lemmon v. Snap, Inc.,
`995 F.3d 1085 (9th Cir. 2021) ................................................................................................... 8
`
`People ex rel. Lockyer v. Fremont Life Ins. Co.,
`104 Cal. App. 4th 508 (2002) .................................................................................................. 14
`
`Lopez v. Smith,
`203 F.3d 1122 (9th Cir. 2000) ................................................................................................. 25
`
`Mason v. Mach. Zone, Inc.,
`851 F.3d 315 (4th Cir. 2017) ................................................................................................... 21
`
`Medrazo v. Honda of N. Hollywood,
`205 Cal. App. 4th 1 (2012) (abrogated in part on other grounds by
`Veera v. Banana Republic, LLC, 6 Cal. App. 5th 907 (2016)) ............................................... 13
`
`Mendia v. Garcia,
`768 F.3d 1009 (9th 2014) ........................................................................................................ 14
`
`National City v. Fritz,
`33 Cal. 2d 635 (1949) .............................................................................................................. 17
`
`People v. Mason,
`261 Cal. App. 2d 348 (1968) ................................................................................. 18, 19, 21, 22
`
`People v. Shira,
`62 Cal. App. 3d 442 (1976) ..................................................................................................... 19
`
`Pet Food Express, Ltd. v. Applied Underwriters, Inc.,
`No. 2:16-CV-01211 WBS AC, 2019 U.S. Dist. LEXIS 156198
`(E.D. Cal. Sept. 11, 2019) ....................................................................................................... 13
`
`Philpott v. Super. Ct.,
`1 Cal. 2d 512 (1934) ................................................................................................................ 25
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`iv
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 7 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Process Specialties, Inc. v. Sematech, Inc.,
`No. CIV. S-00-414 FCD PAN, 2001 U.S. Dist. LEXIS 26261
`(E.D. Cal. Nov. 8, 2001) ......................................................................................................... 25
`
`Progressive W. Ins. Co. v. Super. Ct.,
`135 Cal. App. 4th 263 (2005) .................................................................................................. 22
`
`Ristic v. Mach. Zone, Inc.,
`No. 15-cv-8996, 2016 U.S. Dist. LEXIS 127056
`(N.D. Ill. Sept. 19, 2016) ......................................................................................................... 23
`
`Rosales v. FitFlop USA, LLC,
`882 F. Supp. 2d 1168 (S.D. Cal. 2012) ................................................................................... 11
`
`Safeway, Inc. v. Super. Ct.,
`238 Cal. App. 4th 1138 (2015) ................................................................................................ 23
`
`Schnall v. Hertz Corp.,
`78 Cal. App. 4th 1144 (2000) .................................................................................................. 23
`
`Somers v. Dig. Realty Trust, Inc.,
`119 F. Supp. 3d 1088 (N.D. Cal. 2015) .................................................................................. 14
`
`Soto v. Sky Union, LLC,
`159 F. Supp. 3d 871 (N.D. Ill. 2016) ...................................................................................... 21
`
`Steroid Hormone Prod. Cases,
`181 Cal. App. 4th 145 (2010) .................................................................................................. 14
`
`In re Tobacco II Cases,
`46 Cal. 4th 298 (2009) ............................................................................................................. 11
`
`Trinkle v. Stroh,
`60 Cal. App. 4th 771 (1997) .................................................................................................... 20
`
`U.S. v. Girard,
`601 F.2d 69 (2d Cir. 1979) ...................................................................................................... 20
`
`U.S. v. Schwartz,
`785 F.2d 673 (9th Cir. 1986) ................................................................................................... 20
`
`Williams v. Facebook, Inc.,
`384 F. Supp. 3d 1043 (N.D. Cal. 2018) .................................................................................. 14
`
`Williams v. Gerber Prods. Co.,
`523 F.3d 934 (9th Cir. 2008) ................................................................................................... 22
`
`Constitutions
`
`U.S. Const., art. III .................................................................................................................. 10, 13
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`v
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 8 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Statutes
`
`15 U.S.C. §§ 41-58 .................................................................................................................. 22, 24
`
`18 U.S.C. § 1955 ............................................................................................................... 15, 17, 23
`
`18 U.S.C. § 1955(b)(1) .................................................................................................................. 17
`
`31 U.S.C. §§ 5361-5367 .................................................................................................... 15, 17, 23
`
`31 U.S.C. § 5362(10)(a) ................................................................................................................ 17
`
`47 U.S.C. § 230 ........................................................................................................................... 7, 8
`
`47 U.S.C. § 230(c) ....................................................................................................................... 8, 9
`
`47 U.S.C. § 230(c)(1) ...................................................................................................................... 7
`
`Cal. Penal Code § 330 ................................................................................................................... 23
`
`Cal. Penal Code § 330a ..................................................................................................... 17, 19, 20
`
`Cal. Penal Code § 330a(a) ............................................................................................................. 14
`
`Cal. Penal Code § 330b ................................................................................................ 17, 19 20, 21
`
`Cal. Penal Code § 330b(a) ....................................................................................................... 13, 14
`
`Cal. Penal Code §330b(d) ................................................................................................. 15, 20, 21
`
`Cal. Penal Code §330b(f) ........................................................................................................ 15, 17
`
`Cal. Penal Code § 337j .................................................................................................................. 17
`
`Cal. Penal Code § 337j(a)(1) ......................................................................................................... 15
`
`Cal. Penal Code § 337j(a)(2) ......................................................................................................... 15
`
`Cal. Penal Code § 337j(a)(3) ......................................................................................................... 15
`
`Cal. Penal Code § 330.1 .............................................................................................. 15, 17, 19, 20
`
`Cal. Penal Code § 330.1(f) ............................................................................................................ 15
`
`Cal. Penal Code § 330.2 ................................................................................................................ 20
`
`Cal. Bus. & Prof. Code § 17200 ............................................................................................ 1, 2, 14
`
`Cal. Bus. & Prof. Code § 17204 .......................................................................................... 9, 10, 14
`
`Cal. Bus. & Prof. Code § 19800 ........................................................................................ 14, 17, 23
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`vi
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 9 of 36
`
`
`
`Cal. Civ. Code. § 1750 .................................................................................................................... 2
`
`Cal. Civ. Code § 1770(a)(14) ........................................................................................................ 25
`
`Md. Code Ann., Crim. Law § 12-110 ........................................................................................... 21
`
`Other Authorities
`
`CA Attorney Gen. Opinions, 37 Ops. Cal. Atty. Gen. 126, 128 (1961) ........................................ 17
`
`CA Attorney Gen. Opinions, 67 Ops. Cal. Atty. Gen. 528, 530 (1984) ........................................ 20
`
`CA Attorney Gen. Opinions, 72 Ops. Cal. Atty. Gen. 143, 148 (1989) ........................................ 18
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`vii
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 10 of 36
`
`INTRODUCTION
`
`Loot boxes in video games seem like trivial things not to be taken seriously. They are, after
`
`
`
`I.
`
`
`
`all, games for children and young adults. But a large and growing body of research (another peer-
`
`reviewed study was published in April1) finds loot boxes cause serious mental and public health
`
`problems because of their addictive nature. The addictive nature of these games is not by accident.
`
`Game developers, with Google’s assistance, intentionally structured loot boxes like traditional
`
`gambling games to exploit cognitive traps, psychological triggers, and behavioral heuristics that
`
`cause people to purchase them even when they know it is not in their interest to do so. Children and
`
`teenagers are particularly susceptible to manipulation by these traps and triggers. As a result, loot
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`boxes are enormously profitable for Google, which receives 30% of the revenue from every loot
`
`11
`
`box sold for the work it does in facilitating their development, promotion, and sale.
`
`12
`
`Mindful of the Court’s February 10, 2021, Order Granting Motion to Dismiss [ECF No. 56]
`
`13
`
`(the “Order”), Plaintiffs added many new allegations to bolster their claims, including their claim
`
`14
`
`for violations of the unfair prong of the Unfair Competition Law. Google ignores these new
`
`15
`
`allegations and the unfair prong claim, but a comparison between the original complaint and the
`
`
`
`16
`
`FAC shows their significant differences. See Declaration of Andrew Brown in Support of Plaintiffs’
`
`17
`
`18
`
`Opposition to Defendant’s Motion to Dismiss First Amended Complaint (“Brown Decl.”), Ex. 3.2
`
`Overall, the FAC now asserts two overarching theories supporting each claim. Under the
`
`19
`
`first theory, loot boxes are gambling devices under nine broad California and federal statutes.
`
`20
`
`Google is liable under these laws because they variously prohibit the operating, maintaining,
`
`21
`
`exposing for play, permitting, placing, making, or permitting to be made any agreement regarding
`
`22
`
`games of chance, or being directly or indirectly compensated from, sharing revenue from, or
`
`23
`
`accepting payment in connection with a game of chance. Loot boxes are games of chance and the
`
`24
`
`prizes one has a chance of winning are valuable within the meaning of these statutes. Plaintiffs added
`
`25
`
`26
`
`27
`
`28
`
`
`
`00177131
`
`1
`
`
`See Wardle & Zendle, Loot boxes, gambling, and problem gambling among young people:
`
`results from a cross-sectional online study, Cyberpsychol Behav Soc Netw, 24(4):267-274 (2021).
`
`All “Ex.” references are to documents attached to the Brown Decl.
`
`Case No. 5:20-cv-03901-BLF
`1
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`2
`
`
`
`
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 11 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`more allegations about the value of loot box prizes, including research by economists studying loot
`
`boxes. Loot box prizes are valuable, both monetarily and otherwise.
`
`Under the second theory, Google’s conduct violates established public policies and is
`
`immoral, unethical, and unscrupulous, violating the UCL’s unfair prong and providing another basis
`
`for the unjust enrichment claim. With these, a technical violation of a law is not required.
`
`Plaintiffs also addressed the standing issues the Court noted in the Order by adding
`
`allegations to the FAC and providing additional controlling case law below.
`
`For these and the other reasons discussed below, Google’s motion should be denied.
`
`II.
`
`STATEMENT OF THE CASE
`
`A.
`
`The Two Theories of Liability Alleged
`
`The FAC asserts two overarching theories of liability supporting claims for violations of the
`
`12
`
`Unfair Competition Law, the Consumers Legal Remedies Act, and unjust enrichment. Google only
`
`13
`
`addresses one theory, and then only in part. Under the theory Google partially addresses, Google
`
`14
`
`violates nine state and federal gambling laws because a loot box is an unlicensed gambling device.
`
`15
`
`¶¶ 182(a)-182(i).3 These laws are “broad in their coverage.” Ex. 1 at 1. They prohibit operating,
`
`
`
`16
`
`maintaining, exposing for play, permitting, placing, making, or permitting to be made an agreement
`
`17
`
`regarding games of chance, or “directly or indirectly” receiving compensation from, sharing revenue
`
`18
`
`from, or accepting payment in connection with a game of chance.
`
`19
`
`Under the FAC’s second theory, which Google ignores, Google engages in a predatory
`
`20
`
`monetization scheme that violates established public policies and constitutes immoral, unethical, or
`
`21
`
`unscrupulous conduct, violating the UCL’s unfair prong and providing further basis for the unjust
`
`22
`
`enrichment claim. By design, Google facilitates, guides, assists, and shares revenue in the predatory
`
`23
`
`sale of loot boxes, the most common and lucrative type of “microtransaction” found in video games.
`
`24
`
`As Google knows, loot boxes, with features shared with other types of gambling, trigger compulsive
`
`25
`
`and addictive behavior that unfairly cause children, teenagers, and others to purchase loot box plays.
`
`26
`
`Google encourages and instructs developers on how to create and include loot boxes in games. ¶¶ 6,
`
`27
`
`28
`
`3
`
`
`
`
`
`
`
`00177131
`
`
`“¶” references are to the First Amended Complaint (“FAC”). ECF No. 59.
`
`Case No. 5:20-cv-03901-BLF
`2
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 12 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`22-37, 213. Google profits from the problems loot boxes cause, which are on “an order of magnitude
`
`larger than risk factors such as alcohol dependence.” ¶ 116(i); see also ¶ 118 (loot box addiction
`
`“stronger than [] between problem gambling and factors like … drug use, and depression.”).
`
`B.
`
`The Facts Underlying the Claims
`
`
`
`Google ignores the FAC’s new allegations. These allegations establish Plaintiffs’ standing,
`
`provide the factual framework for both liability theories, and detail the involved role Google plays
`
`in facilitating, creating, and monetizing loot boxes designed to prey on children and others.
`
`1.
`
`The Loot Box
`
`With the rise of portable computing devices such as the Android-enabled smartphones and
`
`10
`
`tablets, the videogame industry shifted away from the “pay to play” model of traditional video
`
`11
`
`games to an app-based “freemium” model, where the games are available for free download. ¶¶ 4,
`
`12
`
`18, 21, 213 (“Make your app available as a free download”). To make money, game developers
`
`13
`
`offer in-game microtransactions to players and design their games to encourage the purchase of in-
`
`14
`
`game items. Id. Of these, loot boxes are the most lucrative. Their sale is rooted in unfair competition.
`
`15
`
`
`
`Loot boxes are designed to trigger and exploit the same compulsive behaviors and addictions
`
`16
`
`caused by other gambling activities. ¶¶ 1, 85-104, 192. They offer the randomized chance to win
`
`17
`
`prizes. ¶¶ 1, 42. Playing a loot box takes no skill. ¶ 43. One simply pays money and then clicks on
`
`18
`
`the loot box, like playing a slot machine. ¶¶ 1, 87, 93. The loot box then lights up, flashes, and makes
`
`19
`
`noises to build excitement as the player anxiously waits to see if he or she will win a rare and
`
`20
`
`valuable prize. ¶¶ 94-96. The chance of winning a prize is randomized, with the desirable prizes
`
`21
`
`much more difficult to win. ¶¶ 46, 52, 60, 101, 165. Playing a loot box is a gamble because one
`
`22
`
`never knows what will be won until after the wager is made and the loot box is opened. ¶¶ 1, 96.
`
`23
`
`Loot boxes can only be obtained by paying money directly to Google through its “Google Play
`
`24
`
`Store” to buy virtual coins, a form of property, which are then used to buy loot boxes. ¶ 44.
`
`25
`
`Thousands of games in the Google Play Store contain “loot boxes.” The types and categories
`
`26
`
`of games with loot boxes vary widely – racing games, battle games, educational games, trivia games
`
`27
`
`and more. ¶ 47. Some of the games with loot boxes involve skill while some require no skill at all.
`
`28
`
`¶ 64. Many games require the purchase of an intermediate virtual currency, but some games allow
`
`
`
`00177131
`
`
`
`
`
`Case No. 5:20-cv-03901-BLF
`3
`PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`
`

`

`Case 5:20-cv-03901-BLF Document 71 Filed 07/30/21 Page 13 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`Google to sell loot boxes directly to gamers. Ex. 2 (Screenshots of FIFA and Brawl Stars). The
`
`superficial aspects of loot boxes and appended games – such as the names, graphics, and sounds –
`
`may differ, but the loot box mechanics and harmful effects are the same. ¶ 48.
`
`2.
`
`Google Helps Create, Market, and Sell Predatory Loot Boxes
`
`Google works hand in glove with game developers to sell loot boxes through the Google
`
`Play Store. ¶ 9. First, under its revenue-sharing arrangement, Google permits loot boxes and
`
`provides a variety of services to assist in their development and sale in return for 30% of the revenue
`
`collected. ¶¶ 6, 9, 29. Google recommends and encourages developers to use loot boxes, and then
`
`provides tools to create them. ¶¶ 28, 30, 32, 47. Google “coaches game developers on ‘[h]ow to
`
`10
`
`build and grow your app’s revenue streams’ through ‘implementing the right monetization strategy’
`
`11
`
`with loot boxes. ¶¶ 4, 213. Google sets out “Best Practices” to:
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`• Make your app available as a free download with limited features for a limited time.
`Then use in-app purchase to unlock the full, unlimited app.
`
`• Offer additional fe