Case 1:24-cv-01646-DLC Document 234 Filed 02/07/25 Page 1 of 37
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`24cv1646(DLC)
`Opinion and
`Order
`
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`-------------------------------------- X
`
`
`:
`SKILLZ PLATFORM INC.,
`:
`
`:
`
` Plaintiff, :
`:
`-v-
`:
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`PAPAYA GAMING, LTD., et al.,
`:
`
`:
`
` Defendants. :
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`:
`
`-------------------------------------- X
`
` :
`PAPAYA GAMING, LTD., et al.,
`:
`:
`
`
` Counterclaim Plaintiffs, :
`
`:
` -v-
`:
`
`:
`SKILLZ PLATFORM INC.,
`:
`
`:
`
` Counterclaim Defendant, :
`
`:
`and
`:
`
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`TETHER STUDIOS LLC, et al.,
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`
`:
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` Additional Counterclaim Defendants. :
`
`:
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`-------------------------------------- X
`
`APPEARANCES:
`
`For plaintiff Skillz Platform Inc.:
`Craig Carpenito
`Amy Katherine Nemetz
`Jessica C. Benvenisty
`King & Spalding LLP
`1185 Avenue of the Americas
`New York, NY 10036
`
`Lazar Pol Raynal
`Michael Anthony Lombardo
`King & Spalding
`110 N Wacker Drive, Suite 3800
`
`
`
`24cv1646(DLC)
`Opinion and
`Order
`
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`-------------------------------------- X
`
`
`:
`SKILLZ PLATFORM INC.,
`:
`
`:
`
` Plaintiff, :
`:
`-v-
`:
`
`PAPAYA GAMING, LTD., et al.,
`:
`
`:
`
` Defendants. :
`
`:
`
`-------------------------------------- X
`
` :
`PAPAYA GAMING, LTD., et al.,
`:
`:
`
`
` Counterclaim Plaintiffs, :
`
`:
` -v-
`:
`
`:
`SKILLZ PLATFORM INC.,
`:
`
`:
`
` Counterclaim Defendant, :
`
`:
`and
`:
`
`:
`TETHER STUDIOS LLC, et al.,
`:
`
`:
`
` Additional Counterclaim Defendants. :
`
`:
`
`-------------------------------------- X
`
`APPEARANCES:
`
`For plaintiff Skillz Platform Inc.:
`Craig Carpenito
`Amy Katherine Nemetz
`Jessica C. Benvenisty
`King & Spalding LLP
`1185 Avenue of the Americas
`New York, NY 10036
`
`Lazar Pol Raynal
`Michael Anthony Lombardo
`King & Spalding
`110 N Wacker Drive, Suite 3800
`
`
`
`Case 1:24-cv-01646-DLC Document 234 Filed 02/07/25 Page 2 of 37
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`Chicago, IL 60606
`
`For defendants Papaya Gaming, Ltd., et al.:
`Anthony Joseph Dreyer
`Jordan Adam Feirman
`Skadden, Arps, Slate, Meagher & Flom LLP
`One Manhattan West
`New York, NY 10001-8602
`
`David B. Leland
`Margaret E. Krawiec
`Michael A. McIntosh
`Skadden, Arps, Slate, Meagher & Flom LLP
`1440 New York Avenue, NW
`Washington, DC 20005
`
`DENISE COTE, District Judge:
`
`Skillz Platform Inc. (“Skillz”) sued its competitor, Papaya
`Gaming, Ltd. and Papaya Gaming, Inc. (collectively, “Papaya”),
`alleging violations of the Lanham Act, 15 U.S.C. § 1125, and the
`New York General Business Law (“GBL”), § 349, through false
`advertising. Papaya brings several counterclaims against
`Skillz, first alleging that Skillz violated the Lanham Act and
`GBL § 349 by falsely advertising various aspects of its own
`games and making false claims about its competitors’ games.
`Papaya also alleges defamation and civil conspiracy, and that
`Skillz and two other companies infringed on Papaya’s trademarks
`and copyrights by copying elements of its games. Skillz has
`moved to dismiss Papaya’s counterclaims in their entirety. It
`has also moved, in the alternative to dismissal, for severance
`of Papaya’s trademark and copyright counterclaims.
`
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`For the following reasons, Skillz’s motion to dismiss is
`granted in part. Additionally, Skillz’s motion to sever
`Papaya’s trademark and copyright counterclaims is granted.
`
`Background
`The following facts are taken from the First Amended
`Counterclaims (“FAC”). Only the facts necessary to decide the
`motion are included. They are assumed to be true for the
`purpose of this motion, and all reasonable inferences are drawn
`in the counterclaim-plaintiffs’ favor.
`Papaya is a developer of mobile, multiplayer games that
`allow users to deposit money and earn real cash prizes, along
`with in-game currency. In a game, users typically compete with
`between five and twenty opponents for the highest score. Using
`an algorithm, Papaya arranges games by matching users of similar
`skill, as measured by each player’s performance in prior games.
`Skillz operates a mobile gaming platform in competition
`with Papaya. The platform hosts games created by third-party
`developers, including two named as counterclaim-defendants:
`Tether Studios LLC (“Tether”) and Golden Wood Company, Ltd.
`(“Golden Wood”). Skillz’s games involve only head-to-head
`gameplay, as opposed to games involving more than two players.
`
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`A.
`Skillz’s Claims About Fairness
`In various ways, Skillz markets its games as being uniquely
`fair and trustworthy. On its apps, it presents a badge
`indicating it is “Committed to Fair Play” and will “[m]atch
`[users] with real players of equal skill” in its games. On
`social media, Skillz has promoted its “unwavering assurance of
`fairness,” including its promise to “NEVER EVER employ bots” and
`“guarantee that every match you engage in is a true reflection
`of your skill level.” In a 2024 “letter to our community,”
`Skillz CEO Andrew Paradise made similar claims, noting the
`company was “committed to rooting out and eradicating cheaters,
`bad players, and bots,” and that its games would include “No
`unfair bots, not ever.” The letter said that Skillz used a
`“proprietary technology to ensure fair matching,” so that users
`could be “sure the competition is real, and so are your chances
`of winning.” Skillz’s website, social media feeds, and
`marketing of individual games repeated much the same claims
`about “pair[ing] players with similar skill levels,” having “a
`fair chance to win,” and the games’ lack of bots. Paradise also
`made these statements on earnings calls with investors,
`emphasizing that Skillz “stands alone” in committing to “fair
`play for skill-based gaming.”
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`B.
`Skillz’s Operation of Games
`Despite its representations, according to the FAC, Skillz
`has used and allowed the use of bots in its games, and it has
`unevenly matched players. Skillz has clarified that it uses
`bots only in certain non-cash games and in games where two human
`players compete asynchronously. In addition to permitting the
`use of bots on its platform, former Skillz employees say that
`the company sometimes manipulates the outcomes of games by
`unevenly matching players.
`The way in which Skillz characterizes and operates games on
`its platform affects Papaya in a few ways. Because of some
`players’ experience with Skillz’s games, they come to believe
`that all mobile gaming is rigged and stop using other games,
`like Papaya’s. Some confuse the two platforms and attribute the
`unfairness of Skillz’s games to Papaya. And if not for Skillz’s
`claims about the fairness of its games, some players may have
`played Papaya’s games instead of Skillz’s.
`C.
`Cash Withdrawals
`In its marketing to consumers, Skillz claims that they can
`withdraw cash that they win on its platform “at any time.” It
`has made this claim in video advertisements, as well as on the
`“Support” page of its website. But some players have complained
`online and in reviews of Skillz’s platform that they were unable
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`to withdraw money from their accounts when they attempted to do
`so. In some cases, players were unable to access their winnings
`because their accounts had been banned from the platform.
`D.
`Claims About Papaya and Other Gaming Companies
`According to the FAC, Skillz has embarked on a public-
`facing campaign to smear competitors like Papaya to position
`itself as fairer and more trustworthy than other mobile gaming
`companies. It has done so in two ways: first, by creating an
`organization that accuses Skillz’s competitors of using bots in
`its games, and, second, by planting and disseminating an article
`that stated Papaya had admitted to using bots in its games.
`Skillz’s claims about Papaya have tarnished Papaya’s reputation
`and that of the mobile gaming industry generally, and, in their
`absence, some users may have played Papaya’s games instead of
`Skillz’s.
`1.
`4FairPlay Organization and Website
`First, Skillz created a “false-front” organization called
`“Fair Play for Mobile Games” or “4FairPlay”, which maintained a
`public website from September 2023 to February 2024. Skillz
`funded the organization and controlled and assisted it. Skillz,
`through its CEO Andrew Paradise, also provided specific
`direction on the design of its website.
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`The 4FairPlay website encouraged and facilitated visitors’
`filing of complaints about mobile gaming companies, other than
`Skillz and including Papaya, with state attorneys general. One
`page titled “File a Complaint,” for example, provided a pre-
`filled form for users to submit a complaint against either
`Papaya or one of two other companies, but not Skillz, to state
`law enforcement.
`The website’s home page included a banner showing a counter
`that purported to display an increasing number of complaints
`filed with state law enforcement about Papaya and two other
`companies. That counter did not display an accurate number of
`complaints; in fact, each time a visitor arrived at the website,
`it would display the same number. The number would appear to
`increase every few seconds, which gave the false impression that
`it was incorporating accurate, live updates. The page also
`encouraged visitors to file a complaint, noting that “thousands
`of players” were doing so.
`The 4FairPlay homepage also displayed a pie chart
`purporting to show the relative number of complaints relating to
`various games offered by Papaya and other companies. Above the
`graph appeared the sentence: “Bingo Cash and Solitaire Cash by
`Papaya Games have received the highest complaints so far
`followed by Solitaire Cash from Avia Games.” The figures
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`displayed in the graph, which remained static, did not reflect
`in real time any actual database of complaints being
`continuously updated. The homepage also presented a map of the
`United States, purporting to show the number of complaints
`submitted from each state. Like the graph, the map’s data
`stayed the same over time and were not connected to any live
`database.
`2.
`Bonus.com Article
`On June 25, 2024, Skillz posted a link to an article on the
`website Bonus.com to its social media accounts (“Bonus.com
`article”). Skillz had been involved in creating the article,
`which was titled “Papaya Gaming Admits Bot Use, Claims No
`Deception.” Skillz’s social media posts thanked Bonus.com for
`“covering this story,” stated that “[f]raud is fraud,” and made
`similar statements decrying bot use in the mobile gaming
`industry.
`The article referred to this litigation, and portrayed
`Papaya as having “admitted” to using bots in the course of
`defending itself from Skillz’s lawsuit, despite Papaya’s
`counsel’s statement at a May 10 conference that Papaya’s
`platform does not use bots.1 Bonus.com ultimately retracted the
`
`
`1 At the May 10 conference, Papaya’s counsel stated that “the
`games as currently constituted do not use bots. Every single
`opponent is a human opponent.”
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`article’s statement that Papaya had admitted to using bots and
`issued a correction, but Skillz did not remove its social media
`posts referencing the article and the claims it initially made.
`E.
`Papaya’s Intellectual Property on Skillz’s Platform
`According to the FAC, another aspect of Skillz’s unfair
`competition with Papaya is its misappropriation of intellectual
`property in Papaya’s games. Several of Papaya’s games,
`particularly SOLITAIRE CASH, BINGO CASH, and 21 CASH, have
`accrued substantial popularity and brand recognition with the
`game-playing public. These similarities between Skillz’s games
`and Papaya’s have caused confusion among consumers, who may
`think that Skillz’s games are associated with Papaya and in some
`cases blame Papaya for deficiencies in games that are actually
`hosted by Skillz.
`1.
`Papaya’s Intellectual Property
`In SOLITAIRE CASH, players win points by clearing cards
`from the game board and creating sequences of cards in
`descending order. In BINGO CASH, players try to win the most
`points by marking, or “daubing,” certain numbers on the game
`board as fast as possible. And in 21 CASH, players create
`stacks of cards adding up to 21, out of a deck of 52 cards,
`within a given time limit.
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`These games have all been offered for several years, during
`which they have been played by millions of people and garnered
`hundreds of thousands of reviews. Users associate these games
`with their names and logos. Accordingly, Papaya has a federal
`trademark registration for each of the games’ names and logos or
`icons. And additional artistic expression within the BINGO CASH
`game, such as play screens, game boards, and other elements of
`the user interface, is the subject of a copyright registration.
`2.
`Games on Skillz’s Platform
`After Papaya released these games, however, several games
`with similar names and imagery appeared on Skillz’s platform.
`First, in June 2023, the Skillz platform began hosting a game
`developed by Tether called CASH OUT BINGO. Like BINGO CASH’s
`logo, CASH OUT BINGO’s logo features the word “BINGO” above
`three colored bingo balls. In both logos, the center ball
`includes a dollar sign in a white circle, while two other balls
`with numbers in white circles appear behind it. In addition,
`the CASH OUT BINGO user interface resembles that of BINGO CASH,
`including the use of a dark blue star against a lighter blue
`square for the bingo board’s center, a blue pill-shaped “Bingo”
`button, a similarly shaped and situated set of meters to display
`bonuses, and similar or identical names and icons for types of
`bonuses (such as “Wild Daub” or “Pick-A-Ball”).
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`Second, BINGO FOR CASH was developed by Golden Wood,
`released on Skillz’s platform in May 2024, and also resembles
`Papaya’s BINGO CASH game. Both games’ interfaces have a purple
`background, use yellow stars for daubed numbers, highlight
`certain numbers in light blue, and use a similar “Bingo” banner
`in which each letter appears in its own pill-shaped frame
`colored red, yellow, purple, green, and blue, respectively.
`Third, 21 BASH, which was developed by Luckyo Limited and
`was released in May 2023, resembles Papaya’s 21 CASH in its name
`and logo. Both games’ icons prominently feature the number “21”
`in a gold font against a purple background. Both icons also
`feature illustrations of playing cards, including an Ace and a
`Jack.
`Fourth, SOLITAIRE WORLD - WIN CASH was developed by
`GameNexa Studios and released in 2023. Its icon resembles that
`of Papaya’s SOLITAIRE CASH. Both icons show illustrations of
`three cards, similarly spread against a green background, where
`the front card displays dollar signs and a gold border, and the
`two cards behind it appear to be more traditionally colored
`white playing cards.
`Fifth, a game developed by DNR Game Studio and released in
`2024, is called SOLITAIRE CASH, but has been listed on app
`stores with longer names including “SOLITAIRE CASH - JUST PLAY
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`NOW” and “SOLITAIRE CASH: WIN REAL MONEY.” This game has the
`same name as Papaya’s SOLITAIRE CASH.
`Finally, as of the FAC’s filing, Skillz was planning to
`offer a game called “21 CASH BLITZ - WIN CASH,” developed by DNR
`Game Studio, beginning in October 2024. The icon for the game
`includes only the words “21 CASH,” such that the game’s title
`appears to be identical to that of Papaya’s 21 CASH.
`F.
`Lawsuit
`Skillz initiated this action against Papaya on March 4,
`2024. Papaya moved to dismiss the claims against it on May 6,
`and that motion was denied in its entirety on July 23. Skillz
`Platform Inc. v. Papaya Gaming, Ltd., No. 24cv1646, 2024 WL
`3526853 (S.D.N.Y. July 23, 2024). On August 5, Papaya filed an
`Answer to the Complaint, as well as counterclaims against Skillz
`and five other companies. On September 4, Skillz moved to
`dismiss and/or sever the counterclaims.
`Following an initial pretrial conference on September 6, an
`Order of the same day set forth a schedule for discovery and
`other pretrial proceedings in this case. Fact discovery in the
`underlying action against Papaya is about to conclude. On
`September 23, Papaya filed the FAC, mooting Skillz’s September 4
`motion. The FAC named only Skillz, Tether, and Golden Wood as
`counterclaim-defendants. Tether filed an Answer on October 7.
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`On October 11, Skillz renewed its motion to dismiss or, in the
`alternative, sever certain counterclaims. The motion was fully
`submitted on November 15.
`
`Discussion
`Papaya brings ten counterclaims against Skillz. In its
`first two claims, the FAC alleges false advertising and
`deceptive practices under the Lanham Act and GBL § 349,
`respectively. In its next two claims, the FAC alleges
`defamation and civil conspiracy to unlawfully harm Papaya under
`New York common law. Next, the FAC alleges trademark
`infringement and contributory and/or vicarious trademark
`infringement in violation of 15 U.S.C. § 1114; false designation
`of origin, false association, and/or unfair competition, and
`contributorily and/or vicariously doing the same, pursuant to 15
`U.S.C. ¶ 1125(a); and copyright infringement and contributory
`and/or vicarious copyright infringement under 17 U.S.C. § 501
`(“trademark and copyright claims”).
`Skillz has moved to dismiss all of Papaya’s counterclaims
`for failure to state a claim for relief pursuant to Rule
`12(b)(6), Fed. R. Civ. P. In the alternative, Skillz argues,
`Papaya’s six trademark and copyright counterclaims should be
`severed.
`
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`To survive a motion to dismiss brought under Fed. R. Civ.
`P. 12(b)(6), “a complaint must contain sufficient factual
`matter, accepted as true, to state a claim to relief that is
`plausible on its face.” Doe v. Franklin Square Union Free Sch.
`Dist., 10 F.4th 86, 94 (2d Cir. 2024) (quoting Ashcroft v.
`Iqbal, 556 U.S. 662, 678 (2009)). “A claim has facial
`plausibility when the plaintiff pleads factual content that
`allows the court to draw the reasonable inference that the
`defendant is liable for the misconduct alleged.” Vengalattore
`v. Cornell Univ., 36 F.4th 87, 102 (2d Cir. 2022) (quoting
`Ashcroft, 556 U.S. at 678). “In determining if a claim is
`sufficiently plausible to withstand dismissal, a court ‘must
`accept as true all allegations in the complaint and draw all
`reasonable inferences in favor of the non-moving party.’” Doe,
`100 F.4th at 94 (citation omitted).
`I.
`Lanham Act and GBL § 349
`Papaya alleges that Skillz violated the Lanham Act and GBL
`§ 349 by falsely advertising its own products, including by
`claiming that its games did not include bots, that it matches
`players evenly, and that it allows users to withdraw cash at any
`time. Papaya also alleges that Skillz made false statements
`about the fairness of games offered by Papaya and other
`competitors. Skillz argues primarily that the FAC fails to
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`state these claims because it does not plausibly allege the
`challenged statements were false. For the following reasons,
`Skillz’s motion is denied with respect to claims arising from
`Skillz’s claims about its own products, but granted to the
`extent counterclaims allege violations based on Skillz’s claims
`about its competitors.
`Under Section 43(a) of the Lanham Act, any person who, on
`or in connection with any goods or services, uses any
`false or misleading description of fact, or false or
`misleading representation of fact, which . . . in
`commercial advertising or promotion, misrepresents the
`nature, characteristics, qualities, or geographic
`origin of his or her or another person's goods,
`services, or commercial activities, shall be liable in
`a civil action by any person who believes that he or
`she is or is likely to be damaged by such act.
`15 U.S.C. § 1125(a)(1). To state a claim under this provision,
`the plaintiff must allege (a) “the falsity of the challenged
`statement,” (b) “materiality, i.e, that the false or misleading
`representations involved an inherent or material quality of the
`product,” (c) “that the defendant placed the false or misleading
`statement in interstate commerce,” and (d) “that the plaintiff
`has been injured as a result of the misrepresentation.” Int’l
`Code Council, Inc. v. UpCodes Inc., 43 F.4th 46, 56 (2d Cir.
`2022) (citation omitted).
`
`“A plaintiff can demonstrate falsity either by showing: (1)
`literal falsity, i.e., that the challenged advertisement is
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`false on its face, or (2) implied falsity, i.e., that the
`advertisement, while not literally false, is nevertheless likely
`to mislead or confuse consumers.” Id. at 57 (citation omitted).
`“[A]n impliedly false message leaves an impression on the
`listener or viewer that conflicts with reality,” and need not
`necessarily imply something that is literally false. Id.
`(citation omitted). A statement’s materiality depends on
`whether it is “likely to influence purchasing decisions.” Id.
`at 63 (citation omitted).
`
`Similarly, a GBL § 349 claim must “allege that a defendant
`has engaged in (1) consumer-oriented conduct that is (2)
`materially misleading and that (3) plaintiff suffered injury as
`a result of the allegedly deceptive act or practice.” Orlander
`v. Staples, Inc., 802 F.3d 289, 300 (2d Cir. 2015) (citation
`omitted). The Second Circuit has noted that these elements
`resemble those of a Lanham Act false advertising claim, and
`neither party suggests the laws differ in any way that is
`material to the instant motion. See UpCodes Inc., 43 F.4th at
`56 n.3.
`A.
`Skillz’s Statements About Its Own Games
`First, Papaya sufficiently alleges that Skillz violated the
`Lanham Act and GBL § 349 by falsely stating that games on its
`platforms did not use bots, matched players evenly, and allowed
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`users to withdraw funds at any time. According to the FAC,
`Skillz claimed in various contexts that its games never involve
`bots and that they ensure players are paired with other players
`of similar skill level. It alleges that those claims are false,
`in that Skillz games did use bots in some contexts and that they
`manipulated the outcomes of games by matching players in a way
`that ensured a certain result. The FAC plausibly alleges that
`the challenged representations were material, evidenced in part
`by customer reviews implying that Skillz’s users participated in
`its games because they thought they would be fairly matched
`against a human. Papaya alleges that these statements have
`injured it by attracting potential Papaya customers to Skillz,
`and by creating confusion that has hurt Papaya’s reputation.
`And there is no dispute that the challenged statements were
`placed in interstate commerce.
`
`Skillz argues to the contrary that Papaya has no factual
`support for its allegations that Skillz used bots or unevenly
`matched players. These claims are governed by Rule 8’s pleading
`standards. To plead plausible claims, Papaya cites to Skillz
`documentation that refers to the use of bots. And the FAC
`refers to language used internally at Skillz, which, construed
`in the light most favorable to Papaya, could suggest that Skillz
`was manipulating the outcomes of games by unevenly matching
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`players. Skillz responds that bot usage in a narrow set of
`circumstances, such as in training games, is immaterial to
`consumers. But the FAC does not allege that Skillz used bots
`only in training games. And, in any event, whether the presence
`of bots in certain narrow contexts is immaterial to consumers
`raises questions of fact. See UpCodes Inc., 43 F.4th at 64.
`Papaya plausibly alleges that Skillz’s claims that it never uses
`bots affect consumers’ decisions to use the platform.
`With respect to the claims that users could withdraw cash
`at any time, Skillz argues that the challenged statements were
`not false when viewed in context, including that the Skillz’s
`website included an article called “why does it take 4-6 weeks
`to get my withdrawal.” While, “under certain circumstances, the
`presence of a disclaimer or similar clarifying language may
`defeat a claim of deception,” Fink v. Time Warner Cable, 714
`F.3d 739, 742 (2d Cir. 2013), to warrant dismissal at this stage
`of the litigation the disclaimer should be located near the
`challenged language and “so clear that no reasonable addressee
`could believe the plaintiffs’ allegations of being misled.”
`UpCodes Inc., 43 F.4th at 63. This is not such a case, as the
`FAC alleges that Skillz made the challenged claims in video
`advertisements and on another page of its website.
`
`
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`Case 1:24-cv-01646-DLC Document 234 Filed 02/07/25 Page 19 of 37
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`B.
`Skillz’s Statements About Its Competitors
`Skillz has also moved to dismiss Papaya’s Lanham Act and
`GBL § 349 claims based on Skillz’s statements about Papaya and
`other competitors. According to the FAC, Skillz implied through
`the graphics and content on the 4FairPlay website that its
`competitors, including Papaya, have been the subjects of many
`consumer complaints related to the use of bots and unfair games,
`while Skillz has not. Skillz argues that Papaya has failed to
`sufficiently allege that the challenged statements were false.
`Skillz is correct.
`As in initial matter, Papaya does not allege that the
`4FairPlay website is “literally false.” Id. at 57. “A message
`can only be literally false if it is unambiguous.” Id.
`(citation omitted). And “a district court evaluating whether an
`advertisement is literally false must analyze the message
`conveyed in full context, i.e., it must consider the
`advertisement in its entirety and not engage in disputatious
`dissection.” Id. (citation omitted). Papaya’s allegations are
`essentially that the website’s graphics caused consumers to be
`confused. The FAC’s assertion that the website’s complaint
`counter “created a false sense of specificity and legitimacy,”
`for example, is not a claim that it was unambiguous or that it
`necessarily implied a constantly updated connection to live
`
`
`
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`Case 1:24-cv-01646-DLC Document 234 Filed 02/07/25 Page 20 of 37
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`database. Similarly, the claims that other companies are
`“scams” or “fraudulent” do not necessarily and ambiguously imply
`a false message, because those words are not susceptible to a
`single clear, widely agreed-upon definition. Apotex Inc. v.
`Acorda Therapeutics, Inc., 823 F.3d 51, 63 (2d Cir. 2016).
`Where “the language or graphic is susceptible to more than one
`reasonable interpretation, the advertisement cannot be literally
`false.” Id. (citation omitted).
`To the extent Papaya’s allegation is that the website was
`impliedly false, it has failed to “plead sufficient facts to
`support a finding that consumers were confused or misled,” as is
`necessary to challenge “a statement that is not literally
`false.” UpCodes Inc., 43 F.4th at 64 n.10. This sort of
`allegation is “usually demonstrated through extrinsic evidence
`of consumer confusion or through evidence of the defendant’s
`deliberate deception.” Id. at 57 (citation omitted). Here, the
`FAC does not allege any such facts, but offers only the
`conclusion that “a reasonable consumer . . . would have been
`deceived” by the website and that the website included “false
`and misleading statements.” Even at this early stage, a claim
`cannot survive based on “threadbare recitals of a cause of
`action’s elements, supported by mere conclusory statements.”
`Iqbal, 556 U.S. at 663.
`
`
`
`20
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`Case 1:24-cv-01646-DLC Document 234 Filed 02/07/25 Page 21 of 37
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`Papaya highlights three aspects of the 4FairPlay website
`aside from the consumer complaint graphics that it says amounted
`to false advertising: Skillz’s hiding its involvement to “give
`the impression” that 4FairPlay was unbiased, the “design” of the
`website suggesting its impartiality, and the website’s omission
`of Skillz as an option for the subject of complaints. But these
`accusations do not identify “any description of fact,” 15 U.S.C.
`§ 1125(a)(1), or statement about a product or service, much less
`a false one.2 Accordingly, Papaya’s Lanham Act and § 349 claims
`regarding the 4FairPlay website are dismissed.
`II. Defamation
`Under New York law, a defamation claim must include:
`1) a written defamatory statement of fact concerning
`the plaintiff; 2) publication to a third party; 3)
`fault (either negligence or actual malice depending on
`the status of the libeled party); 4) falsity of the
`defamatory statement; and 5) special damages or per se
`actionability (defamatory on its face).
`Electra v. 59 Murray Enters., Inc., 987 F.3d 233, 259 (2d Cir.
`2021) (citation omitted). Papaya claims that Skillz defamed it
`
`
`2 Papaya also posits that Skillz’s motion regarding these claims
`could be rejected solely on the basis of its brief’s referencing
`only defamation law to support it. That is not quite true;
`Skillz argues in its brief that Papaya has not pleaded falsity
`under the Lanham Act or GBL § 349. And, importantly, the three
`causes of action share the requirement of falsity. See ONY,
`Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490, 492 (2d
`Cir. 2013) (referring to Lanham Act and GBL § 349 claims as
`“sounding in defamation”).
`
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`Case 1:24-cv-01646-DLC Document 234 Filed 02/07/25 Page 22 of 37
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`through two sets of public communications: first, various
`representations on the 4FairPlay website regarding consumers’
`complaints about Papaya’s games, and second, the Bonus.com
`article that said Papaya had admitted to bot use, which the FAC
`alleges Skillz created and disseminated.
`A.
`4FairPlay Website
`Papaya first alleges that the 4FairPlay website’s various
`representations indicating that Papaya had been the subject of
`consumer complaints were defamatory. Skillz argues that Papaya
`has not sufficiently alleged that those statements were false in
`the sense required to state a defamation claim. Skillz is
`correct.
`To state the falsity element of a defamation claim, the
`complaint “must plead facts that, if proven, would establish
`that the defendant’s statements were not substantially true.”
`Tannerite Sports, LLC v. NBCUniversal News Grp., 864 F.3d 236,
`247 (2d Cir. 2017). “A statement is substantially true if the
`statement would not have a different effect on the mind of the
`reader from that which the pleaded truth would have produced.”
`Id. at 242 (citation omitted). Under this definition, which is
`meant to avoid an “overly technical or exacting conception of
`truth,” “the entire publication, as well as the circumstances of
`
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`Case 1:24-cv-01646-DLC Document 234 Filed 02/07/25 Page 23 of 37
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`its issuance, must be considered in terms of its effect upon the
`ordinary reader.” Id. at 243 (citation omitted).
`The FAC fails to plead that the complaint counter, pie
`graph, and map were not substantially true. For instance, the
`FAC does not allege that multiple consumers had not complained
`about Papaya, or that the complaints about Papaya were not
`increasing over time.3
`Papaya argues, and the FAC asserts in conclusory fashion,
`that the counter falsely gave the impression that these
`statistics were connected to some live database, which imparted
`a “false sense of legitimacy and impartiality.” This parsing of
`the website’s graphic misses the thrust of its presentation,
`which urges viewers to join a growing list of complainants.
`Papaya also notes that other statements on the 4FairPlay
`website -- about “fraudulent games” and “scams” -- can support
`its defamation claim. This argument fails as well. “New York
`law protects derogatory statements which may be categorized as
`‘opinion’ as opposed to ‘fact.” Chau v. Lewis, 771 F.3d 118,
`128 (2d Cir. 2014). And “statements more likely to be
`characterized as fact are readily understood by the reader to
`have a precise, unambiguous and definite meaning and can be
`
`
`3 Skillz’s motion is supported by a spreadsheet of complaints
`against Papaya. Papaya is correct these complaints cannot
`properly be considered on a motion to dismiss.
`23
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`Case 1:24-cv-01646-DLC Document 234
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