ZACHERY LISTON, individually and on behalf of all others similarly situated, Plaintiff, v. KING.COM, LTD., Defendant.
No. 15 CV 01853
May 23, 2017
Judge John J. Tharp, Jr.
MEMORANDUM OPINION AND ORDER
Plaintiff Zachery Liston brings this proposed class action against defendant King.com, Ltd., the operator of the popular mobile game Candy Crush Saga, alleging that King improperly and unilaterally removed
BACKGROUND
In deciding a motion to dismiss under
Candy Crush, played on mobile devices including iPhones, iPads, and Androids, is essentially a match-making puzzle game in which players aim to line up three or more of the same icon in various configurations so as to clear them from the board and earn points. First Am. Compl. ¶¶ 30-34, ECF No. 15. Players advance to subsequent levels of the game as they clear the requisite number of icons from the board, and have only a limited number of turns, or moves, they may take to try to clear those icons. Id. ¶ 34. If a player fails to remove the requisite icons within a certain number of moves, they lose one of their in-game “lives”—chances to line up the requisite number of icons—and have to repeat that level. Id. ¶ 35.
Candy Crush players start the game with five lives, and also gain an additional free life every thirty minutes, up to a limit of five (the “Free Life Option”). Id. ¶¶ 37-38. Players using this method for obtaining additional lives have to wait thirty minutes to resume the game once they have lost all of their lives. Id. ¶ 38. Because the game is “addictive,” as described by news outlets, players often do not want to wait thirty minutes for additional lives, and instead can rely on the two other avenues that King has provided for obtaining more lives. Id. ¶¶ 39-40. The first method is for players to buy additional lives while they are in the game through so-called In-App purchases (the “Purchase Option”). Id. ¶ 42. A player can buy five additional lives for $.99. Id. ¶ 3. The second method is for players to link their Candy Crush accounts to their Facebook accounts, which then enables them to request and receive more lives (which the plaintiff refers to as “Donated Lives”) from their friends on Facebook who also have Candy Crush installed on their mobile devices (the “Facebook Option”). Id. ¶¶ 43-46. If a player’s Facebook friends have not yet installed Candy Crush, they are prompted to do so, meaning that the Facebook Option allows King to receive a benefit from players marketing Candy Crush to their friends, according to Liston. Id. ¶ 45. This option thus enables King to pass on marketing costs to consumers. Id. Under either the Purchase Option or the Facebook Option, “lives have an economic and ascertainable value equal to approximately $0.20.” Id. ¶ 47.
Candy Crush has enjoyed enormous popularity among mobile gamers, bringing in an average of 93 million daily active users in December 2013 and grossing an estimated $1.9 billion in revenue that year. Id. ¶¶ 3, 28. Overall, the game has counted roughly 250 million people as players. Id. ¶ 9. Plaintiff Zachery Liston began playing Candy Crush on his iPhone in early 2012, and connected his Candy Crush account to his Facebook account around that same time. Id. at ¶¶ 49-50. When he ran out of lives, Liston used the Facebook Option, “periodically asking his Facebook friends for Donated Lives.” Id. ¶ 51. Some of those
Based on these vanishing Donated Lives, Liston, an Illinois citizen, brings this proposed class action against the game’s operator, King.com, Ltd. (“King”). Liston filed the first amended complaint in this case on March 27, 2015, asserting claims for violation of the Computer Fraud and Abuse Act (“CFAA”),
ANALYSIS
I. Jurisdiction
Liston asserted both federal question and diversity jurisdiction in his complaint, but he has voluntarily withdrawn his claim under the CFAA, see Pl.’s Resp. at 2 n.1, ECF No. 41, which was the only federal claim he alleged and thus his only basis for federal question jurisdiction. He alleges diversity jurisdiction, meanwhile, under the Class Action Fairness Act (“CAFA”). King does not dispute the existence of diversity jurisdiction, but contends that Liston lacks Article III standing to pursue the claims he has asserted, both individually and on behalf of the putative class.
A. Diversity Jurisdiction under CAFA
The diversity jurisdiction statute,
CAFA’s diversity criteria are satisfied here. King is organized in and has its
B. Standing
King asserts that Liston lacks Article III standing and that the First Amended Complaint must therefore be dismissed under
King argues that Liston has not alleged an injury-in-fact because he played Candy Crush for free, received the additional Donated Lives for free, and never purchased anything from King. Def.’s Mem. at 4-5. King analogizes this scenario to data breach cases in which plaintiffs’ personally identifiable information (“PII”) is accessed, but never actually used improperly, in a breach. Id. at 5. Data breach plaintiffs have alleged that they lost the monetary value of their PII when that information was stolen and potentially
In response, Liston maintains that he has adequately alleged that he suffered injuries-in fact because he asserts that he was deprived of lives he had earned in Candy Crush and was not otherwise compensated for his “social marketing of King’s product.” Pl.’s Resp. at 3. Liston asserts that both he and King believed that the lives and those marketing services had value, as shown by the fact that they had agreed to exchange them, and further argues that the Donated Lives have an ascertainable value of $.20 per life because that is the cost of lives that players could otherwise acquire using the Purchase Option. Id. at 4. Liston argues that Donated Lives are more valuable than the free lives a Candy Crush player can receive by waiting for thirty minutes to pass because the Donated Lives acquired through the Facebook Option can be used immediately or stored for future use (though Liston alleges in this case, of course, that King removed the lives rather than leaving them in storage). Id. Liston asserts that this is “a valuable difference to players, whose addiction to Candy Crush drives King’s entire enterprise,” and further argues that when King deleted the Donated Lives from his account, he lost the economic benefit he had derived from his exchange with King. Id. at 4-5. Liston rejects King’s analogy to PII theft, arguing that such cases do not involve any contractual exchange and that even after a theft of PII, people still retain and may use their PII, whereas Liston has lost all access to the deleted lives. Id. at 7. Finally, Liston argues that any standing challenge to his multi-state claims is premature, and that while there is a split in this District over whether a court should address the standing issue on multi-state claims before the class certification stage, this Court should side with the judges who have deferred the question until after resolving a class certification motion. Id. at 8.
King’s injury-in-fact argument misses the mark. The game operator focuses on Liston’s alleged failure to assert an immediate economic loss, but an injury need not be economic in nature to support Article III standing. See, e.g., United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 686 (1973) (“In interpreting ‘injury in fact’ we made it clear that standing was not confined to those who could show ‘economic harm’ . . . .”). The Supreme Court recently noted in Spokeo, for example, that “the law has long permitted recovery by certain tort victims even if their harms may be difficult to prove or measure,” and that the Supreme Court has previously recognized Article III standing based on alleged deprivations of rights such as free speech and free exercise. Spokeo, 136 S. Ct. at 1549. The Seventh Circuit has similarly noted that “[i]njury-in-fact for standing purposes is not the same thing as the ultimate measure of recovery. The fact that a plaintiff may have difficulty proving damages does not mean that he cannot have been harmed.” Abbott v. Lockheed Martin Corp., 725 F.3d 803, 808 (7th Cir. 2013).
Further, even were immediate economic injury a requirement of standing, King’s analogy to data breach cases to demonstrate Liston’s lack of standing would be unpersuasive. First, even in the context of PII theft, the premise that PII has no inherent economic value is debatable. It is true, as King argues, that some courts hearing data breach or data privacy cases have suggested that PII lacks a monetary value for which plaintiffs could be compensated. See, e.g., Willingham v. Global Payments, Inc., No. 1:12-CV-01157, 2013 WL 440702, *7 (N.D. Ga. Feb. 5, 2013) (PII “does not have an inherent monetary value”); In re Jetblue Airways Corp. Privacy Litig., 379 F. Supp. 2d 299, 327 (E.D.N.Y. 2005) (dismissing a breach of contract claim because plaintiffs “had no reason to expect that they would be compensated for the ‘value’ of their personal information”). But several of the cases King cites have since been reversed or partly vacated on appeal. See In re Google Inc. Cookie Placement Consumer Privacy Litig., 806 F.3d 125, 134, 149 (3d Cir. 2015) (finding plaintiffs did have Article III standing, but had failed to state a claim under the CFAA where they plausibly alleged a market for the internet history data the defendants had compiled but had not alleged any facts showing that they intended to participate in that market or that the defendants had prevented them from recovering that information’s full value), cert. denied, 137 S. Ct. 36 (2016); Galaria v. Nationwide Mutual Ins. Co., 663 Fed. App‘x 384, 388-89 (6th Cir. Sept. 12, 2016) (finding plaintiffs did have Article III standing where they alleged that the theft of their personal data put them at an increased and continuing risk of fraud and that they had expended costs to mitigate that risk). The Seventh Circuit has also recently found Article III standing to be present in cases where the plaintiffs plausibly alleged a substantial risk of identity theft and fraudulent credit card charges in the future and further alleged that they had already spent time and money to mitigate that risk. See Remijas v. Neiman Marcus Grp., LLC, 794 F.3d 688, 693-94 (7th Cir. 2015); Lewert v. P.F. Chang’s China Bistro, Inc., 819 F.3d 963, 966-68 (7th Cir. 2016).
Regardless, the analogy also fails because it is inapt; the factual circumstances of the PII cases on which King relies are simply not analogous to the facts Liston sets out in his complaint. The complaint alleges, plausibly enough, that Candy Crush lives have actual economic value; they are available for purchase at a particular price and King compensates players for marketing the game by facilitating the receipt of Donated Lives. King’s argument that an asset that it is able to sell for 20 cents has no inherent value is untenable; that the game provides a mechanism by which players may also receive such assets for free in exchange for activities that King values does not change that basic fact. The complaint alleges that there is a market price for additional lives, and that claim is corroborated by the fact that King itself sells additional lives in the open market. Accepting that allegation as true for purposes of this motion, as required, Liston plainly has standing to complain of the loss of those assets by means of King’s conduct—whether that conduct is labeled as fraud, theft, conversion, or is described by some other legal theory. Liston’s complaint does not require a determination of whether some future risk is a sufficiently concrete and particularized injury to support Article III standing—as was the issue in several of the above-cited data breach cases—but instead alleges a harm that has already occurred: the removal of Donated Lives from his game account. At this stage of the litigation, Liston has sufficiently alleged an injury in fact to satisfy Article
King’s argument that Liston lacks standing to bring claims under the laws of states where he does not allege he resides or was injured is more complicated, as it presents the conceptual question of whether Liston’s ability to assert such claims is a question of standing, or one of whether he is an appropriate representative of the putative class, or both. King contends that because Liston claims no injuries in any state other than Illinois, he has no standing to pursue statutory causes of action under the laws of any other state; accordingly, King submits that Liston’s claims under any state laws other than those of Illinois must be dismissed. Liston argues that King’s standing challenge to these claims is premature, and that this Court should defer consideration of the issue until this case reaches the class certification stage. In support of his argument, Liston points to the Supreme Court’s recognition of the class action as “‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.’” Pl.’s Resp. at 9 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011)).
Liston is correct that the Supreme Court has indicated that where class certification issues are dispositive and the resolution of those issues is “logically antecedent to the existence of any Article III issues,” a court may resolve the class certification issues first. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 612 (1997); see also Ortiz v. Fibreboard Corp., 527 U.S. 815, 831 (1999) (finding class certification issues should be addressed first where they were logically antecedent to Article III issues and “themselves pertain[e]d to statutory standing, which may properly be treated before Article III standing”). Both Amchem and Ortiz concerned certification of settlement classes in asbestos litigation, and in both cases the Supreme Court reached its decisions based on class certification issues and so did not go on to squarely address the standing issues that objectors to the settlements had also raised. Amchem, 521 U.S. at 628-29; Ortiz, 527 U.S. at 864-65. And the Seventh Circuit relied on Ortiz in Payton v. County of Kane, 308 F.3d 673, 675 (7th Cir. 2002), where six former arrestees had brought a proposed class action against Illinois’ DuPage and Kane counties—the counties that charged the named plaintiffs the bond fees at issue in the case—as well as 17 additional counties that had not charged any of the named plaintiffs the contested bond fee. Id. The counties all imposed the alleged bond fees pursuant to a single state statute, and the appellate court found that it was “reasonable for the putative plaintiff class to try to hold all counties accountable within one suit” and that “[t]he constitutionality of a bond fee . . . should not differ from one county to the next, when such a fee is imposed pursuant to the same statute.” Id. at 680. The Seventh Circuit understood Ortiz “to rest on the long standing rule that, once a class is properly certified, statutory and Article III standing requirements must be assessed with reference to the class as a whole, not simply with reference to the individual named plaintiffs.” Id. Accordingly, the court held that before the district court could decide whether the suit could proceed against the other 17 counties the plaintiffs had named, it had to resolve the question of class certification. Id.
Payton, however, is distinguishable from this case in a significant way: there, the named plaintiffs sought to represent a class against counties which had all acted pursuant to a common state statute. Liston, in contrast, is seeking to represent a class on claims he brings not just under the consumer protection statute of Illinois, but under the consumer protection statutes of the 49 other states as well as the District of Columbia, without any allegation that he lived or was injured in those states. Courts in this District that have considered the situation Liston’s case now presents have split on whether consideration of standing issues may be postponed until after class certification in such circumstances. See Baldwin, 78 F. Supp. 3d at 733-35 (discussing split and collecting cases). Some have taken Amchem and Ortiz to create an exception to the default rule that standing is to be considered as a threshold matter, and applied that exception in such cases. See, e.g., Bietsch v. Sergeant’s Pet Care Prods., Inc., No. 15 C 5432, 2016 WL 1011512, at *9 (N.D. Ill. Mar. 15, 2016) (deferring the standing issue until the class certification stage and agreeing with district court cases that have reached a similar conclusion); In re Aftermarket Filters Antitrust Litig., No. 08 C 4883, 2009 WL 3754041, at *5 (N.D. Ill. Nov. 5, 2009) (denying motion to dismiss antitrust and consumer protection claims brought under the statutes of states in which named plaintiffs did not live or allege injury, finding that the “name plaintiffs’ capacity to represent individuals from other states depends upon obtaining class certification, and the standing issue would not exist but for their assertion of state law claims on behalf of class members in those states.”).
If this really is a standing question, this Court agrees that any exception created by Ortiz and Amchem does not apply to cases like the one Liston presents here. Rather, Ortiz requires “a court simultaneously facing both class certification and Article III standing to deal with Rule 23 issues first when they are dispositive, but [does] not direct[] district courts to postpone an inquiry into the threshold issue of justiciability outside of that context.” In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 2013 WL 4506000, at *6. That the Seventh Circuit has addressed Article III standing prior to class certification post-Ortiz confirms that Ortiz does not require a ruling on class certification before standing. See, e.g., Meyers v. Nicolet Restaurant of De Pere, LLC, 843 F.3d 724, 726 (7th Cir. 2016) (finding that the plaintiff lacked standing, such that the Seventh Circuit need not reach the question of class certification); Arreola v. Godinez, 546 F.3d 788, 794–95 (7th Cir. 2008) (deciding individual standing to pursue injunctive relief prior to evaluating class certification issues). The plaintiff has not yet affirmatively sought the certification of a class,3 so here there is no logically antecedent certification matter to address.
Conceptually, however, this Court questions whether Liston’s claims under state consumer protection statutes present a question of constitutional standing at all. Liston claims injury based on King’s conduct; if he suffered a concrete and particularized injury, he has constitutional standing to pursue his claim. As discussed above, Liston has adequately alleged that he has standing. The question of what legal theories Liston may advance as bases for recovering damages for his injury does not implicate Article III standing; the availability of any particular legal theory presents a question of substantive law. The Supreme Court has observed that “a statute ordinarily provides a cause of action ‘only to plaintiffs whose interests fall within the zone of interests protected by the law invoked.’” Bank of Am. Corp., 2017 WL 1540509, at *6 (quoting Lexmark Intern., Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1388 (2014). This zone-of-interests inquiry requires courts to determine, “‘using traditional tools of statutory interpretation, whether a legislatively conferred cause of action
It is true, as Liston notes, that the class action is “‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only,’” see Wal-Mart, 564 U.S. at 348, but qualifying for that exception depends on the ability of any named plaintiffs to satisfy the numerosity, commonality, typicality, and adequacy of representation requirements of
All of this implies that, although King’s challenge may be mischaracterized, the concerns that have informed the views of courts holding that “standing” to pursue claims based on various state laws should be resolved up front are valid. In the words of another district court:
The alternative proposed by the plaintiffs would allow named plaintiffs in a proposed class action, with no injuries in relation to the laws of certain states referenced in their complaint, to embark on lengthy class discovery with respect to injuries in potentially every state in the Union. At the conclusion of that discovery, the plaintiffs would apply for class certification, proposing to represent the claims of parties whose injuries and modes of redress they would not share. That would present the precise problem that the limitations of standing seek to avoid.
In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143, 155 (E.D. Pa. 2009).
Whether one views the question of Liston’s legal authority to pursue a claim under the law of a state where he did not reside and was not injured as a question of standing, or substantive law, or typicality and adequacy under
II. Failure to State a Claim
King also argues that the complaint should be dismissed under
In its
King’s motion elides this distinction and its import. Regardless of whether facts sufficient to establish the viability of a particular legal theory have been pleaded, Liston’s complaint survives if the facts alleged plausibly entitle him to legal relief under some theory, even if not one expressly identified in the complaint. To prevail on his motion to dismiss, King must establish that none of the legal theories Liston has advanced, or any other, plausibly establishes a right to recover damages from King for the injuries Liston (and the members of the putative class) have allegedly suffered.
To begin, King challenges Liston’s right to recover under the CFAA. Rather than responding to King’s substantive challenges to the CFAA claim, Liston seeks leave to withdraw that “claim” without prejudice. Pl.’s Resp. at 2 n.2. King seeks dismissal of the CFAA claim with prejudice, see Def.’s Reply, ECF No. 44, at 6,
Apart from his “standing” challenge, King has also moved to dismiss the claims under state consumer law under
As to Count III, King argues that Liston has “failed to state a claim” for breach of an implied-in-fact contract because he has “not identified a promise by King that he could retain Donated Lives indefinitely in exchange for soliciting Donated Lives,” and has further failed to allege that King intended to be bound by any such promise. Def.’s Mem. at 19. It is not clear to this Court, based on the allegations in the First Amended Complaint, that a breach of contract theory is available here. Liston has not pled many facts to suggest that a contract existed,4 and instead simply alleges in Count III that when he and the proposed class members used the Facebook Option to obtain Donated Lives, they “entered into a contract with King, wherein Plaintiff and members of a National Class agreed to play Candy
No matter. Again, Liston is not required to plead a legal theory at this stage of the litigation. See, e.g., Rabe v. United Air Lines, Inc., 636 F.3d 866, 872 (7th Cir. 2011) (“A complaint need not identify legal theories, and specifying an incorrect theory is not a fatal error.”); Jogi v. Voges, 480 F.3d 822, 826 (7th Cir. 2007) (“It is established . . . that complaints need not plead legal theories.). As discussed above, Liston has plausibly alleged that lives in Candy Crush—whether donated or otherwise acquired—have some monetary value. Liston alleges that King plucked those lives out of his account, without ever indicating that the lives were valid only for a limited time. The facts alleged in Count III therefore give rise to a plausible legal claim, whether under a theory of breach of contract, theft, conversion, fraud, or something else. Liston’s complaint is sufficient to put King on notice of the essential nature of his claim: King injured Liston by preventing him from using an asset in which he had a property interest. The precise legal theory, or theories, on which such a claim may be premised, will be determined not at this stage, but during discovery, in advance of summary judgment and/or trial. Accordingly, the motion to dismiss is denied as to Count III.
For the same reasons, the Court declines to dismiss the unjust enrichment claim in Count IV. “To prevail on a claim for unjust enrichment, a plaintiff must prove that the defendant ‘retained a benefit to the plaintiff’s detriment, and that defendant’s retention of the benefit violates fundamental principles of justice, equity, and good conscience.’” Nat’l Union Fire Ins. Co. of Pittsburgh v. DiMucci, 34 N.E.3d 1023, 1043 (Ill. App. Ct. 2015) (quoting HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d 672 (1989)).5 Here, Liston alleges that King retained a benefit when Liston marketed Candy Crush to his friends, and that this was to Liston’s detriment in that King removed—without warning—the Donated Lives that Liston had received in exchange for his marketing. As noted above, Liston may yet refine the legal theory or theories he pursues, but at this point his factual allegations are sufficient to defeat King’s motion to dismiss Count IV.6
The ICFA prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices . . . in the conduct of any trade or commerce,”
King also argues that Liston cannot recover under ICFA because he is not a consumer and his claim lacks a consumer nexus. A plaintiff generally must allege that he or she is a “consumer” in order to state an ICFA claim. See Roppo v. Travelers Cos., 100 F. Supp. 3d 636, 650 (N.D. Ill. 2015) (citing Bank One Milwaukee v. Sanchez, 783 N.E.2d 217, 220 (2003)). The ICFA defines a consumer as “any person who purchases or contracts for the purchase of merchandise not for resale in the ordinary course of his trade or business but for his use or that of a member of his household.”
The Court need not evaluate whether Liston has satisfied the consumer nexus test because he has adequately alleged that he is a “consumer” under ICFA. Under that statute, the definition of “merchandise” is not a particularly narrow one; it includes “any objects, wares, goods, commodities, intangibles, real estate situated outside the State of Illinois, or services.”
Nevertheless, there is a shortcoming in Liston’s complaint that does preclude him, on the basis of these allegations, from pursuing a recovery under ICFA. Liston has not satisfied Rule 9(b)’s particularity requirement, and his ICFA claim is therefore dismissed on that basis.7 Rule 9(b) requires that a pleading “state with particularity the circumstances constituting fraud or mistake.”
* * *
For the foregoing reasons, the defendant’s motion to dismiss [31] is granted in part and denied in part. Counts I and V are dismissed without prejudice. The motion to dismiss is denied as to Counts II, III and IV, but proceedings with respect to Count II will be dependent upon and tailored to the identification of a plaintiff or plaintiffs—whether Liston or others—who may permissibly assert causes of action premised on consumer fraud statutes other than that of Illinois.
Date: May 23, 2017
John J. Tharp, Jr.
United States District Judge
Notes
As an initial matter, Mason was not a standing case (at least the issue of standing was not raised in this context); the district and appellate courts held that the complaint failed to state a cause of action, not that the plaintiff lacked standing. In any event, the case is also completely distinguishable. There, the plaintiff complained that she received nothing of value for the digital gold she purchased, but she got exactly what she bargained for, namely the right to access additional resources to play the game. Here, Liston’s complaint is that King took assets he had effectively paid for by providing marketing services. Mason would only be analogous if, having purchased $100 in digital gold, the game operator had removed the digital gold from Mason’s account altogether. Nothing in Mason suggests that a conversion of funds in that manner would not constitute a “real world” economic injury.