Liston v. King.com, Ltd.Liston v. King.com, Ltd.
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 re
BACKGROUND
In deciding a motion to dismiss under Rule 12(b)(1) or Rule 12(b)(6), the Court takes as trae all well-pleaded facts alleged in the complaint and draws reasonable inferences in the plaintiffs favor. Lee v. City of Chi,
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 Crash 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 Face-book who also have Candy Crush installed on their mobile devices (the “Facebook Option”). Id. ¶¶ 43-46. If a player’s Face-book 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 Crash 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”), 18 U.S.C. § 1030 (Count I), breach of implied contract (Count III), and unjust enrichment (Count IV) as an alternative to the breach of implied contract claim, seeking to represent himself and a national class of all individuals in the United States whose Donated Lives were removed from their Candy Crush accounts by King. Id. at 11-22. Liston also brings a claim for violation of the consumer protection statutes of all 50 states and the District of Columbia (Count II), and seeks to represent a multi-state class of all individuals in those states whose Donated Lives were similarly removed. Id. He brings a separate count for violation of Illinois’ Consumer Fraud and Deceptive Business Practices Act, 815 III. Comp. Stat. 505/1 et seq., (Count V), on which he seeks to represent an Illinois subclass of all individuals residing in Illinois who experienced the same removal of their Donated Lives. Id. King has moved to dismiss Liston’s complaint under Rule 12(b)(1) for lack of Article III standing, and under Rule 12(b)(6) for failure to state a claim.
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, 28 U.S.C. § 1332, ordinarily requires complete diversity of citizenship before a federal court may exercise jurisdiction on that basis. CAFA alters the complete diversity requirement, however, vesting federal courts with subject matter jurisdiction over eases in which any member of the proposed class is a citizen of a state and, as relevant here, “any defendant is a foreign state or a citizen or subject of a foreign state.” 28 U.S.C. § 1332(d)(2). For CAFA diversity jurisdiction to be available, the amount in controversy must also exceed the sum or value of $5,000,000, exclusive of interest and costs, and the proposed classes must encompass at least 100 members in the aggregate. Id. § 1332(d)(2), (5).
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 Rule 12(b)(1) for lack of subject matter jurisdiction. Def.’s Mem. at 7, ECF No. 33. The issue of standing concerns whether Liston “is entitled to have the court decide the merits of the dispute or particular issues.” See Apex Digital, Inc. v. Sears, Roebuck & Co.,
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 (“PH”) 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 Face-book 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),
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. 112-CV-01157,
Regardless, the analogy also fails because it is inapt; the factual circumstances of the PII eases 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 somé 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,
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,
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,
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 direet[ ] 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.,
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., —— U.S. -,
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,
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.,
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 Rule 23, there is plainly ample reason at this juncture to question whether Liston will be able to pursue claims based on statutory causes of action created by states where Liston neither lived nor was injured. While it is not, in this Court’s view, appropriate to hold that Liston has no standing to assert his own state law consumer protection claim, it would also be inappropriate to engage in wide-ranging discovery premised on a prospect as to which there is substantial doubt — namely, Liston’s ability to assert
II. Failure to State a Claim
King also argues that the complaint should be dismissed under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. To survive a motion to dismiss under Rule 12(b)(6), “a .complaint must ‘state a claim to relief that is plausible on its face.’ ” Adams v. City of Indianapolis,
In its Rule 12(b)(6) arguments, King attacks each of Liston’s counts separately. Defi’s Mem. at 6-15. As this Court has noted before, this sort of parsing disregards the difference between “claims” and “counts.” “Complaints plead claims, which is to say grievances.” ACF 2006 Corp. v. Mark C. Ladendorf Attorney at Law, P.C.,
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 Rule 12(b)(6), asserting that Liston has pleaded those claims “without identifying the statutory sections allegedly violated or providing factual allegations supporting each element of each claim.” Mem. at 18. This argument, like the standing challenge, is premature. Because a complaint is not required to set forth all (or any) of the legal theories on which recovery may ultimately be asserted, it remains to be seen whether Liston and the putative class will actually move forward on all, or any, of the non-Illinois causes of action. Accordingly, the Court will not evaluate the legal sufficiency of those theories unless and until there is a class representative who may properly assert them.
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,
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.,
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 plaintiffs 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,
The ICFA prohibits “[ujnfair methods of competition and unfair or deceptive acts or practices ... in the conduct of any trade or commerce,” 815 III. Comp. Stat. 505/2. To state a claim under ICFA, a plaintiff must allege “(1) a deceptive act or unfair practice occurred, (2) the defendant intended for plaintiff to rely on the deception, (3) the deception occurred in the course of conduct involving trade or commerce, (4) the plaintiff sustained actual damages, and (5) such damages were proximately caused by the defendant’s deception.” Dubey v. Public Storage, Inc.,
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.,
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.” 815 Ill. Comp. Stat. § 505/1(b). Liston alleges that he marketed Candy Crush to his friends in exchange for Donated Lives. While the Donated Lives did not flow directly from King, but rather from King to Liston’s friends to Liston, the plaintiff here does allege that it was King who made the Facebook Option available to consumers and thereby represented to him and other players that they would “be able to receive and retain Donated Lives for later use.” See Compl. ¶ 108. Liston has thus alleged that he agreed to exchange his marketing services for valuable Donated Lives, and meets the definition of “consumer” for ICFA purposes.
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.
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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.
Notes
. The complaint does not allege that Purchased Lives also disappeared.
. After the parties had completed briefing on the motion to dismiss, King cited as supplemental authority an order granting a motion to dismiss in Mason v. Machine Zone, Inc.,
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.
. The plaintiff filed a class certification motion at the outset of the case, see Am. Mot. for Class Certification, ECF No. 16, but that was done for purely prophylactic purposes. This Court denied the motion without prejudice to its reassertion at whatever point the plaintiff was prepared to brief his motion. See ECF No. 51.
. King filed a separate request for judicial notice in support of its motion to dismiss, asking this Court to take judicial notice of King's license agreement, which was last updated on February 10, 2015, and which King said is "applicable to players who access King's Candy Crush Saga game via their mobile devices” and is "publicly available online.” Req. for Judicial Notice, ECF No. 34, at 1. King argues in its memorandum in support of its motion to dismiss that the Candy Crush Terms of Service “advise players that in-game lives have no financial value and can be removed by King at any time.” Def.’s Mem. at 5 n.4. Liston opposes the request to take judicial notice. PL’s Resp. to Judicial Notice, ECF No. 42. Federal Rule of Evidence 201 does state that a court "may judicially notice a fact that is not subject to reasonable dispute” because it "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Civ. Pro. 201(b)(2). The same rule states that a court "must take judicial notice if a party requests it and the court is supplied with the necessary information.” Rule 201(c)(2). Here, however, there is a critical problem: the license agreement King presents was last updated in 2015, while Liston asserts that King began removing Donated Lives at some point in 2012. Because King has failed to demonstrate that the submitted version of the license agreement was in place and applied to Liston at the relevant time period — the only apparent relevance it could have at this juncture — the request for judicial notice [34] is denied.
. King argues that an unjust enrichment claim also requires that the defendant have had an independent duty to act, but for this point cites only to Martis v. Grinnell Mut. Reinsurance Co.,
. In view of the fact that the unjust enrichment count is pled in the alternative, and that Liston has asserted a breach of contract claim
. While Liston does not dispute that Rule 9(b) applies to the “deceptive” prong of that claim, he argues in his brief that King waived any argument that Rule 9(b) applies to his claim's "unfair” prong. Pl.’s Resp. at 23 & n.6. The Court rejects that argument. King argued in its memorandum in support of its motion to dismiss that Liston had not alleged "fraud or deception with Rule 9(b) particularity.” Def.’s Mem. at-24. King did not address a separate "unfair” prong of the claim in its brief, but did argue for dismissal of the entire ICFA claim on Rule 9(b) grounds. Id. In addition, the Seventh Circuit has previously rejected an argument that the pleading standard of Federal Rule of Civil Procedure 8(a) should instead apply to an allegation of fraudulent conduct that was unfair under the ICFA. Pirelli,