By: Ashley Song
Summary: The Northern District of California dismissed, without further leave to amend, a proposed class action against Apple, which claimed virtual loot boxes in the video game application “Brawl Stars” amounted to gambling.
Key Takeaways: In Taylor et al. v. Apple Inc., Rebecca Taylor and her underage son brought a proposed class action seeking to hold Apple liable for distributing game apps through the Apple App Store that they alleged include features that are legally equivalent to slot machines, as defined and prohibited under California law. The complaint advanced claims for relief under California’s Unfair Competition Law (“UCL”) and California’s Consumers Legal Remedies Act (“CLRA”).
The complaint alleged that Taylor’s underage son had been induced to spend money to make in-game purchases of loot boxes on Brawl Stars. A loot box is a virtual item which can be redeemed by players to receive a randomized selection of virtual items that can range from customization options to game-changing equipment, such as weapons and armor.
The original and amended complaints claimed that various visual and sound features of loot boxes in the game were purportedly designed to “exploit and manipulate the addictive nature of human psychology,” just as slot machines and other forms of gambling do. More specifically, the complaint alleged, “Buying a loot box is a gamble, because the player does not know what the loot box actually contains until it is opened,” and that Apple benefitted from a “predatory monetization scheme that violates established public policies and constitutes immoral, unethical, or unscrupulous conduct.”
In granting Apple’s second motion to dismiss, the Court agreed with Apple that the amended complaint failed to show how the mother and son suffered an economic injury resulting from Apple’s conduct. Apple argued that since the game uses virtual currency, and the virtual items acquired in the game cannot be used or sold in the real world, it was not clear how the plaintiffs had suffered an economic injury.
The Court also tossed the Taylors’ UCL claims that alleged that loot boxes violate California regulations that govern gambling devices. The Court ultimately held that the complaint’s allegations of studies showing that loot boxes have harmful effects were not enough to preserve the claims from dismissal, noting that lawmakers, not the courts, should prohibit them if appropriate.