Wilson v. Playtika, Ltd.

Decision Date20 November 2018
Docket NumberCASE NO. 3:18-cv-05277-RBL
Citation349 F.Supp.3d 1028
Parties Sean WILSON, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. PLAYTIKA, LTD., an Israeli Limited Company, Playtika Holding Corp., a Delaware Corporation, and Ceasars Interactive Entertainment, LLC, a Delaware Limited Liability Company, Defendant.
CourtU.S. District Court — Western District of Washington

Cecily C. Shiel, Janissa Ann Strabuk, Tousley Brain Stephens, Seattle, WA, Benjamin H. Richman, Pro Hac Vice, J. Eli Wade-Scott, Pro Hac Vice, Edelson PC, Chicago, IL, Eve-Lynn Rapp, Pro Hac Vice, Rafey S. Balabanian, Pro Hac Vice, Todd Logan, Pro Hac Vice, Edelson PC, San Francisco, CA, for Plaintiff.

Angelo J. Calfo, Emily Dodds Powell, Calfo Eakes & Ostrovsky PLLC, John Arthur Tondini, Byrnes Keller Cromwell LLP, Seattle, WA, Behnam Dayanim, Pro Hac Vice, C. Reade Jacob, Pro Hac Vice, Edward George, Pro Hac Vice, Paul Hastings LLP, Washington, DC, John Nadolenco, Pro Hac Vice, Mayer Brown, Los Angeles, CA, for Defendant.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS AND STRIKE AND GRANTING DEFENDANTS' REQUEST FOR JUDICIAL NOTICE

DKT. # 40 & 43

Ronald B. Leighton, United States District Judge

INTRODUCTION

THIS MATTER is before the Court on Defendants Playtika, Ltd., Playtika Holding Corp., and Ceasars Interactive Entertainment, LLC.'s (collectively "Playtika") Motion to Dismiss and Strike. Dkt. # 40. The underlying dispute is a class action to recover money lost playing electronic gambling games available through different platforms, including Facebook and mobile. Playtika argues that the Complaint should be dismissed for lack of personal jurisdiction, forum non conveniens , and failure to state a claim. Playtika also argues in the alternative that allegations related to Vegas Downtown Slots should be stricken from the Complaint because Wilson has not alleged that he actually played that game.

BACKGROUND

Playtika Ltd. is an Israeli company that markets a number of apps that allow players to partake in popular gambling games, such as slot machine, via Facebook and mobile. Complaint, Dkt. # 1, at 2, 6. Playtika's apps include Slotomania, House of Fun, Caesars Slots, and Vegas Downtown Slots, the first three of which Wilson has personally played. Id. at 6, 10. All of these apps allow users to play gambling games with virtual "coins" that may be purchased in the apps after users run out of the initial free allotment. Id. at 7-8. Despite the fact that these coins cannot be redeemed for actual money, Wilson alleges that they are nonetheless valuable because they can be used to continue playing. Id. at 7-8, 14. Therefore, Wilson alleges that Playtika's apps constitute gambling as defined by RCW § 9.46.0285 in violation of RCW § 4.24.070. Wilson also alleges two derivative claims for violation of the Washington Consumer Protection Act, RCW § 19.86.010, and unjust enrichment. Id. at 15-18.

DISCUSSION
I. Personal Jurisdiction
a. Legal Standard

When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). A plaintiff cannot simply rest on the bare allegations of its complaint, but rather is obligated to come forward with facts, by affidavit or otherwise, supporting personal jurisdiction. Amba Marketing Systems, Inc. v. Jobar International, Inc., 551 F.2d 784, 787 (9th Cir. 1977). Where the motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts. Schwarzenegger , 374 F.3d at 800. A prima facie showing means that the plaintiff has produced admissible evidence, which if believed, is sufficient to establish the existence of personal jurisdiction. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). Conflicts in affidavits must be resolved in the plaintiff's favor. Id.

b. Application

Playtika contends that Wilson lacks personal jurisdiction to sue in Washington both because Playtika is not headquartered or incorporated in the state and because it merely placed its app in the stream of commerce and did not direct its activities at Washington. Wilson concedes that general jurisdiction is lacking, but argues that specific jurisdiction is satisfied because Playtika entered into numerous contracts with consumers in Washington who had downloaded their app. Essentially, the parties quarrel over whether the "purposeful direction" or "purposeful availment" test for jurisdiction applies.

A court's personal jurisdiction analysis begins with the "long-arm" statute of the state in which the court sits. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002). Washington's long-arm statute extends the court's personal jurisdiction to the broadest reach that the United States Constitution permits, so the jurisdictional analysis under state law and federal due process are the same. Byron Nelson Co. v. Orchard Management Corp., 95 Wash.App. 462, 465, 975 P.2d 555 (1999) ; Schwarzenegger , 374 F.3d at 800–01.

Personal jurisdiction exists in two forms, generaland specific. Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir.2002). For specific jurisdiction, the Ninth Circuit applies a three-prong test. Schwarzenegger , 374 F.3d at 802. First, "[t]he non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws." Id. Second, "the claim must be one which arises out of or relates to the defendant's forum-related activities." Id. Finally, "the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable." Id.

For the first prong, the "purposeful direction" analysis is most often applied in tort cases and "usually consists of evidence of the defendant's actions outside the forum state that are directed at the forum, such as the distribution in the forum state of goods originating elsewhere." Id. at 803. In contrast, the "purposeful availment" analysis is most often used in suits sounding in contract, and often requires "evidence of the defendant's actions in the forum, such as executing or performing a contract there." Id. at 802. When deciding whether to apply the purposeful availment or direction analysis, courts look to the underlying dispute to determine whether it primarily sounds in contract or tort. For example, in Boschetto v. Hansing , the plaintiff's claims included breach of contract, misrepresentation, fraud, and violation of a consumer protection law against the seller, but the court applied the purposeful availment analysis because all of the claims were premised on the contract. 539 F.3d 1011, 1016 (9th Cir. 2008) ; see also Panthera Railcar LLC v. Kasgro Rail Corp. , No. C 12-06458 SI, 2013 WL 1996318, at *4 (N.D. Cal. May 13, 2013) (holding that "[t]he alleged torts of intentional and negligent interference with prospective economic advantage arise out of the parties' contract").

In Mavrix Photo, Inc. v. Brand Technologies, Inc. , the Ninth Circuit applied the purposeful direction analysis in a copyright infringement suit where the plaintiff alleged that the defendant unlawfully posted its photos on its website. 647 F.3d 1218, 1221-22, 1229 (9th Cir. 2011). The court held that there was jurisdiction, and explained that "a website with national viewership and scope [that] appeals to, and profits from, an audience in a particular state ... can be said to have ‘expressly aimed’ at that state." Id. at 1231 ; see also Boschetto , 539 F.3d at 1018 (describing a "sliding scale analysis that looks to how interactive an Internet website is for purposes of determining its jurisdictional effect").

While the purposeful direction analysis tends to focus on the website itself, purposeful availment applies in cases mainly related to specific transactions carried out online through a website or other platform. Boschetto , 539 F.3d at 1018. The Supreme Court has described the analysis as a "practical and pragmatic" review of the contractual relationship, including the overall business negotiations and future objectives of the parties. See id. at 1016 (quoting Burger King Corp. v. Rudzewicz , 471 U.S. 462, 478, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ). In Boschetto , the court found that there was no purposeful availment where the parties consummated one lone transaction for a car via eBay. Id. at 1017. However, the court also stated that a party's use of eBay to establish "regular business with a remote forum" may be sufficient for purposeful availment. Id. at 1019. Indeed, other courts have held that a seller's use of an online platform to run a "sophisticated business" and conduct a "substantial volume of sales" constitutes purposeful availment. See, e.g., Oakley, Inc. v. Donofrio , No. SACV1202191CJCRNBX, 2013 WL 12126017, at *5 (C.D. Cal. June 14, 2013) ; Sennheiser Elec. Corp. v. Chutkowski , No. CV1107886SJOFMOX, 2012 WL 13012471, at *4 (C.D. Cal. Apr. 20, 2012). Courts have also found purposeful availment where the defendant sells inventory and provides follow-up services from its own site. See Helicopter Transp. Servs., LLC v. Sikorsky Aircraft Corp. , 253 F.Supp.3d 1115, 1129 (D. Or. 2017).

This case presents a difficult middle ground between the discrete categories of contract and tort. On the one hand, Wilson's claims sounds in contract since he is essentially trying to recover for numerous transactions that he now argues were illegal. On the other hand, Wilson's claims also rest on the design of Playtika's app as a whole, since he can only succeed if this novel form of online gaming constitutes "gambling" under Washington law. In this way, Wilson's suit resembles a...

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