Mai v. Supercell Oy

Background

Peter Mai brought a proposed class action against Supercell Oy. He asserted claims under California’s Unfair Competition Law, the Consumers Legal Remedies Act, and unjust enrichment. His claims were based on loot boxes in Supercell’s Brawl Stars and Clash Royale mobile games.

The games were free to download, but players could purchase virtual currency called gems through the Apple App Store or Google Play. Players could use gems to purchase loot boxes, which provided an unknown in-game item when opened. Mai alleged that the loot boxes used gambling-like features, encouraged spending, and were illegal “slot machines or devices” under California Penal Code section 330b. He alleged that he had played Clash Royale since at least 2016 and had spent more than $150 on gems for its loot boxes.

Supercell moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim, and Rule 9(b), which requires fraud-based allegations to be pleaded with particular detail.

Standing

The court first considered whether Mai had standing, meaning a legally sufficient injury that could be addressed by the court.

The court dismissed all claims based on Brawl Stars because the complaint did not allege that Mai had played that game or used its loot boxes. The court also addressed the economic-injury requirement for claims under California’s Unfair Competition Law and Consumers Legal Remedies Act. Those laws require a plaintiff to allege a loss of money or property.

Supercell argued that Mai received exactly what he purchased—gems—and that his decision to use those gems on loot boxes did not create an economic loss. The court agreed with the reasoning of another Northern District of California decision involving similar allegations, concluding that the in-game currency did not constitute an economic injury because it could not be converted back into cash. The court therefore dismissed all claims for lack of standing.

Failure to State a Claim

The court further held that dismissal would be warranted even if Mai had standing. All three claims relied on the allegation that Supercell’s loot boxes were illegal slot machines or devices under California Penal Code section 330b.

The court considered Supercell’s arguments that the games were predominantly games of skill, that the items in the loot boxes were not “things of value,” and that the games were not a “machine, apparatus or device” within the statute. The court noted that the complaint described the games as competitive multiplayer games and described Clash Royale as a strategy game, allegations that indicated the involvement of skill.

The court rejected Mai’s argument that the loot boxes should be considered separately from the games. It reasoned that the items obtained from the boxes could be used only within the games and could not be cashed out for real-world money. The court also stated that Mai had provided no legal support for treating game software itself as a statutory “machine, apparatus or device.”

Disposition

The court granted Supercell’s motion to dismiss with leave to amend. It directed Mai to file an amended complaint by October 4, 2021. The order did not state that the dismissal was with prejudice or without prejudice. The court also denied Supercell’s request for judicial notice as moot because it did not need the requested materials to decide the motion.