Activision Denies Contest Player's Fraud Claims; Moves for Arbitration, Dismissal

Defendant Activision also filed Tuesday motions to compel mandatory alternative dispute resolution, to dismiss the case for lack of jurisdiction, to dismiss for improper venue, to dismiss claims for declaratory and injunctive relief and, in the alternative, to transfer the case to U.S. District Court for Central California, all with supporting memoranda.

Montoya’s May class action alleges (see 2305110011) game developer King and Activision misled contestants about their odds of winning a March-April mobile game tournament to get them to bump up their in-app purchases. Montoya asserts defendants “did what they could to mislead contestants into thinking that they were doing well vis-a-vis their competitors, that there were few other players against whom they were competing, and that they had a good chance of making the Finals in London.” That kept players spending money on in-app purchases, the complaint said.

In July, U.S. District Judge Robert Payne for Eastern Virginia denied without prejudice Activision Blizzard’s motion to dismiss or transfer the case (see 2307210047), saying the applicable analysis is different depending on whether dismissal is sought pursuant to the Federal Rules of Civil Procedure or to the Federal Arbitration Act. The motion to dismiss or transfer was denied without prejudice to the filing of separate motions and supporting memoranda “so that analysis can be accomplished in perspective of the facts and law applicable to each motion,” Payne said.

In its answer to the complaint, Activision admitted Candy Crush players can buy in-game items such as lollipop hammers, extra moves, free switches and UFOs, and some players make in-game purchases to try to improve their scores. It denied Montoya’s claim it created in-app purchases to entice gamers to spend money.

In its memorandum in support of its motion to compel mandatory alternative dispute resolution, Activision noted the top 10 finalists of the tournament were invited to participate in a live contest in London for a chance to win a share of $250,000, including the $100,000 top prize and a championship ring. “When Plaintiff did not win, she sued,” said the memorandum. Candy Crush is a free-to-play video game, but Montoya, “facing better players,” chose to make in-app purchases to “outcompete others” and “’boost’ her chances of winning,” it said.

The Candy Crush community forum displayed the rules of the tournament, including Section 1.3 saying each participant “is required to read, understand, and agree to these All Stars Rules before participating in the Tournament,” said the memorandum. It also cited King's terms of service with binding alternative dispute resolution requirements and class action waivers that apply to "King, its parent, subsidiaries, and affiliates."

The arbitration agreement imposes a "pre-arbitral dispute-resolution requirement, the satisfaction of which is precondition to arbitration," said the memorandum. U.S. players must first attempt to resolve any concerns by consulting with King’s customer support team, it said. "Most concerns are quickly resolved in this manner to our customers’ satisfaction," it said. "The parties shall use their best efforts to settle any dispute, claim, question, or disagreement directly through consultation and good faith negotiations which shall be a precondition to either party initiating a lawsuit or arbitration." Absent resolution, players must submit their disputes to binding arbitration, it said.