Antitrust Law Daily Wrap Up, ADVERTISING—9th Cir.: Consumers get second shot at video game misrepresentation claims, (Feb 22, 2016)

By Greg Hammond, J.D.

The federal district court in Riverside, California, erred in dismissing two consumers’ claims that video games producers violated California’s Unfair Competition Law (UCL) and False Advertising Law (FAL) by misrepresenting that an online game would be immediately available to play with the purchase of a video game, the U.S. Court of Appeals in Pasadena has concluded. In reversing and remanding the lower court’s order, the appellate court concluded that the lower court failed to construe the consumers’ allegations that the defendants’ alleged representations were misleading in the light most favorable to the consumers (McMahon v. Take-Two Interactive Software, Inc., February 29, 2016, Per Curiam).

The two consumers filed a putative class action against Take-Two Interactive Software, Inc. and Rockstar Games, Inc., alleging that they would not have purchased Grand Theft Auto V (GTA V) at a “premium price” if the defendants had not misrepresented the availability of Grand Theft Auto Online (GTA Online) on GTA V’s packaging.

The district court erred in concluding as a matter of law that the alleged misrepresentations on GTA V’s packaging were not actionable under the UCL or FAL. The consumers alleged that they read all of the disclosures and statements on GTA V’s packaging, and that these representations led them to believe that GTA Online would be available to play immediately upon purchase of GTA V. However, GTA Online was not available immediately to purchasers. The district court erred, according to the appellate court, by failing to construe the consumers’ allegations that these representations were misleading in the light most favorable to plaintiffs, and by making the finding that the representations were not misleading. In particular, the appellate court noted that the lower court did not address whether the complaint adequately alleged reliance on the alleged misrepresentations.

Lastly, the lower court abused its discretion by denying the consumers leave to amend their complaint, which should be freely granted at least once unless amendment would be futile, the appellate court stated.

The case is No. 14-55296.

Attorneys: James R. Hawkins (James Hawkins APLC) for Bruce McMahon. Lee Scott Brenner (Kelley Drye & Warren LLP) for Take-Two Interactive Software, Inc.

Companies: Take-Two Interactive Software, Inc.

Cases: Advertising AlaskaNews ArizonaNews CaliforniaNews HawaiiNews IdahoNews MontanaNews NevadaNews OregonNews WashingtonNews