Curzi v. Or. State Lottery

286 Or.App. 254

398 P.3d 977

Justin CURZI, on behalf of himself and all other similarly situated individuals, Plaintiff-Appellant,

v.OREGON STATE LOTTERY; IGT (Inc.); GTECH Canada, ULC; and WMS Gaming, Inc., Defendants-Respondents.

A159674

Court of Appeals of Oregon.

Argued and submitted on August 26, 2016.

June 14, 2017

Jay Zollinger argued the cause for appellant. With him on the briefs were Outside General Counsel Services, P.C., Helen C. Tompkins, and Tompkins Law Office, LLC.

Keith L. Kutler, Assistant Attorney General, Salem, argued the cause for respondent Oregon State Lottery. With him on the brief were Ellen F. Rosenblum, Attorney General, and Paul L. Smith, Deputy Solicitor General.

Thomas W. Sondag, Portland, argued the cause for respondents IGT (Inc.) and GTECH Canada, ULC. With him on the brief was Lane Powell PC.

Brad S. Daniels, Timothy W. Snider, and Stoel Rives LLP filed the brief for respondent WMS Gaming, Inc.

Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

SHORR, J.

Plaintiff Justin Curzi appeals from a judgment dismissing his claims with prejudice and a supplemental judgment awarding certain defendants their prevailing party fees. Plaintiff played state-sanctioned video poker machines offered by defendant Oregon State Lottery (the Lottery). Plaintiff brought claims against both the Lottery and several defendants who manufacture video poker machines for the Lottery (collectively, the manufacturers).¹ On appeal, plaintiff raises two assignments of error. Plaintiff first assigns error to the trial court's dismissal of his claims with prejudice. Plaintiff argues that the trial court erred when it dismissed plaintiff's tort claims after it concluded that plaintiff failed to provide timely notice of his claims within the 180-day tort-claim notice period required by the Oregon Tort Claims Act (OTCA), ORS 30.275(2)(b). Plaintiff also argues that the trial court erred when it dismissed his unjust enrichment claim based on its conclusion that the State of Oregon had not waived sovereign immunity from quasi-contract claims.² We conclude that the trial court did not err in granting defendants' motion to dismiss with prejudice on either of those bases.

In plaintiff's second assignment of error, plaintiff contends that the trial court erred in assessing prevailing party fees against him in the supplemental judgment because, under ORS 20.190(6)(a), prevailing party fees may not be assessed in a "class action proceeding under ORCP 32." We agree that the trial court erred in assessing prevailing party fees against plaintiff because, while this case was not "maintained" or certified as a class action proceeding, it was alleged as a class action proceeding under ORCP 32, and a plaintiff who alleges such a proceeding is not subject to prevailing party fees, even if that plaintiff does not ultimately prevail. As a result, we affirm the general judgment, but reverse the award of prevailing party fees to the manufacturers in the supplemental judgment.

We turn to the merits of this appeal. For the purpose of deciding whether a trial court erred in granting an ORCP 21 motion to dismiss, we assume the truth of all well-pleaded facts alleged in the complaint. Doe v. Lake Oswego School District , 353 Or. 321, 323, 297 P.3d 1287 (2013). Further, where the parties have "quoted from, cited, attached, and incorporated by reference a number of documents" outside of the pleadings, we can "consider [those] ‘matters outside the pleading[s], including affidavits, declarations and other evidence presented to the court.’ " Martin v. Lane County , 281 Or. App. 285, 286-87, 383 P.3d 903 (2016) (quoting ORCP 21 A(1)). However, we "must use care to insure that [our] determination of the facts on a motion to dismiss does not interfere with a party's right to a trial on disputed questions of material fact." Black v. Arizala , 337 Or. 250, 265, 95 P.3d 1109 (2004).

Thus, we assume the truth of the allegations in the complaint and may rely on the undisputed facts that the parties presented to the trial court in documents that supplemented their pleadings. Here, the parties presented a number of documents to the trial court to supplement their pleadings. The parties did not dispute the facts in those documents, although the parties argue that there are different conclusions to be drawn from those facts, which we address below. Further, the parties relied on those documents in the trial court to make their arguments, and continue to do so before us.

Turning to those facts, the Lottery owns and operates video poker machines made by the manufacturers. Those video poker machines have an auto-hold feature that recommends to players at certain points during their games which cards players should discard or keep. Players have the option of overriding the auto-hold feature at any time; however, players must actively elect not to rely upon the auto-hold feature in order to avoid following its recommended strategies. The auto-hold feature does not always recommend the best possible playing strategy, and, at times, a player's odds of winning would increase were that player to disregard the auto-hold recommendation. The auto-hold strategy is programmed by the manufacturers.

The Lottery advertises the theoretical payouts for each video poker game, but does not disclose the theoretical payouts adjusted for the suboptimal strategies recommended by some auto-hold features. However, on its website, the Lottery does state, "Auto-hold strategies vary by game, based on the particular features of a game and do not necessarily result in theoretical payouts."

In January 2014, plaintiff was playing video poker on one of the machines owned by the Lottery and made by a defendant manufacturer when he noticed that the game's auto-hold feature was recommending a suboptimal strategy based on his particular hand. On January 16, 2014, plaintiff emailed the Lottery requesting more information about the auto-hold feature. In that email, plaintiff stated:

"By holding the cards you suggested to me, I have a 50% lesser chance of winning. My impression of the rules and regulations surrounding the ‘Hold’ feature on your machines is that the state of Oregon is being fair and telling me the best possible hand to be played. This does not seem to be the case.

"I'm concerned not only for this particular hand, but also, for a) the number of times this hand must have been misrepresented in the history of all of your machines and also b) which other hands in these machines are telling the bettor the wrong cards to hold."

The Lottery responded by email on February 3, 2014. In that response, a representative of the Lottery denied any wrongdoing, stating:

" OAR 177-200-0070 Requirements for Poker Games (3) states:

"Any auto hold features that assist players in their decision as to which of the cards to hold and discard for the chance to obtain a winning combination must be displayed.

"The strategy to get to a winning hand is programmed by the terminal manufacturer, not the Oregon Lottery. In your case, the terminal did advise a strategy—granted not the only strategy—for you to have an opportunity to win with the cards you were dealt."

(Emphasis, boldface, and underscoring in original.) On February 20, 2014, in response to the Lottery's email, plaintiff retained an attorney and filed a public records request with the Lottery for, among other things, "[a]ll inquiries, complaints, and other correspondence from consumers regarding the ‘auto-hold’ feature of any Oregon Lottery video poker terminals," "[d]ocuments sufficient to identify by Court, Case Number, and Case Name, any complaints, administrative claims, or similar proceedings initiated by or against the Oregon Lottery that refer or relate in any way to the ‘auto-hold’ feature of any Oregon Lottery video poker terminals," and

"[a]ny documents that refer or relate in any way to the ‘auto-hold’ feature of any Oregon Lottery video poker terminals including * * * all documents containing information relevant to * * * how many players follow the strategies recommended by the auto-hold feature, and the impact (financial and otherwise) of including the auto-hold feature in video poker games."

Plaintiff received an initial response to his public records request on June 12, 2014, when, plaintiff states, the Lottery disclosed "general information" about one video poker game. On August 8, 2014, plaintiff received more information about the Lottery's posted "payout percentages" in which the Lottery posted the payout odds from different video poker games. Plaintiff learned that the Lottery's posted payout percentages reflected the odds of winning if a player played the optimal strategy each time rather than if the player sometimes followed the auto-hold recommendations. Plaintiff claims that, as of August 8, 2014, he learned that the Lottery had

"actual knowledge, since at least 2009, that the auto-hold strategies were programmed to pay out at 1%-5% less than theoretical payout percentages * * *, that the Lottery knew that class members believed that auto-hold was programmed to recommend ideal playing strategies, and that the Lottery nevertheless consciously elected not to disclose the true impact of auto-hold or to correct how it works."³

Plaintiff eventually sent the Lottery a "Notice of Claim and Demand Pursuant to ORCP 32 H and ORS 30.275" on October 24, 2014, which the Department of Administrative Services received on October 30, 2014. On December 31, 2014, plaintiff filed the present action, asserting causes of action against the Lottery for fraud, misrepresentation, negligence, and unjust enrichment, as well as a cause of action for "action in concert" against the manufacturers.⁴ In his complaint, plaintiff also sought certification of his claims as a class action under ORCP 32.

Defendants responded with a number of ORCP 21 motions to dismiss. In the Lottery's motion, it first argued that plaintiff's tort claims were barred by the...