Heathcote v. Spinx Games Ltd.

WILLIAM HEATHCOTE, Plaintiff, v. SPINX GAMES LTD., et al., Defendants.

Case No. C20-1310-RSM

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

April 28, 2021

ORDER DENYING PLAINTIFF HEATHCOTE'S MOTION FOR TEMPORARY RESTRAINING ORDER

I. INTRODUCTION

This matter comes before the Court on Plaintiff William Heathcote's Motion for a Temporary Restraining Order ("TRO") against Defendants SpinX Games, Ltd. ("SpinX Games"), Grande Games Ltd. ("Grande Games"), and Beijing Bole Technology Co., Ltd. ("Beijing Bole") (collectively, "Defendants"). Dkt. #15. Plaintiff has requested oral argument. The Court finds oral argument unnecessary for ruling on the motion. Having reviewed Plaintiff's motion and Defendants' response, the Court DENIES Plaintiff's motion.

II. BACKGROUND

Plaintiff is a Washington citizen who began playing "Cash Frenzy™ Casino - Free Slots Games" and "Vegas Slots - Casino Slots," which are virtual casino games owned and operated by Defendants. Dkt. #14 at ¶¶ 1-4. All three Defendants are Chinese companies with principal places of business outside the United States, in either Hong Kong or Beijing. Id. at ¶¶ 8-10. However, Plaintiff claims that SpinX Games maintains an office at 2021 Fillmore St., #93 in San Francisco, California given that U.S.-based customers may contact Defendants at that address. Id. at ¶ 8.

Players play Defendants' virtual casino games on their mobile phones. Id. at ¶¶ 2-4. Defendants provide a bundle of free "coins" to first-time visitors used in the slot machine games, but once players lose their initial bundle of coins, they may purchase additional coins starting at $1.99 for 750,000 coins. Plaintiff began playing these virtual casino games on or around spring 2020. Id. at ¶ 7. He lost his initial bundle of free coins and began purchasing additional coins. Between June 2020 and August 2020, Plaintiff lost approximately $300 through playing Defendants' virtual casino games. Id.

Plaintiff initiated this action on September 1, 2020 against Grande Games on behalf of himself and putative class members, alleging violations of Washington law for recovery of money lost at gambling, RCW § 4.24.070, the Washington Consumer Protection Act, RCW § 19.86.010, and unjust enrichment. Dkt. #1 at ¶¶ 36-69. After summons were issued, Plaintiff moved to strike the case schedule on the basis that he was commencing service upon Grande Games through the Hague Convention. Dkt. #6. Because Plaintiff anticipated that service through the Hague Convention would take "4 to 6 months," the Court granted Plaintiff's request to strike deadlines and granted him until March 22, 2021 to update the Court as to the status of service. Dkt. #7.

On March 30, 2021, Plaintiff submitted a status report advising that he was "still working through the Hague Convention" to effect service, but "just learned that Defendant now has asubsidiary head quartered in California." Dkt. #8 at 1-2. Plaintiff advised that he would be filing a petition for alternative service on the subsidiary "in the near future" and would update the Court on status of service on or before April 30, 2021. Id. at 2. On April 9, 2021, Plaintiff filed an Amended Complaint adding SpinX Games and Beijing Bole as Defendants. Dkt. #14 at ¶¶ 8, 10. As of the date of this Order, Plaintiff has not filed a petition for alternative service. Instead, on April 20, 2021, Plaintiff filed the instant TRO motion. Dkt. #15.

Plaintiff's TRO motion seeks emergency relief related to a pop-up window that currently displays on players' devices when they open the gaming application. This pop-up identifies Defendants' new Terms of Service and Privacy Policy, which was updated on February 8, 2021 and published on Defendants' website on February 23, 2021. Dkt. #28 at ¶ 8. The updated Terms of Service added an arbitration agreement and Class Action Waiver not contained in the previous Terms of Service. Dkt. 16-2. Since the updated Terms of Service were published, players opening any of Defendants' games encounter a pop-up notice entitled, "We updated our Terms of Service and Privacy Policy." Dkt. #16-1. The complete notice states:

By tapping the button below, you agree to our updated Terms of Service. These terms include a "Dispute Resolution and Arbitration Provision" requiring individual arbitration of any dispute and waiving your right to join any class action lawsuit or other representative proceeding. You may opt out of this provision by mailing us written notice within 30 days after you first accept these Terms of Service, as explained here. If you have questions about the legal effect of the Terms of Service, you should contact an attorney.

Players in WASHINGTON STATE ONLY, please continue reading: There is a pending lawsuit in federal court in Washington State relating to Grande Games, Ltd. This lawsuit asserts claims under Washington Law, including the Recovery of Money Lost at Gambling Act and the Consumer Protection Act. The lawsuit seeks to recover money allegedly lost while playing Grande Games' games. Grande Games denies the claims and believes they have no merit. The court has not yet decided who is right or whether the lawsuit can proceed as a class action. The plaintiff in the lawsuit is represented by attorneys at the law firm of Bursor & Fisher, P.A., who may be contacted at (646) 837-7150. If you accept the Terms ofService and do not opt out of the Dispute Resolution and Arbitration Provision, you cannot participate in this lawsuit, even if a class is certified.

By tapping the button below you agree to the Terms of Service and acknowledge you have read the Privacy Policy.

Dkt. #16-1. Below the notice is a button that reads in bolded letters: "I agree, Let's Play!" Id.

In mid-April, Plaintiff's counsel began to receive phone calls from players inquiring about the "pop-up" window in the virtual casino games. Dkt. #16 at ¶ 5. The following week, on April 20, 2021, Plaintiff filed the instant TRO requesting that the Court assert control over communications by Defendants with putative class members pursuant to Fed. R. Civ. P. 23(d). Dkt. #15. Specifically, Plaintiff requests this Court require Defendants to (1) immediately stop displaying the pop-up; and (2) restore the Terms of Use to the version in place at the time the case was filed. Id. at 16. On April 23, 2021, Defendants filed a Response opposing Plaintiff's motion. Dkt. #27.

III. DISCUSSION

A. Failure to Effect Service

As an initial matter, Defendants argue that this Court lacks personal jurisdiction over this action given Plaintiff's failure to effect service. Id. at 7-8. Plaintiff concedes that he has not served Defendants with the summons and complaint. Dkt. #15 at 11. Although he claims that Defendants "have evaded service of the lawsuit," id. at 20, he has not petitioned for alternative service. To the extent he deposited a copy of the instant motion at a mailbox address in San Francisco, Defendants dispute that delivery to the Fillmore Street address constitutes proper service, given that it is not the address of any office of Defendants. See Dkt. #27 at 5-6 ("SpinX is currently leasing a post office box in San Francisco for the sole purpose of accepting opt-out notices from U.S. players, as set forth in the New Terms"). The Court finds it highly doubtfulthat Defendants have been properly served at this time. However, given the analysis below, the Court declines to rule on the service issue before the matter is fully briefed. Likewise, given that Defendants have appeared and filed a response, it will not deny the instant motion for failure to provide notice under LCR 65.

B. Legal Standard

The standard for issuing a TRO is the same as the standard for issuing a preliminary injunction. See New Motor Vehicle Bd. of Cal. v. Orrin W. Fox Co., 434 U.S. 1345, 1347 n.2 (1977). A TRO is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). "The proper legal standard for preliminary injunctive relief requires a party to demonstrate (1) 'that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest.'" Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009) (citing Winter, 555 U.S. at 20).

As an alternative to this test, a preliminary injunction is appropriate if "serious questions going to the merits were raised and the balance of the hardships tips sharply" in the moving party's favor, thereby allowing preservation of the status quo when complex legal questions require further inspection or deliberation. All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011). However, the "serious questions" approach supports a court's entry of a TRO only so long as the moving party also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest. Id. at 1135. The moving party bears the burden of persuasion and must make a clear showing that he is entitled to such relief. Winter, 555 U.S. at 22.

For the reasons set forth below, Plaintiff has failed to carry his burden under either test. He has not demonstrated a likelihood of success on the merits on his claim that Defendants' communication interferes with putative class members' rights under Fed. R. Civ. P. 23(d), nor has he raised serious questions going to the merits of that claim.

i. Controlling Class Communications under Rule 23(d)

Under Fed. R. Civ. P. 23(d), courts are afforded "considerable discretion" to regulate defendant communications with class members in order to prevent abuse. Kater v. Churchill Downs Inc., 423 F. Supp. 3d 1055, 1061 (W.D. Wash. 2019) (quoting Jimenez v. Menzies Aviation Inc., No. 15-CV-02392-WHO, 2015 WL 4914727, at *5 (N.D. Cal. Aug. 17, 2015)). "Because class...