Court Opinion

ID: 3179089
Source: CourtListenerOpinion
Date Created: 2016-02-19 21:07:32.374952+00
Date Added: 2024-06-11T12:21:53.184846
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                           FEB 19 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

BRUCE MCMAHON, on behalf of                      No. 14-55296
himself; CHRISTOPHER BENGSTON,
on behalf of himself; and all others             D.C. No. 5:13-cv-02032-VAP-SP
similarly situated,

              Plaintiffs - Appellants,           MEMORANDUM*

 v.

TAKE-TWO INTERACTIVE
SOFTWARE, INC., and TAKE-TWO
INTERACTIVE SOFTWARE, INC., DBA
Rockstar, Erroneously Sued As Rockstar
Games, Inc.,

              Defendants - Appellees.

                   Appeal from the United States District Court
                       for the Central District of California
                   Virginia A. Phillips, District Judge, Presiding

                      Argued and Submitted February 4, 2016
                               Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: WARDLAW and HURWITZ, Circuit Judges and RICE,** Chief District
Judge.

      Bruce McMahon and Christopher Bengston, two video game enthusiasts,

appeal the Rule 12(b)(6) dismissal with prejudice of their putative class action

against Take-Two Interactive Software, Inc. and Rockstar Games, Inc., companies

that produce and distribute video games. We have jurisdiction under 28 U.S.C.

§ 1291. We reverse and remand to the district court to grant leave to McMahon

and Bengston to file an amended complaint.

      1. The district court correctly ruled that plaintiffs’ allegations concerning

their purchase of the video game Grand Theft Auto V (GTA V) sufficed to

establish standing under California’s unfair competition law (UCL), Cal. Bus. &

Prof. Code § 17200 et seq., and false advertising law (FAL), Cal. Bus. & Prof.

Code §17500. Plaintiffs have standing under the UCL and FAL because they have

sufficiently alleged economic injury caused by defendants’ alleged

misrepresentations. See Kwikset Corp. v. Superior Court, 246 P.3d 877, 885 (Cal.

2011) (explaining that economic injury occurs when a plaintiff “surrender[s] in a

transaction more, or acquire[s] in a transaction less, than he or she otherwise would

have,” absent the defendant’s unfair practice). Specifically, plaintiffs allege that

       **
             The Honorable Thomas O. Rice, Chief United States District Judge
for the Eastern District of Washington, sitting by designation.
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they would not have purchased GTA V at a “premium price” if defendants had not

misrepresented the availability of Grand Theft Auto Online (GTA Online) on GTA

V’s packaging.

      2. The district court also correctly determined that plaintiffs stated a claim

for restitution under the UCL and the FAL. “A restitution order against a

defendant [] requires both that money or property have been lost by a plaintiff, on

the one hand, and that it have been acquired by a defendant, on the other.” Id. at

895. Plaintiffs’ allegation that they were induced to pay a premium price for a

video game that did not perform as represented, coupled with their prayer for a

refund of the “monies paid” for that video game, suffices to state a claim for

restitution. See id.

      3. 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

the FAL. The UCL proscribes “unlawful, unfair or fraudulent” business practices,

Cal. Bus. & Prof. Code § 17200, and the FAL prohibits the dissemination of any

advertising “which is untrue or misleading,” id. § 17500. To state a claim under

either statute, plaintiffs must allege that “members of the public are likely to be

deceived” by defendants’ statements, In re Tobacco II Cases, 207 P.3d 20, 29 (Cal.

                                           3
2009) (quotations marks and citation omitted), and that plaintiffs actually relied on

those statements, see id. at 39.

      On a motion to dismiss for failure to state a claim, a court must construe a

complaint’s allegations in the light most favorable to plaintiffs. See Davis v. HSBC

Bank Nev., N.A., 691 F.3d 1152, 1159 (9th Cir. 2012). Here, plaintiffs alleged that

they read all 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. Contrary to these representations, GTA

Online was not available immediately to any purchasers. The district court erred

by failing to construe plaintiffs’ allegations that these representations were

misleading in the light most favorable to plaintiffs, and by making the finding that

the representations were not misleading. See Lilly v. ConAgra Foods, Inc., 743

F.3d 662, 665 (9th Cir. 2014) (“Whether a business practice is deceptive will

usually be a question of fact not appropriate for decision on [a motion to dismiss].”

(quotation marks and citation omitted)).

      The district court did not address whether the complaint adequately alleged

reliance on the alleged misrepresentations. We decline to reach this issue for the

first time on appeal.

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      4. The district court abused its discretion by denying plaintiffs leave to

amend their complaint. Leave to amend at least once is freely granted unless

amendment would be futile. United States v. Corinthian Colleges, 655 F.3d 984,

995–96 (9th Cir. 2011).

      We REVERSE and REMAND with instructions that the district court grant

leave to plaintiffs to file an amended complaint.1

      1
          Plaintiffs’ request for judicial notice on appeal is DENIED.
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