Feheley v LAI Games Sales, Inc. et al

Filing 51

ORDER GRANTING 11 Motion to Dismiss for Lack of Jurisdiction; GRANTING 26 Motion for Summary Judgment and directing further briefing; and DENYING AS MOOT all other pending motions. Signed by Chief Judge Federico A. Moreno on 8/10/2009. (jr)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA Miami Division

Case Number: 08-23060-CIV-MORENO
JOSEPH FEHELEY, on behalf of himself and all others similarly situated, Plaintiff, VS. LA1 GAMES SALES, INC., et al., Defendants.
I

ORDER GRANTING MOTION TO DISMISS AND MOTION FOR SUMMARY JUDGMENT AND DIRECTING FURTHER BRIEFING
Joseph Feheley alleges that the Defendants develop, manufacture, and sell a gambling device that masquerades as an arcade game. He has brought a purported class action against the Defendants alleging violations of Florida's consumer protection statute, violations of consumer protection statutes in other states, breach of express and implied warranty, and unjust enrichment. Defendant Avel has moved to dismiss for lack of personal jurisdiction, and Defendant LAI-USA has moved for summary judgment on the merits. The Court finds that it lacks personal jurisdiction over Avel, and hereby DISMISSES the case against it. The Court also GRANTS summary judgment to LAI-USA, both under Florida's consumer protection statute, and because Feheley lacks standing to bring claims for breach of express or implied warranty or unjust enrichment. Finally, the parties must hrther brief whether Feheley has standing to sue LAI-USA in this Court for breach of consumer protection statutes in other states.

BACKGROUND
On November 3,2008, Joseph Feheley filed a putative national class action Complaint that alleges Defendants LA1 Game Sales, Inc. ("LAI-USA") and LA1 Group ("Avel Pty. ~ t d . " ) develop, ' manufacture and market a gambling game called "Stacker" that masquerades as an arcade-style game. According to Feheley, Stacker offers users "a prize on the basis of chance" and is therefore Feheley alleges that LAI-USA and Avel market and sell Stacker "no different than a slot ma~hine."~ in violation of Florida's statutory prohibition of slot

machine^.^

Of course, Feheley has no standing to simply sue the Defendants for violation of a criminal statute that regulates gambling. Instead, Feheley couches the Defendants' allegedly illegal slot machine activities asperse violations of the Florida Deceptive and Unfair Trade Practices Act, FLA. STAT.ANN. 5501.201 et seq. FDUTPA provides for an individual right to recover damages and
In its Motion to Dismiss for Lack of Personal Jurisdiction, the party Defendant initially named "Leisure and Allied Industries, d/b/a LA1 Group" by Feheley, avers that it is an Australia corporation, whose true corporate name is Avel Pty. Ltd., and that Leisure and Allied Industries is merely a registered trade name. In his Response, Feheley implicitly concedes this point, and proceeds to refer to this Defendant as "Avel". Complaint 140. To support his contention that Stacker is a slot machine and not a video game, Feheley describes the game in the following terms: The object of Stacker is to load or "stack" horizontally-moving blocks up to fifteen (15) levels high. At level eleven (1 I), the game enters a temporary holding pattern in which players can choose to collect a "minor prize" (worth only 20% to 30% of the price of a single play), or risk that prize to continue to play for a more valuable "major prize" (worth about 100 times the price of a single play) which allegedly, can be won at level fifteen (15). . . . Unbeknownst to those who play Stacker, the payout of major prizes is programmable and therefore, winning a major prize is not determined by a player's skill, but rather, by chance. Specifically, Defendants' default setting on every Stacker manufactured and sold is to dispense a major prize only once in every four hundred (400) plays. Thus, if a single play is one dollar ($1.00), a major prize (valued as much as one hundred dollars ($100.00)) will only be dispensed after four hundred dollars ($400.00) have been inserted into the Stacker game. . . . Defendants know that major prizes act as a lure to those who play Stacker, even though only 1 in 400, i.e., one quarter o f one percent (25%) (or less, if the machine is set to dispense major prizes with even lessfrequency) will e