Second District Holds That Purchasing a Product for the Purposes of Litigation Does Not Constitute Injury in Fact Sufficient to Confer Standing Under the UCL

by charlesjung

Slot machine.
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The Second District Court of Appeal found that Burger King’s “Transform Your Way” promotional sweepstakes was not a lottery under Penal Code section 319, and that the game pieces were slot machines or punchboards under Penal Code sections 330b and 330c.  McVeigh v. Burger King Corp., B220964, 2010 WL 4056857 (Cal. Ct. App. 2d Dist. Oct. 18, 2010).  The court also held that purchasing a product for the purposes of litigation did not constitute injury in fact sufficient to confer standing under the Unfair Competition Law.  Id. *1.

Background

Plaintiff went to a Burger King restaurant and asked an employee for a free sweepstakes game piece.  Id. And although the game piece prominently indicated that no purchase was necessary, appellant alleged he was told he could not receive a free chance for a prize unless he bought a value meal.  Id. Plaintiff purchased a value meal and removed a pull-tab game piece from the soda and french fry containers.  Id. The game piece required him to scratch off only one of two concealed areas or the game piece would be voided.  Id. Plaintiff-appellant filed a complaint against Burger King, asserting that Burger King had illegally conducted a lottery in violation of section 319, and it had distributed slot machines or punchboards in violation of section 330c.  Id. Burger King’s business acts or practices allegedly caused appellant and the public unspecified injury, as to which appellant claimed entitlement to relief. Id.

Burger King filed a general demurrer to the complaint, asserting that appellant lacked standing to bring a UCL claim and in any case failed to state any cause of action because he could show no injury in fact.  Id. Burger King asserted its game is a lawful promotional sweepstakes in which consumers have the opportunity to win prizes without having to pay any money in exchange for the opportunity to win.  Id. The court sustained the demurrer without leave to amend.

No Underlying Violation of Statute

The Court of Appeal concluded that Burger King’s sweepstakes game did not amount to a banking game or lottery, nor was the game a forbidden slot machine or punchboard. Id. Penal Code Section 330 et seq. forbids any banking or percentage game played with cards, dice, or any device for money or other representative of value.  Id. A banking game pertains to situations where the house is actually involved in play, its status as the ultimate source and repository of funds dwarfing that of all other participants in the game.  Id. The court concluded that “Burger King is not a participant in the game and has no interest in the outcome.”  Id. It reasoned that the amount of money it will have to pay out or take in does not depend upon whether each individual “bet” is won or lost.  Id. Burger King “will not gain or lose the amounts at stake depending upon the number of persons participating in the game.” Id.

Plaintiff also contended that the game should be deemed an illegal lottery in that consideration is necessary to play and there is no general or indiscriminate distribution of game pieces.  Id. Although the complaint here alleged that plaintiff was told he could not receive a free chance for a prize, the Burger King sweepstakes game piece that appellant attached as an exhibit to his complaint conspicuously stated that no purchase was necessary.  Id. “It is well settled that if facts appearing in exhibits to a complaint contradict those alleged, the facts in the exhibits take precedence over any inconsistent or contrary allegations set out in the pleading.”  Id. “[T]he sweepstakes game gave any and all persons the opportunity to win, and, as clearly displayed on the game piece, no purchase was necessary to participate.”  Id.

The court also found unmeritorious plaintiff’s contention that Burger King’s sweepstakes game is a slot machine or punchboard. Id. The court held that section 330c must be interpreted in harmony with the statutory scheme of which it is a part.  “By referring to the insertion of ‘money or coin or other object,’ subdivision (d) of section 330b makes clear that some valuable consideration must be given in exchange for the chance to operate the slot machine or device.” Id.

The sweepstakes game piece in this instance is not an illegal “punchboard” or slot machine under these authorities, as no stakes were hazarded by the players.  Customers and non-customers alike had the ability to participate in the sweepstakes without furnishing anything of value in consideration for the chance to play.

Id.

Unfair Competition Law

The court also concluded that plaintiff lacked standing to sue under the UCL.  Id. Under Business and Professions Code section 17204, a private party authorized to bring suit for a violation of the UCL is expressly defined as one “who has suffered injury in fact and has lost money or property” as a result of the unfair competition.  Id.

The complaint in this case fails to show that appellant suffered any injury in fact or lost money or property in his dealings with Burger King. He did not allege the food he purchased was defective or unsatisfactory, priced higher than its value, or that he did not want the food.  It may reasonably be inferred that appellant received the benefit of his bargain and suffered no loss.  Even if appellant were to allege he failed to win a prize in the sweepstakes game, he would not have standing to bring a UCL claim based on that failure.  Because it is assumed he gave nothing in value for the chance to participate in the game since no purchase was necessary in order to participate, he could suffer no injury from any failure to achieve a prize. Mere purchase of a product is not an “injury in fact” or “loss of money or property” under the UCL. (Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 816-818 (Buckland ).)

Id.

The court held that a “plaintiff’s purchase of a product for purposes of litigation “cannot reasonably be viewed as ‘lost’ money or property under the standing requirement.” Id. (citing Buckland, 155 Cal. App. 4th at 818).

Judges and Attorneys

Justice Madeleine Flier wrote the opinion for the court.  Justices Tricia A. Bigelow and Elizabeth A. Grimes concurred.

Appeal from a judgment of the Superior Court of Los Angeles County, Judge Michael P. Vicencia.

Tom McVeigh, in pro. per., for Plaintiff and Appellant.

Call & Jensen and Ward J. Lott for Defendant and Respondent.

By CHARLES JUNG

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