Wake Forest Law Review
17Mar

Fourth Circuit Determines “Loss Recovery Statute” Does Not Include Virtual Currency

Categories: 4th Cir. Blog Archive Civil Cases
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By Kelsey Mellan

On March 17, 2017, the Fourth Circuit issued a published opinion in Mason v. Machine Zone, Inc. a civil appeal of the district court’s dismissal of a Loss Recovery Statute claim. Plaintiff Mia Mason filed a class action complaint against Machine Zone, Inc. (“Machine Zone”), the developer of a mobile game entitled “Game of War: Fire Age” (“Game of War”). Mason alleged that she lost money participating in an unlawful “game device” – a virtual wheel that makes up a substantial part of Game of War. The district court dismissed Mason’s class action under FRCP 12(b)(6) for failure to state a claim. The Fourth Circuit subsequently affirmed the district court’s decision.

Facts & Procedural History

Machine Zone developed and operates Game of War, a popular video game that can be downloaded for free on mobile devices. Game of War is a strategy game in which players build virtual towns and armies, and “battle” each other in a virtual world. While it is free to play the game, players can purchase virtual “gold” at prices ranging from $4.99 to $99.99. Players can use this gold to “improve their virtual towns” and to obtain virtual “chips” for use during the Game of War “casino.”  This virtual casino is a game of chance in which players can use their virtual chips for an opportunity to obtain prices for use within the game by “spinning” a virtual wheel – a completely randomized feature of the game. The first time a player enters Game of War, he or she is entitled to one free spin of the wheel. However, after the player uses this free spin, must use chips to pay for each additional spin. If a player doesn’t have enough chips to spin, the player must use virtual gold to obtain more chips.

Players who spin the wheel have no control over the outcome of the spin and, thus, no skill on the part of the player influence what the outcome will be. Players obtain prizes from spinning the wheel. If a player wins enough prizes he or she may want to sell his or her account on “secondary markets” for real money. However, this sale on secondary markets, such as Amazon, would violate Machine Zone’s terms of service.

Mason started playing Game of War on her cell phone in early 2014. After using her complimentary spin of the virtual wheel, Mason began purchasing virtual gold in order to obtain more chips to continue spinning the wheel to earn prizes. Between early 2014 and January 2015, Mason spent over $100 to participate in the casino.

Mason filed a class action in the District of Maryland under Maryland’s Loss Recovery Statute. She alleged that she lost money playing an unlawful “game device” and sought “full disgorgement and restitution of any money [Machine Zone] has won” from Mason and similarly situated Maryland residents. The district court determined that Mason failed to state a claim under the Loss Recovery Statute because “she did not lose money” in the virtual casino – and thus, the court dismissed Mason’s complaint.

Plaintiff-Appellant’s Claim Under Maryland’s Loss Recovery Statute

Mason argues that the district court erred in dismissing her class action under FRCP Rule 12(b)(6) because she lost money while playing in the virtual casino – which she claims is an unlawful “game device” under the Loss Recovery Statute. The Fourth Circuit reviewed the district court’s dismissal de novo, accepting Mason’s well-plead allegation as true and drawing all reasonable inferences in her favor.

Maryland’s Loss Recovery Statute states “a person who loses money at a [prohibited] gaming device…may recover the money as if it were a common debt.” The statute defines gaming device as “a game or device which money or any other thing or consideration of value is bet, wagered, or gambled,” and includes a “wheel of fortune.” Pursuant to the Maryland state case, F.A.C.E. Trading, Inc. v. Todd, the Fourth Circuit was required to interpret Maryland’s gambling statutes in a manner that “gives validity not only to the word, but to the spirit of the law. For the purposes of this appeal, the Fourth Circuit assumed that the virtual casino was a prohibited “gaming device” and agreed with the district court that Mason did not lose any money when spinning the wheel in the virtual casino. Therefore, she failed to satisfy a required element for stating a claim under the Loss Recovery Statute.

In deciding whether the loss of virtual money fell under the Loss Recovery Statute, the Fourth Circuit looked to Cates v. State, a Maryland case which noted that the predecessor to the Loss Recovery Statute encompassed a public policy “not to help one who loses at gambling, but to discourage illegal gambling by putting the winner on notice that the courts will force him to disgorge his winnings.” In the case of Game of War, Machine Zone did not “win” any money. Rather, Mason participated in the virtual casino by “spinning” the virtual wheel where no money was at stake – only virtual prizes and chips. Thus, Mason could not have lost or won money as a result of her participation in the virtual activity. Moreover, the Fourth Circuit determined that the fact that Mason could sell her account on “secondary markets” was irrelevant – as the entire account would be sold, not just the virtual prizes or chips.  Thus, the Fourth Circuit rejected Mason’s contention that the existence of a secondary market showed that she lost money as a result of her participation in Game of War’s virtual casino.

 Disposition

 Accordingly, the Fourth Circuit affirmed the district court’s conclusion that Mason did not “lose money” within the meaning of the Loss Recovery Statute as a result of her participation in the Game of War casino.

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9Feb

Fourth Circuit Requires Maryland Absentee Voting Process to Comply with Title II of the ADA and Rehabilitation Act

Categories: 4th Cir. Blog
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By Taylor Ey

Today, the Fourth Circuit issued its published opinion, affirming the district court’s decision in the civil case of National Federation of the Blind v. Lamone. This case arose under Maryland statutory law governing absentee voting, and Plaintiffs (The National Federation of the Blind and individual Maryland voters) alleged that the Maryland absentee voting process violates Title II of the Americans with Disabilities Act (ADA) and Section 504 of the Rehabilitation Act.  Defendants were Linda Lamone, Maryland’s State Administrator of Elections, and the five members of Maryland’s State Board of Elections (Board).

After a three-day bench trial, the district court ruled in favor of Plaintiffs, and made three legal conclusions that were the subject of this appeal.  There were three issues before the Fourth Circuit: (1) whether Plaintiffs were denied meaningful access to absentee voting in violation of the ADA and the Rehabilitation Act; (2) whether the online ballot marking tool (online tool) is a reasonable remedial modification; and (3) whether requiring Defendants to allow use of the online tool fundamentally alters Maryland’s voting process.

Plaintiffs Were Denied Meaningful Access to Absentee Voting

The first issue was whether Plaintiffs were denied benefits of a public service, program, or activity on the basis of their disability.  In this case, Maryland state elections are a public activity within the meaning of the ADA and Rehabilitation Act. More specifically, Maryland offers its voters the opportunity to vote by absentee ballot.  Marylanders may obtain an absentee ballot by mail, fax, or electronic download.  The electronic download must be printed, marked by hand, and signed and returned in hardcopy.  To facilitate the electronic absentee balloting process, Maryland has been developing an online ballot marking tool.  The online tool was of particular interest to Plaintiffs who, because of their blindness, often need assistance to cast their votes in elections.  The online tool has not been certified as is required under Maryland law, and thus cannot be used by disabled individuals such as Plaintiffs until it is certified, but it has been found to be a reasonably secure tool.

The Fourth Circuit concluded that the scope of the public program at question was Maryland’s absentee program, rejecting Defendants’ argument that the scope should include Maryland’s entire voting program.  The Court reasoned that the Supreme Court has cautioned against defining the program in question too broadly as that practice will avoid the discriminatory effects, and because Maryland allows any voter to use absentee voting, it is reasonable to limit the scope to Maryland’s absentee voting program.

Additionally, the Court rejected Defendants’ argument that Plaintiffs have no right to vote without assistance.  The ADA requires that Plaintiffs are provided “an opportunity to participate . . . equal to that afforded others.”  See 28 C.F.R. § 35.130(b)(1)(ii) (providing guidance from the Attorney General and the Department of Justice to implement Title II’s mandate against discriminatory acts, whose power was specifically granted by Congress).  Because voting is a fundamentally public activity, and Congress passed the ADA to protect disabled individuals from discrimination, Maryland failed to protect its citizens, Plaintiffs, from discrimination when it effectively required them to rely on others to vote by absentee ballot.  Thus, the Fourth Circuit affirmed the district court’s conclusion that Plaintiffs were denied meaningful access to absentee voting.

The Online Tool Was a Reasonable Remedial Modification

Even though the ADA protects disabled individuals from discrimination based on their disability, the ADA does not go so far as to require a public entity to make unreasonable modifications to accommodate individuals.  Therefore, plaintiffs must propose reasonable modifications to the challenged programs that will allow them meaningful access.  In this case, Plaintiffs could point to the already developed online tool as a reasonable modification, if implemented, that would make absentee voting reasonably accessible.  The district court found that this was a reasonable modification, and because the record supported its decision, the Fourth Circuit affirmed on that issue.

Requiring Defendants to Use the Online Tool Does Not Fundamentally Alter Maryland’s Voting Process

Finally, Defendants asserted a fundamental alteration defense.  To prevail, Defendants had the burden to show that the requested modification, the online tool, would be a fundamental alteration to the program, absentee voting.  Defendants argued that the certification process is fundamental to Maryland voting.  However, the Court classified that argument as merely procedural, rather than substantive to voting, and it was not persuaded.  The district court found that the online tool was reasonably secure and had been used without incident in previous elections (it was used in 2012 before the certification requirement was implemented).  Thus, the Fourth Circuit did not disturb the district court’s conclusions on this issue because they were supported by the record as a whole.

The Fourth Circuit Affirmed the District Court

Because the record supported the conclusions of the district court on all three issues, the Fourth Circuit affirmed.  The Court also noted that, although Maryland did not show any animus in denying its citizens meaningful access to absentee voting, the ADA does not require a showing of animus.  Instead, the ADA seeks to provide broad protections for individuals with disabilities, and where individuals have been deprived of their right to participate, public entities will be required to make reasonable accommodations.

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