Jack Nelson Jones Professional Association
January 13-19, 2020
Parnell v. Fanduel, Inc., 2019 Ark. 412 (Dec. 19, 2019)
This case arose on appeal from the Garland County Circuit Court, Honorable Lynn Williams presiding. The appeal involved the dismissal of a class action suit made pursuant to the Arkansas Deceptive Trade Practices Act (ADTPA). The Arkansas Supreme Court (Court) affirmed the dismissal.
Chad Parnell opened an account with FanDuel, which offers Internet-based fantasy sports games on its website, fanduel.com. On June 22, 2017, Parnell filed a class-action lawsuit in the circuit court alleging that FanDuel ran a series of advertisements promoting its fantasy sports games, which informed new subscribers that if they deposited $200 into their account, FanDuel would match their deposit with $200. In his complaint, Parnell alleged that this advertising was illegal because FanDuel did not match his $200 deposit when he opened his account. Parnell alleged violations of the ADTPA and unjust enrichment on behalf of himself and the putative class.
FanDuel subsequently moved to dismiss the action based upon an amendment to the ADTPA passed by the General Assembly in 2017. The amendment, then House Bill 1742, made two pertinent alterations to the existing law. First, it changed the remedy available to civil litigants to the recovery of their “actual financial loss.” Second, the amendment prohibited private class actions under the ADTPA. In its motion to dismiss, FanDuel argued that Parnell’s complaint failed to allege an actual loss and also that the class allegations could no longer be maintained under the amended ADTPA. The circuit court agreed with FanDuel and dismissed both Parnell’s complaint and the class allegations.
The Court first noted that, when reviewing a circuit court’s decision on a motion to dismiss, it court treats the facts alleged in the complaint as true and views them in the light most favorable to the party who filed the complaint. Likewise, in testing the sufficiency of the complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be liberally construed. However, the Court also emphasized that Arkansas law requires fact pleading, and a complaint must state facts, not mere conclusions, in order to entitle the pleader to relief.
Parnell argued that but for FanDuel’s advertisements of matching deposits, he would not have created a FanDuel account and deposited $200. As such, he did not receive the benefit of their bargain and lost $200 by taking FanDuel’s bait. Because Parnell pled that he was deceived by FanDuel’s advertised promise to match $200 deposits with another $200 and did not receive the promised match, he contended he pled cognizable injuries. The Court disagreed.
The Court noted that, even before the 2017 amendment, the ADTPA required for the statement of claim that a private plaintiff must allege both (1) a deceptive consumer-oriented act or practice which is misleading in a material respect, and (2) an injury resulting from such act. It noted the ADTPA had always limited recovery in private suits to cases where the plaintiff has suffered “actual” damage or injury. The legislature amended the provision in 2017 only to make clear an injury must result in an “actual financial loss.” Parnell argued that this provision of the ADTPA that requires “actual financial loss” did not apply to his complaint because it was filed prior to the 91st day after the bill containing the amendment was passed by the General Assembly. Parnell further argues the amendment was a substantive change to the existing law and therefore cannot be applied retroactively.
The Court held that, in this case, it was not necessary to determine whether the amended provision of the ADTPA applied to Parnell because he clearly failed to allege any “actual damage or injury” as required under the previous version of the statute. It found he relied on the conclusory statement in his complaint that he and putative class members “suffered actual monetary damages because of Defendant’s violations of the ADTPA.” However, the Court noted a complaint must allege facts that state a prima facie cause of action, and such cause cannot be stated using conclusory allegations. Here, Parnell had not alleged that he was unable to withdraw his $200 from his FanDuel account nor had he identified any specific injury – financial or otherwise – as a result of FanDuel’s alleged deceptive practices.
On appeal, Parnell attempted to reframe his claim as a failure to receive the “benefit of the bargain” in an effort to overcome any failure to allege any actionable injury. The Court rejected this contention. It noted that Parnell deposited $200 into his FanDuel account for the ability to enter that money into fantasy sports games; this was Parnell’s actual “benefit of the bargain,” and he did not argue that he was denied this benefit. Instead, the Court observed he claimed his FanDuel account had less economic value than represented by FanDuel. But the Court noted that, as other cases had made clear, a speculative injury is not cognizable under the ADTPA. Moreover, it found Parnell had failed to plead that he suffered injury or loss as a result of opening a FanDuel account or that he was in any way prevented from spending or withdrawing the $200 he had deposited.
Finally, the Court addressed the unjust enrichment claim noting that Parnell had never actually alleged that FanDuel was unjustly enriched. The Court noted that unjust enrichment is an equitable doctrine that stands for the principle that one party should not be permitted to unjustly enrich themselves at the expense of another but should be required to make restitution for the benefits received. It found Parnell made no allegation that he was ever prevented from withdrawing his initial deposit from his FanDuel account and thus could not demonstrate that FanDuel was unjustly enriched. Because Parnell’s complaint was devoid of any facts upon which he might be entitled to relief, the Court found the circuit court did not err in dismissing his complaint and class allegations and affirmed the circuit court.