Beyer v. DraftKings, Inc.

Summary

The United States District Court for the Northern District of Illinois considers defendants’ motion to dismiss an amended putative class action challenging DraftKings’ “risk-free” or “no sweat” bets, deposit-match promotions, alleged targeting of underage users, and allegedly addictive platform design. The court holds that some fraud-based claims satisfy Rule 9(b), while dismissing certain claims without prejudice for insufficient detail about when particular plaintiffs saw the advertisements. The court denies dismissal of the Illinois Consumer Fraud and Deceptive Business Practices Act deception claims based on alleged deceptive promotions and finds that federal jurisdiction exists under the Class Action Fairness Act.

Holdings

1. Rule 9(b) does not require plaintiffs to identify the exact advertisement variant they saw in the digital advertising context. Plaintiffs satisfy Rule 9(b) by alleging what statements they saw with representative examples, why the statements were misleading, when and where they were exposed, and how they relied on them.
2. A statement is deceptive under the ICFA if it is likely to mislead a reasonable consumer, even if the statement is literally true. Accurate fine-print disclosures do not foreclose as a matter of law a claim that an ambiguous advertisement deceives reasonable consumers.
3. Plaintiffs plausibly allege actual damages under the ICFA by claiming they deposited money they otherwise would not have and lost it gambling, and did not receive the advertised benefits. Precise dollar calculations are not required at the pleading stage.
4. The alleged practice of deliberately targeting and grooming underage Illinoisans to develop sports betting habits offends Illinois public policy, is immoral, unethical, and unscrupulous, and plausibly causes substantial injury to consumers, satisfying the ICFA unfairness analysis.
5. The interface of the DraftKings app is a product under Illinois products liability law. The analysis focuses on the social policy justifications underlying strict liability rather than a dictionary definition of 'product,' and the app interface is mass-produced, distributed to distant consumers, and designed to addict users.
6. At the pleading stage, it is plausible that gambling addiction constitutes a physical harm sufficient to support products liability claims.
7. A manufacturer has a nondelegable duty to design a reasonably safe product, which applies to the DraftKings app interface classified as a product.

Questions Presented

1. Whether the fraud-based counts (I-VIII) satisfy the heightened pleading standard of Rule 9(b) in the context of digital advertising
2. Whether plaintiffs stated a viable ICFA deception claim regarding the 'risk-free' and deposit match promotions
3. Whether plaintiffs stated a viable ICFA unfair practice claim for targeting underage users
4. Whether plaintiffs stated claims for intentional misrepresentation (Counts IV and V)
5. Whether the unjust enrichment claim (Count VII) survives
6. Whether the civil conspiracy claim (Count VIII) survives
7. Whether the DraftKings app interface constitutes a 'product' under Illinois products liability law
8. Whether plaintiffs adequately alleged physical harm and duty for products liability claims

Disposition

other