Roblox Corporation has twice attempted to persuade a California federal court that it isn’t liable for third-party sites allegedly allowing players to gamble their Robux but will still have to face some of the accusations leveled at it. In a Sept. 19 ruling, United States District Judge Vince Chhabria once again dismissed the allegations of fraud and plea for injunctive relief. However, he allowed the case to continue with negligence claims intact.
The ruling is quite similar to the one Judge Chhabria issued in May. At that time, he granted the plaintiffs a chance to resubmit their complaint to address the issues he had found with it. However, he ruled that there are still problems with the amended complaint and that the plaintiffs will not have a third chance to file.
The plaintiffs, led by Rachel Colvin, are parents of minors who allegedly participated in illegal gambling being offered to Roblox customers through third-party sites: Bloxflip, RBXFlip, and RBLXWild.
The suit targets the companies responsible for those sites but also names Roblox Corporation as a defendant because the gambling transactions allegedly pass through its in-game currency system.
Roblox sells a virtual currency called Robux for real money. Users can spend Robux on in-game content supplied by third-party developers. Those developers can then exchange the Robux for real money payouts, while Roblox Corporation takes a cut of every transaction.
The Robux casinos allegedly ask players to surrender control of their accounts temporarily, whereupon the casino initiates an in-game purchase for a cosmetic item, priced according to the amount the player wants to “deposit.” The casino site then allegedly credits the player’s account with the corresponding amount of Robux. Cashing the Robux out to Roblox allegedly follows the same system but in reverse.
Omission Claims Fail Due to Parental Non-Involvement
In their amended complaint, the plaintiffs switched from accusing Roblox of affirmative misrepresentations to fraud by omission. Initially, they had focused on the statement in Roblox’s terms of service that it does not permit simulated gambling in its game. Roblox’s counter-argument was that none of the alleged gambling occurs within its game.
The new complaint pivoted to the argument that Roblox had a duty to disclose that its players might be “lured into gambling.”
However, claims of this nature require the plaintiff to show that they might have acted differently if they’d had the information in question. Judge Chhabria writes that the parents never claimed to have visited the Roblox site, read its terms & conditions, or been involved in the purchase of Robux:
In fact, the complaint carefully alleges that only the minor plaintiffs—and not their parents—purchased Robux from Roblox, generally through gift cards or with their parents’ credit cards. The plaintiffs even note that those payment methods were entirely within the minor users’ control.
Thus, Judge Chhabria reasons that even if Roblox had included such a warning, the plaintiffs wouldn’t have seen it, so there can be no violation of the relevant state laws.
The ruling notes that during an in-person hearing, the plaintiffs’ counsel advanced a different argument, namely that the children might have acted differently in response to such a disclosure. However, Judge Chhabria notes that such an argument contradicts another one that is fundamental to the rest of the case: that due to their age, the minors in question were not legally or practically capable of making their own decision about whether to gamble.
Roblox Was Plausibly Negligent by Misfeasance
The accusation of negligence hinges on the question of whether Roblox actively facilitated the alleged gambling or merely didn’t do anything to prevent it. In technical legal terms, the question is whether Roblox is accused of nonfeasance or misfeasance.
That’s because it’s generally much harder to show that a “duty of care” exists when the case involves nonfeasance. That is, people and companies don’t typically owe it to one another to intervene to prevent potential harm unless they’ve explicitly taken on that responsibility. On the other hand, there is generally a responsibility not to do anything that creates a risk for others, which is what is meant by “misfeasance.”
In its motion to dismiss, Roblox framed the plaintiffs’ accusations as being claims of nonfeasance. It argued that it had nothing to do with the alleged activities of the Robux casinos and had no duty to intervene to prevent them.
Judge Chhabria opines otherwise in his ruling. He writes:
The plaintiffs allege more than that—they allege that these deliberate design decisions by Roblox created the risk of harm to the minor plaintiffs who otherwise would not have been exposed to the virtual casinos.
Roblox also argued that even within the “general duty of reasonable care” that applies to cases of misfeasance, its duty should be narrowed because it couldn’t have foreseen the creation of Robux casinos. However, Judge Chhabria writes that the complaint “adequately alleges” that the profit motive established by Roblox’s currency system would foreseeably incentivize such behavior.
Given that structure, it seems entirely foreseeable that developers would want to create highly addictive experiences, such as gambling games, that entice users to spend a lot of Robux.
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