• by Wendy Davis  @wendyndavis, May 21, 2024

A federal appellate court on Tuesday declined to throw out lawsuits accusing Apple, Meta and Google of promoting illegal gambling by distributing and profiting from gaming apps.

Instead, a panel of the 9th Circuit Court of Appeals sent the cases back to U.S. District Court Judge Edward Davila in the Northern District of California and directed him to analyze whether Section 230 of the Communications Decency Act protected the tech companies from each of the claims raised in the three complaints.

The move comes in a battle dating to 2000, when people who said they lost money on virtual slot machines alleged in class-action complaints that Google, Meta and Apple wrongly distributed gaming apps, processed in-app payments for virtual currency, and took a commission on the sale of that currency. The users also alleged that the apps themselves were illegal in some states. 

The tech companies argued that Section 230 protected them. That law broadly immunizes interactive companies from liability for material posted by third parties.

Davila ruled in 2022 that Section 230 protects the companies from some “theories” in the complaints. But he also said Section 230 wouldn't apply to claims that rested on the “theory” that tech platforms profited by processing payments for in-game currency.

He wrote that allegations regarding payments and revenue sharing were “grounded in the platforms’ own bad acts, not in the content of the social casino apps that the platforms display on their websites.”

Davila also said “reasonable minds could differ” about the interpretation of Section 230, and authorized an immediate appeal to the 9th Circuit.

The tech companies argued to the appellate court that all of the claims in the three complaints were covered by Section 230. The companies essentially contended that all allegations hinged on the apps' content -- meaning games that allowed people to gamble using virtual currency.

The 9th Circuit panel dismissed the appeals without ruling on the tech companies' arguments. Instead, the panel said Davila's ruling wasn't dispositive enough to justify an appeal because he only dismissed “theories,” as opposed to the actual claims. The complaints against the three companies included more than 120 total claims.

“The parties have yet to brief and the district court has yet to determine which causes of action should be dismissed,” the panel judges wrote. “Thus, even though the certified order is characterized as a 'dismissal order,' it presents the district court’s opinion on an abstract question of law without finally and definitively dismissing any claims.”