Thursday, October 04, 2012

Applebee's sweepstakes not limited to Applebee's, but that's ok

Yay for pictures!

Derbaremdiker v. Applebee's Intern., Inc., 2012 WL 4482057 (E.D.N.Y.)

Plaintiff filed a putative class action against Applebee’s alleging deceptive practices and unjust enrichment in connection with a web sweepstakes.  (The court says “a sweepstakes that plaintiff participated in via defendant's website” and not “an Applebee’s sweepstakes” for reasons that will shortly become clear.)  The court granted defendant’s motion to dismiss.

Derbaremdiker ate at an Applebee’s, and on his receipt was an invitation to go to and take a survey, with the inducement “You could win $1,000/A winner every day! Other great prizes also available daily”:
The receipt also said “Void where prohibited. See Website for rules/details.”  On the website, it said:

“To thank you for your thoughts, you'll have the opportunity to enter our daily drawing for $1,000* Plus, you could instantly win an iPod®† at the end of this survey.”  The asterisk

The asterisk next to “$1,000” referred to this text at the bottom center of the website:

“*CLICK HERE FOR OFFICAL RULES… Cash prize value of $1,000 per day. Apple iPod® prize value of $200 per day.”  If the user clicked, she’d be taken to another website with the heading “OFFICIAL RULES.”

At that point, the official rules said: “You have been invited by Applebee's (the ‘Client’) to participate in the following contest(s), with a chance to win the following eligible prize(s).”  The rules then said that the sweepstakes was sponsored by Empathica, and the “Eligible Prize(s)” were:

• One (1) prize per day of either USD$1,000, CAD$1,000, £1,000, or 1,000 Euros (“Daily Prize”).

• Web (and mail-in) entries only: One (1) prize per day of a 4GB iPod Nano (“Instant Prize”).…

The Rules also said, “The Sponsor [Empathica Inc.] … will pool entries received from Client's [defendant's] surveys with entries received from other clients of Sponsor.”  The Official Rules website also provided a link to the “complete Empathica Inc. Customer Satisfaction Survey Sweepstakes Rules,” which noted that “The chances of winning the prize depend on the number of eligible entries received and the number of the Sponsor's client companies that are participating in the Sweepstakes.”

Derbaremdiker alleged that this was deceptive because the Applebee’s description implied that participants would be competing only against other Applebee’s participants, instead of competing against participants from about 30 businesses.  In addition, he alleged, Applebee’s misrepresented that there were multiple prizes available every day in addition to the $1000, when in fact there was only one a day, the iPod.  Both of these made the payoff much lower than anticipated.

The court rejected the deceptive practices claim under NY GBL § 349.  Though this was consumer-oriented conduct, Derbaremdiker failed to allege that the statements were materially misleading or that he suffered any legally cognizable injury.  Whether considered by itself or with the disclosures on the various websites, the court ruled, the receipt was not materially misleading to a reasonable consumer acting reasonably.  The statements on the receipt didn’t contradict the statements on the websites: it was true that there was a winner every day and that the plaintiff could win $1000, and that there were “other great prizes also available daily,” namely iPods or equivalent $200 Apple gift certificates.  He received what he was offered: a chance to win $1000 or “other great prizes,” either an iPod or a gift certificate.  (Well, another great prize: the terms don’t offer him a chance to win both; they offer the sponsor the option to substitute one or the other.  At oral argument, defendant agreed that the statement was ambiguous, and could imply that there were at least two other prizes.  But it could also reasonably be interpreted to refer “collectively” to the numerous iPods that could be won throughout the duration of the contest.  This ambiguity couldn’t count as materially misleading.) 

Failure to disclose the eligible universe was also not materially misleading.  Derbaremdiker argued that the presentation of the receipt as coming from Applebee’s, the use of the word “our” on the receipt, and the direction to go to an Applebee’s-branded website all indicated that this was an Applebee’s-only contest.  But the receipt didn’t explicitly say Applebee’s only, and did say “no purchase necessary” and that the only entry requirement was to be 18 or over.  “Thus the receipt specifically advised consumers that individuals who were not defendant’s customers were also eligible to enter the Sweepstakes and win the daily prizes.”  Again, the possible implication of exclusivity wasn’t enough to be materially misleading, after considering the full disclosure on the websites.

The court noted that the receipt clearly pointed entrants to the Applebee’s-branded website for rules and details.  At that point, the instructions clearly indicated that there were only two prizes, thus preventing a reasonable consumer from being misled.  And the link to the official rules clearly stated that Applebee’s customers would be pooled with other entrants and that this would affect their chances of winning.  Given this disclosure, which consumers were directed to review by the receipt and the first website, a reasonable consumer who read the official rules wouldn’t have been misled.  “Nor should the defendant be required to make such a full disclosure on the receipt so long as the statements on the receipt were consistent with the Website and the Official Rules, which they were.”  There was no law requiring entrants to review the official rules and accept them prior to entering the sweepstakes.

Likewise, the court ruled that Derbaremdiker didn’t suffer actual harm.  The harm need not necessarily be pecuniary, but lower odds of winning because of competition from other businesses’ customers didn’t qualify.  His injury was merely that he believed his odds of winning were higher than his actual odds, but he needed to allege harm separate from the alleged deception itself.  (Query: what if he pled that his injury was that he provided personal information for use in marketing as consideration for entering the sweepstakes?  I’m not saying that was what happened or that anyone would find a credible connection between that injury and his belief about the odds, but what if defendants had, for example, not awarded any prizes at all?  Presumably then we’d want to find a path for him to succeed.)  Anyway, Derbaremdiker received what he was promised: a chance to win $1000 or an iPod, and no specific odds of winning were ever given.  Instead, the rules explicitly said that his chances depended on the number of eligible entries received and the number of companies participating.  (I’m not sure this argument does all the work the court wants it to. There’s a difference between “I know my odds depend on how many other Applebee’s customers entered” and “I know my odds depend on how many other customers of multiple businesses in multiple countries entered”; one’s rational estimations of the odds would likely differ.)

The court also kicked out the unjust enrichment claim as inadequately pleaded: Derbaremdiker didn’t explain how Applebee’s was unjustly enriched, and given the above findings it didn’t seem that any enrichment would be unjust anyway.

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