Skill Crane Operators Can Defend Against ‘Unfair Practices’ Lawsuits
By Bob Snyder

WALNUT, CA — This year, California news media outlets have been following the story of one law firm that is suing nearly 2,000 small business owners. The defendants are principally mom-and-pop auto repair shops and restaurants that have a public record of any violation of licensing or health rules. According to news reports, the defendants (or potential defendants) receive “demand letters” from plaintiffs’ attorneys. These demand letters seek payment of a few thousand dollars from each business; the money is payable to the law firm filing the suits. In return for receiving this payment, the firm agrees to drop the lawsuit against the individual business. The money thus collected (besides paying the plaintiffs’ lawyers) will allegedly be used to assist consumers.

If this story sounds outrageous, it may well be so. But it’s hardly far-fetched. It’s actually happening. And, regrettably, it is excruciatingly relevant to the amusements industry – particularly the segment dealing with cranes and merchandisers. Not everyone realizes it, but in recent years this part of the coin machine industry has increasingly found itself under legal attack. Unlike the legal battles over coin-operated redemption and merchandising in the 1980s, today’s instigators are not overeager law enforcement professionals doing their jobs. Instead, they are clever, hungry attorneys who – rightly or wrongly – see the amusements industry as a vulnerable target of opportunity with deep pockets. In this respect, the amusement industry’s position today is not so very different from that of other big businesses that are perceived to have substantial resources.

Specifically, in California and elsewhere, select amusement cranes have been the target of a series of such lawsuits. In these actions, the operators and manufacturers were named as defendants. Attorneys for the plaintiffs have charged “unfair business practices,” arguing that cranes are gambling devices that defraud the public. To support these charges, plaintiffs’ attorneys have entered a long list of complaints: the toys cannot be won; the claw rotates on descent without player control and does not reach the corners of the prize field; the claw fingers are too weak and do not fully close; the prizes are packed down; the machines are misleading as players are led to believe that they will win a prize; the machines fail to post notices and adequate instructions… and so forth.

In one California case, even the toys to be won were tested for child safety. At issue were questions such as: could the eyes of a toy be readily be pulled off and become a choking device for a small child? Failing this test, it is likely that the plush and merchandise supply segment of the industry would also be named defendants.

Can the amusements industry prevent such lawsuits? If so, how? If not, what is the best legal defense? These questions will be the subject of this essay. The first line of defense is education, so what follows is a review of key aspects of the suits filed to date, as well as simple preventive measures that operators can employ. A companion essay discusses the broader legal principles and background of unfair business practice lawsuits.

In the suits of recent years, some plaintiffs sought class-action status for larger recovery (financial penalties to be paid by amusement professionals). Each of the defendants hired lawyers; some hired experts (such as my own firm), and paid for forensic testing with controlled studies using the public as control test players in an effort to prove skill predominance in playing the crane (skill did predominate in the model tested and the court record set forth that the crane at issue was predominately skill). This level of defense effort resulted in very significant costs, in addition to serious distractions from daily business. Accordingly, in this type of suit, it’s not uncommon for defendants to settle out of court. Rather than fight for principles and defending their good name, they decide to pay the money – simply to make the case go away. It’s less satisfying, but the reality is that it’s often cheaper.

The end result in some of the crane cases was that, after making large payments to the plaintiffs and incurring high litigation costs, defendants continued to operate the same basic cranes in the same locations but in a new way. Rules and instructions were posted on the machines to address some of the points that were at issue in the lawsuits. Interestingly, after the payment of money in settlement, the alleged wrong apparently disappeared. Perhaps the newly posted rules on the game machines helped. Do players read them? Even if the instructions to players are not read by all players, the posting of notices reduces the likelihood of a future lawsuit by yet another plaintiff.

We need to consider that all redemption and merchandise equipment, and bulk vending, could be subject to similar allegations of unfair business practices, as argued in the crane cases. A capsule with a dollar bill visible in a gumball dispenser could be argued to be gambling, misleading, and unfair to competing operators who do not use the lure of the capsule. Rotary games, pushers, and other merchandisers can each be analyzed for fault, trickery and reasons why the activity should be considered as gambling. Operators and manufacturers alike need to take a fresh look at their merchandising equipment, keeping in mind the potential that these machines could become the subject of a lawsuit.

Your best protection is affirmative prevention. We can’t prevent outside interests from having the perception that everyone in the amusements industry has deep pockets and could be a financially rewarding target for a lawsuit. However, what is preventable is being an easier target through how you conduct your business.

How to protect yourself and minimize your risk of exposure begins with a discussion of your business with an attorney familiar with the topic of consumer law. Invite an inspection by your lawyer of your locations and machines. This may turn out to be a prudent investment.

Next, create good signs as notices. From experience I believe that many manufacturers could do a much better job in posting player game notices, game rules and tips. If players do not read the posting, fine. At least the posting can serve to negate some potential plaintiff arguments, thereby reducing your target size.

What size print to use, and where to post the notices, are questions to take seriously. Your notices should be posted where they will be readily visible to the consumers, written in friendly language, and printed with enough size and contrast to ensure they are easily read. The criteria to use when deciding these questions, is one of reasonableness. In my 30 years of reviewing games, I have seen that operators commonly react with concern that notices will harm the bottom line. In fact, players who do read the notices and tips gain insight into play and have a sense of being even more ready for the challenge. How many players ask for the free contest or sweepstakes entry simply because the rules state “no purchase required?” This makes the point.

Rules should be specific to the product. An example of a posted notice, a header might state “Notice and Hints for Play,” and include the following types of advisories:

Time: You have ____ (seconds) to aim. See the display countdown timer.

Hint: Until you learn the fine points of controlling the claw and machine, it is helpful to play towards the center of the playfield. Accuracy is important. Toys may not be won every time. Toys that are buried or wedged with others are more difficult to win. Smaller, lighter toys are easier to win than the big toys.

Controls: Use the joystick (buttons) to move the claw forward, left, right and back. The claw may rotate as it lowers. The claw can be used to hook, grasp, drag, and knock over toys. Practice is required to get better.

In a rotary game, the rules similarly should state the time allotted to play. Here, hints might include: “The tip of the push finger rotates, or is round. Timing is critical. Toys bumping other toys can change the challenge of the task. You will not win every time.”

Or: “The sweep arm can be nudged in increments only in the first half of movement. The arm then sweeps automatically. Controls: (Careful detailed instructions of how to operate the machine should be included.) Practice will improve your timing and results.”

Obviously, more in-depth notices should be developed unique to the game machine. Notice in our abbreviated examples the statement that “You will not win every time.” This phrase will be helpful in a legal sense. Sure, most players realize this fact, so it will not hurt your bottom line to state it officially. Further, not once did the rules state that the game is one of skill. Most often, to state that fact is self-serving and can create suspicion. It is these words that invite government attention to many eight-liners. Often, the same machines also have signs that say “for amusement only” – which also has a counterproductive effect in many cases.

In conclusion, discuss with your attorney the consumer laws of your state or states where you do business. Create professional notices for your individual games, and as part of your business compliance, procedures and practices for proper operation should be developed and set in motion. Compliance includes setting dates for inspecting all your machines in the field for adequate notices, and ensuring that all required licenses are current. Finally, to stay well-informed about current law enforcement and legal issues in your trade area, be active in one or more trade associations. Maybe you can’t totally ensure that you’ll never be sued, but at least your efforts will make your business a smaller lawsuit target.

VENDING TIMES
Jan-Feb ’03
Vol. 37-No. 1

About The Author

Bob Snyder is president of Bob Snyder and Associates Inc. and an internationally recognized consultant specializing in coin-operated game regulatory and legal issues. His 30-plus years’ experience includes many years as a supervisor with the Los Angeles Sheriff’s Department, directing gambling inquires. He now oversees the National Games Laboratory, a division of his company that conducts forensic examinations on game machines for legal analysis. Bob is a California attorney and adjunct law professor teaching gaming and amusement game law. He may be contacted at tel. (909) 595-1237; fax (909) 594-3279 and e-mail: [email protected].