Class-action suit filed against website before law changes

A class-action lawsuit against an online daily fantasy football company was filed last month in Garland County before a new law banning private class-action claims under the state’s Deceptive Trade Practices Act takes effect.

Chad Parnell claims a FanDuel Inc. promotion to match deposits of up to $200 for new subscribers was “bait and switch” advertising and wants other similarly situated state residents certified as a class.

The complaint filed June 22 said FanDuel didn’t match Parnell’s $200 deposit and called the promotion “false, deceptive, unfair, unconscionable and misleading.” The class encompasses state residents who opened a FanDuel account with a $200 deposit from Aug. 1, 2015, to Dec. 31, 2015.

Attorney Scott Poynter, who filed

the claim on Parnell’s behalf, said the promotion was a misrepresentation.

“You learn you have to gamble a lot of money to get the $200 credit,” he said. “It’s not a true $200 match.”

The lawsuit was filed ahead of the effective date for Act 986, which becomes law July 31 or

90 days after the May 1 adjournment of the Legislature’s 2017 regular session. Proceeding from House Bill 1742 filed by Rep. Laurie Rushing, R-District 26, of Hot Springs, it twice failed to reach the 51-vote threshold in the House before passing with 53 votes March 21.

The prohibition on private class actions filed under the Deceptive Trade Practices Act was added through an amendment introduced March 17 by Rep. Michelle Gray, R-District 62, of Melbourne. Rushing said the addition was part of a compromise to get the bill passed. Mickey Gates, R-District 22, of Hot Springs, was the lone member of the county’s House delegation who didn’t support the bill. He voted present.

Sen. Bill Sample, R-District 14, of Hot Springs, was one of 19 senators who voted for it. Sen. Alan Clark, R-Distinct 13, of Lonsdale, voted against it. The bill passed without the governor’s signature.

Critics of Act 986 have said depriving consumers of the ability to consolidate small claims into a class action removes an important check on commercial wrongdoing, but Rushing said class actions can still be filed through the attorney general’s office.

She said having the state represent classes allows consumers, rather than attorneys, to reap more of the proceeds from successful claims.

“There’s a lot of misunderstanding about this bill,” she said. “A class action is still an option. It’s just a different avenue to go through. We’re trying to prohibit all the money from going to the cost of attorneys. That actually hurts consumers. They get a check for $5 or

$10 in cases that have been settled for millions of dollars.”

The new law permits private class actions related to the state’s usury laws, a concession to those arguing that the bill intended to insulate payday lenders from class-action claims.

“So much of the opposition to the bill came from people who thought we were trying to protect payday lenders, when it was clear that was not the intent,” Rushing said.

The new law narrows the basis for a lawsuit brought under the DTPA to having suffered “an actual financial loss” resulting from the reliance on a false product or service claim. The statute previously allowed consumers to sue for “actual damages” and attorney fees if a product or service violated the DTPA.

Rushing said limiting relief to actual financial harm was a response to lawsuits filed against Subway for its foot-long sandwiches falling short of 12 inches. Class actions filed in multiple states, including Arkansas, were consolidated in federal court. As part of the

2015 settlement, $520,000 in attorney fees were awarded, and the 10-named plaintiffs received

$500 each.

“The attorneys get all the money for suing Subway, and the consumer gets a gift certificate,” Rushing said.

Poynter said Parnell filed his class-action claim in Howard County in 2015 but has since relocated to Garland County. Two Pope County lawsuits filed in 2015 allege FanDuel and DraftKings Inc., another online daily fantasy sports company, are in violation of the state’s anti-gambling statute.

The lawsuits claim daily fantasy sports are games of chance that don’t require skill or judgment. They include an October 2015 notice from the Nevada Gaming Control Board ordering the daily fantasy sports industry to cease operations because it constitutes an unlicensed gambling operation.

The suits were removed to federal court and merged with others from multiple states in federal district court in Massachusetts.