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ERMOLAOU v. FLIPSIDE

March 12, 2004.

SALLY ERMOLAOU, Plaintiff, -v- FLIPSIDE, INC. and JOHN DOES 1, 2, 3 & 4, Defendants


The opinion of the court was delivered by: GERARD E. LYNCH, District Judge

OPINION AND ORDER

Plaintiff Sally Ermolaou ("Ermolaou") sues defendant Flipside, Inc. ("Flipside") for breach of contract and promissory estoppel arising from an internet lottery game operated by Flipside. The claim for promissory estoppel having been dismissed by Order of this Court on September 13, 2002, defendant now moves for summary judgment pursuant to Rule 56(b) of the Federal Rules of Civil Procedure, arguing that the remaining breach of contract claim fails as a matter of law because the undisputed evidence establishes that plaintiff received a winning notification in error and is therefore not the lottery winner under the rules of the game. For the reasons stated below, defendant's motion is granted. Page 2

  BACKGROUND

  Except where noted below, the following material facts are not in dispute, or are sufficiently supported by the plaintiff's evidence that they must be accepted for purposes of defendant's motion. Defendant Flipside, Inc., operates an internet-based lottery game called eXtremelotto, in which participants are invited to select a series of numbers and are promised large cash prizes if their selections match the winning numbers generated by a random process. Plaintiff Sally Ermolaou played the game on March 22, 2001, from her home in Cyprus, selecting the following numbers: (a) for the $1 million drawing: 14, 16, 17, 18, 32, 36; (b) for the $10 million drawing: 3, 4, 14, 18, 24, 31, 51; (c) for the $20 million drawing: 11, 12, 28, 30, 44, 49, 56. The website where Ermolaou entered her number selections contained a link to the eXtremelotto rules, which Ermolaou saw but elected not to open.

  On March 24, 2001, Ermolaou opened her email to find two emails sent to her from Flipside, both dated March 23, 2001, which she read in quick succession. The first email informed Ermolaou that the winning numbers for March 22, 2001 were: (a) for the $1 million drawing: 14, 16, 17, 18, 32, 36; (b) for the $10 million drawing: 3, 4, 14, 18, 24, 31, 51; (c) for the $20 million drawing: 11, 12, 28, 30, 44, 49, 56. Ermolaou checked these numbers against the numbers she had selected on March 22 and was ecstatic to find that the numbers provided in the email matched all of her numbers for all three drawings. Her elation was short-lived, however, as the second email from Flipside informed her that the first email had been sent in error and provided a different set of numbers for each of the three drawings, which did not match the numbers that Ermolaou had selected. In what Flipside characterizes as a comedy of errors, arid Ermolaou characterizes as evidence of a conspiracy to defraud her, the numbers contained in Page 3 the second email were in fact the winning numbers for the March 21, 2001, lotteries, not March 22 as the second email claimed. As explained below, Flipside now contends that the second email was correct to the extent that Ermolaou's numbers were not the winning numbers, but incorrectly stated what the winning numbers were for March 22, 2001.

  Meanwhile, in southern California on the morning of March 23, 2001, Mark Ballin, an insurance adjuster at Claim Specialists International, arrived at work around 8:30 a.m.*fn1 In a procedure repeated each day over the past several years, Ballin opened an email from Gillian Ford at Ernst & Young, sent around 8:00 a.m., informing him that Ernst & Young had verified the accuracy and completeness of the eXtremelotto entries for the previous day. Ballin then walked across his office to a locked cabinet containing a set of sealed, color-coded envelopes provided by an insurance brokerage called ASU International. He selected three envelopes at random — one blue envelope for the $1 million eXtremelotto drawing, one green envelope for the $10 million eXtremelotto drawing, and one red envelope for the $20 million eXtremelotto drawing. He opened each envelope, removed the single sheet of paper containing the winning numbers for each drawing, noted the date and time of the drawing in the appropriate blanks, and signed his name to each of the three sheets. He then faxed the signed sheets to Gillian Ford at Ernst & Young and to Christian Oestlien at Flipside, emailed Ford and Oestlien to confirm the fax and provide the winning numbers a second time, and then placed the original documents Page 4 containing the winning numbers for March 22, 2001, in the files at Claim Specialists International None of the three companies involved in the selection and verification of the winning number for eXtremelotto — Ernst & Young, Claim Specialists International, or ASU International — are affiliated with Flipside.

  According to the documents verified by Ballin, the winning numbers for the March 22, 2001, eXtremelotto drawing were (a) for the $1 million drawing: 2, 11, 14, 48, 53, 55; (b) for the $10 million drawing: 4, 5, 7, 23, 24, 25, 51; and (c) for the $20 million drawing: 15, 21, 30, 36, 38, 51, 53. These numbers were posted on a website operated by Flipside as the official winning numbers for the March 22 eXtremelotto games. As confirmed by Gillian Ford at Ernst & Young on the morning of March 23, 2001, neither Ermolaou nor any other entrant matched all of the winning numbers for any of the three eXtremelotto drawings for March 22, 2001. In other words, under the rules of the game, no one won eXtremelotto for March 22.

  This lawsuit was filed on May 20, 2002, asserting claims of breach of contract and promissory estoppel. Immediately after filing its answer, and without any discovery having been conducted, Flipside moved for summary judgment. In an Order dated September 13, 2002, (the "September Order") the Court denied Flipside's motion for summary judgment on Ermolaou's breach of contract claim, dismissed Ermolaou's promissory estoppel claim, and permitted the parties to proceed with discovery to test the credibility of each parties' claims. Following the September Order, the parties exchanged documents and three depositions were taken: Flipside deposed Ermolaou and Ermolaou deposed Michael Fisher of Flipside and Mark Ballin of Claims Specialists International. Page 5

  At the close of discovery, Flipside renewed its motion for summary judgment, arguing that the discovery confirmed the argument made by Flipside in its initial summary judgment motion: that Ermolaou did not win the eXtremelotto game but was merely erroneously informed that she had won, a series of events that do not support a breach of contract claim.*fn2 In response, Ermolaou contends that the email she received from Flipside notifying her that she had won all three eXtremelotto games for March 22, 2001, creates a genuine factual dispute over whether she won the drawings for those games.

  DISCUSSION I. Legal Standard

  Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In determining whether summary judgment is appropriate, the court must resolve all ambiguities in the light most favorable to the non-moving party and draw all reasonable inferences in the non-moving party's favor. See Wernick v. Federal Reserve Bank of New York, 91 F.3d 379, 382 (2d Cir. 1996). An asserted dispute over a material fact is "genuine," so as to defeat summary judgment, "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." McCarthy v. American Int'l Group. Inc., Page 6 283 F.3d 121, 124 (2d Cir. 2002). Although the burden is on the moving party to demonstrate the absence of any genuine factual dispute, the party opposing summary judgment "may not rest upon mere conclusory allegations or denials, but must bring forward some affirmative indication that his version of relevant events is not fanciful." Podell v. Citicorp Diners Club, Inc., 112 F.3d 98, 101 (2d Cir. 1997) (internal quotation marks and citations omitted). II. Ermolaou's Breach of Contract Claim

  The parties dispute the exact parameters of the contract that Ermolaou asserts was breached. Plaintiff's brief in opposition to summary judgment describes the contract as unilateral, in which Flipside promised that if Ermolaou played eXtremelotto and picked the winning numbers, she would win $31 million. Ermolaou accepted the offer by her performance — selecting numbers for each of the three eXtremelotto drawings for March 22, 2001. Plaintiff contends that this exchange constitutes the entire contract between the parties, and that Flipside breached the contract by failing to pay the prize to Ermolaou after informing her that she had picked the winning numbers. (Plaintiff's Memorandum at 4, n.1). Flipside, on the other hand, asserts that the offer made to Ermolaou to play eXtremelotto incorporated all of the rules of the contest, which were made available to her at the time she accepted the offer to enter the contest by her performance. Ermolaou admitted at her deposition that she saw the hyperlink to the eXtremelotto rules at the time she entered her number selections, although she did not print out or read the rules until March 24, 2001, when she received the two notification emails from Flipside.

  It is hornbook law that the rules of a contest constitute a contract offer and that the participant's entering the contest "constitute[s] an acceptance of that offer, including all of its Page 7 terms and conditions." Fujishima v. Games Mgmt. Servs., 443 N.Y.S.2d 323, 327 (S. Ct. Queens County 1981). See also Endres v. Buffalo Auto. Dealers Ass'n. Inc., 217 N.Y.S.2d 460, 462 (S. Ct. Erie County 1961); Ritz v. News Syndicate Co., 183 N.Y.S.2d 850 (1st Dep't 1959). Even accepting plaintiff's minimalist version of the contract terms (pick the winning numbers and receive the offered prize money), plaintiff's claim for breach of that contract must fail, because the record evidence clearly establishes that Ermolaou did not select the winning numbers for March 22, 2001, and therefore Flipside's refusal to award her the prize money is no breach. However, Ermolaou's own testimony further weakens her claim of breach. She testified at her deposition that, when she entered eXtremelotto, she saw three screens containing the publicly-posted link to the full rules of eXtremelotto and also a fuller description of the game labeled "how it works." (Ermolaou Trans. at 101:16-104:20). A game contestant's rights are limited by the announced rules of the game. See Truong v. AT&T, 663 N.Y.S.2d 16, 16 (1st Dep't 1997); Fujishima, 443 N.Y.S.2d at 327; Wassyng v. Disabled Am. Veterans Serv. Found., 92 F. Supp. 275, 276 (S.D.N.Y. 1950). A failure to read publicly-available rules does not create a claim for breach, where such a claim is barred by the terms contained in those rules. See, e.g., Benabe v. Daily News, L.P., Index No. 15869/96, at 2-4 (N.Y. S.Ct. Apr. 29, 1999) (attached at Tab 2 to Von Simson Statement dated August 30, 2002).

  The rules of this game clearly provide that the sponsor cannot be found liable for "any incorrect and/or inaccurate information," specifically including errors "caused . . . by any of the equipment and/or programming associated with and/or utilized in the Contest or by any technical or human error. . . . " (Exh. D to Declaration of Charles von Simson at ¶ 8 (official rules as produced in discovery by plaintiff)). Such rules have universally been held to preclude liability Page 8 to game participants whose entries matched erroneously published "winning" numbers. See Mayfield v. Daily News, Index No. 125133/99, at 3 (N.Y. S.Ct. June 29, 2000), Benabe v. Daily News, L.P., Index No. 15869/96, at 2-4 (N.Y. S.Ct. Apr. 29, 1999), Bastich v. Daily News L.P., Index No. 19568 CVN 2000 (N.Y. Civ. Ct. Nov. 6, 2000), Dalessandro v. Daily News, Index No. SCB 652/00-41 (N.Y. Civ. Ct. Small Claims Pt. Mar. 22, 2000) (copies available at Von Simson Statement, Tabs 1-5 (unpublished, New York state opinions enforcing rules that preclude liability for printing errors)). See also Craft v. Capital District Regional Off Track Betting Corp., 484 N.Y.S.2d 368, 370 (3d Dep't 1985) (rules are binding notwithstanding erroneous information ...


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