In a ground breaking ruling last week, the Texas Supreme Court declared that government contractors were not covered by the same legal immunity from lawsuits as the institutions to which they provide services.
This is disappointing news for IGT as its GTECH brand was the focus of this ruling as it produced and printed scratch-off tickets for the Texas Lottery Commission and is facing claims from more than 1,200 plaintiffs regarding a “Fun 5” tic-tac-toe game from 2014.
In the court’s majority opinion, Justice Brett Busby noted that the court previously had “few opportunities to address whether a Texas government agency’s immunity from suit might extend to its private contractors, and if so under what circumstances.
“Because GTECH exercised discretion in choosing the game instructions, it would not be entitled to derivative immunity from fraud claims based on those instructions.”
The ruling stems from the consolidated lawsuits brought by thousands of purchasers of the “Fun 5” tic-tac-toe game, who alleged the ticket instructions were misleading and fraudulently caused them to believe they had purchased winning tickets. The game was introduced in September 2014 and shut down six weeks later due to the number of complaints from purchasers and legislators.
The court papers show that GTECH implemented changes requested from the Texas Lottery Commission to the Fun 5 game to prevent micro-scratching, but some of those changes allegedly caused the game instructions to become unclear.
After launch, lottery players began calling the Lottery Commission about the game immediately, saying that they thought a money-bag symbol on their tickets meant an automatic win of five times the amount in the prize box.
Callers complained that the game instructions were misleading, leading them to believe incorrectly that they had winning tickets even though they had not also won the tic-tac-toe game. Legislators also contacted the Lottery Commission regarding constituent complaints that the instructions were misleading. Based on these complaints, the Lottery Commission shut down the game on October 21.
This lead to several people who had purchased non-winning Fun 5’s tickets that included a money-bag symbol sued GTECH, claiming it misled them into believing they would win if their tickets revealed a money-bag symbol.
Plaintiffs filed separate litigation against GTECH in Travis County and Dallas County alleging fraud and conspiracy.
GTECH filed a response in both jurisdictions, asserting that sovereign immunity protections barred all the claims because the company’s work was controlled and directed by the Lottery Commission, an entity with sovereign immunity, a legal doctrine that shields governmental entities from civil liability.
However this latest ruling by the Texas Supreme Court essentially removes that immunity.
Lanier Law Firm’s Kevin Parker, who presented arguments before the court on behalf of 1,200 plaintiffs from the Travis County district court, commented: “This is an important ruling for Texas law and puts both agencies and vendors on notice. It’s going to be much more difficult for companies to wave the immunity flag just because they’re working for a governmental agency.”
The court’s ruling remands both cases to their original jurisdictions for further action.
Back in 2015, Executive Director Texas Lottery Commission Gary Grief provided video testimony on the subject.
