Texas Supreme Court scratches legal immunity claims of state lottery contractor
AUSTIN – On Friday, the Texas Supreme Court published a milestone opinion denying sovereign immunity protection claims of GTECH, a contractor that produced and printed scratch-off tickets for the Texas Lottery Commission.
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.
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.
“This is an important ruling for Texas law and puts both agencies and vendors on notice,” says The Lanier Law Firm’s Kevin Parker, who presented arguments before the court on behalf of James Steele and 1,200 other plaintiffs from the Travis County district court. “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.
GTECH, now known as International Gaming Technology (NYSE: IGT), is a London-based, multinational gambling company that produces slot machines and other gambling technology.
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