Supreme Court, New York County

Decided on March 31, 2026

Index No. 152508/2025

Phaedra F. Perry-Bond, J.

[*1]

Upon the foregoing documents, Defendants' motion to dismiss Plaintiffs SCPS, LLC ("Zula") and SSPS, LLC's ("Sportzino") (collectively "Plaintiffs") Complaint ("Mot. Seq. 002") is granted. Defendants' motion for sanctions and a protective order (Mot. Seq. 004") is denied.

I. Background

Plaintiffs operate online gaming websites, which Defendants claim are unlicensed online [*2]casinos.FN1 Users receive virtual gold coins for free when they register their account, whenever they log into their account, and through certain promotions. Users can also purchase additional coins if they feel the free coins provided are insufficient. The gold coins cannot be exchanged for cash or "real world" prizes. Plaintiffs' terms of service, to which all users must agree to use the websites, contained arbitration clauses, and mandated non-class arbitration.

Allegedly, in early 2024, Defendants began advertising on social media platforms seeking plaintiffs to file claims against various operators of social gaming websites, claiming that individuals who made in-app purchases from certain game developers may be entitled to seek compensation. If individuals clicked on the link in Defendants' advertisement, they were brought to an online questionnaire where the individual would identify which of 97 different online games they played. Plaintiffs were two of the 97 games listed. Defendants amassed thousands of claimants. The claimants signed declarations claiming they spent money on virtual casinos identified in their initial questionnaire and authorized Defendants to seek recovery on their behalf under federal and state law (see NYSCEF Docs. 19-21).

In June of 2024, in compliance with the informal-dispute resolution requirements contained in Plaintiffs' terms & conditions, Defendants sent pre-arbitration "notices of dispute" on behalf of hundreds of claimants to Plaintiffs (NYSCEF Doc. 22). On June 28, 2024, after dispute letters were sent, Plaintiffs revised their Terms of Service to change the agreed-upon forum for arbitration from AAA to "ADR Chambers" in Canada, and changed the applicable choice of law to Canadian law (see NYSCEF Doc. 23). On August 14, 2024, Defendants filed 667 individual demands for arbitration with the American Arbitration Association ("AAA") against Zula and on August 16, 2024, Defendants filed 229 identical demands for arbitration with the AAA against Sportzino. The arbitrations commenced in California.

Plaintiffs allege 186 claimants were not registered users of Zula or Sportzino's websites, and 464 claimants accepted revised Terms and Conditions that required arbitration before a different arbitration tribunal. Plaintiffs allege they suspended claimants accounts, at which time dozens of claimants allegedly stated they were unaware that Defendants had filed arbitration demands on their behalf. However, many of those claimants later submitted declarations in Federal Court stating they did so because of Plaintiffs' threats and coercion.

On September 27, 2024, Plaintiffs filed a Complaint in the United States District Court for the District of Columbia captioned SCPS, LLC and SSPS, LLC v. Kind Law and Ben Travis Law, et. seq. (No. 1:24-cv-02768) (the "District Court Proceeding") seeking injunctive and other relief under the Federal Arbitration Act. Plaintiffs sued not only Defendants in the District Court Proceeding, but all claimants who initiated arbitration. Counter-arbitrations were also filed against the claimants in ADR Chambers in Ontario, which contains more onerous rules than arbitration in AAA including more fees, appearances in Canada, and defaults within 15 days.

On February 7, 2025, Defendants instructed the AAA to dismiss the proceedings filed on behalf of 209 claimants The District Court Proceeding was dismissed on March 31, 2025 because there was no personal jurisdiction over Defendants and the Court found the claims against individual users were not ripe for review (see NYSCEF Doc. 42). Plaintiffs' motion for an injunction was denied. On April 14, 2025, Plaintiffs sued Defendants and all other claimants [*3]moving forward in arbitration, this time in the United States District Court for the Central District of California (the "California Action"). In the California Action, on November 12, 2025, Plaintiffs discontinued their claims against Defendants and claimants who decided not to proceed with arbitrations, and Plaintiffs abandoned their claims that certain arbitrations were filed without authorization (see NYSCEF Doc. 205 at p. 18).

In this case, Plaintiffs sue Defendants for malicious prosecution, tortious interference with prospective business relations, and prima facie tort. Defendants respond to the Complaint with a pre-answer motion to dismiss pursuant to CPLR 3211(a)(1), (a)(7), and (g).

In support of their motion, Defendants produced representation agreements signed by the 209 "unauthorized claimants" at issue in this matter, where the "unauthorized claimants" each signed declarations claiming they spent money on virtual casinos identified in their initial questionnaire and authorized Defendants to seek recover under federal and state law. Defendants claim that after arbitration was commenced, Plaintiffs reached out to claimants, even though Plaintiffs knew they were represented, and sent threatening e-mails, including threats of retaliatory lawsuits and arbitrations. Defendants argue the malicious prosecution claim fails because under California Law, which is where the arbitrations were commenced, there can be no claim for malicious prosecution arising from arbitration. Defendants argue the tortious interference claim is insufficient because Plaintiff fails to allege specific customers or businesses with whom Defendants interfered. Defendants further argue the claim of prima facie tort, which is highly disfavored, is likewise improper. Defendants argue the CPLR 3211(g) motion should be granted because this is a retaliatory lawsuit aimed at Defendants for filing arbitrations against Plaintiffs.

In opposition, Plaintiffs argue the subject matter of this lawsuit does not arise from protected speech under the anti-SLAPP statute. Plaintiff also argue that the malicious prosecution claims should not be governed by California law and that under New York law they have stated valid claims for malicious prosecution. As to the tortious interference claim, Plaintiffs argue they had existing relationships with users whom Defendants allegedly filed unauthorized arbitrations on behalf of. Plaintiffs argue their prima facie tort claim is properly pled in the alternative. Plaintiffs also argue alternatively they should be allowed to conduct anti-SLAPP discovery and that even if this is a SLAPP lawsuit, Defendants should not be awarded fees.

II. Discussion

A. Standard

When reviewing a pre-answer motion to dismiss for failure to state a claim, the Court must give the Plaintiff the benefit of all favorable inferences which may be drawn from the pleadings (Sassi v Mobile Life Support Services, Inc., 37 NY3d 236, 239 [2021]). However, conclusory allegations or bare legal conclusions with no factual specificity are insufficient (Godfrey v Spano, 13 NY3d 358, 373 [2009]). A motion to dismiss for failure to state a claim will be granted if the factual allegations do not allow for an enforceable right of recovery (Connaughton v Chipotle Mexican Grill, Inc., 29 NY3d 137, 142 [2017]). A motion to dismiss based on documentary evidence is appropriately granted when the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law (Goshen v Mutual Life Ins. Co. of New York, 98 NY2d 314 [2002]).

A motion to dismiss under CPLR 3211(g) shall be granted when the movant shows the [*4]action targets speech involving public petition and participation, as defined in Civil Rights Law § 76-a, unless the opposing party shows the action has a substantial basis (see Gillespie v Kling, 217 AD3d 566, 567 [1st Dept 2023]). An action involves public petition and participation if it is "any communication in a place open to the public or a public forum in connection with an issue of public interest" or if it is "any other lawful conduct in furtherance of the exercise of the constitutional right of free speech in connection with an issue of public interest" (see Civil Rights Law § 76-a[1][a]). When CPLR 3211(g) applies, the Court considers affidavits and other evidence to assess whether the pleading has a substantial basis (see Sharp v Bar Fluid LLC, 237 AD3d 628, 629 [1st Dept 2025]; Reeves v Associated Newspapers, Ltd., 232 AD3d 10, 24 [1st Dept 2024]).

In opposing a CPLR 3211(g) motion, a plaintiff must demonstrate that its claims have "a substantial basis in law or is supported by a substantial argument for an extension, modification or reversal of existing law" (see Reeves v Foundation for the Child Victims of the Family Courts, — N.Y.S.3d —, 2026 NY Slip Op. 00861 at *1 [1st Dept 2026]). The "substantial basis" standard is a "heightened burden" compared to the pleading standard under CPLR 3211(a)(7) (S.N. v Integral Yoga Institute, Inc. 245 AD3d 536 [1st Dept 2026]). "Substantial basis," for purposes of a motion to dismiss, requires "such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact" (see Smartmatic USA Corp. v Fox Corp., 213 AD3d 512 [1st Dept 2023]).

B. Application of CPLR 3211(g)

The Court finds that the speech targeted by this lawsuit falls within Civil Rights Law § 76-a's ambit and therefore CPLR 3211(g) applies. The Court is mindful of the legislative history behind Civil Rights Law § 76-a. In 2020, the Legislature amended the anti-SLAPP law to "broaden the scope of the law and afford greater protections to citizens" (Aristocrat Plastic Surgery, P.C. v Silva, 206 AD3d 26, 28 [1st Dept 2022] quoting Mable Assets, LLC v Rachmanov, 192 AD3d 998, 1000 [2d Dept 2021], citing L 2020, ch 250). "Public interest" under the 2020 amendments to the anti-SLAPP law means "any subject other than a purely private matter" (see Civil Rights Law § 76-a[1][d]). The speech targeted here involves public petition and participation.

Contrary to Plaintiffs' framing, consumer protection from allegedly unlicensed online casinos is a matter of public interest. Indeed, the issue has been discussed in the New York State Legislature, as well as in the media, and Plaintiffs themselves have received cease-and-desist letters from the New York Attorney General. Defendants' advertising on social media constitutes speech targeted at a public forum (see, e.g. Gillespie v Kling, 217 AD3d 566, 567 [1st Dept 2023] [statements in online podcast were made in public forum]; Aristocrat Plastic Surgery, P.C. v Silva, 206 AD3d 26, 27-28 [1st Dept 2022] [online reviews were made in public forum]). Defendants' filing of Complaints on behalf of website users with AAA constitutes lawful conduct in furtherance of the website users' right to petition in the sole forum that Plaintiffs' contractually mandated its website users to seek redress from (see, e.g. Black v Ganieva, 236 AD3d 427, 427-428 [1st Dept 2025] [prosecution of legal action is "conduct in furtherance of the exercise of the constitutional rights of free speech and petition"]; see also Sweetpea Ventures Inc. v Belmamoun, 231 AD3d 460 [1st Dept 2024]). Therefore, the more rigorous substantial basis standard applies.

C. Substantial Basis Analysis

Viewing the record before it holistically, the Court finds Plaintiffs' claims lack the [*5]necessary substantial basis to withstand this CPLR 3211(g) motion. As a preliminary matter, "under New York's choice of law rules, malicious prosecution claims are governed by the law of the state where the underlying proceeding took place" which no party disputes is California (see Zeetogroup, LLC v Baker Hostetler, LLP, 224 AD3d 622, 623 [1st Dept 2024]). California law bars malicious prosecutions claims that arise from contractually agreed upon arbitration (id.). Therefore, the malicious prosecution claim is dismissed.

While Plaintiffs in opposition argue that the "proceeding" did not take place in California because there was no arbitration hearing prior to the arbitrations being discontinued, this argument only further demonstrates why Plaintiffs' malicious prosecution claim lacks a substantial basis. Plaintiffs cannot argue that an arbitration proceeding did not progress far enough for the law of the state in which the arbitration proceedings were commenced to apply, and at the same time seek to assert a malicious prosecution cause of action on those proceedings. Plaintiffs cannot argue in good faith argue they have a claim for malicious prosecution based on arbitrations commenced in California but argue the prosecution did not proceed far enough for California law to apply.

The tortious interference with prospective business relations claim likewise lacks substantial basis. In any event, Plaintiffs tortious interference with prospective business relations claim fails because there must be facts showing that the Defendants' conduct "was motivated solely by malice or to inflict injury by unlawful means going beyond mere self-interest or other economic considerations" (Bradbury v Israel, 204 AD3d 563, 564-65 [1st Dept 2022]; Front, Inc. v Khalil, 103 AD3d 481, 484 [1st Dept 2013]). Nowhere is malice sufficiently pled. Considering the record evidence submitted in support of the motion, Defendants show they were authorized to commence arbitrations by the claimants and they reasonably relied on the claimants' representations that they used and spent money on Plaintiffs' websites. There is no evidence that Defendants filed the arbitrations solely out of malice towards Plaintiffs but rather did so to economically benefit from the litigation and obtain compensation for their clients (see Daniel Szalkiewicz & Associates, P.C. v Liu, 244 AD3d 652 [1st Dept 2025] [failure to allege actions were taken solely out of malice fatal to tortious interference with prospective economic relations claim]; Devash LLC v German American Capital Corp., 104 AD3d 71 [1st Dept 2013]).

Despite Plaintiffs alleging in their Complaint that "prospective business relations" were interfered with, and specifically that Defendants' conduct hindered Plaintiffs' "ability to engage new users," in their opposition Plaintiffs make arguments as to their "existing" relationships with users. To the extent Plaintiffs argue they are actually alleging a tortious interference with contract claim, that cause of action fails because Plaintiffs themselves allege they terminated user accounts rather than the users unilaterally terminating the accounts as a result of Defendants' conduct.

Tortious interference with a contract requires a showing that a third-party breached the interfered with contract (see AREP Fifty-Seventh, LLC v PMGP Associates, L.P., 115 AD3d 402 [1st Dept 2014]). Plaintiffs fail to allege how Defendants procured the website's users to breach. If anything, the record reflects that Plaintiffs terminated access to their website as leverage to coerce claimants to withdraw their arbitration claims. If Plaintiffs allege the breach was users filing arbitration claims against, the Terms of Service do not contain a covenant to refrain from initiating arbitration and explicitly allow for arbitration. Therefore, this claim is also without merit (Beast Investments, LLC v Celebrity Virtual Dining, LLC, 238 AD3d 558, 558-559 [1st [*6]Dept 2025]).

Finally, the prima facie tort claim fails. "Where relief may be afforded under traditional tort concepts, prima facie tort may not be invoked as a basis to sustain a pleading which otherwise fails to state a cause of action in conventional tort" (see Freihofer v Hearst Corp., 65 NY2d 135, 143 [1985]). Because traditional tort concepts could have afforded Plaintiffs relief, but the claims pled failed to state a claim, Plaintiffs cannot seek to proceed on a duplicative claim alleging prima facie tort (see also Matthaus v Hadjedj, 148 AD3d 425, 426 [1st Dept 2017]; Fleischer v NYP Holdings, Inc., 104 AD3d 536, 538-539 [1st Dept 2013]).

Because Defendants have succeeded in obtaining dismissal pursuant to CPLR 3211(g), an award of fees is mandatory pursuant to Civil Rights Law § 70-a (see Gillespie v Kling, 217 AD3d 566. 567 [1st Dept 2023]). The Court declines to issue an award of punitive damages on this record (see, e.g. 215 West 84th St. Owner LLC v Bailey, 217 AD3d 488, 489 [1st Dept 2023]). The Court finds Plaintiffs' request for discovery under CPLR 3211(g) to be unavailing as Plaintiffs fail to explain what discovery is needed to uncover "facts essential to justify its opposition" (see Reeves v Associated Newspapers, Ltd., 232 AD3d 10, 24 [1st Dept 2024]). The record is clear that Defendants obtained signed authorization to commence arbitrations. The Court has considered Plaintiffs' remaining contentions and finds them to be unavailing.

Because the Complaint is dismissed, Mot. Seq. 004, which sought a protective order and dismissal of Plaintiffs' Complaint as a litigation sanction for engaging in unethical behavior is moot. As Defendants are already entitled to legal fees pursuant to CPLR 3211(g), the Court denies Defendants' request for monetary sanctions connected to Mot. Seq. 004.

Accordingly, it is hereby,

ORDERED that Defendants' motion to dismiss Plaintiffs' Complaint pursuant to CPLR 3211(a)(1), (a)(7), and (g) (Motion Sequence 002) is granted, and the Complaint is hereby dismissed, and within thirty days, Defendants shall submit a fee application pursuant to Civil Rights Law § 70-a; and it is further

ORDERED in light of the Complaint being dismissed, Defendants' motion for sanctions (Motion Sequence 004) is denied, to the extent it is not moot; and it is further

ORDERED that within ten days of entry, counsel for Defendants shall serve a copy of this Decision and Order, with notice of entry, on all parties via NYSCEF.

This constitutes the Decision and Order of the Court.