Government Contractor Is Not Immune from Fraud Claims

A divided state supreme court held that a government’s sovereign immunity from suit did not extend to its contractor, and thus, did not insulate the defendant from fraud claims. The decision serves as a cautionary reminder to government contractors that not all actions taken pursuant to government contracts and approval will be immunized from litigation, ABA Litigation Section leaders say.

Confusing Lottery Instructions Lead to Fraud Suits

In Nettles v. GTECH Corporation, the defendant, a designer of scratch-off games for state lotteries, proposed a game called “Fun 5’s” to the Texas Lottery Commission. The Fun 5’s ticket included a tic-tac-toe game. As initially proposed, if the ticket had three dollar-bill symbols in a row, the player would win the amount in the “PRIZE” box. A person could win five times that amount if the “multiplier box” contained a “5.” Only multiplier boxes on winning tickets would contain a “5.”

The commission required the dollar bill symbol to be changed to a “5,” and the “5” in the multiplier box changed to a money bag. The commission also told the defendant to put the money bag on losing tickets to prevent microscratching—scratching a tiny portion of a ticket to determine if it is a winner. The defendant made these changes but did not change the instructions, which read: “Reveal three ‘5’ symbols in any one row, column, or diagonal, win PRIZE in PRIZE box. Reveal a Money Bag ‘[money bag icon]’ symbol in the 5X Box, win 5 times that PRIZE.”