| DOUG GRANT, INC., et al., Plaintiffs, v. GREATE BAY CASINO |
| CORP., et al., Defendants. |
| |
| CIVIL ACTION NO. 97-4291(JEI) |
| |
| UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY |
| |
| 1998 U.S. Dist. LEXIS 6479 |
| |
| |
| May 1, 1998, Original Filed |
| |
| DISPOSITION: All of the claims relating to the alleged violations of the |
| CCC regulations (First, Second, Third, Fifth, Sixth, Seventh, and |
| Thirteenth Counts) dismissed with prejudice. Remainder of the claims |
| (Eighth, Ninth, Tenth, Eleventh, and Lawyer Defendant claims) remanded to
|
| state court. Permission to reinstate the Consumer Fraud Act count (Fourth
|
| and Twelfth Counts) denied. |
| |
| COUNSEL: HOWARD A. ALTSCHULER, ESQ., Haworth, New Jersey, for Plaintiffs.
|
| |
| Adam N. Saravay, Esq., John J. Barry, Esq., BARRY & MCMORAN, Newark,
New |
| Jersey, for Trump Casino Defendants and Co-Counsel for All Other Casino |
| Defendants and Griffin Investigations. |
| |
| John M. Donnelly, Esq., LEVINE, STALLER, SKLAR, CHAN, BRODSKY &
DONNELLY, |
| P.A., Atlantic City, New Jersey, Co-Counsel for Casino Defendants (other |
| than Trump Casino Defendants) and Griffin Investigations. |
| |
| Damien O. Del Duca, Esq., Patrick J. Madden, Esq., MADDEN, MADDEN &
DEL |
| DUCA, Haddonfield, New Jersey, for F. Michael Daily, Ellen Barney Balint,
|
| and Quinne, Dunne, Daily and Higgins, P.A., Defendants. |
| |
| John T. Kelley, Esq., KELLEY, WARDELL & CRAIG, LLP, Haddonfield, New |
| Jersey, for Meranze & Katz, Defendant. |
| |
| Michael L. Rosenberg, Esq., Bart Q. Hollander, Esq., STERNS &
WEINROTH, |
| P.C., Trenton, New Jersey, for Caplan & Luber, Lloyd S. Markind,
Richard L. |
| Caplan, Sharon Morgan and Michele Davis, Defendants. |
| |
| JUDGES: JOSEPH E. IRENAS, U.S.D.J. |
| |
| OPINIONBY: JOSEPH E. IRENAS |
| |
| OPINION: OPINION |
| |
| IRENAS, District Judge: |
| |
| Plaintiffs, who are primarily card-counting blackjack players, bring |
| this action against thirty-eight casino defendants ("Casino
Defendants"), |
| three investigation agencies, and several hundred "John Doe"
defendants, |
| alleging a conspiracy in violation of state and federal RICO statutes,
and |
| violations of the New Jersey Public Accommodations Act and the New Jersey
|
| Consumer Fraud Act. In addition, they assert constitutional and civil |
| rights claims implicating the Equal Protection Clause, the Due Process |
| Clause, Article 1, paragraph 1 of the New Jersey Constitution, 42 U.S.C.
§ |
| 1983 and other state and federal statutes, and various common law claims |
| for breach of contract, fraud, tortious interference with contract and |
| prospective economic advantage, and negligence. The complaint also
asserts |
| an assortment of personal injury claims. including invasions of privacy, |
| misappropriation of name or likeness, libel, slander, and infliction of |
| emotional distress. Finally, plaintiffs assert claims against nine lawyer
|
| and law firm defendants ("Lawyer Defendants") for legal
malpractice, breach |
| of fiduciary duty, negligence, breach of contract, and negligent |
| supervision. n1 Jurisdiction over plaintiffs' federal statutory and |
| constitutional claims is premised upon 28 U.S.C. § 1331. Jurisdiction
over |
| plaintiffs' remaining claims is based upon the Court's supplemental |
| jurisdiction pursuant to 28 U.S.C. § 1367. |
| |
| n1 In addition to these broad and dramatic allegations, the complaint |
| also reels back and forth, bursting at the seams, in its requests for |
| damages and relief. In just one count, the complaint makes a prayer for: |
| compensatory and consequential damages; punitive damages; injunctive |
| remedies; treble damages; interest; costs of suit; attorneys' fees; the |
| dissolution or reorganization of the alleged casino enterprise; the |
| revocation of the charter of corporate defendants organized under the
laws |
| of the State of New Jersey; the denial, suspension or revocation of the |
| license of any foreign corporation; the denial, suspension or revocation
of |
| the license or permit granted to any casino by any department or agency
of |
| the State of New Jersey; a cease and desist order which specifies the
acts |
| and conduct which are to be discontinued, altered or implemented; the |
| restitution of all moneys or property unlawfully obtained or retained by |
| defendants . . ., including but not limited to the return of all bets |
| placed by the plaintiffs, as well as the winnings plaintiffs would have |
| realized for each bet had plaintiffs won the maximum pay-out available
per |
| bet;" and an assessment of civil monetary penalties against
defendants to |
| deter future violations, in an amount equal to three times the amount of |
| the gain. Compl. at 76. Each of the other sixteen counts asks for
similarly |
| broad and sweeping monetary and injunctive relief, including prayers for
a |
| return of all money the plaintiffs would have won had the blackjack game |
| not been rigged, in an amount to be determined at trial, but
conservatively |
| estimated to be at least $347,532,800 for the last six years" and
for |
| special damages for lost bets and income and expenses in an amount to be |
| determined at trial." Compl. at 83, 86. |
| |
| Currently before the Court are motions by all of the defendants to |
| dismiss the plaintiffs' complaint pursuant to Fed. R. Civ. P. 12(b)(6).
The |
| defendants are also in the process of filing a motion for Rule 11 |
| sanctions, Fed. R. Civ. P. 11, against plaintiffs' attorney and the lead |
| plaintiff, Doug Grant von Reiman ("Doug Grant"), who claims to
act as |
| attorney-in-fact for the plaintiffs. We will reserve all issues relating
to |
| the Rule 11 sanctions for consideration at a later date. For the reasons |
| that follow, we will grant the defendants' motions to dismiss under Fed.
R. |
| Civ. P. 12(b)(6) as to the First Count, Second Count, Third Count, Fifth |
| Count, Sixth Count, Seventh Count and Thirteenth Count. These counts are |
| all based on the plaintiffs' central allegation that the casinos' |
| implementation of Casino Control Commission ("CCC") regulations
violates |
| various federal and state statutes, the common law, and the United States
|
| and New Jersey Constitutions. After dismissing all these federal and |
| related claims based on the CCC regulations, we decline to retain subject
|
| matter jurisdiction over the remaining state law claims alleged in the |
| Eighth, Ninth, Tenth and Eleventh Counts and the state law malpractice |
| claims against the Lawyer Defendants. Because these claims do not form
part |
| of the same case or controversy as the CCC regulation claims and because,
|
| in any case, we have discretion to decline to exercise supplemental |
| jurisdiction, we will remand them to state court. As plaintiffs have |
| withdrawn their claims under the Fourth and Eleventh Counts, we will also
|
| dismiss these claims. |
| |
| I. BACKGROUND |
| |
| The individual plaintiffs in this matter are blackjack players who |
| frequent the Atlantic City casinos operated by the Casino Defendants. n2 |
| Most of them have developed card-counting skills which enable them to |
| reduce or eliminate the normal odds in favor of the casinos. The
corporate |
| plaintiffs are corporations associated with plaintiff Doug Grant, Inc., a
|
| New Jersey corporation whose predecessor corporations were involved in |
| operating card-counting schools and mock casinos set up by plaintiff and |
| renowned card-counter Doug Grant. The complaint alleges that the schools |
| and mock casinos were forced to close down in 1992 as the result of the |
| Casino Defendants' alleged illegal countermeasures against card-counters |
| and because of bomb threats, break-ins, destruction of property, theft of
|
| student lists, stalking and other intimidation tactics. Doug Grant, Inc. |
| also provided the training for several cooperative player groups,
including |
| many plaintiffs, who pooled their financial resources and agreed to share
|
| their blackjack winnings. |
| |
| n2 The complaint alleges that only six of the sixty individual |
| plaintiffs are not skilled card-counters. Compl. at P 65. |
| |
| A. The Play of Blackjack, Card-Counting and Shuffling-At-Will and Other |
| Countermeasures |
| |
| The gravamen of plaintiffs' complaint is that the Casino Defendants |
| undertake certain "illegal" countermeasures to eliminate the
advantage a |
| skilled card-counter may be able to gain over the casinos in the game of |
| blackjack. Blackjack is the one casino game in which a player's skill may
|
| increase his chance of winning to the point of eliminating the winning
odds |
| in favor of the "house." Card-counters use intellect and memory
to identify |
| when, during the course of play, the odds of winning are better or worse.
A |
| short discussion of Atlantic City blackjack and the practice of |
| card-counting is necessary to assist the reader in better understanding
the |
| plaintiffs' allegations. |
| |
| Blackjack must be played with decks containing fifty-two cards of four |
| suits (hearts, diamonds, clubs and spades) with each suit containing |
| thirteen cards (Ace, King, Queen, Jack, 10, 9, 8, 7, 6, 5, 4, 3, 2). |
| N.J.A.C. 19:46-1.17. Before blackjack games are commenced, the dealer |
| receives one or more, usually between six to eight, decks from the casino
|
| supervisor and inspects them in the presence of the floorperson. Id. |
| 19:46-1.18(a), (f); id. 19:47-2.4(a). After the cards are inspected, the |
| dealer takes them to his table and spreads them out in a fan, face
upwards, |
| for visual inspection by the first player or players to arrive at the |
| table. Id. 19:47-2.4(b). After the first player or players is afforded an
|
| opportunity to visually inspect the cards, the cards are turned face |
| downward on the table, mixed thoroughly, shuffled until "randomly |
| intermixed," and then placed into a stack. Id. 19:47-2.4(c); id. |
| 19:47-2.5(a). After the shuffle is completed, the dealer asks the player |
| seated at a certain position at the table, as defined by the regulations,
|
| id. 19:47-2.5(e), to cut the deck. Id. 19:47-2.5(b). The player cuts the |
| deck by placing a plastic cutting card in the stack at least ten cards
from |
| either end. Id. 19:47-2.5(c). Once the cutting card has been inserted by |
| the player, the dealer takes all the cards in front of the cutting card
and |
| places them at the back of the stack. Id. 19:47-2.5(d). The dealer then |
| takes the entire stack of cards that was just shuffled and cut and aligns
|
| it along the side of the dealing shoe which has a mark on the side that |
| enables the dealer to insert the cutting card so that it is in a position
|
| "at least approximately" one-quarter of the way from the back
of the stack. |
| Id. 19:47-2.5(d); see id. 19:46-1.19(d)(4). The stack of cards is then |
| inserted into the dealing shoe for commencement of play. Id.
19:47-2.5(d). |
| The cards behind the cutting card will not be used during the game. n3
Id. |
| 19:47-2.5(h). The dealer then deals the cards to the players in a series
of |
| blackjack hands until the dealer reaches the cutting card. Once the
cutting |
| card is reached, the dealer repeats the shuffling process and cutting |
| procedures described above. Id. |
| |
| n3 Plaintiffs allege that most blackjack players refuse to play if the |
| dealer places the cutting card more than seventy-ninety cards from the
back |
| of the stack. The closer the cutting card is to the rear of the stack,
the |
| greater the card-counter's ability to determine whether the shoe is rich
in |
| player-favorable cards. Placing the cutting card closer to the front of
the |
| stack disadvantages the card counter, but also reduces casino
profitability |
| since more time-consuming shuffles will be needed. See infra at 7. |
| |
| In the game of blackjack, where the object of play is to reach as close
to |
| a total card value of "21" without exceeding that value,
certain cards are |
| more favorable to the player and certain cards are more favorable to the |
| dealer. The player-favorable cards are the Ace, King, Queen, Jack and
Ten. |
| The dealer-favorable cards are the 6, 5, 4, 3, and 2. The 7, 8, and 9 are
|
| neutral. At any given point during the play of a shoe, the shoe might |
| contain more player-favorable cards or it might contain more |
| dealer-favorable cards. When there are more player-favorable cards, the |
| players' chances of winning are increased. When there are more |
| dealer-favorable cards, the dealer's chances of winning are increased. |
| Whether and when a shoe will turn out to be player-or dealer-favorable is
|
| purely random. |
| |
| Card-counters attempt to "count cards" so as to determine
whether and |
| when a shoe is player-favorable. They then vary their bets, betting high |
| when the shoe is player-favorable and low when the shoe is |
| dealer-favorable. Bets are placed before each individual round of
blackjack |
| and are generally based on the approved minimums and maximums for the |
| table. According to the plaintiffs, successful card-counting contains |
| several basic elements. These include: the assignment of a point value to
|
| each card, maintaining a running total of those points during play,
betting |
| strategies, playing strategies, money management, a sufficient bankroll, |
| and "the intangible ability to consistently apply these interrelated
|
| strategies under fast-paced casino conditions." Compl. at P 133.1. |
| |
| In order to have the most success, card-counters need to be able to |
| view, through the rounds of play, as many of the cards in the shoe as |
| possible. The greater number of cards they are able to view, the easier
it |
| is for them to determine whether the remaining cards in the shoe are |
| player-favorable or dealer-favorable. For this reason, card-counters
prefer |
| that the dealer places the cutting card toward the end of the shoe,
leaving |
| the fewest number of cards behind the cutting-card and increasing the |
| overall number of cards in play. Card-counters also prefer to have the |
| entire shoe of cards played. If the dealer decides to reshuffle prior to |
| reaching the cutting card, then the card-counters' opportunity to bet
high |
| on a shoe with a remainder of mostly player-favorable cards is
eliminated. |
| The casinos, on the other hand, prefer to decrease the card-counters' |
| opportunity to bet high on a player-favorable shoe. Therefore, it is in |
| their interest to decrease the card-counters' chances of determining |
| whether a shoe is player-favorable by playing with fewer cards in the
shoe |
| (placing the cutting card as far away from the back of the stack as |
| permitted by the regulations). It is also in the casinos' interest to |
| reshuffle prior to reaching the cutting card when the remaining cards in
a |
| shoe are player-favorable. However, neither of these practices come |
| completely free of cost to the casino: the more often the dealer must |
| undertake the meticulous shuffling process, the shorter the actual time
of |
| play and the smaller the profits. |
| |
| Plaintiffs allege that the casinos maintain their own card-counting |
| teams and/or video and computer surveillance equipment to identify |
| card-counters and inform the dealers of their participation in a
blackjack |
| game so that the dealers can take certain countermeasures against them. |
| Plaintiffs challenge these practices as violations of the "cheating
games" |
| statute which provides that it shall be unlawful "knowingly to deal,
|
| conduct, carry on, operate or expose for play any game or games played |
| with cards . . . which have in any manner been marked or tampered with,
or |
| placed in a condition, or operated in a manner, the result of which tends
|
| to deceive the public or tends to alter the normal random selection of |
| characteristics or the normal chance of the game which could determine or
|
| alter the result of the game." N.J.S.A. 5:12-115. First, they claim
that |
| the identifying process is fundamentally flawed because it tends to |
| unfairly misidentify non-card-counters as card-counters. They claim
casinos |
| define card-counters as (1) any patron who increases a bet during a |
| player-favorable count, or (2) any patron who knows or is related to |
| someone who has increased a bet during a player-favorable count.
According |
| to plaintiffs, once identified, that player is "branded for
life" and never |
| able to play a "fair" game of blackjack without being subjected
to |
| countermeasures. The casinos allegedly share information about suspected |
| card-counters through defendant Griffin Investigations and other similar |
| agencies. These agencies allegedly keep dossiers containing the pictures
of |
| suspected card-counters which casino employees then use to spot |
| card-counters for purposes of knowing when to implement countermeasures. |
| |
| Second, plaintiffs claim that the casinos utilize what they term the |
| "cheating-at-will" preferential shuffle and which, as codified
by the |
| regulations, is generally known as the "shuffle-at-will." The |
| shuffle-at-will occurs when the dealer is instructed to reshuffle prior
to |
| the cut-card marker because the casino card-counting team has determined |
| that the shoe is player-favorable and card-counters are suspected to be |
| playing at a given table. Plaintiffs allege that the shuffle-at-will |
| provides an extra 2% advantage to the casino, nearly double the casinos' |
| normal chance of winning, providing the casinos with a windfall of
millions |
| of dollars. They also claim that the shuffle-at-will can be abused and
used |
| to the disadvantage of non-card-counters because dealers and pit bosses
can |
| use it to increase their revenues even when there is no suspected |
| card-counter playing at a table. Plaintiffs recount specific instances in
|
| which individual plaintiffs allegedly were subjected to shuffling-at-will
|
| by specific defendants throughout the past ten years. On some, but not
all, |
| of these occasions, the individual defendant would report the |
| shuffle-at-will to the CCC and/or Department of Gaming Enforcement
("DGE") |
| official required to be on-site at every casino. According to plaintiffs,
|
| no casino has ever responded to such complaints by admitting to counting |
| cards and shuffling during a player-favorable count. |
| |
| Third, plaintiffs, allegedly because they have been identified as |
| card-counters, complain about being limited to one wager, being refused a
|
| deal, having bets pushed back, being forced to bet below the original |
| posted limit, and having "shills" n4 occupy all seats at tables
at which |
| they wished to play. They allege that they were treated in this manner |
| while other non-card-counting players were not. Fourth, plaintiffs claim |
| that the Casino Defendants denied them "comps" n5 after
identifying them as |
| card-counters. Finally, plaintiffs allege that they have been threatened,
|
| assaulted and stalked because of their suspected card-counter status.
They |
| allege that they have been threatened in person while at the casinos by |
| both known and unknown casino employees and that they have been
threatened |
| and sent pornographic materials over the Internet by unnamed John Does |
| allegedly connected to the casinos. |
| |
| n4 "Shills" are persons used by the casinos to induce potential
patrons |
| to enter a casino or entice potential patrons to play any game. Use of |
| "shills" is specifically prohibited by the Casino Control Act
(the "Act"). |
| N.J.S.A. 5:12-100(1). Plaintiffs misuse the term "shills." In
fact, what |
| they complain about is the use of "anti-shills," persons trying
not to |
| induce players to play a game but instead persons trying to prevent
players |
| from playing a game. |
| |
| n5 "Comps" are complimentary services such as free goods,
drinks, meals, |
| parking, lodging. transportation, and entertainment expenses which
casinos |
| are authorized, but not required, to provide patrons pursuant to N.J.S.A.
|
| 5:12-102(m). |
| |
| B. The Casino Control Act and CCC Regulations |
| |
| The Casino Control Act, N.J.S.A. 5:12-1 et seq. (the "Act"),
gives the |
| CCC comprehensive authority to define and regulate the rules and conduct
of |
| play for blackjack and other authorized casino games. See Uston v.
Resorts |
| Int'l Hotel, Inc., 89 N.J. 163, 169, 445 A.2d 370 (1982) (citing N.J.S.A.
|
| 5:12-70f and 100e); see also Campione v. Adamar of N.J., 302 N.J. Super. |
| 99, 113-14, 694 A.2d 1045 (App. Div. 1997), cert. granted, 152 N.J. 9,
702 |
| A.2d 348 (1997). n6 It also grants the CCC "exclusive
jurisdiction" over |
| the interpretation and enforcement of regulations governing "all
matters |
| delegated to it or within the scope of its powers under the provisions of
|
| [the Act]." N.J.S.A 5:12-133(b); see id. 5:12-69 to 70. Among the
matters |
| that the Act delegates to the CCC are the promulgation of regulations |
| regarding the rules of casino games, including blackjack, id. 5:12-69, |
| 70(f), gambling related advertising, id. 5:12-70(o), and the enforcement
of |
| gaming regulations, including the investigation, adjudication, and |
| punishment of regulatory violations, id. 5:12-63(b), (f), (g); 5:12-64; |
| 5:12-129. |
| |
| n6 Uston and Campione are the seminal cases addressing the battle |
| between the Atlantic City casinos and blackjack card-counters. The New |
| Jersey Supreme Court in Uston determined that the casinos could not
exclude |
| card-counters from their premises, as the CCC had not authorized
exclusion |
| of card-counters. Uston, 89 N.J. at 166, 445 A.2d 370. The Court also
held |
| that the Act gives the CCC exclusive and plenary authority "to set
the |
| rules of licensed casino games, which includes the methods for playing |
| those games." Id. at 166. |
| |
| Campione, which is currently before the New Jersey Supreme Court, |
| addressed many of the same issues raised in this complaint. Specifically,
|
| it dealt with the issue of which countermeasures, short of exclusion, the
|
| casinos could utilize to neutralize the threat posed by card-counters. In
|
| Campione, the plaintiff, Mr. Campione, a skilled card-counter, alleged
that |
| he was treated in a discriminatory manner by the casinos in their |
| implementation of certain CCC regulations. He claimed that Tropworld, the
|
| casino in which he most frequently played blackjack, engaged in practices
|
| of shuffling-at-will, lowering the maximum betting limit and restricting |
| him to playing only one hand. He maintained that Tropworld would allow |
| other players at the same table to bet above the maximum limit, to play |
| more than one hand, and to play against the dealer one-on-one, while |
| prohibiting him from doing the same. More specifically, Campione alleged |
| that on one occasion, he was playing and card-counting at a Tropworld
table |
| with a minimum bet of $25 and a maximum bet of $1000, when he placed a
$350 |
| bet in the betting circle. Immediately, the casino floor supervisor, who |
| was also a member of the casino's card-counting team, instructed the
dealer |
| to change the betting-limit sign. Campione was told that he could bet
only |
| $100, while the other player at the table was told he could bet up to |
| $1000. The dealer began dealing and pushed Campione's money out of the |
| betting circle. Campione pushed his money back into the circle. Play
began |
| and Campione received a ten or an eleven and sought to "double
down" his |
| bet by betting an additional $350. He next received a nine or a ten, |
| winning the hand. The casino payed him only $200, $100 for each of his
two |
| bets, instead of the $700 to which Campione believed he was entitled. A |
| confrontation between Campione and the floor supervisor and the CCC and
DGE |
| representatives ensued, but Campione never received further money. See |
| generally, Campione v. Adamar of N.J., 274 N.J. Super. 63, 643 A.2d 42 |
| ERR |
| |
| The trial court in Campione granted summary judgment to Tropworld as to |
| its right to shuffle-at-will, but allowed Campione's cause of action for |
| discrimination to proceed to trial. Campione, 274 N.J. Super. at 83, 643 |
| A.2d 42. The jury awarded Campione $1,519,873.43. Campione, 302 N.J.
Super. |
| at 102, 694 A.2d 1045. The appellate court reversed the verdict, holding |
| that the claim never should have been heard in court since the CCC has |
| exclusive jurisdiction over claims regarding casino implementation of CCC
|
| regulations and therefore no private right of action existed. Campione,
302 |
| N.J. Super. at 110-18. 694 A.2d 1045. The appellate court also determined
|
| that the actions taken by Tropworld were specifically permitted by the
CCC |
| regulations. Id. at 103. Finally, it found that the CCC authorized the |
| disparate treatment of card-counters. Id. at 110. |
| |
| The Supreme Court granted certification on October 7, 1997. Campione, |
| 152 N.J. 9, 702 A.2d 348 (1997). Briefs were submitted on behalf of the |
| parties and by the CCC and DGE. Oral argument, including comments by the |
| CCC and DGE supporting the practices authorized by the CCC regulations
and |
| used against Campione, was held on March 16, 1998. No opinion has yet
been |
| issued. |
| |
| The regulations governing blackjack are exhaustive and set forth in |
| great detail the rules for the conduct of the game. See N.J.A.C.
19:47-2.1 |
| et seq. As recognized by the New Jersey Supreme Court, "it is no |
| exaggeration to state that the Commission's regulation of blackjack is
more |
| extensive than the entire administrative regulation of many
industries." |
| Uston, 89 N.J. at 169, 445 A.2d 370. The CCC is very aware of the |
| card-counter controversy. As both plaintiffs and defendants have |
| recognized, the CCC has carefully considered and addressed in both
proposed |
| and adopted blackjack regulations the effect card-counters can have on
the |
| game and the ways in which casinos should be permitted to respond to |
| professional card-counters. See, e.g., 14 N.J.R. 467-70 (May 17, 1982);
14 |
| N.J.R. 559-69 (June 7, 1982); 14 N.J.R. 841 (Aug. 2, 1982); 23 N.J.R. |
| 1784(b) (June 3, 1991); 23 N.J.R. 2613(a) (Sept. 3, 1991); 23 N.J.R. 3350
|
| (Nov. 4, 1991); 23 N.J.R. 3354 (Nov. 4, 1991); 25 N.J.R. 3953(a) (Sept.
7, |
| 1993); 25 N.J.R. 5521(a) (Dec. 6, 1993). The CCC regulations authorize
the |
| casinos to use certain countermeasures to prevent professional |
| card-counters from overcoming the statistical advantage that is necessary
|
| to ensure the casinos' financial viability. |
| |
| The adoption of many of the CCC regulations authorizing countermeasures |
| occurred in response to the New Jersey Supreme Court's ruling in Uston v.
|
| Resorts Int'l Hotel, Inc., 89 N.J. 163, 445 A.2d 370 (1982). At issue in |
| Uston was whether or not casinos had the authority to exclude
card-counters |
| from their premises. The Court determined that casinos were not
authorized |
| to exclude card-counters. It reasoned that the Act gave the CCC exclusive
|
| and plenary authority to set the rules and methods of play of casino
games |
| and that the CCC had not authorized exclusion as a countermeasure. Id. at
|
| 166. The Court suggested that, if the CCC wanted to approve measures to |
| neutralize the card-counter threat, regulations to that effect, short of |
| violating possible constitutional and statutory limits by fully excluding
|
| card-counters altogether, could be adopted. Id. at 372, 375-76. In fact, |
| prior to Uston, the CCC had already codified a practice originally not |
| intended as a card-counter countermeasure but eventually used by the |
| casinos for that purpose. This regulation provided that: "[a] casino
|
| licensee may permit a player to wager on more than one box at a Blackjack
|
| table." N.J.A.C. 19:47-2.14. n7 The CCC had been allowing the use of
this |
| practice against card-counters through its approval of casinos' internal |
| Section 99 controls. See N.J.S.A. 5:12-99. n8 The rule specifically
offered |
| casinos' discretion to allow players (usually non-card-counters) to bet
on |
| more than one box, and presumably, in light of the discretionary
language, |
| allowed them not to permit card-counters to bet on more than one box. n9 |
| |
| - n7 This 1978 regulation also provided that the CCC could prohibit a |
| casino from allowing patrons to wager on more than one box at a blackjack
|
| table. The CCC felt it needed this authority, because in 1978 there was |
| only one casino in Atlantic City, and it wanted to ensure that, when the |
| blackjack tables were crowded, as many players as possible were given the
|
| opportunity to play. This language was deleted in 1991. See 23 N.J.R. |
| 1784(a) (June 3, 1991); 23 N.J.R. 2869(b) (Sept. 16, 1991). |
| |
| The Appellate Division in Campione seems to have been under the |
| impression that N.J.A.C. 19:47-2.14, authorizing the casinos to permit a |
| player to wager on more than one box, was also adopted as part of the |
| card-counter countermeasures adopted in 1982 subsequent to the Uston |
| decision. See Campione, 302 N.J. Super. at 103, 694 A.2d 1045. However, |
| N.J.A.C. 19:47-2.14 was adopted well before Uston, and was originally not
|
| intended as a countermeasure despite the fact that eventually it was used
|
| by the casinos for that purpose. |
| |
| n8 Section 99 controls are a broad set of internal practices which
casinos |
| use to implement the CCC regulations in all areas of casino operation. As
|
| part of their Section 99 controls, casinos are required to provide the
CCC |
| with all of the practices they utilize to combat card-counters. If the
CCC |
| determines that any of these practices violate the regulations, it will
not |
| approve the offending casino's Section 99 controls. |
| |
| n9 The CCC's attorneys have taken the position that because the |
| regulation affords the casinos discretion to permit a player to wager on |
| more than one box, they likewise have discretion not to permit a player
to |
| wager on more than one box. See Unofficial Transcript of Oral Argument in
|
| Campione, 152 N.J. 9, 702 A.2d 348, (March 16, 1998), Exh. 6 to Pl. Rule
11 |
| Br.. Although the CCC has never officially ruled on the issue and claims |
| that the regulation was not originally aimed at card-counters, it is
aware |
| of how the regulation is used and it has left the regulation in place.
See |
| id. Similarly, the CCC approves the casinos' internal Section 99 controls
|
| which permit casinos to allow one player to wager on more than one box
but |
| to prohibit another player from so doing. See id. at 15; CCC Br. to New |
| Jersey Supreme Court in Campione, Exh. H to Casino Defendants Reply Br.
at |
| 6 |
| |
| After Uston, the CCC held a series of hearings on the issue of |
| card-counters and decided to enact regulations authorizing certain
measures |
| casinos could use to neutralize the potential negative effect
card-counters |
| could have on their financial viability. See Campione, 302 N.J. Super. at
|
| 103, 694 A.2d 1045. The new regulations, which the New Jersey Supreme
Court |
| urged the CCC to adopt in lieu of allowing the casinos to exclude |
| card-counters, balanced the statutory goals of casino viability and fair |
| odds to all players, N.J.S.A. 5:12-100e, and were intended to ensure both
|
| the fairness and integrity of casino gambling and "the right of the
casinos |
| to have the rules drawn so as to allow some reasonable profit."
Uston, 89 |
| N.J. at 175, 445 A.2d 370; see, e.g., 14 N.J.R. 560-61 (June 7, 1982); 23
|
| N.J.R. 1784 (June 3, 1991). |
| |
| Several of these countermeasures involved the manner in which casinos |
| could shuffle the blackjack cards. The first approved shuffling method
was |
| known as the "Bart Carter Shuffle," a "shuffling procedure
in which |
| approximately one deck of cards is shuffled after being dealt, segregated
|
| into separate stacks and each stack is inserted into premarked locations |
| within the remaining decks contained in the dealing shoe." N.J.A.C. |
| 19:47-2.1; see N.J.R. 559(b) (June 7, 1982); 14 N.J.R. 841(b) (Aug. 2, |
| 1982). Another approved shuffling countermeasure, known as the |
| "shuffle-at-will," was approved by the CCC to allow the casinos
to shuffle |
| after any round of play. The CCC amended the existing shuffle regulation
by |
| adding language regarding the casinos' ability to shuffle "after any
round |
| of play:" |
| |
| (a) Immediately prior to commencement of play, after any round of play as
|
| may be determined by the casino licensee and after each shoe of cards is |
| dealt, the dealer shall shuffle the cards so that they are randomly |
| intermixed. . . |
| |
| (h) A reshuffle of the cards in the shoe shall take place after the |
| cutting card is reached in the shoe . . . except that: |
| |
| 1. The casino licensee may determine after each round of play that the |
| cards should be reshuffled; |
| |
| 2. When the "Bart Carter Shuffle" is utilized a reshuffle shall
take |
| place after the cards in the discard rack exceed approximately one deck
in |
| number. |
| |
| N.J.A.C. 19:47-2.5 (emphasis added); see 14 N.J.R. 559(b) (June 7, 1982),
|
| 14 N.J.R. 841(b) (Aug. 2, 1982). |
| |
| Finally, the use of a device known as the continuous shuffling shoe was |
| approved: |
| |
| In lieu of the dealing and shuffling requirements set forth in N.J.A.C. |
| 19:47-2.5 and 2.6, a casino licensee may utilize a dealing shoe or other |
| device designed to automatically reshuffle the cards provided that such |
| shoe or device and the procedures for dealing and shuffling the cards |
| through the use of this device are approved by the Commission or its |
| authorized designee. |
| |
| N.J.A.C. 19:47-2.20; see 14 N.J.R. 559(b) (June 7, 1982), 14 N.J.R.
841(b) |
| (Aug. 2, 1982). |
| |
| The shuffling regulations, particularly the most commonly used |
| shuffle-at-will, enabled the casinos to lessen the card-counters' ability
|
| to determine whether cards remaining in the shoe were player-favorable.
As |
| already noted, when the cards are reshuffled continuously or prior to |
| reaching the cutting-card, card-counters lose their potential advantage |
| over the casinos because they can no longer begin betting high wagers
only |
| when they know their chances of receiving player-favorable cards have
been |
| increased. Though effective against card-counters, the use of these |
| shuffling regulations increases shuffling time and thereby causes the |
| casinos to lose revenue. |
| |
| The CCC also authorized one non-shuffling countermeasure after the Uston |
| decision -- an increase in the number of decks casinos were allowed to
use |
| in blackjack play. N.J.A.C. 19:47-2.2. This helped the casinos combat |
| card-counters by increasing the number of cards card-counters would have
to |
| be able to track in order to determine whether a shoe was
player-favorable. |
| |
| |
| After these initial countermeasures were authorized, the CCC in 1991 |
| approved another regulation which provided that: |
| |
| a casino licensee may at any time change the permissible minimum or |
| maximum wager at a table game, without notifying the Commission of such |
| change, upon posting a sign at the gaming table advising patrons of the
new |
| permissible minimum or maximum wager and announcing the change to patrons
|
| who are at the table. |
| |
| N.J.A.C. 19:47-8.3(c); see 23 N.J.R. 1784(b) (June 3, 1991); 23 N.J.R. |
| 2613(a) (Sept. 3, 1991); 23 N.J.R. 3350(a) (Nov. 4, 1991); 23 N.J.R. |
| 3354(c) (Nov. 4, 1991). This gave the casinos the ability to
automatically |
| lower the betting limit whenever it identified a card-counter playing at |
| one of its tables so that the card-counter would not be able to bet high |
| when the shoe became player-favorable. Then, in 1993, one further
addition |
| was made: |
| |
| (b) A casino licensee may offer: |
| |
| 1. Different maximum wagers at one gaming table for each permissible |
| wager in an authorized game; and |
| |
| 2. Different maximum wagers at different gaming tables for each |
| permissible wager in an authorized game. |
| (c) A casino licensee shall provide notice of the minimum and maximum |
| wagers in effect at each gaming table, and any changes thereto, in |
| accordance with N.J.A.C. 19:47-8.3. |
| (d) Any wager accepted by a dealer which is in excess of the established |
| maximum permitted wager at that gaming table shall be paid or lost in its
|
| entirety in accordance with the rules of the game, notwithstanding that
the |
| wage exceeded the current table maximum. |
| |
| N.J.A.C. 19:47-8.2(b)-(d); see 25 N.J.R. 3953(a) (Sept. 7, 1993); 25 |
| N.J.R. 5521(a) (Dec. 6, 1993). This regulation clarified that the casinos
|
| could specifically limit the wagers of only those patrons identified as |
| card-counters, while permitting non-card-counters to continue betting at |
| higher limits. |
| |
| The New Jersey courts have recognized the legality of the CCC-authorized |
| countermeasures. In particular, they have recognized that the practice of
|
| "shuffling at will," the central concern of plaintiffs' 157
page complaint, |
| is authorized by the CCC regulations, N.J.A.C. 19:47-2.5, and affects all
|
| patrons, even those not counting cards, at a blackjack table. See
Campione, |
| 274 N.J. Super. 63, 79-80, 643 A.2d 42 (Law Div. 1993), rev'd, 302 N.J. |
| Super. 99, 694 A.2d 1045 (App. Div. 1997), cert. granted, 152 N.J. 9, 702
|
| A.2d 348. Further, the Appellate Division in Campione, 302 N.J. Super. at
|
| 110, 694 A.2d 1045, found that the CCC "authorizes the disparate
treatment |
| of card-counters." It noted that the countermeasures allowing
betting |
| limits and permitting casinos to vary the number of boxes which
particular |
| players can wager on have all been approved by the CCC. Id. at 103. Most |
| important, the Appellate Division ruled that "there is no private
cause of |
| action against a casino for its alleged violation of [CCC] regulations |
| governing the manner in which games are played." Id. at 118. Even
prior to |
| the Campione ruling, this Court had suggested in a footnote that no cause
|
| of action exists against casinos for alleged violations of the Act or CCC
|
| regulations. Tose v. Greate Bay Hotel and Casino Inc., 819 F. Supp. 1312,
|
| 1316-17 n.8 (D.N.J. 1993), aff'd, 34 F.3d 1227 (3d Cir. 1994). The Third |
| Circuit has subsequently agreed with our view, holding in Hakimoglu v. |
| Trump Taj Mahal Associates, 70 F.3d 291, 293-94 (3d Cir. 1995), what we |
| suggested in Tose: that where the Act and CCC regulations do not
expressly |
| authorize imposing liability on a casino for conduct clearly within the |
| ambit of the detailed casino regulations, no private cause of action |
| exists. |
| |
| B. CCC Complaint Mechanism |
| |
| The CCC's regulatory enforcement powers include the authority to receive |
| complaints about violations of CCC regulations, to investigate such |
| complaints, and to hold hearings. N.J.S.A. 5:12-63(b), (f), (g); id. |
| 5:12-66. The CCC also has the power to penalize casinos for regulatory |
| violations by issuing reprimands, imposing monetary civil penalties, and |
| even revoking licenses. Id. 5:12-64 to 129. The CCC can also require a |
| casino to make restitution to a complainant. Id. 5:12-129(6). If, at the |
| end of this enforcement process, a complainant is not satisfied, the |
| complainant may appeal the CCC's determination to the Appellate Division.
|
| Id. 52:14B-12. |
| |
| C. Lawyer Defendants |
| |
| The Lawyer Defendants gave plaintiffs varying degrees of advice with |
| respect to the claims alleged in this complaint and possible other claims
|
| related to the same set of facts. Plaintiffs now allege malpractice
claims, |
| essentially stemming from the loss of potential claims due to various |
| statutes of limitations. They also assert claims against the Quinne,
Dunne, |
| Dailey & Higgins defendants for failure to assist plaintiffs in
receiving a |
| portion of the judgment in the test case of Campione, n10 with which |
| plaintiffs allege they were associated. |
| |
| n10 As noted earlier, see supra note 6, the verdict in Campione was |
| reversed by the Appellate Division, 302 N.J. Super. 99, 694 A.2d 1045,
and |
| is currently pending before the Supreme Court. |
| |
| D. Procedural History |
| |
| Plaintiffs initiated this action by filing a 74-page single-spaced |
| complaint in the Superior Court of New Jersey, Middlesex County, on July |
| 18, 1997. On August 6, 1997, plaintiffs filed a petition with the CCC |
| setting forth the identical claims. By letter dated August 20, 1997, the |
| CCC responded that no action would be taken on plaintiffs' petition
pending |
| the New Jersey Supreme Court's consideration of the Petition for |
| Certification in Campione. See Campione, 302 N.J. Super 99, 694 A.2d
1045, |
| cert. granted, 152 N.J. 9, 702 A.2d 348. On August 28, 1997, defendants |
| removed the case to this Court. |
| |
| Prior to the initial scheduling conference, counsel for the Casino |
| Defendants met with plaintiffs' counsel in an effort to narrow the issues
|
| raised in the complaint. That effort was formalized as part of the |
| Management Order issued by Magistrate Judge Joel B. Rosen on November 6, |
| 1997. As directed by that order, the defendants provided plaintiffs with
a |
| letter, dated November 6, 1997, describing their position as to why the |
| complaint should be withdrawn ("Rule 11 Letter"). In response,
plaintiffs |
| filed a 157-page one-and-a-half spaced amended complaint [hereinafter |
| "complaint"], which omitted the antitrust, Fair Credit
Reporting Act, and |
| Consumer Fraud Act n11 claims contained in the original complaint but
added |
| several constitutional and civil rights claims as well as allegations |
| regarding the transmission of threatening and pornographic messages over |
| the Internet. |
| |
| n11 In their reply brief, plaintiffs, without leave of court, reassert |
| their Consumer Fraud Act claim. |
| |
| |
| |
| II. DISCUSSION |
| |
| A. Standard of Review |
| |
| Fed. R. Civ. P. 12(b)(6) provides that a court may dismiss a complaint |
| "for failure to state a claim upon which relief can be
granted." In |
| considering a Rule 12(b)(6) motion, the court will accept the allegations
|
| of the complaint as true. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed.
|
| 2d 90, 94 S. Ct. 1683 (1974). Dismissal of claims under Fed. R. Civ. P. |
| 12(b)(6) should be granted only if "it appears beyond doubt that the
|
| plaintiff can prove no set of facts in support of his claim which would |
| entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L.
Ed. 2d |
| 80, 78 S. Ct. 99 (1957). Although the court must assume as true all facts
|
| alleged, "it is not . . . proper to assume that the [plaintiff] can
prove |
| any facts that it has not alleged." Associated General Contractors
of |
| Calif., Inc., v. California State Council of Carpenters, 459 U.S. 519,
526, |
| 74 L. Ed. 2d 723, 103 S. Ct. 897 (1983). Finally, when "confronted
with [a |
| 12(b)(6)] motion, the court must review the allegations of fact contained
|
| in the complaint; for this purpose the court does not consider conclusory
|
| recitations of law." Commonwealth of Pennsylvania v. Pepsico, Inc.,
836 |
| F.2d 173, 179 (3d Cir. 1988) (emphasis added). |
| |
| B. Fed. R. Civ. P. 8(a) |
| |
| Fed. R. Civ. P. 8(a) provides that "[a] pleading which sets forth a |
| claim for relief . . . shall contain . . . a short and plain statement of
|
| the claim showing that the pleader is entitled to relief." Fed. R.
Civ. P. |
| 8(a). All the Rule requires is a short and plain statement of the claim |
| that will give the defendants fair notice of what the plaintiff's claim
is |
| and the grounds upon which it rests. Leatherman v. Tarrant County
Narcotics |
| Intelligence and Coordination Unit, 507 U.S. 163, 168, 122 L. Ed. 2d 517,
|
| 113 S. Ct. 1160 (1993). |
| |
| Tipping the scales at nearly 157 pages, the complaint hardly comports |
| with principles of brevity. As this Court has previously noted, "the
length |
| of the Complaint might not be deserving of criticism were all of it |
| necessary." See Simmerman v. Corino, 804 F. Supp. 644, 648 (D.N.J.
1992), |
| aff'd, 16 F.3d 405 (3d Cir. 1993). In addition to being overly long, the |
| complaint is inconsistent and confusing, causing this Court to expend
much |
| valuable time in an effort to discern its meaning. While the allegations |
| regarding the so-called "cheating-at-will" preferential shuffle
are very |
| specific and repetitive, the legal basis for this claim "seems to
float |
| free from its moorings and drift into a swirl of dramatic" and
largely |
| irrelevant contentions of perceived violations of the CCC regulations.
Id. |
| On the other hand, the allegations that defendants violated plaintiffs' |
| constitutional rights, statutory civil rights, and various common law
tort |
| principles are vague, ambiguous and clearly insufficient to provide
proper |
| notice to allow defendants to adequately respond to the complaint and |
| prepare for trial. There is a strong argument that portions of the |
| complaint fail to comply with the strictures of Fed. R. Civ. P. 8(a) and |
| might afford this Court a sufficient basis for dismissal. n12 However, a |
| dismissal without prejudice under Fed. R. Civ. P. 8(a) would only lead to
a |
| new filing and needlessly increase the amount of time and money already |
| expended. Thus, the Court will plunge into the complaint's
"Serbonian Bog" |
| n13 and deal with the pending Fed. R. Civ. P. 12(b)(6) motions on the |
| merits. |
| |
| n12 The heart of plaintiffs' case is whether the Act authorizes the CCC |
| to adopt the four or five countermeasures used by the casinos to
frustrate |
| card-counters, particularly the countermeasures which treat card-counters
|
| differently from other blackjack players. These could have been placed at
|
| issue in a clearly drafted complaint of no more than ten to fifteen
pages. |
| |
| n13 John Milton, Paradise Lost, Bk. II, lines 591-94; see also Eugene M. |
| Haring, Drug Abuse and Accidental Death Benefits: Hard Drugs and Hard |
| Cases, 8 FORUM 45 n. 17 (1972). |
| |
| Plaintiffs' wide-ranging and often diverse claims in the complaint |
| naturally fall into two categories: those based on alleged violations of |
| the CCC regulations and those based on unrelated and separable state
common |
| law claims such as personal injury, invasion of privacy, defamation, and |
| attorney malpractice. Our original jurisdiction over this matter is based
|
| entirely upon federal questions raised in some of those claims based on |
| alleged violations of the CCC regulations. The CCC regulation claims are
in |
| the First, Second, Third, Fifth, Sixth, Seventh Counts and in a claim not
|
| included in the complaint which plaintiffs now seek leave to add. The |
| remaining claims, although claimed to be within our supplemental |
| jurisdiction pursuant to 28 U.S.C. § 1367(a), are separable from the CCC
|
| regulation claims if they do not arise from a common nucleus of operative
|
| fact and thus fail to form part of the same case or controversy for |
| purposes of supplemental jurisdiction. 28 U.S.C. § 1367(a); see United
Mine |
| Workers v. Gibbs, 383 U.S. 715, 725-26, 16 L. Ed. 2d 218, 86 S. Ct. 1130 |
| 1966 |
| 405 (3d Cir. 1993). Under 28 U.S.C. § 1367(c)(3), we also have
discretion |
| to decline jurisdiction over any and all pendent state law claims once
all |
| federal claims have been dismissed. See Ehrich v. B.A.T. Indus. P.L.C.,
964 |
| F. Supp. 164 (D.N.J. 1997) (once federal RICO claim was dismissed,
district |
| court declined supplemental jurisdiction over state common law fraud,
civil |
| conspiracy, negligence and negligent misrepresentation claims); Ifert v. |
| Miller, 138 B.R. 159 (E.D. Pa. 1992) (once federal RICO claim was |
| dismissed, district court declined supplemental jurisdiction over state |
| common law contract, fraud, and tortious interference claims), aff'd 981 |
| F.2d 1247 (3d Cir. 1993); Freund v. Florio, 795 F. Supp. 702 (D.N.J.
1992) |
| (once Fourteenth Amendment challenges were dismissed, district court
would |
| not retain supplemental jurisdiction over pendent claims under New Jersey
|
| Constitution). Because our ability to adjudicate plaintiffs' complaint |
| hinges on the survival of the CCC regulation claims, we must first
address |
| the merits of these claims. We will then consider whether we should
decline |
| to exercise supplemental jurisdiction over the marginally-related state
law |
| claims contained in the Eighth, Ninth, Tenth and Eleventh Counts and the |
| malpractice claims against the Lawyer Defendants. |
| |
| C. RICO Claims |
| |
| Plaintiffs' First Count alleges claims for racketeering under federal |
| RICO, 18 U.S.C. § 1964(c), New Jersey RICO, N.J.S.A. 2C:41-4(c), and the
|
| Act RICO. N.J.S.A. 5:12-127(c). As defendants point out, the predicate
acts |
| of alleged racketeering on which plaintiffs' RICO claims are based
consist |
| almost exclusively of the use of countermeasures or alleged violations of
|
| other CCC regulations. In order to make out a RICO claim, plaintiffs
first |
| must show predicate criminal acts undertaken by the defendants which are |
| prohibited by the RICO statute at issue. See, e.g., 18 U.S.C. § 1961,
1962. |
| Plaintiffs claim the Casino Defendants committed the following predicate |
| acts: shuffling-at-will when the count was player-favorable, using
computer |
| and video technology to assist in counting cards and identifying |
| card-counters, denying comps to plaintiffs, using shills, limiting |
| plaintiffs to one hand of blackjack at a time, and lowering betting
limits. |
| Based on the premise that these uses of authorized countermeasures and |
| other alleged regulatory violations are criminal acts, plaintiffs' |
| complaint alleges that the casinos' operation of blackjack violates |
| criminal statutes regarding unlawful debt collection, transmission of |
| gambling information, operation of illegal gambling business, and |
| interstate commerce for an unlawful activity. |
| |
| The primary purported predicate act is the shuffling of cards when the |
| count is favorable to the player, an act which several courts, including |
| this Court, have held is legal. See Hyland v. Griffin Investigation, Civ.
|
| A. No. 95-223 (1996), Exh. A to Casino Defendants Br. The complaint
alleges |
| that use of the "shuffling-at-will" countermeasure constitutes
a predicate |
| act of racketeering because it violates the criminal casino
"cheating" |
| statute, N.J.S.A. 5:12-115. The trial court in Campione rejected this |
| precise claim. Campione, 274 N.J. Super. at 80, 643 A.2d 42
("labeling of |
| the shuffling at will as 'cheating' is specious"). We agreed with
the trial |
| court's Campione holding in our opinion in Hyland. See Hyland, Civ. A.
No. |
| 95-223, at 19-20. Moreover, the language of the regulation itself makes |
| clear that the casino may shuffle at the conclusion of any round of play,
|
| at its discretion: |
| |
| (a) Immediately prior to commencement of play, after any round of play as
|
| may be determined by the casino licensee and after each shoe of cards is |
| dealt, the dealer shall shuffle the cards so that they are randomly |
| intermixed. |
| |
| (h) A reshuffle of the cards in the shoe shall take place after the |
| cutting card is reached in the shoe as provided in N.J.A.C. 19:47-2.6(1) |
| except that: 1. The casino licensee may determine after each round of
play |
| that the cards shall be reshuffled. |
| |
| N.J.A.C. 19:47-2.5(a), (h) (emphasis added). |
| |
| Plaintiffs attempt at length to skew the logical interpretation of this |
| statute and the relevant regulatory history leading to its passage in
order |
| to convince us that the CCC has authorized only a "random
shuffle-at-will." |
| n14 As the Casino Defendants point out, plaintiff' suggestion of the |
| "random shuffle-at-will" is an oxymoron, one which the CCC
never intended |
| to impose on the casinos. |
| |
| - n14 Not only have plaintiffs devoted a large portion of their brief in |
| opposition to the Fed. R. Civ. P. 12(b)(6) motions to attempt to negate
the |
| plain language of the shuffle-at-will regulations by parsing regulatory
and |
| legislative history, but recently they have requested in their brief in |
| response to the defendants' Rule 11 motions that this Court consider
three |
| new events they claim support their proposition that the CCC never |
| authorized the shuffle-at-will. They now claim that comments made by the |
| CCC and DGE during the course of various recent legal proceedings support
|
| their position. They rely on (1) CCC and DGE comments made during oral |
| argument before the New Jersey Supreme Court in Campione, Unofficial |
| Transcript of Oral Argument in Campione, 152 N.J. 9, 702 A.2d 348, (March
|
| 16, 1998), Exh. 6 to Pl. Rule 11 Br., (2) comments made by the CCC in a |
| motion to dismiss an appeal taken by one of the plaintiffs to the New |
| Jersey Appellate Division appealing a CCC letter stating that a casino
had |
| not violated any regulation by shuffling-at-will, In re: Patron Complaint
|
| P98-0222 (Karen Dwyer), Exh. 8 to Pl. Rule 11 Br., and (3) a letter
written |
| by a CCC legal analyst which states that shuffling-at-will is permitted
by |
| the CCC regulations but that the CCC has no regulations addressing the |
| so-called "preferential shuffle." Letter from CCC Legal Analyst
Kenneth |
| Doss to Martin Rose re: Patron Complaint P98-0299 (March 27, 1998), Exh.
9 |
| to Pl. Rule 11 Br., While we are unable to determine from the documents |
| submitted by the plaintiffs whether or not comments made by outside
counsel |
| and an in-house legal analyst reflect official positions held by the CCC
or |
| DGE (in fact the CCC legal analyst's letter explicitly states that |
| opinions set forth herein are those of the Commission staff and are not |
| binding upon the Commission"), we are not at all persuaded by
plaintiffs' |
| view of the import of these various isolated comments. We feel that, if |
| anything, the comments support our view of the shuffle-at-will
regulations. |
| |
| The regulatory history makes clear that the CCC is fully aware and
approves |
| of the practice of shuffling-at-will when there is a player-favorable
count |
| as a countermeasure against card-counters. When the CCC published the |
| proposal to allow the casinos to shuffle-at-will, it noted that the
casinos |
| might shuffle when the count is favorable and that this practice might |
| affect the odds of the game: |
| |
| The economic impact of this proposed amendment would vary depending on |
| when in fact the cards were shuffled. For example, if the cards were
always |
| shuffled after the first round of play regardless of the point count,
then |
| the casino advantage against the basic strategy player and average player
|
| would probably remain the same with the advantage enjoyed by the |
| card-counter being decreased. If the cards, however, were only shuffled
in |
| positive point count situations and not in negative point count
situations, |
| the casino advantage against all types of players would increase. |
| |
| 14 N.J.R. 470 (May 17, 1982). |
| |
| Furthermore, the regulatory history which plaintiffs painstakingly cite |
| as support for their position that the CCC did not authorize the |
| shuffle-at-will as a countermeasure does not prove what they would like
it |
| to prove. Plaintiffs rely on comments made during hearings on the
proposed |
| shuffle-at-will which explore possible disadvantages of the
shuffle-at-will |
| without acknowledging that, these disadvantages notwithstanding, the CCC |
| decided that the shuffle-at- will was the best alternative to neutralize |
| the threat posed by card-counters. The recent brief filed as the official
|
| CCC position before the New Jersey Supreme Court in the Campione case |
| further demonstrates the CCC's unequivocal acceptance of the |
| shuffle-at-will, as well as the other countermeasures plaintiffs allege |
| constitute predicate acts. In their brief, the CCC specifically states
"the |
| practice of 'shuffling-at-will' is authorized by Commission regulations
at |
| N.J.A.C. 19:47-2.5 and affects all patrons at a blackjack table."
CCC Brief |
| at 5, Exh. H to Casino Def. Reply Br. The CCC brief continues: |
| |
| The Commission accords to casino licensees the discretion to permit a |
| player to wager on more than one "box" or place at a table.
N.J.A.C. |
| 19:47-2.14. The Commission has also approved internal control
submissions, |
| filed by casino licensees pursuant to N.J.S.A. 5:12-99, which give casino
|
| licensees the discretion to permit a player to exceed the wager limit at
a |
| table. No Commission regulation requires that these measures be applied
on |
| a table-wide basis, nor has the Commission otherwise required such |
| application of these rules. These rules balance the statutory goals of |
| casino vitality and fair odds to all players, N.J.S.A. 5:12-100e, and
must |
| consider both the fairness and integrity of casino gaming and the
"right of |
| the casinos to have the rules drawn so as to allow some reasonable
profit." |
| |
| Id. at 5-6 (quoting Uston, 89 N.J. at 175, 445 A.2d 370). Plaintiffs |
| simply cannot claim as predicate acts those practices clearly authorized
by |
| the CCC. |
| |
| Plaintiffs' other alleged predicate acts are similarly insufficient to |
| support a RICO claim. The alleged violations of criminal statutes
regarding |
| unlawful debt collection, 18 U.S.C. § 1962, transmission of gambling |
| information, 18 U.S.C. § 1084, interference with commerce by threats or |
| violence, 18 U.S.C. § 1951, interstate commerce for unlawful activity,
18 |
| U.S.C. § 1952, and operating an illegal gambling business, 18 U.S.C. § |
| 1955, all derive from the allegations regarding the use of authorized |
| countermeasures and other alleged violations of the CCC regulations. Any |
| debts allegedly "unlawfully collected" are those lost by
plaintiffs during |
| blackjack games played in accordance with the CCC regulations. Any
"illegal |
| gambling business" or "unlawful activity in interstate
commerce" is simply |
| the play of blackjack as authorized by the CCC. Similarly, the casinos do
|
| not engage "in unlawful activity" or "operating an illegal
gambling |
| business" by not offering plaintiffs "comps," which are
free gifts casinos |
| have absolutely no obligation to offer. These activities do not
constitute |
| crimes and therefore are not predicate acts. Furthermore, plaintiffs, |
| although mentioning the use of "shills" in their complaint, n15
have not |
| made any allegations that the casinos violate the statutory prohibition
of |
| the use of "shills," persons who induce potential patrons to
enter a casino |
| or induce them to play any game. N.J.S.A. 2:15-100(1). Thus, plaintiffs' |
| "shills" allegation likewise fails to state a predicate act. |
| |
| n15 As noted earlier, see supra note 4, plaintiffs' complaints about |
| "shills" are really complaints about the alleged use of
"anti-shills." |
| |
| The only alleged predicate acts that are not based on CCC regulations are
|
| the allegations of assaults, threats, and stalking in person and via the |
| Internet. Plaintiffs allege that one plaintiff was knocked off his seat
on |
| one occasion, that some plaintiffs were followed around casinos, and that
|
| one plaintiff was grabbed by the arm while being escorted out of a
casino. |
| However, these minor altercations do not constitute crimes and therefore |
| are not predicate acts. Nor do the plaintiffs' claims of receiving |
| anonymous pornographic, offensive and threatening messages over the |
| Internet from John Doe defendants constitute predicate acts as plaintiffs
|
| put forth no basis for alleging that the messages were sent by anyone |
| associated with the Casino Defendants. |
| |
| Plaintiffs have also not alleged a compensable injury to "business
or |
| property" within the meaning of the RICO statutes. In order to state
a |
| claim under RICO, a plaintiff must allege an injury to "business or |
| property" that is proximately caused by the RICO violation. 18
U.S.C. § |
| 1964(c). Injury to "business or property" requires a
"concrete financial |
| loss, and not mere 'injury to a valuable intangible property
interest.'" |
| Steele v. Hosp. Corp. of America, 36 F.3d 69, 70 (9th Cir. 1994). A lost |
| opportunity to obtain a financial benefit is too speculative to
constitute |
| an injury to business or property under RICO. Anderson v. Kutak, Rock and
|
| Campbell, 51 F.3d 518, 522 (5th Cir. 1995). A plaintiff must allege |
| present, actual damages, not speculative claims of lost future |
| opportunities. Id. at 522-23; Steele, 36 F.3d at 70-71. In addition, |
| personal injuries are not compensable under RICO. Genty v. Resolution
Trust |
| Corp., 937 F.2d 899, 918-19 (3d Cir. 1991). |
| |
| The only injuries plaintiffs have identified in connection with their |
| RICO claims are (1) the closing of card-counting schools and mock
casinos, |
| and (2) the loss of gambling income. The alleged closure of the |
| card-counting schools and mock casinos might have constituted compensable
|
| injury for those plaintiffs involved in them if these alleged injuries
had |
| occurred within the four-year statute of limitations applicable to civil |
| RICO claims. Klehr v. A.O. Smith Corp., 138 L. Ed. 2d 373, 117 S. Ct.
1984 |
| (1997). However, as the schools were closed in 1992, the plaintiffs' RICO
|
| claim based on this predicate act is time-barred. Plaintiffs' alleged
loss |
| of tens of millions of dollars n16 in gambling income is far too |
| speculative to constitute compensable injury to business or property. The
|
| loss of an opportunity to gamble under favorable conditions does not |
| constitute injury to business since plaintiffs are not, and do not so |
| allege in their complaint, in the "business" of gambling. It
also does not |
| constitute injury to "property" since there is no property
right in the |
| opportunity to gamble under any circumstances. let alone under favorable |
| conditions. In addition, any such loss is far too speculative to be |
| compensable, see Anderson, 51 F.3d at 522-23; Steele, 36 F.3d at 70-71, |
| especially since the complaint itself acknowledges that there are
numerous |
| authorized countermeasures that the casinos can properly use to
completely |
| eliminate any possible advantage a card-counter might be able to obtain. |
| Finally, most of the plaintiffs allegedly ceased card-counting prior to
the |
| four-year statute of limitations. Thus, plaintiffs RICO claims fail
because |
| they have not shown any predicate acts or any injury to
"business" or |
| "property." Accordingly, we will dismiss them under Rule
12(b)(6) for |
| failure to state a claim upon which relief may be granted. |
| |
| n16 In their RICO count, plaintiffs allege an injury to business or |
| property in their loss of tens of millions of dollars in lost gambling |
| income. Compl. at P 276. Later, plaintiffs make a claim for nearly two |
| hundred and fifty million dollars, claiming "an extremely
conservative and |
| mathematically provable estimate of minimum losses... over the last six |
| years amounting to $248,000,000." Id. at P 283. Factoring in the
alleged |
| value of lost comps, they claim the loss rises to $347,532,800. One |
| paragraph of plaintiffs' complaint alleges that during a cooperative
effort |
| from June 1989 to May 1990, participating plaintiffs, betting an average
of |
| $400 per hand, made average daily wagers of approximately $5,760,000 per |
| day. It then alleges that use of shuffling-at will by the casinos
resulted |
| in lost income of $115,000 per day (based on two shifts of 30 players |
| playing four hours per shift, making an average of 60 wagers per hour at |
| $4000 per wager and 2% additional casino advantage over the normal chance
|
| of the game as a result of the shuffle-at-will). If the casinos were not |
| entitled to use the shuffle-at-will, plaintiffs claim they would have
won, |
| during this 11-month period of alleged daily playing by 30 players, |
| approximately $37,950,000. If only 30 card-counters could cause this much
|
