Wednesday, August 21, 2002
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Ninth Circuit Rejects RICO Suits Against Trading Card Manufacturers, Professional Sports Leagues
By a MetNews Staff Writer
A group of suits targeting a popular technique for marketing sports and other trading cards as a violation of the Racketeer Influenced and Corrupt Organizations Act was rejected yesterday by the Ninth U.S. Circuit Court of Appeals.
A three-judge panel affirmed orders by U.S. District Judge Rudi Brewster of the Southern District of California dismissing eight suits in which the plaintiffs-parents of some of the industry’s young customers alleged that the random inclusion of “chase” or “insert” cards into sealed packages encourages children to gamble, in violation of state laws.
Similar suits have been filed around the around the country seeking to recover damages allegedly caused by the sale of packs containing chase or insert cards. Cases have been filed in various jurisdictions since 1996-chase card marketing became popular about eight years ago-but apparently none have succeeded.
One of those cases was thrown out by the Fifth Circuit in 1998, and another by a judge of the U.S. District Court for the Eastern District of New York, the ruling in each case being that the plaintiffs suffered no RICO injury. The Ninth Circuit panel yesterday reached the same conclusion, saying the purchaser gets precisely what he or she bargains for, an assortment of cards that may or may not include the inserts.
Seven of the suits heard by Brewster involved sports cards, and the eighth involved the card game Pokemon.
Chase cards generally depict highly popular players or game pieces and are printed in limited quantities and randomly inserted in sealed packages. Trading cards are normally printed as full sheets of cardstock containing every card of a particular set or series before being cut and sorted, so that each card has an equal chance of showing up in a particular pack.
The chase card can usually be resold for many times the cost of the pack that it came in, which the plaintiffs say makes buying the cards an illegal game of chance. The odds of obtaining the special cards—or “insertion rates” as the industry prefers to call them—are routinely advertised on the packages and in promotional literature.
Defendants in the cases included all of the major trading card manufacturers, the licensing arms of professional baseball, football, basketball and ice hockey, and the players’ unions for those sports. The plaintiffs alleged that the leagues, teams, and players assist the illegal operation by accepting royalties for the use of their names, likenesses, and logos.
Brewster agreed with the plaintiffs that the marketing technique is illegal, at least in New York and California, where most of the sales alleged in the complaints took place. But he held that since the buyer receives cards having some value, along with the psychological benefits of going through the pack searching for the chase card, there is no injury to the buyer’s “business or property” and thus no RICO violation.
Senior Judge Edward Leavy wrote for the Ninth Circuit:
“We agree with...the district court, and with all other courts that have considered this issue. Purchasers of trading cards do not suffer an injury cognizable under RICO when they do not receive an insert card. At the time the plaintiffs purchased the package of cards, which is the time the value of the package should be determined, they receivedvalue—eight or ten cards, one of which might be an insert card—for what they paid as a purchase price. Their disappointment upon not finding an insert card in the package is not an injury to property.”
Judges Thomas G. Nelson and William A. Fletcher concurred.
The case is Chaset v. Fleer/Skybox International, LP, 00-56251.
Copyright 2002, Metropolitan News Company