Wednesday, February 22, 2017
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Court of Appeal Upholds Dismissal of Suit by Poker Players
Two Plaintiffs Claimed Full Tilt Poker Used ‘Bots’ to Cheat
By KENNETH OFGANG, Staff Writer
The Court of Appeal for this district yesterday affirmed dismissal of a suit by a pair of poker players who claim they were mistreated by an operator of online poker games.
Div. Seven, in an unpublished opinion by Los Angeles Superior Court Judge Virginia Keeny, sitting on assignment, held that Los Angeles Superior Court Judge Elizabeth White did not abuse her discretion in dismissing the action by Lary Kennedy and Greg Omotoy for failure to prosecute.
Kennedy, a professional player, and Omotoy sued Full Tilt Poker; its then-parent company Tiltware, LLC; its then-chief executive, Raymond Bitar; and a number of others, including prominent professional players associated with the company, in 2009.
The original complaint included fraud and racketeering causes of action; the plaintiffs accused the defendants of making false promises in order to induce them to play. The alleged falsehoods included assertions that the defendants’ operations did not include gambling, that it did not allow computer “robots,” or bots, to play; and that players are treated “fairly and consistently in accordance with the highest standards of the poker community.”
Kennedy also pled a cause of action for defamation, saying she had been falsely accused of using a robot of her own and that $80,000 had been confiscated from her account based on the accusation.
The plaintiffs also sought restitution to themselves and all similarly situated players under the Unfair Competition Law.
Removal to Federal Court
The case was removed to federal district court, where the judge eventually dismissed the racketeering claim without prejudice for failure to state a cause of action, declined to exercise supplemental jurisdiction, and remanded the case to the state court, where the defendants demurred to the then-operative pleading, the second amended complaint.
Judge David L. Minning sustained the demurrer with leave to amend most of the putative causes of action. The plaintiffs later moved to file a third amended complaint, eliminating Full Tilt Poker as a defendant—on the ground that it was not a legal entity and lacked capacity to be sued—while eliminating causes of action based on fraud and adding claims under the RICO Act and the Consumer Legal Remedies Act.
Class Claims
The RICO and CLRA claims, among others, were pled on behalf of a class. When Minning questioned the class action allegations, plaintiffs’ counsel responded that they were based on new facts, and that counsel intended to add several additional defendants, based on a civil suit that the federal government had filed against many of the same defendants in the Southern District of New York.
(That action was later settled without an admission of liability.)
Minning denied the motion to amend, saying the case had grown from a “give me my money back type of case…into what now appears to be a national class action or potentially national class action” that “doesn’t even sound like the same case anymore.” The proposed new allegations, he suggested, were more appropriately sued upon in a separate action.
Minning said the plaintiffs could file a motion for leave to file a third amended complaint, limited to curing the deficiencies he had identified in the previous pleading.
The plaintiffs then dismissed all of their claims other than for libel, and filed a class action complaint in federal district court. They argued they should be permitted to reopen the previously dismissed RICO action because of “Judge Minning’s ability to handle the complexities of the case, but the judge said they had misconstrued Minning’s comments, and that any prejudice they had suffered was “entirely of their own making.”
The judge stayed the action to avoid the possibility of a result that might conflict with whatever decision was reached in the government’s then-pending action in New York.
The state action subsequently landed in front of White, after the case was deemed related to a later-filed action, and a party in that action filed a Code of Civil Procedure §170.6 declaration against Minning.
At a July 2013 status conference, White noted that the plaintiffs had not filed a motion for leave to file the third amended complaint, pursuant to Minning’s order of nearly two years earlier, and ordered them to show cause why the action should not be dismissed for failure to prosecute, under the discretionary two-year dismissal statute.
A month later, she ruled that the plaintiffs had been given “abundant opportunity to amend” by both Minning and the federal judge, and dismissed the case. The plaintiffs later moved for a new trial based on irregularity in the proceedings, under Code of Civil Procedure §657(1), saying their attempts to amend “were illegally refused or struck by the court” and that an automatic bankruptcy stay as to defendant Erik Lindgren precluded the case from proceeding.
That motion was denied.
Keeny, writing for the Court of Appeal, said the Lindgren bankruptcy stay had no effect on the proceedings because Lindgren didn’t assert it and nobody else had standing to.
She also reiterated the federal judge’s comments, saying Minning did not reject the proposed third amended complaint because of any perceived inadequacies on his part, but because he believed the case would be unmanageable with the addition of the new allegations and new parties.
Those concerns were reasonable, Keeny said, and justified a denial of leave to amend, notwithstanding the principle that such leave should be granted liberally.
Cyrus Sanai represented the plaintiffs on appeal. Erik L. Jackson and Nathan Dooley of Cozen O’Connor represented most of the defendants; however Maurice Suh and Jay Srinivasan of Gibson, Dunn & Crutcher represented Phil Gordon and Craig N. Hentschel and Vivian I. Kim of Dykema Gossett, represented Perry Friedman.
The case is Kennedy v. Ferguson, B253090.
Copyright 2017, Metropolitan News Company