Slip Opinion
E.D. Cal.2020Background
- Stones Gambling Hall (operated by King’s Casino) broadcast “Stones Live Poker” using RFID‑tagged cards and a control room that produced near‑omniscient delayed live streams.
- Michael Postle was a frequent player with an extraordinary win rate and became an on‑camera celebrity; plaintiffs allege he cheated using a confederate who relayed opponents’ cards.
- Veronica Brill publicly accused Postle of cheating, complained to Justin Kuraitis (a Stones employee/director), and Stones publicly announced an internal investigation that found no evidence of cheating.
- Plaintiffs (89+ individuals) sued King’s Casino, Kuraitis, and Postle asserting RICO, fraud, negligent misrepresentation, negligence, constructive fraud, CLRA, libel, and unjust enrichment claims.
- Defendants moved to dismiss. The court dismissed all claims: it granted leave to amend as to King’s Casino and Kuraitis on certain claims (procedural defects like lack of particularity), but dismissed claims against Postle based on California public policy and RICO standing principles (some with prejudice).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Recoverability of gambling losses / public policy | Plaintiffs seek recovery of gambling losses and the rake paid to Stones. | California public policy precludes judicial recovery of gambling losses; damages are speculative. | Gambling losses barred; however rake (monies paid to operate games) may be concrete and potentially recoverable. |
| Fraud (Rule 9(b) specificity; damages) | Kuraitis/Stones publicly declared no cheating; plaintiffs relied and suffered damages. | Fraud allegations lack particularity as to who, when, and what damages (e.g., specific rake amounts/dates). | Fraud claims dismissed for failure to plead damages with specificity; dismissal with leave to amend to plead rake/dates. |
| Constructive fraud / fiduciary duty | Stones had a duty to monitor games and plaintiffs were vulnerable; concealment gave rise to constructive fraud. | No fiduciary or confidential relationship alleged; vulnerability alone insufficient. | Dismissed: plaintiffs failed to allege the requisite fiduciary/confidential relationship. |
| Negligent misrepresentation | Stones implicitly represented games would be secure and supervised. | Plaintiffs fail to identify the alleged confederate or facts showing lack of reasonable basis for representations. | Dismissed with leave to amend (plaintiffs say they can identify the confederate). |
| CLRA applicability | Operation of poker games (tables, dealers, security, staff) are "services" under CLRA. | Gambling/gameplay is not a "service" within the CLRA definitions. | CLRA claim dismissed: poker operation is not a CLRA "service." |
| Negligence / economic‑loss rule & special relationship | Plaintiffs as consumers were intended beneficiaries and foreseeably harmed. | Economic loss rule bars purely economic harms absent a special relationship; no specific intended beneficiary alleged. | Dismissed: no special relationship plausibly alleged; economic loss rule bars claim. |
| Libel per se (tweet by Stones) | Brill contends Stones’ tweet denying cheating referred to her and caused harm. | The tweet was general; millions of users and many accusers—statement not "of and concerning" Brill. | Dismissed: tweet not sufficiently "of and concerning" a single plaintiff (group too large). |
| RICO standing (§ 1964(c)) | Postle and confederates used wire transmissions to cheat; plaintiffs suffered financial injury. | Plaintiffs lack concrete injury to business/property—gambling losses/expectancy are speculative. | RICO claim dismissed for lack of concrete injury; claims premised on gambling losses against Postle dismissed (with prejudice due to public policy). |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausible claim required)
- Kelly v. First Astri Corp., 72 Cal. App. 4th 462 (California public policy bars judicial recovery of gambling losses)
- Vu v. California Commerce Club, Inc., 58 Cal. App. 4th 229 (difficulty proving causation for lost hands; gambling loss issues)
- Fairbanks v. Superior Court, 46 Cal. 4th 56 (CLRA applies only to defined "goods" or "services")
- Davidson v. Kimberly‑Clark Corp., 889 F.3d 956 (Rule 9(b) requires who/what/when/where/how for fraud)
- Lazar v. Superior Court, 12 Cal. 4th 631 (elements of fraud)
- Chaset v. Fleer/Skybox Int’l, LP, 300 F.3d 1083 (RICO standing requires concrete financial loss, expectancy insufficient)
- J’Aire Corp. v. Gregory, 24 Cal. 3d 799 (factors for special‑relationship exception to economic loss rule)
- West v. JPMorgan Chase Bank, 214 Cal. App. 4th 780 (negligent misrepresentation standard: reasonable basis for belief)
- S. Cal. Gas Leak Cases, 7 Cal. 5th 391 (economic loss rule and tort recovery for economic damages)
- Blatty v. New York Times Co., 42 Cal. 3d 1033 (defamation: "of and concerning" requirement)