Some of the defendants in a lawsuit that seeks to recover gambling losses asked a federal judge this month for a protective order against class action discovery.
In the alternative, Tiltware LLC and five other defendants requested an order staying discovery until the federal court for the Southern District of Illinois rules on their pending motions to dismiss.
Judy Fahrner in January filed a class action suit against 26 defendants, both individuals and companies associated with Full Tilt Poker, a website that offers online poker rooms.
She claims that she and other Illinois residents invested money into the site’s poker games and lost it all in 2011 when the Department of Justice shut down the card rooms. Her suit requests class action status to recover gambling losses and up to three times the amount of losses in damages under the Illinois Loss Recovery Act (LRA), 720 ILCS 5/28-8.
The LRA provides that “any person who by gambling shall lose to any other person, any sum or money or thing of value, amounting to the sum of $50 or more …may sue for and recover the money or thing of value, so lost and paid or delivered, in a civil action against the winner thereof, with costs, in the circuit court.”
The statute further states that if a person entitled by the LRA to initiate such an action doesn’t do so within six months, “any person may initiate a civil action against the winner.”
In the motion they filed last week in an attempt to halt discovery, the defendants assert that Fahrner’s claim for relief can’t proceed as a class action because the LRA doesn’t provide for class action recovery for third-parties seeking to recover losses sustained by others.
“There does not appear to be any authority or case law in Illinois or from any other jurisdiction with similar gambling-loss recovery statutes to support the notion that a gambling-loss recovery case instituted by a third-party may be proceed as a class action,” the defendants contend.
Although they note that there appears to be one instance in which an Alabama court recently allowed a group of plaintiffs to proceed as a class, the defendants stress in their motion that unlike Fahrner’s proposed class, the putative class in that case “consisted of actual losers who allegedly lost money playing electric bingo.”
“The reason for absence of class action cases involving third parties is simple—a third party instituting a claim under the LRA may only recover on behalf of herself, although she may recover losses sustained by multiple losers,” the defendants state in their motion.
Pointing to the language of the LRA, they assert that the statute “limits third-party actions to ‘any person’, in the singular form, meaning that it does not contemplate multiple recoveries by multiple persons.”
As such, the defendants contend that “class certification in this case would be inappropriate, vexatious, and completely unnecessary.”
Fahrner, however, argued in her April 18 response to the defendants’ March motion to dismiss that the LRA provides for the recovery of gambling losses by either the loser herself or by another individual.
“The text of this statute does not require a loser to file a lawsuit on his own behalf,” Fahrner asserts. “It provides that the loss can be recovered by any person.”
Saying that the defendants misunderstand her complaint and its basis, Fahrner asserts that she qualifies as “any person” under the LRA and “is also ‘directly related and impacted by someone who lost money gambling on Full Tilt Poker.”
Fahrner states that she brought her class action complaint “on behalf of similarly situated Illinois residents who are likewise closely related to gambling losers and are thus able to recover under the statute.”
In her April court filing, Fahrner argued that the defendants’ motion to dismiss should fail because her suit states a plausible claim, the court has jurisdiction over the defendants and a prior court-ordered settlement does not bar the suit.
To bolster support for their motion to dismiss, the defendants pointed to a court-entered settlement in a 2011 Cook County Circuit Court case brought by Cassandra Sobota (the defendants use this spelling of the plaintiff’s name, while Fahrner spells it Sabota in her court filings).
Sobota made similar claims under the LRA and last year, filed a motion to voluntarily dismiss her suit with prejudice.
A judge granted her motion and wrote in an order that the LRA gave Sobota standing to initiate civil action on behalf of all persons who suffered gambling losses of $50 or more if they failed to pursue their remedy under the LRA within six months, but that she failed to do so within six months.
The order also barred any and all future claims under the LRA against the defendants, the majority of whom are named in Fahrner’s suit, pursuant to the settlement in Sobota’s case.
Fahrner argues that “the doctrine of res judicata does not apply here as the” order in Sobota’s case is“not a final adjudication on the merits, nor is Judy Fahrner in privity with the Plaintiff in the Sabota state action.”
The defendants note in their motion for a protective order against class action discovery that Magistrate Judge Stephen Williams held a telephone hearing last month to discuss scheduling and discovery.
In advance of that hearing, the defendants assert that their attorneys initiated a conference with plaintiff’s counsel so they could submit a joint report and proposed scheduling and discovery order to Williams.
Given the differences in their positions on class action certification and discovery, both sides ended up submitting their own proposed orders to Williams, according to the defendants’ motion.
Williams, the defendants assert, didn’t have their submission at the April hearing and entered the plaintiff’s proposed dates with some modifications and recommended that that they file the instant motion.
As of Tuesday afternoon, no order on the defendants' motion for a protective order had been entered.
Belleville attorneys William J. Niehoff and Laura E. Schrick submitted the motion on behalf of six of the named defendants: Tiltware LLC, Erik Seidel, Howard Lederer, Jennifer Harmon-Traniello and Rational FT Enterprises Ltd.
Belleville attorney Lloyd M. Cueto represents Fahrner.