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Doug Grant, Inc., Richard Andersen, Judy L. Bintliff, Lynn v. Bohsen, Thomas M. Bolick, Michael Bonn, Roland Bryant, Sr., Eugene Clauser, Elmer Conover, Scott Conover, Joseph Curran, Dino D'andrea, Mark F. D'andrea, Warren Davenport, Frank Delia, Karen Dwyer, Dennis F. Foreman, Rosemarie Francis, Stephen Freel, Stavros Georgiou, Kenneth Gross, Adib Hannah, G. Hassan Hattina, Leroy N. Jordan, Roman Kern, Richard H. Kessel, Scott Klee, Jeffrey S. Krah, Kathleen E. Lane-Bourgeois, Thomas J. Lotito, Jr., James MacElroy Mar Tin Malter, Stanley P. McAnally Anne T. McGowan Eugene L. Miserendino, Daniel G. Nauroth, Matthew S. Pellenberg, Daniel Pilone, Stephen F. Pinciotti, Robert E. Prout, Martin Rose, Lynn Rufo, Vincent Salek, Arlen Schwerin, Joseph Scioscia, William F. Strauss, Douglas G. Telman, Aino Tomson, Ants Tomson, Thomas Tomson, Linwood C. Uphouse, Dolores Valancy, Andrew R. Vardzal, Jr., Grant Douglas Von Reiman, Kenneth J. Warner, Steven W Atters, Paul v. Yannessa, Doug Grant College of Winning Blackjack
Citation: 232 F.3d 173Docket: 98-5291
Court: Court of Appeals for the Third Circuit; November 2, 2000; Federal Appellate Court
In the case Doug Grant, Inc. and various individuals, including Richard Andersen and Judy L. Bintliff, the appellants are challenging multiple casino entities including Greate Bay Casino Corporation and several Trump-associated companies. The appeal was heard in the United States Court of Appeals for the Third Circuit, with arguments presented on October 5, 2000, and the decision filed on November 2, 2000. The appeal originated from the United States District Court for the District of New Jersey, presided over by District Judge Joseph E. Irenas. The legal representation included multiple attorneys for both the appellants and the appellees, with specific mention of Howard A. Altschuler for the appellants and Frederick H. Kraus for the Greate Bay Casino entities. The case involves several parties, indicating a complex litigation scenario likely centered around disputes related to the casino industry. The opinion was delivered by Circuit Judge Greenberg, alongside Judges Nygaard and Cowen. An appeal is before the court regarding a May 1, 1998 order that partially dismissed a case under Fed. R. Civ. P. 12(b)(6) due to failure to state a claim. The appellants, blackjack players and corporate entities associated with Doug Grant, Inc., originally filed the action in New Jersey’s Superior Court, which was subsequently removed to federal court. The district court dismissed certain claims but remanded state-law claims back to the Superior Court. The appellants allege that the casinos implemented illegal countermeasures to counter skilled card-counters, which significantly impaired their ability to win at blackjack, a game where skill can shift the odds in favor of the player. The corporate appellants argue that such countermeasures forced the closure of their training schools and mock casinos due to various forms of intimidation, including bomb threats and property destruction. The excerpt also outlines the standard procedure for playing blackjack, detailing how cards are prepared and shuffled before a game, which is essential for understanding the context of the appellants' allegations. The process involves multiple decks, inspection by players, and shuffling to ensure randomness, conducted under the oversight of the Casino Control Commission. A player initiates the cutting of the deck by inserting a plastic cutting card at least ten cards from either end of the stack. The dealer then moves all cards in front of the cutting card to the back of the stack and aligns the shuffled deck in the dealing shoe, ensuring that the cutting card is approximately one-quarter of the way from the back. The cards behind the cutting card are excluded from play. The dealer deals cards until reaching the cutting card, at which point the shuffling and cutting process is repeated. In blackjack, players aim to achieve a total card value of 21 without exceeding it. Specific cards are deemed favorable or unfavorable: Aces, Kings, Queens, Jacks, and Tens are advantageous for players, while 2s through 6s favor the dealer, with 7s, 8s, and 9s being neutral. The composition of the shoe can vary randomly, affecting the odds in favor of either the player or the dealer. Card-counters track favorable cards to optimize their bets, wagering higher when the shoe is advantageous for the player and lower when it favors the dealer. Effective card-counting requires assigning point values to cards, maintaining a running total, and employing strategic betting and money management techniques. Successful card-counters seek to view as many cards as possible to assess the favorability of remaining cards. They prefer the cutting card to be placed toward the end of the shoe and aim for the entire shoe to be played to maximize their betting opportunities before reshuffling occurs. Casinos aim to limit card-counters' ability to bet high during player-favorable shoe situations by manipulating card play, including using fewer cards in the shoe and reshuffling before reaching the cutting card, despite these actions reducing overall playtime and profits. Appellants allege that casinos employ surveillance and identification methods to detect card-counters and subsequently implement countermeasures against them, claiming these practices violate New Jersey's Casino Control Act regarding cheating. They argue that the identification process is flawed, leading to wrongful labeling of non-card-counters and resulting in lifelong stigmatization for those incorrectly identified. Additionally, they assert that casinos misuse the "shuffle-at-will" practice to gain a significant advantage, often reshuffling when a shoe is favorable, resulting in increased profits at the expense of fair play. Specific instances of these practices over the past decade have been reported to regulatory authorities, but the casinos have denied any wrongdoing regarding card counting and shuffling practices. Appellants claim that their identification as card-counters has led to discriminatory treatment at casinos, including limitations on wagering, refusal of cards, and being forced to bet below the posted limits. They allege that casino "shills" occupy all seats at desired tables and that they are denied hospitality "comps" such as meals. Additionally, appellants report being threatened, assaulted, and stalked due to their card-counter status, with threats both in-person from casino employees and online from unidentified individuals connected to the casinos. The New Jersey Casino Control Act grants the Casino Control Commission (CCC) comprehensive authority over blackjack and other casino games, including exclusive jurisdiction to interpret and enforce relevant regulations. The regulations for blackjack are detailed and extensive, with the CCC acknowledging the challenges posed by card-counters and permitting casinos to implement countermeasures to protect their financial interests. This regulatory framework was influenced by the New Jersey Supreme Court's ruling in Uston, which determined that while casinos cannot exclude card-counters outright, the CCC may establish regulations that enable casinos to neutralize the advantages of card-counters without violating constitutional or statutory provisions. Prior to the Uston decision, the Casino Control Commission (CCC) had established regulations allowing casinos to permit players to wager on multiple boxes at blackjack tables, which was used as a countermeasure against card-counters. The CCC's practice allowed casinos discretion to restrict card-counters from betting on more than one box. Following Uston, the CCC conducted hearings and implemented regulations to enable casinos to adopt measures that mitigate the financial risks posed by card-counters, balancing casino viability with fair odds for all players. Key countermeasures included specific shuffling methods, such as the "Bart Carter Shuffle," which involved intricate shuffling procedures to disrupt card-counters' strategies. The CCC also approved the "shuffle-at-will" method, allowing casinos to shuffle cards after each round of play, and introduced continuous shuffling shoes that automatically reshuffle cards. These regulations significantly reduced card-counters' ability to predict favorable outcomes, as continuous reshuffling made it difficult for them to assess the remaining cards in the shoe. The CCC authorized several regulations post-Uston decision to combat card-counting in blackjack. Initially, the CCC permitted casinos to increase the number of decks used, making it harder for card-counters to track cards effectively. In 1991, a regulation allowed casinos to change minimum and maximum wagering limits at gaming tables without prior notification to the Commission, simply by posting a sign and announcing the changes to patrons. This flexibility enables casinos to lower limits for identified card-counters to prevent them from making high bets when conditions favor players. In 1993, further amendments allowed casinos to set different maximum wagers for various tables and for individual players, while still ensuring that all patrons are informed of the current wagering limits. The regulations also permitted casinos to allow wagers below the minimum or above the maximum limits at their discretion, although any excessive wagers would be treated according to the game’s rules, regardless of established limits. New Jersey courts upheld the legality of these CCC-authorized countermeasures, affirming that they permit the disparate treatment of card-counters and are consistent with regulatory authority. The trial court in Campione acknowledged that practices affecting all patrons, including card-counters, were authorized under CCC regulations. The appellate division and the New Jersey Supreme Court supported this view, indicating that the CCC lawfully permits these countermeasures. The jurisdiction for the associated legal complaints arises from alleged violations of federal and state statutes, giving the district court jurisdiction under specified U.S. Code sections. The standard of review for a district court's dismissal of a complaint under Rule 12(b)(6) is plenary, meaning the appellate court applies the same test as the district court. A motion to dismiss may be granted only if, after accepting all well-pleaded allegations as true and viewing them in the most favorable light to the plaintiff, it is determined that the plaintiff is not entitled to relief. Factual allegations must be accepted, but unsupported conclusions and unwarranted inferences are not. Courts must assess the complaint in its entirety based on a justiciable factual situation rather than mere words. The appellants' first claim alleges racketeering under federal and New Jersey RICO statutes, with the predicate acts primarily involving countermeasures and regulatory violations by casinos. To establish a RICO claim, appellants must demonstrate that the casinos engaged in predicate criminal acts. Alleged acts include shuffling cards when favorable to players, using technology to identify card counters, denying comps, employing shills, limiting blackjack play, and failing to disclose countermeasures. The district court noted that the main predicate act cited by appellants was the shuffling of cards when the count favored players. The appellants argued this constituted a violation of New Jersey's criminal "cheating" statute, but the trial court had previously rejected this claim, deeming it specious. The relevant regulation permits casinos to shuffle cards at their discretion after any round of play. Appellants' argument that the regulation allows only a random shuffle was found to conflict with the regulation's explicit language. The CCC permits the practice of shuffle-at-will in casinos as a strategy against card counters, which can influence game odds based on when shuffling occurs. Shuffling after the first round maintains the casino's advantage against basic strategy players, while shuffling only during favorable counts increases the casino's advantage. The appellants challenge the legality of this regulation, but the court finds no illegality, asserting that casinos following CCC-approved practices cannot face RICO liability. The appellants' arguments are criticized for exaggeration and misrepresentation of facts, particularly in claiming that shuffle-at-will secretly removes cards; the reshuffle is a transparent process that merely randomizes the order of cards. The normal random chance of a game is defined by existing rules and CCC regulations, and since the CCC has the authority to define these rules, practices it endorses cannot be labeled as "cheating." Ultimately, the court concludes that the appellants' allegations do not substantiate a RICO claim against the casinos. Appellants' claims of predicate acts under RICO are insufficient as they revolve around alleged violations tied to lawful activities governed by the CCC regulations. Allegations of unlawful debt collection, illegal gambling operations, and interference with commerce stem from debts incurred during authorized blackjack games and from the absence of complimentary offerings (comps) by casinos, which do not constitute criminal actions affecting game integrity. If appellants seek compensation for comps, they should pursue this through New Jersey state courts, potentially in small claims. Furthermore, while appellants mention the use of "shills" to entice players, they fail to provide evidence of violations against the statutory prohibition, as casinos have not used shills to attract them to play. Appellants reference a CCC statement regarding card counting but omit its conclusion, which indicates a lack of evidence for casinos actively soliciting such play. Their claim that casinos should provide comprehensive blackjack rules is also unsupported, as existing brochures offer sufficient information for gameplay without being deceptive. Finally, the assertion that casinos cannot require unequal wagers among players lacks merit according to NJ statutes. Overall, the activities complained of do not amount to criminal conduct or predicate acts under RICO. The CCC has implemented a regulation allowing casinos to set varying wager limits for players suspected of card counting, as outlined in N.J.A.C. S 19:47-8.2(b). Consequently, the casinos are not in violation of the Act in a way that would support a RICO claim. Although appellants challenge the regulation's legitimacy, they have not established a RICO cause of action against the casinos, which are acting in compliance with existing law and CCC regulations. Appellants argue that the casinos’ failure to secure prior approval for countermeasures is a predicate act, yet they acknowledge that the CCC has ruled that such approval is unnecessary. This ruling is currently under appeal. The potential for a federal court to address RICO implications will arise only if the CCC later finds the casinos' practices illegal and they fail to comply. The only alleged predicate acts not based on CCC regulations involve minor incidents of physical altercations and online harassment, such as one player being knocked from his seat, others being followed, and receiving offensive messages. However, these incidents do not demonstrate sufficient egregiousness to support a significant RICO claim, especially considering the appellants seek substantial damages exceeding $347 million. Furthermore, the claims of receiving threatening online messages lack a connection to the casinos, as no evidence suggests casino involvement. The district court's dismissal of the RICO claims is affirmed, with the conclusion that the allegations are insubstantial and bordering on frivolous. The appellants’ claims do not sufficiently allege predicate acts or establish injury to business or property as required for a RICO action. Notably, players can avoid injury by choosing not to gamble, particularly against the casinos' interests when they count cards, making it difficult to characterize any lost opportunity as actual injury. Appellants who have previously engaged in blackjack, knowing the casinos' countermeasures, have inflicted harm on themselves by continuing to play with the intention of profiting from card counting. This situation complicates the application of the RICO framework to individual players aware of these countermeasures. The appellants initially included a claim under the New Jersey Consumer Fraud Act in their original complaint but omitted it in the amended version. They sought to reinstate this claim, which the district court denied, deeming it meritless and futile to amend. The court referenced a New Jersey Supreme Court ruling indicating that the Consumer Fraud Act does not apply to heavily regulated industries where its application could conflict with existing regulatory frameworks, specifically citing the Casino Control Act, which grants the Casino Control Commission (CCC) exclusive authority over casino operations and advertising. Allowing the proposed consumer fraud claim could undermine the CCC's regulatory scheme, as it possesses specialized expertise in these matters, which courts lack. Although courts maintain jurisdiction over common law damage claims against casinos, this does not affect the applicability of different regulatory acts. The district court's denial of the appellants' motion to amend was appropriate, as the proposed claim would not merit legal relief. Additionally, the goals of the Consumer Fraud and Casino Control Acts are not fully aligned. The Consumer Fraud Act focuses on consumer protection, while the Casino Control Act aims to balance the protection of gambling patrons with the financial viability of casinos. The Casino Control Act inherently acknowledges that players are expected to lose money, contrasting with the objectives of the Consumer Fraud Act. In a legal case, the sixth count of the complaint alleges various statutory claims against unidentified defendants (John Does) for sending offensive messages and threats online. However, the appellants failed to establish a connection between the John Does and the casinos, leading the district court to dismiss this claim with prejudice. The appellate court disagreed with the dismissal being with prejudice and ordered it to be without prejudice, allowing the appellants the possibility to refile if they later find sufficient facts linking the casinos to the alleged acts. Additionally, the sixth count includes claims of constitutional violations under the Equal Protection Clause, Due Process Clause, and 42 U.S.C. § 1983. The district court found these claims insufficient for several reasons: the appellants did not demonstrate state action since the casinos, despite being regulated by the state, do not qualify as state actors; the equal protection claim fails as the measures against card counters are rationally related to the legitimate interest of maintaining casino viability; and the appellants do not possess a constitutionally protected property interest in gambling, negating any due process violation. The district court dismissed the constitutional and civil rights claims in the sixth count of the complaint for failure to state a claim. Upon review, it was determined that the dismissal was appropriate for all addressed counts, but count six should have been dismissed without prejudice concerning the issue of sending offensive messages and threats online. Consequently, the order of dismissal will be modified to reflect that count six is partially dismissed without prejudice, while the remaining counts are affirmed with prejudice. The case will be remanded to the district court for an order consistent with this opinion, and costs for the appeal will be charged to the appellants. Additionally, the excerpt notes that extensive documentation was reviewed during the appeal process, highlighting the unusual length of the appendix and the context of countermeasures used by casinos against card counters, which is central to the case. The appellants had also pursued parallel claims in state administrative proceedings and sought a ruling from the New Jersey Casino Control Commission regarding relevant regulations and practices. The casinos have appealed to the New Jersey Superior Court, Appellate Division, asserting that the statute of limitations has expired on some of the appellants' claims. In response, the appellants argue that their claims are timely due to alleged continuing violations. However, it is noted that the corporate plaintiffs ceased operations by 1992, and since the appellants initiated their action in 1997, their federal RICO claims are barred by the four-year statute of limitations. Additionally, the appellate court clarifies that this ruling does not grant casinos unrestricted rights in their dealings with patrons, as discrimination laws remain applicable. Before oral arguments, the appellants requested an evidentiary hearing regarding potential conflicts of interest within the district court, citing concerns over undisclosed interests. The court denied this motion, deeming it without merit and irrelevant, as it conducted a thorough review of all issues raised. Furthermore, while the denial of a motion for leave to amend is typically reviewed for abuse of discretion, the court upheld the denial based on the legal grounds that the proposed amendment would not withstand a motion to dismiss.