In Lawsuit Over Allegedly Defective Baccarat Cards, Casino’s Damages Capped At Little More Than One Green Chip

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Chips (pd)The running battle between the Borgata and world renowned poker player Phil Ivey (among others) continues, and, fortunately, continues to be interesting. As I wrote about here and here, the Borgata sued Ivey and an associate, Cheng Yin Sun, after the two men won more than $9.6 million playing Baccarat at the casino. The Borgata claimed that the two men used an impermissible "edge sorting" scheme  to win the money, and therefore breached their implicit contract with the casino to abide by the terms of the Casino Control Act. The scheme relied, in part on an alleged defect in the playing cards, which Ivey and Sun knew about and exploited. The Third Circuit described it as follows:

The scheme is called "edge sorting," where Sun would identify minute asymmetries on the repeating diamond pattern on the backs of the playing cards to identify certain cards' values, and would have the dealer turn those strategically important cards so that they could be distinguished from all other cards in the deck. Ivey and Sun would then be able to see the leading edge of the first card in the shoe before it was dealt, giving them 'first card knowledge,' and Ivey would bet accordingly.

The Borgata successfully moved for summary judgment against Ivey and Sun, and was awarded more than $10 million in damages.

In addition to suing the players, the casino also sued the manufacturer of the cards that were used in the edge-sorting scheme. Both moved for summary judgment, and both motions were initially denied without prejudice. After the district court's decision on the casino's summary judgment motion against Ivey and Sun, both renewed their motions. The district court again denied both, but in doing so, threw cold water on the casino's claims against the manufacturer, including holding that the most the casino could recover against the manufacturer was $26.88, the cost of the allegedly defective cards.

Continue reading “In Lawsuit Over Allegedly Defective Baccarat Cards, Casino’s Damages Capped At Little More Than One Green Chip”

Phil Ivey Ordered to pay Borgata $10 million (presumably not in chips) for “Edge-Sorting” Scheme

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Chips and cardsA few weeks back, I wrote a post about a lawsuit between the Borgata Casino and world renowned poker player and gambler, Phil Ivey. In the lawsuit, the Borgata accused Ivey and a partner, Cheng Yin Sun, of engaging in an "edge sorting" scheme, which allowed them to shift the odds of Baccarat in their favor and win more than $9.6 million over several visits to the casino. The U.S. Court of Appeals for the Third Circuit described their actions as follows:

The scheme is called "edge sorting," where Sun would identify minute asymmetries on the repeating diamond pattern on the backs of the playing cards to identify certain cards' values, and would have the dealer turn those strategically important cards so that they could be distinguished from all other cards in the deck. Ivey and Sun would then be able to see the leading edge of the first card in the shoe before it was dealt, giving them 'first card knowledge,' and Ivey would bet accordingly.

The Borgata successful moved for summary judgment against both men. It held that casinos and players enter into an implicit contract to, among other things, abide by New Jersey's Casino Control Act ("CCA"). The court determined that, by employing the edge-sorting scheme, Ivey and Sun were using marked cards to play the game, which is prohibited by the CCA. As a result, they breached their contract with the casino. After finding in the casino's favor on liability, the court ordered supplemental briefing on damages. After considering those briefs, the court awarded the casino $10,130,000.

The court held that the appropriate method to assess damages was to restore the status quo ante — i.e., to return the parties to their positions prior to the formation of the contract. It held that Ivey's and Sun's use of marked cards violated the CCA and voided the contract between them and the casino. Because the contracts were void, restoring the parties to their pre-contract position was the appropriate remedy. The casino was, therefore, entitled to the return of all of Ivey's winnings, including the money he won playing craps because "those winnings were directly traceable to his prior Baccarat winnings — i.e., he used Baccarat winnings to play craps."

Continue reading “Phil Ivey Ordered to pay Borgata $10 million (presumably not in chips) for “Edge-Sorting” Scheme”

“Marking” Cards At A Casino = Breach of Contract

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Casino (pd)If you have ever watched ESPN's coverage of the World Series of Poker then you have probably heard of Phil Ivey. For the uninitiated, he is, according to Wikipedia, "an American professional poker player who has won ten World Series of Poker bracelets,  one World Poker Tour title and appeared at nine World Poker Tour final tables . . . [and is] . . . regarded by numerous poker observers and contemporaries as the best all-around player in the world." He is also a party in an interesting lawsuit — Marina District Development Co., LLC v. Ivey — in which it was alleged that he "marked cards" during several Baccarat binges at the Borgata in Atlantic City, during which he won more than $9.6 million.

Before turning to the facts and law at issue in the Borgata case, a few comments on the opinion itself. First, Judge Hillman began his opinion by quoting from a relatively obscure U2 song, "Every Breaking Wave." The lyrics are appropriate — "Every breaking wave on the shore/Tells the next one 'there'll be one more'/Every gambler knows that to lose/Is what you're really there for" — but I thought it was an interesting choice given all the other possible gambling quotes from music and popular culture that were available to him. (I went for a much more obvious choice in my post the other day.) Second, the opinion begins with a succint explanation of gambling: noting that it is illegal, likely because of a "Judeo-Christian doctrine [] that gambling is an immoral vice;" but, "like most vices," states "allow, regulate, and tax some versions of it" under the theory that "[s]tate sanctioned gambling will be cleansed of its most unsavory elements and the games will be conducted under a defined set of polished rules overseen by an administrative body;" and finally that, under these "polished rules," the house always wins, "something every gambler knows." 

With this history in mind, the court turned to the facts of the case. Defendants were Ivey and Cheng Yin Sun, "high stakes' professional gamblers." In April 2012, Ivey contacted Borgata to set up a visit to play high-stakes Baccarat. He made five requests in advance of his visit: (1) a private "pit"; (2) a dealer who spoke Mandarin; (3) a guest (Sun) to sit with him at the table; (4) one 8-deck shoe of "purple Gemaco Borgata playing cards" to be used during the entire session; and (5) an automatic card shuffler to be used instead of a hand shuffle. Borgata agreed and Ivey wired a "front money" deposit of $1 million to the casino. After this initial visit, in which Ivey won $2.4 million, he and Sun came back several more times and played pursuant to the same conditions.

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“Send me dead flowers to my wedding, and I won’t forget to put roses on your grave”

by:  Peter J. Gallagher (@pjsgallagher)

I don't handle any family law cases, mostly because I do not think I could deal with the emotional issues that are often involved in them. But every now and again a family law decision piques my interest. The recent unpublished Appellate Division decision in Taffaro v. Taffaro was one of those cases. In that case, plaintiff was estranged from his half-sister after a dispute over their mother's estate. After the dispute, he began "attaching paper items" to her gravestone, "frequently directed at [his half sister] and referencing the dispute." When some of these items were removed, plaintiff assumed his half-sister did it, so he pursued criminal charges against her and, when these proved unsuccessful, sued her for conversion, invasion of privacy, intentional infliction of emotional distress, and negligent infliction of emotional distress.

The court dismissed the invasion of privacy and intentional and negligent infliction of emotional distress counts on statute of limitations grounds. Even assuming that defendant took the items from the gravestone, which there was no evidence to support, they were taken more than two years before plaintiff sued and plaintiff's claims were thus untimely. The trial court then held a bench trial on the conversion claim and eventually dismissed it as well, holding that plaintiff had abandoned the items. Plaintiff appealed.

The Appellate Division affirmed. It held that conversion is the "unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another . . . ." But, abandonment, which is the relinquishment of "all right, title, claim and possession" of property "with the intention of not reclaiming it," is a complete defense to conversion. In Taffaro, the Appellate Division held that the "necessary overt act" demonstrating abandonment occurred when plaintiff placed the items at his mother's grave. The Appellate Division held that the "ephemeral nature of the cards and decorative items, which were made of paper and left outside" demonstrated plaintiff's "intent to abandon." And, the Appellate Division noted that the purpose of the items was to harass defendant, not honor the memory of plaintiff's mother. Therefore, for all of these reasons, the court held that plaintiff had abandoned the items and could not maintain a cause of action for conversion.

[Fun little fact about the title of this post, which obviously is a portion of the lyrics from one of my favorite Rolling Stones songs, "Dead Flowers." My friend and I went to see Steve Earle at Tradewinds in 1998 when he was touring in support of his El Corazon album. Great show. But then, for the encore, he came walking out with Bruce Springsteen. Now, in the interest of full disclosure, my friend and I went to the show mostly because we were big Steve Earle fans, but partly because of the chance that Bruce might show up. Lucky for us, he did, and they played a couple of Stones songs, including Dead Flowers. They also played Everybody's Trying To Be My Baby" for Carl Perkins who had died a few days before the show. Anyway, click here for the full audio from the encore.]