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.

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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."

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“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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In Case You Ever Find Yourself Fighting With Your Wife Over Your Ferraris . . .

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

Ferrari (pd)Right. I never do either. But if you do (or think you might in the future) then you might want to know about Durrani v. Wide World of Cars. In that case, plaintiff sued a car dealership and her ex-husband's former lawyers for delivering two Ferraris to her ex-husband, allegedly in violation of an order entered in their divorce action.

As the trial court described it, when plaintiff and her ex-husband were married, they lived an "extravagant lifestyle." Among other things,  they owned "twenty-five luxury cars worth approximately one million dollars, boats and properties." Of these assets, however, plaintiff was only on the title of two cars (and not the Ferraris). Nonetheless, during their divorce proceeding, plaintiff sought "exclusive possession" of the Ferraris, which were titled and registered to her ex-husband and stored at the defendant dealership's facilities. Consistent with this claim, plaintiff's counsel sent a letter to the dealership requesting that it not release or transfer the Ferraris to anyone, including plaintiff's ex-husband, and threatening to hold the dealership liable for damages if it did. At the end of the letter, counsel asked the dealership to agree to abide by the demand and indicated that if it did not agree, plaintiff would "immediately seek to serve [the dealership] with a court order." The dealership did not respond.

Around the same time plaintiff's counsel sent this letter, the family part entered an order in the divorce proceeding preventing either party from dissipating, selling, etc. any assets of the marriage, and specifically identified the Ferraris in a list of assets to which this restraint applied. Plaintiff's counsel sent a copy of the order to the dealership, purportedly placing it on notice of the terms.

 

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Appellate Division Holds That Buyer Can Sue Seller’s Broker For Failing To Relay Offer To Seller

by: Peter J. Gallagher (@pjsgallagher)

In a decision issued earlier this week, the Appellate Division reinstated a lawsuit against a real estate broker who failed to relay an offer from the buyer to its client, the seller. If you are thinking, as I was, "of course the court would do this, why wouldn't you be able to sue" then read on because the facts of the case make the trial court's decision to dismiss the complaint even more unbelievable. (Of course, at this point in the case, all we have are plaintiff’s allegations, which the court had to assume were true for purposes of evaluating the trial court’s decision on the motion to dismiss.)

In D'Agastino v. Gesher LLC, plaintiff wanted to buy a home in Jackson, New Jersey. The home, which had been foreclosed, was owned by the lender and was being offered for sale at $184,900. Plaintiff instructed his broker to contact the seller's broker and make an offer of $150,000. After receiving no response, plaintiff's broker faxed a written offer to the seller's broker, sent a confirming email to the broker, and eventually tried to contact the seller directly to confirm that the offer was received. None of these efforts were successful.

Seller's broker eventually responded and told plaintiff that the seller had lowered its price to $129,000 and suggested that plaintiff lower its bid. Plaintiff's broker said this "sounded fishy" and advised plaintiff not to lower the bid. Plaintiff took his broker's advice.

 

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