United States District Court, Southern District of Illinois
JUDY FAHRNER, individually, and on behalf of the class she represents, and DANIEL FAHRNER, individually, and on behalf of the class he represents, Plaintiffs,
TILTWARE LLC; RATIONAL FT ENTERPRISES LIMITED, HOWARD LEDERER, JENNIFER HARMON-TRANIELLO, ERIK SEIDEL, and UNKNOWN DEFENDANTS, Defendants.
MEMORANDUM and ORDER
David R. Herndon, United States District Court.
Introduction and Background
Pending before the Court are defendant Rational FT Enterprises Limited’s motion to dismiss third amended complaint (Doc. 165) and defendants Titlware LLC, Howard Lederer, Erik Seidel and Jennifer Harmon-Traniello’s motion to dismiss the third amend complaint (Doc. 169). Plaintiffs oppose the motions (Docs. 181 & 182). Based on the following, the Court GRANTS the motion.
On January 25, 2013, Judy Fahrner, individually and on behalf of all others similarly situated, filed a first amended complaint against Raymond Bitar, Nelson Burtnick, Full Tilt Poker Ltd., Titlware LLC, Vantage, Ltd., FILCO, Ltd., KOLYMA Corp. A.V.V., Pocket Kings Ltd., Pocket Kings Consulting Ltd., Ranston Ltd., Mail Media Ltd., Howard Lederer, Philip Ivey Jr., Christopher Ferguson, Johnson Juanda, Jennifer Harmon-Traniello, Phillip Gordon, Erick Lindgren, Erik Seidel, Andrew Bloch, Mike Matusow, Gus Hansen, Allen Cunningham, Patrik Antonius, Rafael Furst, and Rational FT Enterprises Limited in the St. Clair County, Illinois Circuit Court (Doc. 2-1). Plaintiff alleged that defendants knowingly and intentionally accepted gambling losses through an illegal gambling enterprise known as “Full Tilt” in violation of the Illinois Loss Recovery Act, 720 ILCS 5/28-8 (“LRA”). Fahrner’s first amended complaint contained twenty six counts for violations of 720 ILCS 5/28-1 and 720 ILCS 5/28-8 against each of the named defendants. That complaint purported to be a class action for “hundreds of thousands – possibly millions of Illinois poker players who lost money to Full Tilt and whose close relatives are entitled to tripled recovery of said losses in accordance with 720 ILCS 5/28-8.” (Doc. 2-1, p.11).
On March 7, 2013, defendants Tiltware LLC (“Tiltware”) and Seidel removed the case to this Court based on the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. 1332(d) (Doc. 2). Thereafter, on January 9, 2014, plaintiff Judy Fahrner filed a second amend complaint against Allen Cunningham, Jennifer Harmon-Traniello, Howard Lederer, Mike Matusow, Rational FT Enterprises (“Rational FT”), Seidel and Tiltware (Doc. 124). Meanwhile in a companion case, Sonnenberg v. Oldford, 13-cv-0344-DRH, the undersigned judge granted in part and denied in part a motion to dismiss based on almost identical allegations and the same statute as this case. See Sonnenberg v. Oldford, 13-cv-0344-DRH; Doc. 68. Based on the Court’s decision in Sonnenberg, Fahrner filed a motion for leave to file a third amended complaint to which the defendants opposed. On June 19, 2014, the Court allowed plaintiff leave to file an amended complaint (Doc. 162).
On June 20, 2014, plaintiffs filed a third amended class action complaint adding Daniel Fahrner as a named plaintiff (Doc. 163). The third amended complaint is “an action to recover money lost by the residents of the State of Illinois to the online poker business commonly known as Full Tilt Poker.” Id. at ¶ 1.The third amended class action complaint contains thirty-two counts: Count 1 against Rational FT, Count V against Titlware, Count IX against Lederer, Count XIII against Jennifer Harmon-Traniello, Count XVII against Erik Seidel, Count XXI against Mike Matusow, Count XXV against Allen Cunningham and Count XXIX against unknown defendants are brought by Judy Fahrner as “any person, ” individually and on behalf of Illinois residents, that lost money with Full Tilt pursuant to the LRA, 720 ILCS 5/28-8 and the remaining Counts: Count II against Rational FT, Count III against Rational FT, Count IV against Rational FT, VI against Tiltware, VII against Titlware, VIII against Titlware, X against Howard Lederer, XI against Howard Lederer, Count XII against Howard Lederer, Count XIV against Jennifer Harmon-Traniello, Count XV against Jennifer Harmon-Traniello, Count XVI against Jennifer Harmon-Traniello, Count XVIII against Erik Seidel, Count XIX against Erik Seidel, Count XX against Erik Seidel, Count XXIII against Mike Matusow, Count XXIV against Mike Matusow, Count XXVI against Allen Cunningham, Count XXVII against Allen Cunningham, Count XXVIII against Allen Cunningham, Count XXX against unknown defendants, Count XXXI against unknown defendants and Count XXXII against unknown defendants brought by Daniel Fahrner as a “loser, ” individually and on behalf of Illinois residents, that gambled and lost money on Full Tilt Poker pursuant to 720 ILCS 5/28-1, 28-3, and 28-7. Judy Fahrner seeks to represent the following class:
Those individuals who lost an amount of $50.00 or more on Full Tilt, excluding those individuals who have previously brought an action against any Defendant to recover their losses under the Illinois Loss Recovery Act, 720 ILCS 5/28-8. The measure of damages for this class is all money lost by Illinois gamblers on Full Tilt.
(Doc. 163; pg. 14, ¶ 47). Daniel Fahrner seeks to represent a very similar class:
Those individuals who lost an amount of $50.00 or more on Full Tilt, excluding individuals who have previously brought an action against any Defendant to recover their losses. The measure of damages for this class is also all money lost by Illinois gamblers on Full Tilt.
(Doc. 163; pg. 15, ¶ 55).
The specific allegations as to defendants Rational RF, Titlware, Lederer, Harmon-Traniello and Seidel are contained in paragraphs 5 through 16 of the third amended complaint. Plaintiffs allege that Rational FT “is a business entity organized in and operating under the laws of the Isle of Man. Rational FT is licensed by the Isle of Man Gaming Authority to operate online poker rooms and accept gambling losses.” (Doc. 163; pg. 3, ¶ 7). Plaintiffs allege that Tiltware “is a business entity headquartered and organized under the laws of the state of California. At all times relevant herein, Tiltware participated in and or/directed the illegal acts of other defendants.” (Doc. 163; pg. 3, ¶ 8). As to defendant Lederer, plaintiffs allege that he “is an individual residing in the state of Nevada and a member of Full Tilt Enterprise. At all times relevant herein, Lederer was a shareholder, owner, president, director, and/or participant in Full Tilt and/or one or more Full Tilt Companies. Lederer, a professional poker player, himself, was a member of Team Full Tilt. … Besides his involvement with the business, upon information and belief, Lederer played poker against Illinois residents online through Full Tilt Poker and won money from them in violation of Illinois law.” (Doc. 163; pg. 3, ¶ 9). As to Harmon-Traniello, plaintiffs similarly allege that she “is an individual residing in the State of Nevada and is a member of Full Tilt Enterprise. At all times relevant herein, Harman was a shareholder, owner, director, and/or participant in Full Tilt and/or one or more Full Tilt Companies. Harman, a professional poker player herself, was a member of Team Full Tilt. … Besides her involvement with the business, upon information and belief, Harman played poker against Illinois residents online through Full Tilt Poker and won money from them in violation of Illinois law.” (Doc. 163; pgs. 3-4, ¶ 10). Likewise to defendant Seidel, plaintiffs allege that he “is an individual residing in the State of Nevada and is a member of Full Tilt Enterprise. At all times relevant herein, Seidel was a shareholder, owner, director, and/or participant in Full Tilt and/or one or more Full Tilt Companies. Seidel, a professional poker player himself, was a member of Team Full Tilt. … Besides his involvement with the business, upon information and belief, Seidel played poker against Illinois residents online through Full Tilt Poker and won money from them in violation of Illinois law.” (Doc. 163; pg. 4, ¶ 11). Further, plaintiffs allege:
14. “… Rational RF, Titlware, the individuals named herein, and certain other unknown entities and individuals (the “Unknown Full Tilt Defendants”) acted in concert in a joint venture to facilitate, host, operate, and profit from an online poker business commonly known as Full Tilt. 15. Upon information and belief, defendants Rational RF, Tiltware, the individuals named herein, and the Unknown Full Tilt Defendants established a series of shell companies to conceal their identity and avoid their legal responsibilities. 11. The Defendants are shams and alter egos of one another and their individual owners.”
(Doc. 163; pg. 5, ¶¶ 14-16).
Federal Rule of Civil Procedure 8(a)(2) imposes “two easy-to-clear hurdles” that a complaint must satisfy in order to survive a motion to dismiss pursuant to Federal Rule of Procedure 12(b)(6). Tamayo v. Blagojevich, 526 F.3d 1074, 1084 (7th Cir. 2008)(quoting EEOC v. Concentra Health Svcs., Inc., 496 F.3d 773, 776 (7th Cir. 2007)). First, a complaint must describe the plaintiff's claims and the grounds supporting them in “sufficient detail to give the defendants fair notice” of the claims alleged against them. This requires more than mere “labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007).
Second, to survive a motion to dismiss, the court determines whether the well-pleaded allegations, if true, “plausibly suggest a right to relief, raising that possibility above a speculative level.” See Iqbal 556 U.S. at 679; Concentra, 496 F.3d at 776. A claim has facial plausibility when the pleaded factual content allows the Court to draw a reasonable inference that the defendant is liable for the misconduct alleged. See Iqbal, 556 U.S. at 678. “The plausibility standard ... asks for more than a sheer possibility that a defendant acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678 (internal quotation marks omitted). “‘Plausibility’ in this context does not imply that the district court should decide whose version to believe, or which version is more likely than not.” Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010). Rather, Twombly and Iqbal require “the plaintiff to ‘provide some specific facts' to support the legal claims asserted in the complaint.” McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)). Though the “degree of specificity required is not easily quantified, ... ‘the plaintiff must give enough details about the subject-matter of the case to present a story that holds together.’” Id. (quoting Swanson, 614 F.3d at 404). If a complaint does not satisfy these two criteria, “the plaintiff pleads itself out of court.” Concentra, 496 F.3d at 776. Accordingly, a motion to dismiss may be properly granted where the plaintiff does not allege a plausible entitlement to relief either by (1) failing to provide the defendant with notice of plausible claims against it or (2) asserting only speculative or conclusory allegations in the complaint.
The “Loss Recovery Act should not be interpreted to yield an unjust or absurd result contrary to its purpose.” Vinson v. Casino Queen, Inc., 123 F.3d 655, 657 (7th Cir. 1997) (citations omitted). “The Loss Recovery Act was intended to deter illegal gambling by using its recovery provisions as a powerful enforcement mechanism.” Id. Illinois statutes like the Loss Recovery Act (LRA”) are “penal in their nature, ” Robson v. Doyle, 61 N.E. 435, 437 (Ill. 1901), and “must be strictly construed.” See Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1023 (7th Cir. 2013); see also Reuter v. MasterCard Int’l, Inc., 921 N.E.2d 1205, 1211 ( Ill. App. 2010)(noting that an Illinois Circuit Court “explained that the [Loss Recovery Act] is penal in nature and must therefore be strictly construed.”).
To inform the reader, the Court sets out the relevant sections of the statute contained in the third amended complaint. ...