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Sonnenberg v. Oldford Group, Ltd.

United States District Court, Southern District of Illinois

March 24, 2015

KELLY SONNENBERG, individually, and on behalf of the class she represents, and Y SONNENBERG, individually, and on behalf of the class he represents, Plaintiffs,
v.
OLDFORD GROUP, LTD., RATIONAL ENTERTAINMENT ENTERPRISES, LTD., and UNKNOWN DEFENDANTS, Defendants.

MEMORANDUM AND ORDER

David R. Herndon, United States District Court.

Introduction and Background

Pending before the Court is defendant Rational Entertainment Enterprises, Ltd., and Oldford Group Ltd.’s motion to dismiss second amended complaint (Docs. 75 & 76). Plaintiffs oppose the motion (Doc. 79). Based on the following, the Court GRANTS the motion.

On January 25, 2013, Kelly Sonnenberg, individually and on behalf of all others similarly situated, filed a first amended complaint against Isai Scheinberg, Paul Tate, Nelson Burtnick, Oldford Group, Ltd. (“Oldford”), Pyr Software, Ltd., Stelekram, Ltd., Rational Entertainment Enterprises, Ltd. (“REEL”), and Sphene International, Ltd for violations of the Illinois Anti-Gambling statutes in the St. Clair County, Illinois Circuit Court (Doc. 4-1).[1] Sonnenberg alleged that defendants knowingly and intentionally accepted gambling losses through an illegal gambling enterprise known as “PokerStars” in violation of the Illinois Loss Recovery Act, 720 ILCS 5/28-8 (“LRA”).[2] Sonnenberg’s first amended complaint contained eight 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 PokerStars and whose close relatives are entitled to tripled recovery of said losses in accordance with 720 ILCS 5/28-8.” (Doc. 4-1, p. 4).

On April 9, 2013, REEL removed the case to this Court based on the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. 1332(d) (Doc. 4).[3] Thereafter, REEL filed a motion to dismiss arguing that: (1) the forfeiture of PokerStars Group of companies’ profits by the United States and plaintiff’s decision not to challenge the forfeiture precludes plaintiff’s claim; (2) that the Court lacks personal jurisdiction over REEL; and (3) that plaintiff’s first amended complaint fails to state a claim for relief under the LRA.[4] Plaintiff filed her response opposing the motion (Doc. 20) and REEL filed a reply (Doc. 24). On March 14, 2014, the Court granted in part the motion to dismiss and allowed plaintiff leave to file an amended complaint (Doc. 68).

On April 14, 2014, plaintiffs filed a second amended class action complaint adding Casey Sonnenberg as a named plaintiff (Doc. 71).[5] The second amended class action complaint contains twelve counts: Count 1 against REEL, Count V against Oldford and Count IX against unknown defendants (misnamed as IV in the second amended complaint, pg. 24) are brought by Kelly Sonnenberg as “any person, ” individually and on behalf of Illinois residents, that lost money on Pokerstars pursuant to the LRA, 720 ILCS 5/28-8 and the remaining Counts: Count II against REEL, Count III against REEL, Count IV against REEL, VI against Oldford, VII against Oldford, VIII against Oldford, X against unknown defendants, XI against unknown defendants and XII against unknown defendants, are brought by Casey Sonnenberg as a “loser, ” individually and on behalf of Illinois residents, that gambled and lost money on Pokerstars pursuant to 720 ILCS 5/28-1, 28-3, and 28-7.[6] Kelly Sonnenberg seeks to represent the following class:

Those individuals who lost an amount of $50.00 or more on Pokerstars, 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 Pokerstars.

(Doc. 71; pg. 11, ¶ 41). Casey Sonnenberg seeks to represent a very similar class:

Those individuals who lost an amount of $50.00 or more on Pokerstars, 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 Pokerstars.

(Doc. 71; pg. 13, ¶ 49).

The specific allegations as to defendants REEL and Oldford are contained in paragraphs 7 through 11 of the second-amended complaint. Plaintiffs allege that REEL “is a business entity organized in and operating under the laws of the Isle of Man. REEL is licensed by the Isle of Man Gaming Authority to operate online poker rooms and accept losses from Illinois gamblers. (Doc. 71; pg. 3, ¶ 7). Plaintiffs allege that Oldford “is a business entity organized under the laws of the British Virgin Islands. At all times relevant, Oldford was a parent company and/or directed the illegal acts of other defendants.” (Doc. 71; pg. 3, ¶ 8). Further, plaintiffs allege:

9. “… REEL, Oldford, and certain other unknown entities and individuals (the “Unknown Pokerstars Defendants”) acted in concert in a joint venture to facilitate, host, operate, and profit from an online business commonly known as Pokerstars. 10. Upon information and belief, defendants REEL, Oldford, and the Unknown Pokerstars 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. 71; pg.3, ¶¶ 9-11).

Analysis

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 second amended complaint. ...


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