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Empress Casino Joliet Corp. v. Johnston

United States District Court, N.D. Illinois, Eastern Division

July 10, 2015

EMPRESS CASINO JOLIET CORP., et al., Plaintiffs,
JOHN JOHNSTON, et al., Defendants

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[Copyrighted Material Omitted]

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For Empress Casino Joliet Corporation, an Illinois corporation, Des Plaines Development Limited Partnership, an Illinois limited partnership doing business as, Harrah's Casino Cruises Joliet, Hollywood Casino-Aurora, Inc., an Illinios corporation, Elgin Riverboat Resort-Riverboat Casino, an Illinois general partnership doing business as, Grand Victoria Casino, Plaintiffs: Robert M. Andalman, LEAD ATTORNEY, Jeremy D. Margolis, Stacy Anne Howard, Loeb & Loeb LLP, Chicago, IL; Blair Robert Zanzig, Hiltz Wantuch & Zanzig LLC, Chicago, IL.

For John Johnston, Balmoral Racing Club, Inc., Maywood Park Trotting Association, Inc., Defendants: William J. McKenna , Jr., LEAD ATTORNEY, Jonathan William Garlough, Martin J. Bishop, Meredith Ann Shippee, Foley & Lardner LLP, Chicago, IL.

For Rod Blagojevich, deponent: Leonard C. Goodman, LEAD ATTORNEY, Chicago, IL.

For Service List: Barbara Carroll Delano, Jennifer Marie Zlotow, Office of the Illinois Attorney General, Chicago, IL.

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MATTHEW F. KENNELLY, United States District Judge.

Several Illinois casinos sued John Johnston and entities that own two horse racing tracks, alleging that the defendants conspired with former Illinois Governor Rod Blagojevich to pay him money in exchange for his signature on the 2008 Illinois Horse Racing Act. The legislation taxed the casinos three percent of their adjusted gross revenues, and the proceeds were placed in a trust for the benefit of the Illinois horse racing industry.

The case was tried before a jury, which found in favor of the plaintiffs on three counts: conspiracy to violate the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § § 1962(d), 1964, civil conspiracy under Illinois law, and unjust enrichment. The jury awarded the casinos roughly $26 million in compensatory damages, which was trebled under RICO, id. § 1964(c), along with $4 million in punitive damages for the civil conspiracy claim. Defendants have moved for judgment as a matter of law and for a new trial. The Court denies the motion for the reasons stated below.

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A. Motion for judgment as a matter of law

Judgment as a matter of law under Federal Rule of Civil Procedure 50 is appropriate only if " no rational jury could have found for the defendants." Venson v. Altamirano, 749 F.3d 641, 646 (7th Cir. 2014). When reviewing a motion for judgment as a matter of law, the Court " must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

1. Quid pro quo

Defendants argue that there was insufficient evidence for the jury to find a quid pro quo, as is required for each of plaintiffs' claims. Because the jury heard evidence from which it could reasonably find a quid pro quo, defendants are not entitled to relief.

Alonzo Monk was a former chief of staff to Blagojevich who Johnston hired as a lobbyist. Monk acted as the intermediary between Blagojevich and Johnston and was at the center of the bribery allegations in this case. In recorded conversations, Blagojevich pressed Monk about when Johnston would make a contribution. Johnston told Monk that he was concerned about the money the race tracks were losing each day Blagojevich did not sign the bill, and Monk conveyed this information to Blagojevich.

Monk testified that the only time Blagojevich's signature was expressly tied to a contribution was during a conversation between Monk and Johnston on December 3, 2008. 12/3/2014 Tr. at 462-63. He also testified that Johnston did not agree to contribute $100,000 in exchange for Blagojevich's signature on the 2008 Act. But an express agreement is not required for civil conspiracy or conspiracy under 18 U.S.C. § 1962(d). See Scherer v. Balkema, 840 F.2d 437, 442 (7th Cir. 1988). Plaintiffs presented evidence from before and after December 3, 2008 from which the jury could conclude that there was a tacit agreement for Johnston to give a contribution in exchange for Blagojevich's signature.

Addressing the evidence chronologically, Johnston testified that he met with Blagojevich and discussed the 2008 Act in April 2008. At that meeting Blagojevich said, " I've appreciated your support in the past and I look forward to your support in the future." 12/4/2014 Tr. at 709-10. This evidence that Johnston's contribution and the 2008 Act were discussed at the same meeting months before the bill was signed, when considered with the other evidence, could have led a reasonable jury to conclude that the two were linked from the outset. According to Monk, Blagojevich said that he had secured a $100,000 commitment from Johnston in August or September 2008. 12/2/2014 Tr. at 304-05. Shortly after that, Johnston's name was listed on a Friends of Blagojevich fundraising list. Id. at 305-06; Pls.' Ex. 14. In a telephone conversation that was recorded by government agents in November 2008, Monk told Robert Blagojevich (the governor's brother) that Johnston was " good for it," referring to the promised contribution. 12/2/2014 Tr. at 322. Additionally, the jury reasonably could have concluded that Johnston's e-mail to members of the horse racing industry dated November 24, 2008 discussing the Act and stating, " [w]e are going to have to put a stronger bit in his mouth," was evidence of Johnston's intent to improperly influence Blagojevich. Pls.' Ex. 27; 12/3/2014 Tr. at 541. Based on this evidence, the jury reasonably could have concluded that Johnston tacitly agreed to pay $100,000 in

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exchange for Blagojevich's signature sometime during the fall of 2008.

Additionally, the jury reasonably could have believed Monk's testimony about his meeting with Johnston at Maywood Park on December 3, 2008. Both Monk and Johnston testified that during that meeting, Monk told Johnston that the governor would not sign the 2008 Act without a campaign contribution. Although Johnston testified that he was disgusted and did not plan to contribute, the jury could have believed Monk, who said that even though Johnston did not make a " specific promise," Monk " thought [Johnston] was going to make a donation as a result of the meeting and other discussions I had." 12/2/2014 Tr. at 360. Immediately after that meeting, Monk called Blagojevich to report that Johnston would pay the money within two weeks. Pls.' Ex. 36. This testimony supports plaintiffs' contention that Johnston tacitly agreed to pay a contribution in exchange for Blagojevich's signature.

2. Pattern of racketeering activity

Defendants argue that there was insufficient evidence that RICO's pattern requirement was met. To establish civil liability for conspiracy under RICO, plaintiffs had to prove that defendants agreed that the affairs of the enterprise would be conducted through " a pattern of racketeering activity," which is defined as " at least two acts of racketeering activity." 18 U.S.C. § § 1961(5), 1962; see also Brouwer v. Raffensperger, Hughes & Co., 199 F.3d 961, 964 (7th Cir. 2000). Although a plaintiff is required to establish two predicate acts, such a showing is not necessarily sufficient. See H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 237, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). The predicate acts must be related and must " amount to or pose a threat of continued criminal activity." Id. at 239.

The Court concluded in its October 24, 2014 summary judgment ruling that plaintiffs identified multiple predicate acts that a reasonable jury could conclude constituted RICO predicates, including " the agreement to pay the bribe itself as well as multiple acts of alleged wire fraud (if nothing else, telephone calls involving the anticipated bribe)." 10/24/2014 Order at 9. Plaintiffs offered evidence of these acts at trial. Defendants argue that because December 3, 2008 was the first time a quid pro quo was discussed, they could not have agreed to the commission of predicate acts that took place before that date. But at least one phone call was recorded after the December 3 meeting, which the jury could reasonably conclude constituted a RICO predicate. Pls.' Ex. 36. Moreover, there was evidence from which the jury could have found an implicit agreement before December 3, as the Court has discussed.

Defendants also argue that " multiple manifestations of the same predicate act" cannot constitute a pattern. Defs.' Mem. in Supp. of Renewed Mot. for J. as a Matter of Law at 5. They essentially contend that there was no threat of continued criminal activity because this case involves a single alleged bribe. A plaintiff can establish continuity through a closed- or open-ended scheme. Specifically, a plaintiff " may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time" or may demonstrate open-ended continuity where " the threat of continuity is demonstrated." H.J. Inc., 492 U.S. at 242. Here, there is insufficient evidence of a closed scheme, because the conspiracy lasted at most from April to December of 2008. ...

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