On Monday, Judge Leonard Sand of the Southern District of New York dismissed many of the claims raised in a class action lawsuit against Full Tilt Poker, many of its companies, many of its owners, and others associated with the organization.
The suit, which was originally filed on June 30th on behalf of all US players, lists thirteen individual defendants: Ray Bitar, Nelson Burtnick, Howard Lederer, Phil Ivey, Chris Ferguson, John Juanda, Jennifer Harman-Traniello, Phil Gordon, Erick Lindgren, Erik Seidel, Andy Bloch, Mike Matusow, Gus Hansen, Allen Cunningham, and Patrik Antonius. (Phil Gordon was later dismissed with prejudice.) It also names nine companies associated with Full Tilt and lists 100 John Does to allow for more people and companies to be added in the future. It alleges that all defendants committed conversion and that Burtnick, Bitar, and various corporate entities violated the Racketeer Influenced and Corrupt Organizations Act.
Motions to dismiss are pretrial motions that ask the court to reject a case on purely legal grounds. A judge’s response to a motion to dismiss typically says nothing about the facts of the case, but rather merely says whether the plaintiff’s claims against the defendant, if true, would justify a legal remedy. The granting of a motion to dismiss is therefore a refutation of the legal argument made by the plantiff rather than a statement about the defendants’ innocence.
Judge Sand granted the motion to dismiss all claims against the individuals other than Bitar and Burtnick.1 The judge agreed with the defense’s argument that the plaintiffs did not allege that these defendants were directly involved in the conversion. In particular, the judge says that the plaintiffs failed to allege that these defendants knew that the conversion was happening and assisted substantially.2 The judge similarly granted the motion to dismiss the claim for conversion against Tiltware and Pocket Kings Consulting, stating that the plaintiffs failed to allege that these two companies “played any role in the decision to prevent Full Tilt Poker customers from withdrawing the money in their accounts.”
Judge Sand also dismissed the RICO charges against all defendants. The plaintiffs’ original complaint alleged that the RICO defendants violated various laws, which caused the US Department of Justice to seize Full Tilt’s assets and therefore deprived players of the ability to withdraw. The judge ruled that does not constitute a direct cause and therefore that the RICO Act does not apply. A civil RICO case, if successful, provides for treble damages.
However, Judge Sand did not dismiss the conversion claim against Pocket Kings, Vantage, and Filco. The judge explained, “The fact that [these] three defendants worked together to maintain the Full Tilt website makes it plausible to infer that they also worked together to block Plaintiffs’ access to the money in their accounts.” But, this is only a small victory for the plaintiffs because these companies are now essentially defunct.
The judge did, however, grant the plaintiffs leave to amend their complaint. Indeed, the original complaint was filed seven months ago. In particular, it was filed long before the DOJ filed its own amended civil complaint on September 20th. Though the DOJ’s new complaint stops short of formally charging Full Tilt’s owners with theft, it does contain an entire section entitled “Full Tilt Poker’s and [Ray Bitar's, Howard Lederer's, Chris Ferguson's, and Rafe Furst's] Theft of Player Funds.” The information contained in that section, together with other information that has come to light since the lawsuit was filed on June 30th, may provide the plaintiffs with more persuasive charges if it chooses to amend.
This particular class action was filed by Wolf Haldenstein Adler Freeman & Herz LLC on behalf of all US players who had real money balances on Full Tilt Poker on April 15, 2011. The class is represented by named plaintiffs Steve Segal, Nick Hammer, Robin Hougdahl, and Todd Terry. It was the first of a handful of class action suits that have been filed against various individuals and companies associated with Full Tilt Poker since Black Friday.
Various people related to the case either could not be reached for comment or refused to comment publicly. However, Ifrah Law, the firm that wrote the initial motion to dismiss, posted a statement on its website.
Correction 2/1/2012 12:46 AM EST
This article briefly erroneously stated that the motions to dismiss were granted on Wednesday. They were in fact granted on Monday, January 30th.
Subject: Poker apologizes for any confusion caused.
Thanks to S:P reporter Diamond Flush for quickly catching the error.
Edited on 2/1/2011 3:19 AM EST: Switched two instances of “prosecution” to “plaintiffs.”
- Ray Bitar and Nelson Burtnick were not included in the original motion to dismiss. They are currently the only Full Tilt executives who face criminal charges. ↩
- According to Miele v. American Tobacco Company, a defendant is guilty of aiding and abetting only if “the defendant (1) knew that another’s conduct constituted a breach of duty and (2) gave substantial assistance or encouragement to the other.” ↩