Judge Dismisses Most of FTP Class Action

February 1, 2012 - 12:42 AM EDT
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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.”

Footnotes

  1. 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.
  2. 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.”

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10 Responses to Judge Dismisses Most of FTP Class Action

  1. peter
    February 1, 2012 at 2:18 AM EDT

    Does all this affect in any way the deal between GBT and DOJ?

  2. yyjn12
    February 1, 2012 at 3:33 AM EDT

    Any news about when we can expect FTP back online ?

  3. Jonemann
    February 1, 2012 at 11:36 AM EDT

    Hello

    Would it be possible to have some more understandable cliffs for us NON-US people who might find this text difficult to understand because of all the legal language? For me its difficult to understad exactly what this article says, because I am not familiar with the legal terms. I know there are links, but thought maybe it would be possible to write some cliffs of some sort which might be a litle more understandable.

    • Jonemann
      February 1, 2012 at 11:38 AM EDT

      because the links in themselves also contained difficult english legal language.

  4. jimsbets
    February 1, 2012 at 12:22 PM EDT

    Noah or DF – if tapie is correct and the the acquisition goes through this montg does that meab the DOJ will begin the process of repaymebt at that time?

  5. SixthSense
    February 2, 2012 at 3:41 AM EDT

    Why are only Ray Bitar and Nelson Burtnick facing criminal charges but NOT Chris Ferguson and Howard Lederer ?

    • J. Crowhurst
      February 12, 2012 at 7:37 AM EDT

      Because there’s no evidence that Ferguson and Lederer had any direct involvement in the transactions that violated U.S. law.

  6. PokerStars
    June 30, 2012 at 6:42 AM EDT

    This is good news for full tilt. Fingers crossed that they get back online soon!

    • cal cool
      July 25, 2012 at 6:22 PM EDT

      I am curious as to why you apparantly want a crooked outfit “back on line”
      Is it because it is like the old joke punchline
      “it’s the only game in town?
      just asking

  7. Michael
    September 6, 2012 at 9:50 AM EDT

    Very informative article, some good info!

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