Appeals Court Rejects Compulsive Gambler’s “Frivolous” RICO Claim
In a stinging opinion, the U.S. Court of Appeals for the Seventh Circuit recently dismissed a compulsive gambler’s claim as “exactly the type of bootstrapping that federal courts abhor.” The court then directed the plaintiff’s attorneys to show cause why they should not be sanctioned for filing a “frivolous” appeal. Williams v. Aztar Indiana Gaming Corporation, 351 F.3d 294 (7th Cir. 2003).
David M. Williams, a former auditor with the Indiana Department of Revenue, said he became addicted to gambling over a period of several years while patronizing Aztar’s casino in Evansville, Ind. A friend, Darlene Tempel, became concerned about Williams’ gambling and made several attempts to induce Aztar to prevent Williams from gambling at its casino.
In apparent response to Tempel’s concerns, Aztar sent Williams a letter informing him that “prior to gaming with us, at any time in the future, you must present us with medical/psychological information which demonstrates that your patronage of our facility poses no threat to your safety and/or well being.” Williams did not return to the Aztar casino for over a year thereafter, but then gambled there on several occasions, concealing his identity from Aztar personnel. After those first few visits, Williams began to use his Aztar “Fun Card,” which triggered the mailing of Aztar promotional materials to his home – despite Aztar’s earlier letter to him. Over a year later, a casino security guard recognized Williams and evicted him from the premises.
Prominent among Williams’ claims was one based on the Racketeer Influenced and Corrupt Organizations Act (“RICO”), asserting that the letter and promotional materials sent by Aztar constituted RICO predicate acts of mail fraud. He also posed tort and contract claims under state law, asserting that casinos have a legal duty to stop known compulsive gamblers from gambling. After discovery, the trial court granted summary judgment in Aztar’s favor on all claims, holding that Indiana law imposed no duty on casinos “to expel casino patrons identified as compulsive gamblers.”
On appeal, Williams challenged only the dismissal of his negligence claims. The Seventh Circuit never reached that issue, however, concluding that Williams’ RICO theory was “so feeble, so transparent an attempt to move a state-law dispute to federal court” that the trial court lacked subject matter jurisdiction over the entire case.
The appellate opinion by Judge Ann Williams summarily rejected Williams’ theory that Aztar’s exclusion letter and promotional mailings constituted intentional misrepresentations designed to defraud Williams under the federal mail fraud statute. The court explained that Aztar’s letter did not represent or warrant that Williams would be prevented from gambling if he did not provide the requested medical documentation, and concluded that Aztar’s promotional materials were “nothing more than sales puffery.” Both holdings are important in view of the practical difficulties casinos face in enforcing the exclusion of any patron from gambling and in terminating promotional mailings. The court concluded that Williams’ RICO claim “was frivolously filed solely to invoke the jurisdiction of the federal courts” and ordered Williams’ attorney “to show cause within 14 days why he should not be sanctioned.”
The Williams ruling sends a strong warning against attempts to use RICO claims to steer compulsive gambling litigation into federal courts, though the court did not address Williams’ claim to federal jurisdiction based on federal maritime law. Claims against riverboat casinos routinely draw on maritime law in seeking federal jurisdiction, which may seem more attractive – afterWilliams – to compulsive gambling plaintiffs seeking a federal forum.
