The opinion of the court was delivered by: IRENAS
Plaintiffs, who are primarily card-counting blackjack players, bring this action against thirty-eight casino defendants ("Casino Defendants"), three investigation agencies, and several hundred "John Doe" defendants, alleging a conspiracy in violation of state and federal RICO statutes, and violations of the New Jersey Public Accommodations Act and the New Jersey Consumer Fraud Act. In addition, they assert constitutional and civil rights claims implicating the Equal Protection Clause, the Due Process Clause, Article 1, paragraph 1 of the New Jersey Constitution, 42 U.S.C. § 1983 and other state and federal statutes, and various common law claims for breach of contract, fraud, tortious interference with contract and prospective economic advantage, and negligence. The complaint also asserts an assortment of personal injury claims. including invasions of privacy, misappropriation of name or likeness, libel, slander, and infliction of emotional distress. Finally, plaintiffs assert claims against nine lawyer and law firm defendants ("Lawyer Defendants") for legal malpractice, breach of fiduciary duty, negligence, breach of contract, and negligent supervision.
Jurisdiction over plaintiffs' federal statutory and constitutional claims is premised upon 28 U.S.C. § 1331. Jurisdiction over plaintiffs' remaining claims is based upon the Court's supplemental jurisdiction pursuant to 28 U.S.C. § 1367.
Currently before the Court are motions by all of the defendants to dismiss the plaintiffs' complaint pursuant to Fed. R. Civ. P. 12(b)(6). The defendants are also in the process of filing a motion for Rule 11 sanctions, Fed. R. Civ. P. 11, against plaintiffs' attorney and the lead plaintiff, Doug Grant von Reiman ("Doug Grant"), who claims to act as attorney-in-fact for the plaintiffs. We will reserve all issues relating to the Rule 11 sanctions for consideration at a later date. For the reasons that follow, we will grant the defendants' motions to dismiss under Fed. R. Civ. P. 12(b)(6) as to the First Count, Second Count, Third Count, Fifth Count, Sixth Count, Seventh Count and Thirteenth Count. These counts are all based on the plaintiffs' central allegation that the casinos' implementation of Casino Control Commission ("CCC") regulations violates various federal and state statutes, the common law, and the United States and New Jersey Constitutions. After dismissing all these federal and related claims based on the CCC regulations, we decline to retain subject matter jurisdiction over the remaining state law claims alleged in the Eighth, Ninth, Tenth and Eleventh Counts and the state law malpractice claims against the Lawyer Defendants. Because these claims do not form part of the same case or controversy as the CCC regulation claims and because, in any case, we have discretion to decline to exercise supplemental jurisdiction, we will remand them to state court. As plaintiffs have withdrawn their claims under the Fourth and Eleventh Counts, we will also dismiss these claims.
The individual plaintiffs in this matter are blackjack players who frequent the Atlantic City casinos operated by the Casino Defendants.
Most of them have developed card-counting skills which enable them to reduce or eliminate the normal odds in favor of the casinos. The corporate plaintiffs are corporations associated with plaintiff Doug Grant, Inc., a New Jersey corporation whose predecessor corporations were involved in operating card-counting schools and mock casinos set up by plaintiff and renowned card-counter Doug Grant. The complaint alleges that the schools and mock casinos were forced to close down in 1992 as the result of the Casino Defendants' alleged illegal countermeasures against card-counters and because of bomb threats, break-ins, destruction of property, theft of student lists, stalking and other intimidation tactics. Doug Grant, Inc. also provided the training for several cooperative player groups, including many plaintiffs, who pooled their financial resources and agreed to share their blackjack winnings.
A. The Play of Blackjack, Card-Counting and Shuffling-At-Will and Other Countermeasures
The gravamen of plaintiffs' complaint is that the Casino Defendants undertake certain "illegal" countermeasures to eliminate the advantage a skilled card-counter may be able to gain over the casinos in the game of blackjack. Blackjack is the one casino game in which a player's skill may increase his chance of winning to the point of eliminating the winning odds in favor of the "house." Card-counters use intellect and memory to identify when, during the course of play, the odds of winning are better or worse. A short discussion of Atlantic City blackjack and the practice of card-counting is necessary to assist the reader in better understanding the plaintiffs' allegations.
Blackjack must be played with decks containing fifty-two cards of four suits (hearts, diamonds, clubs and spades) with each suit containing thirteen cards (Ace, King, Queen, Jack, 10, 9, 8, 7, 6, 5, 4, 3, 2). N.J.A.C. 19:46-1.17. Before blackjack games are commenced, the dealer receives one or more, usually between six to eight, decks from the casino supervisor and inspects them in the presence of the floorperson. Id. 19:46-1.18(a), (f); id. 19:47-2.4(a). After the cards are inspected, the dealer takes them to his table and spreads them out in a fan, face upwards, for visual inspection by the first player or players to arrive at the table. Id. 19:47-2.4(b). After the first player or players is afforded an opportunity to visually inspect the cards, the cards are turned face downward on the table, mixed thoroughly, shuffled until "randomly intermixed," and then placed into a stack. Id. 19:47-2.4(c); id. 19:47-2.5(a). After the shuffle is completed, the dealer asks the player seated at a certain position at the table, as defined by the regulations, id. 19:47-2.5(e), to cut the deck. Id. 19:47-2.5(b). The player cuts the deck by placing a plastic cutting card in the stack at least ten cards from either end. Id. 19:47-2.5(c). Once the cutting card has been inserted by the player, the dealer takes all the cards in front of the cutting card and places them at the back of the stack. Id. 19:47-2.5(d). The dealer then takes the entire stack of cards that was just shuffled and cut and aligns it along the side of the dealing shoe which has a mark on the side that enables the dealer to insert the cutting card so that it is in a position "at least approximately" one-quarter of the way from the back of the stack. Id. 19:47-2.5(d); see id. 19:46-1.19(d)(4). The stack of cards is then inserted into the dealing shoe for commencement of play. Id. 19:47-2.5(d). The cards behind the cutting card will not be used during the game.
Id. 19:47-2.5(h). The dealer then deals the cards to the players in a series of blackjack hands until the dealer reaches the cutting card. Once the cutting card is reached, the dealer repeats the shuffling process and cutting procedures described above. Id.
In the game of blackjack, where the object of play is to reach as close to a total card value of "21" without exceeding that value, certain cards are more favorable to the player and certain cards are more favorable to the dealer. The player-favorable cards are the Ace, King, Queen, Jack and Ten. The dealer-favorable cards are the 6, 5, 4, 3, and 2. The 7, 8, and 9 are neutral. At any given point during the play of a shoe, the shoe might contain more player-favorable cards or it might contain more dealer-favorable cards. When there are more player-favorable cards, the players' chances of winning are increased. When there are more dealer-favorable cards, the dealer's chances of winning are increased. Whether and when a shoe will turn out to be player-or dealer-favorable is purely random.
Card-counters attempt to "count cards" so as to determine whether and when a shoe is player-favorable. They then vary their bets, betting high when the shoe is player-favorable and low when the shoe is dealer-favorable. Bets are placed before each individual round of blackjack and are generally based on the approved minimums and maximums for the table. According to the plaintiffs, successful card-counting contains several basic elements. These include: the assignment of a point value to each card, maintaining a running total of those points during play, betting strategies, playing strategies, money management, a sufficient bankroll, and "the intangible ability to consistently apply these interrelated strategies under fast-paced casino conditions." Compl. at P 133.1.
In order to have the most success, card-counters need to be able to view, through the rounds of play, as many of the cards in the shoe as possible. The greater number of cards they are able to view, the easier it is for them to determine whether the remaining cards in the shoe are player-favorable or dealer-favorable. For this reason, card-counters prefer that the dealer places the cutting card toward the end of the shoe, leaving the fewest number of cards behind the cutting-card and increasing the overall number of cards in play. Card-counters also prefer to have the entire shoe of cards played. If the dealer decides to reshuffle prior to reaching the cutting card, then the card-counters' opportunity to bet high on a shoe with a remainder of mostly player-favorable cards is eliminated. The casinos, on the other hand, prefer to decrease the card-counters' opportunity to bet high on a player-favorable shoe. Therefore, it is in their interest to decrease the card-counters' chances of determining whether a shoe is player-favorable by playing with fewer cards in the shoe (placing the cutting card as far away from the back of the stack as permitted by the regulations). It is also in the casinos' interest to reshuffle prior to reaching the cutting card when the remaining cards in a shoe are player-favorable. However, neither of these practices come completely free of cost to the casino: the more often the dealer must undertake the meticulous shuffling process, the shorter the actual time of play and the smaller the profits.
Plaintiffs allege that the casinos maintain their own card-counting teams and/or video and computer surveillance equipment to identify card-counters and inform the dealers of their participation in a blackjack game so that the dealers can take certain countermeasures against them. Plaintiffs challenge these practices as violations of the "cheating games" statute which provides that it shall be unlawful "knowingly to deal, conduct, carry on, operate or expose for play any game or games played with cards . . . which have in any manner been marked or tampered with, or placed in a condition, or operated in a manner, the result of which tends to deceive the public or tends to alter the normal random selection of characteristics or the normal chance of the game which could determine or alter the result of the game." N.J.S.A. 5:12-115. First, they claim that the identifying process is fundamentally flawed because it tends to unfairly misidentify non-card-counters as card-counters. They claim casinos define card-counters as (1) any patron who increases a bet during a player-favorable count, or (2) any patron who knows or is related to someone who has increased a bet during a player-favorable count. According to plaintiffs, once identified, that player is "branded for life" and never able to play a "fair" game of blackjack without being subjected to countermeasures. The casinos allegedly share information about suspected card-counters through defendant Griffin Investigations and other similar agencies. These agencies allegedly keep dossiers containing the pictures of suspected card-counters which casino employees then use to spot card-counters for purposes of knowing when to implement countermeasures.
Second, plaintiffs claim that the casinos utilize what they term the "cheating-at-will" preferential shuffle and which, as codified by the regulations, is generally known as the "shuffle-at-will." The shuffle-at-will occurs when the dealer is instructed to reshuffle prior to the cut-card marker because the casino card-counting team has determined that the shoe is player-favorable and card-counters are suspected to be playing at a given table. Plaintiffs allege that the shuffle-at-will provides an extra 2% advantage to the casino, nearly double the casinos' normal chance of winning, providing the casinos with a windfall of millions of dollars. They also claim that the shuffle-at-will can be abused and used to the disadvantage of non-card-counters because dealers and pit bosses can use it to increase their revenues even when there is no suspected card-counter playing at a table. Plaintiffs recount specific instances in which individual plaintiffs allegedly were subjected to shuffling-at-will by specific defendants throughout the past ten years. On some, but not all, of these occasions, the individual defendant would report the shuffle-at-will to the CCC and/or Department of Gaming Enforcement ("DGE") official required to be on-site at every casino. According to plaintiffs, no casino has ever responded to such complaints by admitting to counting cards and shuffling during a player-favorable count.
Third, plaintiffs, allegedly because they have been identified as card-counters, complain about being limited to one wager, being refused a deal, having bets pushed back, being forced to bet below the original posted limit, and having "shills"
occupy all seats at tables at which they wished to play. They allege that they were treated in this manner while other non-card-counting players were not. Fourth, plaintiffs claim that the Casino Defendants denied them "comps"
after identifying them as card-counters. Finally, plaintiffs allege that they have been threatened, assaulted and stalked because of their suspected card-counter status. They allege that they have been threatened in person while at the casinos by both known and unknown casino employees and that they have been threatened and sent pornographic materials over the Internet by unnamed John Does allegedly connected to the casinos.
B. The Casino Control Act and CCC Regulations
The Casino Control Act, N.J.S.A. 5:12-1 et seq. (the "Act"), gives the CCC comprehensive authority to define and regulate the rules and conduct of play for blackjack and other authorized casino games. See Uston v. Resorts Int'l Hotel, Inc., 89 N.J. 163, 169, 445 A.2d 370 (1982) (citing N.J.S.A. 5:12-70f and 100e); see also Campione v. Adamar of N.J., 302 N.J. Super. 99, 113-14, 694 A.2d 1045 (App. Div. 1997), cert. granted, 152 N.J. 9, 702 A.2d 348 (1997).
It also grants the CCC "exclusive jurisdiction" over the interpretation and enforcement of regulations governing "all matters delegated to it or within the scope of its powers under the provisions of [the Act]." N.J.S.A 5:12-133(b); see id. 5:12-69 to 70. Among the matters that the Act delegates to the CCC are the promulgation of regulations regarding the rules of casino games, including blackjack, id. 5:12-69, 70(f), gambling related advertising, id. 5:12-70(o), and the enforcement of gaming regulations, including the investigation, adjudication, and punishment of regulatory violations, id. 5:12-63(b), (f), (g); 5:12-64; 5:12-129.
The regulations governing blackjack are exhaustive and set forth in great detail the rules for the conduct of the game. See N.J.A.C. 19:47-2.1 et seq. As recognized by the New Jersey Supreme Court, "it is no exaggeration to state that the Commission's regulation of blackjack is more extensive than the entire administrative regulation of many industries." Uston, 89 N.J. at 169, 445 A.2d 370. The CCC is very aware of the card-counter controversy. As both plaintiffs and defendants have recognized, the CCC has carefully considered and addressed in both proposed and adopted blackjack regulations the effect card-counters can have on the game and the ways in which casinos should be permitted to respond to professional card-counters. See, e.g., 14 N.J.R. 467-70 (May 17, 1982); 14 N.J.R. 559-69 (June 7, 1982); 14 N.J.R. 841 (Aug. 2, 1982); 23 N.J.R. 1784(b) (June 3, 1991); 23 N.J.R. 2613(a) (Sept. 3, 1991); 23 N.J.R. 3350 (Nov. 4, 1991); 23 N.J.R. 3354 (Nov. 4, 1991); 25 N.J.R. 3953(a) (Sept. 7, 1993); 25 N.J.R. 5521(a) (Dec. 6, 1993). The CCC regulations authorize the casinos to use certain countermeasures to prevent professional card-counters from overcoming the statistical advantage that is necessary to ensure the casinos' financial viability.
The adoption of many of the CCC regulations authorizing countermeasures occurred in response to the New Jersey Supreme Court's ruling in Uston v. Resorts Int'l Hotel, Inc., 89 N.J. 163, 445 A.2d 370 (1982). At issue in Uston was whether or not casinos had the authority to exclude card-counters from their premises. The Court determined that casinos were not authorized to exclude card-counters. It reasoned that the Act gave the CCC exclusive and plenary authority to set the rules and methods of play of casino games and that the CCC had not authorized exclusion as a countermeasure. Id. at 166. The Court suggested that, if the CCC wanted to approve measures to neutralize the card-counter threat, regulations to that effect, short of violating possible constitutional and statutory limits by fully excluding card-counters altogether, could be adopted. 445 A.2d at 372, 375-76. In fact, prior to Uston, the CCC had already codified a practice originally not intended as a card-counter countermeasure but eventually used by the casinos for that purpose. This regulation provided that: "[a] casino licensee may permit a player to wager on more than one box at a Blackjack table." N.J.A.C. 19:47-2.14.
The CCC had been allowing the use of this practice against card-counters through its approval of casinos' internal Section 99 controls. See N.J.S.A. 5:12-99.
The rule specifically offered casinos' discretion to allow players (usually non-card-counters) to bet on more than one box, and presumably, in light of the discretionary language, allowed them not to permit card-counters to bet on more than one box.
After Uston, the CCC held a series of hearings on the issue of card-counters and decided to enact regulations authorizing certain measures casinos could use to neutralize the potential negative effect card-counters could have on their financial viability. See Campione, 302 N.J. Super. at 103, 694 A.2d 1045. The new regulations, which the New Jersey Supreme Court urged the CCC to adopt in lieu of allowing the casinos to exclude card-counters, balanced the statutory goals of casino viability and fair odds to all players, N.J.S.A. 5:12-100e, and were intended to ensure both the fairness and integrity of casino gambling and "the right of the casinos to have the rules drawn so as to allow some reasonable profit." Uston, 89 N.J. at 175, 445 A.2d 370; see, e.g., 14 N.J.R. 560-61 (June 7, 1982); 23 N.J.R. 1784 (June 3, 1991).
Several of these countermeasures involved the manner in which casinos could shuffle the blackjack cards. The first approved shuffling method was known as the "Bart Carter Shuffle," a "shuffling procedure in which approximately one deck of cards is shuffled after being dealt, segregated into separate stacks and each stack is inserted into premarked locations within the remaining decks contained in the dealing shoe." N.J.A.C. 19:47-2.1; see N.J.R. 559(b) (June 7, 1982); 14 N.J.R. 841(b) (Aug. 2, 1982). Another approved shuffling countermeasure, known as the "shuffle-at-will," was approved by the CCC to allow the casinos to shuffle after any round of play. The CCC amended the existing shuffle regulation by adding language regarding the casinos' ability to shuffle "after any round of play:"
(a) Immediately prior to commencement of play, after any round of play as may be determined by the casino licensee and after each shoe of cards is dealt, the dealer shall shuffle the cards so that they are randomly intermixed. . .
(h) A reshuffle of the cards in the shoe shall take place after the cutting card is reached in the shoe . . . except that:
1. The casino licensee may determine after each round of play that the cards should be reshuffled;
2. When the "Bart Carter Shuffle" is utilized a reshuffle shall take place after the cards in the discard rack exceed approximately one deck in number.
N.J.A.C. 19:47-2.5 (emphasis added); see 14 N.J.R. 559(b) (June 7, 1982), 14 N.J.R. 841(b) (Aug. 2, 1982).
Finally, the use of a device known as the continuous shuffling shoe was approved:
In lieu of the dealing and shuffling requirements set forth in N.J.A.C. 19:47-2.5 and 2.6, a casino licensee may utilize a dealing shoe or other device designed to automatically reshuffle the cards provided that such shoe or device and the procedures for dealing and shuffling the cards through the use of this device are approved by the Commission or its authorized designee.
N.J.A.C. 19:47-2.20; see 14 N.J.R. 559(b) (June 7, 1982), 14 N.J.R. 841(b) (Aug. 2, 1982).
The shuffling regulations, particularly the most commonly used shuffle-at-will, enabled the casinos to lessen the card-counters' ability to determine whether cards remaining in the shoe were player-favorable. As already noted, when the cards are reshuffled continuously or prior to reaching the cutting-card, card-counters lose their potential advantage over the casinos because they can no longer begin betting high wagers only when they know their chances of receiving player-favorable cards have been increased. Though effective against card-counters, the use of these shuffling regulations increases shuffling time and thereby causes the casinos to lose revenue.
The CCC also authorized one non-shuffling countermeasure after the Uston decision -- an increase in the number of decks casinos were allowed to use in blackjack play. N.J.A.C. 19:47-2.2. This helped the casinos combat card-counters by increasing the number of cards card-counters would have to ...