Reuter v. Mastercard International, Inc.

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State: Illinois

Court: 5th District Appellate

Docket No: 5-07-0372 Rel

Case Date: 01/05/2010

Preview:N O T IC E Decision filed 01/05/10. The text of this dec ision m ay b e changed or corrected prior to the P e t i ti o n for filing of a or the

NO. 5-07-0372 IN THE APPELLATE COURT OF ILLINOIS

Re hea ring

FIFTH DISTRICT _________________________________________________________________________ THOMAS REUTER, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Christian County. ) v. ) No. 00-L-8 ) MASTERCARD INTERNATIONAL, INC.; VISA ) U.S.A., INC.; MBNA CORPORATION; ) CITIGROUP, INC.; CHASE MANHATTAN ) CORPORATION; BANK ONE CORPORATION; ) BANK OF AMERICA CORPORATION; U.S. ) BANCORP; FLEET FINANCIAL GROUP, INC.; ) FEDERAL DEPOSIT INSURANCE ) CORPORATION, as Receiver of Citizens National ) Bank of Macomb; BUSEY BANK OF URBANA; ) UNITED COMMUNITY BANK OF CHATHAM; ) and PALMER BANK, ) Honorable ) David W. Slater, Defendants-Appellees. ) Judge, presiding. _________________________________________________________________________ JUSTICE CHAPMAN delivered the opinion of the court: This appeal involves section 28-8 of the Criminal Code of 1961 (720 ILCS 5/28-8 (West 1998)). That section provides that any person who loses money or any other thing of value through illegal gambling may recover what was lost from the winner. 720 ILCS 5/288(a) (West 1998). If the gambler does not bring a suit to recover his or her losses within six months of the time they occur, any other individual may bring a civil suit for damages triple the amount lost by the gambler. 720 ILCS 5/28-8(b) (West 1998). The plaintiff brought the instant lawsuit under this second provision. His complaint named as defendants MasterCard International, Inc., Visa U.S.A., Inc., and several banks that issued MasterCard and Visa credit cards to Illinois consumers who used their credit cards to gamble on Internet casinos.
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disposition of the same.

At issue is whether these defendants are "winners" under the statute. The trial court held that they are not and, accordingly, granted the defendants' motion to dismiss. We affirm that ruling. On March 3, 2000, the plaintiff, Thomas Reuter, filed a 23-count complaint seeking damages under section 28-8(b) of the Criminal Code of 1961 (720 ILCS 5/28-8(b) (West 1998)). That section provides that if a person who lost at illegal gambling does not bring a suit to recover his losses within six months, any person may bring an action against the winner for three times the amount lost. 720 ILCS 5/28-8(b) (West 1998). This provision is intended to serve as an enforcement mechanism. Vinson v. Casino Queen, Inc., 123 F.3d 655, 657 (7th Cir. 1997) (applying Illinois law). The complaint alleged a civil conspiracy to operate online casinos, a form of gambling that is illegal in Illinois. The plaintiff sought treble damages under section 28-8(b) for the losses of an individual named Glenn Lee, as well as the unspecified losses of unnamed Illinois cardholders. Count I of the complaint alleged that defendants MBNA Corp. (MBNA) and MasterCard International, Inc. (MasterCard), conspired to violate section 28-1 of the Criminal Code of 1961 (720 ILCS 5/28-1 (West 1998)), which prohibits many forms of gambling. The plaintiff alleged the following facts. MBNA is a bank that issues credit cards to Illinois consumers through defendant MasterCard. MBNA and MasterCard have a "merchant agreement" with a company called Intersafe Global, which is identified as the "cashier" on Internet casino sites. Gamblers visiting these sites can use their credit cards to purchase virtual chips from Intersafe Global, which they can then use to place bets. According to the complaint, MBNA and MasterCard knew that Intersafe Global and other similar companies (referred to in the complaint as "gambling finance companies") worked directly with online casinos, including Casino-on-Net, the Internet casino that Glenn Lee used. The complaint alleged that MasterCard's logo appears on the Casino-on-Net site.
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None of the Internet casinos or gambling finance companies are named as defendants in the complaint. Count I further alleged that pursuant to its merchant agreements with MBNA and MasterCard, Intersafe Global paid these defendants a fixed percentage of the money that cardholders spent purchasing Internet gambling chips to place bets on Casino-on-Net. Any winnings were credited to the gambler's credit card account if a balance on the card was "due and owing." MBNA issued a Platinum Plus MasterCard to Glenn Lee, who used the card to purchase $49,500 in virtual chips from Intersafe Global. Lee gambled with these chips on Casino-on-Net between January 1, 1999, and September 2, 1999, and lost the entire $49,500. The complaint alleged that any periodic winnings Lee received during this period were credited to his MBNA MasterCard account. In count I of his complaint, the plaintiff sought $148,500 (three times the amount Lee lost) pursuant to section 28-8(b). The plaintiff alleged that MBNA and MasterCard were liable for these losses because (1) they were "winners" under the statute and (2) they were liable for the losses as coconspirators with the Internet casinos and gambling finance companies. Count II of the complaint also alleged that MasterCard and MBNA conspired to violate Illinois gambling laws. Count II contained essentially the same factual allegations as count I, but it alleged a broader conspiracy with additional victims. More specifically, the plaintiff alleged that MBNA and MasterCard had merchant agreements not only with Intersafe Global but with one or more of the other Internet gambling finance companies listed in a one-page exhibit attached to the complaint. He further alleged that these finance companies allowed gamblers to purchase chips from one or more of the online casinos listed in a nine-page exhibit attached to the complaint. He alleged that between September 1997 and September 1999, Illinois residents used their MBNA MasterCards to gamble online and
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lost "large sums of money" doing so. As damages, the plaintiff sought three times the amount the court would find to have been lost by all Illinois cardholders except for Glenn Lee. The remaining 21 counts of the complaint alleged identical civil conspiracies between MasterCard and several other banks that issue credit cards through MasterCard and between Visa and banks (including MBNA) that issue Visa credit cards. In each, the plaintiff sought damages in unspecified amounts for three times the losses of all Illinois cardholders except for Glenn Lee. On May 12, 2000, the defendants filed a joint motion to dismiss the complaint pursuant to both sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2615, 2-619 (West 1998)). They alleged that (1) all 23 counts of the complaint failed to state a cause of action because they did not allege facts demonstrating that the named defendants are "winners" under the statute and (2) counts II through XXIII of the complaint additionally failed to state a claim because the plaintiff did not identify any gambling losses subject to recovery under the statute and the plaintiff cannot bring an action "on behalf of an unidentified putative statewide class of alleged losers at gambling." In addition, they alleged that (1) all 23 counts are preempted by federal banking laws, (2) the gambling finance companies and Internet casinos are indispensable parties, and (3) the dispute is subject to mandatory arbitration clauses in the consumer credit card agreements (see 735 ILCS 5/2619(9) (West 1998)). On August 4, 2000, the plaintiff filed his response to the defendants' motion to dismiss. Attached to the plaintiff's response were two lengthy appendices. In relevant part, the appendices contained an affidavit of Glenn Lee and a letter from the customer satisfaction department of MBNA. The affidavit was notarized on July 31, 2000. In it, Lee averred that in January 2000, he sent a certified letter to MBNA requesting that MBNA issue
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a letter authorizing Casino-on-Net to wire any of Lee's winnings directly to him. He further averred that he received a letter in response "declining [his] request but congratulating [him] on [his] recent luck with [his] Casino-on-Net transactions." That letter, dated March 15, 2000, is also included in the appendices, and it states in relevant part as follows: "We congratulate you on your recent luck with your Casino-On-Net transactions. However, MBNA is not able to dictate to the merchant the method used to dispose your winnings. Whenever a merchant charges an account for a particular transaction, it is normal for any subsequent transactions related to the initial transaction to be credited against the same account." On September 6, 2000, the plaintiff filed a motion for leave to file an amended complaint. He sought to amend the complaint to seek damages for the gambling losses incurred by Illinois cardholders up through February 2000. On September 21, 2000, the court held a hearing and heard arguments. No transcript or bystander's report of that hearing appears in the record. The court took the matter under advisement. On August 2, 2001, the plaintiff filed a renewed motion to amend his complaint, again seeking damages for gambling losses incurred up to February 2000. On August 31, the trial court granted the motion for leave to amend over the objection of the defendants. On October 19, 2001, the court entered a detailed written order granting the defendants' motion to dismiss the entire complaint. The court noted that the primary issue in this case is whether the defendants are "winners" under the statute. The court cited dictionary definitions for the terms "win" and "winner," noting that a "winner" is defined as " 'a person or thing that wins' " and that "win" is defined as " 'to gain a victory; succeed; to gain in competition, as a prize, victory as in a contest.' " The court then explained that the statute is penal in nature and must therefore be strictly construed. The court rejected the plaintiff's argument that a strong public policy against gambling dictated a more liberal
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construction of the statute. In doing so, the court noted that many forms of gambling which were once illegal had been legalized, evincing a more "relaxed attitude" toward gambling. The court found that the defendants' role in the gambling transactions was complete prior to any gambling occurring. The court further found that the amount of profit earned by the defendants for providing basic financial services did not depend on the outcome of the gambling. That is, the gamblers would owe the defendants the same amount whether they won or lost. Similarly, the fee charged to the casinos and finance companies for transferring money is based on the amount of chips purchased, not the outcome of any bets placed. The court briefly addressed the additional issues raised by the defendants. The court found that these issues were moot in light of its finding that the defendants were not "winners." The court stated, however, "[I]t does appear to this Court that the Internet Finance Companies and Internet Casinos are necessary parties, that the claims against the National Banks are preempted by Federal Law, and that the Plaintiff has attempted to state a claim for a class of individuals without certifying the class and without specifying with certainty the names or damages of the class." The court also stated that the arbitration clause did not appear to be applicable, based on the penal nature of the statutory claim. The court dismissed the plaintiff's complaint with prejudice. On October 22, 2001, the plaintiff filed a motion for leave to file a second amended complaint. We note it appears that, although the court had already entered its order dismissing his complaint, the plaintiff had not yet been notified of the ruling. The motion sought to amend the complaint to add additional damages for gambling losses incurred between September 2000 and April 19, 2001. On November 16, 2001, the plaintiff filed a motion to reconsider the court's October 19 order. He asked the court to reconsider the findings it had made and to address his civil conspiracy theory, which was not expressly addressed in the court's order. In addition, he
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argued that the court erred in dismissing his complaint with prejudice rather than allowing him an opportunity to amend it further. He contended that, if given the opportunity to do so, he would have amended his complaint to include a claim based on a theory that the defendants aided and abetted illegal gambling. On February 4, 2002, the defendants filed a response to the plaintiff's motion to reconsider. They argued that the motion should be denied because the plaintiff did not raise any arguments not previously presented to the court. They further argued that the implicit request to amend the complaint to add a claim based on an aiding-and-abetting theory of liability could not be raised for the first time in a motion to reconsider. The motion to reconsider remained pending for five years. On June 4, 2007, the court made a docket entry denying the motion to reconsider and the motion to file a second amended complaint. The court found that all the arguments raised in the motion for reconsideration had been considered when the court made its initial ruling and that the named defendants were not "winners" as required for a recovery under the statute. This appeal followed. The plaintiff argues that the court erred in dismissing his complaint. He contends that (1) the credit card and bank defendants are "winners" under the statute because they had a stake in the outcome of the gambling, (2) alternatively, they are liable as coconspirators under a civil conspiracy theory, (3) the casinos and financing companies are not necessary parties, (4) the plaintiff's claims against the bank defendants are not preempted by federal bank regulations, and (5) the plaintiff has not tried to maintain a class action. He further contends that the court erred in not allowing him a further opportunity to amend his complaint. The defendants argue that we may affirm the court's dismissal of counts II through XXIII of the complaint on the basis that they did not allege recoverable losses with sufficient specificity. We find that the court properly dismissed the complaint for a failure
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to state a claim because (1) the named defendants are not "winners" under the statute and (2) the plaintiff has not alleged either his own damages or facts showing the concert of purpose necessary to maintain a cause of action for civil conspiracy. We also find that the court did not err in failing to offer the plaintiff the opportunity to further amend his complaint where he did not ask for this opportunity. Because of these conclusions, we need not consider the additional issues raised by the parties. This case comes to us after a dismissal pursuant to section 2-615 of the Code of Civil Procedure. On appeal, we must take all well-pled facts in the plaintiff's complaint as true and draw reasonable inferences from the facts pled in favor of the plaintiff. We need not, however, accept as true any conclusions that are asserted unless they are supported by sufficient specific factual allegations. Pawlikowski v. Toyota Motor Credit Corp., 309 Ill. App. 3d 550, 555, 722 N.E.2d 767, 770 (1999). We review the court's ruling de novo. Turner v. Memorial Medical Center, 233 Ill. 2d 494, 499, 911 N.E.2d 369, 373 (2009). The plaintiff first argues that his complaint alleged sufficient facts to show that the named defendants are "winners" under the statute. We disagree. We first note that neither party has pointed us to a case decided under Illinois law that is directly analogous to the one before us, and we have found none. Two federal cases cited by the defendants

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