Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 1 of 34
TBoutrous ibsondunn.com
333 Sout Grand Avenue
CASE NO. CV 08-5121-GHK (CWx) NOTICE OF MOTION AND
RELIEF UNDER FEDERAL RULE
limited liability CCHi!pany; and
Declaration of Douglas M. Fuchs filed concurrently herewith i
Date: October 14, 2008
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H. King of
This motion is made under Federal Rules of
grounds that:
(1) Plaintiff s suit, which seeks recovery of alleged gambling losses, is barred
(2) Plaintiff canot bring a claim for breach of contract because he alleges no
(3) Plaintiff fails to allege his claim for fraud with the required particularity;
( 4) Plaintiff fails to allege a claim for negligence or negligent
(5) Plaintiff canot recover in tort for his alleged damages, which are pure
(6) Plaintiff s unjust enrichment claim fails because unjust enrichment is not
claim as one for restitution, Plaintiff
This Notice of
Gibson, Dunn & Crutcher LLP
DEFENDANTS' MOTION TO DISMISS Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 3 of 34
1 This motion is made following the conference of counsel pursuant to L.R. 7-3
2 which occurred on August 28,2008. 3 DATED: September 15,2008
Theodo ë:Boutrous, r:
SCIENTIFIC GAMS INTERNATIONAL, INC.
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INTRODUCTION...... 1
B. Pari-Mutuel Betting and Multi-Entrant Horse Racing Bets ...... 5
CALIFORNIA LA W AND PUBLIC POLICY BARS EACH
SINGLE VIABLE
A. Plaintiffs Contract Claim Fails As A Matter Of
B. Plaintiff Cannot State A Claim For Unjust Enrichment......
C. Plaintiffs Tort Claims Fail As A Matter of
Rigorous Standards For Pleading Fraud......
And Therefore, Canot Be Liable For '
Plaintiffs Tort Claims Are Also
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Bell Atl. Corp. v. Twombly,
232 CaL. App. 3d 1335,284 CaL. Rptr. 108 (1991)...... passim
Castano v. Am. Tobacco Co.,
Charnay v. Cobert, 145 CaL. App. 4th 170, 51 CaL. Rptr.3d 471 (2006)...... 19
Chavez v. Blue Sky Natural Beverage Co.,
Dinosaur Dev. Inc. v. White, 216 CaL. App. 3d 1310,265 CaL. Rptr. 525 (1989)...... 17
DM Research, Inc. v. College of Am. Pathologists,
Dumas v. Kipp,
Emery v. Emery, 45 CaL. 2d 421,289 P.2d 218 (1955) ...... 8
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Enreach Tech., Inc. v. Embedded Internet Solutions Inc.,
Fieldstone Co. v. Briggs Plumbing Prods., Inc., 54 CaL. App. 4th 357,62 CaL. Rptr. 2d 701 (1997)...... 22
Ghirardo v. Antonioli, 14 CaL. 4th 39,57 CaL. Rptr.2d 687 (1996)...... 18
Gridley v. Dorn, 57 CaL. 78 (1880)...... 8
30 CaL. 2d 49, 179 P.2d 804 (1947) ...... 8
83 CaL. 7 (1890)...... 19,20
In re Camarillo,
In re Paxil Litig.,
Kelly v. First Astri Corp., 72 CaL. App. 4th 462,84 CaL. Rptr.2d 810 (1999)...... passim
Kelly v. First Astri Corp.,
Lauriedale Assocs. Ltd. v. Wilson, 7 CaL. App. 4th 1439, 9 CaL. Rptr. 2d 774 (1992)...... 18
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83 CaL. App. 2d 381, 188 P.2d 758 (1948) ...... 8,9
77 CaL. App. 4th 723, 91 CaL. Rptr.2d 881 (2000)...... 18
101 CaL. App. 2d 215,225 P.2d 276 (1950) ...... 6
123 CaL. App. 4th 379, 20 CaL. Rptr.3d 1 15 (2004)...... 17
210 CaL. App. 3d 100,257 CaL. Rptr. 473 (1989)...... 14
106 CaL. App. 4th 779, 131 CaL. Rptr. 347 (2003)...... 17
15 CaL. App. 4th 1821, 19 CaL. Rptr. 646 (1993)...... 8
North Am. Chem. v. Superior Ct., 59 CaL. App. 4th 764,69 CaL. Rptr.2d 466 (1997)...... 21
Paracor Fin. v. Gen. Elec. Capital Corp.,
25 CaL. App. 3d 750, 102 CaL. Rptr. 286 (1972)...... 19
S.U Wilson & Co. v. Smith Intl, Inc.,
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Scognamilo v. Herrick, 106 CaL. App. 4th 1139, 131 CaL. Rptr.2d 393 (2003)...... 13
63 CaL. 2d 9, 45 CaL. Rptr. 1 7 (1965)...... 21
Smith v. Allstate Ins. Co., 160 F. Supp. 2d 1150 (S.D. CaL. 2001)...... 19
138 CaL. App. 2d 350, 291 P.2d 987 (1956) ...... 8
73 CaL. App. 2d 25, 165 P.2d 709 (1946) ...... 8
13 CaL. 4th 475, 53 CaL. Rptr.2d 812 (1996)...... 8
43 CaL. 3d 64, 233 CaL. Rptr. 294 (1987)...... 1, 13, 14
CaL. Civ. Code § 3301...... 13 OTHER AUTHORITIES
NEW YORK TIMES (May 4, 2008) ...... 11
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1 MEMORANDUM OF POINTS AND AUTHORITIES 23 INTRODUCTIONI. 4 Plaintiffs lawsuit is an il-fated attempt to recover losingbets he (and a putative
5 nationwide class of
7 these hopelessly speculative claims are nothing more than an attempt to use the legal 8 system as insurance for losing wagers. This lawsuit is doomed for several simple and
9 compellng reasons. 10 First and foremost, California law and public policy bar suits by plaintiffs 11 seeking to recover damages or restitution arising out of gambling activity, regardless of
12 its legality. See Kelly v. First Astri Corp., 72 CaL. App. 4th 462,489, 84 CaL. Rptr.2d
14 arising from gambling activity under any legal theory. Id. Accordingly, Plaintiffs 15 lawsuit, which "arises out of the offering and accepting of legal racing wagers"
16 (Compl. ~ I)-i.e., gambling-in California and is governed by California law, is
18 Second, Plaintiff does not allege-nor could he allege-any legally cognizable
19 injur. Plaintiff
20 wager, and that is exactly what he received. Plaintiff 21 he would have won but for any alleged defect in the tickets he received. Indeed, any
24 CaL. Rptr. 294 (1987). For this reason, claims arising out of 25 heard not by the courts, but by the California Horse Racing Board ("CHR"), the
26 agency responsible for the regulation of
27 the alleged conduct that is the subject of Plaintiffs Complaint has already been fully
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2 Exhibit A to the Declaration of
3 Third, undeterred by the fact that his baseless claims fail as an individual matter,
4 Plaintiff goes even fuher, purporting to bring suit on behalf of a nationwide class of
5 bettors. But his class allegations face their own insurmountable hurdles. Indeed, the 6 choice of law issues themselves would preclude class certification. Plaintiff even
7 purports to include in the class bettors in a State where Quick Pick bets are illegal and the inherent 8 thus could not have taken place (Texas). Moreover, because of
9 speculativeness and uncertainty posed by Plaintiffs claims, it would be impossible for 10 any putative class member to prove injury and establish standing and thus impossible
13 member to attempt to determine which races they bet on, whether the last-posting
15 included the last-posting horse. Accordingly, Plaintiffs putative class could never be
17 Finally, even if California substantive law permitted a cause of action to recover
18 gambling losses (which it does not), Plaintiffs Complaint fails as a matter of 19 the following sufficient and additional reasons: (1) Plaintiffs cause of action for 20 breach of contract fails because his allegations are insufficient to create a contract 21 between Plaintiff and Scientific Games; (2) unjust enrichment is not a legally
22 cognizable claim under California law and, even if
23 one for restitution, Plaintiff 24 entitlement to this relief; (3) Plaintiff failed to plead-and cannot plead-his cause of
action for 25 action for fraud with the required particularity; and (4) Plaintiffs causes of
26 fraud, negligence, and negligent misrepresentation fail as a matter of law.
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1 Because Plaintiff s entire Complaint fails as a matter of law and canot be cured 2 by amendment, this Court should grant Scientific Games' Motion to Dismiss with
3 prejudice. 45 BACKGROUNDli 6 A.
8 are taken from the Complaint and are assumed true solely for purposes of this motion
9 to dismiss. Plaintiff Jerr Jamgotchian is a California resident who has placed 10 numerous "wagers on races during the class period at BetJ et terminals using Scientific 11 Games (sic) computerized system." Compl. ~ 11. Defendants are Delaware entities 12 that do business in the State of California (hereinafter "Scientific Games"). Compl. 13 ~~12-14.
14 Scientific Games is a "leading worldwide provider of 15 transaction processing pari-mutuel wagering systems to licensed pari-mutuel
17 on horse races. . . and other events." Id. (emphases added). According to Plaintiff,
18 Scientific Games offers, among other services, "Quick-Picks" to customers of 19 tracks by providing a computerized terminal where bettors can place "randomized
21 the Quick-Picks would be random bets drawn from all the horses in a given race, 22 although he does not allege any specific communications from Scientific Games to that
23 effect. 24 were not "fairly randomized." Id. ~ 9.
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various race tracks in California. Id. ~ 4. Plaintiff
alleges that the winner of
Notably, Plaintiff does not allege that any of
exact order of
Without alleging any specifics, Plaintiff claims that the absence of
knew of
the last-posting horse. Id. ~ 9.
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2 A Superfecta bet requires a bettor to accurately predict the first four finishers in
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1 Plaintiff acknowledges that in July 2008, Scientific Games entered into a 2 settlement agreement with the CHR, the entity charged with regulating the
3 production of
5 has agreed, inter alia, to provide refunds to those who purchased Quick-Pick tickets
6 from its machines between July 1,2007 to June 2,2008. Id. In light of
7 a plaintiff in a similar lawsuit voluntarily dismissed his case. Ex. A to Fuchs Dec. at 6. 8 Based on these allegations, Plaintiff purports to sue on behalf of a nationwide
9 class of
13 and other relief. Id.
14 B. Pari-Mutuel Betting and Multi-Entrant Horse Racing Bets
15 Plaintiffs allegations arise out of 16 horse races. In pari-mutuel gambling,
18 which are accumulated in pools for win, place and show; the track
Plaintiff pUlP0rts to have filed his Complaint on behalf of aputative class of
Wisconsin. Compl. ~ 16. But tne frivolousness of Plaintiffs Complaint is
purports to Dring suit would result in intractable choice of
noting that in nationwide class actions grounded in state law, choice of f;robiems. See, e.g, In re Bridges
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Mattson v. Hollywood Turf Club, 101 CaL. App. 2d 215,219,225 P.2d 276 (1950).
multi-entrant tickets such as the "Superfecta." Compl. ~ 23.
A superfecta race is a system of
that any bettor can claim from a wager. 4 Hochberg v. New York City OffTrack Betting Corp., 343 N.Y.S.2d 651,653-57, 74
27 5 This is unsurprising, as the last-posting horse is well-known long-shot. For 28 1929. See iñfra n.9.
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A complaint should be dismissed under Rule 12(b)( 6) if it does not contain "enough facts to state a claim to relief that is plausible on its face." Bell AtL. Corp. v. Twombly, 550 U.S. _' 127 S. Ct. 1955, 1974, 167 L.Ed 929 (2007). While "(a)ll
to the nonmoving part," Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336,337-38 (9th Cir.
1996), "a plaintiffs obligation to provide the 'grounds' of his 'entitle(ment) to relief
ofa cause of
1999) ("Conclusory allegations in a complaint, if
that the plaintiff
allegations must be enough to raise a right to relief above the speculative leveL."
The Court's review is limited to the face of
the Court should order a dismissal with prejudice. Dumas v. Kipp, 90 F.3d 386, 393
PLAINTIFF'S CLAIMS
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Gibson, Dunn & Crutcher LLP
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1 California, however, has a "broad, strong policy against judicial resolution of civil
2 claims arising out of gambling contracts or transactions." Kelly, 72 CaL. App. 4th at 3 488. This policy bars Plaintiffs lawsuit in its entirety. See id. at 490. It should,
4 therefore, be dismissed with prejudice.
5 F or more than a century, plaintiffs have been barred from bringing claims under
6 California law arising out of a gambling contract or transaction, regardless of the
7 theory under which the claims are brought, and regardless of whether the gambling 8 activity at issue is legal or ilegaL. "California's strong, long-standing public policy 9 regarding gambling is a broad policy against judicial resolution of civil claims arising
11 at 471; see also id. at 489; Hamilton v. Abadjian, 30 CaL. 2d 49,51-52, 179 P.2d 804
12 (1947); Metropolitan Creditors Servo v. Sadri, 15 CaL. App. 4th 1821, 1824-25, 19 CaL.
13 Rptr. 646 (1993); Tokar v. Redman, 138 CaL. App. 2d 350,351-52,291 P.2d 987 14 (1956); Lavick v. Nitzberg, 83 CaL. App. 2d 381,382-83, 188 P.2d 758 (1948); Wallace 15 v. Opinham, 73 CaL. App. 2d 25, 28-29, 165 P.2d 709 (1946); Gridley v. Dorn, 57 CaL. 16 78, 80 (1880). This case is entirely about recovering gambling losses-it "arises out of
20 Kelly demonstrates the breadth and depth of California's public policy against
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where the injury occurred (California), the law of 421,427,289 P.2d 218 (1955).
2l84-85, 53 CaL. Rptr.2d 812 (1996).
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1 sought recovery of losses (restitution) and lost profits (consequential damages) they
2 incurred while gambling there. The trial court entered summary judgment on behalf of
3 the defendants, finding that all of
4 due to California's longstanding refusal to recognize claims arising out of gambling
5 activity. Kelly, 72 CaL. App. 4th at 468-69.
6 Kelly affirmed the trial court's dismissal of 7 review of California's policy against judicial recognition of claims involving gambling
8 activity. Noting decisions such as Lavick, 83 CaL. App. 2d at 382-83, which refused to
9 enforce claims arising out of legal gambling transactions, the court in Kelly concluded 10 that California's public policy against judicial recognition of claims involving 11 gambling remained vibrant and conclusive "notwithstanding shifting public attitudes 12 about gambling and public acceptance of . . . gambling both in California and on 13 California Indian lands," and regardless of whether the gambling activity involved was 14 legal or illegaL. Kelly, 72 CaL. App. 4th at 489-90 (citations omitted). Kelly held: 15 (W)e hold that (plaintiff s) action is barred as a matter of law and 16 strong public policy, and thus the court properly granted summary
17 judgment in favor of respondents. As we have discussed, California's 18 long-standing public policy regarding gambling is a broad, strong 19 policy against judicial resolution of civil claims arising out of 20 gambling contracts or transactions, and this public policy, in the 21 absence of a statutory right to bring such claims, applies to both 22 actions for recovery of gambling losses and actions to enforce 23 gambling debts.
25 (Bank. N.D. CaL. May 11,2005) (California public policy prohibits the enforcement
26 of 27 The same legal principles and public policy control this case. Here, as in Kelly,
28 Plaintiffs lawsuit derives from gambling activity. California's refusal to recognize
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1 claims arising out of gambling thus bars this suit as a matter of law. Accordingly, the 23 Court should grant Scientific~ Games' motion to dismiss, without leave to amend. 4 THE COMPLAINT FAILS TO ALLEGE ANY LEGALLY
Plaintiffhas suffered no cognizable injury as a result of the alleged defect in
racing tickets. Compl. ~~ 39, 49, 55, 58. Plaintiff
class did have a chance to win on every wager they made. Indeed, by virte of the '
long odds of
court2 the federal court must follow the state intermediate appellate court
to review the Court of Appeal's decision in Kelly. See Kelly v. First Astri Corp.,
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1 actually enhanced, as a statistical matter, the chance of a Quick-Pick wager being a 2 winner.9 This fact alone makes proof of injury impossible.
3 Plaintiff does not-and cannot-elaim that, as a result of the alleged defect, a 4 Quick-Pick ticket could never result in a win. Plaintiff also does not-and cannot-
5 allege that he and the other putative class members would have won but for the alleged
6 software defect. Because Plaintiff does not-and cannot-allege a legally cognizable
7 injury, his Complaint should be dismissed with prejudice. See Twombly, 127 S.Ct. at 8 1959 (to withstand a motion to dismiss, "(fJactual allegations must be enough to raise a 9 right to relief above the speculative level"). 10 A.
were not damaged.lo Id.
of a race, particularly in a field that includes numerous ruers such as the
KentucKv Derby history - Clyde Van Dusen, in I929." Drape, Joe, Filly's Death Casts Shadow Over Big Brown's Derby Victory, NEW YORK TIMES
For instance, if Plaintiff or any member of
plaintilfwas not deprive a of any benefits of
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1 Plaintiff has not alleged one instance in which he bet on a horse race where the
2 last-posting horse finished in the top three or four. Based on that failure alone,
4 would have won on any of 5 even ifhe had received a ticket that included the last-posting horse. Moreover, for 6 races in which the last-posting horse did not finish in the top three or four, Plaintiff and
7 the putative class may actually have had an increased chance of winning on their
8 multi-entrant wagers. 9 Because Plaintiff does not and cannot allege any actual injury, he lacks standing
10 to bring this lawsuit. Plaintiff canot show "( 1) that he personally has suffered some 11 actual or threatened injury as a result of defendant's conduct, (2) that the injury fairly 12 can be traced to the challenged action and (3) that the injur is likely to be redressed by 13 a favorable decision." Bullfog Films, Inc. v. Wick, 847 F.2d 502,506 nA (9th Cir.
14 1988) (citations and quotations omitted). Moreover, Plaintiff
16 Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir. 2003) (holding that plaintiffs must allege 17 and show "they personally have been injured," and, if they fail, plaintiffs lack standing 18 and the class action should be dismissed). More importantly, no plaintiff could ever be
20 plaintiff 21 have selected the last-posting horse for the particular tickets purchased by Plaintiff and
22 by each of
24 bets.11 Accordingly, the Complaint should be dismissed with prejudice.
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Even if
degree of certainty. See, e.g., CaL. Civ. Code § 3301 (contract cause of
and the putative class to recover
is inherently speculative-indeed, inipossible-Plaintiffhas failed to allege any legally
wagers, including what horse was the last-posting horse, his knowledge of
the weather, the type of track, etc. Such indeterminable inquiries are exactly why
a valid cause of action. See, e.g., Youst v. Longo, 43 CaL. 3d 64 (1987) (holding that
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Gibson, Dunn & Crutcher LLP
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2 Youst, the Supreme Court of California concluded that, because extending liability for
3 interfering with "the chance of winning a contest" sends courts into "uncharted seas,"
4 recovery in such cases should be denied. Id. at 74 (quotingW. Prosser & W. Page 5 Keeton~ Prosser & Keeton on Torts § 130 at 1006 (5th ed. 1985)). Youstthus held that 6 because courts are il-equipped to determine what the probability of certain outcomes
8 agency, the CHR, is the appropriate body for resolving disputes arising out of
9 racing-not the courts. Youst,43 CaL. 3d at 78. This is precisely what occurred here 10 when Scientific Games entered into a settlement agreement with the CHR. Compl. ~
12 mechanism for addressing the alleged conduct that is the basis for all of Plaintiff s 13 claims. 14 Similarly, in McDonald v. Scripps Newspaper, the Court of Appeal rejected 15 speculative tort and contract claims brought by a participant in a spellng bee who 16 blamed his losses on operators who allegedly violated the rules, thereby allowing the 17 participant who eventually defeated the plaintiff to advance in an earlier round. 210 18 CaL. App. 3d 100, 104,257 CaL. Rptr. 473 (1989). The plaintiff argued that he would
20 advanced earlier. Id. But the court held this "injury" to be too speculative because the
22 the participant who beat him. Id. at i 05. The court thus held that the complaint should 23 be dismissed without leave to amend because "where the nature of plaintiff s claim is 24 clear, but under substantive law no liability exists, leave to amend should be denied."
26 putative class is likewise too speculative to support a cause of action under California
28 Complaint without leave to amend.
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PLAINTIFF'S COMPLAINT FAILS TO ALLEGE A SINGLE VIABLE
Even if Plaintiff could bring a civil suit arising out of his gambling activity, his
claim as one for restitution, Plaintiff has not, and canot, allege facts necessary to
establish his entitlement to restitution; (3) Plaintiff
( 4) Plaintiff s causes of action for negligence and negligent misrepresentation fail
18 In this case, it is undisputed that Scientific Games is not the owner or the 19 operator of any racetrack in California (or in any of the other states alleged to have 20 class members). Under California law, the only entities that can operate any pari- 21 mutuel wagering in California are licensed pari-mutuel operators. Instead, Scientific 22 Games is a vendor to the licensed pari-mutuel operator)2 A bettor in a pari-mutuel
conducting wagering and selling pari-mutuel tickets. See CHR Rule No. 1951,
htt :llww.chrb.ca. actlOn= rowse y
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1 betting system does not contract with the vendor of the tickets13; rather, "(t)he
2 transaction is between the participants in the pari-mutuel pools, the odds and terms
3 thereof being determined by participants according to the amount of
4 into the pooL." Brown, 232 CaL. App. 3d at 1339-40 (citations and quotations omitted).
6 ticket. Id. at 1340. The case law is such "to foreclose the development of spurious
7 theories by out-of-Iuck gamblers, not to mention silencing the specter of fraud." Id.
9 the race track, and "not its agents," in this case, allegedly Scientific Games. Jd; see 10 Hochberg, 343 N.Y.S.2d at 657 ("(T)he placing of a wager at a race track does not
12 transaction was. . . between the participants in the pari-mutuel pools.").l4 13 In Brown, the plaintiff sued a 7- Eleven store and the California State Lottery 14 Commission for breach of contract. Plaintiff claimed that both the 7-Eleven and the
19 machine defect, was unable to do so. Id. He further claimed that he would have 20 picked the correct numbers ifhe had been given the chance. Id. The Court of Appeal 21 held that he had no contractual rights against the lottery commission or the 7-Eleven,
22 even if
14 The conclusion that there was no contract between Plaintiff and Scientific Games
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2 because the company would not take bets on one particular horse that went on to finish
3 in fourth place on a superfecta ticket. 343 N.Y.S.2d at 654. Specifically, the plaintiff
4 alleged that he relied on misinformation in placing his bet and contracting with the 5 company. Id. at 655. Notwithstanding the company's alleged misrepresentation, the
6 court held that no contract existed between the plaintiff and the company. Id. at 657.
7 Plaintiffs' claim is remarkably similar to the claims rejected in Brown and
9 acted as either the operator of the betting pool or as an agent 10 track, in taking money for bets on horse racing. Compl. ~ 35. Plaintiff claims to have
12 from the randomly picked tickets. Id. ~~ 6-8. And Plaintiff alleges that he and the 13 putative class were enticed to enter into the contracts by Scientific Games' alleged 14 misrepresentation.' Id. ~ 35. Under these circumstances, California law is clear that no 15 contract could have been formed as a matter of law)5 Because Plaintiff and the
18 B. Plaintiff Cannot State A Claim For Unjust Enrichment. 19 Plaintiff s purported "claim" for unjust enrichment fails for several reasons.
22 Inc., 403 F. Supp. 2d 968,976 (N.D. CaL. 2005) (granting summary adjudication 23 "because unjust enrichment is not a valid cause of action in California"); McBride v. 24 Boughton, 123 CaL. App. 4th 379,387,20 CaL. Rptr.3d 115 (2004) ("Unjust
his bargain-a chance to win a mufti -entrant wager-and was therefore not
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1 enrichment is not a cause of action, however, or even a remedy. . . ."); Melchior v. 2 New Line Prods., Inc., 106 CaL. App. 4th 779, 793,131 CaL. Rptr. 347 (2003) ("(T)here
3 is no cause of action in California for unjust enrichment.").
4 Second, even if this Court were to treat Plaintiff s claim for unjust enrichment as
5 one for restitution, see Dinosaur Dev. Inc. v. White, 216 CaL. App. 3d 1310, 1314,265 6 CaL. Rptr. 525 (1989) ("Unjust enrichment. . . is synonymous with restitution"), there 7 must be a predicate act to support restitution. Reynolds Metals Co. v. Ellis, 202 F.3d
8 1246, 1248 (9th Cir. 2000). Restitution canot be awarded without a "showing of
9 fraud or wrong-doing." Id. As explained herein, Plaintiff 10 predicate wrongdoing by Scientific Games. 11 Third, "unjust enrichment is an action in quasi-contract, which does not lie when
12 an enforceable, binding agreement exists defining the rights of
15 39, this claim should be dismissed. "Even though Rule 8( e )(2) . . . allows a par to 16 state multiple, even inconsistent claims, it does not alter a substantive right between 17 the parties and accordingly does not allow a plaintiff invoking state law to an unjust 18 enrchment claim while also alleging an express contract. As a result, Plaintiff cannot 19 assert his unjust enrchment claim in the alternative." Gerlinger v. Amazon. com, Inc.,
20 311 F. Supp. 2d838, 856 (N.D. CaL. 2004).
21 Fourh, even if 22 these substantial legal impediments, Plaintiff has not alleged, and canot allege, facts 23 to establish the following necessary elements for restitution: (1) the receipt of a
24 benefit; (2) at the expense of another; and (3) that retention of
26 Rptr.2d 687 (1996); Lectrodryer v. SeoulBank, 77 CaL. App. 4th 723, 726, 91 CaL.
27 Rptr.2d 881 (2000). Plaintiff plainly was not injured; he received a chance of
28 on his wagers. Moreover, he may even have received an improved chance of
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Finally, an award of restitution canot frstrate public policy. Lauriedale Assocs. Ltd. v. Wilson, 7 CaL. App. 4th 1439, 1449,9 CaL. Rptr. 2d 774 (1992).
public policy, see Kelly, 72 CaL. App. 4th at 488, Plaintiffs claim for unjust
C. Plaintiff's Tort Claims Fail As A Matter of Law.
Much Less Satisfied The Rigorous Standards For Pleading
CaL. 2001).
As pleaded, Plaintiffs purported fraud claim contains only conclusory
the complaint failed to identify the nature of
statements were made-i.e., what medium of advertisements, when they occurred, and
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Because the allegations in the Complaint fail to meet the rigors of
More importantly, as discussed, supra, Plaintiff
damages" he suffered as a result of
Holton v. Noble, 83 CaL. 7,9 (1890)); see Charnay v. Cobert, 145 CaL. App. 4th 170,
Chavez v. Blue Sky Natural Beverage Co., 503 F. Supp. 2d 1370, 1373 (N.D. CaL.
2. Scientific Games Had No Duty To Plaintiff And, Therefore, Cannot Be Liable For Negligence Or Negligent
breach of
those bettors. Id. Because a vendor providing a ticket has no duty to a bettor, a vendor
any duty on (Scientific Games)." Id. The possibility of
Gibson, Dunn & Crutcher LLP CASE NO. CV 08-5121-GHK (CWx) Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 30 of 34
post-is remote. Supra Section II.B & n.9. Moreover, members of
races; and
tickets"-let alone suppliers to vendors of
3. Plaintiff's Tort Claims Are Also Barred By The Economic Loss
All of
be recovered in tort.
"Generally, under the 'economic loss' rule, a plaintiff
pecuniary injury as the result of
Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 31 of 34
1 Superior Ct., 59 CaL. App. 4th 764, 777-80, 69 CaL. Rptr.2d 466 (1997); see also S.M 2 Wilson & Co. v. Smith Int'l, Inc., 587 F.2d 1363, 1376 (9th Cir. 1978) (applying
3 California's economic loss rule in affirming dismissal of tort claims). This rule
4 follows from the principle that "contract and warranty law should govern the economic
5 relationship between a buyer and a seller and between a manufacturer and a
7 protecting the consumer's reasonable expectations and preventing a manufacturer from
8 suffering liability for damages of unown and unlimited scope, see Fieldstone Co. v.
10 In this case, Plaintiff claims that Scientific Games is responsible for "tak(ing)
13 concerning how the Quick-Pick system functioned." Compl. ~ 58. In other words,
15 allegedly defective product it provided to several race tracks, its software. The sole 16 damages Plaintiff attributes to this alleged defect are pure economic losses "in an
17 amount to be proven at triaL." Compl. ~ B. But "benefit of 18 based in contract law and should be governed thereby." Apollo Group, 58 F.3d at 481.
20 negligence claim with prejudice. 2122 CONCLUSION VII.
24 attempt to recover losing wagers on horse races and is absolutely barred by California
26 claims are utterly speculative and impossible to prove. This defect is fatal to each 27 cause of action and demonstrates not only that Plaintiff lacks standing and is an
Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 32 of 34
1 class representative. Plaintiff also fails to allege a valid contract between Plaintiff and 2 Scientific Games, fails to provide a basis for restitution, fails to plead fraud with the
3 required particularity, and impermissibly attempts to recover pure economic damages
4 for an alleged defective product. For all of
5 a matter of law, and Scientific Games respectfully requests that the Complaint be 6 dismissed with prejudice pursuant to Federal Rule of Civil Procedure 12(b )(6).
Attorneys for Defendants '
Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 33 of 34
I am employed in the County of
550 West C Street, Suite 1600
U.S. Postal Service on that same day in the ordinary course of business. I am
deposit for mailing in affidavit. '
to a messenger for personal delivery before, 5 :00 p.m. on the above-mentioned
Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 34 of 34
with the firm's practice of collection and processing
ordinar course of business.
7 1
Crutcher LLP DEFENDANTS' REQUEST FOR JUDICIAL NOTICE CASE NO. CV 08-5121-GHK (CWx)