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 Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 2 of 34 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. Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 4 of 34 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 Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 5 of 34 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 Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 6 of 34 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 Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 7 of 34 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., Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 8 of 34 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 Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 9 of 34 Gibson, Dunn & Crutcher LLP Case 2:08-cv-05121-GHK-CW Document 7 Filed 09/15/2008 Page 10 of 34 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 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 11 of 34 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