Mr. Michael Stephens

Self-Exclusion, Responsible Gambling and the Courts:

A Discussion of Self-Exclusion and Prior Judicial Decisions

Concerning Casino Gaming.

Ms. Constance Ladell Moderator

Self Exclusion, Responsible Gambling And The Courts: A Discussion of Self-Exclusion and Prior

Judicial Decisions Concerning Casino Gaming

January 2013 K. Michael Stephens and

Kimberley Knapp Hunter Litigation Chambers

Law Corporation

Overview

Overview: Part I

• Around the world, casino operators have been the subject of legal proceedings in connection with gambling activity (both within the self-exclusion context and beyond)

Overview: Part II

• Survey existing body of case law from those jurisdictions (Australia, Great Britain, the U.S., and Canada), and highlight key aspects of those cases

Australia

Australia

• Courts in Australia have generally found that casino operators owe no duty of care to protect problem gamblers against economic losses

Reynolds v. Katoomba RSL All Services Club Limited, [2001] NSWCA 234

In rejecting Mr. Reynolds’ claim and dismissing his appeal, Chief Justice Spigelman stated:

“…Save in an extraordinary case, economic loss occasioned by gambling should not be accepted to be a form of loss for which the law permits recovery. I make allowances for an extraordinary case, without at the present time being able to conceive of any such case…”

Foroughi v. Star City Pty Limited, [2007] FCA 1503

• Dismissed claim by plaintiff for economic losses arising after he had self-excluded from casino

• Self-exclusion form contained a provision by which plaintiff acknowledged that it was his responsibility not to enter or gamble within the casino

• Court held that there was nothing in the Casino Control Act to support a private right of action additional to the obligations imposed upon casino operators

• The Court also rejected the claims of misleading or deceptive and unconscionable conduct under the Trade Practices Act

Kakavas v Crown Limited & Anor, [2007] VSC 526

• Gambler sought in damages from Casino claiming unconscionable conduct, deceptive and misleading conduct, negligence and restitution

• Several of plaintiff’s claims did not survive motion to strike

Kakavas v Crown Melbourne Limited & Ors, [2009] VSC 559

• Court dismissed Mr. Kakavas’ claim

• Decision was affirmed on appeal, but leave has been granted for further appeal to the High Court of Australia

Great Britain

Great Britain

• Great Britain has produced a leading decision in the area of self-exclusion litigation

Calvert v. William Hill Credit Ltd. [2008] EWHC 454 (Ch Div); affirmed on appeal

[2009] 2 W.L.R. 1065 (CA) Justice Briggs began by noting that it was the first time an English court had been required to consider the question:

“...whether a bookmaker who has, at the customer's request, undertaken to prohibit the customer from gambling for a specified period, owes the customer a duty to take reasonable care to enforce that prohibition, so as to protect the problem gambler from the risk of gambling losses during the specified period”

Calvert (continued)

• At trial, plaintiff was found to be a pathological gambler

• Justice Briggs rejected the existence of a broad duty of care to problem gamblers generally

• Justice Briggs accepted a duty of care to enforce the prohibition on gambling that it had given at plaintiff’s request

• Nevertheless, he dismissed the action on the ground that the breach did not cause plaintiff’s financial losses

Calvert (continued) • Justice Briggs was satisfied that Plaintiff’s gambling

disorder was so compulsive, and that the other gambling opportunities available to him were so extensive, that defendant’s negligence contributed to his losses only by accelerating what would probably have occurred in any event

• The decision of Justice Briggs was affirmed on appeal solely on the basis of lack of causation

The United States

The United States

• New Jersey and Indiana have been a source of litigation involving self-excluded and compulsive gamblers

I/M/O Petition of S.D. for Removal from the Voluntary Self-Exclusion List, 943 A.2d 188 (N.J.Super.A.D. 2008), 399 N.J. Super. 107,

2008 N.J. Super. LEXIS 65 • A gambler who had placed himself on the

Casino Control Commission’s lifetime self-exclusion list petitioned to have himself removed from the list after he had learned that out-of-state casinos affiliated with the state casinos would also exclude him from their gaming facilities

I/M/O Petition of S.D. for Removal from the Voluntary Self-Exclusion List (continued)

The Court upheld the Commission’s decision to deny the gambler’s petition for removal, finding ample basis for the decision in fact, law and public policy. In doing so, the Court noted:

In essence, self-exclusion is designed as a means to help problem gamblers help themselves; it places responsibility squarely on self-excluded persons themselves to refrain from prohibited activities, albeit with the assistance and cooperation of the casinos. …

Taveras v. Resorts International Hotel, Inc., et al, 2008 U.S. Dist. LEXIS 71670

• Plaintiff brought an action against six New Jersey casinos alleging, among other things, that the casinos had breached their duty of care and contractual obligations to her, that they were strictly liable in respect of the “abnormally dangerous activity” of gambling, and that they had intentionally inflicted emotional distress - after having received notice that she was a compulsive gambler

• Court dismissed the action

• The Court declined to find any outrageous or extreme conduct necessary for the intentional infliction claim

Merrill v. Trump Indiana, Inc., 320 F.3d 729 (7th Cir. 2003)

• A compulsive gambler, alleged that the riverboat casino failed to prevent him from gambling after he had asked to be evicted from the casino if he entered

• Federal Court of Appeals held that there was no statutory or common law duty of care

• The Court concluded that neither the Indiana gaming statute, nor regulations, imposed a duty upon the casino to eject a gambler who requested to be placed on the casino’s eviction list – at most, it imposed a duty upon the casino operator to the State through the Indiana Gaming Commission – not to the individual gambler

Stulajter v Harrah’s Indiana Corp., 808 N.E.2d 746 (Ind.App. 2004)

• Self-exclusion context

• Court finds gaming statutes and regulations did not create a private cause of action against casino operator

Ceasars Riverboat Casino, LLC v Kephart, 903 N.E. 2d 117 (Ind.App. 2009),

2009 Ind. App. LEXIS 514 • Casino brought an action against a

compulsive gambler after her cheques were not honoured; the gambler counterclaimed alleging that the casino took advantage of her known pathological gambling condition to unjustly enrich itself

• The trial court denied the casino’s motion to dismiss the counterclaim

Ceasars Riverboat Casino, LLC v Kephart,943 N.E.2d 1120 (Ind. 2010), 2010 Ind. LEXIS 560 • On appeal to the Supreme Court of Indiana, the majority of

the court found it unnecessary to decide whether casino operators had a common law duty to refrain from attempting to entice or contact gamblers that it knew or should have known were compulsive gamblers, holding instead that the legislature had by implication abrogated any common law claim that casino patrons might otherwise have against casinos for damages resulting from enticing patrons to gamble and lose money at casino establishments

Ceasars (continued)

• “In this case, not only does the statutory scheme cover the entire subject of riverboat gambling, but the statutory scheme and Kephart’s common law claim are so incompatible that they cannot both occupy the same space. …”

• “The legislature did not require casinos to identify and refuse service to pathological gamblers who did not self-identify. Kephart’s claim directly conflicts with the legislature’s choice.”

Canada

Canada • Legal landscape in Canada is still in

development

• A number of cases involving self-excluded gamblers are working their way through the Canadian courts

• To date, to our knowledge there has been no decision on the full merits of a claim by a self-excluded gambler, although some preliminary decisions have been issued

Edmonds v Laplante, [2005] OJ No 6454 (SCJ)

• Not directly involving self-exclusion or compulsive gambling litigation

• Plaintiff alleged, and the Court accepted, that the Gaming Corporation owed him a duty of care to implement non-negligently the policy that it had undertaken in respect of “insider-win investigations”

Dennis v Ontario Lottery and Gaming Corporation, 2010 ONSC 1332, 101 OR (3d) 23, aff’d 2011 ONSC 7024, 344 DLR (4th) 65 (Div Ct)

• Self-exclusion case

• Court considered a motion for certification in proposed class proceedings in Ontario

• The claim alleged negligence, occupiers’ liability and breach of contract, and sought damages or disgorgement of profits derived by OLGC from class members

Dennis (continued) • Justice Cullity’s discussion of the plaintiff’s claims

involves a preliminary assessment of whether a cause of action has been pleaded. It is not a consideration or determination on the merits of the case

• On the negligence claim, Justice Cullity held that the plaintiff should be permitted to have the duty of care tried on the basis of evidence without being “driven from the judgment seat” at the preliminary stage

Dennis (continued)

• Justice Cullity allowed the claim in occupier’s liability to stand until a trial on the basis of the sufficiency of the pleadings

• The decision of Justice Cullity denying certification affirmed on appeal to the Divisional Court, but leave for further appeal to the Ontario Court of Appeal has been granted

Haghdust v British Columbia Lottery Corporation, 2013 BCSC 16

• Jackpot entitlement rule self-exclusion program

• Plaintiffs applied to have their actions consolidated and certified as a class proceeding

• The certification was granted by BC Supreme Court

Burrell v Metropolitan Entertainment Group, 2010 NSSC 476,

aff’d 2011 NSCA 108

Court summarily dismissed the plaintiff’s action against the Nova Scotia Gaming Corporation, the Attorney General and the casino operator, alleging a duty of care to ensure appropriate steps were taken to prevent plaintiff’s gambling

Burrell (continued)

In declining to find a duty of care under common law, the Court noted the absence of cases in Canada and the rejection of such a broad duty in Australia, the United Kingdom, and the United States

Burrell (continued)

The decision was upheld on appeal to the Nova Scotia Court of Appeal:

“Mr. Burrell’s losses precede his request for exclusion and the prohibition notice under the Protection of Property Act. His claim asserts the existence of the broad duty of care that was rejected in Calvert, was not considered in Dennis, and is unsupported by the Australian and American cases. Mr. Burrell cites no authority that has accepted a duty of care to problem gamblers who have neither self-excluded nor been lured by individually targeted promotion.”

• Other cases before courts

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