United States District Court, S.D. New York
OPINION AND ORDER
M. WOOD, UNITED STATES DISTRICT JUDGE
April 2011, the Government commenced this in rem
forfeiture action against the three leading internet poker
companies doing business in the United States-PokerStars,
Full Tilt Poker, and Absolute Poker/Ultimate Bet-and certain
of their officers. The Complaint sought forfeiture of all
right, title, and interest in the assets of these companies,
pursuant to 18 U.S.C. §§ 1955(d) and 981(a)(1)(A)
September 2011, Cardroom International, LLC
("Cardroom"), a Florida corporation that offers
online poker gaming, filed a claim asserting an interest in
up to $30 million of the assets seized in the forfeiture
action. (Cardroom Claim, [Doc. No. 62]). The Government
subsequently moved to strike Cardroom's claim, (Mot. to
Strike, [Doc. No. 205]), and in response, Cardroom sought
leave to amend, (Opp n to Mot. to Strike, [Doc. No. 253]),
which the Court denied, finding undue delay and bad faith. On
August 19, 2016, this Court granted the Government's
motion to strike Cardroom's claim. (August
19th Opinion & Order, [Doc. No. 334]).
Judgment was entered on August 25, 2016. [Doc. No. 336].
Cardroom now files both a motion for a "new trial"
and a motion to alter the judgment. [Doc. Nos. 339, 340]. For
the reasons discussed below, the Court DENIES Cardroom's
motion for a "new trial, " and DENIES its motion to
alter the judgment.
The Origins of the Civil Forfeiture Action
Government forfeiture action at issue stems from a criminal
prosecution of the three leading online poker companies doing
business in the United States: PokerStars, Full Tilt Poker
("Full Tilt") and Absolute Poker/Ultimate Bet
(collectively, the "Poker Companies"). In March of
2011, the Government filed a criminal indictment charging
certain officers of the Poker Companies with violations of
the Unlawful Internet Gambling Enforcement Act,
("UIGEA"), 31 U.S.C. § 5363, and other
laws. In conjunction with the criminal
prosecution, the Government also filed an in rem
forfeiture action and a civil money laundering complaint,
seeking forfeiture of all right, title, and interest in the
assets of the Poker Companies (collectively, the
"Defendant Property"). Id. at
Cardroom's Claim to the Defendant Property
September of 2011, Cardroom filed a claim asserting an
interest in an unspecified $30 million of Defendant Property.
(Cardroom Claim at 1 [Doc. No. 62]). Cardroom's claim was
based on its expectation of an "inevitable
judgment" in its favor in a case filed on the same day
in California state court against PokerStars and Full Tilt
(the "California Action"). Cardroom alleged damages of
at least $30 million in the California Action, and sought to
have those damages satisfied out of the proceeds of the
Government's in rem forfeiture action.
Cardroom later conceded that its claim to the Defendant
property was "contingent" and was "not at this
time enforceable." (Cardroom Answer ¶ 3, [Doc. No.
79]). The Government subsequently moved to strike
Cardroom's claim on the basis that it was premised on a
hypothetical future judgment, rather than an interest in any
specific res that was part of the Defendant Property. (Mot.
To Strike, 1-2 [Doc. No. 203]). In August 2012, Cardroom
responded to the Government's motion to strike.
(Opp'n to Mot. to Strike, [Doc. No. 253]). In its
response, Cardroom made no effort to address the arguments
raised in the Government's moving papers, or to defend
the merit of its original claim premised on the California
Action. See Id. Instead, Cardroom advanced an
entirely new theory as to why it was entitled to $30 million
of Defendant Property, and sought leave to amend its claim.
See Id. It argued that the Government's
violation of a 2003 contractual transfer restriction (the
"Transfer Restriction") between Cardroom's
predecessor-in-interest and Full Tilt's
predecessor-in-interest rendered Cardroom a valid claimant to
the $30 million. Id.
Opinion and Order Granting Motion to Strike
August 19, 2016, this Court granted the Government's
motion to strike. It held that Cardroom lacked standing to
claim the funds, both under the applicable statutes and under
Article III of the United States Constitution. This Court
held that Cardroom's original claim, based on its
expectation of securing a judgment against Full Tilt and
PokerStars in the California Action, was "plainly
insufficient to establish Cardroom's standing as a
Plaintiff." (O & O at 7). Furthermore, the Court
held that, in the unlikely event that Cardroom did obtain a
judgment in that Action, such a judgment did not establish an
interest in a particular, specific asset that was required in
order to assert a valid claim to Defendant property.
Id. Even in the event of a judgment, Cardroom would
be, at best, a general unsecured creditor with no standing in
the instant in rem forfeiture action. Id.
Court then addressed Cardroom's new contractual claim,
for which it sought leave to amend. Cardroom asserted a right
to Defendant Property based on the Government's purported
violation of a 2003 Transfer Restriction agreement between
Cardroom's predecessor-in-interest and Full Tilt's
predecessor-in-interest, which prohibited the parties from
transferring their interest in certain copyrighted software.
Id. at 4. Cardroom claimed that the Government
violated the Transfer Restriction when it transferred Full
Tilt's forfeited assets-including its joint interest in
the software-to PokerStars as part of a comprehensive
settlement agreement, without requiring PokerStars to agree
in writing to abide by the written terms of the Transfer
Restriction. Id. To find such a violation, the Court
would be required to read the Transfer Restriction to apply
in perpetuity, as Cardroom argued it did. Id. at 8.
However, the Court held that the Transfer Restriction was
"much more logically read" to have expired years
earlier, and to have no application to the Government's
transfer of the $30 million Cardroom claimed. Id. at
8-9. The Court also held that Cardroom would have no claim to
the Defendant property even if the Court did employ
Cardroom's interpretation of the Transfer Agreement;
Cardroom would, at most, "be limited to a suit for
breach of contract." Id. at 9.
Court denied Cardroom's request for leave to amend on the
additional grounds of undue delay and bad faith. The Court
found that Cardroom had no plausible excuse for its failure
to address the Government's alleged breach of Transfer
Agreement in its first filing. Id.