District Judge Dismisses Class-Action Suit against Party

14 October 2008

A two-year-old lawsuit against PartyGaming has been dismissed in Federal District Court in Cleveland, after Judge Ann Aldrich ruled the case would be more suited for a court in Gibraltar.

Rose Wong and Patrick Gibson of Cleveland, Ohio, in September 2006 filed class-action proceedings against PartyGaming, accusing the company of collusion, breach of contract and negligent, reckless or intentional misrepresentation.

Specifically, Ms. Wong and Mr. Gibson claimed that PartyGaming made false statements in the terms-and-conditions section on its Web site, PartyPoker.com, including: PartyPoker.com employed the use of a collusion-prevention system; PartyPoker.com did not allow customers to open more than one account; and that PartyPoker.com worked to prevent underage and problem gambling.

In light of these false statements, the plaintiffs argued, thousands of PartyPoker's single-table players lost money at the hands of customers who opened multiple accounts in order to collude to the disadvantage of other players on the site.

Ms. Wong and Mr. Gibson further alleged that PartyGaming was unable or unwilling to remedy the situation, but instead chose to conceal the problem so as not to lose business.

The initial complaint sought nationwide class-action status and asked for $5 million in relief -- based on a nationwide class-action minimum.

But in March 2007, after two amended complaints, Judge Aldrich ruled that Ms. Wong and Mr. Gibson could only represent a class in Ohio -- not a nationwide class -- because the laws of all 50 states may not be sufficiently similar.

Ultimately, though, the case boiled down to a clause in the terms-and-conditions section, on PartyPoker.com, addressing jurisdiction and forum selection in the event of a legal dispute.

The "consent to jurisdiction and forum selection" clause in a contract states the location where any disputes relating to the agreement will be resolved.

The forum-selection clause on PartyPoker.com read:

This Agreement shall be governed by and construed in accordance with the laws of Gibraltar without giving effect to conflicts of laws principles. You irrevocably agree to submit, for the benefit of the Company, to the exclusive jurisdiction of the courts of Gibraltar for settlement of any disputes or matters arising out of or concerning this Agreement or its enforceability. If any part of this Agreement is found to be invalid, illegal or unenforceable in any respect, it will not affect the validity of the remainder of the Agreement, which shall remain valid and enforceable according to its terms.

While both plaintiffs acknowledged in the initial and subsequently amended complaints that they agreed to the terms and conditions when registering for PartyPoker.com, both argued that the forum-selection clause was null and void because they were induced under false pretenses.

The plaintiffs claimed instead that the case fell under United States jurisdiction because PartyGaming violated the Ohio Consumer Sales Protection Act and other states' consumer protection statutes.

Judge Aldrich ruled on Sept. 30, however, that the plaintiffs' statements were, in fact, false because PartyGaming's statements indicate that collusion, multiple accounts and problem gambling are problems that the company is attempting to resolve.

Furthermore, she decreed, the plaintiffs never claimed the forum selection clause was unknown to them; the clause was obvious in the terms and conditions and it was stated forcefully.

Judge Aldrich dismissed the case on the grounds that PartyGaming's terms and conditions, to which the plaintiffs agreed, clearly state that legal disputes must be settled in a Gibraltar court.

And as expected, on the same day, the plaintiffs filed a notice of appeal at the United States Court of Appeals for the Sixth Circuit.

Click here to view the original complaint.

Click here to view the order of dismissal.

Click here to view the notice of appeal.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.