Cardroom International Lawsuit vs. Tiltware, PokerStars Formally Dismissed

scales-justiceAnother FlushDraw exclusive — more breaking news in the California civil case of Cardroom International LLC vs. Mark Scheinberg, et al.  As hinted at last week, Judge Elizabeth White has now formally signed the decision dismissing all claims in the case.

The decision by White, signed on July 12, 2013, also included the denial of a formal objection submitted by Cardroom International’s primary owner, attorney Cyrus Sanai, which we’ll detail a bit later in this post.

The formal dismissal (pending a probable appeal by Sanai), involved several corporate and individual defendants for PokerStars and the pre-Black Friday Full Tilt, referred to as Tiltware LLC in the case.

In addition to the Scheinbergs of PokerStars ownership renown, individual defendants on the Full Tilt side included most prominent former owners of that site, including Howard Lederer, Ray Bitar, Chris Ferguson, Phil Gordon, Phil Ivey, Perry Friedman, John Juanda, Erik Seidel, Andy Bloch and others.

The ruling against Florida-based Cardroom International and Sanai paves the way for the eventual freeing up of $30 million being held in escrow by the US Department of Justice pending this case’s outcome.  The claim alleged civil RICO and antitrust violations and sought at least $10 million in damages, which was trebled to $30 million under the RICO statute.

The $30 million has been reserved from the more than $700 million that PokerStars has paid to the Department of Justice in several installments since Stars reached its 2012 settlement in the Black Friday case.  The $30 million is not supposed to be tied to the remission process in which former US customers of Full Tilt continue to wait for refunds of balances from that site.

Sanai’s and Cardroom International’s case bounced through multiple legal jurisdictions before being remanded back to California for an initial resolution.  In addition to the initial RICO and antitrust allegations, Sanai also claimed that Cardroom International later acquired an unresolved ownership interest in the Full Tilt software, which eventually transferred through several corporate entities before being acquired by Cardroom International in bankruptcy proceedings related to the dissolution of an online site called JetSet Poker.

Sanai’s connection to Full Tilt dates back to the formation of the company itself, before the company was even known by that name, and about when a group of prominent players led by Ferguson and often called the “Jesus Coalition” invested in the future site.

The objection by Sanai to Judge White’s proposed decision was filed on July 8th, and was summarily dismissed as part of White’s signed ruling.  The decision to dismiss without leave to further amend, meaning that the case is closed pending a probable appeal attempt.

Sanai’s objection to White’s proposed decision began by calling the ruling “gibberish”:

In making this objection, Plaintiffs are not seeking to re-argue matters that were considered by this Court and ruled upon, so failure to object to object to the substance of this Court’s tentative [findings? ruling? — the objection clearly omitted a word here] and comments does not mean that they are acceded to.

However, to the extent that the proposed ruling is gibberish, requests relief that this Court cannot grant based on the rulings before it, includes irrelevant matter, or makes points never argued, raised, or endorsed by this Court in writing or orally, then an objection is proper.

The disclaimer of the “re-arguing” of the case brings up a related topic of Sanai’s and Cardroom International’s filings and claims in this and related matters, which opposing attorneys generally view as delaying and obstructionist, including in a memorandum filed in the federal “Black Friday” case by USDOJ attorney Jason Cowley.  Sanai has been in legal deep water over such tactics before, and his brother Fredric Sanai was recently disbarred in the state of Washington over such delaying tactics in a home-ownership case in which Cyrus Sanai also figured prominently.  That matter is also continuing to be contested.

In this case’s objection, which was duly dismissed, Sanai chided Judge White about the supposed “gibberish” nature of the ruling.  Sanai also wrote the following:

[T]he Court should carefully read the proposed order.  [The “Court”, meaning Judge White, actually wrote the order; this is Sanai telling her she needs to re-read her own words — hh]  As significant portions of the the order are completely outside the power of this Court to enter, the Court may well elect to write a new final order.

Among the assertions made by Sanai were that White lacked the authority to dismiss the case with prejudice, particularly in regard to parties who have yet to be served in connection with the case (another possible opening for Sanai to amend and delay the proceedings, and thus fatigue his legal opponents), or for those defendants for whom a motion to quash was granted (all those appear to have been declared moot in the final decision, rather than being granted).

Sanai also claimed that deadlines for legal service for certain documents were still pending, despite the three oral hearings held on the matter in May and June.  Sanai also continued to contest disputed legal service and related summons connected to the initial filing of the case, suggesting broad rewrites to later pages of the decision which would have the general effect of rendering the decision as a non-ruling, and thus paving the way for appeal.

That appeal seems likely in any event, in some form, particularly the ongoing claims of lack of jurisdiction.  The antagonism between Sanai and the court seems apparent from the denied objection’s final paragraph:


Instead, the California claims of Cardroom International against Full Tilt and PokerStars have been dismissed… at least temporarily.


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