Bingo Innovative Software, LLC v. Cahill

28 Mass. L. Rptr. 449
CourtMassachusetts Superior Court
DecidedJune 9, 2011
DocketNo. SUCV201002743A
StatusPublished

This text of 28 Mass. L. Rptr. 449 (Bingo Innovative Software, LLC v. Cahill) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bingo Innovative Software, LLC v. Cahill, 28 Mass. L. Rptr. 449 (Mass. Ct. App. 2011).

Opinion

Troy, Paul E., J.

INTRODUCTION

Plaintiff Bingo Innovative Software, LLC filed this action against the defendants alleging tortious interference with contract and conspiracy with respect to the granting of lottery contracts. This matter is before the court on the Massachusetts State Lottery Commission’s Motion to Dismiss pursuant to Mass.R.Civ.P. 12(b)(6). Also before the court is Defendants Cahill and Cavanagh’s Motion to Dismiss. For the reasons discussed below, the individual defendants’ motion to dismiss is DENIED in part and ALLOWED in part. In addition, the Massachusetts State Lottery Commission’s motion to dismiss is ALLOWED.

BACKGROUND

The following facts, taken from the complaint, are assumed to be true for purposes of this motion. At all relevant times, defendant Timothy Cahill (“Cahill”) was the Treasurer of the Commonwealth and the Chair of the Massachusetts State Lottery Commission (“Lottery”). Defendant Mark Cavanagh (“Cavanagh”) is the Executive Director of the Lottery. Bingo Innovative Software, LLC (“BIS”) is a small Rhode Island business which owns proprietary software designed to enable lotteries to implement Bingo games using lottery electronic infrastructure and other media including television, internet, and smartphones.

At various times, the Lottery issued a Request for Response seeking proposals for lottery games. In November of 2003, BIS competitor Scientific Games retained Regan Communications Group of Boston (“Regan”) to represent it in its efforts to procure and maintain such contracts. Regan employees visited Cahill several times to facilitate Scientific Games’s business interests. One component of Regan’s “pitch” was to allow Cahill to choose a charity which would benefit from donations from Scientific Games. Regan billed Scientific Games $8,000 per month. Upon receipt of payment, Regan would immediately remit $3,000 a month for “grassroot services” to CanAm Consultants, a public relations firm run by Cahill’s close friend Thomas Kelly.

Alan Middleton, the head of government relations for Scientific Games, was convicted of violating North Carolina’s lobbying laws for funneling funds through a public relations firm controlled by a political operative, Kevin Geddings, when North Carolina was considering creation of a state lottery. Geddings was convicted of fraud for failing to disclose his financial dealings with Scientific Games when he accepted a seat on the newly formed North Carolina Lottery Commission.

The Lottery issued a Request for Response seeking proposals for electronic games. On March 12, 2007, the Lottery commissioned a focus group to study BIS’s Bingo game and Scientific Games’s Daily Race Game using the same group of participants. John Della Volpe of Harvard University conducted the study, designed to elicit market preferences. A summary of the study concluded, “TV Bingo was aimed at the older, Lottery demographic and was a home run. While further discussion and some research ought to be done before a final decision is made to move forward, the qualitative research indicates that this game could be a major success for the Lottery.”

The Lottery did not release study results for the Daily Race Game. The Lottery entered into an agreement with Scientific Games to implement the Daily Race Game and purchased 1,000 high definition monitors at a cost of $500 each. The Daily Race Game was a “dismal failure” which the Lottery cancelled after seven months.

[450]*450After BIS pressured the Lottery to implement its Bingo game, the Lottery reluctantly signed a two-month pilot agreement providing that the Lottery would be responsible only for internal systems accommodations using current staff for the game and promotion of the game from its existing budget. Under the pilot agreement, BIS was responsible for providing the software for the game and other costs, and the parties agreed to use their best efforts to implement the game in 2008. By the fall of 2008, the Lottery had failed to take any steps to comply with its contractual obligations. BIS alleges that “ [t]his failure occurred as the direct and proximate result of directions given to Defendant Cavanagh by Defendant Cahill.” BIS further alleges that Cavanagh and Cahill caused Lottery employees to claim that the Lottery was under severe cost-cutting pressures in order to hinder implementation of the Bingo game.

In summer of 2010, Lottery officials informed BIS that a discussion of contract terms could not proceed until BIS obtained an agreement with G Tech. G Tech provides a license to the Lottery for use of certain intellectual property employed in the operation of Lottery games. Access to this intellectual property is necessary for any game provider to implement its game on the Lottery’s system. The Lottery’s contract with G Tech states that any entity given access to G Tech’s intellectual property must agree to abide by the same confidentiality requirements as the Lottery, but does not state anything about game providers executing separate contracts with G Tech. The Request for Response to which BIS originally responded did not mention such a requirement. G Tech markets a Bingo game in Europe and is a competitor of BIS for the U.S. market. BIS alleges that “[t]he policy of requiring game providers to obtain permission from G Tech effectively allows G Tech to determine which of its competitors will be able to do business with the Massachusetts Lottery.”

BIS alleges that Cahill and Cavanagh have acted for the improper purpose of providing “compensation to Scientific Games International for campaign fundrais-ing for Cahill. Such fundraising was undertaken by Scientific Games in a ‘pay to play’ scheme in which most-favored contractor status was awarded based on fundraising activity. Such fundraising was arranged by and through a political operative engaged by Scientific Games who enjoys a close personal relationship with Defendants and who is a neighbor of Defendant Cahill. The relationship has included fundraising among Scientific Games executives and others in New York City and elsewhere resulting in donations to Defendant Cahill’s campaign fund in substantial amounts.”

Cahill and Cavanagh knew that implementation of BIS’s Bingo game was crucial to BIS’s ability to demonstrate to other state lotteries that the game would be successful. BIS further alleges that Cahill and Cavanagh have acted with the improper purpose “to hinder and obstruct Plaintiffs business development for the benefit of G Tech, a competitor of Plaintiff in the provision of BINGO games to state lotteries” and “in order to interfere with and hinder the advantageous and contractual relations enjoyed by Plaintiff with the Lottery.” On July 9, 2010, BIS filed this suit against Cahill and Cavanagh individually, as well as the Lottery. BIS alleges that Cahill and Cavanagh intentionally interfered with BIS’s contract with the Lottery and with BIS’s advantageous relations with other lotteries. BIS further alleges civil conspiracy against all defendants.

Prior Litigation

BIS has attached to its opposition eight exhibits consisting of court documents relating to a prior federal lawsuit against Cahill and Cavanagh. In deciding a Rule 12(b)(6) motion, the court may consider only the allegations of the complaint, exhibits attached to the complaint, and matters of public record. Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000).

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Bluebook (online)
28 Mass. L. Rptr. 449, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bingo-innovative-software-llc-v-cahill-masssuperct-2011.