Tonkawa Tribe of Indians of Oklahoma v. Scientific Games Corporation

District Court, D. Nevada·Decided August 27, 2021·No. 2:20-cv-01637·Unknown

Opinion

TONKAWA TRIBE OF INDIANS OF ) OKLAHOMA, et al., ) ) Case No.: 2:20-cv-01637-GMN-BNW Plaintiffs, ) vs. ) ORDER ) SCIENTIFIC GAMES CORPORATION, et ) al., ) ) Defendants. ) ) ) ALFRED T. GIULIANO as Liquidation ) Trustee for RIH Acquisitions NJ, LLC d/b/a ) Magnolia House Casino d/b/a The Atlantic ) Club Casino Hotel and Ranchos Club Casino, ) Inc, ) ) Intervenor. ) ) Pending before the Court is the Motion to Intervene, (ECF No. 4) filed by Alfred T. Giuliano as Liquidation Trustee for RIH Acquisitions NJ, LLC d/b/a Magnolia House Casino d/b/a The Atlantic Club Casino Hotel and Ranchos Club Casino, Inc. d/b/a Magnolia House Casino (“Intervenor”). Plaintiffs Tonkawa Tribe of Indians of Oklahoma d/b/a Tonkawa Enterprises, Cow Creek Band of Umpqua Tribe of Indians, and Umpqua Indian Development Corporation, (collectively, “Plaintiffs”) filed a Response, (ECF No. 34). Intervenor filed a Reply, (ECF No. 40). Also pending before the Court is Intervenor’s Motion to Transfer, (ECF No. 5). Plaintiffs filed a Response, (ECF No. 33), to which Intervenor filed a Reply, (ECF No. 41). For the reasons discussed below, the Court GRANTS Intervenor’s Motion to Intervene and Motion to Transfer. This case arises from Defendant Scientific Games Corporation’s, Defendant Bally Technologies’, and Defendant Bally Gaming’s (collectively, “Defendants’”) alleged monopolization of the relevant market for automatic card shuffling machines for regulated casinos in the United States. Defendant Scientific Games Corporation (“SGC”) manufactures automatic card shufflers, which are sold and leased to regulated casinos in the United States. (Second Amended Complaint (“SAC”) ¶ 17, ECF No. 39). Defendant SGC acquired Defendant Bally Technologies in 2015. (Id.). At that time, Defendant Bally Technologies owned both non-party SHFL Entertainment, Inc. (“SHFL”) and Defendant Bally Gaming. (Id.). SHFL owns two patents— the ‘982 patent and the ‘935 patent—based on its model of an automatic card shuffler named “Deckmate 1.” (Id. ¶18). The Deckmate 1 is installed directly into the gaming table with the upper surface sitting flush with the surface of the table. (Id. ¶ 18). According to SHFL, the Deckmate 1 uniquely uses an elevator to shuffle the cards under the gaming table. (Id.). The elevator has a cover that takes the cards from the dealer, randomly shuffles the cards, and moves automatically to return the cards to the dealer when the cards are completely randomized. (Id.). In 2003, the United States Patent and Trademark Office (“PTO”) issued the ‘982 patent and ‘935 patent. (Id. ¶¶ 18–19). Between 2002 and 2013, SHFL initiated various patent infringement lawsuits against other competitors in the card shuffling relevant market, including CARD LLC, VendingData, Taiwan Fulgent, and TCS John Huxley America, Inc. (“TCS”). (Id. ¶ 25–26, 45). Plaintiffs

allege that these lawsuits often resulted in SHFL’s eventual acquisition of the competitors, which reduced meaningful competition in the card shuffling relevant market. (Id. ¶ 50). Specifically, in October 2012, SHFL filed suit against Digideal Corporation (“Digideal”) in the District of Nevada, alleging that Digideal’s prototype, the DigiShuffle, infringed SHFL’s ‘982 and ‘935 patents. (Id. ¶ 25). In January 2014, Digideal initiated re-examination proceedings before the PTO on claims 1–3 and 42–46 of the ‘982 patent; and claims 1, 2, 9–11, and 14 of the ‘935 patent. (Id. ¶ 28). As to the ‘982 patent, Digideal challenged claims 1–3 and 42–46, arguing that the Block ‘044 patent issued in March 2002 utilized the same technology alleged to be innovative in the Deckmate 1. (Id. ¶ 21, 39). The PTO agreed and initially rejected the claims based on other pieces of prior art. (Id. ¶ 21). SHFL, in response, amended its claims to state that the Deckmate 1 must be mounted flush with the gaming table surface—a feature not taught by the Block patent. (Id.). The PTO ultimately confirmed that the claims in the ‘982 patent were patentable and reissued a reexamination certificate in July 2015. (Id.). Similarly, as to the ‘935 patent, the PTO initially rejected some of the claims in light of the Block ‘044 patent and Roblejo ‘122 patent. (Id. ¶ 22). Upon SHFL’s cancellation of the reexamined claims, the PTO issued a reexamination certificate for the ‘935 patent. (Id. ¶ 30). Plaintiffs allege that SHFL failed to disclose relevant pieces of prior art concerning the Nicoletti Shuffler, the Luciano Prototype, the Roblejo Prototype, and the Block patent during the re-examination proceedings and underlying prosecution. (Id. ¶¶ 40–49). A. Shuffle Tech Litigation In April 2015, Shuffle Tech International, LLC (“Shuffle Tech”) filed the first monopolization suit against SHFL in the Northern District of Illinois. (Id. ¶ 21); see generally Shuffle Tech International LLC et al. v Scientific Games Corp. et al. (“Shuffle Tech Litigation”), No. 1:15-cv-3702 (N.D. Ill.). Shuffle Tech, a potential competitor, alleged that

SHFL violated Section 2 of the Sherman Act by fraudulently procuring two patents from the PTO and engaging in sham litigation to eliminate competitors in the relevant market. (SAC ¶ 21). In August 2018, a jury returned a verdict against Defendants and SHFL for $315 million to compensate Shuffle Tech for their lost profits materially caused by Defendants’ monopolization of the card shuffling relevant market. (See J., Shuffle Tech Litigation, Ex. B to SAC, ECF No. 39-2). B. Other Related Litigation Multiple similar lawsuits, including the present action, emerged after the Shuffle Tech Litigation. On March 15, 2019, TCS filed suit against Defendants in the Northern District of Illinois. See TCS John Huxley America, Inc., et al. v. Scientific Games Corp. et al., Case No. 19-cv-1846 (N.D. Ill.) (the “TCS Litigation”). TCS alleges that Defendants monopolized the market for automatic card shufflers for regulated casinos through: (a) Defendants’ wrongful enforcement of fraudulently procured patents from the PTO; and (b) Defendants’ sham litigation against TCS and other competitors. (See Compl., TCS Litigation, Ex. B to Mot. Transfer, ECF No. 5-1). On September 4, 2020, Intervenor filed his own lawsuit against Defendants in the Northern District of Illinois. See Alfred T. Guiliano v. Scientific Games Corp. et al., Case No. 1:20-cv-05262 (N.D. Ill.) (the “Guiliano Litigation”). Intervenor, a direct purchaser of automatic card shufflers, alleges that Defendants’ monopolization and exclusion of competitors forced direct purchasers to pay “supracompetitive prices” in violation of Sections Two and Three of the Sherman Act. (See Compl. ¶ 5, Guiliano Litigation, Ex. C to Mot. Transfer, ECF No. 5-1). On September 8, 2020, Rancho’s Club Casino, Inc. d/b/a Magnolia House Casino filed a nearly identical class action in the Northern District of Illinois on behalf of direct purchasers of automated card shufflers. Rancho’s Club Casino, Inc. v. Scientific Games Corp. et al., Case No. 1:20-cv-05295 (N.D. Ill.) (the “Rancho’s Club Casino Litigation).

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Tonkawa Tribe of Indians of Oklahoma v. Scientific Games Corporation, (D. Nev. 2021).

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