Franceschi v. Harrah's Entertainment, Inc., 2011 WL 9305 (D. Nev.)
Franceschi claimed that Harrah’s California ads were deceptive in luring California players to Nevada, but have an undisclosed policy of barring “skillful” blackjack players (card counters), taking their pictures, and putting the pictures in a shared database for other casinos. He alleged that he was harmed by being barred from multiple casinos, including Harrah's Las Vegas, Caesar's Palace, Paris Las Vegas, the Rio All-Suites Hotel, and Harrah's Reno.
The court found that it had subject matter jurisdiction over Franceschi’s claims under California statutory and common law, but dismissed sua sponte for failure to state a claim.
An allegedly unfair or deceptive business practice can’t be the basis of a California cause of action if the conduct has been deemed lawful. Here, the allegations were “nothing more than a clever attempt to plead around the statutory bars to relief for exclusion of card counters.” The right to exclude others is a fundamental element of private property ownership, extending to gaming establishments. Thus, Nevada casinos are under no duty to admit card counters and may exclude them as a matter of business judgment. Though plaintiff alleged that defendants advertised services without the intent to sell them, he’s ultimately seeking redress for their exercise of their right to exclude him. He can’t plead around an absolute bar to relief by recasting his cause of action as one for unfair competition. (Really? If the ads communicate the message that everyone is welcome (on which I express no opinion), then they’re deceptive; it’s perfectly possible to deceptively advertise conduct that is in itself completely lawful, for example if I advertise that my car gets 40 mpg when really it gets 32 mpg. Suppose, hypothetically, that the ads said outright, “we don’t exclude anyone.” Is this lie immune?)
Even if his CLRA and UCL claims survived, they didn’t satisfy the “reasonable consumer” test requiring that members of the public are “likely to be deceived” by the conduct. A plaintiff must show that the practice at issue is likely to deceive the reasonable consumer to whom the practice was directed, a person of ordinary intelligence and not a small segment of the market. Card counters can’t be categorized as reasonable consumers or ordinary consumers: “Skilled card counters employ their intellect and memory to develop the advanced ability necessary to track a casino dealer's cards and adjust their betting strategy. In doing so, card counters can overcome a casino's mathematical advantage and increase their odds of winning. Mastery of this complex practice clearly demonstrates natural aptitude and superior reasoning--and it is precisely because of these qualities that card counters can hardly be considered ordinary consumers who are likely to be decieved by Defendants' advertisements.”
Okay, this is bizarre (I will set aside here what the court apparently “knows” to be true about card counters' natural talents under Iqbal and Twombly, but this would be a good example of a case where the judge’s view of the world leads the court to reach far beyong the pleadings). I would readily accept the argument that, by virtue of the specialized training required to be a good card counter, card counters know that casinos try to exclude them and therefore can’t be fooled by general welcoming ads. Natural aptitude and superior reasoning about card sequences confer no general advantage in interpreting ads, however, and in fact the kind of literal mathematical reasoning used to count cards would probably, if applied to ads, lead a person to multiple errors given that ads routinely rely on pragmatic implication rather than strict formal logic. Smart in one area, smart in all is a terrible rule, and the better-reasoned cases involving highly trained individuals such as doctors (and lawyers) point out that it’s possible to fool them too, especially in areas outside their expertise (such as interpreting ad claims)—in fact, I’ve read that doctors are great targets for financial scams, precisely because they’re so confident of their own intelligence and capabilities but have limited relevant knowledge.
Anyway, the court went on, “the level of skill required in this practice ensures that card counters do not comprise a sizeable part of the population. Thus, Franceschi cannot show that card counters amount to more than a small segment of expert blackjack players--not the general body of reasonable consumers who the CLRA and UCL protect.” There was no allegation that defendants directed their ads towards card counters. Thus, the ads would not deceive reasonable consumers.
Common law fraud in California requires misrepresentation, scienter, intent to induce reliance, justifiable reliance, and resulting damage. Silence alone is generally not actionable, absent half-truth or a confidential relationship between the parties. Plaintiff’s common law claims failed as a matter of law because defendants didn’t owe him any duty to disclose that card counters could be excluded. Nor could a card counter ever show justifiable reliance.