Attorney Gen. v. Powerpick Player's Club Of Mich. LLC

• Decision Date: 05 January 2010
• Docket Number: Docket No. 283858.
• Citation: 287 Mich.App. 13,783 N.W.2d 515
• Parties: ATTORNEY GENERALv.POWERPICK PLAYER'S CLUB OF MICHIGAN, LLC.
• Court: Court of Appeal of Michigan — District of US

287 Mich.App. 13

783 N.W.2d 515

ATTORNEY GENERALv.POWERPICK PLAYER'S CLUB OF MICHIGAN, LLC.

Docket No. 283858.

Court of Appeals of Michigan.

Submitted June 9, 2009, at Grand Rapids.

Decided Jan. 5, 2010, at 9:05 a.m.

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Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and Donald S. McGehee and Melinda A. Leonard, Assistant Attorneys General, for plaintiff.

Morganroth & Morganroth, PLLC (by Mayer Morganroth and Jason R. Hirsch), Southfield, for defendant.

Before: JANSEN, P.J., and HOEKSTRA and MARKEY, JJ.

JANSEN, P.J.

In this action brought to enjoin an alleged public nuisance, plaintiff Attorney General appeals by leave granted the circuit court's order denying his motion for summary disposition. We reverse and remand for further proceedings consistent with this opinion.

I

Defendant PowerPick Player's Club of Michigan, LLC, operates what it characterizes as a professional lottery club. The Attorney General filed the present action alleging that PowerPick's operations violated several of Michigan's antigambling statutes and therefore constituted an enjoinable public nuisance. The Attorney General also alleged that PowerPick's operations violated the Michigan Consumer Protection Act (MCPA), MCL 445.901 et seq.

A

Contrary to the ruling of the circuit court, the material facts of this case are beyond serious dispute. Indeed, PowerPick, itself, confirms the majority of the relevant factual details of this case through its own exhibits and documentary evidence. PowerPick is a subsidiary of PowerPick America, LLC, which was started in Arizona in the mid-1990s by Andrew and Judy Amada. It has operated in Michigan since 2002. PowerPick's main business is pooling lottery players. On its website, under the heading “What is PowerPick all about”, PowerPick describes the nature of its business in broad overview:

PowerPick is about giving people HUNDREDS MORE chances of becoming a lottery jackpot winner through pools put together by PowerPick, and all you need is yourself. Our pools include many benefits.... We do everything for you, so you can start out sharing HUNDREDS of tickets instead of sharing just a few tickets! While the best example of pooling is the “office pool” where groups of players combine their dollars to share the tickets and share the winnings, with PowerPick, each person in the group ends up with dramatically more chances of becoming a big winner because of the large blocks of tickets that are purchased. Plus you will benefit from so many of our other free services....

PowerPick does all the work [for] you. One call can answer your questions and we can place your order by

phone or mail. You can use a credit card, debit card or check over the phone. You won't be standing in line, forgetting to buy tickets or making last minute dashes to the store. It's simply the most powerful, exciting and convenient way of playing.

Customers join PowerPick by paying a nominal “one-time setup fee.” Once a customer has joined, he or she may then select from PowerPick's various pooling packages. PowerPick uses a computer system to randomly assign each customer to a particular pool of the type that he or she has chosen. After the assignment is made, PowerPick mails the customer a confirmation certificate, listing all the numbers purchased for the particular pool. PowerPick operates several different types of pooling packages that its customers can choose to join.

PowerPick's primary pooling packages are called “PowerPools,” which consist of Mega Millions pools, Classic Lotto 47 pools, Keno pools, and Fantasy 5 pools. According to PowerPick's website, the Mega Millions pools and Classic Lotto 47 pools consist of either 25 or 50 shares each. The Keno pools and Fantasy 5 pools consist of 10 shares each. After the participants in a particular PowerPool pay their money, PowerPick uses a portion of it to buy lottery tickets from a licensed Michigan lottery retailer.

The participants in the particular PowerPool then share any winnings on a pro rata basis. Thus, for example, if a customer buys one share in a 25-share PowerPool, he or she receives 1/25 of any winnings for that particular pool. Similarly, if a customer buys three shares in a 50-share PowerPool, he or she receives 3/50 of any winnings for that particular pool.

PowerPick operates other pools as well. For example, customers who have bought into one of PowerPick's main PowerPools may also participate in one or both of the “Million Dollar Clubs” (MDCs). PowerPick offers a $50 MDC and $100 MDC. PowerPick's website describes the $100 MDCs as follows:

We will purchase up to 5 blocks of 1,000 tickets ... on EVERY drawing night the Mega Millions jackpot is estimated to be $100 MILLION or more. In addition you can purchase up to 3 shares in each block [pool], which makes your share of the prize 3 times greater!

We will try to keep the number of shares in each pool to about 1,200 plus or minus about 100 to produce an approximate range of 1100 to 1300 shares, with 1100 being the absolute minimum. PowerPick receives any shares under 1100 that are not ordered. So, if there are 1,200 shares in the pool, then each prize will be divided 1,200 ways. And, of course, all the prizes, not just the jackpot, will be distributed.

PowerPick further describes how to participate in the $100 MDCs:

All you do is sign up saying that you would like to share in 1,000 extra Mega Millions tickets each drawing night that the Mega Millions jackpot is $100 Million or higher. What does this cost? Just a Buck! You will own 1 share in 1,000 tickets for only $1 per drawing.

The $50 MDCs operate similarly except that PowerPick purchases 500 tickets, rather than 1,000 tickets, when the Mega Millions jackpot is more than $50 million but less than $100 million. PowerPick's website further describes the $50 MDCs:

This club works identically the same as the $100 MDC, except that each pool is 500 tickets instead of 1,000 tickets and the number of shares in each pool is about half as many, so the number of shares in each pool will be approximately 600-700, with 600 being the absolute minimum. PowerPick receives any shares under 600 that are not ordered.

Unlike the participants in the PowerPools, the participants in the MDCs do not know how many other participants will be in their respective pool at the time they buy their tickets. According to Andrew Amada's deposition testimony, PowerPick decides how many players will be in an MDC pool only after considering how many shares have been bought. If more than 1,300 shares are bought, a second MDC pool is opened. The number of participants is then split evenly between the two MDC pools.

PowerPick also conducts what it calls “MegaPools.” It describes the MegaPools on its website as follows:

Each MegaPool is a separate pool of 100 Mega Millions tickets that are purchased every Tuesday and Friday night. This pool is a FREE bonus and is in addition to each player's PowerPool.

* * *

Each MegaPool is made up of approximately 700-1,400 players. Every active member with a PowerPool selection is included in a MegaPool!

Thus, every PowerPick customer is included in one of the MegaPools as an additional “FREE bonus” as long as he or she is participating in at least one PowerPool.

It also appears that PowerPick can purchase shares in any of its pooling packages just like any of its customers can. In this way, PowerPick, itself, receives a pro rata share of any money won by the particular pools in which it participates.

PowerPick conducts additional games of chance that it announces from time to time in its newsletter. For instance, in one game, newsletter readers were asked to count the “Shamrocks hidden” within the newsletter and send in their count. The newsletter announced that “[t]he first three randomly drawn with the correct answer will each win 10 of the $10 Take Home Millions scratch tickets.” PowerPick regularly awards Michigan Lottery scratch-off tickets as prizes in these periodic newsletter games.

PowerPick claims to be substantially similar to a typical office lottery club. But unlike the practice of a typical office lottery club, PowerPick does not use all the money it collects from its customers to buy lottery tickets. According to its website, only 51 percent of the money that PowerPick collects from its customers is used to buy lottery tickets. Forty-one percent goes to “[c]ompany operating costs” and eight percent is taken as PowerPick's profit. Further, as noted previously, PowerPick can supplement its profits by purchasing its own shares in the various pools that it operates. PowerPick, itself, receives a pro rata share of any winnings when it does so.

B

In March 2006, the Attorney General sent a letter to PowerPick, demanding that PowerPick

cease and desist using the “Michigan Lottery” and “MegaMillions” names and any versions of those names, cease and desist selling or reselling Michigan Lottery tickets or shares and providing Michigan Lottery tickets or shares as bonuses or awards to its customers, and that PowerPick disconnect, disable and discontinue its Michigan Web site for the reason that engaging in these activities violates [federal law] and the Michigan Penal Code.

The Attorney General pointed out that MCL 432.27(1) provides that “[a] person shall not sell a ticket or share at a price greater than that fixed by rule of the commissioner. A person other than a licensed lottery sales agent shall not sell lottery tickets or shares.” The Attorney General also noted that “ MCL 750.301 prohibits accepting money with the understanding that money will be paid to any person contingent upon the happening of an uncertain event.” The Attorney General went on to state:

The Penal Code further prohibits buying and selling pools, MCL 750.304; publishing information concerning making bets or selling pools, MCL 750.305; keeping or occupying a building for gaming, MCL 750.302; possessing pool tickets,

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