Chaset v. Fleer/Skybox Intern., Lp
| Decision Date | 20 August 2002 |
| Docket Number | No. 00-56266.,No. 00-56255.,No. 00-56260.,No. 00-56253.,No. 00-56251.,No. 00-56261.,No. 00-56256.,No. 00-56263.,00-56251.,00-56256.,00-56263.,00-56253.,00-56260.,00-56266.,00-56255.,00-56261. |
| Citation | 300 F.3d 1083 |
| Parties | Nicholas CHASET; Gretchen Dumas, as Guardian ad litem for, Plaintiffs-Appellants, v. FLEER/SKYBOX INTERNATIONAL, LP, Defendant-Appellee. Nicholas Chaset; Gretchen Dumas, as Guardian ad litem for, Plaintiffs-Appellants, v. Upper Deck Company; Vintage Sports Cards, Inc.; Treat Entertainment, Inc., Defendants-Appellees. Nicholas Chaset; Jon Rodriquez, on behalf of themselves and all others similarly situated; Gretchen Dumas, as Guardian ad litem for; Irene Torres, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. Topps Company, Inc., Defendant-Appellee. Nicholas Chaset; Gretchen Dumas, as Guardian ad litem for, Plaintiffs-Appellants, v. Playoff Corporation, Defendant-Appellee. Nicholas Chaset; Gretchen Dumas, as Guardian ad litem for, Plaintiffs-Appellants, v. Racing Champions Corporation, Defendant-Appellee. Nicholas Chaset; Irene Torres, Guardian ad litem; Gretchen Dumas, as Guardian ad litem for; Jon Rodriguez, a minor, by and through his guardian ad litem, Plaintiffs-Appellants, v. Major League Baseball Players Association; Major League Baseball Properties, Inc.; NBA Properties, Inc.; NFL Properties, Inc.; National Football League Players Association, dba NFL Players, Inc.; Players, Inc.; National Hockey League Enterprises; NHL Players Association; Walt Disney Company, Defendants-Appellees. Irene Torres, as Guardian ad litem for John Rodriguez; Jeffrey Fishman, on behalf of themselves and all others similarly situated; Steven Price, on behalf of themselves and all others similarly situated; Lance Kuba, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. Pacific Trading Cards, Inc., Defendant-Appellee. Andrew Imber, a minor; Alex Silverman, a minor; Anthony Treviranus, a minor; Kathleen Paige Treviranus, a minor; Kelly Treviranus, as guardian ad litem for Anthony Treviranus, Plaintiffs, and Gabriel Laus; Marci Imber, as guardian ad litem for Andrew Imber; Janet Silverman, as guardian ad litem for Alex D.C. No. Silverman; Gabriela LAUS, as CV-99-02010-RMB guardian ad litem for Gabriel Laus; Peter Walzer, as guardian ad litem for Graham Walzer; Steven Spiegler, as guardian ad litem for Matthew Spiegler, Plaintiffs-Appellants, v. Nintendo Of America, Inc.; Wizards Of The Coast, Inc.; 4Kids Entertainment, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Eric Isaacson, Milberg Weiss Bershad Hynes & Lerach, San Diego, CA; Henry Rossbacher, Rossbacher & Associates, Los Angeles, CA, for the plaintiffs-appellants.
Shepard Goldfein and Douglas B. Alder, Skadden, Arps, Slate, Meagher & Flom, New York, NY; Martin Fineman, Davis, Wright, Tremaine, San Francisco, CA; Michael L. Lipman, Coughlan, Semmer & Lipman, Michael Dukor, Dukor, Spradling & Metzer, Edward J. McIntyre, Solomon, Ward, Seidenwurm & Smith, San Diego, CA; Eric J. Lobenfeld; Chadbourne & Parke, New York, NY; Meryl Young, Gibson, Dunn & Crutcher, Irvine, CA; Kent B. Gross and Valerie M. Goo, Pillsbury Winthrop, Richard A. Schirtzer, Quinn, Emmanuel, Urquhart, Oliver & Hedges, Los Angeles, CA; Kenneth M. Fitzgerald, Latham & Watkins, Terry Ross, Gray, Cary, Ware & Freidenrich, San Diego, CA; Michael J. Baker, Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Grace K. Won, Farela, Braun & Martel, San Francisco, CA, for the defendants-appellees.
Appeals from the United States District Court for the Southern District of California Rudi M. Brewster, District Judge, Presiding. CV-99-01739-RMB, CV-99-01946-RMB, CV-98-02121-RMB, CV-99-01963-RMB, CV-99-01780-RMB, CV-98-01772-RMB, CV-97-01658-RMB, CV-99-02010-RMB.
Before LEAVY, T.G. NELSON, and W. FLETCHER, Circuit Judges.
In these eight consolidated cases, purchasers of trading cards (appeal the district court's dismissals of their actions brought under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 ("RICO")). The district court held that the purchasers did not have standing because they were not injured in their business or property as required by RICO's § 1964(c). We have jurisdiction over this timely appeal under 28 U.S.C. § 1291 and, after de novo review, we affirm.
These are consolidated appeals from the dismissals of eight virtually identical actions brought by sports and entertainment trading card purchasers. The defendants-appellees are manufacturers and distributors of trading cards and licensors of the intellectual property depicted on these cards. In each of these actions, the purchasers alleged that the random inclusion of limited edition cards in packages of otherwise randomly assorted sports and entertainment trading cards constituted unlawful gambling in violation of RICO.
The foundation of most trading card products is a base set of cards, which may include as many as eighty different cards, each with a different picture on it. Beginning in the early 1990's most trading card products also included smaller sets of "insert" or "chase" cards, which may include as many as ten or fifteen different cards, or as few as one card. These insert cards are more rare than base cards and, thus, they generally are more desirable to card collectors. Trading card packs and display boxes typically state the odds of receiving in a given pack an insert card from any of the various insert sets. Almost every card manufacturer also includes a disclaimer which states that the advertised odds are an average for the entire production run and are not guaranteed within an individual pack or box.1 There is a secondary market for trading cards, active at trading card conventions, trading card stores, and on the Internet, which places higher values on some cards than others.
In these actions, the plaintiffs asserted that the marketing and distribution of trading cards constituted gambling, a RICO violation, because the essential elements of gambling — price, chance, and prize — were all present. That is, the purchasers paid at least a portion of the purchase price for the chance to win an insert card. They sought compensatory and treble damages.
The defendants moved to dismiss for failure to state a claim based, in part, on the ground that the plaintiffs lacked standing because they had not suffered an injury cognizable under RICO. The district court ultimately granted the motions to dismiss without leave to amend, and entered judgment for defendants, holding that there was no injury because plaintiffs "struck a bargain with Defendants and received the benefit of their bargain." Dumas v. Major League Baseball Props., Inc., 104 F.Supp.2d 1220, 1223 (S.D.Cal. 2000); see also Rodriguez v. Topps Co., 104 F.Supp.2d 1224, 1227(S.D.Cal.2000); Schwartz v. Upper Deck Co., 104 F.Supp.2d 1228, 1230-31 (S.D.Cal.2000).
Judgments were entered dismissing the RICO claims without leave to amend and dismissing the supplemental state law claims without prejudice pursuant to 28 U.S.C. § 1367(c). The plaintiffs timely appealed.
To prevail on a civil RICO claim, a plaintiff must prove that the defendant engaged in (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity and, additionally, must establish that (5) the defendant caused injury to plaintiff's business or property. 18 U.S.C. §§ 1962(c), 1964(c). The Fireman's Fund Ins. Co. v. Stites, 258 F.3d 1016, 1021 (9th Cir.2001) (citation omitted). To demonstrate injury for RICO purposes, plaintiffs must show proof of concrete financial loss, and not mere injury to a valuable intangible property interest. See Oscar v. University Students Coop. Ass'n, 965 F.2d 783, 785 (9th Cir.1992) (en banc). Congress enacted RICO "to combat organized crime, not to provide a federal cause of action and treble damages" for personal injuries. Id. at 786.
Therefore, "a RICO plaintiff' only has standing if, and can only recover to the extent that, he has been injured in his business or property by [reason of] the conduct constituting the violation.'" Holmes v. Securities Investor Prot. Corp., 503 U.S. 258, 279, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992) (O'Connor, J., concurring) (alteration in original) (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). Moreover, the defendant's violation of § 1962 must be the proximate cause of plaintiff's injury. Id. at 265-68, 112 S.Ct. 1311.
The issue of RICO injury in the context of trading card purchases is one of first...
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