Reuter v. Mastercard Intern., Inc.

• Citation: 921 N.E.2d 1205,337 Ill. Dec. 67
• Decision Date: 05 January 2010
• Docket Number: No. 5-07-0372.,5-07-0372.
• Parties: Thomas REUTER, Plaintiff-Appellant, v. MASTERCARD INTERNATIONAL, INC.; Visa U.S.A., Inc.; MBNA Corporation; Citigroup, Inc.; Chase Manhattan Corporation; Bank One Corporation; Bank of America Corporation; U.S. Bancorp; Fleet Financial Group, Inc.; Federal Deposit Insurance Corporation, as Receiver of Citizens National Bank of Macomb; Busey Bank of Urbana; United Community Bank of Chatham; and Palmer Bank, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

921 N.E.2d 1205

337 Ill. Dec. 67

Thomas REUTER, Plaintiff-Appellant, v. MASTERCARD INTERNATIONAL, INC.; Visa U.S.A., Inc.; MBNA Corporation; Citigroup, Inc.; Chase Manhattan Corporation; Bank One Corporation; Bank of America Corporation; U.S. Bancorp; Fleet Financial Group, Inc.; Federal Deposit Insurance Corporation, as Receiver of Citizens National Bank of Macomb; Busey Bank of Urbana; United Community Bank of Chatham; and Palmer Bank, Defendants-Appellees.

No. 5-07-0372.

Appellate Court of Illinois, Fifth District.

January 5, 2010.

Stephen M. Osborne, The Sharp Law Firm, P.C., Mt. Vernon, IL; Bruce A. Beeman, Wolter, Beeman & Lynch, Springfield, IL, for Appellant, Thomas Reuter.

William P. Hardy, J. William Roberts, Hinshaw & Culbertson LLP, Springfield, IL; Colleen Kennedy, Daniel H. Bookin, Randall W. Edwards, O'Melveny & Meyers LLP, San Francisco, CA, for VISA, U.S.A., Inc.

R. Mark Mifflin, Giffin, Winning, Cohen & Bodewes, P.C., Springfield, IL; Marianne Short, Dorsey & Whitney, LLP, Minneapolis, MN, for U.S. Bank National Association, N.A.

R. Mark Mifflin, Giffin, Winning, Cohen & Bodewes, P.C., Springfield, IL; Jim McCabe, Gregory P. Dresser, Morrison & Forester, LLP, San Francisco, CA, for Bank of America, N.A., Fleet Bank, N.A., MBNA America Bank, N.A.

Brian T. Schurter, Tummelson Bryan & Knox, LLP, Urbana, IL, for Busey Bank of Urbana.

Thomas H. Wilson, Sorling, Northrup, Hanna, Cullen & Cochran, Ltd., Springfield, IL, for First USA Bank, N.A., Chase Manhattan Bank USA, N.A.

Lawrence J. Kwacala, Flack, McRaven & Stephens, Macomb, IL, for Federal Deposit Insurance Corporation, as receiver for Citizens National Bank of Macomb.

Paul E. Adami, Fred C. Prillaman, Joel A. Benoit, Mohan, Alewelt, Prillaman & Adami, Springfield, IL; Jay N. Fastow, Dickstein Shapiro, LLP, New York, NY, for MasterCard International, Inc.

Lorilea Buerkett, Eric L. Grenezebach, Brown, Hay & Stephens, Springfield, IL, for United Community Bank.

Karen L. Kendall, Frederick P. Velde, Heyl, Royster, Voelker & Allen, Peoria, IL; Christopher R. Lipsett, WilmerHale, New York, NY, for Citigroup, Inc. (A joint brief was filed by all appellees)

Justice CHAPMAN delivered the opinion of the court:

This appeal involves section 28-8 of the Criminal Code of 1961 (720 ILCS 5/28-8 (West 1998)). That section provides that any person who loses money or any other thing of value through illegal gambling may recover what was lost from the winner. 720 ILCS 5/28-8(a) (West 1998). If the gambler does not bring a suit to recover his or her losses within six months of the time they occur, any other individual may bring a civil suit for damages triple the amount lost by the gambler. 720 ILCS 5/28-8(b) (West 1998). The plaintiff brought the instant lawsuit under this second provision. His complaint named as defendants MasterCard International, Inc., Visa U.S.A., Inc., and several banks that issued MasterCard and Visa credit cards to Illinois consumers who used their credit cards to gamble on Internet casinos. At issue is whether these defendants are "winners" under the statute. The trial court held that they are not and, accordingly, granted the defendants' motion to dismiss. We affirm that ruling.

On March 3, 2000, the plaintiff, Thomas Reuter, filed a 23-count complaint seeking damages under section 28-8(b) of the Criminal Code of 1961 (720 ILCS 5/28-8(b) (West 1998)). That section provides that if a person who lost at illegal gambling does not bring a suit to recover his losses within six months, any person may bring an action against the winner for three times the amount lost. 720 ILCS 5/28-8(b) (West 1998). This provision is intended to serve as an enforcement mechanism. Vinson v. Casino Queen, Inc., 123 F.3d 655, 657 (7th Cir.1997) (applying Illinois law). The complaint alleged a civil conspiracy to operate online casinos, a form of gambling that is illegal in Illinois. The plaintiff sought treble damages under section 28-8(b) for the losses of an individual named Glenn Lee, as well as the unspecified losses of unnamed Illinois cardholders.

Count I of the complaint alleged that defendants MBNA Corp. (MBNA) and MasterCard International, Inc. (MasterCard), conspired to violate section 28-1 of the Criminal Code of 1961 (720 ILCS 5/28-1 (West 1998)), which prohibits many forms of gambling. The plaintiff alleged the following facts. MBNA is a bank that issues credit cards to Illinois consumers through defendant MasterCard. MBNA and MasterCard have a "merchant agreement" with a company called Intersafe Global, which is identified as the "cashier" on Internet casino sites. Gamblers visiting these sites can use their credit cards to purchase virtual chips from Intersafe Global, which they can then use to place bets. According to the complaint, MBNA and MasterCard knew that Intersafe Global and other similar companies (referred to in the complaint as "gambling finance companies") worked directly with online casinos, including Casino-on-Net, the Internet casino that Glenn Lee used. The complaint alleged that MasterCard's logo appears on the Casino-on-Net site. None of the Internet casinos or gambling finance companies are named as defendants in the complaint.

Count I further alleged that pursuant to its merchant agreements with MBNA and MasterCard, Intersafe Global paid these defendants a fixed percentage of the money that cardholders spent purchasing Internet gambling chips to place bets on Casino-on-Net. Any winnings were credited to the gambler's credit card account if a balance on the card was "due and owing."

MBNA issued a Platinum Plus MasterCard to Glenn Lee, who used the card to purchase $49,500 in virtual chips from Intersafe Global. Lee gambled with these chips on Casino-on-Net between January 1, 1999, and September 2, 1999, and lost the entire $49,500. The complaint alleged that any periodic winnings Lee received during this period were credited to his MBNA MasterCard account. In count I of his complaint, the plaintiff sought $148,500 (three times the amount Lee lost) pursuant to section 28-8(b). The plaintiff alleged that MBNA and MasterCard were liable for these losses because (1) they were "winners" under the statute and (2) they were liable for the losses as coconspirators with the Internet casinos and gambling finance companies.

Count II of the complaint also alleged that MasterCard and MBNA conspired to violate Illinois gambling laws. Count II contained essentially the same factual allegations as count I, but it alleged a broader conspiracy with additional victims. More specifically, the plaintiff alleged that MBNA and MasterCard had merchant agreements not only with Intersafe Global but with one or more of the other Internet gambling finance companies listed in a one-page exhibit attached to the complaint. He further alleged that these finance companies allowed gamblers to purchase chips from one or more of the online casinos listed in a nine-page exhibit attached to the complaint. He alleged that between September 1997 and September 1999, Illinois residents used their MBNA MasterCards to gamble online and lost "large sums of money" doing so. As damages, the plaintiff sought three times the amount the court would find to have been lost by all Illinois cardholders except for Glenn Lee.

The remaining 21 counts of the complaint alleged identical civil conspiracies between MasterCard and several other banks that issue credit cards through MasterCard and between Visa and banks (including MBNA) that issue Visa credit cards. In each, the plaintiff sought damages in unspecified amounts for three times the losses of all Illinois cardholders except for Glenn Lee.

On May 12, 2000, the defendants filed a joint motion to dismiss the complaint pursuant to both sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 1998)). They alleged that (1) all 23 counts of the complaint failed to state a cause of action because they did not allege facts demonstrating that the named defendants are "winners" under the statute and (2) counts II through XXIII of the complaint additionally failed to state a claim because the plaintiff did not identify any gambling losses subject to recovery under the statute and the plaintiff cannot bring an action "on behalf of an unidentified putative statewide class of alleged losers at gambling." In addition, they alleged that (1) all 23 counts are preempted by federal banking laws, (2) the gambling finance companies and Internet casinos are indispensable parties, and (3) the dispute is subject to mandatory arbitration clauses in the consumer credit card agreements (see 735 ILCS 5/2-619(9) (West 1998)).

On August 4, 2000, the plaintiff filed his response to the defendants' motion to dismiss. Attached to the plaintiff's response were two lengthy appendices. In relevant part, the appendices contained an affidavit of Glenn Lee and a letter from the customer satisfaction department of MBNA. The affidavit was notarized on July 31, 2000. In it, Lee averred that in January 2000, he sent a certified letter to MBNA requesting that MBNA issue a letter authorizing Casino-on-Net to wire any of Lee's winnings directly to him. He further averred that he received a letter in response "declining [his] request but congratulating [him] on [his] recent luck with [his] Casino-on-Net transactions." That letter, dated March 15, 2000, is also included in the appendices, and it states in relevant part as follows:

"We congratulate you on your recent luck with your Casino-On-Net transactions. However, MBNA is not able to dictate to the merchant the method used to dispose your winnings. Whenever a merchant charges an account for a particular transaction, it is normal for any subsequent transactions related to the initial transaction to be credited against the same account."

On September 6, 2000, the plaintiff filed a motion for leave to file an amended complaint. He sought to amend the complaint to...