Talk N Win, Inc. v. Harris

Decision Date27 November 2013
Docket NumberCASE NO. CV F 13-0971 LJO SMS
CourtU.S. District Court — Eastern District of California
PartiesTALK N WIN, INC., et al., Plaintiffs, v. KAMALA D. HARRIS, et al., Defendants.



(Docs. 25, 27.)


Judges in the Eastern District of California carry the heaviest caseload in the nation, and this Court is unable to devote inordinate time and resources to individual cases and matters. This Court cannot address all arguments, evidence and matters raised by parties and addresses only the arguments, evidence and matters necessary to reach the decision in this order given the shortage of district judges and staff. The parties and counsel are encouraged to contact United States Senators Dianne Feinstein and Barbara Boxer to address this Court's inability to accommodate the parties and this action. The parties are required to consider, and if necessary, to reconsider consent to one of the Court's U.S. Magistrate Judges to conduct all further proceedings in that the Magistrate Judges' availability is far more realistic and accommodating to parties than that of U.S. District Judge Lawrence J. O'Neill who must prioritize criminal and older civil cases. A Magistrate Judge consent form is available on this Court's website.

Civil trials set before Judge O'Neill trail until he becomes available and are subject to suspension mid-trial to accommodate criminal matters. Civil trials are no longer reset to a later date if Judge O'Neill is unavailable on the original date set for trial. If a trial trails, it may proceed with little advance notice, and the parties and counsel may be expected to proceed to trial with less than 24 hours notice. Moreover, this Court's Fresno Division randomly and without advance notice reassigns civil actions to U.S. District Judges throughout the nation to serve as visiting judges. In the absence of Magistrate Judge consent, this action is subject to reassignment to a U.S. District Judge from outside the Eastern District of California. Case management difficulties, including trial setting and interruption, are avoided if the parties consent to conduct of further proceedings by a U.S. Magistrate Judge.


Defendant California and Tulare County law enforcement officials seek to dismiss as legally barred and insufficiently pled plaintiff Talk N Win, Inc. ("TNW") and Silva Ghreir's ("Ms. Ghreir's") constitutional deprivation and related claims arising from seizure of computers and related equipment in connection with criminal investigation into gambling activities. TNW and Ms. Ghreir (collectively "plaintiffs") respond that their operative First Amended Complaint ("FAC") alleges sufficient facts to implicate the law enforcement officials in violations of plaintiffs' constitutional rights and wrongful detention of their property to require declaratory relief. This Court considered on the record the F.R.Civ.P. 12(b)(6) motions of defendants California Attorney General Kamala D. Harris ("AG Harris"), Wayne Quint ("Chief Quint"), Bureau Chief of the California Bureau of Gambling Control ("Bureau"), and Tulare County District Attorney Tim Ward ("DA Ward").1 This Court VACATES the December 2 and 3, 2013 hearings on the motions to dismiss. See Local Rule 230(g). For the reasons discussed below, this Court DISMISSES the FAC's claims against the state defendants and DA Ward.

Plaintiffs' Telephone Card Promotion

TNW distributes rechargeable prepaid telephone calling cards and promotional software to advertise calling cards and provides consulting services for its clients regarding marketing. TNW is a distributor "Tel-Connect" domestic long distance cards ("phone cards") for Pong Marketing and Promotions, Inc. ("Pong"). The phone cards are sold in retail stores with which TNW and Pong have entered into location agreements. To promote the phone cards, TNW offers the Pong Marketing Sweepstakes Management System 3.0 computer software to enable stores' customers to participate in a sweepstakes game through computer workstations. The game offers instant cash prizes.

To participate in the game, a customer types in an account number. The promotional game server communicates with the customer's computer to sequentially select an electronic game piece from a finite field or batch. Each game piece is pre-assigned with a prize value that is revealed on the customer's computer screen in entertaining and colorful displays.

Ms. Ghreir owns and operates her Dreamland and Wonderland stores (collectively "stores") in Visalia, California. The stores make retail sales of phone cards, and their primary business is phone card sales. Ms. Ghreir licenses TNW's software to allow customers to play the sweepstakes game on computer terminals.

Bureau Law Enforcement Advisory

The Bureau issued its December 5, 2012 law enforcement advisory ("advisory") to address computer sweepstakes games:

With increasing frequency, so-called "Internet cafes" that sell Internet time or phone cards in conjunction with a "promotional sweepstakes," are operating throughout California. The "sweepstakes aspect" of the Internet cafes permits customers to play gambling-themed games on computers to win cash prizes. The Bureau . . . considers Internet cafes that offer these types of sweepstakes to be illegal gambling operations.

The advisory addresses "method of operation":

After making a purchase of Internet time or phone time, customers swipe themagnetic card through a card reader at a computer terminal or station inside the Internet café to play gambling-themed games. Along with Internet time or phone time, customers receive sweepstakes "entries" or "credits" based upon the amount spent (e.g., 100 sweepstakes entries for $1.00 of Internet time purchased). The sweepstakes entries are displayed on the computer screens as "credits." The customer then has the option to select one of several gambling-themed games and makes bets with the credits. Customers who win prizes can cash in any winnings, or use the winnings to purchase additional internet time and sweepstakes entries.

The advisory characterizes as illegal slot machines or devices computers that offer the sweepstakes described in the advisory. The advisory further addresses Bureau assistance to local law enforcement:

The Bureau will assist California law enforcement agencies working toward prosecution or pursuing civil or administrative actions in connection with Internet café gambling operations. Assistance may encompass advice, Bureau personnel and equipment, search warrant examples, and other experienced assistance with enforcement operations. The local law enforcement agency will retain the lead role and be responsible for evidence retention, seizure of funds, and prosecution, or civil or administrative action against the establishment.

The FAC accuses the Bureau and the California Department of Justice ("DOJ") to have disseminated the advisory to local law enforcement agencies, including the Tulare County District Attorney's Office ("DA's Office"), and to have assisted them to raid and close stores that sell prepaid phone cards using sweepstakes promotions.

Investigation By Tulare County District Attorney's Office

Near the end of January 2013, J. Lee ("Investigator Lee"), a DA's Office investigator, visited Ms. Ghreir's stores and asked how the businesses worked. Investigator Lee told TNW's Michael Strawbridge ("Mr. Strawbridge") of the advisory concerning plaintiffs' type of business and that he investigated whether plaintiffs' businesses conducted illegal gambling as described in the advisory. Investigator Lee was given a complete demonstration of the products and sweepstakes program and spent an hour at the stores.

On February 11, 2013, Investigator Lee visited the Dreamland store and was given a complete demonstration of the sweepstakes program and phone cards and was allowed tosearch and investigate the store. Investigator Lee spend nearly three hours at the store.

VPD officer Clay Moffett ("Officer Moffett") prepared a search warrant affidavit ("affidavit") at issue in this action and which indicates that he "spoke with the Tulare County District Attorney's Office along with investigators and several Detectives throughout the Central Valley in regard to the operation of illegal gambling establishments."

The Bureau's Investigation

A DOJ agent contacted VPD about illegal gambling at Internet cafes. In February 2013, DOJ and/or Bureau agents met with VPD and possibly DA Ward. In May 2013, two DOJ agents conducted an undercover investigation of Ms. Ghreir's stores in conjunction with VPD. Plaintiffs characterize the investigation to include inspection of Ms. Ghreir's stores and equipment, speaking with customers and employees, and playing the promotional sweepstakes games.

Officer Moffett's affidavit notes that:

1. He was contacted by DOJ Agent Gene Pinon ("Agent Pinon") regarding gambling casinos in Visalia and "was advised that they were operating as internet cafes, named Wonderland and Dreamland";

2. Agent Pinon had provided Officer Moffett with California Department of Motor Vehicles ("DMV") printouts of Ms. Ghreir and obtained the printouts by entering Ms. Ghreir's address into the DMV data base; and

3. On May 9, 2013, Officer Moffett conducted "an undercover detail utilizing two undercover Department of Justice Task Force Agents to enter the businesses."

In May 2013, Mr. Strawbridge met with Chief Quint, Assistant Bureau Chief Martin Horan, and Deputy Attorney General Tim Muscat to address the advisory. Mr. Strawbridge explained the "irreparable effects" of the advisory and law enforcement policies on TNW's business and customers. Mr. Strawbridge presented TNW's position that TNW's sweepstakes program and software are not illegal gambling devices and are lawful.

Searches Of Ms. Ghreir's Stores And Home

On May 28, 2013, VPD, working with DA Ward, DOJ and the Bureau, coordinated...

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