Gambler’s Embezzlement Calls Casino’s Role in Problem Behavior Into Question

NOLA 180 (“NOLA”), a non-profit corporation, was the manager of Langston Hughes Academy Charter School. Kelly Thompson, the Financial Officer of Langston Hughes, was found guilty in federal court of embezzling $667,000 from NOLA, in order to finance her gambling habit. Subsequently, NOLA filed suit against Jazz Casino, alleging that it “substantially participated in and facilitated the gambling obsession of Thompson, and at times materially assisted, encouraged, and otherwise aided and abetted Thompson in the gambling obsession that led to Thompson’s theft.” NOLA also alleged that Jazz Casino “encourag[ed] and/or contribut[ed] to the financial loss suffered by NOLA.” The trial court, The Civil District Court from the Orleans Parish, heard the case. The trial court ruled that NOLA failed to state a right of action or cause of action and dismissed all of NOLA’s claims.

NOLA appealed, and the appellate court, The Court of Appeal for the Fourth Circuit of Louisiana, heard the case. On appeal, the sole issue was whether NOLA’s petition and amended petition stated a cause of action or a right of action against Jazz Casino. On appeal, NOLA asserted three theories for which it could be entitled to relief: it claimed relief under La. Civ. Code art. 2315 for general negligence; under the Louisiana Unfair Trade Practices Act (“LUTPA”); or under the “abuse of rights” doctrine, see Morse v. J. Ray McDermott & Co.,344 So.2d 1353 (La. 1976).

Unfortunately for NOLA, not all of those theories could be reviewed. First, NOLA never presented any claims pursuant to LUTPA before the trial court. Appellate courts are limited to reviewing only what is in the record; therefore, the LUTPA claim could not be reviewed. Second, NOLA’s “abuse of rights” doctrine claim, also could not be reviewed. It was not mentioned in NOLA’s petition or amended petition. “That argument is first made in NOLA 180’s opposition memorandum filed in the trial court.” The Court of Appeals noted that “This court is a court of record and can only review what is contained in the record on review.” The Court stated,”We note also that large portions of plaintiff’s brief alluding to research, psychiatric findings, and compulsive gambling, are not contained in the record.”

In other words, on appeal, NOLA could not introduce new claims. The Court of Appeals was limited to reviewing whether Jazz Casino could be held responsible for the losses sustained by NOLA when its employee (Thompson) embezzled funds to finance her gambling habit. And the legal issue was whether NOLA stated a valid cause of action for relief. The Court of Appeals affirmed the trial court’s findings and determined that NOLA did not state a valid cause of action for relief, and due to the reasons that follow in the subsequent paragraphs.

Louisiana’s relevant gambling statutes are found in Title 27 of the Louisiana Revised Statutes, which contains the policies for development and regulation of authorized gambling in Louisiana. The state legislature debated gambling activity and recognized that gambling “is a serious and widely-recognized problem.” However, the legislature did not impose an affirmative duty on casino operators to identify problem gamblers. La. R.S. 27:27.1H. The Legislature does require gambling facilities to post signs that provide toll-free numbers for information and referral services regarding compulsive or problem gambling. In certain limited instances, sanctions can be imposed “if a licensee, permittee, or casino gaming operator willfully fails to exclude from its establishment a person placed on a self-exclusion list.”

When a problem gambler self-reports, he or she is placed on a list that is maintained by the casino, and only then could a casino be held liable for the compulsive gambler being allowed to patronize the gambling facility. The record does not indicate that Thompson self-reported and was placed on a list. Based on Louisiana’s gambling statutes, the Court of Appeals came to the conclusion that Jazz Casino did not have a duty to identify and recognize compulsive gamblers. Therefore, NOLA’s petition failed to state a cause of action against Jazz Casino.

NOLA also claimed that it should be allowed to conduct discovery and then amend its petition in order to state a valid cause of action, “to cure the defects”. The Court of Appeals disagreed. The Court found that there was “no provision that a plaintiff be allowed to conduct discovery prior to curing the defects.” The Court also noted that NOLA did not indicate to the trial court that it desired to amend its petition. The Court of Appeals found that NOLA could not cure the defects in its petitions.

The Court of Appeals affirmed the Trial Court and assessed all costs of the appeal to NOLA 180.

This case showed the importance of clearly stating a valid legal cause of action. In the instant case, when the Court of Appeals reviewed the record, it was clear that NOLA had not stated a valid legal cause of action because there was no affirmative duty for Jazz Casino to identify and recognize compulsive gamblers.

It is very important when filing suit that a party carefully plead a cause of action
for which relief can be granted. Call the Berniard Law Firm today to speak with an attorney immediately if you are facing a pressing legal matter and require assistance.

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