Success in the casino business often boils down to the ability to bring new technologies to the marketplace, and back in 2014, gaming behemoth Caesars Entertainment and its subsidiary Caesars Entertainment Services (CES) appeared to have crafted a winning combination with tech developer Tipping Point Gaming (TPG).
As part of the arrangement, according to court filings, CES offered to help deploy its partner’s new technology and secure the necessary Gaming Labs Industries certification. For a while, it appeared the partnership was really going places.
However, the alliance changed dramatically in 2017 after TPG informed CES of its plan to sell its assets to a third party. That decision resulted in protracted litigation. Each side claimed breach of contract. TPG also claimed a breach of the implied duty of good faith and fair dealing, intentional interference with a prospective contract, and fraud.
The battle at the district court level was pitched and experienced presiding judge Nancy Allf admitted into evidence damaging emails that appeared to demonstrate that CES had delayed TPG from receiving the necessary certification. The technology isn’t much good if it’s not allowed to be implemented.
Despite that and other developments at the jury trial, the court gutted TPG’s claims by granting a CES motion for judgment as a matter of law. The jury awarded no damages. The judge concluded CES was the prevailing party and awarded its attorneys their fees and costs of approximately $2.6 million.
There was a lot at stake, according to TPG’s damages expert, who told the court the company had suffered more than $10 million in direct damages and somewhere between $2.6 million and $66.8 million in consequential damages for the alleged breach-of-contract issue.
The court denied TPG’s attempt to get a new trial. The company appealed to the Nevada Supreme Court, which on June 12 reversed and remanded the lower court’s decision and granted a new trial. Its order was professionally presented, but biting just the same. At one point, it reminded the parties that the district court had “admitted internal CES emails in which CES executives stated that CES may need to intervene in TPG’s potential sale or resort to a ‘nuclear option.’”
The remand made the news, but the Supreme Court’s decision denying reconsideration on July 30 was less well publicized. That means the litigation, once considered shelved, is heading back into the system and will include its most damning claims.
The high court took pains to question and correct several points of law that eluded the district court at trial, including its judgment as a matter of law ahead of a jury verdict. One example:
“Here, TPG presented evidence that it had a contractual relationship with a prospective buyer and that CES knew of the relationship. TPG also presented evidence in the form of emails that CES intended to prevent the acquisition. CES, without privilege or justification, intervened to delay TPG from receiving GLI certification. The buyer ultimately canceled its contract to purchase TPG. Thus, because TPG presented sufficient evidence from which a jury could return a verdict in its favor, the district court erred by granting judgment as a matter of law as to TPG’s claim for intentional interference with prospective contract.”
The high court also determined that the lower court acted incorrectly when it barred TPG’s civil fraud claim.
Some of the emails I’ve reviewed figure to leave a mark the second time around. One appears to give insight into what CES executives were thinking after learning TPG founder Sam Johnson was planning to take his technologies elsewhere.
One wrote, “We should place the GLI submission on hold. … I don’t want Sam having any help getting his products to the field.”
Johnson, described by his allies as “serial entrepreneur,” has secured more than 90 patents over a 35-year career.
In a news statement following the reversal, Johnson said, “Several executives with Caesars had originally been discussing buying into our company, or even purchasing it entirely, and moving forward with the project. Caesars not only abruptly pulled the plug on our agreement, not only turned on my team at TPG, but they made the decision to do all they could to poison the well and crush us. They focused on stepping in to delay the certification process with GLI instead of facilitating it as they represented, which they knew with certainty would prevent us from ever coming to market.”
Now that it appears to be heading back to court, this is definitely a legal fight worth watching.