Borgata Vs. Ocean Casino ‘Poaching’ Case Mired In Cell Phone Surrender Dispute

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A full month has passed since a federal judge ordered a key former Borgata casino executive to turn over a company cell phone and other electronic devices that could provide the main evidence in a court fight with Atlantic City rival Ocean Casino Resort, and those devices have not yet been provided.

Why is that the case? Recent filings paint very different scenarios.

Attorneys for Borgata, which has sued Ocean as well as two executives who shifted their employment from Borgata, told a Nevada District Court judge last week that defendant William Callahan “has engaged in strategic delay and manufactured artificial disputes to prevent Borgata from examining those devices and create the impression that he is attempting to comply with the Court’s order.

“Defendant has, in each email and every telephone conference, attempted to claim the mantle of reasonableness and good faith. But, as is often the case, truth does not belong to the one who shouts the loudest.”

The Callahan side offered its version in a filing just hours later:

“One month after the Court’s Order, the examination still has not taken place and Mr. Callahan has been left in the unenviable position of needing and wanting to comply with the Court’s preliminary injunction order, only to be stymied at every turn by the Borgata. Indeed, Mr. Callahan wants the examination to be completed as soon as possible to refute the false allegations that he misappropriated Plaintiff’s ‘trade secrets.’”

The crux of the matter

The argument is whether Callahan brought inside secrets about Borgata’s biggest gamblers — or “whales” — with him to Ocean. Callahan’s attorneys have sought to modify a court order to limit a forensic examiner’s evidence search to May 1 and beyond — which, Borgata’s team notes, is shortly after Callahan began working for Ocean.

A second request that has met objections by Borgata was to let Callahan decide which contacts in the devices could be relevant to the assertion of “trade secrets” being shifted to Ocean.

Borgata attorneys assert that “the misconduct is serious” and that “sanctions should issue.”

Another thicket here is Callahan objecting to a forensic examiner recommended by Borgata but declared unqualified by Callahan. Also at issue is who pays for the examination.

On Oct. 21, Callahan’s team said it was “in the process of drafting a protocol” to define timing, which devices are relevant, and how the searches will be conducted. Borgata attorneys say that for the next two weeks, no protocol was issued and that “discussions surrounding the protocol took on a circus funhouse mirror-like quality.” Ocean attorneys eventually conceded they never produced a protocol, while declaring that issue moot because Borgata eventually developed its own and Ocean worked off amending that proposed framework.

“The time has come for Defendant Callahan’s strategizing and obstruction to end,” Borgata attorney Paul Trimmer concluded while proposing a $1,000-per-day penalty on Callahan for any required device surrenders not made beginning on Thanksgiving Eve.

New Ocean executive fires back

But the proposed adjustments to the court order are merely “to protect Mr. Callahan from the ‘fishing expedition’ that Plaintiff have stated that they will be conducting without any limitation,” his attorneys wrote. “Not surprisingly, Mr. Callahan’s new personal phone contains a substantial amount of attorney-client privileged communications, as well as personal information.”

Additionally, Callahan’s side says he has agreed to remove the May 1 date limitation — which it says Borgata ignored in its recent filing because it is “ever determined to drive up the costs of this litigation.”

On Sept. 30, a federal judge dismissed a motion for sanctions against Ocean for a “late night phone call” made to a current Borgata executive seeking testimony about whether Callahan had permission to take the company cell phone with him when he left the company.

But U.S. Magistrate Judge Brenda Weksler wrote, “[T]he Court is troubled by defense counsel contacting Mr. [Jason] Lyons. He is an executive of an opposing party, and a purely factual analysis of the issue suggests this contact was impermissible. However, the Court is required to not just look at the facts, but also to apply Nevada law.”

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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