Borgata, Ocean Casinos Stalled In Legal Battle, High-Roller Client Information At Stake

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The lawsuit filed by Borgata in August against Atlantic City rival Ocean Casino accuses the latter of “raiding Borgata’s casino marketing department” in an effort to poach many of Borgata’s best customers — known as “whales.”

But five months later, the two sides haven’t even been able to agree on the parameters of a forensic search of a cellphone of former Borgata executive William Callahan that went with him in May when he joined up with Ocean, the Boardwalk casino formerly known as Revel that reopened in mid-2018.

A federal judge, seemingly content to let the warring casinos rack up legal bills over such minutiae as who pays the forensic examiner, so far mostly has declined to intervene.

That has left Borgata, for example, to file “Plaintiff’s Reply In Support Of Its Motion For Leave To File Redacted Supplemental Declarations … In Support Of Plaintiff’s Motion For Temporary Restraining Order And Preliminary Injunctive Relief” last week.

And that submission came one week after “Defendants’ Reply In Support Of Defendants’ Cross-Motion To Plaintiff’s Motion To Compel Compliance With Preliminary Injunction.”

Is all this really necessary?

Million-dollar clients central to dispute

A clue comes from a line in last week’s 10-page filing by Borgata: “Plaintiff also discussed why that [personal customer] information is valuable and how it could be used by competitors — i.e., that targeting of high value gaming customers, which are critical to the financial success of Borgata (and would similarly be to its competitors), would result in significant financial damage especially considering the ongoing COVID-19 pandemic (reduced capacity, low travel).”

That supplemented a Dec. 7 filing that laid bare the sort of pampering that most casino patrons can only try to imagine.

“Given that Borgata’s high-level customers frequently gamble seven figures annually, every aspect of the customer’s experience needs to be as perfect as possible. There is no publicly available database where Borgata (or any casino for that matter) can go to learn the kind of food a customer likes to eat, what casino games they like to play, or the kind of bed sheets and toiletries they prefer to use.

“Rather, the Borgata compiles this information piece by piece over the course of the Borgata’s relationship with the customer which often spans many years. Thus, the value of the information, at least in part, is that it is akin to an intelligence report.”

Those stakes help explain the level of rancor in these months of filings.

Fighting words on both sides

Borgata:

“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 time has come for Defendant Callahan’s strategizing and obstruction to end. … Although Defendant Callahan casts himself in the role of the innocent victim, the reality is different. … Callahan’s position during negotiations seems to be variations of the idiom ‘my way or the highway.'”

Ocean:

“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 parties have spilled much ink over a process when the time and resources could have been spent actually removing the allegedly trade secret information from Mr. Callahan’s phone. The delay smacks of gamesmanship and bad faith, and Mr. Callahan simply asks for an order to permit him to brief that issue another day.

“Defendant Callahan is not failing to comply with the Order just because he does not submit to Plaintiff’s attempt to expand the Order and trample his rights. … [T]o assert that the Court may not even enter a protective order regarding the search of a party’s personal electronic devices due to the timing of when the search occurs highlights just how unabashedly one-sided Plaintiff has approached this litigation since its inception.”

Borgata:

“Callahan has thrown up imaginary roadblock after imaginary roadblock. … Callahan has refused to turn over his devices and negotiated in bad faith, making unreasonable proposals which would require Plaintiff to forego information to which it is legally entitled.”

According to Borgata’s attorneys, Ocean personnel contacted at least one “high roller” to “solicit a declaration from that customer about their relationship with Borgata. In doing so, the customer was very upset and concerned about information concerning their relationship with Borgata becoming public.

“Identification of the customers (and more specifically, identification as high-level customers) and disclosure of their preferences, dates they visited Borgata, and gaming history thrust their private affairs, which may be a source of annoyance, embarrassment, and harassment to them, into the public sphere for consumption.”

Three months since any ruling

U.S. Magistrate Judge Brenda Weksler last stepped in on Sept. 30, denying motions made by both sides in the case.

But Borgata scored a symbolic victory regarding Ocean’s contact with current Borgata executive Jason Lyons seeking supportive testimony about whether Callahan had permission to take the company cellphone in question with him when he left the company.

“[T]he Court is troubled by defense counsel contacting Mr. Lyons,” Weksler wrote. “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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