Casino Queen Marquette, Inc. v. Sci. Games Corp.

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CASINO QUEEN MARQUETTE, INC. CASINO QUEEN, INC., Plaintiffs, v. SCIENTIFIC GAMES CORPORATION; BALLY TECHNOLOGIES, INC.; and BALLY GAMING, INC., Defendants.

No. 21-cv-01798

United States District Court, N.D. Illinois, Eastern Division

May 19, 2022

MEMORANDUM OPINION AND ORDER

JOHN F. KNESS, United States District Judge.

Plaintiffs Casino Queen Marquette, Inc. and Casino Queen, Inc. purchased automatic playing card shufflers from Defendants Scientific Games Corporation, Bally Technologies, Inc., and Bally Gaming, Inc. But, Plaintiffs say, Defendants obtained fraudulent patents for those card shufflers and engaged in sham lawsuits to enforce those patents. When Plaintiffs learned about Defendants' conduct and realized that Defendants had been charging Plaintiffs supracompetitive prices- prices higher than those that would be set in a competitive market-for card shufflers, Plaintiffs brought the present antitrust suit seeking damages and injunctive relief.

Presently before the Court is Defendants' motion to dismiss Plaintiffs' claims as time-barred. (Dkt. 15.) But, as explained below, Plaintiffs need not plead around affirmative defenses like statutes of limitations. So long as there is a conceivable set of facts, consistent with the complaint, “that would defeat a statute-of-limitations defense, questions of timeliness are left for summary judgment (or ultimately trial), at which point the district court may determine compliance with the statute of limitations based on a more complete factual record.” Sidney Hillman Health Ctr. of Rochester v. Abbott Lab'ys, Inc., 782 F.3d 922, 928 (7th Cir. 2015). Such a set of facts exists here, and Plaintiffs have not “pleaded [themselves] out of court” by alleging unambiguously that they knew or reasonably should have known about the injuries giving rise to this suit before the statute of limitations expired. Accordingly, the motion to dismiss is denied.

I. BACKGROUND

Plaintiffs operate riverboat casinos. (Dkt. 1 ¶¶ 11-12.) Defendants develop, manufacture, and sell technology-based products and services for the “worldwide gaming lottery, social and digital gaming industries.” (Id. ¶¶ 13-15.)^[1] Between April 2009 and the filing of this suit, Plaintiffs purchased or leased “substantial quantities” of automatic card shufflers from Defendants. (Id. ¶¶ 11-12.) According to Plaintiffs, Defendants charged “supra-competitive prices”-and thus “collect[ed] monopoly rents”-for those card shufflers. (Id. ¶ 5.)

Defendants were allegedly able to charge supracompetitive prices because, through a scheme of “patent fraud and sham litigation, ” Defendants “achieved a 100% share in the [$100 million card shuffler] market.” (Id. ¶¶ 3, 28, 33, 35.) According to Plaintiffs, Defendants “defrauded the [U.S. Patent and Trademark Office] by intentionally omitting material references from” Defendants' patent applications and subsequent filings. (Id. ¶ 68.) Indeed, Defendants omitted critical information about the existence of earlier automatic card shuffler models including the “Nicoletti, ” the “Roblejo, ” and the “Luciano” shufflers. (Id. ¶¶ 68-69.) Plaintiffs say that if Defendants had properly disclosed information about those earlier models, the PTO would not have granted Defendants' patent applications for the automatic card shufflers at issue here. (Id. ¶¶ 82, 84-86.)

Plaintiffs also allege that Defendants engaged in “sham” litigation to enforce their fraudulently-obtained patents. (Id. ¶¶ 35-66.) As early as 2003, Defendants sued or threatened to sue potential competitors “to secure Defendants' dominance and monopoly.” (Id. ¶ 38.)^[2] So equipped with “fraudulently procured patents, ” enforced through “sham” litigation, Defendants could charge supracompetitive prices. (Id. ¶¶ 2, 31.)

Frustrated by that conduct, some of Defendants' competitors began to pursue legal challenges to Defendants' market dominance. In April 2015, Shuffle Tech “filed suit against Defendants alleging that their patents were invalid and that [Defendants] nevertheless knowingly attempted to enforce [those patents] in violation of' various state and federal laws. (Id. ¶ 62.)^[3] A federal jury in Chicago eventually ruled in favor of Shuffle Tech, finding (in Plaintiffs' words) that Defendants “had illegally monopolized the relevant shuffle market by using sham litigation predicated on invalid patents obtained by fraud.' (Id. ¶ 63); see Shuffle Tech, et al. v. Scientific Games Corp., No. 15-cv-3702, Dkt. 293 (N.D. Ill.) (“Shuffle Tech Litigation'). And on March 20, 2020, in a similar suit brought by TCS Inc., another judge in this District denied Defendants' motion to dismiss. (Dkt. 1 ¶ 2); see TCS John Huxley Am., Inc. v. Sci. Games Corp., 2020 WL 1678258 (N.D. Ill. March 20, 2020).

Plaintiffs allege that they were unaware of Defendants' unlawful conduct until Judge Blakey's denial of Defendants' motion to dismiss in TCS on March 20, 2020. (Dkt. 1 ¶ 87.) Specifically, after that decision, “through conversations with their attorneys,' Plaintiffs “discovered that Defendants had achieved not only market power as [a result] of superior skill, foresight, or industry, but in fact, maintained monopoly power through their use of anticompetitive and illicit behavior designed to exclude and punish would-be competitors.' (Id.)

Plaintiffs filed suit on April 2, 2021, seeking damages and injunctive relief under 15 U.S.C. §§ 15, 26. (See Dkt. 1.) Section 15 authorizes suits by “any person . . . injured in his business or property by reason of anything forbidden in the antitrust laws.” 15 U.S.C. § 15. Then, section 26 entitles parties “to sue for and have injunctive relief . . . against threatened loss or damage by a violation of the antitrust laws.” 15 U.S.C. § 26.

Now before the Court is Defendants' motion to dismiss, in which Defendants argue that Plaintiffs' suit is barred by the applicable statute of limitations. According to Defendants, had Plaintiffs “exercised reasonable diligence in the months and years before April 2017-four years before they filed the present case-Plaintiffs would have discovered their claims.” (Dkt. 21 at 6.) In Defendants' view, the March 20, 2020 discovery date alleged by Plaintiffs “is simply implausible.” (Dkt. 16 at 17.)

II. STANDARD OF REVIEW

A motion under Rule 12(b)(6) “challenges the sufficiency of the complaint to state a claim upon which relief may be granted.” Hallinan v. Fraternal Ord. of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Each complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). These allegations “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Put another way, the complaint must present a “short, plain, and plausible factual narrative that conveys a story that holds together.” Kaminski v. Elite Staffing, Inc., 23 F.4th 774, 777 (7th Cir. 2022). In evaluating a motion to dismiss, the Court must accept as true the complaint's factual allegations and draw reasonable inferences in the Plaintiff's favor. Iqbal, 556 U.S. at 678. But even though factual allegations are entitled to the assumption of truth, mere legal conclusions are not. Id. at 678-79.

III. DISCUSSION

Plaintiffs' claim under 15 U.S.C. § 15 is subject to a four-year statute of limitations. 15 U.S.C. § 15b (“Any action to enforce any cause of action under section 15 . . . of this title shall be forever barred unless commenced within four years after the cause of action accrued.”); see In re Copper Antitrust Litig., 436 F.3d 782, 789 (7th Cir. 2006) (applying § 15b's statute of limitations to private federal antitrust action).^[4]

Statutes of limitations generally begin to run-that is, the cause of action “accrue[s]” under 15 U.S.C. § 15b-when the “defendant commits an act that injures a plaintiff's business.” In re Copper, 436 F.3d at 789 (quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338 (1971)). But under the discovery rule, the limitations period does not begin to run until the plaintiff “discovered or should have . . . discovered” its injury. Barry Aviation, Inc. v. Land O'Lakes Mun. Airport Comm'n, 377 F.3d 682, 688 (7th Cir. 2004); see also In re Sulfuric Acid Antitrust Litig., 703 F.3d 1004, 1014 (7th Cir. 2012) (applying discovery rule to federal antitrust suit); In re Copper, 436 F.3d at 789 (“[I]n the absence of a contrary directive from Congress [statutes of limitations are] qualified by the discovery rule.”). Other Courts in this District apply the discovery rule in cases like this. See, e.g., In re Broiler Chicken Antitrust Litig., 290 F.Supp.3d 772, 808 (N.D. Ill. 2017).

Plaintiffs' alleged injury is their payment of “more [money] for automated card shufflers than they otherwise would have in a competitive market.” (Dkt. 1 ¶ 1.) Whether the present suit is barred by the statute of limitations thus turns on whether Plaintiffs “discovered or should have discovered” that Defendants charged them such supracompetitive prices more than four years before the filing of this suit; in other words, before April 2, 2017.

In their motion to dismiss, Defendants argue that the present suit is time-barred because “the actions giving rise to Plaintiffs' claims”-Defendants' alleged fraudulent procurement of patents and engagement in sham litigation-“date back to events between 2003 and 2012” and because those actions have “been the subject of other widely-publicized antitrust litigation as early as 2015.” (Dkt. 16 at 6.)

But it is well-established that a plaintiff generally does not need to “anticipate and overcome” affirmative defenses at the...