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Ari Jubelirer v. Mastercard International, Inc., et al.

In this action, defendants and their financial brethren dodged a significant bullet with the dismissal of plaintiff's action which sought, inter alia, a declaration that credit card debts arising out of online gambling losses are unforceable.

According to the court, defendants contract with online casinos to process for a fee charges incurred by online gamblers. One such entity was the online Casino 21. Plaintiff used his Mastercard to fund gambling activities at Casino 21. After incurring a loss of $20 (and a $4.95 processing fee) he brought this suit, in which he alleged that defendants' actions constituted a violation of 18 U.S.C. §1962(c), known as the "RICO" statute. Alternatively, plaintiff alleged that defendants had, by their conduct, aided and abetted a violation of that statute. Lastly, plaintiff sought a declaratory judgment that his $24.95 debt to defendants, which arose out of his online gambling loss, was not enforceable.

On defendants' motion, the court dismissed plaintiff's claims. However, because of the nature of the court's determination, explained below, it did not reach the merits of plaintiff's main contention -- the unenforceability of his debt to defendants.

To state a claim under 18 U.S.C. §1962(c), "plaintiff must allege four elements: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." The court held that plaintiff failed to state a claim under this statute because he had not alleged facts sufficient to establish that the alleged wrong at issue was committed by a "RICO" enterprise. Said the court:

Plaintiff has alleged facts which make it apparent that the only relationship between the on-line casino and the defendants is a routine contractual relationship for the provision of consumer financing. That relationship does not constitute a RICO enterprise.

Plaintiff's claim that defendants aided and abetted a RICO violation was dismissed on the grounds that no such cause of action was authorized under the RICO statute.

This left the court with plaintiff's claim for declaratory relief. The court declined to rule on the merits of this claim. Instead, it dismissed this claim for procedural reasons.

The court found that it did not have independent subject matter jurisdiction over plaintiff's declaratory judgment claim, because that claim did not assert a federal claim for relief. The court then declined to exercise pendent jurisdiction over plaintiff's claim for declaratory relief and accordingly dismissed this suit. Left for another day is the enforceability of credit card debts, such as plaintiff's, which arise from online gambling activities.