School’s Financial Advisor Uses Funds for Gambling, Is Casino Responsible?

In order to take a case to the courtroom, you must have a cause of action. Generally, a cause of action means that there is some law that the other person has violated, and that violation has harmed you, so you should be compensated for that harm. If the law does not offer the plaintiff a remedy, then they cannot bring a case to court. When a court determines whether there is a cause of action, it does not look at the evidence of the case. Instead, it looks to only the petition that the plaintiff has filed. It assumes that all the facts are true to make this initial determination. Once a cause of action is established, then the case can go through the normal procedures to get into a courtroom.

Langston Hughes Academy Charter School’s former financial advisor stole money from the school in the amount of $667,000. She spent a portion of those funds at the Treasure Chest Casino. The school attempted to sue the casino to recover at least a portion of that money. In order to recover, the school needed to show that they had a cause of action against the casino. The school argued three major causes of action.

First, the school argued under the Louisiana Unfair Trade Practices Act (LUTPA). LUTPA provides a cause of action for “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” The plaintiff must “prove that the conduct offends public policy, is immoral, unethical, oppressive, unscrupulous, or substantially injurious to customers.” Hernaez v. Mothe Life Ins. Co., 09-0147, p. 7 (La. App. 5 Cir. 11/10/09), 28 So.3d 454, 458. While the LUTPA originally only applied to consumers and business competitors, the Louisiana Supreme Court recently expanded the definition to include all people.

While the expansion is beneficial for the school, the school still needs to meet two tests to have a claim under LUTPA. The first is that the person must have suffered a loss that is easily connected to a dollar amount, and the loss results from another’s use of unfair methods of competition and unfair or deceptive acts or practices. See Cheramie Serv. Inc. v. Shell Deepwater Prod., Inc., 09-1633, p. 6 (La. 4/23/10), 35 So.3d 1053, 1057. While the school easily met the first portion of the test, due to the loss of $667,000, the court found that they did not meet the second test. The second test requires that the casino have unfair methods of competition or deceptive acts, not the individual who actually embezzled the money. The court found that the casino was acting within its normal course of business, which was not deceptive in any way; the deception was more on the part of the financial advisor. Additionally, the court pointed out that Louisiana generally favors strictly regulated legalized gambling because of the many economic benefits that it provides. Therefore, the school failed to have a cause of action under the LUTPA.

The school then attempted to use another cause of action under the duty of care. Their argument was that the casino failed to recognize that the financial advisor was a compulsive or problem gambler, so they failed their duty of care. However, La. R.S. 27:27.1(H) does not require casinos to recognize compulsive gamblers because that requires medial and clinical expertise. Since the legislature specifically does not require casinos to recognize and deal with compulsive gamblers, the court did not feel they should require the casino to make that determination either. Therefore, the court reasons that since the casino has no duty to recognize the gambler, then the casino also has no duty to protect a third party who many actually own the money either. The court points out that, as a general matter, there is no duty to protect others from the criminal activities of third person. Therefore, the school failed to have a cause of action under a duty of care.

The final argument that the school used was under the “Abuse of Rights” doctrine. The school argued that since the casino was “promoting and fostering” the financial advisor’s gambling addiction, then they abused their rights in their role as a casino. This doctrine has four prongs, and while the court lists those prongs, it finds no real reason to complete the analysis because the entire analysis is based on the assumption that the casino should have recognized that the financial advisor was a compulsive gambler. Since the court already determined that the casino was not required to recognize her as compulsive gambler under statute, the analysis ended short. Therefore, the school did not have a cause of action under the “Abuse of Rights” doctrine.

Because the school could not find a cause of action, the court dismissed the claim against the casino. While the school will likely still be able to sue the financial advisor, they will not be able to get damages out of the casino because of the lack of cause of action. There are many types of remedies under the law, but you do have to have a claim in order to get one of those remedies.

The Berniard Law Firm can help you decide if you have a cause of action. If you have legal issue, contact the Berniard Law Firm toll free at 1-866-574-8005.