The US Court of Appeals for the Sixth Circuit has affirmed a lower court’s decision to remand four separate lawsuits against online social casino operators back to Tennessee state court.
Four Separate Lawsuits Were Filed Against Online Social Casino Operators
The decision was issued on March 14th and pertained to the subject matter of whether lead plaintiff Gina Burt had Article III standing to pursue the claims in federal court.
According to multiple reports, the appellate court ruled that she did not, which stripped federal courts of jurisdiction over the matter. The lawsuits were originally filed in Tennessee state court.
Of course, the four separate lawsuits were brought against Playtika, VGW Holdings, Aristocrat Leisure, Ltd, and Product Madness, Inc. The plaintiffs alleged these companies operated illegal online gambling platforms that resulted in financial losses for Tennessee residents.
The suits were consolidated for appeal under case number 25-5038. The plaintiffs sought to recover losses incurred by Tennessee players under Tennessee Code Ann. § 29-19-105, a statute allowing third parties, including family members, to reclaim gambling losses on behalf of affected individuals.
VGW Cited Jurisdiction Under The Class Action Fairness Act
VGW and the other defendants removed the cases to federal court, citing jurisdiction under the Class Action Fairness Act (CAFA) and traditional diversity jurisdiction.
However, the US District Court for the Eastern District of Tennessee granted the plaintiffs’ motion to remand the case back to state court. The court ruled that the lawsuit was not a “class action” as defined under CAFA, meaning CAFA jurisdiction was not applicable.
Defendants appealed the remand order, arguing that federal jurisdiction was proper under both CAFA and traditional diversity jurisdiction principles. However, the Sixth Circuit pointed out that it did not need to resolve those statutory jurisdictional issues because the lead plaintiff lacked Article III standing.
Plaintiff Did Not Personally Suffer A Gambling Loss
The Sixth Circuit panel, consisting of Judges Gilman, Gibbons, and Thapar, ruled that Gina Burt lacked standing because she did not personally suffer a gambling loss.
The court emphasized that under federal constitutional law, a plaintiff must demonstrate: A physical injury or emotional harm and/or a causal connection between the harm and the defendant’s conduct.
Burt, the court noted, did not meet the first requirement. She sought to recover gambling losses incurred by Tennessee residents, not by herself. That was a major issue.
Although Tennessee law permits such third-party recovery, federal courts are not bound by state standing statutes when determining their own jurisdiction. The court cited TransUnion LLC v. Ramirez (2021) and Spokeo, Inc. v. Robins (2016).
By affirming the district court’s remand order, the Sixth Circuit reinforced the precedent that federal jurisdiction is not available in cases where plaintiffs lack constitutional standing.
The ruling effectively sends the lawsuits back to Tennessee state court, where plaintiffs will argue their claims under state gambling laws. The ruling is a setback for defendants hoping to keep the litigation in federal court.
Ultimately, this does nothing to change the way how lawmakers feel about social casinos.