Overview
On November 9, 2020, Cohen Milstein filed Mohawk Gaming Enterprises LLC v. Scientific Games, et al., Case No. 01-20-0015-6196, a novel class arbitration lawsuit, before the American Arbitration Association (AAA). Mohawk seeks treble damages and injunctive relief to redress injuries to competition caused by Scientific Games Corporation, Bally Technologies, Inc., and Bally Gaming, Inc. (collectively, “Scientific Games”) in the U.S. market for automatic card shufflers designed for casino use. Mohawk allege that Scientific Games controls virtually 100% of the relevant card shuffler market and maintains monopoly power through deceptive tactics such as fraudulently procuring patents then asserting those patents in sham lawsuits against competitors, thereby suppressing competition and deterring entry of new competitors.
On February 8, 2022, Arbitrator John Wilkinson of the AAA ruled that under the license and lease agreement entered into between Mohawk and Scientific Games, this matter can proceed as a class arbitration. Scientific Games, however, immediately petitioned the New York State Court to vacate the Arbitrator’s decision, but a judge denied the petition on August 9, 2022. Scientific Games subsequently appealed the petition denial. On June 22, 2023, the Supreme Court for the State of New York, Appellate Division, affirmed the lower court’s decision with costs, thereby affirming the AAA ruling that this matter can proceed as a class arbitration.
As of November 2, 2023, the case is in expert discovery.
Case Background
In 2015, Mohawk entered into an agreement with Scientific Games to license and lease automatic card shufflers. Automatic card shufflers play an important role in casinos because they produce reliably random shuffles without human assistance or interference, thereby ensuring fairness, increased game speed, profitability, and security for virtually every card game played on the casino floor.
Mohawk alleges that Scientific Games controls virtually 100% of the relevant market and maintains monopoly power by fraudulently procuring patents then asserting those patents in sham lawsuits against competitors. These lawsuits have chased competitors out of the market and deterred the entry of new competitors, leaving Scientific Games free to charge monopoly rents without fear of competitors undercutting it or stealing market share.
Only recently has the full scale of Scientific Games’ fraud and misconduct come to light. In August 2018, a jury in the Northern District of Illinois found clear and convincing evidence that Scientific Games had willfully acquired or maintained monopoly power by abusing the patent system and the courts, and that this abuse had harmed consumers of automatic card shufflers, such as Mohawk, and awarded the competitor-plaintiffs $105 million in damages, which was then trebled for a total of $315 million. See Shuffle Tech Int’l, LLC. v. Sci. Games Corp., No. 15-cv-03702, 2015 WL 5934834 (N.D. Ill. Oct. 12, 2015). In a subsequent competitor suit alleging similar antitrust violations, another federal court recently denied Scientific Games’ motion to dismiss. See TCS John Huxley Am., Inc. v. Sci. Games Corp., No. 19-cv-01846, 2020 WL 1678258 (N.D. Ill. Mar. 20, 2020).
Scientific Games’ conduct has forced businesses like Mohawk to pay artificially inflated prices for automatic card shufflers. Mohawk brings this action against Scientific Games on behalf of itself and a class of similarly situated consumers. Mohawk seeks injunctive relief under Sections 2 and 3 of the Sherman Act (15 U.S.C. §§ 2 and 3) and treble damages under the antitrust laws.