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A Split Decision

13 May 1998

Well, that didn't take long. With oral arguments heard last week, it was only days before the Minnesota Supreme Court judges came out with a ruling on the Granite Gate/Wagernet (Kerry Rogers) case. As veteran readers will remember, this was the long-pending case about whether or not the State of Minnesota has jurisdiction to bring a consumer fraud case against WagerNet for offering internet gambling services to Minnesota residents.

The defendant, Rogers, lost the District Court battle which ruled that the state does indeed have jurisdiction. The Supreme Court ruling was a split decision, 3-3 (one of the seven judges recused himself because of a relationship with Rogers' local attorney.) In essense, this evenly divided decision means that the lower court ruling in favor of the state is upheld.

According to a spokeswoman for the Minnesota Attorney General's office, Hubert H. Humphrey III (who was also very busy with the tobacco settlement!) is not surprised and is pleased with the results. They're looking forward to going back to Ramsey County District to finally try the consumer fraud case.

But, according to Oscar Goodman and Marty Keach, the defendant's Las Vegas-based attorneys, they're not done yet. "We're a long way from that case being tried," said Goodman.

The legal team is exploring two options....going straight to the U.S. Supreme Court with the case or petitioning for a rehearing from the divided Supreme Court. At the time of this writing, they were leaning toward pressing on toward an appeal to the US Supreme Court. Goodman noted, "Because the State of Minnesota's highest court couldn't decide on this issue, I think we could get a hearing on this issue. It's the type of issue which might tickle the imagination of the Justices."

Why is it such a key issue? Because it's one which has implications that are much broader than internet gambling. It might well be a bellwether for many internet issues to come.

The guts of the case is whether or not a state has personal jurisdiction over a company not located in the state but offering a website over the internet. Who is responsible for initiating contact on a website? The operator of the site which has it in cyberspace or the consumer who is making commands on his or her keyboard to go to a specific site?

Oscar Goodman gave an interesting analogy as it relates to the issue. "Rather than this site shooting from the internet into the State of Minnesota," he said, "it's more like a resident of Minnesota reaching out into cyberspace and pulling the bullet from the barrel."

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