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Emily D. Swoboda

Lawyer Gives Insider's View to Kentucky Appeals Hearing

12 December 2008

As IGamingNews was unable to attend today's hearing, Patrick T. O'Brien, who is representing five of the domain name defendants in the case, provided a blow by blow of the proceedings.

Attorneys representing 141 online gambling domain name defendants in Kentucky left an appeals courtroom today with feelings of optimism.

A lawsuit, filed in mid-September by the Commonwealth of Kentucky, sought to block access to the domain names in Kentucky. In the same month, Judge Thomas D. Wingate of the Franklin County Circuit Court ordered the seizure and forfeiture of the domain names. One month later, he put a hold on the forfeiture, giving the defendants 30 days to block Kentucky residents from their sites.

Following Judge Wingate's decision, four parties for the defense filed a writ of prohibition with the Kentucky Court of Appeals asking for the case to be dismissed.

Oral arguments were heard today by a three-judge panel in Louisville, Ky.

The petitioners were divided into four presentations, each delivering a different argument.

Leading off, Bill Johnson, a local attorney working with Mr. O'Brien on the case, argued that the commonwealth is trying to take parts of criminal and civil statutes and frame them in a civil context, when in fact there is no case at all.

Mr. Johnson also said the plaintiffs argue that the domain names can't appear in court, that they can't hire attorneys.

"The commonwealth argues it needs the owners to appear, but they could have easily found out who the owners are -- the names are right there on the registries," Mr. O'Brien said. "The plaintiffs actually admitted to that. But they chose to sue was 141 domain names, so what they got back was 141 domain names."

Mr. Johnson wrapped up his arguments by saying that first of all, the domain names are not located in the state, so there is no jurisdiction to seize them. Second, a domain name is not a gambling device, he said.

"So, basically you have an action that has no basis in law in a court that has no jurisdiction," Mr. O'Brien said.

Next up was John Fleischaker, counsel for the Interactive Media Entertainment and Gambling Association, who addressed first amendment issues.

"He argued that the content (online gambling content) is legal in most of the world, even in Kentucky," Mr. O'Brien said. "He said that people who gamble on the Internet in Kentucky are not violating the law, and seizing the domain names is seizing a means of expression."

Phillip Scott appeared on behalf of the Interactive Gaming Council, arguing that, as most of the domain names in question belong to poker sites, playing poker is not a crime in Kentucky. According to Kentucky law, he argued, gambling must predominantly be a game of chance, and whether or not poker is a game of chance is for a jury to decide, not a judge.

The last attorney appearing for the defense team was John Tate, a local attorney, who explained that in an in rem action, or a lawsuit against an item of property, the property must be located in the jurisdiction, and the owners of the property must have what's called minimum contact with the jurisdiction in order to seize the property.

Minimum contact is a civil procedure used to determine when it is appropriate for a court in one state to assert personal jurisdiction over a defendant from another state.

"The plaintiffs keep talking about minimum contact, but they keep ignoring that the domain names are not located within the state," Mr. O'Brien said.

Basically, Mr. Tate's argument, according to Mr. O'Brien, was that the plaintiffs are trying to confuse the court by confusing the standards.

When the attorney for commonwealth, Eric Lycan, took the floor, Mr. O'Brien said his basic argument was that all Internet gambling is illegal and pointed to the recent “60 Minutes” program detailing the massive cheating scandal carried out at two online poker sites, Absolute Poker and Ultimate Bet.

In addition, he quoted Catherine Hanaway, United States Attorney for the Eastern District of Missouri, who said at a hearing before the House Committee on the Judiciary last year that Internet gambling is "a colossal criminal enterprise disguised as a business."

Mr. O'Brien said he has a good feeling about the outcome of the hearing based on the interaction with the judges.

"Two of the three judges really came down with tough questions for the plaintiffs' attorney," Mr. O'Brien said. "The presiding judge, Michelle M. Keller, remarked that she could not see how the court could determine that a domain name is a gambling device -- that is for the legislature to determine.

"In our rebuttal, we said that nine states have addressed Internet gambling, and Kentucky is not one of them," he continued.

And on the subject of domain name location, Mr. O'Brien said he felt that for the most part, the judges were cognizant of matters of technology.

"Two of the three judges, by their questions, were very keyed in on the fact that current definition of gambling device is really stretching it to say that it covers domain names," he said. "And that there is no provision in the law under which they could say these domain names are located in Kentucky. And they're trying to seize the property without ever having established a criminal law."

The third judge, Michael Caperton of the Third District, arrived late to the hearing. Thus, he missed a significant portion of the defense's oral arguments and questioned whether a domain name could be a gambling device.

"He kept coming back to: 'If it's a device, is the domain name on the computer?'" Mr. O'Brien said. "If it was going to go his way, he was going to take the whole computer. That's what I think."

Judge Caperton will have the opportunity, however, to review the oral arguments presented today.

Mr. O'Brien and the rest of the defense team hope the panel rules in their favor -- and quickly.

Typically, he said, a decision on a writ is made rapidly. So, lawyers expect to hear something in the next two weeks.

"Because there is no jurisdiction, because the domain name is not a gambling device, because it is not located in Kentucky, because the Commonwealth has not followed the proper procedures for a civil case, the court should be prohibited from proceeding any further," Mr. O'Brien said.

"Based on all of these (reasons), we've asked the court to issue a writ of prohibition prohibiting the judge from proceeding," he added. "And based on their questions, (the judges) seem to be receptive to our arguments."

Lawyer Gives Insider's View to Kentucky Appeals Hearing is republished from
Emily D. Swoboda
Emily D. Swoboda