DraftKings Taking a Gamble: Daily Fantasy Sports Operation Bets Gambler’s Wife is Insincere in Requested Damages

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On June 3, 2016, Daily fantasy operator DraftKings insisted a Tennessee federal court continue to review a woman’s lawsuit to be reimbursed for her husband’s daily fantasy gambling losses. Previously, Erica Miller filed a motion to have her suit returned to Tennessee state court because her request for damages just under $47,000 — well under the $75,000 threshold required for federal jurisdiction. This lawsuit has developed a bizarre shift in traditional legal practice where the plaintiff is saying they want less money and the defendant is claiming they are being sued for more.

Originally, Miller filed suit against DraftKings on November 6, 2015 in a Tennessee state court under a state statute that allows spouses of frequent gamblers to sue for their spouse’s losses. DraftKings immediately removed the suit to a Tennessee federal court postulating that Miller purposely underestimated her husband’s losses by over $10,000 and that, in combination with the likely punitive damages, makes the amount in controversy exceed $75,000. This would mean the case has federal jurisdiction and belongs in federal court. Last month, Miller filed a motion to remand back to state court in response to the removal.

In their response to Miller’s motion, DraftKings claims that Miller is being disingenuous with her calculation and claim for damages. Specifically, they claim that her request for $46,440 in damages with omission of a specific figure for punitive damages is a ploy to remain under $75,000 while leaving the door open for a ruling over $75,000. DraftKings claims this is evident by their previous offer to settle the lawsuit before litigation for $74,000 which Miller declined, indicating she believes her ultimate award could be more. Thus, DraftKings’ opposition to a remand to state court is a result of their belief the amount in controversy should not only include Miller’s $46,440 compensatory request, but also her open-ended punitive damages request.

On Friday, Miller quickly responded accusing DraftKings of misrepresenting their settlement negotiations and not telling the full story. She claims that she was the one who offered $74,000 – still under the threshold – in response to DraftKings’ offer of about $15,000. Further, they bring forward case law which illustrates that speculative and unspecified damages cannot be used in the calculation of the amount in controversy. Finally, Miller alleges that DraftKings is merely trying to have her lawsuit sucked into their Multi-District Litigation in a Massachusetts federal court over similar issues. Attorneys for Miller claim that DraftKings, and other large corporations, are using Multi-District Litigation as a tool to absorb small individual claims to delay the process and create additional expenditures until the lawsuit is no longer feasible.

Of interesting note is that DraftKings contends that counsel for Miller is using this lawsuit to replace the Multi-District Litigation which he launched a bid to serve as lead counsel for which was ultimately rejected. They claim that he has been merely copying and pasting language from the complaints and motions in those cases, further indicating federal jurisdiction is proper.

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