HARRISBURG – A state appellate court has concurred with a Dauphin County judge’s ruling that preliminary objections brought by two gaming organizations against a group of consultants for that industry were not in error, and the consultants’ action to bring charges under the Dragonetti Act was rightly dismissed.
On Aug. 16, a panel trio from the Superior Court of Pennsylvania ruled in favor of appellees Pace-O-Matic, Inc. and POM of Pennsylvania, LLC, and against appellants BMM North America, Inc. (doing business as “BMM Testlabs”), Travis Foley and Peter Nikiper, with Judge Correale F. Stevens authoring the Court’s opinion.
“On March 9, 2023, appellants filed a civil complaint against appellees, raising a single count of wrongful use of civil proceedings pursuant to the Dragonetti Act. Therein, appellants averred they are in the business of providing field service, regulatory consulting and testing to gaming operators. Appellees are in the business of designing, licensing and distributing software for ‘Pennsylvania Skill Amusement Device’ gaming machines (the “POM Machines”) for use in non-casino establishments in Pennsylvania,” Stevens said.
“Appellants averred that the POM Machines are the subject of several court cases in Pennsylvania, involving the seizure of the POM Machines by the Pennsylvania State Police, Bureau of Liquor Control Enforcement. Appellants averred that appellees have paid, and continue to pay, for the defense of the third-party respondents in the POM Machine cases. Appellants indicated they have been retained as expert witnesses by the Pennsylvania Attorney General’s Office, as well as the Office of General Counsel for the Pennsylvania State Police, in the POM Machine cases. In this vein, appellants authored an expert report regarding the POM Machines, and this report was disclosed to the plaintiffs in the POM Machine cases. In the BMM Expert Report, appellants opined that the POM Machines were more likely considered games of chance akin to a casino slot machine, which cannot be operated without a casino license, as opposed to a game of skill, which may be operated without a casino license in Pennsylvania.”
The appellees then tried to bring suit against the appellants in the Dauphin County Court of Common Pleas in November 2022 – a tactic BMM, Foley and Nikiper alleged was done to intimidate or otherwise influence their expert testimony in the POM Machine cases.
BMM, Foley and Nikiper further noted that, during the underlying action, Pace-O-Matic and POM sought discovery of information which was protected by the attorney work product privilege, and was otherwise not discoverable in the POM Machine cases.
In response, counsel for BMM, Foley and Nikiper served papers to opposing counsel in November 2022, charging them with a violation of the Dragonetti Act, for wrongful use of civil proceedings – and if the appellees did not withdraw the underlying action, the appellants would seek recovery of attorneys’ fees and costs.
However, Pace-O-Matic and POM never filed a complaint in their case and voluntarily discontinued it without prejudice in February 2023.
“Based on the aforementioned allegations, appellants claimed that, as it relates to the underlying action, appellees were liable for the wrongful use of civil proceedings under the Dragonetti Act. In this vein, they averred appellees took part in the civil proceedings against appellants, and they were either grossly negligent in taking part in the civil proceedings or acted without probable cause, as well as primarily for a purpose other than that of securing the proper discovery, joinder of parties, or adjudication of the claim on which the underlying action was based. Appellants specifically averred that, in filing the underlying action, appellees acted primarily for the purpose of intimidating or otherwise influencing appellants’ testimony in the POM Machine cases,” Stevens stated.
“Furthermore, appellants alleged the underlying action was terminated in [their] favor. They also alleged that, as a proximate cause of appellees initiating the underlying action, appellants suffered damages, including attorneys’ fees, costs and expenses to defend themselves in the underlying action. They alleged they were damaged because they were ‘forced to forego further opportunities to act as an expert witness against [appellees] and/or other parties similarly situated in other cases.’ Finally, appellants sought punitive damages against appellees on the basis appellees’ conduct in initiating and/or continuing the underlying action was outrageous.”
In April 2023, Pace-O-Matic and POM brought preliminary objections in response to BMM, Foley and Nikiper’s efforts to have the prospective case recognized as a violation of the Dragonetti Act – on the grounds that those parties “failed to attach documents upon which the Dragonetti Act claim is based and/or the complaint failed to set forth a claim upon which relief may be granted”, and that the prospective case ended due to Pace-O-Matic and POM’s voluntary discontinuance, rather than a judge ruling in BMM, Foley and Nikiper’s favor.
The Dauphin County court agreed and dismissed BMM, Foley and Nikiper’s Dragonetti Act proceedings in September 2023 – leading those parties to appeal to the Superior Court the following month.
“In the present matter, the pleadings established that appellees were not faced with imminent defeat when they voluntarily discontinued the underlying action on Feb. 7, 2023. To the contrary, the litigation was in the very preliminary stages. Further, appellants’ attempt to enter a judgment of non pros occurred on Feb. 9, 2023, after appellees had already voluntarily discontinued the underlying action without prejudice,” Stevens said.
“Finally…appellants suggest that appellees’ voluntary discontinuance of the underlying action tended to show they abandoned a claim brought in bad faith such that the discontinuance was tantamount to a termination in appellants’ favor. That is, they claim appellees discontinued the underlying action only after appellants demanded they file a complaint and provided notice of their intent to file a judgment of non pros absent the filing of a complaint. In the case sub judice, given the underlying action was in its preliminary stages, and appellees had not even filed a complaint, we agree with the trial court that there was no ‘last-second dismissal in the face of imminent defeat.’ Accordingly, we conclude the trial court did not err in sustaining appellees’ preliminary objection on this basis. Consequently, we need not address appellants’ remaining issues, and we affirm.”
Superior Court of Pennsylvania case 1458 MDA 2023
Dauphin County Court of Common Pleas case 2023-CV-01713
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com