Gowen vs. Full Tilt: Next steps

Clonie Gowen

News broke last week that Clonie Gowen has filed suit against Full Tilt Poker and its associated companies, its CEO/CFO Raymond Bitar and 13 members of Team Full Tilt.

As reported earlier by PokerListings, Gowen's complaint alleges five causes of action: breach of contract, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, unjust enrichment and fraud.

Gowen seeks damages in excess of $40 million - which she alleges is 1% of the companies' estimated value - plus the value of her services to Full Tilt, as well as punitive damages.

Although the various causes of action depend on different legal theories for their validity, they all arise from the same set of facts.

Gowen claims that in April of 2004 she entered into an oral agreement wherein she was given a 1% ownership interest in the Full Tilt-related companies in exchange for her agreement to represent the Full Tilt brand as a celebrity poker player. She was thereafter listed on Full Tilt's Web site as a member of Team Full Tilt, and represented Full Tilt as a celebrity endorser in the media and at events.

From 2004 to the present, according to the suit, Gowen has performed all of her obligations under the agreement, but has not received any monetary distributions, despite the fact that starting in May 2007, her fellow Team Full Tilt members each began receiving distribution checks from the companies.

Gowen does claim that on Nov. 6, 2007, Lederer offered to pay her approximately $250,000 for her "past performance" on behalf of the company, but that she rejected this offer because it was only a fraction of what was owed to her.

Gowen alleges that she continued to offer her services as a member of Team Full Tilt until Nov. 11, 2008, when she was told by the defendants that they would be issuing a press release informing the public that she was no longer a member of the team. Her lawsuit followed.

Breach of contract alleged

Gowen's breach of contract claim - which is alleged against all of the defendants - is relatively straightforward (we had an agreement, you breached it), although it is not clear why the cause of action includes Harman-Traniello, Matusow, Cunningham, Hansen and Antonius as defendants, since they did not seem to be owners of Full Tilt or Team Full Tilt Pro members at the time of the alleged oral agreement.

The fact that there is no written contract between Gowen and the companies will not prevent her from pursuing this claim since oral agreements generally are as enforceable as written agreements, except under certain circumstances which do not appear to apply here.

However, oral agreements typically present more difficult proof issues, as the parties may have an entirely different understanding as to what they were agreeing to.

"Minority oppression"?

Gowen's breach of fiduciary duty claim is brought against just the individual defendants, under a "minority oppression" theory. She alleges that as a minority shareholder, she suffered unjust and inequitable treatment at the hands of the rest of the shareholders of the companies in a number of ways.

She alleges that she was not allowed to vote on matters involving the companies and was not advised of the companies' financial status or their day-to-day operations. She claims that she was effectively frozen out of the companies' affairs and further claims the other shareholders made distribution payments to themselves, while paying her nothing.

Faithful to Full Tilt, to her detriment

In her fraud cause of action, Gowen makes additional factual allegations to establish that the defendants made certain intentional misrepresentations to her, which she relied on to her detriment.

She claims that that she had a meeting with Bitar at her home in Texas in April 2004, and that Bitar offered her a 1% ownership interest in the various Full Tilt companies in exchange for her agreeing to represent the Full Tilt brand as their "female pro," beginning with her representing Full Tilt at the upcoming World Series of Poker.

Gowen further alleges that a month later, she attended a meeting in defendant Ivey's suite at the Golden Nugget in Las Vegas where the majority of other Team Full Tilt members were present and in which Lederer informed the group that their ownership interest was not only in Full Tilt but also in Tiltware.

Based on the statements made at these two meetings, Gowen claims, she joined Full Tilt, performed all her responsibilities as a member of Team Full Tilt, and did not pursue any other outside opportunities.

The next step in the litigation is for the various defendants to be served with the Complaint. At that point, they can either file a motion to dismiss (which typically only deals with jurisdictional or pleading shortcomings and not the substantive merits of the claims), or they can file an Answer.

Once the defendants have filed their Answers, the case will proceed to the formal discovery phase, where both sides can conduct depositions and request documents and answers to written questions.

Discovery phase may shed light

In this type of case, discovery can be quite illuminating. It will flesh out what was said, when it was said, and what conduct everyone engaged in. This will help determine from a legal standpoint whether the parties entered into an enforceable agreement, whether there were misrepresentations, what the parties' respective obligations were and what the potential damages are.

Particularly interesting will be the discovery concerning the terms of the agreements with the other original Team Full Tilt members, as well as the statements made by the defendants around the time that Gowen claims that she entered into her agreement.

For example, in announcing the launch of Full Tilt Poker back in May 2004, TiltWare referred to its roster of professional poker players - specifically naming Gowen along with Ivey, Ferguson and others - as a unique and special feature of the site.

The announcement included the statement that "the software was designed by some of the world's finest and most notable poker players, including Andy Bloch, Chris "Jesus" Ferguson, Phil Gordon, Clonie Gowen, Phil Ivey, John Juanda, Howard Lederer, Erick Lindgren and Erik Seidel, also known as 'Team Full Tilt.'"

"Our entire team is passionate about poker and is intrigued by this cultural phenomenon that is sweeping the country," Bob Wolf, chief marketing officer of TiltWare, LLC, is quoted as saying at the time.

"We ultimately formed TiltWare to develop better, more effective online poker software, but could never have been successful without the expertise and talent of some of the world's leading poker players that comprise Team Full Tilt. Together, we are making online poker a fun, seamless and secure experience."

Gowen's case will present many thorny issues that will keep the poker community riveted for quite some time. Next year may have two main events - one at the Rio and one at the courthouse.

Related Article: Clonie Gowen files suit against Full Tilt

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