Plaintiffs Rena and Sheldon Gottlieb claim that they won $1
million at Tropicana Casino and Resort*fn1 ("Tropicana") in
Atlantic City, New Jersey, and that defendant Tropicana won't
pay. Tropicana denies that plaintiffs won the jackpot. Tropicana
has brought a third party complaint against its insurer and two
insurance brokers claiming that if it is liable to plaintiffs,
the third party defendants are liable over to it based upon a
prize indemnity insurance policy. Presently before the court is
the motion of Tropicana for summary judgment on all counts of the
We may grant summary judgment only if there is no genuine issue
of material fact and the moving party is entitled to summary
judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex
Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d
265 (1986). We review all evidence and make all reasonable
inferences from the evidence in the light most favorable
to the non-movant. See Wicker v. Consolidated Rail Corp.,
142 F.3d 690, 696 (3d Cir.), cert. denied, 525 U.S. 1012, 119 S.Ct.
530, 142 L.Ed.2d 440 (1998).*fn2
The following facts are uncontested. During the summer of 1999,
the Gottliebs, who are Pennsylvania residents, were vacationing
at a rented apartment in Atlantic City, New Jersey. On July 24,
1999, after dinner with friends, the Gottliebs visited the
Tropicana, a New Jersey corporation that operates a gambling
casino in Atlantic City, offers people membership in its "Diamond
Club." In order to become a Diamond Club member, an individual
must visit a promotional booth in the casino, obtain and fill out
an application form, and show identification. There is no charge.
The application form lists the individual's name, address,
telephone number, and e-mail address, and the information
provided is entered into the casino's computer database. Each
member receives a Diamond Club card bearing a unique
identification number. The member then presents or "swipes" the
card in a machine each time he or she plays a game at the casino,
and the casino obtains information about the member's gambling
habits. The casino's marketing department then uses that
information to tailor its promotions.
Ms. Gottlieb was, and had been for a number of years, a member
of Tropicana's Diamond Club. Upon entering the casino on July 24,
1999, she immediately went to the Fun House Million Dollar Wheel
Promotion ("Million Dollar Wheel") and waited in line for
approximately five minutes before it was her turn to play.
Diamond Club members were entitled to one free spin of the
Million Dollar Wheel each day. As its name suggests, the
promotion offered participants the chance to win a grand prize of
$1 million. Ms. Gottlieb had played the game several times
before. In both New Jersey and Pennsylvania, Tropicana had
advertised the Million Dollar Wheel in newspapers, magazines, and
with direct mailings, although there is no evidence that the
Gottliebs saw any of the advertisements.
Not surprisingly, the parties do not agree as to everything
that happened once Ms. Gottlieb started play. However, they do
agree that she presented her Diamond Club card, a casino operator
swiped it through the card reader, she pressed a button to
activate the wheel, and the Million Dollar Wheel began spinning.
Ms. Gottlieb contends that the wheel landed on the $1 million
grand prize, but that when it did so, the casino attendant
immediately swiped another card through the machine, reactivated
the wheel, and then the wheel landed on a prize of two show
tickets. Tropicana avers that the wheel simply landed on the
lesser prize. The casino says the wheel never landed on $1
million, and the attendant never intervened and reactivated the
Tropicana has moved for summary judgment on Count I of the
complaint, a claim for breach of contract. According to
Tropicana, it is well established under New Jersey law that
participation in a promotion such as the Million Dollar Wheel
cannot constitute consideration that would support the formation
of an enforceable contract. On the other hand, plaintiff argues
that the law of Pennsylvania applies where participation in a
promotion such as the instant one is sufficient consideration to
form a binding contract.
In a diversity action such as this one, we apply the choice of
law rules of the forum state, in this case Pennsylvania, in
determining which state's substantive law
will be applied. See Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Shuder v.
McDonald's Corp., 859 F.2d 266, 269 (3d Cir. 1988). Under
Pennsylvania law, we must determine whether any conflict between
the laws of the relevant states is a false conflict. See LeJeune
v. Bliss-Salem, Inc., 85 F.3d 1069, 1071 (3d Cir. 1996);
Cipolla v. Shaposka, 439 Pa. 563, 267 A.2d 854, 855-56 (1970).
If the conflict is real, we proceed to determine which forum has
the greater interest, considering the qualitative contacts of the
states, the parties and the controversy. See LeJeune, 85 F.3d
at 1071; Cipolla, 267 A.2d at 856. Pennsylvania law requires us
to apply the law of the state having the most significant
relationship with the parties and the incident. See Griffith v.
United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796, 801, 805-06
(1964). Before beginning any conflicts of law analyses, however,
we must first determine whether there is any conflict between the
laws of the two jurisdictions.
Under both Pennsylvania and New Jersey law, adequate
consideration is necessary in order to form an enforceable
contract. See Continental Bank of Pennsylvania v. Barclay Riding
Academy, Inc., 93 N.J. 153, 459 A.2d 1163, 1171 (1983);
Stelmack v. Glen Alden Coal Co., 339 Pa. 410, 413-14,
14 A.2d 127 (1940). Consideration is a bargained for exchange, and it may
take the form of either a detriment to the promisee or a benefit
to the promisor. See Continental Bank, 459 A.2d at 1172;
Stelmack, 339 Pa. at 414, 14 A.2d at 128.
In support of its contention that New Jersey law holds that no
valid consideration exists when a person participates in a
promotion, Tropicana cites only one case, a 1985 unpublished
transcript of a ruling of the Superior Court of New Jersey.
There, the Resorts International Hotel, Inc., a licensed casino
operator in New Jersey, sued the New Jersey Division of Gaming
Enforcement seeking a declaratory judgment that three promotions
it was conducting, a gin rummy tournament and two stock market
games, did not violate New Jersey law. See Resorts Int'l Hotel,
Inc. v. New Jersey Div. of Gaming Enforcement, No. L39436-85,
slip op. (N.J.Super. Ct. Law Div., Atlantic Co. Oct. 25, 1985).
The question before the court was whether "something of value"
passed from the player to the casino, making the promotions
illegal gambling in violation of New Jersey law.*fn3 The court
did not determine whether a contract had been formed. It did
observe, however, that in the past the presence of only "minute
consideration" made a promotion illegal gambling under New Jersey
law. Id. at 11. Over time, though, the scope of "something of
value" had been restricted and "strictly defined." Id. at 12.
In other words, "something of value" requires more than the
minimum consideration that would support the formation of a
contract. The court concluded that nothing "of value" had passed
from player to casino in the course of the three promotions.
Id. at 13. It did not decide, as Tropicana contends, that
participation in a promotion cannot constitute adequate
consideration for a contract.
We find the decision of the New Jersey Supreme Court in Lucky
Calendar Co. v. Cohen, 19 N.J. 399, 117 A.2d 487 (1955), op.
adhered to on reh'g, 20 N.J. 451, 120 A.2d 107 (1956), to be on
point. There, an advertising company brought a declaratory
judgment action against the Camden County prosecutor, seeking a
determination that its promotional advertisement campaign for
Acme Super Markets did not violate New Jersey's Lottery Act. The
centerpiece of the campaign was a calendar
that had Acme coupons bordering it, which was distributed by mass
mailings. See Lucky Calendar, 117 A.2d at 489-90. The calendar
contained an explanation of the "Lucky Calendar Prize Contest."
Entrants had the opportunity to win prizes in monthly drawings.
All they had to do to enter was tear the entry form off of the
calendar, enter a name, address, and phone number, and have the
form deposited in a box at any Acme store. There was no charge,
and they were not required to be present for the drawing. See
id. at 490.
The question in Lucky Calendar was whether there had been
consideration for participation in the drawings. The Supreme
Court of New Jersey noted that, assuming consideration was
required in order for something to qualify as an illegal lottery
under the Lottery Act, it need only be the minimum consideration
that is necessary to form a contract. See id. at 495. It
[T]he consideration in a lottery, as in any form of
simple contract, need not be money or the promise of
money. Nor need it be of intrinsic value; "a rose, a
hawk or a peppercorn" will suffice, provided it is
what is asked for by the promisor and is not illegal.
. . . Whether a "peppercorn" or the filling in and
delivering of a coupon is sufficient consideration
for a promise depends only on whether it was the
requested detriment to the promisee induced by the
promise. That is consideration which is regarded as
such by the parties.
Id. (citing Williston on Contracts (rev. ed. 1936), §§ 100 n.
8 and 115).*fn4
The court determined that consideration was present "both in
the form of a detriment or inconvenience to the promisee at the
request of the promisor and of a benefit to the promisor." Id.
"Completing the coupon and arranging for the deposit of it in the
box" at the store was the detriment to the promisee, and the
"increase in volume of business" was the benefit to the promisor
and its customer, the owner of the Acme stores. Id. at 496. As
the court pointed out, "The motives of the plaintiff and its
customer [in offering the Lucky Calendar Prize Contest] . . . are
in nowise altruistic." Id.
In Cobaugh v. Klick-Lewis, Inc., 385 Pa. Super. 587,
561 A.2d 1248, (1989), the Superior Court of Pennsylvania decided that
there was adequate consideration to form a binding contract where
a golfer, who was participating in a tournament, shot a
hole-in-one after seeing a contest announcement offering a new
car to anyone who could ace the particular hole. See Cobaugh,
561 A.2d at 1249-50. The court noted that the promisor benefitted
from the publicity of the promotional advertising, and the golfer
performed an act that he was under no legal obligation to
perform. See id. at 1250.
The laws of New Jersey and Pennsylvania similarly hold that the
minimal detriment to a participant in a promotional contest is
sufficient consideration for a valid contract. As there is no
conflict between the laws of the two states, we need not engage
in any conflict of laws analysis. It simply does not matter which
law we apply.
Ms. Gottlieb had to go to the casino to participate in the
promotion. She had to wait in line to spin the wheel. By
presenting her Diamond Club card to the casino attendant and
allowing it to be swiped into the casino's machine, she was
permitting the casino to gather information about her gambling
habits. Additionally, by participating in the game, she was a
part of the entertainment that casinos, by their very nature, are
designed to offer to all of those present. All of these
detriments to Ms. Gottlieb were "the requested detriment[s] to
the promisee induced by the promise" of Tropicana to offer her a
chance to win $1
million. Lucky Calendar, 117 A.2d at 495. Tropicana's motives
in offering the promotion were "in nowise altruistic." Id. at
496. It offered the promotion in order to generate patronage of
and excitement within the casino. In short, Ms. Gottlieb provided
adequate consideration to form a contract with Tropicana.
Tropicana alternately argues that even if there was
consideration here, the agreement was illegal, and thus
unenforceable. As Tropicana has taken the position that New
Jersey substantive law applies to this case, we will address its
contention under that state's laws.
The New Jersey Criminal Code makes it an offense to conduct an
illegal lottery, which it defines as follows:
"Lottery" means an unlawful gambling scheme in which
(a) the players pay or agree to pay something of
value for chances, represented and differentiated by
numbers or by combinations of numbers or by some
other media, one or more of which chances are to be
designated the winning ones; and (b) the winning
chances are to be determined by a drawing or by some
other method based upon the element of chance; and
(c) the holders of the winning chances are to receive
something of value.
N.J. Stat. Ann. § 2C:37-1(h). The code defines "something of
any money or property, any token, object or article
exchangeable for money or property, or any form of
credit or promise directly or indirectly
contemplating transfer of money or property or of any
interest therein, or involving extension of a
service, entertainment or a privilege of playing at a
game or scheme without charge. This definition,
however, does not include any form of promise
involving extension of a privilege of playing at a
game without charge on a mechanical or electronic
amusement device, other than a slot machine as an
award for the attainment of a certain score on that
Id. § 2C:37-1(d).