Facts

On Oct. 15, 2015, at 10:50 a.m., armed agents of the California Bureau of Gambling Control raided the offices of plaintiff Fortune Players Group Inc. located in Daly City. Fortune Players is a third party provider of propositional player services and, as such, is subject to the Gambling Control Act. Fortune Players provides its services at Lucky Chances Casino, a cardroom located in Colma. Defendants remained in the Fortune Players' offices until approximately 3:30 p.m.

PLAINTIFFS' CONTENTIONS:
At the time of the raid, only two female employees were present in the Fortune Players offices, Angelita De Los Reyes, who was the office manager, and Vanessa Parungao, her assistant. The agents forced De Los Reyes and Parungao to leave their desks and go into the windowless lunchroom. Once there, the agents brought out Parungao, took her photograph, demanded her identification, and interrogated her. The agents then sent Parungao back to the lunchroom. When Parungao had to use the bathroom, two female agents escorted her to the women's restroom and remained inside while Parungao used the toilet.

The agents then brought out De Los Reyes, photographed her and interrogated her. Defendant Special Agent Aaron Wong told De Los Reyes that she could not use her cell phone and that she could not answer the business phones that were ringing. Soon thereafter, certain of defendants turned off the ringers on the business phones. During her interrogation, the agents threatened her individual license with the Gambling Control Commission. The agents confiscated numerous items from the desk of De Los Reyes and questioned her about the items. At the conclusion of the interrogation of De Los Reyes, defendant Special Agent Yolanda Sanchez demanded access to her personal cell phone. Agent Sanchez proceeded to examine the text messages in the cell phone of De Los Reyes, and to forward copies of certain text messages to her own cell phone.

Defendants prevented Parungao and De Los Reyes from conducting any work during the entirety of the raid. In addition, defendants copied (imaged) the hard drives of the various computers located in the Fortune Players offices. Among the electronic files copied by defendants were attorney-client communication documents, trade secrets, and proprietary information.

On Oct. 21, 2015, Agent Sanchez wrote a five-page report regarding the events of Oct. 15, 2015 at the offices of Fortune Players Group. Agent Sanchez's report specifically refers to the Department of Fair Employment and Housing lawsuit brought on behalf of Maria Escueta against Fortune Players Group. The report also includes admissions that the purpose and focus of the search was to obtain evidence to be used against Fortune Players Group in the lawsuit brought by Department of Fair Employment and Housing on behalf of Escueta. The matter entitled Department of Fair Employment and Housing v. Fortune Players Group, Inc., San Mateo County Superior Court Case Number CIV 529332 was awaiting trial at the time of the raid. It had been trailing on a day-to-day basis since October 12, because no courtroom was available.

On Oct. 26, 2015, the attorney for the Department of Fair Employment and Housing, Nelson Chan, called Agent Sanchez as a witness on behalf of the Department of Fair Employment and Housing. Her testimony was admitted, over an objection made by Fortune Players Group. Sanchez testified regarding her Oct. 15, 2015 "on-site inspection" of Fortune Players Group. Specifically, Agent Sanchez testified regarding certain of the property seized by the eight agents of the Bureau of Gambling Control during their search of the offices of Fortune Players Group on Oct. 15, 2015. The Department of Fair Employment and and Housing introduced into evidence at trial two of the work planners of De Los Reyes seized during the Oct. 15, 2015 inspection. The Department of Fair Employment and Housing also introduced into evidence at trial photos taken of text messages on the cell phone of De Los Reyes, which Agents took after she seized the cell phone of De Los Reyes during the Oct. 15, 2015 raid.

Plaintiffs' third claim for relief states that the warrantless search of the offices of Fortune Players Group was objectively unreasonable, unnecessary, and was in violation of the Fourth Amendment. Defendants' search exceeded the permissible scope of warrantless inspections permitted by Business and Professions Code Section 19827 and, as such, violated the Fourth Amendment.

Plaintiffs claimed that defendants violated the above statute and regulation by falsely imprisoning the two employees on site on Oct. 15, 2015, and subjected Parungao and De Los Reyes to custodial interrogations that included threats and coercion. Defendants also copied (imaged) the hard drives of plaintiff's office computers, seized the personal cell phone of De Los Reyes and searched it without a warrant, seized personal papers and calendars that belonged to De Los Reyes. Bureau Chief Wayne Quint Jr. did not approve the warrantless inspection in advance.

DEFENDANTS' CONTENTIONS:
Defense contended______________________________________________

Result

The case settled for $325,000, at a mandatory settlement conference, in exchange for a dismissal with prejudice of plaintiffs' complaint. In addition, the Bureau of Gambling Control agreed to certain injunctive relief regarding warrantless inspections in the future.

Other Information

MEDIATOR: Chief Magistrate Judge Joseph C. Spero FILING DATE: Feb. 17, 2016.