Note from Professor:

This case deals with consideration. Before reading the case in its entirety, begin by reading the first rollover, the text that it highlights is the rule of law that was working from. With that rule as your foundation, consider the question that the court needed to address and specifically how it addressed it (including the principles that the court articulated to reach the result).

This case has been edited by the professor. If you would like to view the full case, you may do so on Westlaw.

BARTLE, District Judge.

***

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 wheel.

***

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. 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 explained:

[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).

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's motion for summary judgment against Ms. Gottlieb on Count I of the complaint will be denied.

***

This material was reprinted from Westlaw with permission of Thomson Reuters.