Club Ass'n of West Virginia, Inc. v. Wise, Civ.A. 2:01-0634.

• Citation: 156 F.Supp.2d 599
• Decision Date: 31 August 2001
• Docket Number: No. Civ.A. 2:01-0634.,Civ.A. 2:01-0634.
• Parties: CLUB ASSOCIATION OF WEST VIRGINIA, INC., et al., Plaintiffs, v. Robert E. WISE, Jr., in his official capacity as Governor of the State of West Virginia, et al., Defendants.
• Court: U.S. District Court — Southern District of West Virginia

156 F.Supp.2d 599

CLUB ASSOCIATION OF WEST VIRGINIA, INC., et al., Plaintiffs, v. Robert E. WISE, Jr., in his official capacity as Governor of the State of West Virginia, et al., Defendants.

No. Civ.A. 2:01-0634.

United States District Court, S.D. West Virginia.

August 31, 2001.

Jeffrey V. Mehalic, Law Offices of Jeffrey V. Mehalic, Charleston, West Virginia, John P. Davis, III, Jones, Gregg, Creehan & Gerace, Pittsburgh, Pennsylvania, for plaintiffs.

Thomas R. Goodwin, Johnny M. Knisely, II, Carrie Goodwin Fenwick, Goodwin & Goodwin, for defendants.

MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending is Defendants' motion to dismiss. The Court GRANTS the motion.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Introduction

On July 19, 2001 Plaintiffs filed an eleven (11) count Complaint challenging the new Limited Video Lottery Act, West Virginia Code Sections 29-22B-101 to 1903, enacted by the Legislature during a 2001 Special Session. Employing a variety of state and federal constitutional claims, Plaintiffs seek "a permanent injunction enjoining defendants from implementing and enforcing the Limited Video Lottery Act." (Compl. at 42).

Defendants' motion to dismiss raises a host of challenges to the Court's subject matter jurisdiction. In the alternative, Defendants assert the Court should abstain from exercising any jurisdiction it might possess. Analysis of the legal arguments is aided by a preliminary discussion of West Virginia's 138-year history of regulating gambling devices and, to a lesser extent, its treatment of lotteries in general.

A. West Virginia's Regulation of Gambling Devices and Lotteries (1863 to 1982)

In 1863, the Framers of the first West Virginia Constitution adopted a categorical ban on lotteries, stating "No lottery shall be authorized by law; and the buying, selling or transferring of tickets or chances in any lottery shall be prohibited." W.Va. Const. Art. XI, § 1 (1863). The 1863 Constitution was superseded in 1872, but the ban on lotteries remained intact. W.Va. Const. Art. VI, § 36 ("The legislature shall have no power to authorize lotteries or gift enterprises for any purpose, and shall pass laws to prohibit the sale of lottery or gift enterprise tickets in this State."). The ban seems to have had its genesis in the Commonwealth's distaste for such enterprises. See Robert M. Bastress, The West Virginia Constitution 162 (1995) (noting the provision is "similar in substance to ... Article IV, Section 33 of the Virginia Constitution of 1851").¹

The State's principal legislative effort to implement Section 36 can be found in Chapter 151 of the West Virginia Code of 1887. That Chapter, entitled "Offenses Against Public Policy[,]" prohibited everything from the establishment of a lottery to the keeping of a gaming table, "faro bank, or keno table, or a table of the like kind[.]" W.Va.Code c. 151, § 1;² see generally id. §§ 1-16. In the first century of the State's existence, the Supreme Court of Appeals of West Virginia confronted the general issue of gambling a number of times, most often in the context of Chapter 151 or its successor, Chapter 61, Article 10.

For example, in 1904 the Supreme Court of Appeals decided a pair of cases construing Chapter 151, Section 1. The cases dealt with slot machines, the progenitors of the modern video poker machines. First, in State v. Gaughan, 55 W.Va. 692, 48 S.E. 210 (1904), the Court very broadly interpreted Section 1 to prohibit slot machines.³ Although slot machines were not specifically mentioned in the statute,⁴ Gaughan held "no game of unequal chances can be played anywhere lawfully." Id. at 697, 48 S.E. at 212 (emphasis added).

Paired with this expansive reading of the definition of a prohibited gambling device, however, was a decision the same year that practically slowed efforts to halt the proliferation of such devices. In Syllabus Point 3 of Woods v. Cottrell, 55 W.Va. 476, 476, 47 S.E. 275, 275 (1904), the West Virginia Court held when slot machines or other gaming devices are seized under Section 1, they can be destroyed only upon conviction of their owner under that Section.

Following Gaughan and its progeny of fifty years, it seemed "settled" in 1955 "that `a one-armed bandit' slot machine [wa]s a `gaming device of like kind'" as defined in West Virginia Code 61-10-1. Philip Bonner Hill, supra at 104. In State v. Calandros, 140 W.Va. 720, 86 S.E.2d 242 (1955), however, a public-policy shift appears to have occurred. Calandros was convicted under Section 61-10-1 for placing a slot machine in the "Believe It or Not Restaurant" in Ripley, West Virginia. The circumstances of the case, and Calandros' defense, were to become quite familiar in the decades that followed:

Defendant testified ... the gaming device was never intended to be used in gambling; that he had placed a sign on the front of the device which read, `For Amusement Only', when the gaming device was installed in the clubroom; and to his knowledge the device was a `free game' device.

The gaming table was electrically operated. It could be played for either five or twenty-five cents. After a coin had been inserted, a lever or handle on the center front was `tripped', which caused three discs or reels in the cabinet to spin. Each reel had a number of pictures or figures representing oranges, lemons, plums, cherries, bells, and bars upon them. In order to win, it was necessary that a certain combination of those pictures be in line on the three reels when the reels stopped turning. The device did not pay money, but a winner was paid in some instances by an employee of the club.

Id. at 721-22, 86 S.E.2d at 243 (emphasis added).

The West Virginia Court essentially agreed with Calandros and, in the process, seemingly abandoned well-established precedent originating with Gaughan:

The evidence ... does not establish that the device in question was either an `A.B.C. or E.O. table, or faro bank, or keno table, or any other gaming table or device of like kind ***'. The device in question is referred to in the testimony as being similar to a `slot machine' or a `one armed bandit'; but we cannot assume that such devices are of `like kind' to those named in the statute. The mere fact that the device could possibly be used or adapted to gambling, does not make it of `like kind'. The burden was on the State to establish that the table or device involved in this proceeding was one condemned by the statute.

Id. at 728, 86 S.E.2d at 247.⁵ Chief Justice Lovins dissented, perhaps sparking a debate that has continued in one form or another for decades. Based on what he believed to be "well established and time-tried principles" since Gaughan, id. at 731, 48 S.E. 210, he observed:

The method of operation was such that the chances for the player to win were unequal. The record clearly establishes such unequality. A game of that character cannot be lawfully played at any place.

Id. at 729, 86 S.E.2d at 247.

In 1970, the Legislature superseded Calandros by statute. Analogous to the mixed signals of the West Virginia Court in 1904, the Legislature expanded the list of prohibited gambling devices, but then practically confounded enforcement mechanisms. In sum, the outdated Section 61-10-1 was amended to cover "any slot machine, multiple coin console machine, multiple coin console slot machine or device in the nature of a slot machine," while also providing:

[T]he provisions of this section shall not extend to coin-operated nonpayout machines with free play feature or to automatic weighing, measuring, musical and vending machines which are so constructed as to give a certain uniform and fair return in value or services for each coin deposited therein and in which there is no element of chance.

W.Va.Code § 61-10-1 (emphasis added). In the years following the amendment, the State continued to struggle with the regulation of the machines and enforcement under amended Section 61-10-1.

In State v. Wassick, 156 W.Va. 128, 191 S.E.2d 283 (1972), defendant was convicted of violating Section 61-10-11 prohibiting any person from setting up, promoting, or managing a lottery for anything of value. Defendant owned a multiple-coin pinball machine located in a tavern known as Jean and John's Place. In March 1969 an undercover police officer received a payoff of $2.00 from the tavern owner after the officer registered a number of free games on the machine. Defendant asserted his ownership of the machine, which lacked a built-in pay-out mechanism, did not constitute a lottery. After noting the key elements of a lottery are consideration, prize and chance, the West Virginia Court held free plays on the machine at issue constituted a prohibited prize. The holding, however, appeared in obvious tension with the "free play" proviso added by the Legislature to Section 61-10-1 in 1970.

The next significant development was State v. 25 Slot Machines, 163 W.Va. 459, 256 S.E.2d 595 (1979). In that case, the Supreme Court of Appeals addressed the seizure and proposed destruction of gambling devices from four fraternal organizations in Brooke County. The proposed destruction under Section 61-10-1, however, was in seeming conflict with the 1904 ruling in Woods and its progeny.⁶ The West Virginia Court thus overruled that line of authority:

We disagree with these cases insofar as they compel prior conviction of one accused of keeping or exhibiting slot machines before the machines can be destroyed. Nothing in the statute even implies such a proposition.

Id. at 462, 256 S.E.2d at 597. Thus the Supreme Court of Appeals changed the course of the law once again, via Syllabus Points 1 and 2:

1. Devices listed in W.Va.Code, 61-10-1 are prima facie contraband when seized on a warrant alleging use for gaming and may be destroyed without the prior conviction of their owner or owners for using them for gaming. We expressly overrule Pt. 3, Syllabus, Woods v. Cottrell, 55 W.Va. 476, 47 S.E. 275 (1904).

2....