Casino Ass'n of La. v. State ex rel. Foster

• Decision Date: 21 June 2002
• Docket Number: No. 2002-CA-0265.,2002-CA-0265.
• Citation: 820 So.2d 494
• Court: Louisiana Supreme Court
• Parties: CASINO ASSOCIATION OF LOUISIANA & Individual Members v. STATE of Louisiana, Through the Honorable Murphy J. FOSTER, Governor, The Honorable Richard P. Ieyoub, Attorney General.

820 So.2d 494

CASINO ASSOCIATION OF LOUISIANA & Individual Members v. STATE of Louisiana, Through the Honorable Murphy J. FOSTER, Governor, The Honorable Richard P. Ieyoub, Attorney General.

No. 2002-CA-0265.

Supreme Court of Louisiana.

June 21, 2002.

R. Gray Sexton, L. Rand Dennis, Richard P. Ieyoub, Attorney General, Maris L. McCrory, Baton Rouge, Counsel for Applicant.

Juston M. O'Brien, Paul S. West, McGlinchey, Stafford, Baton Rouge, Richard C. Stanley, Donald H. Knecht, Jr., Thomas M. Flanagan, Stanley & Flanagan, New Orleans, Dean A. Cole, Cliffe E. Laborde, III, Laborde & Neuner, Lafayette, Counsel for Respondent.

VICTORY, J.

This case is before us on direct appeal of a finding by the district court that the statutes prohibiting campaign contributions from the riverboat and land-based casino industries are unconstitutional. After reviewing the record and the applicable law, we reverse the judgment of the district court and uphold the constitutionality of these statutes.

FACTS AND PROCEDURAL HISTORY

On September 20, 2000, the Casino Association of Louisiana ("CAL")¹ and its individual members filed a Petition for Declaratory Judgment in the 19th Judicial District Court alleging that the provisions of La. R.S. 18:1505.2(L) prohibiting campaign contributions by the riverboat and land-based casino industries are unconstitutional. Treasure Chest Casino, LLC ("TCC")² and two Harrah's entities, Harrah's Operating Company, Inc. and Harrah's Entertainment, Inc. (jointly "Harrah's")³, were permitted to intervene in the lawsuit in light of their respective interests in the laws that regulate the casino gaming industry.

Harrah's, TCC, CAL and its individual members are prohibited from making campaign contributions to candidates or to political committees of candidates by operation of La. R.S. 18:1505.2(L), which provides in pertinent part as follows:

L. (1) The legislature recognizes that it is essential to the operation of effective democratic government in this state that citizens have confidence in the electoral process and that elections be conducted so as to prevent influence and the appearance of influence of candidates for public office and of the election process by special interests, particularly by persons substantially interested in the gaming industry in this state.

(2) No person to whom this Subsection is applicable as provided in Paragraph (3) of this Subsection shall make a contribution, loan, or transfer of funds, including but not limited to any in-kind contribution, as defined in this Chapter, to any candidate, any political committee of any such candidate, or to any other political committee which supports or opposes any candidate.

(3) This Subsection shall be applicable to all of the following:

. . .

(a)(ii) Any person who holds a license to conduct gaming activities on a riverboat, who holds a license or permit as a distributor or supplier of gaming devices or gaming equipment including slot machines, or who holds a license or permit as a manufacturer of gaming devices or gaming equipment including slot machines issued pursuant to the Louisiana Riverboat Economic Development and Gaming Control Act [La. R.S. 27:41 et seq.], and any person who owns a riverboat upon which gaming activities are licensed to be conducted.

(iii) Any person who holds a license or entered into a contract for the conduct of casino gaming operations, who holds a license or permit as a distributor of gaming devices or gaming equipment including slot machines, or who holds a license or permit as a manufacturer of gaming devices or gaming equipment including slot machines issued pursuant to the Louisiana Economic Development and Gaming Corporation Act [La. R.S. 27:201 et seq.], and any person who owns a casino where such gaming operations are licensed.

(b)(i) Any person who has an interest, directly or indirectly, in any legal entity included in Subparagraph (a) of this Paragraph. "Interest," as defined in this Subparagraph, means ownership by an individual or spouse, either individually or collectively, of an interest which exceeds ten percent of any legal entity. An indirect interest is ownership through any number of layers of legal entities when twenty-five percent or more or each legal entity is owned by the legal entity ownership beneath it.

(ii) Any holding, intermediary, or subsidiary company of any person included in Subparagraph (a) of this Paragraph and any officer, director, trustee, or partner thereof.

(c) Any officer, director, trustee, partner, or senior management level employee or key employee as defined in R.S. 27:205(19) of any person included in Subparagraph (a) or (b) of this Paragraph.

. . .

(e) The spouse of any person to whom this Subsection is made applicable by this Paragraph.

Following a hearing, the district court, Judge Timothy Kelley presiding, declared La. R.S. 18:1505.2(L)(3)(a)(ii) and La. R.S. 18:1505.2(L)(3)(b)(c)(e), insofar as they are applicable to La. R.S. 18:1505.2(L)(3)(a)(ii) and (iii), unconstitutional. The court also declared unconstitutional a corresponding provision of the Louisiana Administrative Code, 42 LA-ADC Pt. IX, § 2941, insofar as it applies to the owners of any holding company of the casino gaming operator, their affiliated companies, and all of their officers, directors, partners, senior management, and key employees. In support, the district court relied upon the reasoning of the majority of this Court in Penn v. State, 99-2337 (La.10/29/99), 751 So.2d 823, cert. denied, 529 U.S. 1109, 120 S.Ct. 1962, 146 L.Ed.2d 793 (2000), which declared unconstitutional provisions of La. R.S. 18:1505.2(L) barring campaign contributions by the video poker industry. The State has appealed the district court's judgment directly to this Court pursuant to La. Const. Art. V, § 5(D).

DISCUSSION

In Penn, in a four-three per curiam decision, this Court declared unconstitutional La. R.S. 18:1505.2(L)(3)(a)(i), La. R.S. 18:1505.2(L)(3)(b)(i) insofar as it is applied to La. R.S. 18:1505.2(L)(3)(a)(i), and Rule 107 of Title 42 of the Louisiana Administrative Code, insofar as Rule 107 precludes candidate and political committee contributions by video draw poker licensees.⁴ For the reasons that follow, we decline to follow Penn and hold that the legislative bans on campaign contributions by riverboat gaming and land-based casino interests do not violate the First and Fourteenth Amendments to the United States Constitution.⁵

The First Amendment provides that "Congress shall make no law ... abridging the freedom of speech." U.S. Const. Amend. I. The Fourteenth Amendment makes this most important guarantee applicable to the states as well as the Congress. Buckley v. Valeo is the seminal United States Supreme Court case on modern campaign finance reform in the context of the First Amendment. 424 U.S. 1, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976). In reviewing the contribution⁶ and expenditure⁷ limits contained in the 1974 amendments to the Federal Election Campaign Act of 1971 (the "Act"),⁸ the Buckley Court made clear that restrictions on campaign contributions and expenditures "operate in an area of the most fundamental First Amendment activities," namely, the rights of freedom of association and freedom of expression. 424 U.S. at 14, 96 S.Ct. 612. In discussing the Act's impact on the First Amendment's guarantee of freedom of expression, the Court distinguished between expenditure restrictions and contribution restrictions, characterizing expenditure restrictions as follows:

A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today's mass society requires the expenditure of money....

The expenditure limitations contained in the Act represent substantial rather than merely theoretical restraints on the quantity and diversity of political speech.... (Emphasis added).

424 U.S. at 19, 96 S.Ct. 612.⁹

In discussing restraints on contributions in the context of freedom of expression rights, the Court held:

By contrast with a limitation upon expenditures for political expression, a limitation upon the amount that any one person or group may contribute to a candidate or political committee entails only a marginal restriction upon the contributor's ability to engage in free communication. A contribution serves as a general expression of support for the candidate and his views, but does not communicate the underlying basis for the support. The quantity of communication by the contributor does not increase perceptibly with the size of his contribution, since the expression rests solely on the undifferentiated, symbolic act of contributing. At most, the size of the contribution provides a very rough index of the intensity of the contributor's support for the candidate. A limitation on the amount of money a person may give to a candidate or campaign organization thus involves little direct restraint on his political communication, for it permits the symbolic expression of support evidenced by a contribution but does not in any way infringe the contributor's freedom to discuss candidates and issues. While contributions may result in political expression if spent by a candidate or an association to present views to the voters, the transformation of contributions into political debate involves speech by someone other than the contributor. (Emphasis added).

Id., 424 U.S. at 21, 96 S.Ct. 612.¹⁰ The Court made the distinction again later in the opinion when noting that "unlike a person's contribution to a candidate, a candidate's expenditure of his personal funds directly facilitates his own political speech." Id., 424 U.S. at 53, n. 58, 96 S.Ct. 612; see also California Medical Ass'n v. Federal Election Comm'n, ...