COMMONWEALTH EX REL. BROWN v. INTERACTIVE MEDIA ENTERTAINMENT, No. 2009-SC-000043-MR.
| Decision Date | 18 March 2010 |
| Docket Number | No. 2009-SC-000043-MR. |
| Parties | COMMONWEALTH of Kentucky, ex rel. J. Michael BROWN, Secretary, Justice and Public Safety Cabinet, Appellant, v. INTERACTIVE MEDIA ENTERTAINMENT AND GAMING ASSOCIATION, INC.; Interactive Gaming Council; vicsbingo.com; playersonly.com; sportsbook.com; sportsinteraction.com; mysportsbook.com; linesmaker.com; and Hon. Thomas D. Wingate, Judge, Franklin Circuit Court, Appellees. |
| Court | United States State Supreme Court — District of Kentucky |
David Eric Lycan, William Harvey May, Aaron Davis Reedy, Hurt, Crosbie & May PLLC, William Cecil Hurt, Jr., Wethington, Hurt & Crosbie, PLLC, Lexington, KY, Counsel for Appellant.
Jon L. Fleischaker, Robert Kenyon Meyer, James Lee Adams, Dinsmore & Shohl, LLP, Louisville, KY, Counsel for Appellee, Interactive Media Entertainment & Gaming Association, Inc.
Margaret Eileen Mary Keane, Greenebaum, Doll & McDonald, PLLC, Louisville, KY, Phillip D. Scott, Greenebaum, Doll & McDonald, PLLC, Lexington, KY, Counsel for Appellee, Interactive Gaming Council.
Bruce F. Clark, Stites & Harbison, PLLC, Frankfort, KY, Ian Thomas Ramsey, John Lewis Tate, Joel Beres, Stites & Harbison, PLLC, Louisville, KY, Counsel for Appellees, Interactive Gaming Council and vicsbingo.com.
William E. Johnson, Johnson, True & Guarnieri, LLP, Frankfort, KY, Counsel for Appellees, playersonly.com, sportsbook.com, sportsinteraction.com, mysportsbook.com and linesmaker.com.
Thomas D. Wingate, Frankfort, KY, Appellee.
Laura Anne D'Angelo Wyatt, Tarrant & Combs, LLP Lexington, KY, Daniel G. Dougherty, Ebay, Inc., San Jose, CA, Counsel for Amicus Curiae, ebay, Inc.
Michael Romano Mazzoli, Cox & Mazzoli, PLLC, Louisville, KY, Timothy B. Hyland, Rockville, MD, Counsel for Amicus Curiae, Network Solutions, LLC.
David Alan Friedman, Louisville, KY, Counsel for Amicus Curiae, The Electronic Frontier Foundation, The Center for Democracy and Technology, The American Civil Liberties Union of Kentucky, The Media Access Project, The United States Internet Industry Association, The Internet Commerce Coalition, The Internet Commerce Association.
Joshua Taylor Rose, Charles M. Pritchett, Jr., Bart Loveman Greenwald, Frost, Brown, Todd, LLC, Louisville, KY, Counsel for Amicus Curiae, Poker Players Alliances.
This case arises from an order by the Franklin Circuit Court that 141 internet domain names be seized from their owners and operators and transferred to the dominion and control of the Commonwealth. Attorneys acting on behalf of the domain names sought a writ of prohibition against the seizure, which the Kentucky Court of Appeals granted. Because the parties seeking the writ have failed to demonstrate that they have standing to do so, this Court reverses, though this does not foreclose the possibility of future relief.
Initiating a fight against internet gambling in Kentucky, the Commonwealth filed an in rem action in Franklin Circuit Court over multiple pieces of intangible property—141 internet domain names. The Commonwealth had funded an extensive research project, whereby several civilians were employed to search the internet for gambling domains. The 141 domains discovered in the search were, in the Commonwealth's view, hosting illegal gambling activities. Armed with KRS 528.010 and acting through the Secretary of the Justice and Public Safety Cabinet, J. Michael Brown, the Commonwealth sued in Franklin Circuit Court to have those domain names seized.
In a hearing where only the Commonwealth participated, the trial court heard testimony regarding the discovery and nature of the domain names. Using a probable-cause standard, the court concluded that the websites were indeed violating Kentucky's gambling laws. Pursuant to what it found to be a civil forfeiture remedy in KRS 528.010, the court ordered seizure of the domain names and instructed their registrars to transfer them to the Commonwealth of Kentucky.
When those supposedly affected learned of the order, counsel appeared in Franklin Circuit Court on their behalf to challenge the seizure. The parties purporting to be affected by the seizure were atypical in rem claimants, however. Instead of owners, operators, or registrants of the website domain names, the lawyers opposing the Commonwealth claimed to represent two types of entities: (1) the domain names themselves and (2) gaming trade associations who profess to include as members registrants of the seized domains, though they have yet to reveal any of their identities. The various groups of domain names and gaming associations sought to intervene in the case and dismiss the seizure. The circuit court ultimately denied all motions to intervene or dismiss and scheduled a forfeiture hearing where the actual registrants and owners of the seized domains could prove their innocence.1 The court specifically noted in its order that only the domain name owners, operators, and registrants had a legal interest in the domain names and only they or their representatives could defend against forfeiture.
Upon the denial of their motions, the groups and associations sought a writ of prohibition from the Court of Appeals to enjoin the impending forfeiture. The Court of Appeals issued the writ, reasoning that the trial court acted beyond the jurisdiction of KRS 528.100. The Commonwealth, appealing as a matter of right, asks this Court to vacate the writ of prohibition.
Numerous, compelling arguments endorsing the grant of the writ of prohibition have been presented throughout the Court of Appeals' opinion, Judge Taylor's separate concurrence, the Appellees' briefs, the amici briefs, and oral argument before this Court. This plethora of arguments includes, among others, that (1) Kentucky law only mandates the seizure of tangible gambling devices, and not intangible things such as domain names; (2) the court's civil forfeiture was unauthorized because KRS 528.100 only contemplates criminal sanctions; and (3) Kentucky lacks in rem jurisdiction over the domain names because they are not located in Kentucky.
Although all such arguments may have merit, none can even be considered unless presented by a party with standing. No such party has appeared at the original proceedings in Franklin Circuit Court, the writ petition at the Court of Appeals, or on the appeal here to this Court. As mentioned above, two types of Appellees sought the writ, claiming an interest in the domain names: (1) the purported domain names themselves and (2) associations of anonymous domain registrants. Neither group meets the basic requirements of standing.
Counsel purportedly appeared directly on behalf of six domain names and participated in the writ action at the Court of Appeals. The advocacy on behalf of five of these domain names was consolidated into one representation. These five domain names—playersonly.com, sportsbook.com, sportsinteraction.com, mysportsbook.com, and linesmaker.com—have been referred to as the "group of five." The sixth, vicsbingo.com, joined in the appeal through separate counsel, together with the Interactive Gaming Council, one of the gaming associations. Counsel for these six domain names have consistently claimed the names are some of the intangible property seized by the trial court and that the names are appearing to protect their own interests in themselves. Put simply, counsel purports to represent property that is protecting itself.
Although unaddressed in the Court of Appeals opinion below, the Commonwealth has apparently challenged the standing of these individual domain names at every stage of the proceedings. It has insisted that the property seized cannot defend itself, but can only be defended by those having an interest in the property—namely owners and registrants of domain names. Since no owners or registrants have ever claimed to be participating in this case at any level, the Commonwealth requests that this Court vacate the writ and restore the seizure of the domain names.
The domain names' assertion of standing hinges on the origination of this controversy as an in rem proceeding. They claim that since the Commonwealth named the domain names as the in rem defendants, the names must have an opportunity to represent themselves.
The domain names' argument confuses the nature of in rem litigation. It has long been recognized in Kentucky, as well as elsewhere, that in in rem litigation, only those with an interest in the property, such as current owners, have an interest in the litigation. See Taylor v. City of La Grange, 262 Ky. 383, 90 S.W.2d 357 (1936); City of Middlesborough v. Coal & Iron Bank, 33 Ky. L. Rptr. 469, 110 S.W. 355, 356 (1908); United States v. One 1965 Cessna 320C Twin Engine Airplane, 715 F.Supp. 808, 810 (E.D.Ky.1989). The property does not have an interest in itself and, therefore, does not have any interest in the litigation. See United States v. One Parcel of Real Property, 831 F.2d 566, 568 (5th Cir.1987) (). An internet domain name does not have an interest in itself any more than a piece of land is interested in its own use. Just as with real property, a domain name cannot own itself; it must be owned by a person or legally recognized entity. Nor does the property itself care whether it is owned and operated by private business or seized by state government.
When faced with a similar claim, the Fifth Circuit found the concept of property having in rem standing to be so far-fetched as to be "not arguable on its merit s" and "frivolous," id., that it issued sanctions against the attorneys purporting to represent such property. See id. at 568-69. This Court agrees that the contention that mere property can represent itself is frivolous.
The fundamental standing requirement of an interest in the property does not dissipate in a writ case. A writ of...
To continue reading
Request your trial