Dep't of Tex. v. Tex. Lottery Comm'n

• Decision Date: 28 July 2014
• Docket Number: No. 11–50932.,11–50932.
• Citation: 760 F.3d 427
• Parties: DEPARTMENT OF TEXAS, VETERANS OF FOREIGN WARS OF the UNITED STATES; AMVETS Department of Texas, Incorporated; AMVETS Post 52, Incorporated; AMVETS Post 52, Auxiliary, Incorporated; The Great Council of Texas, Improved Order of Redmen; Redmen War Eagle Tribe No. 17; Redmen Tribe No. 21 Geronimo; Redmen Ramona Council No. 5; The Institute for Disability Access, Incorporated, doing business as Adapt of Texas; Temple Elks Lodge No. 138, Benevolent and Protective Order of Elks of The United States of America, Incorporated; Bryan Lodge No. 859, Benevolent and Protective Order of Elks of The United States of America, Incorporated; Austin Lodge No. 201, Benevolent and Protective Order of Elks of The United States of America, Incorporated; Anna Fire and Rescue, Incorporated, Plaintiffs–Appellees, v. TEXAS LOTTERY COMMISSION; Gary Grief, Executive Director in His Official Capacity; Sandra K. Joseph, Director of Charitable Bingo in Her Official Capacity; Mary Ann Williamson, Commissioner in Her Official Capacity; Unknown Commissioner in Official Capacity; J. Winston Krause, Commissioner in His Official Capacity, Defendants–Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

760 F.3d 427

DEPARTMENT OF TEXAS, VETERANS OF FOREIGN WARS OF the UNITED STATES; AMVETS Department of Texas, Incorporated; AMVETS Post 52, Incorporated; AMVETS Post 52, Auxiliary, Incorporated; The Great Council of Texas, Improved Order of Redmen; Redmen War Eagle Tribe No. 17; Redmen Tribe No. 21 Geronimo; Redmen Ramona Council No. 5; The Institute for Disability Access, Incorporated, doing business as Adapt of Texas; Temple Elks Lodge No. 138, Benevolent and Protective Order of Elks of The United States of America, Incorporated; Bryan Lodge No. 859, Benevolent and Protective Order of Elks of The United States of America, Incorporated; Austin Lodge No. 201, Benevolent and Protective Order of Elks of The United States of America, Incorporated; Anna Fire and Rescue, Incorporated, Plaintiffs–Appellees,

v.TEXAS LOTTERY COMMISSION; Gary Grief, Executive Director in His Official Capacity; Sandra K. Joseph, Director of Charitable Bingo in Her Official Capacity; Mary Ann Williamson, Commissioner in Her Official Capacity; Unknown Commissioner in Official Capacity; J. Winston Krause, Commissioner in His Official Capacity, Defendants–Appellants.

No. 11–50932.

United States Court of Appeals, Fifth Circuit.

July 28, 2014.

Held Unconstitutional

V.T.C.A., Occupations Code § 2001.456(2)

V.T.C.A., Occupations Code § 2001.456(3)Anatole Robert Barnstone, Esq., Austin, TX, for Plaintiffs–Appellees.

Arthur Cleveland D'Andrea, Office of the Attorney General, Office of the Solicitor General, James Carlton Todd, Assistant Attorney General, Office of the Attorney General, General Litigation Division, Austin, TX, for Defendants–Appellants.

Appeal from the United States District Court for the Western District of Texas.

Before STEWART, Chief Judge, and JOLLY, DAVIS, JONES, SMITH, DeMOSS, DENNIS, CLEMENT, PRADO, OWEN, ELROD, SOUTHWICK, HAYNES, GRAVES, and HIGGINSON, Circuit Judges.^*

STEWART, Chief Judge, joined by JOLLY, DAVIS, JONES, SMITH, CLEMENT, PRADO, OWEN, ELROD, SOUTHWICK, HAYNES, and HIGGINSON:

The issue presented in this appeal is the constitutionality of political advocacy restrictions contained in the Texas Bingo Enabling Act (“the Bingo Act”). The Bingo Act allows charitable organizations to raise money by holding bingo games on the condition that the money is used only for the organizations' charitable purpose. Plaintiffs–Appellees filed suit challenging these restrictions, arguing they violate their speech rights under the First Amendment. The district court granted summary judgment in favor of Appellees and issued a permanent injunction preventing enforcement of the challenged provisions. The panel majority opinion, which reversed the district court, was vacated by our decision to rehear this case en banc. Dep't of Tex., Veterans of Foreign Wars of the U.S. v. Tex. Lottery Comm'n, 734 F.3d 1223 (5th Cir.2013). For the reasons stated below, we now affirm the district court's permanent injunction and summary judgment.

I. BACKGROUND

In Texas, gambling is generally prohibited. Tex. Const. art. III, § 47. However, in 1980, the Texas Constitution was amended to establish an exception to this prohibition for charitable bingo. Id. § 47(b). The Texas legislature implemented this exception through the Bingo Act, which authorizes qualified nonprofit organizations to host bingo games. Tex. Occ.Code Ann. § 2001.001 et seq. The Bingo Act contains the following political advocacy restrictions:

A licensed authorized organization may not use the net proceeds from bingo directly or indirectly to: (1) support or oppose a candidate or slate of candidates for public office; (2) support or oppose a measure submitted to a vote of the people; or (3) influence or attempt to influence legislation.

Id.§ 2001.456.

Plaintiffs–Appellees are a host of nonprofit organizations (and/or their parent organizations) licensed to conduct bingo in Texas (“the Charities”). The lead Plaintiffs are the Department of Texas, Veterans of Foreign Wars (“VFW”) and the Institute for Disability Access, d/b/a ADAPT of Texas. On June 25, 2010, they brought suit under 42 U.S.C. § 1983 against the commissioners and two executive officers of the Texas Lottery Commission, the state agency responsible for bingo licensing and regulation (collectively, “the Commission”).¹ Specifically, they alleged that the latter two of these restrictions, Sections 2001.456(2)- (3), violate their right to freedom of speech.

The First Amendment challenge was twofold: First, the Charities claimed that subsections two and three of Section 2001.456 are facially unconstitutional because they are a direct abridgement of speech with no compelling or substantial justifying interest. Second, they claimed the law unconstitutionally discriminates between the Charities and similarly situated businesses, such as racetracks, which are not prohibited from using their revenue for political purposes.

In light of the then-upcoming legislative session, the Charities moved for entry of a preliminary injunction barring enforcement of the political speech restrictions in Section 2001.456(2)-(3). The district court granted the Charities' request on October 29, 2010 and explained its reasoning in an extensive opinion. Relying heavily on the Supreme Court's opinion in Citizens United v. Federal Election Commission, 558 U.S. 310, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010), the district court concluded that the restrictions in Section 2001.456 violate the First Amendment because they burden political speech and fail to satisfy strict scrutiny. The district court also concluded that the restrictions are unconstitutional conditions because they require that, as a condition of participating in the state's charitable bingo program, the Charities not exercise their right to engage in political speech.

The Charities moved for summary judgment, which the district court granted, permanently enjoining the Commission from enforcing the invalid provisions. The Commission appealed. A unanimous panel of this court originally reversed the district court's summary judgment in favor of the Charities and its permanent injunction preventing enforcement of the challenged statutory provisions. Dep't of Texas, Veterans of Foreign Wars of U.S. v. Texas Lottery Comm'n, 698 F.3d 239 (5th Cir.2012), withdrawn,727 F.3d 415 (5th Cir.2013), vacated,734 F.3d 1223 (5th Cir.2013). After panel rehearing, a panel majority issued a revised opinion that again reversed the district court's judgment. Texas Lottery Comm'n, 727 F.3d 415, vacated,734 F.3d 1223. Thereafter, this court granted en banc rehearing. 734 F.3d 1223.

II. STANDARD OF REVIEW

We review a district court's summary judgment de novo, applying the same standards as the district court. Ballard v. Devon Energy Prod. Co., 678 F.3d 360, 365 (5th Cir.2012). Summary judgment should be granted if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).

III. DISCUSSION

The Commission first attacks the Charities' standing to bring the underlying suit. The Commission next argues that because the Bingo Act creates a subsidy the state may constitutionally attach restrictions to funds earned by a charity through participation in the program. Additionally, the Commission argues that even if the Bingo Act does not create a subsidy, the restrictions are permissible under the First Amendment. We address each argument in turn.

A. Standing²

Constitutional standing is a jurisdictional question that we review de novo. Nat'l Fed'n of the Blind of Tex., Inc. v. Abbott, 647 F.3d 202, 208 (5th Cir.2011). To establish Article III standing, a plaintiff must show “an injury-in-fact caused by a defendant's challenged conduct that is redressable by a court.” K.P. v. LeBlanc, 627 F.3d 115, 122 (5th Cir.2010). For a plaintiff's claim to be redressable, it must be “likely, as opposed to merely speculative, that a favorable decision will redress the plaintiff's injury.” S. Christian Leadership Conference v. Supreme Court of State of La., 252 F.3d 781, 788 (5th Cir.2001). “[A] plaintiff satisfies the redressability requirement when he shows that a favorable decision will relieve a discrete injury to himself. He need not show that a favorable decision will relieve his every injury.” LeBlanc, 627 F.3d at 123 (alteration in original) (quoting Larson v. Valente, 456 U.S. 228, 243 n. 15, 102 S.Ct. 1673, 72 L.Ed.2d 33 (1982)).

The Commission argues that the Charities' claims are not redressable because the relief they seek—the ability to use bingo proceeds for political advocacy—is independently foreclosed by the requirement in the Texas Constitution and the Bingo Act that bingo proceeds be used only for an organization's charitable purpose. SeeTex. Const. art. III, § 47(b)(1); Tex. Occ.Code Ann. § 2001.454(a). According to the Commission, even if we enjoin enforcement of the political advocacy restrictions, the charitable purpose requirement, which the Charities have not challenged, would still prohibit the Charities from using bingo proceeds for lobbying or to support or oppose ballot measures. As support, the Commission argues: (1) that by enacting the challenged political advocacy restrictions, the legislature made clear that an organization's charitable purpose cannot include political activity, and (2) the Commission's interpretation of the charitable purpose requirement is reasonable and entitled to deference.

The Commission's standing argument requires that we interpret the charitable purpose requirement as containing an independent prohibition on the use of bingo proceeds for political advocacy in addition to the prohibition in Section 2001.456 challenged by the Charities. While the term “charitable purpose” is not defined in the Texas Constitution, it is defined in the Bingo Act. See Owens v. State, 19 S.W.3d 480, 484 (Tex.App.-Amarillo 2000, no pet.) (“The [Texas] Legislature may define terms which are not defined in the Constitution itsel...