Ecumenical Ministries of Oregon v. Oregon State Lottery Com'n

• Decision Date: 07 April 1994
• Docket Number: C-11532
• Citation: 318 Or. 551,871 P.2d 106
• Parties: ECUMENICAL MINISTRIES OF OREGON, Victor G. Atiyeh, Robert W. Straub, Vern Ryles, Walter D. Pelett, and James W. Knapp, Petitioners on Review/Respondents on Review, and Clair Vandehey, Plaintiff, v. OREGON STATE LOTTERY COMMISSION and James J. Davey, Lottery Director, Respondents on Review/Petitioners on Review, and The Oregon Restaurant Association and Video Lottery Consultants, Inc., Intervenors-Respondents on Review/Petitioners on Review. CC 91; CA A72455; SC S40178 (Control), S40463, S40568.
• Court: Oregon Supreme Court

Page 106

871 P.2d 106

318 Or. 551

ECUMENICAL MINISTRIES OF OREGON, Victor G. Atiyeh, Robert W Straub, Vern Ryles, Walter D. Pelett, and James W Knapp, Petitioners on Review/Respondents on Review and Clair Vandehey, Plaintiff, v. OREGON STATE LOTTERY COMMISSION and James J. Davey, Lottery Director, Respondents on Review/Petitioners on Review and The Oregon Restaurant Association and Video Lottery Consultants, Inc., Intervenors-Respondents on Review/Petitioners on Review.

CC 91C-11532; CA A72455; SC S40178 (Control), S40463, S40568.

Supreme Court of Oregon.

Argued and Submitted Jan. 4, 1994.

Decided April 7, 1994.

Rick T. Haselton, Portland, argued the cause for petitioners on review/respondents on review Ecumenical Ministries of Oregon, et al. With him on the petition and response was Lindsay, Hart, Neil & Weigler, Portland.

Michael D. Reynolds, Asst. Atty. Gen., Salem, argued the cause and filed a response for respondents on review/petitioners on review Oregon State Lottery Commission, et al. Thomas A. Balmer, Deputy Attorney General, Salem, filed the petition. With him on the petition were Theodore R. Kulongoski, Atty. Gen., Virginia L. Linder, Sol. Gen., and Elizabeth S. Harchenko, Sp. Counsel, Salem.

Jacob Tanzer, of Ball, Janik & Novack, Portland, argued the cause for intervenors-respondents on review/petitioners on review. With him on the petition was Rochelle Lessner.

Henry Kane filed an amicus curiae brief pro se.

Hardy Myers, of Stoel Rives Boley Jones & Grey, Portland, filed a brief for amici curiae Multnomah Kennel Club, Inc., and The New Portland Meadows, Inc.

[318 Or. 553-A] Before CARSON, C.J., and GILLETTE, VAN HOOMISSEN, FADELEY, UNIS and GRABER, JJ.

GRABER, Justice.

In this case, we are called on to decide the constitutionality of three statutes relating to the operation of the State Lottery--ORS 461.215, 461.217, and 461.546 ¹--under the present version of Article XV, section 4, of the Oregon Constitution. As originally adopted in 1857, Article XV, section 4, provided:

"Lotteries, and the sale of Lottery tickets, for any purpose whatever, are prohibited In 1976, the voters adopted an amendment, which had been submitted to them by the Legislative Assembly, excepting charitable, fraternal, and religious organizations from the prohibition against lotteries in Article XV, section 4.

and the Legislative Assembly shall prevent the same by penal laws." ²

In 1984, Article XV, section 4, was amended through the initiative process. As pertinent here, Article XV, section 4, now provides:

"(3) There is hereby created the State Lottery Commission which shall establish and operate a State Lottery. All proceeds from the State Lottery, including interest, but excluding costs of administration and payment of prizes, shall be used for the purpose of creating jobs and furthering economic development in Oregon.

"(4)(a) The State Lottery Commission shall be comprised of five members appointed by the Governor and confirmed by the Senate * * *. * * * The Commission is empowered to promulgate rules related to the procedures of the Commission and the operation of the State Lottery. * * *

" * * * * *

"(d) The Director [of the State Lottery] shall implement and operate a State Lottery pursuant to the rules, and under the guidance, of the Commission. * * * The State Lottery may operate any game procedure authorized by the Commission, except parimutuel racing, Social games, and the games commonly known in Oregon as bingo or lotto, whereby prizes are distributed using any existing or future methods among adult persons who have paid for tickets or shares in that game; provided that, in lottery games utilizing computer terminals or other devices, no coins or currency shall ever be dispensed directly to players from such computer terminals or devices.

"(e) There is hereby created within the General Fund the Oregon State Lottery Fund which is continuously appropriated for the purpose of administering and operating the Commission and the State Lottery. * * * [T]he State Lottery shall operate as a self-supporting revenue-raising agency of state government * * *. The State Lottery shall pay all prizes and all of its expenses out of the revenues it receives from the sale of tickets or shares to the public and turn over the net proceeds therefrom to a fund to be established by the Legislative Assembly from which the Legislative Assembly shall make appropriations for the benefit of the public purpose of creating jobs and furthering economic development in Oregon. At least 84% of the total annual revenues from the sale of all lottery tickets or shares shall be returned to the public in the form of prizes and net revenues benefitting the public purpose.

" * * * * *

"(7) The Legislative Assembly has no power to authorize, and shall prohibit, casinos from operation in the State of Oregon."

In 1991, plaintiffs, Ecumenical Ministries of Oregon and various individuals, brought an action for declaratory judgment and injunctive relief against the Oregon State Lottery Commission and the Lottery Director, alleging that ORS 461.215 and 461.217 (providing for the initiation by the Lottery Commission of video lottery games) and 461.546 ³ (providing for the distribution of some of the The Oregon Restaurant Association and Video Lottery Consultants, Inc., intervened in the action. Defendants and intervenors moved for judgment on the pleadings pursuant to ORCP 21 B. ⁴ Concluding that the case presented "only legal issues to be resolved by the court," that a "motion for judgment on the pleadings is the appropriate procedural device for disposition of the case" and that the statutes do not violate the relevant provisions of the Oregon Constitution, the trial court granted defendants' and intervenors' motion. Plaintiffs appealed.

revenues generated by those games) violate certain provisions of Article XV, [318 Or. 556] section 4. In particular, plaintiffs alleged that, when implemented, ORS 461.215 and 461.217 will result in the creation of "state-sponsored video poker" that will "have the effect of creating casino gambling in the State of Oregon," in violation of Article XV, section 4(7), of the state constitution. Plaintiffs further alleged that ORS 461.546(1) "mandat[es] the use of net revenues of the Oregon Lottery for purposes other than the constitutionally-mandated purpose of creating jobs and furthering economic development in Oregon" and "authoriz[es] that more than 16% of lottery revenues be expended on costs of administration, including gaming law enforcement," in violation of Article XV, sections 4(3) and 4(4)(e), of the Oregon Constitution.

The Court of Appeals, sitting in banc, reversed the decision of the trial court and remanded the case for further proceedings. Ecumenical Ministries v. Oregon State Lottery Comm., 118 Or.App. 735, 849 P.2d 532 (1993). The Court of Appeals held that the terms "casino" and "video poker" are ambiguous and that plaintiffs "are entitled to present evidence" to demonstrate the meaning of those terms and the manner in which "video poker" may violate the constitutional prohibition against "casinos." Id. at 740-42, 849 P.2d 532. The court also held that plaintiffs "are entitled to present evidence to support their claim that the allocations [mandated] in ORS 461.546 are not for the purpose of creating jobs and furthering economic development in Oregon." Id. at 742-43, 849 P.2d 532.

Rossman, J., joined by Edmonds, J., dissented. Judge Rossman reasoned that "video poker" is authorized by ORS 461.215 and 461.217 and that it is unconstitutional "casino gambling"; he also reasoned that the allocation of funds mandated by ORS 461.546(1) does not promote economic development. Ecumenical Ministries v. Oregon State Lottery Comm., 118 Or.App. 735, 849 P.2d 532 (1993) (Rossman, J., dissenting). Judge Rossman stated that, "in this straightforward, facial challenge to the statutes," plaintiffs were entitled to judgment on the pleadings. 118 Or.App. at 747, 849 P.2d 532.

Intervenors moved for reconsideration, arguing that the case presented questions of law requiring no evidentiary amplification. The Court of Appeals allowed reconsideration and adhered to its former opinion. Ecumenical Ministries v. Oregon State Lottery Comm., 121 Or.App. 389, 854 P.2d 952 (1993).

Plaintiffs sought review in this court on the issue of the constitutionality of ORS 461.546(1). Defendants and intervenors sought review on that issue and on the issue of the constitutionality of ORS 461.215 and 461.217. We allowed review in order to answer those questions of law. We now reverse the decision of the Court of Appeals and affirm in part and reverse in part the judgment of the circuit court.

METHOD OF RESOLVING A FACIAL CHALLENGE

To determine whether the challenged statutes, on their face, violate Article XV, sections 4(3), 4(4)(e), and 4(7), we must ascertain the meaning of those constitutional provisions and statutes, none of which has been construed by this court. The Court of Appeals held that the meaning of the pertinent constitutional provisions and statutes is not a question of law that can be decided on a motion for judgment on the pleadings. In its original opinion below, the Court of Appeals concluded that there are disputed issues of The Court of Appeals erred in holding that an evidentiary hearing is required when analyzing an ambiguous term in the constitution or in a statute. The dispositive issues presented in this facial challenge are issues of law. Granted, in determining the meaning of a term in the constitution, or in analyzing the constitutionality of a law, the court may take judicial notice of certain facts. When a court does so, however, the court is taking judicial notice of legislative facts, which are facts utilized in determining what the law--statutory, decisional, or constitutional--is or should be. See State v. Clowes, 310 Or. 686, 692 n. 7, 801 P.2d 789 (1990) (defining and...