F.A.C.E. v. Todd

• Decision Date: 27 July 2006
• Docket Number: No. 112 September Term 003.,112 September Term 003.
• Citation: 903 A.2d 348
• Parties: F.A.C.E. TRADING, INC. d/b/a Face Card Promotions, et al. v. Joel J. TODD, State's Attorney.
• Court: Court of Special Appeals of Maryland

Page 348

903 A.2d 348

F.A.C.E. TRADING, INC. d/b/a Face Card Promotions, et al. v. Joel J. TODD, State's Attorney.

No. 112 September Term 003.

Court of Appeals of Maryland.

July 27, 2006.

David C. Gaskill, Ocean City, for appellants.

William F. Brockman, Assistant Attorney General (J. Joseph Curran, Jr., Attorney General, and Laura F. Davies Tilley, Assistant Attorney General, on brief), Baltimore, for appellee.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, GREENE, JOHN C. ELDRIDGE (Retired, Specially Assigned), JJ.

ELDRIDGE, J.

The issue in this case is whether games of chance, based upon tickets or coupon cards which can be purchased from a dispensing machine for one dollar each, and which offer consumers the chance to win cash prizes, constitute illegal "gaming devices" or "games" under Maryland Code (2002, 2004 Repl.Vol.), § 12-101(d)(1)(ii) of the Criminal Law Article, and are punishable as misdemeanors under § 12-104 of the Criminal Law Article.¹ We shall hold that the games of chance here involved are illegal and punishable under §§ 12-101(d) and 12-104.

I.

This case was decided in the Circuit Court for Worcester County by a grant of the defendant's motion for summary judgment. As such, "`[w]e review the record in the light most favorable to the non-moving party [here the plaintiff] and construe any reasonable inferences which may be drawn from the facts against the movant.'" Lee v. Cline, 384 Md. 245, 248, 863 A.2d 297, 299 (2004), quoting Walk v. Hartford Casualty, 382 Md. 1, 14, 852 A.2d 98, 106 (2004). See, Maryland Rule 2-501; Charles County Commissioners v. Johnson, 393 Md. 248, ___, 900 A.2d 753, ___ (2006); Jurgensen v. New Phoenix, 380 Md. 106, 114, 843 A.2d 865, 869 (2004); Sadler v. Dimensions Healthcare Corp., 378 Md. 509, 533, 836 A.2d 655, 669 (2003); Remsburg v. Montgomery, 376 Md. 568, 579-580, 831 A.2d 18, 24 (2003); Rite Aid v. Hagley, 374 Md. 665, 684, 824 A.2d 107, 118 (2003); Lovelace v. Anderson, 366 Md. 690, 695, 785 A.2d 726, 728 (2001), and cases there cited.

Appellant, F.A.C.E. Trading, Inc., doing business as Face Card Promotions, is engaged in the business of marketing and distributing Ad-Tabs^TM. These are coupon cards or tickets which can be purchased from a dispensing machine for one dollar each.² With the purchase of these coupon cards, consumers receive discounts on various consumer products and the chance to win cash prizes. F.A.C.E. Trading licenses retail establishments and restaurants in over 30 states to carry the dispensing machines, with the coupon cards, for the use of their customers.

One such dispensing machine was located in "Captain's Pizza," a restaurant in West Ocean City, Maryland, licensed by F.A.C.E. Trading to have the machine. That particular machine offered consumers the option to purchase coupon cards or tickets giving them discounts on consumer products ranging from $5.00 to $30.00 from four companies which were Campbell's Soup, Dart World, Sports Bar Clothing and Zippo Brand Products. Different coupon cards related to different products, and the amounts of the discounts, as well as the conditions, varied. In operating the machine, the customer could select which company's products the coupon card would relate to. The coupon cards purchased from the machine also included pull-tabs offering consumers the chance to win cash prizes. The machine was located directly adjacent to a Maryland State Lottery machine. In the windows of Captain's Pizza and on the face of the Ad-Tab^TM machine were various advertisements, which in large, bold type informed consumers of the chance to win a cash prize by using the machine. Located on the side of the Ad-Tab^TM machine were mail-in cards, which customers could send in for a free chance to win the cash prizes. There was also a toll-free telephone number which could be called for a free entry. The free chance to win was limited to one entry per family per day.

In a letter to F.A.C.E. Trading's attorney dated May 20, 2002, Joel J. Todd, State's Attorney for Worcester County, informed the attorney for F.A.C.E. Trading that "I have instructed my investigator to see to it that the Ad-Tab dispenser located at Captain's Pizza at the White Marlin Mall be removed as soon as possible." In response, F.A.C.E. Trading instituted the present action by filing in the Circuit Court for Worcester County a complaint for a declaratory judgment and injunctive relief against the State's Attorney. F.A.C.E. Trading requested the court to declare that the Ad-Tab^TM machine and the coupon cards did not constitute illegal gaming and/or lottery and to enjoin the State's Attorney from prohibiting or interfering with the sales and marketing of the coupon cards in Captain's Pizza.

After commencement of the action, the State's Attorney, represented by the Maryland Attorney General's Office, filed a motion for summary judgment with supporting affidavits, asserting that the material facts were undisputed.³ One such affidavit was from Thomas V. Manzari, an investigator for the Maryland State Lottery Agency. Mr. Manzari stated that on March 14, 2002, he traveled to Captain's Pizza in response to a report filed by a field representative about the presence of an illegal lottery machine. Mr. Manzari stated that, upon arriving at Captain's Pizza, he "saw a pull-tab machine that had pull-tab tickets inside it. The machine displayed a sign that said you could win various amounts from $50 to $200." Mr. Manzari also stated that he inserted $20.00 into the machine and received 20 tickets. The 20 tickets consisted of four different types, one of which was "entitled `Double Money II.'" Four of the 20 tickets were one dollar winners, and he cashed in three of them, receiving three dollars from Terry Koshi, a person who identified herself as the manager of Captain's Pizza. According to Mr. Manzari, "Terry Koshi kept the three winning tickets after she paid me for them." Mr. Manzari further stated that "[t]he front of the dispenser machine did not refer to receipt of merchandise, discount coupons, or free tickets" and that he did not see any reference elsewhere on the machine or on the front of the tickets to those alleged offers. He said that the front of each ticket referred only to the chance to win cash prizes along with the logo of the companies offering the discount coupon. The product discount information was on the back of each ticket.

Additionally, the State attached the affidavits of Jeff R. Mayne, an investigator for the State's Attorney for Worcester County, and Ruth Geddie, a District Manager for the Maryland State Lottery Agency. Both Mr. Mayne and Ms. Geddie stated that the machine on the premises of Captain's Pizza dispensed pull-tab tickets for one dollar each, that the front of the machine contained an advertisement offering consumers the chance to win cash prizes, and that neither the front of the machine nor the fronts of the tickets contained any mention of product discounts, free tickets or receipt of merchandise. Mr. Mayne said that he "put $1.00 into the machine and received a ticket entitled `Double Money II,'" and that he "was able to choose between different styles of tickets." Mr. Mayne further stated that when he visited Captain's Pizza on March 20, 2002, there were free entry forms affixed to the side of the machine which could be used by consumers to obtain free chances to win cash prizes.

In its motion and supporting memorandum, the State argued that the Ad-Tab^TM machine constituted an illegal slot machine under Maryland Code (2002, 2004 Repl. Vol), § 12-301 of the Criminal Law Article. The State also argued that the game of chance involving the coupon cards and the machine constituted illegal gaming under § 12-101(d) of the Criminal Law Article, and constituted an illegal lottery under §§ 12-201 et seq. of the Criminal Law Article. The State requested the court to enter a declaratory judgment that the machines were illegal slot machines, and that the scheme constituted illegal gaming and/or lottery. The State argued that the Ad-Tab^TM machines and the cards themselves had all the elements of illegal gambling, namely that consideration is given for the chance to win a prize or reward. The State further alleged that the product discounts provided for on the backs of the coupon cards that were being sold were merely pretexts for illegal gambling activities.

F.A.C.E. Trading responded by filing its own motion for summary judgment and opposition to the State's motion, with supporting affidavits. F.A.C.E. Trading argued that the Ad-Tab^TM machines were not slot machines because they did not fit within the definition of "slot machine" set forth in § 12-301 of the Criminal Law Article. F.A.C.E. Trading further argued that the coupon cards did not constitute illegal gaming and/or lottery devices because they offered consumers the opportunity to purchase valuable products at discounts and that the chances to win cash prizes were merely incidental to the purchases of the products. F.A.C.E. Trading contended that the advertisements, some of which are contained in the record, made clear that the purpose of the machine was to dispense coupon cards for discounts on various products. Furthermore, F.A.C.E. Trading claimed that the existence of mailin cards and a toll-free telephone number, which consumers could use to obtain free chances to win the cash prizes, confirmed that the promotion did not constitute illegal gambling.

The advertisements, which F.A.C.E. Trading described in its motion and attached affidavits, were posters and placards in the windows of Captain's Pizza, inside the restaurant, and on the front of the machine. They informed consumers that coupons were available for such things as a ten dollar discount on a case of Campbell's Soup or Pork & Beans, thirty dollars in discounts on sports clothing from "Sports Bar," and discounts on merchandise from "Dart World."⁴ The signs also stated that no purchase was...