Gallas v. Alexander
| Decision Date | 27 September 2007 |
| Docket Number | No. 06-956.,06-956. |
| Citation | 371 Ark. 106,263 S.W.3d 494 |
| Court | Arkansas Supreme Court |
| Parties | Glenn GALLAS, Terry Mayfield, & Richard McGrew, Appellants, v. Cecil ALEXANDER, Chairman, Arkansas Racing Commission; Oaklawn Jockey Club, Inc.; Arkansas Horsemen Benevolent & Protective Assoc., Inc.; & Southland Racing Corp., Appellees. |
Appellants Glenn Gallas, Terry Mayfield, and Richard McGrew appeal from the circuit court's order granting summary judgment to appellees Cecil Alexander, Chairman of the Arkansas Racing Commission (the Commission); Oaklawn Jockey Club, Inc.; and Arkansas Horsemen Benevolent & Protective Association, Inc. (AHBPA) and dismissing appellants' complaint, which alleged that Act 1151 of 2005, permitting the public's authorization of wagering on electronic games of skill at horse and greyhound racing parks, was unconstitutional.1 Appellants raise three points on appeal: (1) that the circuit court erred in finding that Act 1151 was not an unlawful delegation of power by the legislature to the racing venues; (2) that the circuit court erred in finding that Act 1151 was not an unlawful delegation of power from the legislature to the Commission; and (3) that the circuit court erred in finding that Act 1151 was not unconstitutional as special or local legislation. We affirm.
On March 22, 2005, Act 1151 of 2005 became law without the signature of then-Governor Mike Huckabee. The Act provided, in part, that:
cities or counties where horse racing or greyhound racing parks are located in Arkansas should have the opportunity to address these issues and promote economic development, tourism, and agribusiness by allowing the voters in these cities or counties to have the opportunity by local election to authorize horse racing or greyhound racing parks in their communities to offer wagering on additional forms of electronic games of skill.
Act 1151 of 2005, § 1 (now codified at Ark.Code Ann. § 23-113-101(c) (Supp. 2005)). The Act amended Title 23 of the Arkansas Code and established Chapter 113, entitled Wagering on Electronic Games of Skill Conducted by Horse Racing and Greyhound Racing Franchisees, Subject to Approval at Local Option Election. See Act 1151 of 2005, § 1. The Act set forth legislative findings explaining the basis for the legislation, see Ark.Code Ann. § 23-113-101, and named the legislation the "Local Option Horse Racing and Greyhound Racing Electronic Games of Skill Act." See Ark.Code Ann. § 23-113-102 (Supp.2005).
On December 6, 2005, appellants filed a complaint and petition for declaratory judgment, challenging the legislation.2 In it, appellants claimed that the Act was invalid in that it unlawfully delegated the legislature's authority to two private entities, namely Southland Racing Corporation, a greyhound racetrack in West Memphis, Arkansas, and Oaklawn Jockey Club, a horse racetrack in Hot Springs, Arkansas, to determine whether a county-wide or city-wide election should be held on wagering on electronic games of skill.3 It further alleged that the Act constituted an unlawful delegation of power to the Commission, in conferring upon the Commission the power to decide what constitutes an electronic game of skill. Finally, the complaint asserted that the legislation constituted special legislation. In a first-amended petition, appellants added additional claims. Specifically, appellants alleged an equal-protection claim, a monopolies claim, and petitioned for a preliminary and permanent injunction.
On February 1, 2006, appellee Oaklawn moved for summary judgment. In its motion, Oaklawn asserted that appellants' claims were fatally flawed and must be dismissed, on the following bases: (1) the plaintiffs were estopped from contesting the constitutionality of Act 1151 because they failed to challenge it by filing suit before the election; (2) Act 1151 was not special or local legislation; (3) Act 1151 did not improperly delegate legislative power; (4) there was no improper monopoly; (5) there was no equal-protection violation; (6) Arkansas Constitutional Amendment 46 permitted such regulation to promote horse racing in Hot Springs; (7) plaintiffs failed to exhaust their administrative remedies; (8) plaintiffs lacked standing; (9) the complaint failed to state facts upon which relief could be granted; (10) plaintiffs failed to follow statutory election-contest procedure; (11) Arkansas law prohibited amending of an election-contest complaint; (12) venue was not proper as to all parties; and (13) the circuit court lacked subject-matter jurisdiction. Appellants responded.
On February 13, 2006, the AHBPA moved to intervene in the matter, and appellants responded in opposition to the motion. On March 6, 2006, the circuit court held a hearing on the motion to intervene, which the circuit court granted. Then, on March 16, 2006, appellants moved for summary judgment. In the motion, appellants asserted that Act 1151 was unconstitutional for the following reasons: (1) Act 1151 unconstitutionally delegated authority to Oaklawn; (2) Act 1151 unconstitutionally delegated power to the Commission; (3) Act 1151 was special legislation because it arbitrarily disenfranchised the residents of Garland County; (4) Act 1151 was special legislation because it only gave gambling rights to racetracks and, more specifically, to Oaklawn and Southland and no other persons or businesses in the State of Arkansas; (5) Act 1151 violated equal protection of the laws of Arkansas; and (6) Act 1151 created an illegal monopoly. On March 30, 2006, the Commission filed its motion for summary judgment. In addition to the reasons set forth by Oaklawn in its summary-judgment motion, the Commission asserted that the Act was constitutional for two additional reasons: (1) the franchise holder had not been delegated the power to make the law; and (2) the legislature provided sufficient oversight by the Commission and reasonably comprehensive guidance to audit the franchise holder's limited discretionary authority. With respect to determining whether a game constituted an electronic game of skill, the Commission maintained that the Act was constitutional because it conveyed sufficient direction to the Commission when measured by common understanding and practice. Finally, the Commission claimed that the Act did not constitute special legislation, did not violate equal protection, and did not authorize a monopoly because Oaklawn and Southland were not given the exclusive right to conduct wagering on electronic games of skill. On April 6, 2006, the AHBPA moved to adopt and join in the summary-judgment motions filed by Oaklawn and the Commission.
On April 14, 2006, the parties filed a stipulation to undisputed facts, and on April 21, 2006, the circuit court held a hearing on the cross-motions for summary judgment. At the conclusion of the hearing, the circuit court took the matter under advisement. On May 2, 2006, the circuit court filed its memorandum opinion. In it, the circuit court first found that the matter could not be characterized as an election contest, which should have been brought before the election. It then ruled that an exception to the rule of exhausting administrative remedies applied, since there were no disputed facts for the parties to present and the analysis required consisted solely of applying the law to the undisputed facts and rendering a decision. Next, the circuit court dismissed appellants' claims alleging an improper monopoly and an equal-protection violation, finding that appellants lacked standing to make both challenges. That being said, the circuit court found that appellants did have standing to challenge the constitutionality of the Act as county voters that may have suffered harm by the citywide-only election. With respect to venue, the circuit court found that venue was proper as each of the remaining litigants stipulated to that.
Next, the circuit court found that the General Assembly did not delegate its power to make law, despite the extent to which the statute permitted franchise holders to determine the venue of the election, as it did not allow the franchise holder or the local voters any discretion in determining what the law was or would be with respect to wagering on electronic games of skill. In addition, the circuit court found that the conditions put in place by the General Assembly, which must be complied with after the election, demonstrated that the franchise holder did not have sole discretion in picking the forum. As to appellants' allegation that the Act impermissibly delegated legislative authority to the Commission, the circuit court found that making a factual determination as to whether a particular electronic game has an element of skill or not was clearly an administrative-agency function. The circuit court also found that the legislative definition of "electronic games of skill" conveyed sufficient direction to the Commission when making such a determination. Finally, the circuit court concluded that Act 1151 was constitutional because the rational-basis test was satisfied and it further found that the General Assembly's reasoning was rational with respect to why...
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