Holliday Amusement Co. v. South Carolina

• Decision Date: 08 March 2005
• Docket Number: No. 02-1122.,02-1122.
• Citation: 401 F.3d 534
• Parties: HOLLIDAY AMUSEMENT COMPANY OF CHARLESTON, INCORPORATED; Warren P. Holliday, Plaintiffs-Appellants, v. State of SOUTH CAROLINA; Grady L. Patterson, Jr., in his official capacity as Treasurer of the State of South Carolina; Jim Hodges, Governor of South Carolina; Charles M. Condon, Attorney General; Robert M. Stewart, individually, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

401 F.3d 534

HOLLIDAY AMUSEMENT COMPANY OF CHARLESTON, INCORPORATED; Warren P. Holliday, Plaintiffs-Appellants, v. State of SOUTH CAROLINA; Grady L. Patterson, Jr., in his official capacity as Treasurer of the State of South Carolina; Jim Hodges, Governor of South Carolina; Charles M. Condon, Attorney General; Robert M. Stewart, individually, Defendants-Appellees.

No. 02-1122.

United States Court of Appeals, Fourth Circuit.

Argued: October 29, 2002.

Decided: March 8, 2005.

As Amended: March 23, 2005.

ARGUED:

Roger J. Marzulla, Marzulla & Marzulla, Washington, D.C., for Appellants. Robert Holmes Hood, Hood Law Firm, L.L.C., Charleston, South Carolina, for Appellees.

ON BRIEF

: Nancie G. Marzulla, Marzulla & Marzulla, Washington, D.C., for Appellants. Deborah Harrison Sheffield, Hood Law Firm, L.L.C., Charleston, South Carolina; Charles M. Condon, South Carolina Attorney General, Nathan Kaminski, Jr., Senior Assistant Attorney General, Office of the Attorney General of south carolina, Columbia, South Carolina, for Appellees.

Before WIDENER, WILKINSON, and KING, Circuit Judges.

Vacated and remanded with instructions by published opinion. Judge Widener wrote the opinion, in which Judge Wilkinson and Judge King concurred.

WIDENER, Circuit Judge:

The plaintiffs are Warren P. Holliday and Holliday Amusement Co., Inc., of which Warren Holliday is the sole owner and operator (Holliday). On January 19, 2001, Holliday filed a complaint in the United States District Court for the District of South Carolina, Charleston Division alleging that South Carolina's enactment and enforcement of 1999 S.C. Act No. 125, now codified as S.C.Code Ann. § 12-21-2710 (2000) (the Act), destroyed Holliday's business, resulting in an unconstitutional taking of his property in violation of the Constitution and 42 U.S.C. § 1983. Holliday sought declaratory and injunctive relief, or, in the alternative, damages arising out the unconstitutional taking. On December 21, 2001, the district court dismissed the action based on its finding that the court lacked subject matter jurisdiction because the major issues of the case had previously been litigated in Westside Quik Shop, Inc. v. Stewart, 341 S.C. 297, 534 S.E.2d 270 (2000), cert. denied, 531 U.S. 1029, 121 S.Ct. 606, 148 L.Ed.2d 518 (2000), thereby divesting the district court of jurisdiction under the Rooker-Feldman doctrine.

Because we believe that Johnson v. De Grandy, 512 U.S. 997, 114 S.Ct. 2647, 129 L.Ed.2d 775 (1994), decided that the Rooker-Feldman doctrine does not apply when the party asserting the claim in federal court was not a party to the state proceedings, and because the subsequent Supreme Court and Fourth Circuit cases citing Johnson have continued to uphold this standard, we vacate the district court's decision.

I.

Since 1976, Warren Holliday has owned and operated Holliday Amusement Co., Inc. in South Carolina, in which he sold video gaming machines throughout the State. On July 1, 1999, the State of South Carolina enacted S.C. Act No. 125, which made possession of video gaming machines illegal after July 1, 2000, and subjected the machines to forfeiture and destruction by the State. S.C.Code Ann. § 12-21-2710 (2000). At the time the Act went into effect, Holliday owned 532 operational video gaming machines. Immediately following its enactment, owners and lessees of video gaming machines filed suit in a South Carolina state court challenging the constitutionality of the Act. Holliday was not a party in the Westside Quik Shop, Inc. litigation, but was a member of the South Carolina Coin Operators Association which filed an amicus brief in the South Carolina court.¹ See Brief of Amici Curiae S.C. Coin Operators Ass'n, Inc., Westside Quik Shop, Inc. v. Stewart, 531 U.S. 1029, 121 S.Ct. 606, 148 L.Ed.2d 518 (2000) (00-433). The plaintiffs in Westside Quik Shop, Inc. sought an injunction against enforcement of the Act, claiming that it effected an unconstitutional taking of their property without just compensation. Westside Quik Shop, Inc., 534 S.E.2d at 271.

The South Carolina Supreme Court found that the Act did not constitute an unconstitutional taking without just compensation, and because that court did not find a Constitutional violation, it summarily disposed of the plaintiff's 42 U.S.C. § 1983 claim. Westside Quik Shop, Inc., 534 S.E.2d at 275. Thus, the court refused to enjoin enforcement of the Act. The Act went into effect as of July 1, 2000, as codified under S.C.Code Ann. § 12-21-2710.

On January 19, 2001, Holliday brought this action in federal district court, claiming that enactment and enforcement of the Act destroyed his business, resulting in millions of dollars of uncompensated loss, which constituted a taking in violation of the U.S. Constitution and 42 U.S.C. § 1983. He sought declaratory and injunctive relief, or, alternatively, damages arising out of the alleged uncompensated taking.

After reviewing the record of the Westside Quik Shop, Inc. case, the district court granted the motion to dismiss for lack of subject matter jurisdiction because it held the Rooker-Feldman doctrine applied. Holliday appealed. We vacate and remand.

On appeal, Holliday raises as the following principal issue that the Rooker-Feldman doctrine is inapplicable because Holliday was not a party to the Westside Quik Shop, Inc. litigation. He argues that he could not have been because his injury did not arise until after the South Carolina Supreme Court rendered its decision to enforce the Act, and Holliday's lawsuit is ripe for federal court review and federal court ripeness requirements do not implicate the Rooker-Feldman doctrine.

Expressing no opinion on the merits, we review de novo the district court's dismissal of Holliday's claims for lack of subject matter jurisdiction. See Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir.1999); Guess v. Bd. Of Med. Exam'rs of State of N.C., 967 F.2d 998, 1002 (4th Cir.1992).

II.

The Rooker-Feldman doctrine is a jurisdictional rule providing that lower federal courts generally cannot review state court decisions; rather, jurisdiction "lies exclusively with superior state courts, and, ultimately, the United States Supreme Court." See Allstate Ins. Co. v. W. Va. State Bar, 233 F.3d 813, 816 (4th Cir.2000). See also District of Columbia Ct.App. v. Feldman, 460 U.S. 462, 482-86, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983); Rooker v. Fid. Trust Co., 263 U.S. 413, 415-16, 44 S.Ct. 149, 68 L.Ed. 362 (1923). Under this doctrine, federal district courts are barred from considering issues already presented by a party and decided by a state court and also are barred from hearing Constitutional claims that are "`inextricably intertwined with' questions [so] ruled upon by a state court." Plyler v. Moore, 129 F.3d 728, 731 (4th Cir.1997). A federal claim is considered to be "inextricably intertwined" with a state court judgment when "the federal claim succeeds only to the extent that the state court wrongly decided the issues before it." Allstate Ins. Co., 233 F.3d at 819.

The first argument that Holliday asserts is that Rooker-Feldman is inapplicable because Holliday was not a party in the Westside Quik Shop, Inc. litigation. The Supreme Court decided this issue in Johnson v. De Grandy, 512 U.S. 997, 114 S.Ct. 2647, 129 L.Ed.2d 775 (1994) in favor of Holliday's argument, and neither any Supreme Court nor a fourth circuit decision since Johnson has lessened the impact of that holding.

In Johnson, separate groups of Hispanic and black voters claimed that Florida's reapportionment plan establishing legislative districts for the state Senate and House unlawfully diluted the voting strength of Hispanics and blacks in violation of § 2 of the federal Voting Rights Act of 1965. In a review required by the State Constitution, initiated by the Florida Attorney General, the Supreme Court of Florida, by declaratory judgment, held the plan valid under federal and state law. In re: Constitutionality of Senate Joint Resolution 2G, Special Apportionment Session, 597 So.2d 276 (Fla.1992). The Florida court, however, also acknowledged that time restraints prevented a full review and authorized any "protestor" to bring a Voting Rights Act challenge in that court. The plaintiffs, however, chose to bring their § 2 claim in federal district court. The United States also filed a similar complaint in the district court, alleging a § 2 violation. After consolidating the actions, the district court found in favor of the plaintiffs. Johnson, 512 U.S. at 1001-04, 114 S.Ct. 2647. On appeal, the Court rejected the State's argument that the claims of the United States should have been dismissed under the Rooker-Feldman rule because they had already been litigated before the Supreme Court of Florida. Johnson, 512 U.S. at 1005-06, 114 S.Ct. 2647. Accordingly, the Court denied the State's argument that the federal government's § 2 challenge should be dismissed under the Rooker-Feldman doctrine. The Court explained that "because the United States was not a party in the state court," the Rooker-Feldman doctrine did not apply and thus the United States' claim was not barred.

The Supreme Court in Johnson could hardly have stated more clearly that the Rooker-Feldman doctrine did not apply other than to parties in the state proceedings. And in the 14 subsequent Supreme Court cases which cite the Johnson decision, none dilute this requirement.² In the case at hand, Holliday was not a party to the Westside Quik Shop, Inc. state litigation.

This court also has not watered down that aspect of the Rooker-Feldman discussion found in Johnson. We have cited Johnson nine times, and have not disturbed the requirement of participation in the state proceeding.³ In particular, two cases from this court specifically state that the Rooker-Feldman doctrine is inapplicable in instances in which the person asserting the claim in federal court was not a party to the state proceeding. See, e.g.,...