Ibiz, LLC v. City of Hayward
| Citation | 962 F.Supp.2d 1159 |
| Decision Date | 15 August 2013 |
| Docket Number | Case No. C 13–1537 SC |
| Parties | IBiz, LLC, Plaintiff, v. City of Hayward, Defendant. |
| Court | U.S. District Court — Eastern District of California |
OPINION TEXT STARTS HERE
John H. Weston, G. Randall Garrou, Jerome H. Mooney, Weston, Garrou, and Mooney, 12121 Wilshire Blvd., Suite 525, Los Angeles, CA, for Plaintiff.
Michael Gregory Vigilia, City Attorney's Office, City of Hayward, 777 B Street, 4th Floor, Hayward, CA, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
Now before the Court is Plaintiff IBiz, LLC's (“Plaintiff”) motion for a preliminary injunction against Defendant City of Hayward (“Defendant” or “City”). ECF No. 19 (“Mot.”). The case is related to No. 13–1212 (the “Net Connection Case”), and the parties often incorporate documents from that case into their papers. ECF Nos. 20 (“Opp'n”), 32 (“Reply”). Concurrently with this Order, the Court issued an order denying Net Connection's motion for a preliminary injunction in the Net Connection Case. Net Connection Case, ECF No. 54 (“Net Connection Order”). The Court incorporates its findings from the Net Connection Order into this one, except that as to the Figure 8 System used by IBiz, there is not a separate pool for each game theme played, but instead, there are separate pools determined by the number of points utilized to enter. Thus, in the Figure 8 System, the same pool, e.g. the “50 point pool,” may be accessed by multiple games.
The parties also agreed to have this motion determined without oral argument, 1 and the Court finds that decision appropriate per Civil Local Rule 7–1(b). For the reasons explained in this Order, the Court GRANTS Plaintiff's motion for a preliminary injunction and enters an injunction, detailed below.
The following facts are taken from the parties' briefs and accompanying declarations and requests for judicial notice, which the Court grants under Federal Rule of Evidence 201. The parties also incorporate some facts from the Net Connection Case, and since the two cases are so similar, the Court often refers to its Order discussing that case's more extensive record.
Plaintiff describes itself as an Internet café and business center, located in downtown Hayward. Mot. at 3–4. (The Court refers to Plaintiff's physical location as “IBiz Hayward”). Its business is very much like Net Connection's: it sells computer rental time, which includes Internet access and an array of computer-based programs and services. See Net Connection Order at 2–3. Also like Net Connection, Plaintiff uses a promotional sweepstakes program to promote its services. Mot. at 4–5; Net Connection Order at 3–4.
While Plaintiff does not fully describe the process through which it obtained a business license from Defendant, the parties agree that Plaintiff somehow obtained one and that the situation is almost identical to Net Connection's. See Mot. at 7–8; Opp'n at 19–21; Net Connection Order at 5–7. In other words, Plaintiff applied for and obtained a license through the usual channels, as Net Connection did, and the Court presumes that this means Plaintiff's business license was also approved from a land use perspective. See Net Connection Order at 5–7, 18–20.
Plaintiff is located in Hayward and is therefore subject to the same zoning laws and regulations as Net Connection. Its case is therefore based on two ordinances that Defendant enacted between February and April 2013. The first is Ordinance No. 13–03, which was an interim urgency ordinance adopted on February 20, 2013 under California Government Code section 65858. See Net Connection Order at 10. The second is Ordinance No. 13–05, which is an extension of Ordinance No. 13–03 that the City Council unanimously adopted on April 2, 2013 after providing notice on March 22 and a hearing on April 2. ECF No. 18 (“Pl.'s RJN”) Ex. 2 (“Ordinance No. 13–05”); see also Net Connection Order at 10–12.2
Ordinance No. 13–05, the extended Ordinance and the operative law at this point, has several relevant parts. First, Ordinance No. 13–05 defines “Computer Gaming and Internet Access Businesses” as follows:
... [A]n establishment that provides one or more computers or other electronic devices for access to the World Wide Web, Internet, e-mail, video games or computer software programs that operate alone or networked (via LAN, WAN, wireless access or otherwise) or that function as a client/server program, and which seeks compensation or reimbursement, in any form, from users. “Computer Gaming and Internet Access Business” shall also be synonymous with a personal computer (“PC”) café, Internet café, cyber café, sweepstakes gaming facilities, business center, Internet sales business and Internet center with Internet sweepstakes-type games....
The moratorium's scope, as to Computer Gaming and Internet Access Businesses, is set out here:
...[F]rom and after the effective date of this Ordinance, no permit or any other applicable license or entitlement for use, including but not limited to, the issuance of a business license, business permit, building permit, use permit or zoning text amendment shall be approved or issued for the establishment or operation of Computer Gaming and Internet Access Businesses in the City of Hayward. Additionally, Computer Gaming and Internet Access Businesses are hereby expressly prohibited in all areas and zoning districts in the City.
Ordinance No. 13–05 also declares Computer Gaming and Internet Access Businesses to be nuisances:
The establishment, maintenance or operation of a Computer Gaming and Internet Access Business as defined herein with[in] the City limits of the City of Hayward is a public nuisance. Violations of this Ordinance may be enforced by any applicable law, including but not limited to injunctions, administrative citations or criminal penalties.
On April 5, 2013, shortly after the Court entered a temporary restraining order for Net Connection, Net Connection Case ECF No. 13, Plaintiff sued Defendant, and one week later it amended its complaint. ECF Nos. 1 (“Compl”), 5 (“FAC”). The Court related this case to the Net Connection Case on April 15, 2013, and on May 7, 2013, Plaintiff moved for a preliminary injunction.
In Plaintiff's FAC, it asserts nine causes of action against Defendant:
(1) violation of procedural due process;
(2) violation of substantive due process;
(3) violation of equal protection based on the Ordinance;
(4) violation of equal protection based on allegedly discriminatory enforcement of the California lottery statute, Cal. Pen. Code § 319;
(5) a facial challenge to Ordinance No. 13–03 based on an alleged violation of the First Amendment and the California Constitution's free speech provisions;
(6) injunctive relief prohibiting Defendant's enforcement of California's slot machine and lottery statutes, Cal. Pen. Code §§ 330a, 330b, 330.1 (slot machine statutes), 319 (lottery statute);
(7) in the alternative, injunctive relief prohibiting threatened ex parte mass seizures of Plaintiff's computers;
(8) declaratory judgments that Plaintiff's operation of business is permissible or a legal nonconforming use, and that its sweepstakes software is legal and permissible under California law; and
(9) petition for a writ of mandate and stay.
Compl. ¶¶ 37–125.
A plaintiff seeking a preliminary injunction must establish (1) that it is likely to succeed on the merits, (2) that it is likely to suffer irreparable harm absent preliminary relief, (3) that the balance of equities tips in its favor, and (4) that an injunction is in the public interest. Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008).
The Ninth Circuit has formulated a version of the preliminary injunction test in which “serious questions going to the merits” and a balance of hardships tipping toward the plaintiff can support the issuance of a preliminary injunction, so long as there is a likelihood of irreparable injury and the injunction is in the public interest (that is, so long as the plaintiff makes a showing on all four prongs of the Winter test). See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131–33 (9th Cir.2011). In other words, under this formulation, a stronger showing under one factor could offset a weaker showing for another, but a plaintiff must still satisfy every Winter factor. Id. at 1135.
IV. DISCUSSIONA. Claims 1–4, 8, and 9
Plaintiff's Claims 1–4, 6, 8, and 9 are virtually identical to the claims at issue in the Net Connection Case. The Court will not restate what it explained at length in the Net Connection Order, because the Court finds no material differences in the facts or law that the parties discuss in this case.
The Court adopts its findings and reasoning from the Net Connection Order and finds that Plaintiff has failed to show a likelihood of success on Claims 1–4, 8, or 9 in its FAC, since, in summary, (1) Defendant did not act ultra vires, arbitrarily, or unreasonably in enacting the Ordinances or declaring Defendant's business a nuisance; (2) Defendant did not deny Plaintiff procedural due process; (3) Defendant did not violate Plaintiff's right to equal protection; and (4) the Court need not address any of Plaintiff's arguments about the California lottery or slot machine statutes, since a decision on those issues would not resolve any actual controversies and would result in the Court making an impermissible advisory ruling and deciding unnecessary issues of state law. See Net Connection Order at 15–33.
B. Claims 5–7
Plaintiff's Claims 5, 6, and 7 are not addressed in the Net Connection Order. Claim 5 is a First Amendment challenge to the Ordinance. Claims 6 and 7 request that the Court enjoin certain types of ex parte or summary mass seizures of computers from Plaintiff.
i. Plaintiff's First Amendment...
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