Interactive Media Ent. And Gaming Ass'n Inc v. Wingate

• Decision Date: 23 September 2010
• Docket Number: No. 2010-SC-000212-TG,2010-SC-000266-TG.,2010-SC-000212-TG
• Citation: 320 S.W.3d 692
• Parties: INTERACTIVE MEDIA ENTERTAINMENT AND GAMING ASSOCIATION, INC., Petitioner,v.Hon. Thomas D. WINGATE, Judge, Franklin Circuit Court; Jack Conway, Attorney General, Commonwealth of Kentucky, Respondents.andCommonwealth of Kentucky, ex rel. J. Michael Brown, Secretary, Justice and Public Safety Cabinet, Real Party In Interest,andInteractive Gaming Council, a Non-Profit Trade Association, Petitioner,v.Hon. Thomas D. Wingate, Judge, Franklin Circuit Court, Respondent.andCommonwealth of Kentucky, ex rel. J. Michael Brown, Secretary, Justice and Public Safety Cabinet, Real Party In Interest.
• Court: United States State Supreme Court — District of Kentucky

320 S.W.3d 692

INTERACTIVE MEDIA ENTERTAINMENT AND GAMING ASSOCIATION, INC., Petitioner,

v.Hon. Thomas D. WINGATE, Judge, Franklin Circuit Court; Jack Conway, Attorney General, Commonwealth of Kentucky, Respondents.andCommonwealth of Kentucky, ex rel. J. Michael Brown, Secretary, Justice and Public Safety Cabinet, Real Party In Interest,

and

Interactive Gaming Council, a Non-Profit Trade Association, Petitioner,

v.Hon. Thomas D. Wingate, Judge, Franklin Circuit Court, Respondent.andCommonwealth of Kentucky, ex rel. J. Michael Brown, Secretary, Justice and Public Safety Cabinet, Real Party In Interest.

Nos. 2010-SC-000212-TG, 2010-SC-000266-TG.

Supreme Court of Kentucky.

Sept. 23, 2010.

OPINION AND ORDER GRANTING TRANSFER AND DENYING PETITION

The Petitioners, Interactive Media Entertainment and Gaming Association (IMEGA) and Interactive Gaming Council (IGC), both seek to have their writ actions in the Court of Appeals transferred to this Court. The Court of Appeals recommended transfer of both actions. Since writ actions are original filings before the Court of Appeals, an appeal of its decision regarding the writ is the proper procedural mechanism to reach this Court, not a motion for transfer. However, given that this Court views this writ action as an attempt to bypass the procedural and substantive jurisdiction of the trial court, and since we and the Court of Appeals have already reviewed the record in this case on a previous writ action, we grant transfer. However, we deny the writ.

I. Background

This matter originated with an action by the Commonwealth in Franklin Circuit Court to seize 141 domain names, which the Commonwealth alleged to be hosting illegal internet gambling. The action was styled and conducted as an in rem proceeding because the Commonwealth was not suing anyone, but was instead trying to seize property-the intangible domain names. The trial court found that there was probable cause to believe that the websites were violating Kentucky gambling laws, and ordered seizure of the domain names. After learning of the seizure, several parties claiming an interest in the domain names came forward, through counsel. They sought to intervene in the action and to contest the seizure. Several of these parties purported to be the gambling domain names themselves, while others were gambling associations claiming an associational interest in contesting the seizure. The trial court denied standing to any of these parties to contest the seizure because they were not owners or registrants of the domain names, and therefore, did not have a legal interest in the matter. Without any adverse claimants, the trial court then set a forfeiture hearing to allow the actual registrants and owners of the domain names to come forward and contest the forfeiture. Denied at the trial court, the same parties seeking to intervene filed an original action at the Kentucky Court of Appeals, seeking a writ of prohibition. They claimed the trial court, by ordering seizure of the domain names, was acting outside its jurisdiction, which is one of the grounds for granting a writ. The Court of Appeals granted the writ in a 2-to-1 decision on the merits that the trial court did not have jurisdiction to order the seizure of the gambling domain name because they were not gambling devices. The opinion, as well as the concurrence and dissent, failed to adequately address that the parties' standing was also at issue in the writ action, as raised by the Commonwealth.

In March, 2010, this Court reversed the Court of Appeals. See Commonwealth ex rel. Brown v. Interactive Media Entertainment and Gaming Ass'n, Inc., 306 S.W.3d 32, 34 (Ky.2010). In so doing, this Court agreed with the trial court that neither the domain names themselves nor the gambling associations had established standing to contest the seizure. The domain names were the actual properties seized, so they could not contest their own seizure. Meanwhile, the gambling associations had not made any showing that they actually represented owners or registrants of the seized property, so they could not have associational standing. However, that opinion did not clearly delineate that by agreeing with the trial court's view of the standing of the Petitioners, this Court viewed standing to take a writ action as derivative of a party having a stake in the underlying action. That Opinion merely denied standing to proceed in that writ action.

Upon our reversal of the granting of the writ, the two gambling associations-IMEGA and IGC-filed subsequent writ petitions at the Court of Appeals. They claimed to have cured their standing defects by naming some of their members and including affidavits that these members are owners or registrants of some of the domain names. The Court of Appeals granted the associations' motions to recommend transfer of the case to this Court because the Court of Appeals had already ruled on the merits. We accept transfer and now deny the writ without further proceedings.

II. Discussion

A. Standing

The controlling point that was perhaps not clear in Commonwealth ex rel. Brown v. Interactive Media Entertainment and Gaming Ass'n, Inc. is that a party without standing, or a stake, in the lower court proceeding for which a writ is sought simply does not have standing to seek a writ against the lower court. Writ actions are not available to any party that might claim to have an interest in underlying litigation: such a party must have demonstrated a real and justiciable stake in the lower court proceeding, which in turn gives rise to a stake in the concomitant writ action.

At the point when the first writ action was filed in the Court of Appeals, the trial court had determined that the Petitioners were not the actual owners or registrants of the domain names, and therefore had no standing to intervene. Having been denied intervention, the Petitioners were not proper parties in the underlying action, and obviously had no standing to challenge, by writ action or otherwise, anything other than the lower court's standing determination. In the first writ action, instead of addressing the jurisdictional issues that had been raised at and addressed by the Court of Appeals, this Court reviewed the trial court's decision that the Petitioners had no standing. We agreed with the trial court's findings in this regard and overruled the Court of Appeals, which had prematurely addressed the merits of the trial court's jurisdiction to seize the domain names. Since Petitioners had no standing to challenge that jurisdiction, and instead could only challenge whether the trial court was correct in its determination as to their standing in the lower court, this Court denied the writ both substantively on the standing issue and procedurally on the jurisdiction issue.

However, in conclusory dicta, this Court created some confusion when it stated,

If a party that can properly establish standing comes forward, the writ petition giving rise to these proceedings could be re-filed with the Court of Appeals. The Court of Appeals could then properly proceed to the merits of the issues raised, or upon a proper motion, this Court could accept transfer of the case, as the merits of the argument have already been briefed and argued before this Court.

Interactive Media Entm't & Gaming Ass'n, Inc., 306 S.W.3d at 40.

While this Court believes it should have been apparent that it was referring to a potential writ action after the question of standing was heard and decided by the trial court on a renewed motion to intervene, the language can be subject to the interpretation implicit in the Petitioners' decision to proceed directly to the Court of Appeals after identifying an alleged domain name owner. No doubt, the Petitioners' interpretation was driven in part by this Court's statement that proof of standing “may be done by reference to the facts in the underlying litigation or a verified assertion, such as in an affidavit, attached to the petition.” Id. However, as the record demonstrates, neither of these options is workable at this point.

The Petitioners have attempted to proceed under the second option, specifically by filing with their renewed writ petition several affidavits claiming to identify members who own domain names subject to the seizure order. For example, IMEGA has included affidavits that purport to show that Yatahay, Ltd.-the lone member that group has identified-actually owns a seized domain. Yet, the Commonwealth takes issue with IMEGA's assertion and questions the adequacy of the affidavits, pointing to an unconventional and arguably improper notarization. Moreover, the Commonwealth has presented contrary evidence of another entity's ownership of the domain name. Of course, whether Yatahay actually owns the domain name is critical to IMEGA's assertion of standing. While this preliminary factual dispute may be a relatively simple one, it involves a fact finding mission that an appellate court, even one facing a writ petition, is not well suited to undertake.

Though this Court has on occasion noted that fact-finding by an appellate court may be required in the course of resolving a writ petition see, e.g. Newell Enterprises, Inc. v. Bowling, 158 S.W.3d 750, 758 n. 13 (Ky.2005) (noting that “because [an appellate court] acts as the trial court in original actions, such findings are necessary”), such claims have been made in an attempt to delineate when the various standards of review are to be used in a writ action and are arguably dicta. It is difficult to imagine a scenario where it would actually be appropriate for an appellate court to decide questions of fact where the relevant facts are disputed, especially when the court is faced with the type of limited record found in a writ action. As this Court has more recently noted, writ decisions are inherently difficult in large part...