Johnson v. Collins Entertainment Co., Inc., No. 3:97-2136-17.

CourtUnited States State Supreme Court of South Carolina
Writing for the CourtAnderson
Citation88 F.Supp.2d 499
Docket NumberNo. 3:97-2136-17.
Decision Date28 April 1999
PartiesJoan Caldwell JOHNSON, Bryce Anderson, Lorraine Witherspoon Baker, William Bell, Faye Blaylock, Sara Edell Boan, Mike Brewer, Mike Brown, Ronald Callahan, Sandra Coulter, Lisa Crum, Andreas Drutis, Darryl Bernard Epps, Buster Elfin Floyd, Deanna Kay Frans, William Joseph Harnett, Jr., George Henley, Loretta Jones, Margaret Locklear, Tammy Locklear, Linda McCleod, William McCormick, Hugh Meise, Patty Miller, Andrew Nobles, Gary Padgett, Mary Pinchback, Vardry Pittman, Albert J. Samra, Mason Skeenes, Danny Kay Smith, Amber Strickland, Charles Stubbs, Lonya Thigpen, James Thompson, Joseph Chester Walker, Jessie Williams, Valerie Williams, on behalf of themselves and all others similarly situated, Plaintiffs, v. COLLINS ENTERTAINMENT COMPANY, INC., Ace Amusement, LLC, American Amusement Company, Inc., American Amusement of Aiken, Inc., B & J Amusement, Best Amusement Co., Broyles & Lutz, Inc., CBA Games, Inc., Carousel Amusements, Coley, Inc., Drew Industries, Fast Freddies, Great Games, Inc., Greenwood Music Co., Inc., H & J of South Carolina, Inc., Holliday Amusement Company of Charleston, Inc., Hoyts Music Co., Inc., Huckleberry Amusement, Inc., Ingram Investments, J.M. Brown Amusement Co., Inc., Joytime Distributors & Amusement, MHJ Corporation, MHS Enterprises, Inc., Martin Coin Machine, Inc., McDonald Amusement Co., Midlands Gaming Corp., Pedroland, Inc., R.L. Jordan Oil Co. of North Carolina, Red Dot Amusements, Rosemary Coin Machines of Florence, Inc., Scott's Vending Inc. of Columbia, Sumter Petroleum Co., Tim's Amusement, Inc., Video-Matic Amusements, Inc., H. Hugh Andrews, II, Pamela A. Andrews, Dwayne I. Bohannon, J.M. Brown, Don E. Broyles, Grace E. Coley, Fred Collins, J. Samuel Cox, Kenneth G. Flowe, Carey Hardee, Scott G. Hogue, Lowell E. Holden, Patricia Holliday, Warren P. Holliday, Henry E. Ingram, Steven E. Lipscomb, Tim Mahon, Jimmy Martin, Jr., Cynthia McDonald, James McDonald, Allan Schaefer, David R. Simpson, Ron Simpson, Mickey H. Stacks, William Darwin Wheeler, Hershel L. Williamson, in their individual and corporate capacities as representatives of all others similarly situated, Defendants.
88 F.Supp.2d 499
Joan Caldwell JOHNSON, Bryce Anderson, Lorraine Witherspoon Baker, William Bell, Faye Blaylock, Sara Edell Boan, Mike Brewer, Mike Brown, Ronald Callahan, Sandra Coulter, Lisa Crum, Andreas Drutis, Darryl Bernard Epps, Buster Elfin Floyd, Deanna Kay Frans, William Joseph Harnett, Jr., George Henley, Loretta Jones, Margaret Locklear, Tammy Locklear, Linda McCleod, William McCormick, Hugh Meise, Patty Miller, Andrew Nobles, Gary Padgett, Mary Pinchback, Vardry Pittman, Albert J. Samra, Mason Skeenes, Danny Kay Smith, Amber Strickland, Charles Stubbs, Lonya Thigpen, James Thompson, Joseph Chester Walker, Jessie Williams, Valerie Williams, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
COLLINS ENTERTAINMENT COMPANY, INC., Ace Amusement, LLC, American Amusement Company, Inc., American Amusement of Aiken, Inc., B & J Amusement, Best Amusement Co., Broyles & Lutz, Inc., CBA Games, Inc., Carousel Amusements, Coley, Inc., Drew Industries, Fast Freddies, Great Games, Inc., Greenwood Music Co., Inc., H & J of South Carolina, Inc., Holliday Amusement Company of Charleston, Inc., Hoyts Music Co., Inc., Huckleberry Amusement, Inc., Ingram Investments, J.M. Brown Amusement Co., Inc., Joytime Distributors & Amusement, MHJ Corporation, MHS Enterprises, Inc., Martin Coin Machine, Inc., McDonald Amusement Co., Midlands Gaming Corp., Pedroland, Inc., R.L. Jordan Oil Co. of North Carolina, Red Dot Amusements, Rosemary Coin Machines of Florence, Inc., Scott's Vending Inc. of Columbia, Sumter Petroleum Co., Tim's Amusement, Inc., Video-Matic Amusements, Inc., H. Hugh Andrews, II, Pamela A.

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Andrews, Dwayne I. Bohannon, J.M. Brown, Don E. Broyles, Grace E. Coley, Fred Collins, J. Samuel Cox, Kenneth G. Flowe, Carey Hardee, Scott G. Hogue, Lowell E. Holden, Patricia Holliday, Warren P. Holliday, Henry E. Ingram, Steven E. Lipscomb, Tim Mahon, Jimmy Martin, Jr., Cynthia McDonald, James McDonald, Allan Schaefer, David R. Simpson, Ron Simpson, Mickey H. Stacks, William Darwin Wheeler, Hershel L. Williamson, in their individual and corporate capacities as representatives of all others similarly situated, Defendants.
No. 3:97-2136-17.
United States District Court, D. South Carolina, Columbia Division.
April 28, 1999.

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COPYRIGHT MATERIAL OMITTED

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MEMORANDUM OPINION ON PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT

ANDERSON District Judge.


Introduction

Late in the 1986 legislative session, a state senator successfully added a proviso to the 1986-87 South Carolina General Appropriations bill which carved out an exception to the state's 274 year old laws prohibiting gambling.1 This little-noticed, highly-technical, and slightly-ambiguous amendment to the anti-gambling statute provides that "coin-operated nonpayout [machines] with free play feature" are exempt from a state law which otherwise prohibits "any vending or slot machine ... or other device pertaining to games of chance."2

The South Carolina Supreme Court subsequently held that this proviso legitimized the payment of money to players of video gaming machines, as long as the money was dispensed by a person and not the machine.3 Since that ruling, South Carolina's video poker industry has grown exponentially. According to the most recent figures released by the South Carolina Department of Revenue, there are currently over thirty-four thousand video poker machines in South Carolina.4 The money wagered on these machines in calendar year 1998 totaled more than two and one-half billion dollars.5 In 1998, on average, each machine took in over eighty-seven thousand dollars in wagers. Furthermore, this translates into over six hundred sixty dollars being wagered on video poker by every man, woman, and child in South Carolina.6

In response to this explosive growth, the South Carolina General Assembly has made periodic attempts to regulate the industry, enacting laws designed to be a moderating influence on both the availability and attractiveness of the machines. For example, there is a restriction of five machines per single place or premises.7 The video poker industry has been successful in court challenges to some of these laws.8 It is one of these laws, limiting cash payouts to $125 per player per location, that is now before this court for interpretation and enforcement.

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Procedural History of Case

Plaintiffs, purporting to represent themselves and others similarly situated, initiated this action in state court in June 1997 seeking actual and punitive damages, as well as injunctive relief. Plaintiffs claim to be addicted gamblers. They assert a variety of claims against the defendants in this case, who comprise a substantial segment of the video poker industry in South Carolina. Plaintiffs contend, among other things, that defendants have violated various state laws and regulations, that these violations induced plaintiffs to gamble excessively, and that as a result, plaintiffs have sustained devastating economic losses of varying degrees, including personal bankruptcy, loss of homes, life savings, college savings, and the like. Plaintiffs also claim a variety of less tangible but nonetheless substantial consequential injuries, including emotional devastation and destroyed marriages. Because one of the plaintiffs' claims is under federal law — the Racketeer Influenced and Corrupt Organizations Act (RICO) — defendants removed the action to federal court, thus presenting this court with a hotly-contested controversy involving not only a federal racketeering claim, but also several thorny state law issues.9

In mid-1998, plaintiffs moved for a preliminary injunction on the $125 payout limit. At a status conference held to discuss this and other issues, this court raised the question of whether the plaintiffs would be able to post an adequate bond to secure a preliminary injunction, as required by Fed. R.Civ.P. 65(c). The question of an adequate bond became more acute when the South Carolina Attorney General, who had been allowed to intervene in the action to join all of plaintiffs' contentions, decided to withdraw except as to the lottery issue. He expressly withdrew from any attempt to seek interpretation or enforcement of the $125 payout limit, indicating to the court that it is his office's traditional practice to defer to the South Carolina Department of Revenue on such issues. Had the Attorney General remained aligned with the plaintiffs on this issue, the bond issue would have been a lesser factor because, in some circumstances, the state is not required to post a bond.

In light of these developments, plaintiffs decided not to pursue their request for a preliminary injunction, opting instead to conduct discovery on the $125 payout issue and then move for partial summary judgment and a permanent injunction10 enforcing the payout limit against eight defendants: Collins Entertainment Corporation, Inc., Fred Collins, Jr., R.L. Jordan Oil Co., MHS Enterprises, Inc., Mickey Stacks, Pedroland, Inc., Ingram Investments, Inc. and Henry E. Ingram.

Plaintiffs filed the present motion in late February, 1999. This court thereafter accorded the defendants two extensions of time within which to respond. After all briefs had been filed, the matter came before the court for oral argument on April 19, 1999.11 Although the motion is directed at only eight of the named defendants, the court permitted briefing and

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argument by all of the defendants in the case because of the potential consequences to them of an adverse ruling. After hearing nearly eight hours of oral argument on April 19, the court took the matter under advisement and indicated that it would announce its ruling on the injunction request the following day. On April 20, the court orally granted plaintiffs' motion for a permanent injunction and indicated that a written order would follow. The effective date of the ruling was stayed until ten days after the filing of a written order. This order memorializes the court's oral ruling of April 20, 1999.

Standard

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). It is well established that summary judgment should be granted "only when it is clear that there is no dispute concerning either the facts of the controversy or the inferences to be drawn from those facts." Pulliam Inv. Co. v. Cameo Properties, 810 F.2d 1282, 1286 (4th Cir.1987).

The party moving for summary judgment has the burden of showing the absence of a genuine issue of material fact, and the court must view the evidence before it and the inferences to be drawn therefrom in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962).

A party "cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another." Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985). Therefore, "[m]ere unsupported speculation ... is not enough to defeat a summary judgment motion." Ennis v. National Ass'n of Bus. & Educ. Radio, Inc., 53 F.3d 55, 62 (4th Cir.1995).

Summary judgment is particularly appropriate where claims rest on issues of legal interpretation and application of appropriate legal standards. See generally, Schwarzer, Hirsch & Barrans, The Analysis and Decision of Summary Judgment Motions, 139 F.R.D. 441, 456-57 (1992). Summary judgment motions may address fewer than all claims and may resolve only specified issues without resolving any claims in full. Fed.R.Civ.P. 54(b) & 56(d).

Facts

Viewed in the light most favorable to the defendants, there is clear and unequivocal evidence in the record demonstrating a widespread and systematic pattern by these...

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2 practice notes
  • Mims Amusement v. Law Enforcement Div., No. 26046.
    • United States
    • United States State Supreme Court of South Carolina
    • October 3, 2005
    ...beginning in 1986 into a multi-billion dollar business by its demise in July 2000. See e.g. Johnson v. Collins Entertainment Co., 88 F.Supp.2d 499 (D.S.C.1999) (outlining the below-the-radar development of $2.5 billion video poker industry in South Carolina, legislative attempts to regulate......
  • City of Charleston, S.C. v. Hotels.Com, Lp, C.A. No. 2:06-cv-1646-PMD.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • April 29, 2008
    ...in such a way as to avoid any absurd results that may arise from such an interpretation. See, e.g., Johnson v. Collins Entm't Co., 88 F.Supp.2d 499, 508 (D.S.C.1999) ("The court will reject an interpretation of a statute which leads to absurd results that could not have been intended. The c......
2 cases
  • Mims Amusement v. Law Enforcement Div., No. 26046.
    • United States
    • United States State Supreme Court of South Carolina
    • October 3, 2005
    ...beginning in 1986 into a multi-billion dollar business by its demise in July 2000. See e.g. Johnson v. Collins Entertainment Co., 88 F.Supp.2d 499 (D.S.C.1999) (outlining the below-the-radar development of $2.5 billion video poker industry in South Carolina, legislative attempts to regulate......
  • City of Charleston, S.C. v. Hotels.Com, Lp, C.A. No. 2:06-cv-1646-PMD.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • April 29, 2008
    ...in such a way as to avoid any absurd results that may arise from such an interpretation. See, e.g., Johnson v. Collins Entm't Co., 88 F.Supp.2d 499, 508 (D.S.C.1999) ("The court will reject an interpretation of a statute which leads to absurd results that could not have been intended. ......

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