ROUSSO v. State of Wash., 83040-1.

• Decision Date: 23 September 2010
• Docket Number: No. 83040-1.,83040-1.
• Citation: 239 P.3d 1084
• Court: Washington Supreme Court
• Parties: Lee H. ROUSSO, Petitioner, v. STATE of Washington, Respondent.

239 P.3d 1084

Lee H. ROUSSO, Petitioner,

v.STATE of Washington, Respondent.

No. 83040-1.

Supreme Court of Washington,En Banc.

Argued May 27, 2010.

Decided Sept. 23, 2010.

COPYRIGHT MATERIAL OMITTED.

Lee Howard Rousso, The Law Office of Lee H. Rousso, Seattle, WA, for Petitioner.

Jerry Alan Ackerman, H. Bruce Marvin, Office of the Attorney General, Olympia, WA, for Respondent.

Jeffrey L Fisher, Roger Ashley Leishman, Davis Wright Tremaine, L.L.P., Seattle, WA, amicus counsel for Cheryl Blake, John Blake, Rob Esene & Jim Gauley.

Paul Douglas Swanson, Lane Powell PC, Seattle, WA, Thomas C. Goldstein, Issac J. Lidsky, Jonathan H. Eisenman, Akin Gump Strauss Hauer & Feld, L.L.P., Washington, DC, amicus counsel for Poker Players Alliance.

SANDERS, J.

¶ 1 The question before this court is not whether Internet gambling, including playing poker on-line, should be illegal. That determination is reserved to the legislature, and the legislature addressed the issue by enacting and amending RCW 9.46.240, which criminalizes the knowing transmission and reception of gambling information by various means, including use of the Internet. Since sending and receiving gambling information is illegal, Internet gambling in the state of Washington is effectively banned. ¹

¶ 2 It is not the role of the judiciary to second-guess the wisdom of the legislature, which enacted this ban. The court has no authority to conduct its own balancing of the pros and cons stemming from banning, regulating, or openly permitting Internet gambling. See Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 470, 101 S.Ct. 715, 66 L.Ed.2d 659 (1981) (“[I]t is not the function of the courts to substitute their evaluation of legislative facts for that of the legislature.”); Ferguson v. Skrupa, 372 U.S. 726, 730, 83 S.Ct. 1028, 10 L.Ed.2d 93 (1963) (“[C]ourts do not substitute their social and economic beliefs for the judgment of legislative bodies, who are elected to pass laws.”).

¶ 3 The only issue before this court is whether Washington's ban on Internet gambling is an unconstitutional infringement of the dormant commerce clause. See U.S. Const. art. I, § 8, cl. 3. The commerce clause grants Congress the authority “[t]o regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” Id. The Supreme Court interpreted a dormant commerce clause from this text, reasoning since Congress has the power to regulate interstate commerce, states are precluded from doing so by enacting laws or regulations that excessively burden interstate commerce. E.g., Maine v. Taylor, 477 U.S. 131, 137, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986).

¶ 4 Determining whether Washington's ban on Internet gambling violates the dormant commerce clause is a multistep analysis. Outlined briefly, we must first determine whether Congress has granted the states authority to regulate Internet gambling. If it has, the dormant commerce clause does not apply and RCW 9.46.240 is upheld. See Ne. Bancorp, Inc. v. Bd. of Governors, 472 U.S. 159, 174, 105 S.Ct. 2545, 86 L.Ed.2d 112 (1985).

¶ 5 If Congress has not, the dormant commerce clause applies, and we must determine (a) whether the language of the statute openly discriminates against out-of-state entities in favor of in-state ones or (b) whether the direct effect of the statute evenhandedly applies to in-state and out-of-state entities. Bostain v. Food Express, Inc., 159 Wash.2d 700, 718, 153 P.3d 846 (2007).

¶ 6 If the statute does not openly discriminate and applies evenhandedly, it does not violate the dormant commerce clause if (1) there is a legitimate state purpose and (2) the burden imposed on interstate commerce is not “ ‘clearly excessive’ ” in relation to the local benefit. State v. Heckel, 143 Wash.2d 824, 832-33, 24 P.3d 404 (2001) (quoting Franks & Son, Inc. v. State, 136 Wash.2d 737, 754, 966 P.2d 1232 (1998)); accord Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970).

¶ 7 If the statute openly discriminates or does not apply to in-state and out-of-state entities evenhandedly, it is upheld only if it is necessary to achieve an important state interest unrelated to economic protectionism. Mt. Hood Beverage Co. v. Constellation Brands, Inc., 149 Wash.2d 98, 110, 63 P.3d 779 (2003) (citing New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 274, 276, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988)).

FACTS AND PROCEDURAL HISTORY

¶ 8 Lee Rousso, a Washington resident, gambled by playing poker on-line and wishes to do so again, but Washington law prohibits it. Rousso sought a declaratory judgment that RCW 9.46.240 is unconstitutional, arguing the statute violates the dormant commerce clause as a state regulation impermissibly burdening interstate and international commerce. The trial court granted summary judgment in favor of the State, holding the statute is constitutional. The Court of Appeals affirmed. Rousso v. State, 149 Wash.App. 344, 347, 204 P.3d 243, review granted, 166 Wash.2d 1032, 217 P.3d 337 (2009).

ANALYSIS

I. Has Congress expressly authorized the state regulation of Internet gambling?

¶ 9 Congress has the authority to regulate matters affecting interstate commerce and also the authority to delegate such regulation to the states. See Ne. Bancorp, Inc., 472 U.S. at 174, 105 S.Ct. 2545. If Congress grants the states authority to regulate a certain matter, a state's regulation is consistent with the commerce clause. Id. “[B]ecause of the important role the Commerce Clause plays in protecting the free flow of interstate trade,” Congress' delegation of that authority must be “ ‘unmistakably clear.’ ” Taylor, 477 U.S. at 138-39, 106 S.Ct. 2440 (quoting South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 91, 104 S.Ct. 2237, 81 L.Ed.2d 71 (1984)).

¶ 10 Here, the State argues two Congressional acts manifest “unmistakably clear” intent to delegate to the states the authority to regulate on-line gambling. Neither of these acts manifests such intent. The acts cited recognize and expressly preserve a state's authority to criminalize some or all gambling activities within the state's borders, but nothing more.

¶ 11 The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), codified as 31 U.S.C. §§ 5363-5367, prohibits any person engaged in the business of gambling from accepting money in any form for participation in unlawful Internet gambling. Id. § 5363. The UIGEA recognizes that some types of bets are rendered unlawful under state law, id. § 5362(10)(A), and clarifies that it does not alter any state gambling laws, id. § 5361(b). Nowhere does the UIGEA permit the states to regulate gambling activities outside their borders or without regard to the commerce clause.

¶ 12 The federal wire act of 1961 (Wire Act) criminalizes the use of wire communication facilities ² to place bets through interstate or foreign commerce. 18 U.S.C. § 1084(a). The Wire Act then clarifies it does not prevent transmission of information assisting the placement of bets from a state where the bet is legal to another state where it is legal. 18 U.S.C. § 1084(b). Again, the Wire Act recognizes the states' authority to regulate the type of gambling permitted within its borders, but does not delegate any authority to regulate interstate commerce with impunity.

¶ 13 Congress has not delegated to the states its authority to regulate interstate Internet gambling. The dormant commerce clause is applicable here, as the Court of Appeals correctly held. See Rousso, 149 Wash.App. at 351-57, 204 P.3d 243.

II. Does RCW 9.46.240, ³ by its language or effect, discriminate against interstate commerce in favor of in-state economic interests?

¶ 14 Because a statute that discriminates against interstate commerce is subject to heavier scrutiny under the dormant commerce clause, we must first determine whether RCW 9.46.240 discriminates in its language or direct effect. ⁴ See, e.g., Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986); Bostain, 159 Wash.2d at 718, 153 P.3d 846. Here, the language of RCW 9.46.240 is not discriminatory; it equally prohibits Internet gambling regardless of whether the person or entity hosting the game is located in Washington, another state, or another country.

¶ 15 Neither does RCW 9.46.240 have a direct discriminatory effect on interstate commerce. The statute prohibits Internet gambling evenhandedly, regardless of whether the company running the web site is located in or outside the state of Washington. See Brown-Forman Distillers Corp., 476 U.S. at 579, 106 S.Ct. 2080. The effects imposed on in-state and out-of-state entities engaging or that would engage in Internet gambling are the same. See CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 87-88, 107 S.Ct. 1637, 95 L.Ed.2d 67 (1987); Clover Leaf Creamery Co., 449 U.S. at 471-72, 101 S.Ct. 715. RCW 9.46.240 is not discriminatory under the dormant commerce clause.

¶ 16 Rousso argues RCW 9.46.240 is discriminatory because the Internet gambling ban excludes Internet gambling web sites, all of which are out-of-state businesses, ⁵ from the Washington market while leaving untouched an alternative service- in-state, “brick and mortar” (i.e., where individuals are physically present) gambling businesses. This argument misconstrues and misapplies the test under the dormant commerce clause in several ways.

¶ 17 First, Rousso misapprehends what constitutes a direct discriminatory effect on interstate commerce. The question is how the effects of the ban are imposed on in-state and out-of-state entities, not what the effect is on those entities' revenue. The ban on Internet gambling has the same effect on all entities, regardless of origin: a ban on the transfer of gambling information via the Internet.

¶ 18 The Supreme Court addressed this distinction in CTS Corp., 481 U.S. 69, 107 S.Ct. 1637. There, state regulations hindering hostile takeovers of Indiana...