State ex rel. Walgate v. Kasich
| Decision Date | 27 June 2017 |
| Docket Number | No. 16AP–737,16AP–737 |
| Citation | 2017 Ohio 5528,93 N.E.3d 417 |
| Parties | STATE EX REL. Robert L. WALGATE, Jr., Plaintiff–Appellee, [Frederick C. Kinsey, Plaintiff–Appellant], v. John R. KASICH et al., Defendants–Appellees. |
| Court | Ohio Court of Appeals |
On Brief: Black, McCuskey, Souers & Arbaugh, Thomas W. Connors and James M. Wherley, Canton, for appellant Frederick C. Kinsey. Argued: Thomas W. Connors.
On Brief: Michael DeWine, Attorney General, and Tiffany L. Carwile, for appellee John R. Kasich. Argued: Tiffany L. Carwile.
On Brief: Michael DeWine, Attorney General, Peter M. Thomas, Charles E. Febus and Micahel A. Rzymek, Columbus, for appellees Ohio Casino Control Commission, Chairman Jo Ann Davidson, Vice Chairman June E. Taylor, Executive Director Matt Schuler, and Commissioners Martin R. Hoke, Ranjan Manoranjan, Will Lucas, John S. Steinhauer, and McKinley E. Brown.
On Brief: Calfee, Halter & Griswold LLP, Christopher S. Williams, James F. Lang, Matthew M. Mendoza and Alexander B. Reich, Cleveland, for intervening appellees Jack Ohio LLC, JACK Cleveland Casino LLC, and JACK Cincinnati Casino LLC.
On Brief: Ice Miller, LLP, Matthew L. Fornshell, John H. Oberle and Albert G. Lin, Columbus, for intervening appellees Central Ohio Gaming Ventures, LLC and Toledo Gaming Ventures, LLC.
DECISION
{¶ 1} Plaintiff-appellant, Frederick C. Kinsey ("appellant"), appeals from the September 26, 2016 judgment of the Franklin County Court of Common Pleas, granting defendants-appellees, John R. Kasich, Governor of Ohio et al. and intervening defendants-appellees, Ohio Gaming Ventures, LLC's et al. (collectively "appellees") motions for judgment on the pleadings. For the reasons that follow, we affirm the judgment of the trial court.
{¶ 2} This case originated on October 21, 2011 as a multi-plaintiff, multi-claim challenge to state constitutional, legislative, and administrative provisions related to gambling in the state both at casinos and race tracks. On January 3, 2012, the plaintiffs filed an amended complaint naming as defendants, Governor John R. Kasich; the State Lottery Commission; the interim director and members of the State Lottery Commission; the Casino Control Commission; the chairman, vice chairman, executive director, and members of the Casino Control Commission, and Ohio Tax Commissioner Joseph W. Testa ("state defendants"). (Am. Compl. at ¶ 11–20.) State ex rel. Walgate v. Kasich , 147 Ohio St.3d 1, 2016-Ohio-1176, 59 N.E.3d 1240, ¶ 7. The amended complaint raised 17 claims. Id . at ¶ 8. The final claim in the amended complaint is that Article XV, Section 6 of the Ohio Constitution and related legislative enactments violate the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution by granting a monopoly to the gaming operators whom the state approved. Id . at ¶ 10.
{¶ 3} A number of gaming operators filed motions to intervene as well as motions for judgment on the pleadings. Id. at ¶ 12. The trial court granted the motions to intervene. (Feb. 24, 2012 Decision and Entry.).
{¶ 4} The state defendants moved the trial court to dismiss the entire action for lack of standing and failure to state a claim upon which relief can be granted pursuant to Civ.R. 12(B)(6). State ex rel. Walgate v. Kasich , 147 Ohio St.3d 1, 2016-Ohio-1176, 59 N.E.3d 1240 at ¶ 13.
{¶ 5} The trial court granted the state's motion to dismiss for lack of standing and this court affirmed the trial court's judgment. Id . at ¶ 14, 15 ; State ex rel. Walgate v. Kasich , 2013-Ohio-946, 989 N.E.2d 140. The standing challenge was appealed to the Supreme Court of Ohio, and the court concluded that one plaintiff, appellee Frederick Kinsey, had standing to maintain his equal protection claim. State ex rel. Walgate v. Kasich , 147 Ohio St.3d 1, 2016-Ohio-1176, 59 N.E.3d 1240 at ¶ 1, 52. Appellee had alleged in the amended complaint that:
He is being deprived of the right to exercise the trade or business of casino gaming in Ohio by Art. XV, § 6 (C) of the Ohio Constitution. He would engage in casino gaming in Ohio but for the provisions of Art. XV, § 6(C) which grant a special and exclusive privilege to engage in casino gaming in Ohio to two gaming corporations.
{¶ 6} The Supreme Court of Ohio remanded the case to the trial court stating:
We specifically reverse the Tenth District's judgment only to the extent that it affirms the trial court's dismissal of Kinsey's equal protection claim, and we remand to the Franklin County Court of Common Pleas for further proceedings on that claim.
{¶ 7} On remand, appellees filed answers and motions for judgment on the pleadings arguing that appellant had not stated a claim under the equal protection clause. In his response, appellant also alleged that he had pled a claim under the privileges and immunities clause of the Fourteenth Amendment to the United States Constitution.
{¶ 8} The trial court granted appellees' motions, finding that Article XV, Section 6(C) was rationally related to two legitimate state interests: (1) regulating casino gaming as a vice activity, and (2) promoting the economic development of the state. Therefore, the trial court concluded that appellant could not sustain his equal protection claim.
{¶ 9} The trial court also found that appellant had failed to plead a claim for violation of the privileges and immunities clause of the Fourteenth Amendment.
{¶ 10} This appeal ensued, with appellant assigning the following as error:
{¶ 11} Civ.R. 12(C) states that "[a]fter the pleadings are closed but within such times as not to delay the trial, any party may move for judgment on the pleadings." Dismissal under Civ.R. 12(C) is appropriate when the court: "(1) construes the material allegations in the complaint, with all reasonable inferences to be drawn therefrom, in favor of the nonmoving party as true, and (2) finds beyond doubt, that the plaintiff could prove no set of facts in support of his claim that would entitle him to relief." State ex rel. Midwest Pride IV, Inc. v. Pontious , 75 Ohio St.3d 565, 570, 664 N.E.2d 931 (1996), citing Lin v. Gatehouse Constr. Co. , 84 Ohio App.3d 96, 99, 616 N.E.2d 519 (8th Dist. 1992) ; see also , Peterson v. Teodosio , 34 Ohio St.2d 161, 165–66, 297 N.E.2d 113 (1973). Therefore, Civ.R. 12(C) requires the court to determine that there are no material issues of fact and that the movant is entitled to judgment as a matter of law. Pontious at 570, 664 N.E.2d 931, citing Burnside v. Leimbach , 71 Ohio App.3d 399, 403, 594 N.E.2d 60 (10th Dist. 1991). A judgment on the pleadings dismissing an action is subject to a de novo standard of review in the court of appeals. Smith v. Ohio Dept. of Transp. , 10th Dist. No. 15AP-521, 2015-Ohio-5240, 2015 WL 8773816, ¶ 6.
{¶ 12} Ohio Constitution, Article XV, Section 6 (C)(1) provides, as follows:
Casino gaming shall be authorized at four casino facilities (a single casino at a designated location within each of the cities of Cincinnati, Cleveland, and Toledo, and within Franklin County) to create new funding for cities, counties, public school districts, law enforcement, the horse racing industry and job training for Ohio's workforce.
The constitutional provision also provides for the creation of the Ohio casino control commission "which shall license and regulate casino operators * * * and all gaming authorized by section 6(C), to ensure the integrity of casino gaming." Ohio Constitution, Article XV, Section 6 (C)(4).
{¶ 13} The Ohio Constitution further requires "each initial licensed casino operator of each of the four casino facilities to pay an upfront license fee of fifty million dollars ($50,000,000) per casino facility for the benefit of the state * * * used to fund state economic development programs which support regional job training efforts to equip Ohio's workforce with additional skills to grow the economy."
Ohio Constitution, Article XV, Section 6 (C)(4). The constitutional provision further provides for a detailed scheme for taxation of casino revenue and distribution of the casino tax proceeds. Ohio Constitution, Article XV, Section 6 (C)(2) and (3).
{¶ 14} In addition:
Each initial licensed casino operator of each of the four casino facilities shall make an initial investment of at least two hundred fifty million dollars ($250,000,000) for the development of each casino facility for a total minimum investment of one billion dollars ($1,000,000,000) statewide. A casino operator: (a) may not hold a majority interest in more than two of the four licenses allocated to the casino facilities at any one time: and (b) may not hold a majority interest in more than two of the four casino facilities at any one time.
Ohio Constitution, Article XV, Section 6 (C)(5).
{¶ 15} Statutes and regulations enacted after the passage of the constitutional amendment require casino operators to meet strict requirements for licensure including reputation, business experience, financial integrity, criminal history, good character, the ability to maintain adequate insurance, payment of a nonrefundable application fee of $1,500,000, and to provide a $1,000,000 surety bond. See generally , R.C. 3772.10 ; Ohio Adm.Code: 3772–4.
{¶ 16} In the amended complaint, appellant alleged that " Art. XV, § 6 (C) of the Ohio Constitution, H.B. 1, H.B. 519 and H.B. 277 grant a monopoly to the gaming companies signing the MOU [Memorandum of Understanding], on casino gaming and related activity in the areas identified therein." (Am. Compl. at ¶ 120.) A memorandum of understanding was attached to the amended complaint as an...
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