State v. Glusman

• Decision Date: 30 September 1982
• Docket Number: Nos. 12946,13217,s. 12946
• Citation: 98 Nev. 412,651 P.2d 639
• Parties: STATE of Nevada, State of Nevada Gaming Commission and State of Nevada Gaming Control Board, Appellants, v. Fred J. GLUSMAN and International Dress Shop, Inc., Respondents. Fred J. GLUSMAN and International Dress Shop, Inc., Appellants, v. STATE of Nevada, State of Nevada Gaming Commission, and State of Nevada Gaming Control Board, Respondents.
• Court: Nevada Supreme Court

Page 639

651 P.2d 639

98 Nev. 412

STATE of Nevada, State of Nevada Gaming Commission and State

of Nevada Gaming Control Board, Appellants, v. Fred J. GLUSMAN and International Dress Shop, Inc., Respondents.

Fred J. GLUSMAN and International Dress Shop, Inc., Appellants, v. STATE of Nevada, State of Nevada Gaming Commission, and State of Nevada Gaming Control Board, Respondents.

Nos. 12946, 13217.

Supreme Court of Nevada.

Sept. 30, 1982.

Richard H. Bryan, Atty. Gen., Patricia W. Becker, Chief Deputy Atty. Gen., Carson City, Nikolas L. Mastrangelo, Deputy Atty. Gen., Gaming Div., Las Vegas, for State of Nev., State of Nev. Gaming Com'n, and State of Nev. Gaming Control Bd.

George E. Graziadei, and Scott Michael Cantor, Las Vegas, Shellow, Shellow & Glynn, Milwaukee, Wis., for Fred J. Glusman, and Intern. Dress Shop, Inc.

Frank W. Daykin, Legislative Counsel, Carson City, for Legislative Com'n as amicus curiae.

OPINION

STEFFEN, Justice:

These consolidated appeals stem from issues involving the constitutional validity of Nevada gaming statute NRS 463.160(8)(a), hereinafter frequently referred to as "the statute", ¹ and the jurisdiction of the district court to grant injunctive relief against the implementation thereof by state gaming authorities. After preventing enforcement of the statute through issuance of a preliminary injunction, the district court determined that the legislation was constitutional and dissolved the injunction. We qualifiedly affirm the decision supporting the statute, but hold that the district court was without jurisdiction to enjoin its enforcement.

Frederick J. Glusman is an officer, director and sole shareholder of International Dress Shop, Inc. (International). International is engaged in the retail clothing business on the premises of the Las Vegas Hilton and Stardust hotels under the name of Fredde's Dress Shops. The International shops at the Hilton and Stardust have operated continuously under leases dated in 1968 and 1977, respectively.

Pursuant to the recommendation of the Nevada Gaming Control Board (Board), the Nevada Gaming Commission (Commission) issued an order directing Glusman to apply to the latter agency for a determination of suitability to be associated with a gaming enterprise. The statutory authority for the order, NRS 463.160(8)(a), reads as follows:

If the premises of a licensed gaming establishment are directly or indirectly owned or under the control of the licensee therein, or of any person controlling, controlled by, or under common control with the licensee, the commission may, upon recommendation of the board, require the application of any business or person for a determination of suitability to be associated with a gaming enterprise if the person or business:

(a) Does business on the premises of the licensed gaming establishment.

Glusman responded to the order by filing a complaint for declaratory and injunctive relief with the district court, asserting constitutional infirmity in the questioned statute. The district court granted Glusman and International a preliminary injunction from which the State of Nevada, State of Nevada Gaming Commission and State of Nevada Gaming Control Board (the State) appealed under Case No. 12946. During the pendency of the latter appeal, the district court heard the complaint for declaratory relief and held against Glusman and International, thus prompting the appeal in Case No. 13217. (Hereafter, for purposes of this opinion, Glusman and International will alternatively be referred to as appellants).

In a major sense, the determination of the issues before us is dictated by the unique setting of the Nevada gaming industry. The peculiar nature of the gaming industry presents numerous concerns and problems of control, the resolution of which must be readily available to cognizant government authorities of this state. It has been clearly recognized by our earlier decisions that gaming longevity and vitality, under continuing state authority, are dependent upon effective control mechanisms which will assure appropriate deference to the health, safety and welfare of the citizenry. It is in that context that the Nevada Legislature has enacted legislation designed to provide effective and timely management of the gaming industry. NRS ch. 463.

We turn first to the question of the injunctive relief provided by the district court in Case No. 12946. Ordinarily this issue would fall prey to the mootness doctrine since the injunction has been dissolved. It is, however, within the inherent discretion of this Court to consider issues of substantial public importance which are likely to recur, in spite of any intervening event during the pendency of an appeal which has rendered the matter moot. In Re M, 3 Cal.3d 16, 89 Cal.Rptr. 33, 37-39, 473 P.2d 737, 741-743 (1970). The instant action poses such an issue and we deem it worthy of resolution.

Appellants attempt to posture themselves outside the purview of NRS 463.343 (the declaratory judgments provision of the gaming chapter) by disclaiming the status of "applicant, licensee or person found suitable." This contention is without merit. The statutory definition of "applicant" ² clearly includes those who have been ordered to apply for a finding of suitability. Having so held, the question then arises as to whether appellants may nevertheless circumvent the dictates of NRS 463.343 by petitioning the district court under the Uniform Declaratory Judgments Act, NRS ch. 30, for declaratory relief and a stay of proceedings. The court below erroneously decided in the affirmative. The power of the legislature to restrict the availability of injunctive relief by the judiciary in gaming matters is well established. Gaming Control Bd. v. Dist. Ct., 82 Nev. 38, 409 P.2d 974 (1966). If appellants' position were to prevail, it would render NRS 463.343 selectively nugatory and allow effective avoidance of the prohibition against injunctive jurisdiction by the judiciary within statutorily defined areas of gaming. Accordingly, we hold that NRS 463.343(5)(b) effectively deprived the district court of jurisdiction to entertain injunctive relief to appellants and that the granting of such relief was error. Other issues on this point are defused by our holding and will not be discussed.

We are asked by the state to sidestep the constitutional issues raised by appellants in Case No. 13217 in deference to the doctrine of exhaustion of administrative remedies. The "exhaustion doctrine" is a salutary one which often fully and finally resolves disputes without need for litigation. First Am. Title Co. v. State of Nevada, 91 Nev. 804, 543 P.2d 1344 (1975). In the instant case, appellants elected to disregard their administrative remedies under the apparent assumption that relief would be withheld by the administrative agencies. There is nothing in the record indicating appellants would have succumbed to a deaf ear had they sought exemption from a finding of suitability by the Commission. However, convinced of the unconstitutionality of NRS 463.160(8)(a), appellants opted to refuse any semblance of cooperation with the gaming authorities. Since we have held that a stay of proceedings was unavailable under NRS ch. 30, and since such relief was available pursuant to NRS 463.343(4), it follows that appellants should have proceeded under the latter statute and exhausted their administrative remedies.

Although we are reluctant to circumvent the exhaustion doctrine, there are compelling reasons for doing so in this case. The constitutional issues, which may have remained submerged through an administrative proceeding, have been met and decided by the district court in an adversary posture and were subjected to critical analysis in the context of an actual controversy. Further, it is within our discretion not to apply the exhaustion doctrine especially where the issues relate solely to the interpretation or constitutionality of a statute. Cafferello v. U. S. Civil Serv. Com'n, 625 F.2d 285 (9th Cir. 1980); Frontier Airlines v. C.A.B., 621 F.2d 369 (10th Cir. 1980); Public Utilities Comm. v. United States, 355 U.S. 534, 78 S.Ct. 446, 2 L.Ed.2d 470 (1958). Finally the magnitude of the issues and the likelihood of their future recurrence justify a present judicial determination on the merits.

Appellants assert error by the district court in finding NRS 463.160(8)(a) constitutional on its face and as applied to them. We do not agree. We have long recognized, as a general principle, that statutes should be construed, if reasonably possible, so as to be in harmony with the constitution. Copeland v. Woodbury, 17 Nev. 337, 30 P. 1006 (1883); cited with approval in Milchem Inc. v. District Court, 84 Nev. 541, 445 P.2d 148 (1968). In the face of attack, every favorable presumption and intendment will be brought to bear in support of constitutionality. As previously held, "[a]n act of the legislature is presumed to be constitutional and should be so declared unless it appears to be clearly in contravention of constitutional principles." State ex rel. Tidvall v. Eighth Judicial District Court, 91 Nev. 520, 526, 539 P.2d 456, 460 (1975). In the case before us, the statute attacked must be considered in light of this state's policy regarding the gaming industry as expressed in NRS 463.130(1). NRS 463.130(1) provides in pertinent part:

(c) Public confidence and trust can only be maintained by strict regulation of all persons, locations, practices, associations and activities related to the operation of licensed gaming establishments and the manufacture or distribution of gambling devices and equipment.

(d) All establishments where gaming is conducted and where gambling devices are operated, manufacturers, sellers and distributors of certain gambling devices and equipment in the state shall therefore be licensed, controlled and assisted to protect the public health, safety, morals, good order and general welfare...