{ "id": 4362815, "name": "HEST TECHNOLOGIES, INC. and INTERNATIONAL INTERNET TECHNOLOGIES, LLC, Plaintiffs v. STATE OF NORTH CAROLINA, ex rel. BEVERLY PERDUE, GOVERNOR, in her official capacity; NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY; SECRETARY OF CRIME CONTROL AND PUBLIC SAFETY REUBEN YOUNG, in his official capacity; ALCOHOL LAW ENFORCEMENT DIVISION; DIRECTOR OF ALCOHOL ENFORCEMENT DIVISION JOHN LEDFORD, in his official capacity, Defendants", "name_abbreviation": "Hest Technologies, Inc. v. State ex rel. Perdue", "decision_date": "2012-03-06", "docket_number": "No. COA11-459", "first_page": "308", "last_page": "320", "citations": [ { "type": "official", "cite": "219 N.C. App. 308" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "684 S.E.2d 477", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2009, "pin_cites": [ { "page": "480" } ], "opinion_index": 0 }, { "cite": "200 N.C. App. 561", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 4172456 ], "year": 2009, "pin_cites": [ { "page": "564" } ], "opinion_index": 0, "case_paths": [ "/nc-app/200/0561-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 14.306.4", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "pin_cites": [ { "page": "(a)(3)(i)" } ], "opinion_index": 0 }, { "cite": "382 S.E.2d 801", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "pin_cites": [ { "page": "808" } ], "opinion_index": 0 }, { "cite": "95 N.C. App. 258", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520368 ], "year": 1989, "pin_cites": [ { "page": "269-70" } ], "opinion_index": 0, "case_paths": [ "/nc-app/95/0258-01" ] }, { "cite": "557 S.E.2d 119", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2001, "pin_cites": [ { "page": "122", "parenthetical": "internal quotations and citation omitted" }, { "page": "122" } ], "opinion_index": 0 }, { "cite": "147 N.C. App. 670", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9381059 ], "weight": 2, "year": 2001, "pin_cites": [ { "page": "675", "parenthetical": "internal quotations and citation omitted" }, { "page": "675" } ], "opinion_index": 0, "case_paths": [ "/nc-app/147/0670-01" ] }, { "cite": "131 S. Ct. 2729", "category": "reporters:federal", "reporter": "S. Ct.", "case_ids": [ 4334708, 12450503 ], "weight": 2, "year": 2011, "pin_cites": [ { "page": "2733" }, { "page": "714" } ], "opinion_index": 0, "case_paths": [ "/us/564/0786-01", "/l-ed-2d/180/0708-01" ] }, { "cite": "131 S. Ct. 2653", "category": "reporters:federal", "reporter": "S. Ct.", "case_ids": [ 12450498, 5923853 ], "weight": 2, "year": 2011, "pin_cites": [ { "page": "2667" }, { "page": "558" } ], "opinion_index": 0, "case_paths": [ "/l-ed-2d/180/0544-01", "/us/564/0552-01" ] }, { "cite": "2010 N.C. Sess. Laws 103", "category": "laws:leg_session", "reporter": "N.C. Sess. Laws", "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 14-306.4", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 27, "pin_cites": [ { "page": "(a)(3)(i)" }, { "page": "(a)(3)(i)" }, { "page": "(a)(3)(i)" }, { "page": "(b)" }, { "parenthetical": "a" }, { "parenthetical": "a" }, { "parenthetical": "a" }, { "parenthetical": "a" } ], "opinion_index": 0 }, { "cite": "72 L. Ed. 2d 443", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 1982, "opinion_index": 1 }, { "cite": "456 U.S. 927", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6259081, 6257099, 6257452, 6256407, 6258416, 6258710, 6256758, 6259382, 6258108, 6257758 ], "year": 1982, "opinion_index": 1, "case_paths": [ "/us/456/0927-09", "/us/456/0927-03", "/us/456/0927-04", "/us/456/0927-01", "/us/456/0927-07", "/us/456/0927-08", "/us/456/0927-02", "/us/456/0927-10", "/us/456/0927-06", "/us/456/0927-05" ] }, { "cite": "650 F.2d 1033", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1239957 ], "year": 1981, "pin_cites": [ { "page": "1039" } ], "opinion_index": 1, "case_paths": [ "/f2d/650/1033-01" ] }, { "cite": "380 S.E.2d 602", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1989, "pin_cites": [ { "page": "604", "parenthetical": "quoting Clark v. City of Los Angeles, 650 F.2d 1033, 1039 (9th Cir. 1981), cert. denied, 456 U.S. 927, 72 L. Ed. 2d 443 (1982)" }, { "page": "604", "parenthetical": "citation and quotation marks omitted" } ], "opinion_index": 1 }, { "cite": "94 N.C. App. 453", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527384 ], "weight": 2, "year": 1989, "pin_cites": [ { "page": "458", "parenthetical": "quoting Clark v. City of Los Angeles, 650 F.2d 1033, 1039 (9th Cir. 1981), cert. denied, 456 U.S. 927, 72 L. Ed. 2d 443 (1982)" }, { "page": "458" } ], "opinion_index": 1, "case_paths": [ "/nc-app/94/0453-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 309.6", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 1986, "opinion_index": 1 }, { "cite": "114 S.E.2d 660", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1960, "pin_cites": [ { "page": "664", "parenthetical": "\"The State possesses the police power in its capacity as a sovereign, and in the exercise thereof the Legislature may enact laws, within constitutional limits, to protect or promote the health, morals, order, safety and general welfare of society.\"" } ], "opinion_index": 1 }, { "cite": "252 N.C. 690", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8625444 ], "year": 1960, "pin_cites": [ { "page": "694", "parenthetical": "\"The State possesses the police power in its capacity as a sovereign, and in the exercise thereof the Legislature may enact laws, within constitutional limits, to protect or promote the health, morals, order, safety and general welfare of society.\"" } ], "opinion_index": 1, "case_paths": [ "/nc/252/0690-01" ] }, { "cite": "594 S.E.2d 1", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2004, "pin_cites": [ { "page": "15" } ], "opinion_index": 1 }, { "cite": "358 N.C. 160", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2986939 ], "year": 2004, "pin_cites": [ { "page": "181" } ], "opinion_index": 1, "case_paths": [ "/nc/358/0160-01" ] }, { "cite": "2011 WL 3958437", "category": "reporters:specialty_west", "reporter": "WL", "weight": 6, "year": 2011, "pin_cites": [ { "parenthetical": "No. 6:11-CV-155-ORL-28DAB" }, { "page": "1" }, { "page": "2" } ], "opinion_index": 1 }, { "cite": "783 F. Supp. 2d 1197", "category": "reporters:federal", "reporter": "F. Supp. 2d", "case_ids": [ 4246499 ], "weight": 8, "year": 2011, "pin_cites": [ { "parenthetical": "hereinafter \"Allied Veterans I\"" }, { "page": "1201", "parenthetical": "quoting Seminole County Ordinance 2011-1" }, { "page": "1200" }, { "page": "1202, 1206" }, { "page": "1202" }, { "page": "1207" } ], "opinion_index": 1, "case_paths": [ "/f-supp-2d/783/1197-01" ] }, { "cite": "382 S.E.2d 801", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "pin_cites": [ { "page": "808", "parenthetical": "concluding the plaintiffs' free bingo game was properly regulated by the State under our gambling statutes as the Legislature defined \"bingo,\" in N.C. Gen. Stat. \u00a7 309.6 (1986), as a \"game of chance,\" and did not require payment of consideration to play the game" } ], "opinion_index": 1 }, { "cite": "95 N.C. App. 258", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520368 ], "year": 1989, "pin_cites": [ { "page": "269", "parenthetical": "concluding the plaintiffs' free bingo game was properly regulated by the State under our gambling statutes as the Legislature defined \"bingo,\" in N.C. Gen. Stat. \u00a7 309.6 (1986), as a \"game of chance,\" and did not require payment of consideration to play the game" } ], "opinion_index": 1, "case_paths": [ "/nc-app/95/0258-01" ] }, { "cite": "131 S. Ct. 2729", "category": "reporters:federal", "reporter": "S. Ct.", "case_ids": [ 4334708, 12450503 ], "weight": 3, "year": 2011, "pin_cites": [ { "page": "2733" }, { "page": "714" } ], "opinion_index": 1, "case_paths": [ "/us/564/0786-01", "/l-ed-2d/180/0708-01" ] }, { "cite": "2010 N.C. Sess. Laws 103", "category": "laws:leg_session", "reporter": "N.C. Sess. Laws", "weight": 2, "opinion_index": 1 }, { "cite": "N.C. Gen. Stat. \u00a7 14-306.4", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 17, "pin_cites": [ { "page": "(a)(3)(i)" }, { "page": "(b)", "parenthetical": "emphasis added" }, { "page": "(a)(3)", "parenthetical": "emphasis added" }, { "page": "(a)(5)", "parenthetical": "emphasis added" }, { "page": "(a)(3)(i)" } ], "opinion_index": 1 } ], "analysis": { "cardinality": 959, "char_count": 27129, "ocr_confidence": 0.745, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.14877778588635862 }, "sha256": "2365563b96d5474ec792b60baf99b5020a24da75f68883b0161d141371527621", "simhash": "1:cce21b2072365ef9", "word_count": 4259 }, "last_updated": "2023-07-14T22:16:59.313771+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judge McGEE concurs.", "Judge HUNTER, Robert C. dissents by separate opinion." ], "parties": [ "HEST TECHNOLOGIES, INC. and INTERNATIONAL INTERNET TECHNOLOGIES, LLC, Plaintiffs v. STATE OF NORTH CAROLINA, ex rel. BEVERLY PERDUE, GOVERNOR, in her official capacity; NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY; SECRETARY OF CRIME CONTROL AND PUBLIC SAFETY REUBEN YOUNG, in his official capacity; ALCOHOL LAW ENFORCEMENT DIVISION; DIRECTOR OF ALCOHOL ENFORCEMENT DIVISION JOHN LEDFORD, in his official capacity, Defendants" ], "opinions": [ { "text": "CALABRIA, Judge.\nBoth parties appeal the trial court\u2019s order which invalidated N.C. Gen. Stat. \u00a7 14-306.4(a)(3)(i) as unconstitutionally overbroad and upheld the constitutionality of the remainder of that statute. We affirm in part and reverse in part.\nI. Background\nPlaintiff Hest Technologies, Inc. (\u201cHest\u201d) is a Texas corporation authorized to transact business in North Carolina. Plaintiff International Internet Technologies, LLC (\u201cIIT\u201d) is an Oklahoma corporation also authorized to transact business in North Carolina. Hest and IIT (collectively \u201cplaintiffs\u201d) sell long-distance telephone time and high-speed internet service in internet cafes, business centers, convenience stores, and other retail establishments in North Carolina.\nIn addition, each plaintiff has developed their own proprietary sweepstakes management software. Plaintiffs use this software to conduct promotional sweepstakes as a means of marketing their products at the point of sale. When plaintiffs\u2019 customers make a qualifying purchase of plaintiffs\u2019 products, they receive one or more sweepstakes entries. Alternatively, individuals may enter plaintiffs\u2019 sweepstakes without purchasing any of plaintiffs\u2019 products by completing entry forms that are available at each retail location. Free entries are not treated any differently than entries accompanying a purchase.\nThe result of each sweepstakes entry has been pre-determined by the sweepstakes software prior to disbursement. A player who has received a sweepstakes entry can only reveal this predetermined result by connecting to a computer terminal on which the sweepstakes software has been loaded. Once connected, the player has the option of either (1) choosing an \u201cinstant reveal,\u201d whereby the results of the sweepstakes entry are immediately displayed on a computer screen; or (2) having the results revealed through a video game played on the computer terminal. The method by which the result is revealed does not affect the outcome of the sweepstakes. Moreover, customers retain the value of the purchased prepaid phone or internet time, regardless of the outcome of the sweepstakes.\nOn 4 March 2008, plaintiffs initiated a declaratory judgment action against defendants in Guilford County Superior Court. Plaintiffs sought a declaration that its promotional sweepstakes did not violate any North Carolina gaming or gambling laws which were in effect at that time. Plaintiffs also sought injunctive relief to prevent defendants from attempting to enforce those laws against plaintiffs\u2019 sweepstakes systems. On 16 April 2008, the trial court temporarily enjoined defendants from any enforcement actions against plaintiffs. After the injunction was entered, plaintiffs continued to conduct their promotional sweepstakes.\nOn 20 July 2010, the North Carolina General Assembly enacted House Bill 80. This legislation amended the North Carolina General Statutes to include a provision which prohibited conducting or promoting any sweepstakes which utilized an \u201centertaining display.\u201d 2010 N.C. Sess. Laws 103 (codified as amended at N.C. Gen. Stat. \u00a7 14-306.4 (2011)). Plaintiffs\u2019 sweepstakes systems fell squarely within the ambit of the new N.C. Gen. Stat. \u00a7 14-306.4.\nIn response to the enactment of House Bill 80, plaintiffs amended their original complaint to include an allegation that N.C. Gen. Stat. \u00a7 14-306.4 was, inter alia, an unconstitutional regulation of plaintiffs\u2019 protected First Amendment speech. On 11 October 2010, defendants filed a motion to dismiss plaintiffs\u2019 complaint for failure to state a claim upon which relief could be granted pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. Defendants\u2019 motion argued that N.C. Gen. Stat. \u00a7 14-306.4 was \u201cconstitutional in all respects\u201d and that plaintiffs\u2019 sweepstakes operations were in violation of that law. On 5 November 2010, plaintiffs filed a motion for summary judgment on their First Amendment claims.\nOn 18 November 2010, the trial court conducted a hearing on the parties\u2019 respective motions. On 30 November 2010, the trial court entered an \u201cOrder and Final Judgment\u201d which held that N.C. Gen. Stat. \u00a7 14-306.4(a)(3)(i) was unconstitutionally overbroad under the United States and North Carolina constitutions. In addition, the trial court upheld the constitutionality of the remainder of the statute and dissolved the preliminary injunction preventing enforcement of the gambling laws against owners and operators of plaintiffs\u2019 sweepstakes systems. Plaintiffs and defendants each appeal.\nII. Constitutionality of N.C. Gen. Stat. \u00a7 14-306.4\nBoth parties contend that the trial court erred in assessing the constitutionality of N.C. Gen. Stat. \u00a7 14-306.4. Defendants argue that the trial court erred by concluding that N.C. Gen. Stat. \u00a7 14-306.4(a)(3)(i) was unconstitutionally overbroad. Plaintiffs, in turn, argue that the trial court erred by failing to conclude that the entire statute was unconstitutional. We agree with plaintiffs and conclude that the entirety of N.C. Gen. Stat. \u00a7 14-306.4 is an unconstitutionally overbroad regulation of free speech.\nA. Regulation of Speech\nDefendants first argue that N.C. Gen. Stat. \u00a7 14-306.4 does not implicate the First Amendment because it does not actually regulate any speech, protected or otherwise. Instead, defendants contend, and the dissent agrees, that the statute only regulates plaintiffs\u2019 conduct.\nN.C. Gen. Stat. \u00a7 14-306.4 states, in relevant part:\nNotwithstanding any other provision of this Part, it shall be unlawful for any person to operate, or place into operation, an electronic machine or device to do either of the following:\n(1) Conduct a sweepstakes through the use of an entertaining display, including the entry process or the reveal of a prize.\n(2) Promote a sweepstakes that is conducted through the use of an entertaining display, including the entry process or the reveal of a prize.\nN.C. Gen. Stat. \u00a7 14-306.4(b) (2011). Defendants are correct that this statute attempts to regulate some conduct. Specifically, the statute attempts to regulate the use of an electronic machine or device in conjunction with a sweepstakes. However, the broad manner in which the statute attempts to regulate this conduct is problematic.\nWhile it is true that plaintiffs are free to allow anyone to play their video games so long as the video games are not used to conduct or promote sweepstakes, it is equally true that plaintiffs remain free to conduct or promote sweepstakes so long as they do not involve the use of plaintiffs\u2019 video games. N.C. Gen. Stat. \u00a7 14-306.4 does not forbid the conducting or promotion of sweepstakes provided that the result of the sweepstakes entry is conveyed through any method other than an entertaining display. For example, if the sweepstakes conducted by plaintiffs were exactly the same in all respects, except that the results were conveyed by means of a scratch off ticket, a motion picture, a cartoon, or a simple verbal acknowledgment, the sweepstakes would be permitted by North Carolina law. Ultimately, North Carolina law permits players to learn the results of their sweepstakes entries by using the exact same computer terminals which display plaintiffs\u2019 video games, so long as the result is conveyed by words displayed on the monitor, rather than by an entertaining display. Thus, it is the specific method of disseminating sweepstakes results through an entertaining display that is criminalized by N.C. Gen. Stat. \u00a7 14-306.4.\nThe United States Supreme Court has stated that \u201cthe creation and dissemination of information are speech within the meaning of the First Amendment.\u201d Sorrell v. IMS Health Inc., 131 S. Ct. 2653, 2667, 180 L. Ed. 2d 544, 558 (2011). Moreover, that Court has also recently made clear that video games are entitled to full First Amendment protections:\nLike the protected books, plays, and movies that preceded them, video games communicate ideas\u2014and even social messages\u2014through many familiar literary devices (such as characters, dialogue, plot, and music) and through features distinctive to the medium (such as the player\u2019s interaction with the virtual world). That suffices to confer First Amendment protection.\nBrown v. Entm\u2019t Merchs. Ass\u2019n, 131 S. Ct. 2729, 2733, 180 L. Ed. 2d 708, 714 (2011).\nIn light of these holdings, banning the dissemination of sweepstakes results through entertaining displays cannot be characterized as merely a regulation of conduct. Instead, that portion of N.C. Gen. Stat. \u00a7 14-306.4 which forbids \u201cthe reveal of a prize\u201d by means of an entertaining display directly regulates protected speech under the First Amendment. This necessitates reviewing the statute under established First Amendment doctrine.\nB. Overbreadth\n\u201cA statute is overbroad if it sweeps within its ambit not solely activity that is subject to government control, but also includes within its prohibition the practice of a protected constitutional right.\u201d State v. Arnold, 147 N.C. App. 670, 675, 557 S.E.2d 119, 122 (2001) (internal quotations and citation omitted). In the instant case, N.C. Gen. Stat. \u00a7 14-306.4 prohibits plaintiffs from revealing sweepstakes results by means of an entertaining display, which the statute defines as \u201cvisual information, capable of being seen by a sweepstakes entrant, that takes the form of actual game play, or simulated game play . . . .\u201d N.C. Gen. Stat. \u00a7 14-306.4 (a)(3) (2011). The statute also provides a list of examples of entertaining displays, which it notes are \u201cby way of illustration and not exclusion.\u201d Id. These examples are:\na. A video poker game or any other kind of video playing card game.\nb. A video bingo game.\nc. A video craps game.\nd. A video keno game.\ne. A video lotto game.\nf. Eight liner.\ng. Pot-of-gold.\nh. A video game based on or involving the random or chance matching of different pictures, words, numbers, or symbols not dependent on the skill or dexterity of the player.\ni. Any other video game not dependent on skill or dexterity that is played while revealing a prize as the result of an entry into a sweepstakes.\nId. However, the examples listed in N.C. Gen. Stat. \u00a7 14-306.4 (a)(3) do not limit the definition of entertaining display, and thus, the statute ultimately bans all \u201cvisual information . . . that takes the form of actual ... or simulated game play.\u201d This definition necessarily encompasses all forms of video games, from the simplest simulation to a much more complex game requiring substantial amounts of interactive gameplay by the player, and thus, operates as a categorical ban on all video games for the purposes of communicating a sweepstakes result. As a result, regardless of the types of games the General Assembly intended to regulate, the statute is constitutionally over-broad, as its plain language \u201csweeps within its ambit. . . the practice of a protected constitutional right.\u201d Arnold, 147 N.C. App. at 675, 557 S.E.2d at 122.\nAccordingly, we hold that the portion of N.C. Gen. Stat. \u00a7 14-306.4 which criminalizes the dissemination of a sweepstakes result through the use of an entertaining display must be declared void, as it is unconstitutionally overbroad. However, the trial court\u2019s order, which only invalidated N.C. Gen. Stat. \u00a7 14-306.4 (a)(3)(i), was not sufficient to cure this constitutional defect. As previously noted, the examples in N.C. Gen. Stat. \u00a7 14-306.4 (a)(3)(a)-(h), which the trial court upheld, do not place any limitations on the definition of an entertaining display, and it is this definition, when applied to the dissemination of a sweepstakes result, which is unconstitutionally overbroad. Consequently, the trial court erred by only invalidating the single example of an entertaining display contained in subsection (i). Instead, the entire statute must be invalidated.\nIII. Conclusion\nN.C. Gen. Stat. \u00a7 14-306.4 regulates constitutionally protected speech. Specifically, the portion of the statute which forbids revealing a sweepstakes result by means of an entertaining display acts as a regulation of plaintiffs\u2019 right to communicate the results of otherwise lawful sweepstakes by means of a specific category of protected speech. While this Court has recognized, and we agree, that \u201c[i]t is the legislature\u2019s prerogative to establish the conditions under which bingo, lotteries, or other games of chance are to be permitted,\u201d Animal Protection Society v. State of North Carolina, 95 N.C. App. 258, 269-70, 382 S.E.2d 801, 808 (1989), the portion of the statute at issue in the instant case regulates solely how a sweepstakes result is communicated, rather than the underlying circumstances under which the sweepstakes are permitted. The General Assembly cannot, under the guise of regulating sweepstakes, categorically forbid sweepstakes operators from conveying the results of otherwise legal sweepstakes in a constitutionally protected manner. N.C. Gen. Stat. \u00a7 14-306.4 is unconstitutionally overbroad in these circumstances and must be declared void. Consequently, the portion of the trial court\u2019s order which declared N.C. Gen. Stat. \u00a7 14.306.4(a)(3)(i) unconstitutional is . affirmed; the remainder of the order is reversed.\nAffirmed in part and reversed in part.\nJudge McGEE concurs.\nJudge HUNTER, Robert C. dissents by separate opinion.\n. In determining that N.C. Gen. Stat. \u00a7 14-306.4 regulates only conduct, the dissent relies solely on a pair of orders by a single United States District Court judge, interpreting an ordinance in Seminole County, Florida. These orders are not binding upon this Court and we find them unpersuasive.\n. It is unnecessary to determine where plaintiffs\u2019 specific games would fall within this spectrum. For purposes of an overbreadth challenge, \u201cthe challenger has the right to argue the unconstitutionality of the law as to the rights of others, not just as the ordinance is applied to him.\u201d State v. Mello, 200 N.C. App. 561, 564, 684 S.E.2d 477, 480 (2009).", "type": "majority", "author": "CALABRIA, Judge." }, { "text": "HUNTER, Robert C., Judge,\ndissenting.\nThe majority concludes that N.C. Gen. Stat. \u00a7 14-306.4 (2011) regulates protected speech and is unconstitutionally overbroad. Because I conclude the statute regulates conduct rather than speech, I respectfully dissent.\nPlaintiffs argue that N.C. Gen. Stat. \u00a7 14-306.4 violates the First Amendment of the United States Constitution because (1) it is a content-based restriction on protected expression that fails strict scrutiny; and (2) it is overbroad, in that it criminalizes a substantial number of video games that are unrelated to gambling. I disagree. I would reverse the trial court\u2019s order to the extent that it held N.C. Gen. Stat. \u00a7 14-306.4(a)(3)(i) is unconstitutional. I would affirm the order to the extent the trial court concluded that, in all other respects, 2010 N.C. Sess. Laws 103 is constitutional. I would also hold the trial court did not err in dissolving the preliminary injunction prohibiting enforcement of N.C. Gen. Stat. \u00a7 14-306.4.\nThe statute states in pertinent part:\n(b) Notwithstanding any other provision of this Part, it shall be unlawful for any person to operate, or place into operation, an electronic machine or device to do either of the following:\n(1) Conduct a sweepstakes through the use of an entertaining display, including the entry process or the reveal of a prize.\n(2) Promote a sweepstakes that is conducted through the use of an entertaining display, including the entry process or the reveal of a prize.\nN.C. Gen. Stat. \u00a7 14-306.4(b) (2011) (emphasis added). Subsection (a) of the statute defines \u201centertaining display\u201d:\n\u2018Entertaining display\u2019 means visual information, capable of being seen by a sweepstakes entrant, that takes the form of actual game play, or simulated game play, such as, by way of illustration and not exclusion:\na. A video poker game or any other kind of video playing card game.\nb. A video bingo game.\nc. A video craps game.\nd. A video keno game.\ne. A video lotto game.\nf. Eight liner.\ng. Pot-of-gold.\nh. A video game based on or involving the random or chance matching of different pictures, words, numbers, or symbols not dependent on the skill or dexterity of the player.\ni. Any other video game not dependent on skill or dexterity that is played while revealing a prize as the result of an entry into a sweepstakes.\nN.C. Gen. Stat. \u00a7 14-306.4(a)(3) (emphasis added). \u201cSweepstakes\u201d is also defined by the statute as \u201cany game, advertising scheme or plan, or other promotion, which, with or without payment of any consid eration, a person may enter to win or become eligible to receive any prize, the determination of which is based upon chance.\" N.C. Gen. Stat. \u00a7 14-306.4(a)(5) (emphasis added).\nA. Regulation of Speech\nAs the majority notes, the United States Supreme Court recently released Brown v. Entm\u2019t Merchs. Ass\u2019n, _ U.S. _, _, 131 S. Ct. 2729, 2733, 180 L. Ed. 2d 708, 714 (2011), in which the Court held that video games are protected speech under the First Amendment:\nLike the protected books, plays, and movies that preceded them, video games communicate ideas\u2014and even social messages\u2014through many familiar literary devices (such as characters, dialogue, plot, and music) and through features distinctive to the medium (such as the player\u2019s interaction with the virtual world). That suffices to confer First Amendment protection.\nI, however, do not believe Brown applies to plaintiffs\u2019 appeal. Rather, I conclude that N.C. Gen. Stat. \u00a7 14-306.4 regulates conduct not speech.\nAn ordinance similar to N.C. Gen. Stat. \u00a7 14-306.4 was recently challenged as an unconstitutional restraint on free speech in the United States District Court of the Middle District of Florida. Allied Veterans of the World, Inc.: Affiliate 67 v. Seminole County, Fla., 783 F. Supp. 2d 1197 (M.D. Fla. 2011) (hereinafter \u201cAllied Veterans I\u201d). There, the plaintiffs challenged an ordinance enacted in Seminole County, Florida that prohibited the use and possession of \u201c \u2018simulated gambling devices,\u2019 \u201d defined as devices which provide \u201c \u2018a computer simulation of any game, and which may deliver or entitle the person or persons playing or operating the device to a payoff.\u2019 \u201d Id. at 1201 (quoting Seminole County Ordinance 2011-1).\nThe plaintiffs in Allied Veterans I sold internet access for use by their customers on the plaintiffs\u2019 desktop computers. Id. at 1200. The plaintiffs also provided their customers the opportunity to participate in a sweepstakes. Id. The customer had the option to play a video simulation of a casino game to learn whether the customer had won the sweepstakes prize. Id.\nThe plaintiffs challenged the Seminole County ordinance as violating the federal constitution arguing, inter alia, it was a content-based restriction on speech that fails strict scrutiny, and it was unconstitutionally vague. Id. at 1202, 1206. The district court rejected the plaintiffs\u2019 First Amendment challenge holding that the ordinance regulated the plaintiffs\u2019 conduct rather than their speech. Id. at 1202. The district court further held that because the plaintiffs\u2019 conduct was clearly proscribed by the ordinance, they could not challenge the ordinance as being void for vagueness. Id. at 1207.\nAfter the Supreme Court\u2019s decision in Brown, supra, the plaintiffs in Allied Veterans I filed an interlocutory appeal. Allied Veterans of the World, Inc.: Affiliate 67 v. Seminole County, Fla., _ F. Supp. 2d _, 2011 WL 3958437 (M.D. Fla. Sept. 8, 2011) (No. 6:11-CV-155-ORL-28DAB) (hereinafter \u2018Allied Veterans IT). In Allied Veterans II, the plaintiffs argued that in light of the Supreme Court\u2019s holding in Brown the Seminole County ordinance was an impermissible restriction on free speech. Id. at _, 2011 WL 3958437 at 1. The district court again rejected the plaintiffs\u2019 argument and held that Brown was inapplicable because the ordinance at issue regulated conduct, not speech. Id. The plaintiffs were free to provide their video games to their customers so long as the games were not associated with the sweepstakes payoff. Id. at _, 2011 WL 3958437 at 2.1 find this reasoning persuasive and applicable in this case.\nHere, N.C. Gen. Stat. \u00a7 14-306.4 does not prohibit plaintiffs from allowing a customer to play plaintiffs\u2019 video games. Rather, the statute prohibits plaintiffs from conducting or promoting their sweepstakes through the use of a video game. Plaintiffs are free to allow anyone to play their video games so long as the video games are not used to conduct or promote a sweepstakes. Because the statute merely regulates conduct and not speech, it is not subject to strict scrutiny, as plaintiffs contend. Rather, the law is subject to a rational basis review, whereby the law need only be rationally related to the State\u2019s police powers. Rhyne v. K-Mart Corp., 358 N.C. 160, 181, 594 S.E.2d 1, 15 (2004).\nHere, one of the Legislature\u2019s stated purposes in enacting N.C. Gen. Stat. \u00a7 14-306.4 was to protect the morals of the inhabitants of our State from the \u201cvice and dissipation\u201d that is brought about by the \u201crepeated play\u201d of sweepstakes due to the use of \u201csimulated game play,\u201d similar to video poker, \u201ceven when [such game play is] allegedly used as a marketing technique.\u201d 2010 N.C. Sess. Law 103. The protection of the morals of our State\u2019s inhabitants is a legitimate government purpose. See State v. Warren, 252 N.C. 690, 694, 114 S.E.2d 660, 664 (1960) (\u201cThe State possesses the police power in its capacity as a sovereign, and in the exercise thereof the Legislature may enact laws, within constitutional limits, to protect or promote the health, morals, order, safety and general welfare of society.\u201d) I conclude the State\u2019s prohibition of the use of \u201centertaining displays\u201d that use actual or simulated game play for the promotion and conducting of sweepstakes is rationally related to this legitimate governmental purpose.\nB. Overbreadth\nPlaintiffs also argue that N.C. Gen. Stat. \u00a7 14-306.4 bans all video games from being used in promotional sweepstakes, including videos games unrelated to gambling, and is thereby unconstitutionally over-broad. I disagree.\nPlaintiffs place much emphasis on the fact that consideration is not required to play their sweepstakes; free entries are available upon request. This fact, they argue, takes sweepstakes out of the realm of gambling and establishes that their sweepstakes are a legal activity. However, as this Court stated in Animal Prot. Soc. of Durham, Inc. v. State, \u201c [i]t is the [Legislature\u2019s prerogative to establish the conditions under which bingo, lotteries, or other games of chance are to be permitted.\u201d 95 N.C. App. 258, 269, 382 S.E.2d 801, 808 (1989) (concluding the plaintiffs\u2019 free bingo game was properly regulated by the State under our gambling statutes as the Legislature defined \u201cbingo,\u201d in N.C. Gen. Stat. \u00a7 309.6 (1986), as a \u201cgame of chance,\u201d and did not require payment of consideration to play the game). Thus, the fact that individuals can participate in plaintiffs\u2019 sweepstakes and watch their video games without payment of consideration does not establish that the State is without power to regulate how sweepstakes are conducted.\n\u201c \u2018The overbreadth doctrine holds that a law is void on its face if it sweeps within its ambit not solely activity that is subject to governmental control, but also includes within its prohibition the practice of a protected constitutional right.\u2019 \u201d Treants Enters., Inc. v. Onslow County, 94 N.C. App. 453, 458, 380 S.E.2d 602, 604 (1989) (quoting Clark v. City of Los Angeles, 650 F.2d 1033, 1039 (9th Cir. 1981), cert. denied, 456 U.S. 927, 72 L. Ed. 2d 443 (1982)). Plaintiffs argue that N.C. Gen. Stat. \u00a7 14-306.4 is overbroad because the law\u2019s definition of \u201centertaining display\u201d encompasses all video games, \u201cfrom classic arcade games like Pac-Man to modern, story-driven video games\u201d\u2014and video games are protected speech. However, I conclude N.C. Gen. Stat. \u00a7 14-306.4 does not ban video games nor prohibit plaintiffs from allowing a customer to play their video games. Rather, the statute prohibits plaintiffs, or any person, from conducting or promoting a sweepstakes through the use of a video game. Plaintiffs are free to allow anyone to play their video games so long as the video games are not used to conduct or promote sweepstakes. The statute does not \u201cinclude [] within its prohibition the practice of a protected constitutional right,\u201d Treants Enters., 94 N.C. App. at 458, 380 S.E.2d at 604 (citation and quotation marks omitted), and thus is not overbroad.\nI conclude N.C. Gen. Stat. \u00a7 14-306.4 is not a content-based restraint on protected expression and is not unconstitutionally over-broad. Accordingly, I would reverse the trial court\u2019s order to the extent that it held N.C. Gen. Stat. \u00a7 14-306.4(a)(3)(i) is unconstitutional; I would affirm the order to the extent the trial court concluded that, in all other respects, 2010 N.C. Sess. Laws 103 is constitutional; and I would hold the trial court did not err in dissolving the preliminary injunction prohibiting enforcement of N.C. Gen. Stat. \u00a7 14-306.4.", "type": "dissent", "author": "HUNTER, Robert C., Judge," } ], "attorneys": [ "Kilpatrick Townsend & Stockton LLP, by Adam H. Chames, Richard S. Gottlieb, and Richard D. Dietz; Grace, Tisdale & Clifton, P.A., by Michael A. Grace and Christopher R. Clifton, for plaintiff International Intent Technologies, LLC.", "Smith Moore Leatherwood LLP, by Richard A. Coughlin and Elizabeth B. Scherer, for plaintiff Hest Technologies, Inc.", "Attorney General Roy Cooper, by Assistant Solicitor General John F. Maddrey and Special Deputy Attorney General Hal F. Askins, for defendants." ], "corrections": "", "head_matter": "HEST TECHNOLOGIES, INC. and INTERNATIONAL INTERNET TECHNOLOGIES, LLC, Plaintiffs v. STATE OF NORTH CAROLINA, ex rel. BEVERLY PERDUE, GOVERNOR, in her official capacity; NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY; SECRETARY OF CRIME CONTROL AND PUBLIC SAFETY REUBEN YOUNG, in his official capacity; ALCOHOL LAW ENFORCEMENT DIVISION; DIRECTOR OF ALCOHOL ENFORCEMENT DIVISION JOHN LEDFORD, in his official capacity, Defendants\nNo. COA11-459\n(Filed 6 March 2012)\n1. Constitutional Law\u2014Free Speech\u2014video games and entertaining displays\nThat portion of N.C.G.S. \u00a7 14-306.4 which forbade the revelation of a sweepstakes prize by an entertainment display directly regulated protected speech under the First Amendment. Banning the dissemination of sweepstakes results through entertaining displays could not be characterized as merely a regulation of conduct.\n2. Constitutional Law\u2014Free Speech\u2014sweepstakes results\u2014 entertaining displays\u2014ban overbroad\nThe portion of N.C.G.S. \u00a7 14-306.4 which criminalized the dissemination of a sweepstakes result through use of an entertaining display was unconstitutionally overbroad and void. The definition of entertaining displays encompassed all forms of videogames. The trial court\u2019s order was not sufficient to cure the constitutional defect in that it invalidated only a single example of an entertaining display rather than the entire statute.\nJudge HUNTER, Robert C., dissents by separate opinion.\nAppeal by plaintiffs and defendants from order entered 30 November 2010 by Judge John O. Craig, III in Guilford County Superior Court. Heard in the Court of Appeals 25 October 2011.\nKilpatrick Townsend & Stockton LLP, by Adam H. Chames, Richard S. Gottlieb, and Richard D. Dietz; Grace, Tisdale & Clifton, P.A., by Michael A. Grace and Christopher R. Clifton, for plaintiff International Intent Technologies, LLC.\nSmith Moore Leatherwood LLP, by Richard A. Coughlin and Elizabeth B. Scherer, for plaintiff Hest Technologies, Inc.\nAttorney General Roy Cooper, by Assistant Solicitor General John F. Maddrey and Special Deputy Attorney General Hal F. Askins, for defendants." }, "file_name": "0308-01", "first_page_order": 318, "last_page_order": 330 }