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  "name_abbreviation": "Sandhill Amusements v. State",
  "decision_date": "2012-03-06",
  "docket_number": "No. COA11-301",
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      "SANDHILL AMUSEMENTS, et al., Plaintiffs v. STATE OF NORTH CAROLINA; GOVERNOR BEVERLY PERDUE, in her official capacity; NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY, BRYAN E. BEATTY, in his official capacity; ALCOHOL LAW ENFORCEMENT DIVISION; DIRECTOR OF ALCOHOL ENFORCEMENT DIVISION, WILLIAM CHANDLER, in his official capacity, Defendants"
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      {
        "text": "CALABRIA, Judge.\nSandhill Amusements, Inc., Carolina Industrial Supplies, J & F Amusements, Inc., J & J Vending, Inc., Matthews Vending Co., Patton Brothers, Inc., Trent Brothers Music Co., Inc., S & S Music Co., Inc., Old North State Amusements, Inc., and Uwharrie Fuels LLC (collectively \u201cplaintiffs\u201d) appeal the trial court\u2019s order which granted defendants\u2019 motion to dismiss plaintiffs\u2019 complaint for failure to state a claim upon which relief could be granted and dissolved plaintiffs\u2019 preliminary injunction. We reverse.\nPlaintiffs sell long distance telephone time in retail establishments throughout North Carolina. Plaintiffs\u2019 product is marketed through the use of a promotional sweepstakes system.\nWhen 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 an entry form available at each retail location. Free entries axe not treated any differently than entries accompanying a purchase.\nAfter distributing the sweepstakes entry, the owner or employee of the retail establishment activates a \u201csweepstakes terminal\u201d on which the sweepstakes player can play a video game. The video game reveals whether the consumer has won the sweepstakes prize.\nOn 18 March 2009, plaintiffs initiated a declaratory judgment action against defendants in Wake 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 2 July 2009, plaintiffs obtained a preliminary injunction prohibiting defendants from taking any enforcement action against plaintiffs for the possession, use, or operation of the sweepstakes system. 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 unconstitutional and, in the alternative, that plaintiffs were being selectively prosecuted. On 19 November 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 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.\nOn 29 November 2010, the trial court conducted a hearing on defendants\u2019 motion. At the conclusion of the hearing, the trial court determined that N.C. Gen. Stat. \u00a7 14-306.4 was constitutional, dismissed plaintiffs\u2019 complaint in its entirety, and dissolved plaintiffs\u2019 preliminary injunction. The trial court entered a written order memorializing its decision that same day. Plaintiffs appeal.\nIn a decision filed today in Hest Technologies, Inc. v. State, No. COA11-459, _ N.C. App. _, _ S.E.2d _ (2012), this Court held that \u201cthe 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 over-broad.\u201d Since N.C. Gen. Stat. \u00a7 14-306.4 has been declared void as unconstitutionally overbroad, the trial court\u2019s order in the instant case must be reversed.\nReversed.\nJudge McGEE concurs.\nJudge HUNTER, Robert C. dissents by separate opinion.",
        "type": "majority",
        "author": "CALABRIA, Judge."
      },
      {
        "text": "HUNTER, Robert C., Judge,\ndissenting.\nIn reversing the trial court\u2019s order the majority relies on Hest Technologies, Inc. v. State, _ N.C. App. _, _, _ S.E.2d _, _, (March 6, 2012) (No. COA 11-459), where this Court held that N.C. Gen. Stat. \u00a7 14-306.4 (2011) is void for being unconstitutionally overbroad. In a dissenting opinion in Hest Technologies, I concluded N.C. Gen. Stat. \u00a7 14-306.4 regulated conduct rather than speech and the statute was not unconstitutionally overbroad. Id. at _, _ S.E.2d at _ (Hunter, J., dissenting).\nPlaintiffs appeal from the trial court\u2019s order granting the State\u2019s motion to dismiss plaintiffs\u2019 complaint for failure to state a claim upon which relief could be granted and dissolving plaintiffs\u2019 preliminary injunction against the enforcement of N.C. Gen. Stat. \u00a7 14-306.4. Plaintiffs argue section 14-306.4 is an unconstitutional restriction on their freedom of speech, is unconstitutionally vague, and is a violation of their rights to due process and equal protection under our federal and state constitutions. I disagree.\nConsistent with my opinion in Hest Technologies, I must dissent from the majority\u2019s holding in the instant case and conclude that N.C. Gen. Stat. \u00a7 14-306.4 is not a restriction on speech. I further conclude that plaintiffs cannot challenge section 14-306.4 for vagueness; plaintiffs have failed to establish a violation of their rights to equal protection under the law; and plaintiffs have failed to establish a claim of selective prosecution. Accordingly, I would affirm the trial court\u2019s order.\nA. Regulation of Speech\nPlaintiffs argue that N.C. Gen. Stat. \u00a7 14-306.4 is an impermissible restriction of their freedom of speech as guaranteed by the First and Fourteenth Amendments of the United States Constitution and article I, section 14 of the North Carolina Constitution. Specifically, plaintiffs contend that the statute\u2019s prohibition of the use of an \u201centertaining display\u201d in conducting or promoting a sweepstakes is an impermissible content-based restriction on speech, proscribing the manner in which they communicate to a sweepstakes entrant whether the entrant has won a prize.\nIn Hest Technologies, _ N.C. App. at _, _ S.E.2d at _ (Hunter, J., dissenting), I addressed a similar constitutional challenge to the statute. My reasoning in that case applies to this appeal and leads me to the same conclusion, that N.C. Gen. Stat. \u00a7 14-306.4 is a restriction on conduct, not speech. Id,.; see also Allied Veterans of the World, Inc.: Affiliate 67 v. Seminole County, Fla., 783 F. Supp. 2d 1197 (M.D. Fla. 2011) (rejecting a First Amendment challenge to a similar law prohibiting the use of \u201csimulated gambling devices\u201d in sweepstakes concluding the law regulated conduct not speech); 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) (concluding, on subsequent appeal, that Brown v. Entm\u2019t Merchs. Ass\u2019n, _ U.S. _, _, 131 S. Ct. 2729, 2733, 180 L. Ed. 2d 708, 714 (2011) did not apply to law prohibiting the use of \u201csimulated gambling devices\u201d in sweepstakes because the law regulated conduct, rather than speech or expressive conduct). Thus, I would overrule plaintiffs\u2019 argument that N.C. Gen. Stat. \u00a7 14-306.4 is a content-based restriction on protected expression.\nB. Vagueness\nNext, plaintiffs contend N.C. Gen. Stat. \u00a7 14-306.4 is unconstitutionally vague. Specifically, plaintiffs take issue with the statute\u2019s definition of \u201centertaining display\u201d and its lack of definitions for \u201cvisual information\u201d and \u201cgame play.\u201d Plaintiffs also argue it is impossible to ascertain the type of machine the statute prohibits. I disagree.\n\u201cIt is a basic principle of due process that an enactment is void for vagueness if its prohibitions are not clearly defined.\u201d Grayned v. City of Rockford, 408 U.S. 104, 108, 33 L. Ed. 2d 222, 228 (1972). However, \u201c[o]ne to whose conduct a statute clearly applies may not successfully challenge it for vagueness.\u201d Parker v. Levy, 417 U.S. 733, 756, 41 L. Ed. 2d 439, 458 (1974). As evidenced by plaintiffs\u2019 argument that section 14-306.4 applies to them\u2014albeit as a restriction of their speech rather than their conduct\u2014they cannot challenge the statute for vagueness. This is so even under the heightened scrutiny applied to laws implicating First Amendment protections of speech. Holder v. Humanitarian Law Project, _ U.S. _, _, 130 S. Ct. 2705, 2719, 177 L. Ed. 2d 355, 375 (2010). Nor can plaintiffs challenge the statute for vagueness as applied to the conduct of others. Id. Thus, I would hold plaintiffs\u2019 void for vagueness challenge is overruled.\nC. Equal Protection\nPlaintiffs also argue that N.C. Gen. Stat. \u00a7 14-306.4 violates their rights to equal protection under our federal and state constitutions. Specifically, plaintiffs contend that the statute arbitrarily distinguishes between classes of business using sweepstakes as a promotional tool. I disagree.\nAs discussed above, I have concluded the statute regulates plaintiffs\u2019 conduct not their speech. Thus, the statute does not implicate a fundamental right and is subject to a rational basis review. See Hodel v. Indiana, 452 U.S. 314, 331, 69 L. Ed. 2d 40, 55 (1981) (\u201cSocial and economic legislation . . . that does not employ suspect classifications or impinge on fundamental rights must be upheld against equal protection attack when the legislative means are rationally related to a legitimate governmental purpose.\u201d); Liebes v. Guilford Co. Dept. of Pub. Health, _ N.C. App. _, _, 713 S.E.2d 546, 553, disc. review denied, _ N.C. _, 718 S.E.2d 396 (2011).\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.\nThat the statute does not prohibit all forms of sweepstakes is not a basis for plaintiffs\u2019 constitutional challenge. \u201c[T]here is no constitutional requirement that a regulation, in other respects permissible, must reach every class to which it might be applied\u2014that the Legislature must be held rigidly to the choice of regulating all or none.\u201d Silver v. Silver, 280 U.S. 117, 123, 74 L. Ed. 221, 226 (1929) (rejecting an equal protection challenge to a law permitting recovery for injuries by gratuitous passengers injured in automobiles, but not permitting recovery by gratuitous passengers injured in other classes of motor vehicles). \u201cIt is enough that the present statute strikes at the evil where it is felt and reaches the class of cases where it most frequently occurs.\u201d Id. Thus, our Legislature\u2019s decision to protect the morals of our State\u2019s inhabitants by prohibiting sweepstakes that utilize \u201centertaining displays\u201d while allowing other forms of sweepstakes is not a valid basis for plaintiffs\u2019 equal protection challenge.\nLastly, plaintiffs\u2019 equal protection challenge alleges N.C. Gen. Stat. \u00a7 14-306.4 unreasonably restricts their right to earn a livelihood. \u201cThe right to work and earn a livelihood is a property right that may not be denied except under the police power of the State in the public interest for reasons of health, safety, morals or public welfare.\u201d Warren, 252 N.C. at 693, 114 S.E.2d at 663.\nIn Warren, the North Carolina Supreme Court further stated that for the Legislature to utilize the State\u2019s police power to enact laws for the regulation of an occupation \u201c \u2018(1) the purpose of the statute must be within the scope of the police power, (2) the act must be reasonably designed to accomplish this purpose, and (3) the act must not be arbitrary, discriminatory, oppressive or otherwise unreasonable.\u2019 \u201d 252 N.C. at 694, 114 S.E.2d at 664 (quoting In re Russo, 107 Ohio App. 238, 150 N.E.2d 327, 331 (1958)). Here, our Legislature stated that the statute was enacted to protect the morals of the State\u2019s inhabitants. 2010 N.C. Sess. Law 103. The purpose of the law is therefore within the scope of the State\u2019s police powers. Warren, 252 N.C. at 694, 114 S.E.2d at 664. As explained above, I have also concluded the statute is reasonably related to this purpose and is not arbitrary. Thus, I would hold plaintiffs\u2019 argument that N.C. Gen. Stat. \u00a7 14-306.4 impermissibly restricts their right to earn a livelihood is overruled.\nD. Selective Prosecution\nPlaintiffs alternatively allege they are being selectively prosecuted under N.C. Gen. Stat. \u00a7 14-306.4.1 disagree.\nThe two-part test to establish a claim of discriminatory selective prosecution requires:\n(1) the defendant must make a prima facie showing that he has been singled out for prosecution while others similarly situated and committing the same acts have not; (2) upon satisfying (1) above, he must demonstrate that the discriminatory selection for prosecution was invidious and done in bad faith in that it rests upon such impermissible considerations as race, religion, or the desire to prevent his exercise of constitutional rights.\nMajebe v. N.C. Bd. of Med. Examiners, 106 N.C. App. 253, 260-61, 416 S.E.2d 404, 408 (1992) (quoting State v. Howard, 78 N.C. App. 262, 266-67, 337 S.E.2d 598, 601-02 (1985), disc. review denied, 316 N.C. 198, 341 S.E.2d 581 (1986)).\nPlaintiffs contend they are similarly situated to others who have not been prosecuted for operating video games that require the deposit of tokens to activate a machine that dispenses prizes based on chance. Plaintiffs further allege their prosecution was intentionally discriminatory, motivated by a \u2022 discriminatory purpose\u2014the desire to impede plaintiffs\u2019 rights to free speech\u2014and has a discriminatory effect.\nTaking plaintiffs\u2019 allegations as true in light of defendants\u2019 motion to dismiss, Scheerer v. Fisher, 202 N.C. App. 99, 102, 688 S.E.2d 472, 474, disc. review denied, 364 N.C. 435, 702 S.E.2d 305 (2010), I conclude plaintiffs have failed to allege how they have been singled out for prosecution. The amendments to N.C. Gen. Stat. \u00a7 14-306.4 prohibiting the use of \u201centertaining displays\u201d for conducting or promoting sweepstakes did not become effective until 1 December 2010. 2010 N.C. Sess. Law 103. Yet, plaintiffs moved to amend their complaint seeking declaratory judgment and injunctive relief in September 2010 and the trial court granted defendants\u2019 motion to dismiss on 29 November 2010. Thus, plaintiffs\u2019 claim of selective prosecution was made and dismissed prior to the effective date of the statutory amendments enacted by the Legislature in 2010 N.C. Sess. Law 103. Plaintiffs have cited no other authority under which their alleged prosecution occurred. As such, I conclude plaintiffs\u2019 have failed to state a claim for selective prosecution.\nFor the foregoing reasons, I conclude the trial court did not err in granting defendants\u2019 motion to dismiss plaintiffs\u2019 complaint. Accordingly, I would affirm the trial court\u2019s order.",
        "type": "dissent",
        "author": "HUNTER, Robert C., Judge,"
      }
    ],
    "attorneys": [
      "Daughtry, Woodard, Lawrence & Starling, by Kelly K. Daughtry, for plaintiff-appellants.",
      "Attorney General Roy Cooper, by Assistant Solicitor General John F. Maddrey and Special Deputy Attorney General Hal F. Askins, for defendant-appellees."
    ],
    "corrections": "",
    "head_matter": "SANDHILL AMUSEMENTS, et al., Plaintiffs v. STATE OF NORTH CAROLINA; GOVERNOR BEVERLY PERDUE, in her official capacity; NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY, BRYAN E. BEATTY, in his official capacity; ALCOHOL LAW ENFORCEMENT DIVISION; DIRECTOR OF ALCOHOL ENFORCEMENT DIVISION, WILLIAM CHANDLER, in his official capacity, Defendants\nNo. COA11-301\n(Filed 6 March 2012)\nGambling\u2014sweepstakes\u2014entertaining display\u2014prohibition unconstitutional\nAn order dismissing a complaint that sought an injunction that its promotional sweepstakes did not violate any North Carolina gaming or gambling law was reversed where N.C.G.S. \u00a7 14-306.4, under which plaintiffs\u2019 sweepstakes squarely fell, was held to be unconstitutional by Hest Technologies, Inc. v. State, No. COA11-459 (Filed 6 March 2012).\nJudge HUNTER, Robert C. dissents.\nAppeal by plaintiffs from order entered 29 November 2010 by Judge Paul C. Ridgeway in Wake County Superior Court. Heard in the Court of Appeals 25 October 2011.\nDaughtry, Woodard, Lawrence & Starling, by Kelly K. Daughtry, for plaintiff-appellants.\nAttorney General Roy Cooper, by Assistant Solicitor General John F. Maddrey and Special Deputy Attorney General Hal F. Askins, for defendant-appellees."
  },
  "file_name": "0362-01",
  "first_page_order": 372,
  "last_page_order": 379
}
