Deon v. Barasch

341 F.Supp.3d 438

Pasquale T. DEON, Sr., and Maggie Hardy Magerko, Plaintiffs,

v.David M. BARASCH, Kevin F. O'Toole, Richard G. Jewell, Sean Logan, Kathy M. Manderino, Merritt C. Reitzel, William H. Ryan, Jr., and Dante Santoni Jr., Members of the Pennsylvania Gaming Control Board, in their official capacities; Paul Mauro, Director of the Pennsylvania Gaming Control Board's Bureau of Investigation and Enforcement, in his official capacity; Cyrus Pitre, Director of the Pennsylvania Gaming Control Board's Office of Enforcement Counsel, in his official capacity; and Josh Shapiro, Attorney General of Pennsylvania, in his official capacity, Defendants.

Civil No. 1:17-cv-1454

United States District Court, M.D. Pennsylvania.

Signed September 19, 2018

Adam A. Desipio, Nathan P. Heller, Timothy J. Lowry, Courtney G. Saleski, Pro Hac Vice, DLA Piper LLP, Philadelphia, PA, Jesse C. Medlong, Pro Hac Vice, Amanda L. Morgan, DLA Piper LLP, San Francisco, CA, John J. Hamill, Pro Hac Vice, DLA Piper LLP, Chicago, IL, Alexander W. Saksen, Lee K. Goldfarb, Paul Gavin Eastgate, Gordon & Rees Scully Mansukhani LLP, Pittsburgh, PA, for Plaintiffs.

Allison L. Deibert, PA Office of Attorney General, Bureau of Consumer Protection, Karen Mascio Romano, Pennsylvania Office of Attorney General, M. Abbegael Giunta, PA Governor's Office of General Counsel, Harrisburg, PA, for Defendants.

MEMORANDUM

SYLVIA H. RAMBO, United States District Judge

In this civil rights action, Pasquale T. Deon, Sr., and Maggie Magerko ("Plaintiffs") challenge the constitutionality of Section 1513 of the Pennsylvania Gaming Act, 4 Pa. C.S. § 1513, under the First Amendment and the Equal Protection Clause of the Fourteenth Amendment. Presently before the court is Plaintiff's motion for summary judgment seeking declaratory and injunctive relief. For the reasons that follow, the court will grant Plaintiff's motion.

I. Factual Background and Procedural History

The facts relevant to the disposition of this matter are not in dispute. Plaintiff Deon is a shareholder of Sands Pennsylvania Inc., a company owning a 90 percent interest in Sands Bethworks Gaming LLC ("Sands"), a privately held gaming business licensee under the Gaming Act. (Doc. 47, ¶¶ 1, 2.) Plaintiff Magerko is the beneficiary of a trust that is the owner of Nemacolin Woodlands, Inc. ("Nemacolin"). (Id. at ¶ 10.) Nemacolin owns Woodlands Fayette, LLC ("Woodlands"), a privately held gaming business licensee under the Gaming Act. (Id. at ¶¶ 10, 11.) Both plaintiffs applied to the Pennsylvania Gaming Control Board ("Board") to be licensed as a "principal"¹ under the Gaming Act. (Id. at ¶¶ 5, 17.) Defendants are members or employees of the Board and the Attorney General of Pennsylvania and are tasked with the enforcement of the Gaming Act and rules and regulations promulgated thereunder. (Id. at ¶ 23.)

Plaintiff Deon filed the initial complaint in this matter on August 15, 2017. (Doc. 1.) Defendants filed an answer with affirmative defenses on September 29, 2017. (Doc. 32.) On October 20, 2017, Plaintiffs filed an amended complaint, and Defendants again filed an answer with affirmative defenses on November 3, 2017. (Docs. 34, 38.) Plaintiffs filed the instant motion for summary judgment on January 16, 2018. (Doc. 46.) The matter has been fully briefed and is ripe for disposition.

II. Discussion

Plaintiffs argue that Section 1513 of the Gaming Act is unconstitutional under the First Amendment and the Equal Protection Clause of the Fourteenth Amendment because it prohibits certain classes of people, e.g. gaming-license applicants, licensees, and principals of licensees, from making any political contributions. In pertinent part, Section 1513 provides:

The following persons shall be prohibited from contributing any money or in-kind contribution to a candidate for nomination or election to any public office in this Commonwealth, or to any political party committee or other political committee in this Commonwealth or to any group, committee or association organized in support of a candidate, political party committee or other political committee in this Commonwealth:

(1) An applicant for a slot machine license, manufacturer license, supplier license, principal license, key employee license, interactive gaming license or horse or harness racing license.

(2) A slot machine licensee, licensed manufacturer, licensed supplier, interactive gaming operator or licensed racing entity.

(3) A licensed principal or licensed key employee of a slot machine licensee, licensed manufacturer, licensed supplier, interactive gaming operator or licensed racing entity.

4 Pa. C.S. § 1513. A "political committee" is defined as "[a]ny committee, club, association or other group of persons which receives contributions or makes expenditures." 4 Pa. C.S. § 1513(d). Section 1513(c) establishes penalties for unlawful contributions including civil fines and misdemeanors. Plaintiffs aver that they desire to make political contributions, but have been unable to do so for fear of incurring fines or risking criminal prosecution under the Gaming Act.

A. Legal Standards

Summary judgment is appropriate where "there is no genuine issue as to any material fact and [ ] the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c) ; Pearson v. Component Tech. Corp. , 247 F.3d 471, 482 n.1 (3d Cir. 2001) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). A genuine issue of material fact exists only when "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate where only issues of law remain. Int'l Bhd. of Elec. Workers, AFL-CIO, Local 1522 v. AT & T Microelectronics, Inc. , 909 F.Supp. 294, 296 (E.D. Pa. 1995) ; Kreimer v. Bureau of Police for Town of Morristown , 958 F.2d 1242, 1250 (3d Cir. 1992). Because the parties agree on the relevant facts and raise only issues of law, this matter is ripe for summary adjudication.

The First Amendment, applicable to the States through the Fourteenth Amendment, prohibits the enactment of laws "abridging the freedom of speech." U.S. Const., Amdt. 1. As a general principle, the First Amendment prohibits the government from restricting expression "because of its message, its ideas, its subject matter, or its content."

Ashcroft v. Am. Civil Liberties Union , 535 U.S. 564, 573, 122 S.Ct. 1700, 152 L.Ed.2d 771 (2002). Thus, any law or regulation that is content based will be subjected to a strict scrutiny analysis, meaning that the law must be the least restrictive means to achieve a compelling governmental interest. Reed v. Town of Gilbert, Ariz. , ––– U.S. ––––, 135 S.Ct. 2218, 2226, 192 L.Ed.2d 236 (2015) (internal quotation omitted). Conversely, where a law is content neutral, the courts apply an intermediate scrutiny analysis that requires the government to prove only that the law is "narrowly tailored to achieve a significant government interest." McTernan v. City of York, PA , 564 F.3d 636, 653 (3d Cir. 2009).

In the context of elections for government office, the Supreme Court has opined that "[t]here is no right more basic in our democracy than the right to participate in electing our political leaders." McCutcheon v. Fed. Election Comm'n , 572 U.S. 185, 191, 134 S.Ct. 1434, 188 L.Ed.2d 468 (2014) (Roberts, C.J.) (plurality opinion). To that end, the Court in McCutcheon established a modified standard of scrutiny uniquely applicable to limits on direct campaign contributions in contrast to restrictions on independent expenditures, i.e. , expenditures made independently of a candidate's campaign such as to a Political Action Committee ("PAC"). Restrictions on independent expenditures remain subject to strict scrutiny; however, restrictions on direct campaign contributions are subject to a modified form of intermediate scrutiny, described as a "lesser but ‘still rigorous standard of review.’ " Id. (citing Buckley v. Valeo , 424 U.S. 1, 29, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976) ). "Under that standard, ‘[e]ven a "significant interference" with protected rights of political association may be sustained if the State demonstrates a sufficiently important interest and employs means closely drawn to avoid unnecessary abridgement of associational freedoms.’ " Id. (quoting Buckley v. Valeo , 424 U.S. at 25, 96 S.Ct. 612 ). Thus, the first step in the court's inquiry is to determine if the Commonwealth has demonstrated a sufficiently important interest justifying the contribution ban.

B. Sufficiently Important Governmental Interest

The Commonwealth bears the burden of proving the constitutionality of Section 1513. McCutcheon , 572 U.S. at 209, 134 S.Ct. 1434 (citing U.S. v. Playboy Entm't Grp., Inc. , 529 U.S. 803, 816, 120 S.Ct. 1878, 146 L.Ed.2d 865 (2000) ). "[M]ere conjecture" about the risk of corruption or its appearance is insufficient to show that a contribution restriction promotes a sufficiently important government interest. Id. at 210, 134 S.Ct. 1434 ; Nixon v. Shrink Missouri Gov't PAC , 528 U.S. 377, 392, 120 S.Ct. 897, 145 L.Ed.2d 886 (2000). The Supreme Court has expressly recognized that preventing quid pro quo corruption or the appearance of such corruption is a sufficiently important reason, and in fact, the only sufficiently important reason, to justify restrictions on political contributions. McCutcheon , 572 U.S. at 207-208, 134 S.Ct. 1434 (citing Citizens United v. Fed. Election Comm'n , 558 U.S. 310, 359, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010) ). In the instant case, it is uncontested that the ostensible purpose of Section 1513 is to prevent quid pro quo corruption and the appearance of such corruption. The legislative purpose section of the Gaming Act was recently amended to specifically provide:

The General Assembly has a compelling interest in protecting the integrity of both the electoral

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