CCI ENTERTAINMENT, LLC T/A CROOKED I SPORTS BAR & GRILL ET AL.
STATE OF MARYLAND ET AL.
Woodward, Kehoe, Salmon, James P. (Retired, Specially Assigned) JJ.
The primary dispute in this case is whether a 2012 amendment to the State's gaming law violates the Maryland constitutional prohibition against "special laws." We hold that it does not. The appellants/cross-appellees are CCI Entertainment, L.L.C., trading as the Crooked I Sports Bar & Grill, which operated a gaming establishment in Calvert County, and its principals (collectively "CCI"). The appellees/cross-appellants are the State, Governor Martin O'Malley, the General Assembly, and the State's Attorney for Calvert County (collectively, "the State").
At issue is chapter 603 of the Acts of 2012, which, among other things, amended the statutory definition of "slot machine" in ways that rendered unquestionably illegal the gaming machines that CCI asserts had been legal up to that time. CCI contends that § 3 of chapter 603 is a "grandfather" provision that exempted a small number of existing entities—but not it—from the effect of the amendments. CCI argues that it should have been included within this class of grandfathered businesses and that chapter 603 was deliberately and specifically drafted to exclude it.
CCI filed suit in the Circuit Court for Anne Arundel County against the State seeking declaratory and injunctive relief. Pertinent to this appeal, CCI alleged that: 1) § 3 of chapter 603 is a "special law" and violates Article III, § 33 of the Maryland Constitution; 2) the same provision offends equal protection principles by treating CCI differently from similarly-situated businesses without any legitimate, rational basis; and 3) chapter 603, when applied to it, constitutes an unconstitutional taking of CCI's property. The State contested all of these allegations.
In discovery, CCI sought to obtain documents and emails in the possession of the General Assembly related to the drafting and consideration of Senate Bill 864, which, when enacted, became chapter 603. The circuit court ordered the General Assembly to disclose certain documents for in camera review, and denied CCI's remaining discovery requests. The State filed an interlocutory appeal of this order. CCI asserts that the circuit court erred in restricting its ability to obtain the discovery it requested. The State contends that the circuit court's order compelling the General Assembly to disclose documents for in camera review violated "the State's sovereign immunity, the speech and debate clause, and the absolute legislative privilege of the General Assembly and its members."
After an evidentiary hearing, the court denied CCI's request for a preliminary injunction. The parties then stipulated to an order consolidating the preliminary injunction proceedings with a trial on the merits and the circuit court entered final judgment in favor of the State. CCI appealed and its appeal and the State's appeal were consolidated by this Court, with the State designated as appellee/cross-appellant.
CCI raises the following issues, which we have re-worded:
I. Did the circuit court err in deciding that uncodified § 3 of chapter 603 of the Laws of 2012 was not a special law prohibited by Article III, § 33 of the Maryland Constitution?
II. Did the circuit court err in concluding that the same provision of chapter 603 violated CCI's rights to equal protection of the law?
III. Did the circuit court err in not declaring that chapter 603 constituted a taking of CCI's property without due process?
IV. Did the circuit court err by prohibiting CCI discovery and excluding evidence presented by CCI regarding statements and actions by legislators and/or their personnel who drafted chapter 603?
The State presents the following issue in its cross-appeal:
Was the [circuit] court's order compelling the General Assembly of Maryland to disclose documents for in camera review entered in violation of the State's sovereign immunity, the speech and debate clause, and the absolute privilege of the General Assembly and its members?
We will affirm the judgment of the circuit court. Turning first to the special law issue, and applying the analysis articulated in Cities Service v. Governor, 290 Md. 553 (1981), and MDE v. Days Cove, 200 Md.App. 256 (2011), we hold that chapter 603 is not a special law. We also conclude that chapter 603 does not violate CCI's equal protection and due process rights. The circuit court's discovery rulings did not prejudice CCI because, to the extent that the information it sought was relevant, it presented unchallenged evidence to the same effect. Our disposition of CCI's issues renders the State's cross-appeal moot.
In order to provide context to the parties' assertions, it is necessary for us to set out the complicated legal and factual background to the current dispute, a task that will involve a fair amount of slow drilling through hard wood.
The Initial Slot Machine Statute: Article 27, Section 264B
The operation of slot machines has been regulated by statute in Maryland since 1963. The original regulations were enacted by ch. 617 of the Acts of 1963 and codified at Md. Code (1957), Art. 27, § 264B. The act provided that: "It shall be unlawful for any person, firm or corporation to locate, possess, keep, maintain or operate any slot machine within this State . . ., except as provided in [other parts of the statute]." Art. 27, § 264B(I). The act defined "slot machine" as follows (emphasis added):
Any machine . . . that is adapted for use in such a way that, as a result of the insertion or deposit therein, or placing with another person of any piece of money, coin, token or other object, such machine . . . is caused to operate or may be operated, and by reason of any element of chance or of other outcome of such operation unpredictable by him, the user may receive or become entitled to receive any piece of money, coin, token or other object representative of and convertible into money . . . .
Art. 27, § 264B. The act's purpose was: "to define the term 'slot machines, ' [and] to make it unlawful to possess or operate such machines except for a specified period in the four Southern Maryland Counties [Calvert, St. Mary's, Anne Arundel, and Charles Counties] during which these machines were to be gradually decreased year by year and 'providing for the gradual and eventual total abolition . . . of all slot machines within this State.'" Clerk of Circuit Court for Calvert County v. Chesapeake Beach Park, Inc., 251 Md. 657, 661 (1968) (quoting ch. 617 of the Acts of 1963); see also State v. 149 Slot Machines, 310 Md. 356, 365 (1987) ("[T]he General Assembly intended a total abolition of slot machines adapted for gambling."). Although § 264B was amended in 1981 and 1983, the definition of slot machine remained substantively unaltered. See State v. 158 Gaming Devices, 304 Md. 404, 407 n.1 (1985) (quoting ch. 540 of the Acts of 1983); ch. 280 of the Acts of 1981.
At the time that Article 27 § 264B was enacted, there was no State-wide licensing system for slot machine operations. Instead, some counties had local law provisions permitting them to grant licenses.
Bingo Enters the Digital Era: Chesapeake Amusements v. Riddle
On February 13, 2001, the Court of Appeals issued its opinion in Chesapeake Amusements v. Riddle, 363 Md. 16 (2001). The issue in Chesapeake Amusements was "whether a dispensing machine with a video screen that displays the contents of the [paper] tickets that it dispenses and emits a musical tone that signals when a winning ticket is being dispensed is a 'slot machine'" as defined by § 264B. Chesapeake Amusements, 363 Md. at 18. The parties in that case did not dispute that the machine—called the Lucky Tab II—offered a form of "instant bingo." The parties stipulated that the game of instant bingo involved pre-printed bingo tickets, some of which contained winning combinations of letters and numbers. Id. at 20. The Court described the Lucky Tab II as:
an electrically operated machine that dispenses paper pull-tab tickets from a roll of preprinted paper pull-tabs inserted in the machine by [an employee of the operator]. [E]ach ticket dispensed by the Lucky Tab II is part of a particular deal of outwardly identical tickets, in which the total number of tickets, as well as the number of winning tickets, were determined when the deal was constructed and printed.
Id. at 21. The parties provided an agreed statement of facts explaining how "instant bingo" was played using the Lucky Tab II machine:
A customer inserts money into the Lucky Tab II and pushes a button located on the front of the machine; a pull-tab ticket is then dispensed into a tray on the front of the machine. When a ticket is purchased from the Lucky Tab II, a bar code reading device in the interior of the machine reads the bar code on the back of the ticket as it is being severed from the roll of tickets and dispensed into the tray. The information from the bar code is used to create a video image of the symbols that appear on the inside of the ticket, and that image is then displayed on the video screen located on the front of the Lucky Tab II. The video image of the symbols on the inside of the ticket is displayed on the screen after a brief delay. . . . As in a retail store setting, the bar code reader also reads and records accounting information relating to the ticket purchase. The video display of a winning ticket is accompanied by a musical signal. Depending on the amount of money deposited into the machine by the customer, the dispensing button can be pushed again to dispense another ticket.
Id. at 22. The parties further agreed that: "it is only on the basis of the symbols that appear on the inside of the paper ticket that a winning ticket is determined, " and, thus, that "the symbols that are displayed on the video screen are not used to determine whether the customer is entitled to a prize." Id.
In reversing the circuit court's conclusion that the Lucky Tab II was a slot machine under § 264B, the Court emphasized that, in order to constitute a slot machine, the statute required there to "be consideration supplied by the user on the possibility that he or she will receive a prize 'by reason of' the unpredictable operation of the machine." Chesapeake Amusements, 363 Md. at 30 (quoting § 264B). The Court observed that, in contrast to this requirement, "[t]he Lucky Tab II machine d[id] not pick the paper pull-tab tickets sold in a random fashion, " and, instead, "dispensed [tickets] in sequence from the deal placed into it by [the operator's] employee." Id. For this reason, among others, the Court reasoned that "it is with the paper pull-tabs with which the game is played, " id. at 31, and not the visual images depicted on the monitor nor the machine's audio accompaniment. See id. ("The player enhancement features, the video and audio, respond only to the information contained in the paper pull tabs, and, therefore, have no ability to affect the outcome of the game; the outcome of the game is set once the paper pull-tab is purchased non-randomly."). Because the "element of chance [was] in the pull-tabs themselves, and not in the operation of the machine, " the Court concluded that the Lucky Tab II was not a slot machine. Id. at 41.
Chesapeake Amusements's focus on the design and operation of the machine—as opposed to a player's visual and auditory experiences—is a significant element in Maryland's approach to slot machine regulation.
The Re-Codification of Article 27
By chapter 26 of the Acts of 2002, Maryland's criminal law statutes were recodified as the Criminal Law Article and Art. 27, § 264B was re-codified at Md. Code (2002) § 12-301 of the Criminal Law Article ("CR"). Section 12-301 provided, in pertinent part (emphasis added):
In this subtitle:
(1) "slot machine" means a machine, apparatus, or device that:
(i) operates or can be made to operate by inserting, depositing, or placing with another person money, a token, or another object; and (ii) through the element of chance or any other outcome unpredictable by the user, awards the user:
1. money, a token, or other object that represents or that can be converted into money; or
2. The right to receive money, a token, or another object that represents and can be converted into money
Section 13 of chapter 26 explained that, "except as expressly provided in this Act, this Act shall be construed as a nonsubstantive revision, and may not otherwise be construed to render any substantive change in the criminal law of the State."
The General Assembly Responds to Chesapeake Amusements: Chapter 474 (SB 959) of the Acts of 2008
In 2008, the General Assembly enacted, and the Governor signed into law, Senate Bill 959 (chapter 474 of the Acts of 2008) ("SB 959" or "the 2008 law"). The bill's preamble indicated that it was passed to accomplish several purposes, including: 1) "altering the definition of 'slot machine' . . . to include certain machines, apparatuses, or devices that make a certain award to a user through the reading of a game of chance or the delivery of a game of chance"; 2) "providing that the definition of 'slot machine' does not include certain machines, apparatuses, or devices"; and 3) "authorizing the continued use of certain instant bingo machines under certain circumstances." Chapter 474 amended § 12-301's definition of slot machine as follows (emphasis added):
In this subtitle:
(1) "slot machine" means a machine, apparatus, or device that:
(i) operates or can be made to operate by inserting, depositing, or placing with another person money, a token, or another object; and (ii) through the element of chance, the reading of a game of chance, the delivery of a game of chance, or any other outcome unpredictable by the user, awards the user:
1. money, a token, or other object that represents or that can be converted into money; or
2. The right to receive money, a token, or another object that represents and can be converted into money;
The bill also expressly excluded certain types of machines from this definition. To this end, § 12-301(3) provided in relevant part (emphasis added):
(3) "slot machine" does not include a machine, apparatus, or device that:
(iii) dispenses paper pull tab tip jar tickets or paper pull tab instant bingo tickets that must be opened manually by the user provided that the machine apparatus, or device does not:
1. read the tickets electronically;
2. alert the user to a winning or losing ticket; or
3. tabulate a player's winnings and losses;
(iv) 1. displays facsimiles of bingo cards that users mark and monitor according to numbers called on the premises by an individual where the user is operating the machine; and
2. does not permit a user to play more than 54 bingo cards at the same time;
Two other provisions of the 2008 law are pertinent to the present case.
First, CR § 13-101(b) prohibited counties from issuing new bingo licenses to entities "not licensed to conduct commercial bingo on or before June 30, 2008." Thus, the bill effectively closed the class of those operating pursuant to commercial bingo licenses issued on the county level.
Second, the 2008 law contained an uncodified temporary grandfather provision. Section 2 of the act stated (emphasis added):
That, notwithstanding the provisions of Section 1 of this Act, an entity licensed to offer instant bingo under a commercial bingo license as of July 1, 2007, or by a qualified organization as defined in § 13-201 of this article on the premises of the qualified organization may continue to operate a game of instant bingo in the same manner using electronic machines until January 1, 2009, provided that:
(1) the machines have been in operation for a 1-year period ending December 31, 2007;
(2) the entity does not operate more than the number of electronic machines operated as of February 28, 2008; and
(3) the conduct of the gaming and operation of the machines are consistent with all other provisions of the Criminal Law Article.
The bill went into effect on July 1, 2008.
CCI Obtains a License from Calvert County
On June 26, 2008, that is, after the enactment and approval of the 2008 law but prior to § 13-101(b)'s cut-off date for new licensees, CCI obtained a NG Beach Bingo License from Calvert County for the Crooked I Bar & Grill, an establishment located in Chesapeake Beach, Calvert County, Maryland. (CCI initially applied for a license in October of 2007 but it was not granted by the county commissioners until June 26th.) The NG Beach Bingo License authorized CCI to conduct bingo operations "throughout the year, " seven days a week, without "limitation on seating or player capacity, " CR § 13-705(e)(1)(vii),  but proscribed the operation "of any [d]evice specifically prohibited by law." CCI began operating approximately 105 electronic bingo machines at the Crooked I in May of 2009.
The trial court found, and the parties do not dispute on appeal, that CCI's machines did not offer a game of "instant bingo" as described in Chesapeake Amusements. Instead, CCI's machines offered a form of "bonanza bingo, " which Richard LaBrocca—the State's expert witness—described as follows:
Bonanza bingo is a style of bingo where balls are predrawn, a variable number of balls, generally not all of them, but it could be. And then a player makes a purchase of a bingo card, which is then applied to those balls. Dobbing—the ball is drawn, in an attempt to match a predesignated pattern for winning the prize. The balls remain fixed. Ball players purchase many bingo cards and attempt to achieve the game-ending pattern, regardless of what the pattern may be.
In appearance and from the perspective of a user, CCI's machines were nearly indistinguishable from video slot machines. The machines were housed in free-standing, six-foot tall terminals that featured a headboard with a vertical video screen that displayed various phrases—e.g., Wicked Mad Hot, Some Like it Hot, and similar expressions—as well as the amount of the current jackpot. Below the headboard sat a second, diagonally-positioned video screen that prominently featured a five column scrolling bar or electronic "reel" that displayed various objects such as cherries, bells, poker chips, crowns, hearts, and large letters and numbers, among other symbols, which rotated in a fashion that corresponded to the success of the user in the game. A small display above the scrolling bar displayed a bingo card, which the machine automatically filled in for the user as the user pressed a button on the terminal. If the user was lucky enough to draw a winning bingo card upon the user's press of the button, the machine's lower video screen flashed, displayed a reel and bingo card with a winning combination, and the screen informed the user of the number of credits he or she had won. If the user did not draw a winning combination, the machine's lights did not flash, and the bingo card and reel revealed that the user had lost the game. A user could continue to play the game so long as he or she had sufficient credits—i.e., had entered the required payment into the system, or had accumulated enough winnings to continue playing—until the user requested a cash out ticket of whatever credits remained. The machine permitted the user, through the hitting of buttons, to select different levels of play and to bet varying amounts as the game continued.
CCI's machines were pre-programmed to deliver a certain payout percentage—i.e., the percentage likelihood of winning—and could be reprogrammed by CCI to deliver varying payout percentages. The bingo "balls" that corresponded to the bonanza bingo game were not drawn nor called contemporaneously. Instead, according to Christopher Russell, one of CCI's owners, the numbers were precalled by an individual and then entered into and stored on a computer server, which was then accessed by the bingo machines during play. Mr. Russell testified that the numbers were pre-called by an individual at the Crooked I in an attempt to bring the machines within the ambit of § 12-301(3)(iv).
Before it began operations, CCI's representatives met with the State's Attorney for Calvert County on several occasions regarding whether its machines complied with Maryland law. On December 11, 2008, the State's Attorney wrote CCI, stating that she believed that the proposed machines offered a form of "bingo" but that there was a degree of uncertainty about the ...