Appeals court rules against Torch Electronics and Missouri Gaming Commission

An appeals court refuses to declare whether or not the video gaming machines that have proliferated in gas stations and bars across Missouri in recent years are illegal gambling devices or not gambling devices and therefore legal. The Missouri Court of Appeals, Western District on May 28 affirmed a trial court’s dismissal of several claims and counterclaims related to a Missouri Highway Patrol seizure of the devices.

Torch Electronics operates and licenses electronic gaming devices and placed its machines in convenience stores owned by Warrenton Oil Company. The Missouri Highway Patrol seized the devices, deeming them illegal “gambling devices.” Torch and Warrenton Oil sued the Highway Patrol and the Department of Public Safety (DPS) seeking a declaration that the devices are not “gambling devices” as defined in section 572.010, RSMo, as well as an injunction preventing the Highway Patrol from seizing them as such. The Missouri Gaming Association filed a counterclaim against Torch and Warrenton Oil, seeking a declaration that the devices are illegal and an injunction prohibiting the two entities from operating them. Torch and Warrenton then moved to dismiss the Gaming Association’s counterclaim, while the Highway Patrol and DPS moved to dismiss the plaintiff’s amended petition. The Cole County Circuit Court dismissed all claims with prejudice, and the plaintiffs and the Gaming Association appealed.

A unanimous three-member panel of the Missouri Court of Appeals, Western District on May 28 affirmed the trial court dismissals “on the grounds that the parties sought declaratory judgments and injunctive relief relating to a criminal law, Missouri courts do not provide equitable relief relating to a criminal statute absent a challenge to the statute’s constitutionality or validity, and no such challenge was raised by the parties,” according to the opinion written by Judge Edward R. Ardini Jr.

Judge Ardini continued, “Generally, Missouri courts lack authority to enter a declaratory judgment or order injunctive relief that interferes with the enforcement of criminal statutes…. There are sound policy reasons why courts should not be used to civilly enforce criminal laws, including the difference in the burden of proof between a criminal prosecution and an action for equitable relief. Further, courts should avoid encroaching on the constitutional and statutory duties of prosecutors to enforce the criminal laws by permitting private litigants to seek enforcement through a civil action for declaratory or injunctive relief.”

The Western District noted there is an exception to the general rule where the criminal law in question is unconstitutional or otherwise invalid, but the plaintiffs did not challenge the constitutionality or validity of section 572.010, which defines “gambling device” as “any device, machine, paraphernalia or equipment that is used or usable in the playing phases of any gambling activity, whether that activity consists of gambling between persons or gambling by a person with a machine.” The court noted that the statute defines gambling is not a crime if it is licensed, but plaintiffs are not licensed to conduct gambling activity.

“In sum, Plaintiffs have sought a declaratory judgment and injunctive relief that would interfere with the enforcement of the criminal laws of Missouri,” Judge Ardini wrote. “Plaintiffs have not challenged the constitutionality or validity of section 572.010, thus they are not exempt from the general rule that Missouri courts do not grant equitable relief that would interfere with the enforcement of criminal law. As a result, we find the trial court did not err in dismissing Plaintiffs’ amended petition.”

The Western District also affirmed the dismissal of the Gaming Association’s counterclaim, noting it too sought a declaration from the trial court interpreting a criminal law. “Missouri courts do not provide equitable relief that interferes with the enforcement of criminal law absent a challenge to the law’s constitutionality or validity,” and the Gaming Association did not raise that challenge.

The cases are Torch Electronics vs. Missouri Department of Public Safety; Missouri Gaming Association, WD86610 (Consolidated with WD86674) and WD86689.

https://molawyersmedia.com/2024/05/29/appeals-court-rules-against-torch-electronics-and-missouri-gaming-commission/