Ark. SC rules against Internet cafe over sweepstakes promotions
LITTLE ROCK, Ark. (Legal Newsline) - The Arkansas Supreme Court has affirmed a ruling against an Internet cafe and business center over its so-called "sweepstakes promotions."
In its April 12 ruling, the Court upheld an order by the Pulaski County Circuit Court, dismissing with prejudice Cancun Cyber Cafe and Business Center Inc.'s complaint for emergency declaratory and injunctive relief and denying as moot Cancun's petition for temporary restraining order and preliminary injunction.
Cancun, which opened in August last year, sold computer time, provided printing, faxing and copying services, and operated a "sweepstakes promotion," whereby its customers could play casino-style video games to learn whether they had won prizes.
About a month later, Cancun temporarily shut down to "protect itself, its customers and its employees from the threats of seizure of property, arrest and prosecution."
Soon after, it filed a complaint for emergency declaratory and injunctive relief and a motion for temporary restraining order and preliminary injunction against the city of North Little Rock, North Little Rock Police Chief Danny Bradley and Pulaski County Prosecuting Attorney Larry Jegley.
Cancun sought declarations that:
- Its business and sweepstakes promotion was lawful and did not violate any lottery, gaming or gambling law of the state;
- The criminal arrest or prosecution of Cancun would be an unconstitutional restraint on free speech under the First Amendment of the U.S. Constitution and article 2, section 6 of the Arkansas Constitution because Cancun uses the sweepstakes to communicate to its customers;
- Its criminal arrest or prosecution would be unconstitutional under the equal protection clauses of the U.S. Constitution and the Arkansas Constitution because it is being treated differently than other businesses that use sweepstakes; and
- Its arrest or prosecution would be unconstitutional under the due process clauses of the U.S. Constitution and the Arkansas Constitution because the state's gambling laws are void for vagueness.
Cancun sought injunctive relief to prohibit any prosecution or other law-enforcement action against it.
Jegley, in turn, filed a motion to dismiss Cancun's complaint, asserting that it lacked standing to seek declaratory relief because there was no justiciable controversy between the parties, and Cancun could not initiate a lawsuit to seek an advisory opinion holding that its business operation is lawful.
In its Oct. 14, 2011 order, the circuit court granted Jegley's motion to dismiss and denied as moot Cancun's motion for temporary restraining order and preliminary injunction.
Cancun appealed to the state's high court.
Chief Justice Jim Hannah, who wrote the Court's seven-page ruling, disagreed with Cancun's contention that it presented a justiciable controversy.
Hannah said it was "apparent" that Cancun was seeking an advisory opinion, rather than the resolution of an actual controversy.
"We have long held that courts do not sit for the purpose of determining speculative and abstract questions of law or laying down rules for future conduct," the chief justice wrote.
"Because there is no existing legal controversy in this case, the circuit court did not err in concluding that Cancun was not entitled to declaratory relief. It follows that Cancun was not entitled to injunctive relief, which was dependent on the grant of declaratory judgment.
"We hold that the circuit court did not abuse its discretion in granting Jegley's motion to dismiss and denying as moot Cancun's motion for temporary restraining order and preliminary injunction."
A number of state attorneys general, including those in Ohio and Michigan, have come out against and filed lawsuits against such Internet sweepstakes cafes.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.
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