Appellate Materials: CYBER ISLAND VS SPRINGFIELD TOWNSHIP POLICE DEPARTMENT

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DANIEL M, HORRIGAN
20 JAN -3 PH 2: 28
SUMMIT COUNTY
CLERK OF COWfN3THE COURT OF COMMON PLEAS
SUMMIT COUNTY, OHIO

. ¢S
CASE NO. CV 2010-06-4165 o-

CYBER ISLAND, et al., )
)
Plaintiffs, ) JUDGE PARKER
)
v. )
)
SPRINGFIELD TOWNSHIP ) FINAL JUDGMENT
POLICE DEPARTMENT, et al., ) (Final Appealable Order)
: a)
Defendants. )
I. INTRODUCTION

A. CASE HisToRY

This action is a consolidation of three cases filed challenging the constitutionality of a
Summit County ordinance regulating entertainment device arcades. The initial action filed
was Cybér Island v. Springfield Township Police Department, Case No. CV 2010-06-4165. It
was consolidated with F&C Marketing v. Springfield Township Police Department, Case No.
CV 2010-06-4167 and Gold Rush v. Springfield Township Police Department, Case No.
2010-06-4194. Subsequently, F&C Marketing voluntarily dismissed its action pursuant to
Ohio Civil Rule 41.

On July 28, 2010, plaintiffs filed amended complaints in the Cyber Island and Gold
Rush cases in which all defendants other than the County of Summit were dropped. Thus, the
consolidated cases are being pressed on behalf of Cyber Island; Richard A. Bowling, LLC
d.b.a. 777 Sweeps; Gold Rush Cyber Café, LLC, d.b.a. Gold Rush; and Spinners Internet
Café, LLC, d.b.a. Café 7 against the defendant, County of Summit.

On June 10, 2010, the court granted plaintiffs’ motions for temporary restraining order
in order to preserve the status quo and preclude enforcement of the challenged ordinance

pending disposition of plaintiffs’ claims.COPY

 

 

Following several pretrial conferences and stipulations to continue the temporary
restraining order in effect, the parties requested the court to consolidate the hearing on
plaintiffs’ motions for preliminary injunction with a trial on the merits, pursuant to Ohio Civil
Rule 65(B)(2). The request to consolidate the trial on the merits with the preliminary
injunction hearing was granted, and the trial commenced on September 15, 2010. The parties
were given the opportunity to submit pre- and post-trial briefs. The last of the briefs was

submitted on October 15, 2010. The matter is now fully ripe for resolution. With this

decision, the court addresses and resolves each of the claims presented.

B. SuBiecT MATTER IN DISPUTE

On May 10, 2010, Summit County Council adopted amended Ordinance Number
2010-160. On May 11, 2010, the Summit County Executive approved the ordinance, which
thereafter became effective and was codified in Chapter 755 of the Ordinances of the County
of Summit under the title “Entertainment Device Arcades.”

The stated purpose of the ordinance is to regulate entertainment device arcades,
businesses commonly known as “Internet Cafes.” In these businesses patrons may purchase
Internet time on individual computer terminals. When a customer purchases Internet time,
that customer receives a sweepstakes ticket. The customer can either use the ticket number to
access slot machine-simulating Internet video games on the computer terminals or redeem the
ticket immediately to discover whether that ticket entitles the holder to a prize; either way, the
prize is the same. According to plaintiffs, the fact that a person plays a simulated game of
chance’on the Internet in no way affects the chances that a prize will be received from the use
or redemption of the ticket.

Concerned about the effect these businesses (10 or more of which had opened in or
around Springfield Township by the time of the trial), have on the health, safety, morals,
and/or general welfare of the communities within Summit County, council enacted the
challenged ordinance to regulate businesses of this sort that either have been or seek to be

established.

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IL. BENCHMARK PRINCIPLES FOR ANALYSIS OF CONSTITUTIONAL CHALLENGES

A. GENERALLY APPLICABLE PRINCIPLES

Plaintiffs challenge the validity of the ordinance in question and urge the court to
declare it unconstitutional in its entirety or, failing that, in various respects. They challenge
the ordinance on its face and as applied to them in their particular circumstances. Plaintiffs
effectively invite the court to evaluate the public policy judgments made by the legislative
body and, where necessary, to invalidate them. However, the fundamental principle of the
constitutional separation of powers among the three branches of government is that the
legislative branch is "the ultimate arbiter of public policy." State ex rel. Cincinnati Enquirer,
Div. of Gannett Satellite Information Network v. Dupuis, 98 Ohio St. 3d 126, 2002-Ohio-
7041, at (21, 781 N.E.2d 163. That being so, the court notes that the legislative branch has
the power to create and refine codified laws to meet the needs of the citizens of Ohio. The
court is not free to substitute its judgment for that of the Summit County Council. Whether or
not this court agrees with the public policy judgments made by the county council, it is bound
to accept them. Only when those judgments have the effect of depriving citizens of their
constitutional tights unreasonably or arbitrarily may the court step in and invalidate legislative
enactments.

The standards for an Ohio court’s evaluation of legislative enactments have been in
place for decades. In State ex rel. Dickman v. Defenbacher (1955), 164 Ohio St. 142, 57 Ohio
Op. 134, 128 N.E.2d 59, our supreme court set forth the still-applicable principles that must
be applied whenever a court assesses the constitutionality of a duly-enacted piece of
legislation. Because Dickman discussed such principles comprehensively, it warrants

extensive quotation, with this court’s emphases added:

“A regularly enacted statute of Ohio is presumed to be constitutional and is
therefore entitled to the benefit of every presumption in favor of its
constitutionality. This court has held enactments of the General Assembly to
be constitutional unless such enactments are clearly unconstitutional beyond a
reasonable doubt.

Paragraph four of the syllabus in Williams v. Scudder, 102 Ohio St., 305, 131
N. E., 481, states:COPY -

 

 

"The legislative judgment in this behalf will not be nullified except when it
clearly appears that there has been a gross abuse of such discretion in
undoubted violation of some state or federal constitutional provision."

In State, ex rel. Durbin, v. Smith, Secy. of State, 102 Ohio St., 591, 133 N. E.,
457, the court, in a per curiam opinion, said:

"In the recent case of City of Xenia v. Schmidt, 101 Ohio St., 437, this court
declared: '1. A legislative act is presumed in law to be within the constitutional
power of the body making it, whether that body be a municipal or a state
legislative body. 2. That presumption of validity of such legislative enactment
cannot be overcome unless it appear that there is a clear conflict between the
legislation in question and some particular provision or provisions of the
Constitution.’ In the opinion by Wanamaker, J., at page 443, the opinion of
John Marshall, C. J., in the case of Fletcher v. Peck, 6 Cranch, 87, * * * is
quoted with approval as follows: 'The question, whether a law be void for its
repugnancy to the Constitution, is, at all times, a question of much delicacy,
which ought seldom, if ever, to be decided in the affirmative, in a doubtful
case. The court, when impelled by duty to render such a judgment, would be
unworthy of its station, could it be unmindful of the solemn obligations which
that station imposes. But it is not on slight implication and vague conjecture
that the Legislature is to be pronounced to have transcended its powers, and its
acts to be considered as void. The opposition between the Constitution and the
law should be such that the judge feels a clear and strong conviction of their
incompatibility with each other."

"And in City of Xenia v. Schmidt, at page 444, Judge Wanamaker again quotes
from the opinion of Justice Washington in the case of Ogden v. Saunders, 12
Wheat., 213 (1827), as follows: 'If I could rest my opinion in favor of the
constitutionality of the law * * * on no other ground than this doubt so felt and
acknowledged, that alone would, in my estimation, be a satisfactory
vindication of it. It is but a decent respect due to the wisdom, the integrity, and
the patriotism of the legislative body by which any law is passed, to presume in
favor of its validity, until its violation of the Constitution is proved beyond a
reasonable doubt. This has always been the language of this court, when that
subject has called for its decision * * *.'

"Quoting again from the opinion of Chief Justice Waite in Sinking Fund Cases,
99 U.S., 700 (1878): ‘Every possible presumption is in favor of the validity of a
statute, and this continues until the contrary is shown beyond a rational doubt.
One branch of the government cannot encroach on the domain of another
without danger. The safety of our institutions depends in no small degree on a
strict observance of this salutary rule."COPY »

 

 

"Also quoting from the opinion of Chief Justice Shaw in the case of Wellington
et al., Petitioners, 16 Pick., 87: 'To repeat what has been so often suggested by
courts of justice, that when called upon to pronounce the invalidity of an act of
legislation * * * [they will] never declare a statute void, unless the nullity and
invalidity of the act are placed, in their judgment, beyond reasonable doubt.’

"Quoting again from the opinion of Justice Ranney in the case of Cincinnati,
Wilmington & Zanesville Rd. Co. v. Clinton County Commissioners, 1 Ohio
St., 77, * * * [Wanamaker, J.] approved this language: 'But while the right and
duty of interference in a proper case, are thus undeniably clear, the principles
by which a court should be guided, in such an inquiry, are equally clear, both
upon principle and authority * * * and it is only when manifest assumption of
authority, and clear incompatibility between the Constitution and the law
appear, that the judicial power can refuse to execute it. Such interference can
never be permitted in a doubtful case. * * *'

"This same principle was approved and applied in the recent case of Pohl v.
State * * * [102 Ohio St., 474], in which all members of this court concurred.
It is there stated that 'if under any possible state of facts the sections [of the
law] would be constitutional, this court is bound to presume that such facts
exist.”

Any doubt as to the constitutionality of a statute will be resolved in favor of its
validity. State, ex rel. Doerfler, Pros. Atty., v. Price, Atty. Genl., 101 Ohio St.,
50, 128 N. E., 173.

Every reasonable presumption will be made in favor of the validity of a statute.
State v. Parker, 150 Ohio St., 22, 80 N. E. (2d), 490; State, ex rel. Mack,
Judge, v. Guckenberger, Aud., 139 Ohio St., 273, 39 N. E. (2d), 840, 139 A. L.
R,, 728.

Turner, J., in Wilson v. Kennedy, 151 Ohio St., 485, 492, 86 N. E. (2d), 722,
said:

"It is the duty of the court where constitutional questions are raised as here to
liberally construe a statute to save it from constitutional infirmities.”

"In 8 Ohio Jurisprudence, 160, Section 61, it is said:

"The presumption in favor of the constitutionality of statutes leads to the
conclusion that where the validity of an act is assailed, and there are two
possible interpretations, one of which would render it valid, and the other
invalid, the court should adopt the former so as to bring the act into harmony
with the Constitution.’

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"In 8 Ohio Jurisprudence, 154, Section 58, it is said:

"Tt is a well established canon of construction that every reasonable
presumption be indulged in favor of the constitutionality of a statute.

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Id. at 147-149.

The court notes the recent Ohio Supreme Court decision reaffirming the manner in
which constitutional challenges to legislative enactments must be conducted. Pickaway
County Skilled Gaming, LLC y. Cordray, 127 Ohio St. 3d 104; 2010-Ohio-4908; 936 N.E.2d
944. In Pickaway, the court made it crystal clear that government has a legitimate interest in
regulating economic activity arising from skilled gaming operations. Though plaintiffs in this
case do not operate such facilities, the ordinance in question deals with both sweepstakes
games such as plaintiffs operate and skilled gaming. Thus, it is quite unlikely, given
Pickaway, that any constitutional challenge to a legislative enactment dealing with such
businesses will succeed if predicated on a contention that the government has no business
regulating skilled games or sweepstakes.

Given the foregoing settled principles, it can readily be seen that the ordinance at issue
is presumed to be constitutional unless plaintiffs can prove beyond a reasonable doubt that the
law violates their constitutional rights. In this instance, plaintiffs challenge the ordinance on
due process and equal protection grounds. Each challenge must be analyzed separately.”

B. STANDARD OF REVIEW FOR PLAINTIFFS’ DUE PROCESS CHALLENGE

A legislative enactment may be challenged on the ground that it violates the due
process provision of Section 16, Article I of the Ohio Constitution. Such challenges are the
equivalent of due process challenges raised under the United States Constitution. Arbino v.
Johnson & Johnson, 116 Ohio St.3d 468, 2007-Ohio-6948 at ¥48, 880 N.E.2d 420. When
reviewing a legislative enactment on due process grounds, the court must apply a rational-
basis test unless the ordinance impacts fundamental rights. Id. at (49. Here, plaintiffs raise
no fundamental rights challenges.! As a result, the ordinance must be found valid “(1) if it
bears a real and substantial relation to the public health, safety, morals or general welfare of
the publié, and (2) if it is not unreasonable or arbitrary.” Id. In applying this test, the court

must examine the record to determine whether those who challenge the ordinance have

' Plaintiffs, for example, do not contend that the ordinance particularly affects and impacts them because of their
race Or Sex.

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introduced evidence to show, beyond a reasonable doubt, that there is no relationship between
the ordinance and the protection of the public health, safety, morals, or general welfare or
whether, if there is such a relation, plaintiffs’ rights have been unreasonably or arbitrarily
comproniised.

C. STANDARD OF REVIEW FOR PLAINTIFFS’ EQUAL PROTECTION CHALLENGE

Plaintiffs’ equal protection challenge rests upon Section 2, Article II of the Ohio
Constitution. The Ohio Supreme Court has determined that this provision is the equivalent of
the federal equal protection clause found in the Fourteenth Amendment to the United States
Constitution. Arbino v. Johnson & Johnson, 116 Ohio St.3d 468, 2007-Ohio-6948 at §63,
880 N.E.2d 420.

When legislation infringes upon a fundamental constitutional right or the rights of a
suspect class, the law in question must be strictly scrutinized before it can be determined to be
constitutional. See State v. Williams, 88 Ohio St.3d 513, 530, 2000-Ohio-428, 728 N.E.2d
342. However, if neither a fundamental right nor a suspect class is involved, a rational-basis
test is used to evaluate an equal protection claim. In other words, if there is a rational
relationship between the achievement of a legitimate governmental interest and the plan set
forth in the legislation, the challenged law must be upheld. See, Menefee v. Queen City Metro
(1990), 49 Ohio St.3d 27, 29, 550 N.E.2d 181. If the legislation under challenge is facially
neutral (e.g. no distinction is made on the face of the ordinance regarding its application to
various classes of citizens) the rational-basis test must be used, even if the legislation impacts,
in its results, one segment of the community more than another. Arbino, supra , 2007-Ohio-

6948 at §65.

TH. PLAINTIFFS’ SPECIFIC CHALLENGES

The positions of the parties to this dispute could not be more in opposition. On the
one hand; plaintiffs claim they are legitimate entertainment businesses, and they argue that the
challenged legislation was enacted in order to run them out of business. They point to the
enactment of comparable ordinances in the city of Akron and other Summit County
municipalities, after which similar businesses were forced to close and/or relocate. Plaintiffs
assert that forcing otherwise lawful businesses to close simply because they are not popular
bears no relationship to the public health, safety, or morals; it is arbitrary and unreasonable;

and it cannot be a legitimate purpose of the government.

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The county, on the other hand, contends that it has the right and obligation to regulate
plaintiffs’ businesses in particular and Internet cafes in general because they are cash-centered
businesses; their mere presence in the townships of the county has caused an uptick in
criminal enforcement activities of township and county law enforcement agencies; and it is
probable that these businesses are, in actuality, facades for illegal gambling. The county
argues that even if Internet cafes are legitimate businesses, the heightened cost experienced
by the county to regulate and enforce the law (e.g. to preclude the operation of gambling
houses) warrants appropriate regulation and licensing.

Plaintiffs’ arguments focus on five specific aspects of the legislation. But, plaintiffs
first demand that the entire ordinance be declared unconstitutional. However, plaintiffs argue
in the alternative that if some of the legislation is found to be constitutional, then some or all
of these five offending provisions must be struck down individually.

A. PLAINTIFFS’ EVIDENCE

The thrust of plaintiffs’ presentation at trial was to argue the lack of any legitimate
basis for the county’s conclusions respecting the general need for the legislation. They also
argued that there was no permissible basis for the particular sections of the ordinance
plaintifi’s have challenged. Plaintiffs presented little evidence supporting their arguments.
None of the persons who own an interest in the plaintiff entities testified. And no person
employed by any of the plaintiffs testified. Plaintiffs called no expert witnesses. Instead,
they called Summit County Councilperson Paula Prentice as if on cross-examination and
offered four exhibits during the course of their examination of Ms. Prentice. Three of the
exhibits Were admitted in evidence; the fourth, Plaintiffs’ Exhibit 4, was refused on hearsay
grounds. Once the three exhibits were admitted, plaintiffs rested. Plaintiffs also cross-
examined the four witnesses called by Summit County during the defense case in chief.

Plaintiffs’ Exhibit 1 is a collection of ordinances adopted in various cities in Summit
County that appear to regulate skill-based game facilities. Plaintiffs offered Exhibit 1 to
prove that Summit County merely cut and pasted its ordinance using the provisions

previously adopted by the other political subdivisions.COPY -

 

 

Plaintiffs’ Exhibit 3 is an email from Darlene Mims, Chief of Staff of the Summit
County Council, forwarding a mark-up of the proposed legislation that had been submitted
with other email comments on the ordinance by Ryan Forman of Eclipse Testing. Plaintiffs’
Exhibit 2 is an attachment to Plaintiffs’ Exhibit 3. Plaintiffs offered Exhibits 2 and 3 to prove
that an independent testing firm — Eclipse Testing — had told the county before passage of the
ordinance that independent testing entities would be unable to certify that the software used
by plaintiffs to operate their game computers were being used in compliance with the Ohio
Revised Code, because such entities do not offer legal opinions. Mr. Forman also commented
that because neither the county nor the state had established a set of technical criteria which,
if met, would permit a sweepstakes game to be deemed compliant with Ohio law, testing
firms would have no objective way to assess compliance with Ohio law. Mr. Forman also
had pointed out that compliance or noncompliance with such technical specifications was the
only thing independent testing firms could determine.

Plaintiffs presented no evidence that shed light on their individual operations or the
ways in which the ordinance would affect or harm them. This strategic decision virtually
doomed plaintiffs’ as-applied challenge to the ordinance because the court was given no
evidence to support the arguments made by plaintiffs’ counsel. The impact of this will be
further addressed below.

|. Plaintiffs’ Facial Attack on the Entire Ordinance

In regard to plaintiffs’ general attack on the entire ordinance, their proof fell short of
what would be necessary to demonstrate beyond a reasonable doubt that the ordinance
infringed their due process and equal protection rights. In sum, plaintiffs have not shown that
the ordinance as a whole lacks a real and substantial relationship to the public health, safety,
morals, or general welfare. And plaintiffs’ evidence fell short of proving beyond a reasonable
doubt that the ordinance as a whole is unreasonable or arbitrary. Finally, plaintiffs’ evidence
did not prove beyond a reasonable doubt either that the ordinance as a whole does not attempt
to deal with a legitimate purpose of the government or that it lacks any relationship to the

accomplishment of that purpose.COPY -

 

 

The county, on the other hand, offered evidence that since the appearance of
plaintiffs’ businesses in the unincorporated areas of the county (such as Springfield
Township) there has been an increase in reports of criminal activity in the areas near such
businesses; an increase in the need to respond to calls in regard to such entities, an increase in
the number of constituent complaints to county council (e.g., reports of patrons of such
businesses losing substantial sums of money thinking they were indeed gambling; reports of
concerns about an increase in criminal activity); and a growing concern on the part of those
charged with ensuring public safety and general welfare that the absence of any state law
regulating Internet cafes and sweepstakes businesses would make their tasks extremely
difficult. The county also argued — without any evidentiary support ~ that the ordinance was
necessary because it is easy for Internet cafes and sweepstakes businesses to change their
machines and/or software settings to convert what may have been legal activities to illegal
gaming. While the court considers many of the county’s expressions of concern to be subject
to legitimate attack (for example, proof adduced at trial showed that the police have more
criminal complaints to deat with at the Wal-Mart on the border of Springfield and Coventry
townships than they do at all of the internet cafes in Springfield Township combined), the
court cannot say that plaintiffs have proven beyond a reasonable doubt that there is no
relationship between the ordinance and the public safety and morals or that the county lacked
a legitimate governmental purpose in attempting to address the concerns brought to the
attention of council. Nor is the court willing to rule that the ordinance, considered as a whole,
is unreasonable or arbitrary.

The court proceeds to evaluate each of the specific areas of concern raised by
plaintiffs:

A, LICENSING Fees

: 1. Plaintiffs’ Arguments

Plaintiffs challenge the licensing fees required under the ordinance on due process and
equal protection grounds. They contend the fees to be charged are unreasonable and arbitrary
and lack a relation to public safety, morals or general welfare. Plaintiffs argue that in order
not to be unreasonable or arbitrary, licensing fees imposed under the ordinance must be
reasonable sums that approximate the costs to be incurred by the county in dealing with the

licensed activities. This can include fees related to the use of the police, to defray the cost of

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inspection, and other regulatory measures. In essence, plaintiffs contend the licensing fees

are unreasonable and arbitrary on the following grounds:

* Councilperson Prentice admitted the licensing fees were “arbitrary.”

¢. The amount of the licensing fees are exorbitant, jumping from $0 pre-ordinance to
$13,000 for the 4 of the year post-ordinance and a total for the first year would be
$25,000. *

¢ There is no legislative history showing how Summit County calculated or
determined the number for the fees of $1,000 annually per arcade and the $200 per

device semi-annually.

e. There were no studies presented at the time the ordinance was adopted to support
the amount of the fees.

e It was unreasonable and arbitrary to make the license application fees non-
refundable.

¢ The legislation does not show how the fee money would be spent (in relation the
expense to the community).

¢ .The new or added expense to the community would probably be nominal.

¢ A plain reading of the ordinance makes the licensing fee appear as more of a
penalty to those engaged in a lawful business.

2. Defendant’s Arguments

The county submitted little evidence at the trial on the issue of the legitimacy of the

licensing fees in the ordinance, particularly in light of the admission by Councilperson
Prentice that the licensing fees were “arbitrary.” Nevertheless, the county argued against

plaintiffs’ position by making the following points:

¢. The county does not have to show the best means for achieving its ends, but just
that the means are rational in relation to its goals. Here, according to the county,
that would mean the county could charge any sum as a license fee provided that it
was going to incur some cost to enforce the ordinance.

¢ The cost of regulating a machine or game system (that could be used for gambling)
is much higher than most jukeboxes or purely mechanical devices.

* Due to the complexity of the machine, law enforcement may need to call in third-
party experts.

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+e This activity has been associated with gambling so there is time and money spent
on prosecutions and monitoring of these types of businesses.

¢ Licensing fees in other jurisdictions were considered when determining Summit
County’s fees.

e The fee is much less when compared to that of liquor establishments and casinos
as well.

e The county cannot determine what impact the fees have on the business because

revenue and income documents were not provided to the county.

Plaintiffs’ attack on the licensing fee portion of the ordinance was heavily based on
Councilperson Prentice’s trial admission that the fees were “arbitrary.” But it was also
founded on the fact that the county had — and presented at trial — no data to show that the
licensing fees to be collected were roughly equal to the actual costs to be incurred by the
county in administering the law. Plaintiffs also secured admissions from Councilperson
Prentice that she was not aware of the need to hire more people or of any actual cost increase
that the county would incur.

The county’s responses — (i) that the county is not required to show an exact match
between the fee revenues to be generated and the costs the fees are intended to defray, (ii) that
the county is permitted to estimate the costs to be incurred, and (iii) that the county may take
into account and model its ordinance upon the legislative enactments of comparably situated
governmental bodies — are on target. The evidence indicates that the county will incur some
added costs to enforce the entertainment device arcade ordinance. Therefore, it must be
concluded that the licensing fee section of the ordinance bears a real and substantial relation
to the safety, morals, and general welfare of the public.

In addition, plaintiffs have not proven that the licensing fee section of the ordinance
was unreasonable or arbitrary. Giving consideration to the overall content of Councilperson
Prentice’s testimony and the credibility of that testimony, the court concludes that her
characterization of the fees as “arbitrary” was intended to mean that the amounts of the fees
were simply selected, rather than the result of a calculation of precise cost recovery estimates.
She also testified that the fees were keyed to the fees charged by other political subdivisions.

In that sense, the fees were by definition nof arbitrary. In short, plaintiffs have not brought

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forward evidence to prove beyond a reasonable doubt that there was a due process violation
stemming from the enactment of the challenged licensing fee arrangement.

For the same reasons, plaintiffs have not carried their burden of proof for their equal
protection challenge to the manner in which licensing fees would be collected. Plaintiffs
challenged the ordinance on the ground that those regulated by it would be required to pay
licensing fees that are higher than those charged to other types of businesses. That argument
was not supported by any evidence offered at trial. Even if it had been, the fact that one type
of business is regulated differently than another does not necessarily prove an equal protection
violation. The county showed that the entertainment device arcades at issue were requiring
the county to implement inspection and enforcement activities and that in providing them the
county would incur various types of added costs. These added and legitimate demands upon
government mean there is support for the fees charged.

Plaintiffs have not shown that the licensing fee portion of the ordinance does not bear
a rational relationship to a legitimate governmental purpose. Given the applicable legal
standards, plaintiffs have not demonstrated any violation of their rights to equal protection of
the law.

B. PHOTO IDENTIFICATION

1. Plaintiff's Arguments

Section 755.08(f) of the ordinance requires those regulated to require a photo
identification of every person to whom anything of value is given in connection with the
entertainment device arcade. Also, the arcade must record extensive details regarding the
users of the facility, the devices used by the users, and when a person receives more than $10
worth of value, the arcade must make a copy of that person’s photo identification. Plaintiffs
challenged the photo identification and recordkeeping requirements of §755.08(f) on the
following grounds:

¢ The ordinance requires meticulous personal records for all prizes and also requires
photo identification for prizes valued over $10, which serves no recognizable
government interest or any purpose to the public health, morals, safety, or general
welfare of the community because the prizes are trivial (free game of pinball, a
stuffed animal, or a free sandwich).

¢ In comparison, the Ohio Lottery only requires photo identification and recording
for prizes over $599. Prizes under that amount can be collected at a retail location
without identifying information recorded. Thus, the Summit County requirement
is intrusive, unreasonable, and arbitrary.

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¢ The purpose of the Ohio Lottery requirement is to aid in collecting taxes on lottery
winnings, and no similar purpose is found with regard to the Internet cafes.

«The meticulous record keeping is overly burdensome, and no other regulated
business is subject to such onerous requirements.

2. Defendant’s Arguments
¢ The photo identification requirement ensures that minors are not allowed to enter

the establishment and use the equipment.

¢  Italso serves to document that prizes do not exceed the limits established under
Ohio law.

* RC. §2915.01(AAA)(1)(a) limits the value of prizes won by playing skills games
to $10; and under §2915.02 (BBB) it also prohibits the giving of items such as
cash, gift cards, or equivalents.

e The requirement is not burdensome because much of the information required
under the ordinance is already recorded by the computers being used in plaintiffs’
facilities. ,

¢ The purpose of the recording and reporting requirement under the ordinance is to
ensure that the skill-games are operated lawfully, which is different from the
federal income tax purpose of the lottery-reporting requirement.

As with the evaluation of the ordinance’s license fee requirement, here, the evaluation
must examine and determine whether there is any set of circumstances under which the
challenged provision could be found constitutional. Initially, it must be noted that the court
finds the photo identification requirement to be ill considered, poorly supported’, and
reflective of council’s disfavor of entertainment device arcades. While the county argues that
the photo identification requirement would ensure that the arcades are operated lawfully, the

county has not pointed out how that would be so.

2 The county’s arguments regarding the photo identification requirement seem odd. For example, the county
contends the requirement would permit the county to document that the prizes won by patrons do not exceed the
limits established by Ohio law. At trial, however, Councilperson Prentice acknowledged that there is no Ohio
law limit on sweepstakes winnings. And the county’s post-trial brief did not point to any such limit. The
county’s reference to the $10 winnings limit for skill-based games is irrelevant. There is no such limit for
sweepstakes games.

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The county contends the photo identification and record keeping requirements of
§755.08(f) will be keep minors from partaking of the entertainment offered at plaintiffs’
establishments. While this contention seems speculative and redundant — in light of the
separately stated prohibition of minors’ rights to enter in ordinance §755.08(e) — the court
cannot state that there are no set of factual circumstances under which such requirements
might not have that effect. It is certainly possible that some seventeen-year-old might elect
not to enter and attempt to use these facilities if he or she knows that a copy of their driver’s
license will be made.

As noted above, Ohio law requires legislation to be found constitutional if there is any
possible state of facts under which the sections of the law could be found constitutional. And
precedent requires this court to presume that such facts exist. Given such a daunting
governing standard, the court is required to conclude that plaintiffs have not proven beyond a
reasonable doubt that §755.08(f) infringes their due process or equal protection rights. The
fact that this court — or the plaintiffs — might have chosen different means to accomplish the
objectives the legislation sought to address is immaterial.

The fact that a governmental requirement imposes burdens — even significant ones — is
not itself the standard upon which a legislative enactment may be struck down. If it were,
there would be no regulatory agencies in this state or nation. Moreover, plaintiffs offered no
evidence that even a single one of their patrons would cease using their businesses if photo
identification and other information were to be collected from them. They offered no
evidence to support their contention that the requirements of §755.08(f) were unduly
burdensome. Plaintiffs’ failure to produce any evidence of the particular impact of §755.08(f)
forces the court to conclude that plaintiffs have not proven the legislation to be
unconstitutional as applied.

C: SQUARE FOOTAGE REQUIREMENT

Section 755.08(b) of the ordinance requires there to be a minimum of 50 square feet of
floor space for each entertainment device. Plaintiffs raise due process and equal protection
challenges to that requirement based on the following contentions:

1. Plaintiff's Arguments

¢ The square footage requirement is not supported by any scientific studies or
: evidence presented to the council that would correlate to a public health, moral,
safety, or general welfare reason for the restriction.

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¢ The computer terminals at an Internet café are comparable to the computer
terminals at a public library or local school, and this requirement would require
enormous buildings.

¢ The requirement of 50 square feet is not related to the device being used, the
person using the device, or the environment the device is in.

The county rejects plaintiffs’ arguments and poses the following responses:

2. Defendant’s Arguments

« Local government is given wide latitude to set fire and safety regulations and to
place limitations on the occupancy of certain spaces. The court must not substitute
its judgment for that of the legislative body.

¢ The county does not have to conduct new studies or produce evidence independent
of that already generated by other cities as long as the county relies upon evidence
that is reasonably believed to be relevant to the problem that it is addressing.

¢ The plaintiff cannot just pack in as many machines as possible. For the safety of
patrons the ordinance requires enough room for the electronic devices, which
require wiring and produce heat as well as walkways and aisles.

Though hotly contested at trial, plaintiffs’ challenge of the minimum square footage
requirement of §755.08(b) fares no better than the challenge to the photo identification
requirement. Initially, the court notes that to the extent plaintiffs’ challenge is based ona
belief that the ordinance requires there to be a minimum of 50 feet benveen entertainment
devices, plaintiffs misread the plain language of the ordinance. Rather than requiring a 50
lineal foot separation between machines, the ordinance plainly requires that there be a
minimum of 50 square feet per entertainment device per room. Thus, a room containing 10
such devices would have to be at least 500 square feet in area. Plaintiff's could line up 10
device terminals in a row and put them all on one side of a 20-foot by 25-foot room and be in
compliance. A 50-foot by 40-foot room, could accommodate 40 such devices.

Plaintiffs presented no evidence that their facilities contained more devices than would
be able to be accommodated under the foregoing, plain-language interpretation of the
ordinancé. Although they complained that other computer-containing facilities such as public
libraries or Kinko stores are not subjected to similar minimum space requirements, they
presented no evidence as to the size or computer-density of such places. Instead, they relied
upon argument and supposition to support their contentions, as if to suggest the court could

take judicial notice of the arrangement of such places. This the court cannot and will not do.

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The county contends that the establishment of minimum square footage requirements
is a justifiable exercise of the county’s public safety regulatory authority. Because the court
must presume that there may be some facts suggesting that safety could be assured by limiting
the congestion in entertainment device arcades, and because the county is not required to
conduct new engineering studies to justify its policy judgments, the court must find that the
square footage limitation bears a real and substantial relation to the public health, safety, or
general welfare and that it is not arbitrary or unreasonable. Further, the court must also find
that the imposition of a square footage limitation is rationally related to a legitimate
governmental purpose. The court concludes that the justification for the square footage
requirement offered by the county, though not precise or founded on a specific study, is
reasonable. Given these findings, the court is constrained to reject plaintiffs’ due process and
equal protection challenges to §755.08(b) of the ordinance.

C. CERTIFICATION OF COMPLIANCE

Section 755.03 of the ordinance requires entertainment device arcade operators to
apply for and receive a license before they can commence or continue operations. Subsection
755.03(b)(1 1) requires the submission of a “certificate or report, provided by an Authorized
Independent Testing Laboratory,” verifying that each entertainment device in the arcade
“complies with all provisions of the Ohio Revised Code and is not a game of chance,
gambling device, gaming device, or other device that is prohibited from operation in the State
of Ohio under any provision of the Ohio Revised Code.” The section requires annual updates
to such certifications and further reviews whenever the devices or software are updated.

Plaintiffs challenged the certification requirement on the general ground that it was
unreasonable and arbitrary because none of the authorized testing laboratories would issue the
required certificate or report. In essence, plaintiffs contend it is unconstitutional to require a
business to do something the government knows cannot be done. To summarize, plaintiffs
contend:

1; Plaintiff's Arguments

ny

* A testing laboratory cannot express the legal conclusion that an entertainment
device complies with the entire Ohio Revised Code. At best the laboratory could
test the device to see how it works.

© . The only local “authorized” laboratory refused to issue legal findings regarding
compliance with all provisions of the Ohio Revised Code.

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Internet cafes provide Internet access to customers at a nominal fee, and this poses
no health, safety, or moral detriment to society so Internet cafes should not be
required to be inspected in the same way as sweepstake machines and games of
skill.

¢ This service is actually a benefit to society because the cafes are providing access
to information via the Internet.

¢ The computers are similar to what is found at a school or public library, and there
is no inspection requirement for those computers.

¢ The inspections are subjective determinations by laboratories, which could lead to
differing interpretations of the Ohio Revised Code by different laboratories that
would eventually lead to confusion instead of a uniform application of the
ordinance.

The county rejects plaintiffs’ arguments and poses the following responses:

2, Defendant’s Arguments

¢ Representatives from the Eclipse Company seemed to indicate that the necessary
certifications could be obtained.

¢ Because all of the machines can run sweepstakes and skill-games they need to be
certified to protect the consumer, much like gasoline pumps and seal scales, to
ensure that the machines are legal and honest.

¢ When local government chooses to regulate activity that has not been preempted
by the state, non-uniformity is common and is not grounds for invalidating the
law.

¢ This issue is not supported or briefed by the plaintiff.

One of the most intriguing elements of plaintiffs’ challenge to the ordinance was their
contention that the county could not constitutionally require entertainment device arcade
owners to provide certifications that the county knew could not be obtained. At the time of
filing suit and seeking temporary injunctive relief, plaintiffs filed the affidavits of George
Georgekopoulos and Richard Bowling, respectively the owners of Cyber Island and 777
Sweeps, two of the arcades affected by the ordinance. Each affidavit asserted it would not be
possible to: “comply with Chapter 755.03, license application requirements, in that said
section requires a legal opinion that “entertainment devices are not a game of chance,
gambling device or gaming device, or other device that is prohibited from operation in the

state of Ohio under any provision of the Ohio Revised Code.” In addition, the

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Georgekopoulos affidavit attached a November 26, 2008 letter from Nick Farley, president of
Nick Farley & Associates of Solon, OH. The thrust of the Farley letter was to indicate that
the software described in his letter, the VS2 Café Sweepstakes System offered by VS2
Worldwide Communications, LLC, was not gambling software. The Georgekopoulos’
affidavit asserted that his business used the VS2 Café sweepstakes system. Plaintiffs offered
the Farley letter as their Exhibit 4 at trial.

A lengthy colloquy between the court and counsel occurred at trial concerning
plaintiffs’ belief that they would be permitted to admit the Farley letter without calling him to
testify. The discussion led the court to conclude that plaintiffs’ belief‘was not founded on any
representation or commitment from counsel for the county. Instead, the court concluded that
the parties had merely stipulated to the authenticity, not the admissibility of each others’
exhibits. The county objected to the admission of the Farley letter. The court refused the
exhibit on hearsay grounds.

Plaintiffs’ counsel also mentioned — as an alternative to calling Farley to testify — that
the Bowling and Georgekopoulos affidavits (with Farley letter as an attachment) had already
been filed with the court during the temporary. restraining order proceedings. While Civil
Rule 65(B)(2) allows the court to consider evidence offered at the preliminary injunction
stage at atrial on the merits, there is nothing in the rule that permits the court to consider TRO
affidavits or evidence at the trial on the merits. Even when preliminary injunction evidence is
considered at the trial, it must be admissible at trial on the merits. Thus, Civil Rule 65 does
not, itself, provide a basis for overcoming hearsay objections.

Plaintiffs chose not to call Nick Farley, purportedly an expert on the issue of whether
the certification of compliance required in ordinance §755.03 could be obtained. They also
chose not to have any of their principals, such as Mr. Georgekopoulos or Mr. Bowling, testify
at trial. The court cannot consider the content of the affidavits submitted by those individuals
in determining the merits issues now before the court. The court also cannot consider the

Farley letter, attached to the Georgekopoulos affidavit.

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The only evidence in the record relating to whether plaintiffs could obtain the required
certification was less than definitive. Plaintiffs Exhibits 2 and 3 contained expressions of
opinion by Ryan’Forman of Eclipse Compliance Testing.? These exhibits, replete with
hearsay statements, were admitted in evidence without objection by the county. Forman’s
email (Plaintiffs’ Exhibit 3) explains why the entertainment devices at issue operate games
that are akin to McDonald’s Restaurant Monopoly sweepstakes and are not gambling systems.
The email does not state that Eclipse Testing cannot give the sort of certifications required in
the ordinance. Forman’s comment on the ordinance, and, in particular, the § 755.03(b)(11)
certification section was as follows:

Typically, the purpose of an Independent Test Lab is to either do an in-depth
review of a system and write a report outlining how that game/system operates,
or it is to take a list of published Technical Standards (basically a list of criteria
that a game/system must meet in order to be legal) and verify that the system
meets those requirements. As we are engineers, mathematicians, etc.,
independent test labs do not generally offer a legal opinion as to whether a
game/system complies with a law. A test lab would be able to render a
détermination of compliance with a Technical Standard or set of criteria to test
to. As we see it, a test lab would be able to write a technical report, which lays
out exactly what the game/system does, and perhaps an external legal entity
would proffer an opinion based upon that report that could be taken into
consideration for a determination of legality under Ohio Revised Code. Ifa set
of Technical Standards or Criteria stating what specifics a game must meet to
be legal in Ohio are available for the test lab to focus on verifying, a technical
report could then be written to say that the criteria was met or not, and the
[Summit County] Council or Office of Consumer Affairs could then deem if
the test lab has found the game to meet those criteria, it can get a license.
However, that type of report cannot be written without testing criteria in place.
We would be pleased to discuss this in more detail upon request.

Plaintiffs presented the foregoing statement at trial to Councilperson Prentice to show
that council knew before passing the ordinance that it would be difficult for the parties to be
regulated under the ordinance to comply with the compliance certification requirement. The
Forman statements, even if their obvious hearsay nature is overlooked, cannot be considered
to be proof beyond a reasonable doubt or even clear and convincing proof that plaintiffs
cannot obtain the required certifications. First, the court has no information to substantiate

that Ryan Forman has any expertise to make the statements given. Second, the statement does

3 Identified as “a division of NFA.” The court takes notice of the fact that the “NFA” company logo on
Plaintiffs’ Exhibit 3 is the same as the logo on the refused Plaintiffs’ Exhibit 4, authored by Nick Farley of Nick
Farley & Associates.

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not definitively state that compliance certifications cannot be provided; instead, it indicates
that testing laboratories "do not generally offer a legal opinion." Third, the statement suggests
that the opinion of a testing lab, coupled with a separate, legal opinion could be sufficient to
satisfy a compliance certification requirement.

Plaintiffs contend that Councilperson Prentice admitted that certifications required the
ordinance could not be obtained. (Gold Rush Post-Trial Brief at p. 2) The court did not
interpret the Prentice testimony the same way plaintiffs do. The court considered that
Councilperson Prentice was merely acknowledging the content of the Forman statements all
the while expressing the view that the certification requirement could be met and was
reasonable. The court concludes that plaintiffs have failed to prove the basic premise of their
argument: that it is impossible to obtain a compliance certification.

The county's interest in requiring certifications of compliance is obvious. It wishes to
ensure that entertainment device arcades do not operate illegal gambling systems or games of
chance. By imposing a requirement for certifying that the sys