AG v. DRT, Gov Guam, Atlas Amusement Ent. Inc., Darryl R. Styles dba D&D Games, Guam Music, Inc.

Opinion

FiLED SUPE?EOR COUR1 GUAM 1 2O2c&tJI3 CLERK OF EURT 3 IN THE SUPERIOR COURT OF GUAy.

4 LEEVIN TAITANO CAMACHO, Attorney CiVIL CASE NO. CV0780-13 General of Guam, 6 Plaintiff, 7 vs. 8

DAFNE M. SHIMIZU, Director, Guam Department of Revenue and Taxation; Governor of Guam; ATLAS AMUSEMENT 11 ENTERPRISES, INC.; DARRYL R. 12 STYLES dlbla D&D GAMES; GUAM MUSIC, INC.; and DOES 1-10, 13

14 Defendants.

15 DARRYL R. STYLES dlbla D&D GAMES, DECISION AND ORDER 16

17 Cross-Plaintiff,

18 vs. 19 GOVERNMENT OF GUAM, 20 Cross-Defendant. 21

23 Cross-Plaintiff, 24 vs. 25

26 DAFNE M. SHIMIZU, Director, Guam Department of Revenue and Taxation, 27

28 Cross-Defendant. Decision and Order . Civil Case No. CVO7$0-13; Camacho v. Shimizu, et at.

2 This matter came before the Honorable Arthur R. Barcinas on July 29, 2020, upon the 3 Defendant Guam Music, Inc.’s Motion for Stay of Execution of Judgment Pending Appeal filed 4 June 8, 2020 (“Motion for Stay”). Assistant Attorney Generals Marianne Woloschuk 5 represented the Plaintiff Leevin Taitano Camacho, Attorney General of Guam (“Plaintiff” or 6 “Attorney General of Guam”). Attorney Sophia S. Diaz of the Office of the Governor of Guam 7 represented the public Defendants Dafne M. Shimizu, the Director of Guam Department of 8 Revenue and Taxation (“DRT”), and Lourdes A. Leon Guerrero, Governor of Guam. Attorney 9 Seth forman represents the Defendant Atlas Amusement Enterprises, Inc (“Atlas”). Attorney 10 Curtis C. Van de veld represents the Defendant and Cross-Plaintiff Darryl R. Styles d/b/a D&D ii Games (“Styles”). Attorney F. Randall Cunliffe represents the Defendant Guam Music, Inc 12 (“Guam Music”). Attorney Daniel I. Berman represents the Intervenor and Cross-Plaintiff 13 Pacific Amusement, Inc. (“Pacific Amusement”). Having reviewed the pleadings and legal 14 authorities, and having heard oral arguments in this matter, the Court issues the following 15 Decision and Order. 16 BACKGROUND 17 This case arises from a prolonged dispute between the Attorney General of Guam, the 18 executive branch, and owners of electronic gaming devices, regarding the legality of the 19 licensing and operation of such gaming devices in Guam. Both the procedural history and facts 20 of this case have been thoroughly outlined in the various pleadings, orders, and appeals in the 21 record. Thus, the following facts are only those pertinent to the instant Motion for Stay of 22 Execution of Judgment Pending Appeal. 23 On March 13, 2020, the Court issued its Decision and Order granting the Plaintiff’s 24 Motion for Summary Judgment thereby declaring DRT’s gaming rules and regulations 25 purporting to regulate electronic gaming devices in Guam invalid. Subsequently, the Judgment 26 was issued on March 16, 2020, but was not entered on the docket until June 3, 2020. The 27 Judgment, inter alia, declared that “[e]lectronic gaming device licenses issued pursuant to 3 28

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1 G.A.R. § 7114(a)(5) are void. All such licenses shall be immediately revoked and no new 2 licenses shall be issued.” See Judgment (Mar. 16, 2020). 3 On June 8, 2020, Defendant Guam Music filed a Notice of Appeal. Defendant Atlas also 4 filed a notice of appeal on June 12, 2020. On June 8, 2020, Defendant Guam Music filed the 5 instant Motion for Stay. Defendant Atlas joined Defendant Guam Music’s Motion for Stay on 6 June 12, 2020. In their Motion, Defendant Guam Music moves the Court, pursuant to Guam 7 Rule of Civil Procedure 62(d) and Guam Rules of Appellate Procedure Rule 12 for a stay of 8 execution of the Judgment entered in this matter pending final resolution of its appeal to the 9 Supreme Court of Guam. The Plaintiff filed an Opposition on July 6, 2020. On July 29, 2020, a 10 hearing on was held on the Motion for Stay. At the conclusion of the hearing, the Court took the 11 matter under advisement. 12 DISCUSSION 13 As a preliminary matter Rule 12 of the Guam Rules of Appellate Procedure provides 14 that “[aJ party must ordinarily move first in the Superior Court for. . . a stay of the judgment or 15 order of a Superior Court pending appeal.” Guam R. App. P. 12(a)(1)(A). The Court has the 16 “inherent power to control the disposition of the cases on its docket in a manner which will 17 promote the economy of time and effort for itself, for counsel, and for litigants.” CMAX, Inc. v. 18 Halt, 300 F.2d 265, 268 (9th Cir. 1962) (citing Landis v. N. Am. Co., 299 U.S. 248, 254 (1946). 19 With regard to stays, the Supreme Court of the United States has stated that “a stay is an 20 intrusion into the ordinary processes of administration and judicial review, and accordingly is 21 not a matter of right, even if irreparable injury might otherwise result.. . .“ Nken v. Holder, 566 22 U.S. 418, 427 (2009) (citations and internal quotations omitted). Instead, it is an exercise of 23 judicial discretion, and the propriety of its issue is dependent upon the circumstances of the 24 particular case. Id. at 433 (quoting Virginia Petroleum Jobbers Assn. v. Federal Power 25 Comm’n, 259 F.2d 921, 925 (C.A. D.C. 195$). Accordingly, the party requesting a stay bears 26 the burden of demonstrating that circumstances warrant a stay. Id. at 433-34; see also U.S. v. 27 Government of Guam, No.02-00022, 2017 WL 1347667, at *5 (D. Guam April 7, 2017). 28

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Here, Defendant Guam Music argues that it is entitled to a stay as a matter of right 2 pursuant to Guam Rule of Civil Procedure (“GRCP”) 62(d). GRCP 62(d) states, “[w]hen an 3 appeal is taken, the appellant by a supersedeas bond may obtain an automatic stay subject to the 4 exceptions contained in subdivision (a) of this rule. .. .“ Guam R. Civ. P. 62(d). Under GRCP 5 62(d), a party appealing a decision of the trial court is entitled to an automatic stay of a money 6 judgment. J.J. Moving Servs., Inc. v. Sanko Bussan (Gttam) Co., 1998 Guam 19 ¶ 38 (1998). 7 Thus, GRCP 62(d) applies only to a stay of a money judgment. Id.; see also Arban v. West Pub. 8 Corp., 345 f.3d 390, 409 (6th Cir. 2003) (“Rule 62(d) entitles a party who files a satisfactory 9 supersedeas bond to a stay of money judgment as a matter of right.”) (emphasis added) .

10 contrast, absent a money judgment, “[a] stay of execution is an equitable remedy that is not ii available as a matter of right.” Wood v. Collier, 836 F.3d 534, 538 (5th Cir. 2016) (citing Hill v. 12 McDonough, 547 U.S. 573, 584 (2006)); see Nken, 556 U.S. at 433 (“A stay is not a matter of 13 right . . . It is instead ‘an exercise of judicial discretion’ . . . [that] ‘is dependent upon the 14 circumstances of the particular case.”). Defendant Guam Music concedes that there is no 15 monetary judgment and thus, there is no need for a supersedeas bond. Therefore, because the 16 Judgment in this matter is not a money judgment, GRCP 62(d) does not apply and Defendant 17 Guam Music is not entitled to an automatic stay as a matter of right. Nonetheless, absent a bond, 18 the Court may exercise its discretion and issue a stay using the four-factor test below. 19 In determining whether to stay enforcement of a judgment pending appeal, courts 20 consider the following four factors: “(1) whether the stay applicant has made a strong showing 21 that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured 22 absent a stay; (3) whether issuance of the stay will substantially injure the other parties 23 interested in the proceedings; and (4) where the public interest lies.” Nken, 556 U.S. at 434 24 (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). However, the first and second factors

26 GRCP Rule 62(d) was adopted from the Federal Rule of Civil Procedure (‘FRCP”) 62(d). Thus. federal case law interpreting FRCP 62(d) is persuasive. See Govt of Gttam u. 0 ‘Keefe on behalf of Heirs of Torres Estate, 2018 27 Guam 4 ¶ 9 (2018) (“As a threshold matter, we note that because the [GRCP] are generally derived from, although not identical to. the [FRCP]. federal decisions that construe the federal counterparts to the [GRCPI are persuasive 28 authority.’) (citing People v. Quitugua, 2009 Guam 10 ¶ 10).

Page 4 of 8 Decision and Order Civil Case No. CVO78O-13; Caniacho e. Shimiztt. et at. . — likelihood of success and irreparable injury — are the most critical. Id.; see also Sananap v. 2 Cyfred, 2009 Guam 13 ¶ 42 (recognizing that likelihood of success and irreparable injury are 3 considered together on a sliding scale). As aforementioned, “[t]he party requesting a stay bears 4 the burden of showing that the circumstances justify an exercise of [this Court’s] discretion.” 5 Nken, 556 U.S. at 433-34. 6 I. Likelihood of Success on the Merits 7 Regarding the first factor, likelihood of success on the merits, the Nken court held that it 8 is not enough that the likelihood of success on the merits is “better than negligible” or that there 9 is a “mere possibility of relief.” Id. at 434. At a minimum, a movant must show that there is a 10 “substantial case for relief on the merits.” Lair v. Bullock, 697 F.3d 1200, 1204 (9th Cir. 2012) ii (citing Leiva-Perez v. Holder, 640 F.3d 962, 966-68 (9th Cir. 2011) (“a reasonable probability 12 or fair prospect, . . . a substantial case on the merits, . . . or. . . that serious legal questions are 13 raised.”). The standard however, does not require the appellant to show that “it is more likely 14 than not that they will win on the merits.” Id. 15 Here, Defendant Guam Music argues that because the Court did not directly address its 16 Title 1 GCA § 1610 argument, they have a good chance of success on appeal. The Plaintiff, on 17 the other hand, contends that Defendant Guam Music failed to show that there are significant 18 legal questions to be resolved on appeal or that it is likely to prevail on those questions. In its 19 Opposition to the Plaintiff’s Motion for Summary Judgment filed January 24, 2017, Defendant 20 Guam Music argued that Title 1 GCA § 1610, in effect, codified and published all regulations, 21 including DRT’s proposed gaming regulations, received by the Legislative Secretary prior to 22 the Twenty-Seventh Guam Legislature. Thus, Defendant Guam Music argued the gaming 23 regulations were valid. 24 The Court did not neglect to consider Defendant Guam Music’s Title 1 GCA § 1610 25 argument. In its March 13, 2020, Decision and Order, the Court found inter alia that DRT’s 26 proposed gaming regulations were submitted to the Guam Legislature without complying with 27 Guam law, and that DRT exceeded its authority to enact such rules and regulations purporting 28 to regulate electronic gaming devices in Guam. Consequently, the Court declared DRT’s

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1 gaming rules and regulations invalid and thus, void ab initio. The Court agrees with the Plaintiff 2 that Title 1 GCA § 1610 cannot cure an unconstitutional delegation of legislative authority. 3 Thus, the Court finds that the Defendants have not met their burden of showing a strong 4 likelihood of success on the merits. 5 IL Irreparable Injury 6 To establish irreparable injury, the moving party must show more than a mere possibility 7 of irreparable injury — the appellant must show that there is a probability of irreparable injury if 8 the stay is denied. Leiva -Perez v. Holder, 640 F.3d 962, 968 (9th Cir. 2011). In other words, the 9 moving party must show that irreparable injury is likely to occur absent a stay pending appeal. 10 Id. Here, Defendant Guam Music and Defendant Atlas argue that they will suffer financial harm ii if the Court does not stay the Judgment. Specifically, the Defendants argue inter cilia that 12 hundreds of their employees would lose their jobs, business contracts would fail, and the 13 Government of Guam would be deprived of much needed revenue if the Judgment is not stayed 14 pending the Defendants’ appeal in the Supreme Court of Guam. Further, Defendant Guam 15 Music states that it has received COVID-19 federal assistance loans in order to continue to pay 16 their employees during the pandemic shutdown. Consequently, Defendant Guam Music argues 17 that if the Court does not stay the Judgment, the federal government will not forgive their 18 COVID-19 loans. 19 The Defendants assertions are speculative. first, as the Plaintiff argues, it is unclear 20 whether Defendant Guam Music applied for COVID-19 financial assistance after the Court’s 21 March 13, 2020, Decision and Order. If so, then Defendant Guam Music was aware that the 22 Court declared the gaming rules and regulations invalid and thus, understood the risks when it 23 applied for the federal relief programs. Second, the Defendants did not provide the Court with 24 substantial proof to support their allegations of current or future financial harm. Speculative 25 injury does not constitute a showing of irreparable harm. HongKong and Shanghai Banking 26 Corp., Ltd. V. Kallingal, 2005 Guam 13 ¶ 22 (citing Pub. $erv. Co. v. Town of W. Newbury, 27 835 F.2d 380, 383 (1st Cir. 1987). Thus, due to the speculative nature of the Defendants’ 28 assertions, the Defendants fail to show irreparable injury absent a stay of the instant Judgment.

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1 Nonetheless, assuming arguendo that the Defendants will suffer financial hardship if a 2 stay is denied, the law is clear that this does not rise to the level of irreparable harm. Marangi v. 3 Government of Guam, 319 F.Supp.2d 1179, 1186 (citing Enochs v. Williams Packing & Nay. 4 Co., 370 U.S. 1, 6 (1962) (noting injunctive relief is not available simply because the collection 5 of taxes would cause an irreparable injury such as financial ruination). Accordingly, the Court 6 finds that the Defendants have not met their burden of showing irreparable injury absent a stay 7 pending appeal in the Supreme Court of Guam. 8 III. Substantial Injury to the Plaintiff and the Public Interest 9 Finally, the last two factors of the Nken test require the Court to weigh the public io interest against the harm to the Plaintiff. See Lair v. Bullock, 697 F.3d 1200, 1215 (9th Cir. 11 2012) (citing Nken, 556 U.S. at 435). Here, though arguably an economic interest, gambling has 12 long been considered potentially unfavorable to the public’s interest. However, it is not the 13 Court’s function at this time to weigh the policy arguments on either side of this highly 14 contested years-long debate over whether and to what extent gambling should be legalized. 15 Thus, the Court cannot make the determination, in weighing the last two factors, that any harm 16 alleged would necessarily be outweighed by the public’s interest. 17 In sum, the Court finds that the Defendants have failed to demonstrate that irreparable 18 injury is probable absent a stay, that there is a likelihood of success on the merits, and that the 19 balance of hardships weighs in their favor. Accordingly, because the Defendants have not met 20 their burden as to each factor warranting a stay, the Defendants request for a stay of the 21 Judgment pending appeal is DENIED. 22 CONCLUSION 23 For the reasons set forth above, the Court finds that the Defendants have failed t 24 demonstrate that irreparable injury is probable absent a stay, that there is a likelihood of succes 25 on the merits, and that the balance of hardships weighs in their favor. Accordingly, because th 26 Defendants have not met their burden as to each factor, the Defendants request for a stay of tht 27 Judgment pending appeal is DENIED. 28 II

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I I

2 II

3 IT IS SO ORDERED MJG 132020 4

7 HONORABLE ARTHUR R. BARCINAS 8 Judge, Superior Court of Guam 9

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