Monarch Content Management LLC v. Arizona Department of Gaming

• Court: District Court, D. Arizona
• Decided: October 4, 2019
• Docket: 2:19-cv-04928
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Monarch Content Management LLC, et al., No. CV-19-04928-PHX-JJT

10 Plaintiffs, ORDER

11 v.

12 Arizona Department of Gaming, et al.,

13 Defendants. 14 15 At issue is the Motion to Intervene filed by Arizona Downs, LLC (Doc. 42, Mot.), 16 to which Plaintiffs Monarch Content Management LLC (“Monarch”) and Laurel Racing 17 Association, Inc. (“Laurel Park”) filed a Response in opposition (Doc. 53, Resp.), and 18 Arizona Downs filed a Reply (Doc. 55, Reply). The Court will decide the present Motion 19 without oral argument. See LRCiv 7.2(f). 20 I. BACKGROUND 21 On June 7, 2019, the Arizona Legislature passed House Bill (“HB”) 2547 and the 22 Governor signed it into law. HB 2547 amends A.R.S. § 5-112 by, among other things, 23 requiring providers of live horse racing simulcasts for the purpose of pari-mutuel wagering, 24 whether originating in Arizona or out of state, to offer the simulcasts at a reasonable price 25 to all live horse racing permittees and off-track betting (OTB) sites in Arizona. HB 2547 26 vests the Arizona Racing Commission with the exclusive authority to determine the charge 27 that any simulcast provider may levy on live racing permittees and OTB sites in Arizona. 28 The law went into effect on August 27, 2019. 1 Plaintiffs are out-of-state providers of live horse racing simulcasts; Monarch 2 distributes simulcasts for 13 out-of-state racetracks, including Laurel Park. Monarch has 3 entered into a contract for the provision of simulcasts to Turf Paradise, a live horse racing 4 permittee with OTB sites in Arizona, but does not provide its simulcasts to Arizona Downs, 5 the only other such permittee with OTB sites in Arizona. Monarch alleges that it made a 6 business decision not to distribute its simulcasts to Arizona Downs because such 7 distribution “would create dilution of the wagering product and depress the overall 8 consumption of content.” (Doc. 1, Compl. ¶ 43.) 9 On August 9, 2019, Plaintiffs filed this action against the Arizona Department of 10 Gaming—the Arizona agency charged with regulating gaming—and the Arizona Racing 11 Commission, as well as the individual directors and commissioners of each. Plaintiffs seek 12 a declaration that enforcement of A.R.S. § 5-112, as amended by HB 2547, violates the 13 Contract Clauses of the U.S. and Arizona Constitutions, the Dormant Commerce Clause, 14 and Plaintiffs’ free speech rights under the U.S. and Arizona Constitutions; is preempted 15 by the Interstate Horse Racing Act of 1978, 15 U.S.C. §§ 3001 et seq.; and is void for 16 vagueness. Plaintiffs seek an Order permanently enjoining enforcement of A.R.S. § 5-112, 17 as amended by HB 2547. On August 13, 2019, Plaintiffs filed a Motion for Temporary 18 Restraining Order (“TRO”) with Notice (Doc. 20), which remains pending. 19 On August 30, 2019, Arizona Downs filed the present Motion to Intervene, which 20 the Court will now resolve. 21 II. LEGAL STANDARDS 22 Federal Rule of Civil Procedure 24 provides for two types of intervention: 23 intervention as of right and permissive intervention. The Ninth Circuit outlines four 24 requirements for intervention as of right under Rule 24(a)(2):

25 (1) the motion must be timely; (2) the applicant must claim a “significantly 26 protectable” interest relating to the property or transaction which is the subject of the action; (3) the applicant must be so situated that the disposition 27 of the action may as a practical matter impair or impede its ability to protect 28 that interest; and (4) the applicant’s interest must be inadequately represented by the parties to the action. 1 United States v. Aerojet Gen. Corp., 606 F.3d 1142, 1148 (9th Cir. 2010) (quoting Cal. ex 2 rel. Lockyer v. United States, 450 F.3d 436, 440 (9th Cir. 2006)). The movant’s failure to 3 satisfy any single one of these four factors is fatal to a motion to intervene under Rule 4 24(a)(2). Perry v. Proposition 8 Official Proponents, 587 F.3d 947, 950 (9th Cir. 2009). 5 Rule 24(b) governs permissive intervention. An applicant must demonstrate: 6 “‘(1) independent grounds for jurisdiction; (2) [that] the motion is timely; and (3) [that] the 7 applicant’s claim or defense, and the main action, have a question of law or a question of 8 fact in common.’” S. Cal. Edison Co. v. Lynch, 307 F.3d 794, 803 (9th Cir. 2002) (quoting 9 United States v. City of L.A., 288 F.3d 391, 403 (9th Cir. 2002)). Even where those three 10 elements are satisfied, however, the district court retains the discretion to deny permissive 11 intervention. Id. (citing Donnelly v. Glickman, 159 F.3d 405, 412 (9th Cir. 1998)). In 12 exercising its discretion, a court must consider whether intervention will unduly delay or 13 prejudice the original parties and should consider whether the applicant’s interests are 14 adequately represented by the existing parties and judicial economy favors intervention. 15 Venegas v. Skaggs, 867 F.2d 527, 530–31 (9th Cir. 1998). 16 III. ANALYSIS 17 A. Intervention as of Right 18 Because it is dispositive to the question of whether Arizona Downs can intervene as 19 of right under Rule 24(a)(2), the Court addresses only whether the existing parties will 20 adequately represent Arizona Downs’s interest in this lawsuit. “Where an applicant for 21 intervention and an existing party ‘have the same ultimate objective, a presumption of 22 adequacy of representation arises.’” Nw. Forest Res. Council v. Glickman, 82 F.3d 825, 23 838 (9th Cir. 1996) (quoting Or. Envtl. Council v. Or. Dep’t of Envtl. Quality, 775 F. Supp. 24 353, 359 (D. Or. 1991)). In that instance, the moving party bears the burden of 25 demonstrating that the existing parties do not adequately represent its interest through a 26 “compelling showing” to the contrary. Perry, 587 F.3d at 952. The Court assesses the 27 moving party’s showing by considering three factors:

28 1 (1) Whether the interest of a present party is such that it will undoubtedly make all of a proposed intervenor’s arguments; (2) whether the present party 2 is capable and willing to make such arguments; and (3) whether a proposed 3 intervenor would offer any necessary elements to the proceeding that other parties would neglect. 4 5 Id. (quoting Arakaki v. Cayetano, 324 F.3d 1078, 1086 (9th Cir. 2003)). 6 The goal of both Arizona Downs and Defendants here is the same: a declaration that 7 A.R.S. § 5-112, as amended by HB 2547, is constitutional and enforceable. While Arizona 8 Downs states that it has an economic interest in this lawsuit whereas Defendants’ interest 9 lies in public welfare, their goal in this lawsuit is identical and their interests are not 10 “meaningfully distinct” in the context of the lawsuit. See id. at 951. Plaintiffs’ claims are 11 principally questions of law regarding a state law’s constitutionality and whether it is 12 preempted by federal law. As to the Arakaki factors identified above, there is no reason for 13 the Court to believe that Defendants will not make all possible arguments in favor of 14 constitutionality and against preemption or that Defendants and their counsel are not fully 15 capable of doing so. 16 Arizona Downs states that the differences between its and Defendants’ interests 17 manifest themselves in two ways. (Mot. at 9.) First, Arizona Downs contends it would push 18 for a shorter case management schedule and speedier resolution of this matter than 19 Defendants might. The Ninth Circuit has stated that “mere differences in [litigation] 20 strategy . . . are not enough to justify intervention as a matter of right.” Perry, 587 F.3d at 21 954 (internal quotations omitted). Even if Arizona Downs’s proffered reason were 22 sufficient for the Court to find Arizona Downs’s interests are not adequately represented 23 by Defendants, the goal of a shorter case management schedule is certainly represented by 24 Plaintiffs, who have expressed a strong desire for a speedy resolution of this matter. 25 Second, Arizona Downs states it would push for a higher bond amount in the event 26 the Court grants Plaintiffs’ TRO request. However, like a shorter case management 27 schedule, this interest by itself does not rise to the level contemplated by Rule 24(a)(2) and, 28 in any event, the Court agrees with Plaintiffs that a bond representing potential money 1 damages to Arizona Downs would be inappropriate when no damages are at stake in this 2 lawsuit, let alone would Arizona Downs be entitled to them. Because Defendants will more 3 than adequately represent Arizona Downs’s interests in the context of Plaintiffs’ claims in 4 this lawsuit, Arizona Downs is not entitled to intervention as of right. 5 B. Permissive Intervention 6 Although Arizona Downs’s request to intervene meets the three basic elements of 7 permissive intervention under Rule 24(b)—a timely request, grounds for jurisdiction, and 8 a common question of law or fact—considerations of equity and judicial economy counsel 9 against permissive intervention. Importantly, as the Court already noted, Arizona Downs’s 10 interests are more than adequately represented by Defendants in this lawsuit. The Court 11 cannot discern a benefit from having two separate parties brief identical issues with 12 identical goals, when the first party is fully capable of doing so. Perry, 587 F.3d at 955 13 (citing United States ex rel. Richards v. De Leon Guerrero, 4 F.3d 749, 756 (9th Cir. 1993) 14 and noting that court denied “permissive intervention in a subpoena enforcement 15 proceeding seeking disclosure of Northern Mariana Island tax records where the 16 government party to the case made the same arguments as the taxpayer intervenors, and 17 the government party would adequately represent the intervenors’ privacy interests”). 18 On the other hand, there is a cost to Arizona Downs’s intervention in the form of 19 delay. Plaintiffs may have somewhat overstated the extra work and delay that would 20 result—and to some degree, already has—upon Arizona Downs’s intervention in this case. 21 But delay and decreased efficiency are certain to occur when adding an additional party to 22 these proceedings, even if that party is seeking the same relief as an existing party. For 23 example, as the Perry court noted, permitting intervention is likely to cause delay because 24 “each group would need to conduct discovery of substantially similar issues.” Id. This kind 25 of redundancy is unnecessary because the Court anticipates that Defendants will fully 26 “develop[] a complete factual record encompassing [their] interests,” and, again, Arizona 27 Downs’s interests are aligned with Defendants’ interests. Id. As the Perry court decided, 28 permitting intervention does not have identifiable benefits and is thus not worth the cost in 1 || terms of added burden, inefficiency, and delay. Therefore, the Court in its discretion will || deny Arizona Downs’s request for permission to intervene under Rule 24(b). 3 IT IS THEREFORE ORDERED denying the Motion to Intervene filed by Arizona 4|| Downs, LLC (Doc. 42). 5 IT IS FURTHER ORDERED setting oral argument on Plaintiffs’ Motion for 6 || Temporary Restraining Order (Doc. 20) on October 30, 2019, at 1:30 p.m., before District 7\| Judge John J. Tuchi in Courtroom 505, Sandra Day O’Connor Federal Courthouse, 401 8 || West Washington Street, Phoenix, Arizona 85003. The Court will hear only legal argument 9|| on Plaintiffs’ Motion; no new evidence need be presented. 10 Dated this 4th day of October, 2019. CN 11 “wok: 12 wef hlee— Unifga State#District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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