New Hampshire Lottery Commission, et al. v. William Barr, in his official capacity as Attorney General of the United States of America, et al.

2019 DNH 039

• Court: District Court, D. New Hampshire
• Decided: March 8, 2019
• Docket: Consolidated Case No. 19-cv-163-PB
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

New Hampshire Lottery Commission, et al.

v. Case No. 19-cv-163-PB William Barr, in his official Opinion No. 2019 DNH 039 capacity as Attorney General of the United States of America, et al.

O R D E R

A trade association of businesses involved in the internet

gambling industry has filed an emergency motion to intervene in

an action challenging a recent Office of Legal Counsel (“OLC”)

reinterpretation of the Wire Act, which criminalizes certain

gambling activities that involve the use of interstate wires.

The trade association seeks to join two consolidated cases, one

filed by the New Hampshire Lottery Commission (“Lottery

Commission”), and the other by two businesses that contract with

the Lottery Commission. Because the association’s interests

will be adequately represented by the present parties, I deny

the motion.

I. Background

The relevant portion of the Wire Act of 1961, 18 U.S.C.

§ 1084, provides:

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

18 U.S.C. § 1084(a).

In 2011, the Office of Legal Counsel announced that

“interstate transmissions of wire communications that do not

relate to ‘a sporting event or contest,’ fall outside the reach

of the Wire Act.” See Virginia A. Seitz, Whether Proposals by

Illinois and New York to Use the Internet and Out-of-State

Transaction Processors to Sell Lottery Tickets to In-State

Adults Violate the Wire Act, Memorandum Opinion for the

Assistant Attorney General, Criminal Division, U.S. Dept. Just.

1 (Sept. 20, 2011) (quoting 18 U.S.C. § 1084(a)).

In 2018, however, the OLC revisited that interpretation and

determined that “the prohibitions of 18 U.S.C. § 1084(a) are not

uniformly limited to gambling on sporting events or contests.”

See Steven A. Engel, Reconsidering Whether the Wire Act Applies

to Non-Sports Gambling, Memorandum Opinion for the Acting

Assistant Attorney General, Criminal Division, U.S. Dept. Just.

23 (Nov. 2, 2018).

On January 15, 2019, the Deputy Attorney General instructed

federal prosecutors to “refrain from applying Section 1084(a) in

2 criminal or civil actions to persons engaged in conduct

violating the Wire Act in reliance on the 2011 OLC opinion prior

to the date of this memorandum, and for 90 days thereafter.”

See Applicability of the Wire Act, 18 U.S.C. § 1084(a), to Non-

Sports Gambling, U.S. Dept. Just. (Jan. 15, 2019), Doc. No. 2-6.

On February 28, the Deputy Attorney General extended that window

through June 14, 2019. See Additional Directive Regarding the

Applicability of the Wire Act, 18 U.S.C. § 1084(a), to Non-

Sports Gambling, U.S. Dept. Just. (Feb. 28, 2019), Doc. No. 23-

1.

The Lottery Commission filed a complaint and a concurrent

motion for summary judgment on February 15, 2019. The

Commission seeks a declaratory judgment and an order

“permanently enjoining the defendants from enforcing the 2018

Opinion.” See Doc. No. 21-1 at 26. Later that day, NeoPollard

Interactive LLC, which “provides the technological

infrastructure for New Hampshire’s iLottery system,” and its 50%

owner, Pollard Banknote LTD (collectively “NeoPollard”) also

filed a complaint and a concurrent motion for summary judgment.

See Doc. No. 5-1 at 8. NeoPollard seeks a judgment declaring

that the Wire Act is limited to “bets or wagers . . . on a

sporting event or contest.” See Doc. No. 5-1 at 31. I

consolidated the NeoPollard action with the Lottery Commission

action on February 22, 2019. See Doc. No. 9.

3 On February 25, iDevelopment and Economic Association

(iDEA) filed an emergency motion to intervene in this

consolidated action. The association “represents the interests

of nearly two dozen member-organizations from virtually every

sector of the iGaming community, including operations,

development, supply, technology, marketing and payment

processing.” Doc. No. 12-1 at 7. The proposed intervenor

complaint specifies the New Hampshire-based activities of two of

iDEA’s members: “Worldplay Gaming Solutions and Paysafe Group

provide payment-related services in connection with New

Hampshire’s iLottery operation.” See Doc. No. 12-2 at ¶ 14.

The trade association asks to intervene “for the sake of

protecting its members’ interests and advancing separate and

distinct legal rights and interests of private parties operating

outside the specific context of state lotteries.” Doc. No. 12-1

at 7. Neither the consolidated plaintiffs nor the defendants

object to iDEA’s intervention.

II. Analysis

Federal Rule of Civil Procedure 24(a) controls intervention

as of right. That rule provides:

On timely motion, the court must permit anyone to intervene who: (1) is given an unconditional right to intervene by a federal statute; or (2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its

4 interest, unless existing parties adequately represent that interest.

Fed. R. Civ. P. 24(a).

The putative intervenor relies on Rule 24(a)(2). A party

is entitled to intervene on this basis if it establishes (1) the

timeliness of its motion to intervene, (2) the existence of an

interest relating to the transaction that forms the basis of the

pending action, (3) a realistic threat that the disposition of

the action will impede its ability to protect that interest, and

(4) the lack of adequate representation of its position by any

existing party. R & G Mortg. Corp. v. Fed. Home Loan Mortg.

Corp., 584 F.3d 1, 7 (1st Cir. 2009). Each of the four

preconditions is necessary. Pub. Serv. Co. of N.H. v. Patch,

136 F.3d 197, 204 (1st Cir. 1998). “The failure to satisfy any

one of them dooms intervention.” Id. (citing Travelers Indem.

Co. v. Dingwell, 884 F.2d 629, 637 (1st Cir. 1989)).

The First Circuit has noted that “[t]here is no bright-line

rule delineating when a motion to intervene is or is not

timeous.” Banco Popular de P. R. v. Greenblatt, 964 F.2d 1227,

1230 (1st Cir. 1992). “Instead, courts must decide the question

on a case by case basis, examining the totality of the relevant

circumstances.” Id.

This motion is certainly timely, and there is no question

that iDEA and its members have an interest in the interpretation

5 of the Wire Act. The third and fourth factors require more

explanation.

An intervenor must demonstrate “a sufficient practical

impairment to justify intervention under Rule 24(a)(2).” Int’l

Paper Co. v. Inhabitants of Town of Jay, Me., 887 F.2d 338, 345

(1st Cir. 1989). “[U]nder certain circumstances ‘the adverse

impact of stare decisis standing alone may be sufficient to

satisfy the practical impairment requirement.” Id. at 344. But

such circumstances typically involve a party claiming “an

interest in the very property and very transaction that is the

subject of the main action.” See, e.g., Chiles v. Thornburgh,

865 F.2d 1197, 1214 (11th Cir. 1989) (finding stare decisis

effect sufficient in case where detainees in Immigration and

Nationality Services facility intervened in lawsuit challenging

federal government’s operation of that detention center).

This case does not present such circumstances. The members

of iDEA are a diverse set of business entities that, for the

most part, have no direct connection to the present dispute. 1

Cf. Stone v. First Union Corp., 371 F.3d 1305, 1310 (11th Cir.

1 The iDEA entities that are similarly situated, WorldPlay and Paysafe, will have their positions vigorously advocated for by NeoPollard, which has almost identical interests. See Int’l Paper, 887 F.2d at 345 (“[T]he stare decisis problem is greatly lessened where there are parties already in the suit whose position on the issues is the same as the absent party’s.”) (internal quotation marks and citation omitted).

6 2004) (stare decisis risk sufficient where bank employees sought

to intervene in suit against that bank alleging that company-

wide policy violated federal law). Under iDEA’s stare decisis

theory, there is no limiting principle for intervenors to a

declaratory judgment action who are attempting to challenge the

interpretation of a statute. Any person or entity that could be

affected by the proposed interpretation would be able to cite a

possible stare decisis effect as a basis for intervention as of

right. In any event, to the extent a decision from this court

“might have a persuasive effect on later actions by the

petitioners, the effect would be insufficient to supply the

necessary practical impediment.” Fox v. Tyson Foods, Inc., 519

F.3d 1298, 1304 (11th Cir. 2008). 2

Even if the possible stare decisis effect of an adverse

ruling could support intervention in this case, iDEA would not

be entitled to intervene as of right because the existing

plaintiffs can adequately represent iDEA’s interests.

“Typically, an intervenor need only make a ‘minimal’ showing

that the representation afforded by a named party would prove

2 Nor would the possibility of Supreme Court review alter this analysis, because “amici, like respondents, can advise the Supreme Court of missing arguments . . . [a]nd if the [State] refused to appeal from a defeat, a would-be intervenor could then seek to intervene.” Mass. Food Ass’n v. Mass. Alcoholic Beverages Control Comm’n, 197 F.3d 560, 568 (1st Cir. 1999) (citations omitted).

7 inadequate.” B. Fernández & Hnos., Inc. v. Kellogg USA, Inc.,

440 F.3d 541, 545 (1st Cir. 2006). That general rule is subject

to two relevant exceptions. First, where “the intervenor’s

ultimate objective matches that of the named party, a rebuttable

presumption of adequate representation applies.” Id. (citing

Daggett v. Comm. on Governmental Ethics & Election Practices,

172 F.3d 104, 111 (1st Cir. 1999)). Second, when a present

party is a government entity, “the burden of persuasion is

ratcheted upward.” Patch, 136 F.3d at 207. Both exceptions

apply here because the Commission is a state agency and iDEA’s

objectives are closely aligned with those of the plaintiffs.

The Lottery Commission, NeoPollard, and the putative

intervenor seek the same ultimate objective: a declaration that

the 2011 interpretation by the OLC, and not the 2018

interpretation, is the proper interpretation of the Wire Act.

Both the Commission and NeoPollard argue that the Wire Act is

limited to gambling on sports events, that the First Circuit has

already so opined, that the text and structure of the Act

support such a construction, and that the legislative history

bolsters that interpretation. Although the Commission

supplements those arguments with arguments that apply only to

state actors, the presentation of additional arguments does not

render the Commission less zealous with respect to their common

8 objectives. Cf. Mass. Food Ass’n v. Mass. Alcoholic Beverages

Control Comm’n, 197 F.3d 560, 567 (1st Cir. 1999).

Where ultimate objectives are aligned, an intervenor can

rebut the presumption of adequate representation by a showing of

“adversity of interest, collusion, or nonfeasance” or similar

grounds. See B. Fernández, 440 F.3d at 546 (1st Cir. 2006). No

such showing has been made here. As already noted, neither

plaintiff rests its argument exclusively on the treatment of

state-sponsored lottery games, and iDEA does not explain how the

fact that NeoPollard is “not a party to an interstate online

poker agreement” would alter the disposition of this case.

Accordingly, I conclude that iDEA is not entitled to

intervention as a matter of right.

Under Federal Rule of Civil Procedure 24(b)(1)(B), I “may

permit anyone to intervene who . . . has a claim or defense that

shares with the main action a common question of law or fact.”

In my exercise of discretion, I “must consider whether the

intervention will unduly delay or prejudice the adjudication of

the original parties’ rights.” Fed. R. Civ. P. 24(b)(3). In

addition, I may consider “almost any factor rationally relevant”

to the motion for permissive intervention and enjoy “very broad

discretion in granting or denying the motion.” Daggett, 172

F.3d at 113.

9 As I have already explained, iDEA’s interests will be

adequately represented in this litigation. The case will be

decided entirely on the papers and oral argument, relieving the

parties from any need for fact discovery for which iDEA may be

well-suited to assist. Cf. Mass. Food Ass’n, 197 F.3d at 567

(“This is not a case where the complaint was framed so as to

require an evidentiary determination and where the would-be

intervenors had information that could only be presented by

their participation as parties.”). Finally, this case is

proceeding at an expedited pace, and should remain on schedule.

Accordingly, I also deny iDEA’s request for permissive

intervention.

Although the Lottery Commission and NeoPollard will

zealously and effectively pursue the same ultimate objective

that iDEA seeks to achieve, I welcome iDEA’s participation in

this case. It may file a brief as an amicus, and I will grant

iDEA oral argument at any dispositive motion hearing. Cf. State

of Me. v. Dir., U.S. Fish & Wildlife Serv., 262 F.3d 13, 14 (1st

Cir. 2001) (affirming denial of motion to intervene where

district court permitted party “to participate in the litigation

on an amicus-plus status”). Further, should it appear at a

later stage that the plaintiffs are not adequately representing

the interests of iDEA or its members, I will “revisit the matter

of intervention.” See id. at 21.

10 The emergency motion to intervene (Doc. No. 12) is denied

without prejudice.

SO ORDERED.

/s/ Paul J. Barbadoro Paul J. Barbadoro United States District Judge

March 8, 2019

cc: Francis C. Fredericks, Esq. Anthony Galdieri, Esq. Matthew D. McGill, Esq. Michael A. Delaney, Esq. Nicholas F. Casolaro, Esq. Theodore B. Olson, Esq. Steven A. Myers, Esq. Alain J. Ifrah, Esq. Andrew J. Silver, Esq. Claude M. Stern, Esq. Demetrio F. Aspiras, III, Esq. Derek L. Shaffer, Esq.