940 F.3d 457
9th Cir.2019Background
- Plaintiffs (Larry Flynt and the Kelegians) are California cardroom licensees who allege California law (§§ 330, 19858, 19858.5) prevents significant ownership of out-of-state casino businesses; §19858.5 allows at most a 1% ownership exception.
- Kelegian Jr. held a 1% interest in a Washington casino; the California Gambling Commission denied his license renewal in 2014 and fined him, enforcing the ownership limits.
- Plaintiffs claim they repeatedly declined out-of-state investment opportunities because of the statutes and the Commission’s enforcement posture.
- In November 2016 plaintiffs sued under 42 U.S.C. § 1983, bringing a facial Dormant Commerce Clause challenge to §§ 19858 and 19858.5 and seeking prospective relief; the district court dismissed as time-barred.
- The Ninth Circuit majority held the California two-year personal-injury statute of limitations applies but that a continuing-violation accrual theory saved the facial Dormant Commerce Clause claim as timely; the court reversed and remanded.
- A dissent (Judge Rawlinson) argued Ninth Circuit precedent required accrual at the Commission’s June 12, 2014 decision, making the suit untimely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a forum-state statute of limitations governs facial Dormant Commerce Clause claims under § 1983 | Facial challenges are not case-specific and should not be subject to SOL | § 1983 claims are governed by the forum state's chosen SOL for personal-injury actions | SOL applies to facial Dormant Commerce Clause claims (court follows § 1988/Wilson selection rule) |
| When the claim accrued; whether a continuing violation tolls accrual | Statutes operate continuously and Commission’s readiness to enforce produces repeated injuries—each abstention/new enforcement risk restarts limitations period | Plaintiffs knew of the injury by June 12, 2014 (Commission decision); continuing effects of that decision do not create new accruals | Majority: continuing-violation theory applies; at least some injuries occurred within limitations window so claim timely. Dissent: accrual occurred in 2014, so claim time-barred |
| Whether plaintiffs are estopped from challenging the statutes because they lobbied for § 19858.5 | Prior lobbying for the 1% exception does not bar later constitutional challenge | State asserted estoppel based on plaintiffs’ legislative advocacy | Court rejected estoppel argument as unsupported and irrelevant |
| Whether plaintiffs adequately pleaded a facial (vs. as-applied) challenge | Complaint alleges facial Dormant Commerce Clause invalidity | State argued facial-pleading insufficient (not raised below) | Court declined to resolve pleading-sufficiency argument in the first instance |
Key Cases Cited
- Wilson v. Garcia, 471 U.S. 261 (1985) (§ 1988 directs use of state statute of limitations for § 1983 claims)
- Wallace v. Kato, 549 U.S. 384 (2007) (federal law governs accrual of § 1983 claims)
- Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101 (2002) (discrete acts start new limitation periods)
- Scheer v. Kelly, 817 F.3d 1183 (9th Cir. 2016) (accrual when plaintiff knows or has reason to know of injury)
- Bird v. Dep’t of Human Servs., 935 F.3d 738 (9th Cir. 2019) (continuing-effect of past violation insufficient to invoke continuing-violation doctrine)
- RK Ventures, Inc. v. City of Seattle, 307 F.3d 1045 (9th Cir. 2002) (identify operative decision to determine accrual)
- Levald, Inc. v. City of Palm Desert, 998 F.2d 680 (9th Cir. 1993) (accrual principles for § 1983 claims)
- Maldonado v. Harris, 370 F.3d 945 (9th Cir. 2004) (facial constitutional challenges subject to state SOL)
- Kuhnle Bros., Inc. v. Cty. of Geauga, 103 F.3d 516 (6th Cir. 1997) (continuing violation: repeated harms can restart limitations period)
- Palmer v. Bd. of Educ., 46 F.3d 682 (7th Cir. 1995) (series of wrongful acts creates series of claims)