563 S.W.3d 346
Tex. App.2018Background
- Operators (Rylie, Texas C&D Amusements, Brian & Lisa Scott) own and operate chance-based “eight-liner” amusement redemption machines that dispense tickets/coupons redeemable for noncash prizes; City of Fort Worth enacted zoning and licensing ordinances in 2014 regulating "game rooms" and "amusement redemption machines."
- Ordinances confine game rooms to industrial zones, impose 1,000-foot separation from churches/schools/hospitals/other game rooms, limit numbers per lot, restrict alcohol unless premises are TABC-licensed, require city licenses, inspections, occupation taxes, and allow sealing for unpaid fees.
- Operators sued, seeking declarations that ordinances were preempted by Texas Occupations Code chapter 2153 (coin-operated machines) and by the Texas Alcoholic Beverage Code, and later raised an as-applied substantive-due-course-of-law challenge under the Texas Constitution; City counterclaimed seeking declaration that Penal Code §47.01(4)(B) (the "fuzzy-animal" exception) is unconstitutional.
- Trial court granted partial summary judgment for Operators: found some zoning and sealing-fee provisions conflicted with chapter 2153, denied other relief, and denied City’s counterclaim (finding §47.01(4)(B) constitutional). Both parties appealed.
- On appeal the court considered (1) whether Operators’ machines fall within chapter 2153, (2) whether chapter 2153 completely preempts local regulation, (3) whether the Alcoholic Beverage Code preempts the ordinances’ alcohol restrictions, and (4) whether the City’s counterclaim presented a justiciable controversy.
Issues
| Issue | Plaintiff's Argument (Operators) | Defendant's Argument (City) | Held |
|---|---|---|---|
| Whether Operators’ machines are "skill or pleasure coin-operated machines" under chapter 2153 | Machines are coin-operated and dispense amusement/tickets and so fall within the statute | Machines dispense tickets/coupons redeemable for prizes and thus are not the kinds of machines chapter 2153 covers | Held: Machines are covered by chapter 2153 |
| Whether chapter 2153 completely preempts local regulation of such machines | Chapter 2153's purpose phrase "comprehensive and uniform statewide regulation" shows intent to wholly preempt municipal regulation | Chapter 2153 does not preempt because it does not expressly and unmistakably prohibit local regulation | Held: No complete preemption; chapter 2153 does not unmistakably preempt all local regulation |
| Whether Alcoholic Beverage Code preempts ordinances' prohibitions on sale/possession/consumption of alcohol in game rooms | Code does not preempt City restrictions in this context | Ordinances conflict with TABC because the Code exclusively governs alcoholic beverage regulation except where it permits local rules | Held: Ordinance provisions prohibiting sale/purchase/possession/consumption of alcoholic beverages in game rooms conflict with and are preempted by the Alcoholic Beverage Code |
| Whether City’s counterclaim challenging constitutionality of Penal Code §47.01(4)(B) presented a justiciable controversy | N/A (Operators argued lack of jurisdiction) | City sought declaration that fuzzy-animal exception is unconstitutional to affect preemption analysis | Held: Trial court lacked subject-matter jurisdiction over City's counterclaim; matter dismissed for want of jurisdiction |
Key Cases Cited
- Patel v. Texas Department of Licensing & Regulation, 469 S.W.3d 69 (Tex. 2015) (framework for as-applied substantive-due-course-of-law challenges to economic regulation)
- BCCA Appeal Group, Inc. v. City of Houston, 496 S.W.3d 1 (Tex. 2016) (home-rule ordinances unenforceable to the extent inconsistent with state law; requirement of unmistakable clarity for field preemption)
- S. Crushed Concrete, LLC v. City of Houston, 398 S.W.3d 676 (Tex. 2013) (home-rule cities retain full power of self-government absent clear legislative preemption)
- Dallas Merch.’s & Concessionaire’s Ass’n v. City of Dallas, 852 S.W.2d 489 (Tex. 1993) (TABC preemption principles; examples of express statutory preemption language)
- City of Laredo v. Laredo Merchants Ass’n, 550 S.W.3d 586 (Tex. 2018) (local regulation allowed when ancillary and harmonious with state law; interpret preemption narrowly)
- Tex. Lottery Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628 (Tex. 2010) (textualist statutory interpretation principles)
Conclusion: Affirm in part and reverse and render in part — chapter 2153 applies to Operators’ machines and does not completely preempt local regulation; the Alcoholic Beverage Code preempts the ordinances’ alcohol prohibitions; City’s counterclaim on the fuzzy-animal exception was nonjusticiable and dismissed.