LARRY C. FLYNT; HAIG KELEGIAN, SR.; HAIG T. KELEGIAN, JR. v. STEPHANIE K. SHIMAZU, in her official capacity as the Director of the California Department of Justice, Bureau of Gambling Control; JIM EVANS, in his official capacity as Chairman of the California Gambling Control Commission; TRANG TO, in his official capacity as Commissioner of the California Gambling Control Commission; XAVIER BECERRA, in his official capacity as Attorney General of the State of California; PAULA D. LABRIE, in her official capacity as Commissioner of the California Gambling Control Commission
No. 17-17318
United States Court of Appeals for the Ninth Circuit
October 7, 2019
O‘SCANNLAIN, Circuit Judge
D.C. No. 2:16-cv-02831-JAM-EFB
FOR PUBLICATION
OPINION
*Appeal from the United States District Court for the Eastern District of California John A. Mendez, District Judge, Presiding
Argued and Submitted February 13, 2019 San Francisco, California
Filed October 7, 2019
Before: Mary M. Schroeder, Diarmuid F. O‘Scannlain, and Johnnie B. Rawlinson, Circuit Judges.
Opinion by Judge O‘Scannlain; Dissent by Judge Rawlinson
SUMMARY**
Civil Rights
The panel reversed the district court‘s dismissal, on statute of limitations grounds, of a lawsuit brought pursuant to
Plaintiffs hold gambling licenses to own and to operate cardrooms in California and wish to invest substantially in out-of-state casinos. They alleged that
On November 30, 2016, plaintiffs brought suit for declaratory and injunctive relief alleging, in part, that
The panel first held that although this Circuit had yet to apply a state statute of limitations to a facial challenge under the Dormant Commerce Clause, it saw no reason to treat such a claim differently from facial constitutional claims under the First, Fifth, or Fourteenth Amendments. Thus, the panel concluded that plaintiffs’ claims were subject to the forum state‘s statute of limitations. Here, the relevant period was two years.
The panel rejected the State‘s argument that plaintiffs’ claims accrued in 2014 when the Commission issued its adverse decision on Kelegian Jr.‘s investment. The panel held that when the continued enforcement of a statute inflicts a continuing or repeated harm, a new claim arises (and a new limitations period commences) with each new injury. The panel held that assuming for the sake of analysis that
Dissenting, Judge Rawlinson agreed with the district court that plaintiffs’ claims were barred by the applicable two-year statute of limitations. Judge Rawlinson stated that the majority‘s view that the injury continues because the Gambling Commission stands ready to continue to enforce the statute is patently at odds with this Circuit‘s consistently articulated analysis of the continuing violation doctrine.
COUNSEL
Paul J. Cambria Jr. (argued) and Erin McCampbell Paris, Lipsitz Green Scime Cambria LLP, Buffalo, New York, for Plaintiffs-Appellants.
James G. Waian (argued) and Peter H. Kaufman, Deputy Attorneys General; Sara J. Drake, Senior Assistant Attorney General; Xavier Becerra, Attorney General; Office of the Attorney General, San Diego, California; for Defendants-Appellees.
O‘SCANNLAIN, Circuit Judge:
We must decide whether California‘s statute of limitations for personal injury suits bars a facial challenge to the constitutionality of certain California gambling laws.
I
Larry Flynt, Haig Kelegian Sr., and Haig Kelegian Jr. (collectively “Licensees“) hold gambling licenses to own and to operate cardrooms—establishments that “allow patrons to engage in non-banked or non-percentage card games during which the players play against each other and pay the cardroom a fee to use its facilities.”1 In addition to owning cardrooms in California, they wish to invest substantially in out-of-state casinos. They complain, however, that California law prohibits them from doing so.
A
California has long permitted in-state gambling, subject to certain restrictions. Relevant here, the state requires cardrooms to obtain a license to operate, see
This case concerns the intersection of three such laws. First,
The upshot of
B
With these laws on the books, Flynt and the Kelegians allege that they have been unable to pursue numerous investment opportunities in out-of-state casinos, despite having a “keen interest” in doing so and being “ready, willing, and able to compete for the opportunity.” Flynt, for instance, alleges that prior to 2014 and as late as November 2015, he declined offers to purchase casinos in Nevada, Iowa, Colorado, Louisiana, and Mississippi because of California‘s ownership restrictions. The Kelegians claim that they too declined to pursue similar opportunities to invest outside the state.
In 2010, for example, Kelegian Jr. acquired real property in the State of Washington for the purpose of opening a casino there. Together with his wife, Kelegian Jr. formed Kelco Gaming, LLC, which operated the casino. He owned a one-percent interest in the LLC, and his wife owned the remaining ninety-nine percent. At the same time, Kelegian Jr. applied to the California Gambling Commission to renew his licenses for two California cardrooms. The Commission, tasked with reviewing and issuing state gambling licenses, denied his applications on the grounds that his ownership interest in the Washington casino violated
C
On November 30, 2016, Flynt and the Kelegians sued the Bureau of Gambling Control, members of the California Gambling Commission in their official capacities, and the Attorney General of California (collectively, “the State“) under
The district court dismissed the suit, ruling that Licensees’ claims were time-barred because they failed to bring suit within two years of the Commission‘s 2014 decision.
This timely appeal followed.
II
Licensees contend that the district court erred in dismissing their claims as time-barred. “Section 1983 does not contain its own statute of limitations.” Butler v. Nat‘l Comm. Renaissance of Cal., 766 F.3d 1191, 1198 (9th Cir. 2014). Instead, claims brought under
The Supreme Court has never limited the application of a statute-of-limitations period to as-applied challenges. Instead, it has construed
Although our court has yet to apply a state statute of limitations to a facial challenge under the Dormant Commerce Clause, we see no reason to treat such a claim differently from facial constitutional claims under the First, Fifth, or Fourteenth Amendments. Thus, consistent with our court‘s case law, we conclude (as the district court did) that Licensees’ claims are subject to the forum state‘s statute of limitations. Here, the relevant period is two years. See
A
Deciding that California‘s statute of limitations applies—in the abstract—to Licensees’
1
A limitations period begins to run when the claim accrues. See Levald, Inc. v. City of Palm Desert, 998 F.2d 680, 687 (9th Cir. 1993). “It is the standard rule that accrual occurs when the plaintiff has a complete and present cause of action,” Wallace, 549 U.S. at 388 (internal quotation marks and alteration omitted), that is, when the plaintiff “knows or has reason to know of the actual injury,” Scheer, 817 F.3d at 1188 (quoting Lukovsky, 535 F.3d at 1051).
Licensees urge us to reject this rule on accrual for facial constitutional challenges. But just as there is no justification to treat facial challenges differently for purposes of determining whether a statute of limitations applies, there is no reason to do so for purposes of determining when a claim accrues. See Bird v. Dep‘t of Human Servs., 935 F.3d 738, 746 (9th Cir. 2019). Scheer states the proper test for accrual. The question, then, is whether Licensees’ claims accrued outside the limitations period.
2
The State argues (and the district court found) that Licensees’ claims accrued when the Commission issued its adverse decision on Kelegian Jr.‘s investment in June 2014. The State reasons that such decision put all three Licensees on notice of how the Commission would interpret and enforce
Licensees concede that they were aware of the Commission‘s decision and that they refrained from pursuing some investment opportunities as a result. Nevertheless, they urge that their claims are timely because the statutes’ ongoing prohibition, coupled with the Commission‘s willingness to enforce it, effects a “continuing violation” and a “continuing harm“—namely, because of the statutes, Licensees continue to be prohibited from investing substantially in out-of-state casinos, as they wish to do.
When the continued enforcement of a statute inflicts a continuing or repeated harm, a new claim arises (and a new limitations period commences) with each new injury. See Kuhnle Bros., Inc. v. County of Geauga, 103 F.3d 516, 521–22 (6th Cir. 1997); Palmer v. Bd. of Educ. of Comm. Unit Sch. Dist. 201-U, 46 F.3d 682, 686 (7th Cir. 1995) (“A series of wrongful acts . . . creates a series of claims.“); cf. Nat‘l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 113 (2002) (“Each discrete discriminatory act starts a new clock for filing charges alleging that act.“). Assuming for the sake of analysis that
numerous casinos outside of California. And every two years, the Commission stands ready to enforce such prohibition as part of the state‘s license renewal process. See
We need turn only to the First Amended Complaint to observe that such injuries occurred during the limitations period. See Lewis v. City of Chicago, 560 U.S. 205, 214 (2010) (Whether a violation occurred during the limitations period “depends on the claim asserted.“). Licensees allege a present inability to invest. Although they highlight specific forgone investment opportunities from 2014 and 2015, they do not seek damages for such lost opportunities. Instead, they
seek prospective relief, enjoining the State from enforcing the statutes in the future. Assuming a limitations period extending two years back from the date on which Licensees’ filed their First Amended Complaint (June 15, 2017), Licensees’ alleged injuries fall well within the period. The district court erred by concluding otherwise.
The State responds that Licensees failed to plead a continuing violation because their inability to invest outside California is merely a continuing effect of the Commission‘s 2014 decision, rather than a new injury. See Knox v. Davis, 260 F.3d 1009, 1013 (9th Cir. 2001) (A “mere continuing impact from past violations is not actionable” if the violations lie outside the statute of limitations period. (internal quotation marks omitted)); see also Garcia v. Brockway, 526 F.3d 456, 462 (9th Cir. 2008) (A “continuing violation is occasioned by continual unlawful acts, not by continual ill effects from an original violation.“). The Commission‘s decision, however, is not what prohibits Licensees from pursuing their desired investments. The statutes themselves do that. Ultimately, the Commission‘s decision did nothing but enforce the statutes against a particular plaintiff—Kelegian Jr.—with respect to a particular investment. That all three Licensees continue to be precluded from exploring other investment opportunities is not a consequence
on Knox and other similar cases is therefore misplaced.6 Licensees’ claims are timely.
B
Two final arguments raised by the State merit brief attention.
First, the State contends—without support—that Licensees are estopped from asserting their facial challenges to
Second, the State argues cursorily that Licensees failed to plead facts supporting a facial, as opposed to an as-applied, challenge. The State did not raise this argument in its motion to dismiss, so the district court did not rule on it. We decline to do so in the first instance.
III
Assuming that the enforcement of
REVERSED and REMANDED.
RAWLINSON, Circuit Judge, dissenting:
I respectfully dissent. I agree with the district court that the Plaintiffs’ claims were barred by the applicable two-year statute of limitations.
The majority opinion relies on out-of-circuit authority addressing the continuing violation doctrine to reverse the ruling of the district court. See Majority Opinion, pp.12–13 (citing Kuhnle Bros., Inc. v. Cty. of Geauga, 103 F.3d 516, 521–22 (6th Cir. 1997); Palmer v. Bd. of Educ. of Comm. Unit Sch. Dist. 201-U, 46 F.3d 682, 686 (7th Cir. 1995)). However, our precedent supports the ruling by the district court.
As the majority acknowledges, a statute of limitation commences running when the claim accrues. See Levald, Inc. v. City of Palm Desert, 998 F.2d 680, 687 (9th Cir. 1993). In turn, the claim accrues when “a
It is undisputed that Plaintiffs Larry C. Flynt, Haig Kelegian, and Haig Kelegian, Jr. became aware on June 12, 2014, that the challenged statute prohibited any interest in a gambling establishment outside California if that interest exceeded one percent. Because Plaintiffs desired to acquire prohibited interests in gambling establishments outside California, the injury imposed by the statute accrued as to them at the latest on June 12, 2014, when the California Gambling Commission required Kelegian, Jr. to divest himself of a community property interest in a gambling establishment that exceeded one percent. At that point, Plaintiffs knew or had reason to know that the statute imposed an actual injury upon them. See Scheer, 817 F.3d at 1188 (observing that the statute of limitations on a claim against the State Bar would begin to run when discipline was imposed or was foreseeable).
Plaintiffs’ complaint was filed more than two years after the Gambling Commission‘s action, and was thus untimely. The majority avoids this conclusion by employing the continuing violation doctrine as interpreted by other circuits. But the continuing violation doctrine, as interpreted in this circuit, supports the decision of the district court.
In RK Ventures, Inc. v. City of Seattle, 307 F.3d 1045, 1058 (9th Cir. 2002), we determined the limitations period by identifying “when the operative decision occurred.” (internal quotation marks omitted). Once the operative decision is identified, the inevitable consequences of the operative decision do not affect the running of the statute of limitations. See id.
Relying upon out-of-circuit authority, the majority posits that Plaintiffs established the existence of a continuing violation because “the Commission stands ready to enforce” the statutory prohibition “as part of the state‘s license renewal process.” Majority Opinion, p. 13 (citing Kuhnle, 103 F.3d at 522 — Sixth Circuit; Palmer, 46 F.3d at 685–86 — Seventh Circuit). However, our precedent does not support this interpretation of the continuing violation doctrine. Rather, inaction on the part of a government entity has no effect on the statute of limitations calculus. See Scheer, 817 F.3d at 1188 (observing that the statute of limitations was not triggered until the State Bar had imposed discipline). The fact that the Gambling Commission “stands ready” to enforce the statute does not translate into the “discrete act” required to support a continuing violation argument. RK Ventures, 307 F.3d at 1061 (rejecting a continuing violation argument and explaining that “the statute of limitations runs separately from each discrete act“) (citing National Railroad Passenger Corp. v. Morgan, 122 S. Ct. 2061, 2072 (2002)) (emphasis added). Simply put, under our precedent the continuing violation theory cannot rest on a non-act, such as “standing ready” to enforce a statute. See id.
The majority attempts to distinguish our recent decision in Bird v. Dep‘t of Human Servs., No. 17-16076, 935 F.3d 738 (9th Cir. August 23, 2019) (per curiam), reiterating our steady approach to the continuing violation doctrine. See Majority Opinion, p. 14 n.5.
However, there is no principled basis upon which Bird can be distinguished from the facts of this case.
In Bird, the plaintiff brought a claim under
The district court concluded that Bird‘s cause of action accrued at the latest on May 14, 2013, and the complaint filed more than two years after that date was untimely. See Id. at *5.
We affirmed the judgment of the district court that Bird‘s complaint was time-barred. See id. We rejected Bird‘s continuing violation argument and her argument that the statute can be challenged as long as it is in effect. See Id. at *5–6. We confirmed that an alleged due process violation under
Application of this same analysis to the plaintiffs in this case is inescapable. The plaintiffs in this case indisputably became aware on June 12, 2014, that they were prohibited by the challenged statute from acquiring an interest in a gaming establishment outside California in excess of one percent. Their complaint, asserting individualized claims as in Bird, was filed more than two years later, and was untimely. The fact that the Gambling Commission continued to enforce the statute “is insufficient to constitute a continuing violation.” Id. (citation omitted).
In Bird, we specifically addressed and rejected the argument that the continued existence of a challenged statute supports the extension of a limitations period. We explained that acceptance of that argument “would essentially nullify all statutes of limitations with respect to statutory challenges.” Id. at *6.
In the process of debunking Bird‘s argument, we expressly negated any reliance on the Sixth Circuit‘s decision in Kuhnle, a case also heavily relied upon by the majority. In Bird, we explained that Kuhnle “did nothing more than bring the . . . Sixth Circuit[] into alignment with our view that a facial challenge to a statute generally accrues when the statute is enforced.” Id. (citation and internal quotation marks omitted). The majority‘s view that the injury continues because the Gambling Commission “stands ready” to continue to enforce the statute is patently at odds with our consistently articulated analysis of the continuing violation doctrine. See id.
Because the continuing violation theory is not viable under our precedent, I agree with the district court that Plaintiffs’ action is barred by the applicable statute of