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Media Alerts - Department of Texas, Veterans of Foreign Wars v. Texas Lottery Commission - Fifth Circuit
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July 29, 2014
  Department of Texas, Veterans of Foreign Wars v. Texas Lottery Commission - Fifth Circuit
Headline: Fifth Circuit Strikes Down Texas Law Prohibiting Charities from Using Bingo Proceeds to Fund Political Advocacy.

Area of Law: Texas Bingo Enabling Act; First Amendment.

Issue Presented: Whether the political advocacy restrictions contained in the Texas Bingo Enabling Act violate the First Amendment.

Brief Summary: The issue presented in this appeal is the constitutionality of political advocacy restrictions contained in the Texas Bingo Enabling Act ("the Bingo Act"). The Bingo Act allows charitable organizations to raise money by holding bingo games on the condition that the money is used only for the organizations' charitable purpose and not for political advocacy. A group of charities filed suit challenging these restrictions in the U.S. District Court for the Western District of Texas, arguing that the restrictions violated their speech rights under the First Amendment. The district court granted summary judgment in favor of the challengers and issued a permanent injunction preventing enforcement of the speech restrictions. A panel of the U.S. Court of Appeals for the Fifth Circuit reversed the district court, but the panel decision was vacated when the Fifth Circuit decided to rehear the case en banc. The en banc Fifth Circuit affirmed the district court's summary judgment and permanent injunction.

Extended Summary: In 2010, Plaintiffs-Appellees, who are a host of nonprofit organizations licensed to conduct bingo in Texas ("the Charities"), brought suit under 42 U.S.C. ยง 1983 against the commissioners and two executive officers of the Texas Lottery Commission, the state agency responsible for bingo licensing and regulation ("the Commission"). The Texas Bingo Enabling Act ("the Bingo Act") allows charitable organizations to raise money by holding bingo games on the condition that the money is used only for the organizations' charitable purpose and not for political advocacy. The Charities alleged that two of the political advocacy restrictions, Sections 2001.456(2) - (3), violated their right to freedom of speech.

Sections 2001.456(2) - (3) state that:
A licensed authorized organization may not use the net proceeds from bingo directly or indirectly to: ... (2) support or oppose a measure submitted to a vote of the people; or (3) influence or attempt to influence legislation.

The First Amendment challenge was twofold: First, the Charities claimed that Sections 2001.456(2) - (3) are facially unconstitutional because they are a direct abridgement of speech with no compelling or substantial justifying interest. Second, they claimed the law unconstitutionally discriminates between the Charities and similarly situated businesses, such as racetracks, which are not prohibited from using their revenue for political purposes.

The U.S. District Court for the Western District of Texas granted summary judgment in favor of the Charities, permanently enjoining the Commission from enforcing the invalid provisions. The Commission appealed and a unanimous Fifth Circuit panel reversed the district court's summary judgment in favor of the Charities and its permanent injunction preventing enforcement of the challenged statutory provisions. After panel rehearing, a panel majority issued a revised opinion that again reversed the district court's judgment. Thereafter, the Fifth Circuit granted en banc rehearing.

The Fifth Circuit en banc held that (1) the Bingo Act creates a regulatory regime that grants the Charities a benefit - in the form of a license - to conduct bingo games, rather than a government subsidy; (2) the challenged provisions constitute facial restrictions on the Charities' political speech, and therefore strict scrutiny applies; and (3) the political advocacy restrictions in the Bingo Act do not withstand strict scrutiny. The Commission failed to articulate a compelling interest justifying the challenged provisions, but even if the interests raised by the Commission were compelling, the restrictions are not narrowly tailored. Consequently, the provisions at issue are facially invalid under the First Amendment.

Judge Dennis dissented on the grounds that Supreme Court precedent does not permit strict or heightened scrutiny. The charitable bingo program's limitation on the use of bingo proceeds for lobbying and other political speech, which the legislature has decided not to promote, does not "suppress" that speech and therefore should not trigger strict or heightened scrutiny under the First Amendment.

Judge Graves's dissent joined Judge Dennis's but also argued that the Bingo Act's restrictions on the use of bingo proceeds for political advocacy are permissible conditions on a government subsidy and do not operate to penalize speech.

For the full opinion, please see:
http://www.ca5.uscourts.gov/op...ub/11/11-50932-CV2.pdf.

Panel: En banc

Argument Date: 1/22/2014

Date of Issued Opinion: 7/28/2014

Docket Number: No. 11-50932

Decided: Affirmed

Case Alert Author: Kirsty Davis

Counsel: Anatole Robert Barnstone for Plaintiffs-Appellees Department of Texas, Veterans of Foreign Wars of the United States; Amvets Department of Texas, Incorporated; Amvets Post 52, Incorporated; Amvets Post 52, Auxiliary, Incorporated; The Great Council of Texas, Improved Order of Redmen; Redmen War Eagle Tribe No. 17; Redmen Tribe No. 21 Geronimo; Redmen Ramona Council No. 5; The Institute for Disability Access, Incorporated, Doing Business as Adapt of Texas; Temple Elks Lodge No. 138, Benevolent and Protective Order of Elks of the United States of America, Incorporated; Bryan Lodge No. 859, Benevolent and Protective Order of Elks of the United States of America, Incorporated; Austin Lodge No. 201, Benevolent and Protective Order of Elks of the United States of America, Incorporated; and Anna Fire and Rescue, Incorporated. Arthur Cleveland D'Andrea for Defendants-Appellants Texas Lottery Commission; Gary Grief, Executive Director in his Official Capacity; Sandra K. Joseph, Director of Charitable Bingo in her Official Capacity; Mary Ann Williamson, Commissioner in her Official Capacity; Unknown Commissioner in Official Capacity; and J. Winston Krause, Commissioner in his Official Capacity.

Author of Opinion: Chief Judge Stewart (dissents by Judge Dennis and Judge Graves)

Case Alert Circuit Supervisor: Aaron-Andrew P. Bruhl

    Posted By: Aaron Bruhl @ 07/29/2014 12:20 PM     5th Circuit  

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