AJ Sloan Inc. v. Holloway

          ORDER

          Gloria M. Navarro, Chief Judge.

         Pending before the Court is the Motion for Summary Judgment, (ECF No. 28), filed by Defendants Jacqueline R. Holloway (“Director Holloway”) and Clark County (the “County”) (collectively “Defendants”). Plaintiffs AJ Sloan, Inc. (“AJ Sloan”); LGS3, LLC (“LGS3”); LGS4, LLC (“LGS4”); and LGS5, LLC (“LGS5”) (collectively “Plaintiffs”) filed a Response, (ECF No. 31), and Defendants filed a Reply, (ECF No. 35). For the reasons discussed below, the Court GRANTS Defendants' Motion for Summary Judgment.

         I. BACKGROUND

         Plaintiffs own gaming and drinking establishments in Clark County, Nevada, that operate as taverns under “Class A” gaming licenses. These licenses “permit[] the operation of a total of fifteen or fewer slot machines incidental to the primary business at the establishment wherein the slot machines are to be located.” Clark County Code (the “Code”) § 8.04.040(b)(3) (emphasis added).

         Following a proliferation of businesses operating under Class A licenses, the Clark County Board of County Commissioners (the “Board”) passed an amendment to its tavern laws (the “2011 Ordinance”) effective April 9, 2011. (See, e.g., Exs. O, P, Q to Mot. for Summary J. (“MSJ”), ECF Nos. 28-1, 28-2); (Holloway Dep. at 34, Ex. E to MSJ, ECF No. 28-1). The 2011 Ordinance required that taverns operating under Class A limited gaming licenses have a bar and at least eight slot machines “embedded” in the bar. (Holloway Dep. at 54); Code § 8.20.020.385 (Apr. 19, 2011). Taverns licensed “at the same location” prior to December 22, 1990, were exempted from the new requirement. Code § 8.20.020.385 (Apr. 19, 2011).

         County enforcement staff eventually informed the Board that they were experiencing difficulties in enforcing certain provisions of the 2011 Ordinance. (See Ex. X at 29, ECF No. 28-3). In addition, the Board became concerned that certain businesses were exploiting a loophole in the 2011 Ordinance to continue to operate as a “slot parlor” under the guise of tavern.^[1] (See Id. at 34-36). Both concerns related to attempts by some businesses to comply with the “embedded” slot machine requirement by moving free standing “slant top” machines adjacent to a bar. (See, e.g., id. at 29). Because of these issues, the Board decided to again amend the Code. (See Ex. Z at 92, ECF No. 28-3).

         On December 3, 2014, the Board passed Ordinance L-256-14 (the “2014 Ordinance”) by a 6-1 vote. (See Ex. A to MSJ, ECF No. 28-1). The 2014 Ordinance requires taverns to maintain bars with a minimum height of forty inches and to operate a minimum number of slot machines as “bartop machines.”^[2] Code § 8.20.020.385(c)(1). Code § 8.20.020.385(c)(2). A tavern need not comply with these provisions if it either operates seven or fewer slot machines or qualifies as a grandfathered tavern. Code § 8.20.020.385(d)-(e). According to the Code, a “grandfathered tavern” is:

(i) A tavern licensed for fifteen or fewer slot machines, the application for which was pending or approved prior to [December 8, 2006]; or

(ii) Any tavern which, as of December 2, 2014, operated more than fifty percent of the slot machines on its premises as bartop machines, regardless of the height of such bartop machines located in a bar . . . .

Code § 8.20.020.385(a)(i)-(ii).

         On December 31, 2014, Director Holloway of the Business License Department sent Plaintiffs a letter that identified exempted locations. (Ex. 2 to Resp., ECF No. 31-2). The letter reflected Director Holloway's interpretation that, like the 2011 Ordinance, exemption under the 2014 Ordinance depended on the date the tavern location first received a gaming license. (Id.). Shortly thereafter, Board members informed Director Holloway that her interpretation was inconsistent with the language and intent of the 2014 Ordinance. (See Holloway Dep. at 34, 36- 40). Director Holloway revised her interpretation and concluded that the application date of “current ownership, ” rather than tavern location, determined grandfathered status. (Id.). On October 28, 2015, and November 2, 2015, Director Holloway sent two additional letters to Plaintiffs clarifying her revision and notifying Plaintiffs that they no longer qualified for grandfathered status under the corrected interpretation. (Exs. C, D to MSJ, ECF Nos. 28-1).

         Rather than complying with the 2014 Ordinance, Plaintiffs filed the instant case in state court alleging violations of due process and seeking declaratory and injunctive relief. (Ex. B to Pet. for Removal, (“Compl.”), ECF No. 1). Defendants removed the case to this Court and filed the instant Motion for Summary Judgment on Plaintiffs' claims. (See generally MSJ, ECF No. 28).

         II. LEGAL STANDARD

         The Federal Rules of Civil Procedure provide for summary adjudication when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Material facts are those that may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See Id. “Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor.” Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). A principal purpose of summary judgment is “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

         In determining summary judgment, a court applies a burden-shifting analysis. “When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See ...