Case 1:10-cv SS Document 1 Filed 06/25/10 Page 1 of 23 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION

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1 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 1 of 23 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION DEPARTMENT OF TEXAS, VETERANS OF FOREIGN WARS OF THE UNITED STATES; AMVETS DEPARTMENT OF TEXAS, INC. ; AMVETS POST 52, INC.; AMVETS POST 52, AUXILIARY, INC.; THE GREAT COUNCIL OF TEXAS, IMPROVED ORDER OF REDMEN; IMPROVED ORDER OF REDMEN WAR EAGLE TRIBE #17; IMPROVED ORDER OF REDMEN TRIBE #21 GERONIMO; IMPROVED ORDER OF REDMEN RAMONA COUNCIL #5; THE INSTITUTE FOR DISABILITY ACCESS, INC., d/b/a/ ADAPT OF TEXAS; TEMPLE ELKS LODGE NO. 138, BENEVOLENT AND PROTECTIVE ORDER OF ELKS OF THE UNITED STATES OF AMERICA, INC.; BRYAN LODGE 859, BENEVOLENT AND PROTECTIVE ORDER OF ELKS OF THE UNITED STATES OF AMERICA, INC.; AUSTIN LODGE No. 201, BENEVOLENT AND PROTECTIVE ORDER OF ELKS OF THE UNITED STATES OF AMERICA; and ANNA FIRE & RESCUE, INC. Plaintiffs, v. TEXAS LOTTERY COMMISSION, and GARY GRIEF, ITS EXECUTIVE DIRECTOR, PHILLIP SANDERSON, ITS DIRECTOR OF CHARITABLE BINGO, and MARY ANN WILLIAMSON, DAVID J. SCHENCK, and J. WINSTON KRAUSE, ITS COMMISSIONERS, Defendants. CIVIL NO. 1:10-CV-465 PLAINTIFFS ORIGINAL COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

2 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 2 of 23 TO THE HONORABLE JUDGE OF THE UNITED STATES DISTRICT COURT, WESTERN DISTRICT OF TEXAS: NOW COMES, Department Of Texas, Veterans of Foreign Wars of The United States ( VFW, Texas ); Amvets Department Of Texas, Inc. ( Amvets Dept. Of Texas ), Amvets Post 52, Inc. ( Amvets Post 52 ), Amvets Post 52, Auxiliary, Inc. ( Amvets Post 52, Aux. ), The Great Council Of Texas, Improved Order Of Redmen ( Great Council ), Redmen War Eagle Tribe No. 17 ( Redmen Tribe No. 17 ), Redmen Tribe No. 21 Geronimo ( Redmen Tribe No. 21 ), Redmen Ramona Council No. 5 ( Redmen Tribe No. 5 ), And The Institute For Disability Access, Inc., D/B/A/ Adapt Of Texas ( Adapt Of Texas ), Temple Elks Lodge No. 138, Benevolent And Protective Order Of Elks Of The United States Of America, Inc. ( Temple BPOE No. 138 ), Bryan Lodge No. 859, Benevolent And Protective Order Of Elks Of The United States Of America, Inc. ( Bryan BPOE No. 859 ), Austin Lodge No. 201 Benevolent Protective Order Of Elks Of The United States Of America ( Austin BPOE No. 201 ), and Anna Fire and Rescue, Inc. ( Anna Fire & Rescue ), hereinafter, Plaintiffs, complaining of and about Texas Lottery Commission, and Gary Grief, its Executive Director, Phillip Sanderson, its Director Of Charitable Bingo, and Mary Ann Williamson, David J. Schenck, and J. Winston Krause, its Commissioners, in their official capacity, hereinafter Defendants, and for cause of action shows unto the Court the following: I. NATURE OF SUIT 1.1 This civil rights action is filed under 42 U.S.C to guaranty the right of nonprofit organizations holding a Texas bingo license to participate in the political process. State law currently prohibits charities from using bingo funds to influence legislation or support or oppose a constitutional amendment. That law is a facial violation of the organizations right 2

3 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 3 of 23 to free speech. A political battle for the life of bingo is pending in the Texas Legislature, and charities are prohibited from using a significant (in some cases, their main or only) revenue source bingo money to participate in the fight. Plaintiffs seek a declaration that the statutory prohibition on these uses of bingo revenue is unconstitutional, and an injunction against all Defendants from enforcing the challenged law. II. JURISDICTION 2.1 This suit is brought pursuant to 42 U.S.C seeking a declaratory judgment and injunction to redress the past deprivation and to prevent the further deprivation by defendants and their agents, acting under color of state law and ordinance, of rights, privileges, and immunities secured by the Constitution of the United States, namely the due process clause of the Fourteenth Amendment and the First Amendment, guaranteeing to all persons freedom of speech, assembly, and the right to petition for the redress of grievances. This Court has jurisdiction of the subject matter of this action pursuant to 28 U.S.C because the claims asserted in it arise out of the Constitution of the United States and 28 U.S.C because this is a civil rights claim. III. PARTIES COMPLAINING 3.1. Plaintiff VFW, Texas is the Texas member of the Veterans of Foreign Wars of the United States, a federally-chartered veterans organization, and has its principal place of business in Travis County, Texas Plaintiff Amvets Dept. of Texas, Inc., is the Texas member of Amvets National, a federally-chartered veterans organization, and has its principal place of business in Dallas County, Texas. 3

4 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 4 of Plaintiffs, Amvets Post 52 and Amvets Post 52, Aux. are local members of Amvets Dept. of Texas, and each organization holds a license to conduct charitable bingo in the State of Texas, and each has its principal place of business in Dallas County, Texas Plaintiff Great Council, is authorized by the Improved Order of Redmen, America s oldest fraternal organization chartered by the U.S. Congress and is the governing board of authorized fraternal organizations in the State of Texas called tribes Plaintiff Redmen Tribe No. 17 holds a license to conduct charitable bingo in the State of Texas, and has its principal place of business in Cameron County, Texas Plaintiff Redmen Tribe No. 21 holds a license to conduct charitable bingo in the State of Texas, and has its principal place of business in Cameron County, Texas Plaintiff Redmen Tribe No. 5 holds a license to conduct charitable bingo in the State of Texas, and has its principal place of business in Cameron County, Texas Plaintiff Adapt of Texas holds a license to conduct charitable bingo in the State of Texas, and has its principal place of business in Travis County, Texas Plaintiff Temple BPOE No. 138 holds a license to conduct charitable bingo in the State of Texas, and has its principal place of business in Bell County, Texas Plaintiff Bryan BPOE No. 859 holds a license to conduct charitable bingo in the State of Texas, and has its principal place of business in Brazos County, Texas Plaintiff Austin BPOE No. 201 holds a license to conduct charitable bingo in the State of Texas, and has its principal place of business in Travis County, Texas Plaintiff Anna Fire & Rescue 201 holds a license to conduct charitable bingo in the State of Texas, and has its principal place of business in Collin County, Texas. 4

5 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 5 of 23 IV. PARTIES DEFENDANT 4.1. Defendant Texas Lottery Commission is an agency of the State of Texas tasked with the responsibility of administrating and enforcing the Texas Bingo Enabling Act Defendant Gary Grief is the duly appointed Executive Director of the Texas Lottery Commission Defendant Phillip Sanderson is the duly appointed Director of the Charitable Bingo Division of the Texas Lottery Commission Defendants Mary Ann Williamson, David J. Schenck, and J. Winston Krause are the three Commissioners of the Texas Lottery Commission. Williamson is the chairperson At all relevant times, the Defendants acted through their agents and employees, all of whom were duly qualified and acting in their official capacities on behalf of the Texas Lottery Commission At all relevant times, the Defendants, their agents and employees were acting under color of the laws of the State of Texas. V. FACTS A. Legal Background 5.1. The Texas Bingo Enabling Act (the Act ), chapter 2001, Texas Occupations Code, 1 authorizes and regulates the conduct of charitable bingo, one of several forms of legalized gambling in Texas. Section of the Act (cited as Tex. Occ. Code ), 2 provides: 1 The Act was recodified in It was formerly found at Article 179d, Texas Civil Statutes. References in this Complaint to the Act include references to the pre 1999 version. 2 Formerly Tex. Civ. Stat. art. 179d, 19a(h), (i). 5

6 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 6 of 23 SECTION Use of Proceeds by Licensed Authorized Organization. A licensed authorized organization may not use the net proceeds from bingo directly or indirectly to: (1) [NOT APPLICABLE]; 3 (2) support or oppose a measure submitted to a vote of the people; or (3) influence or attempt to influence legislation. The prohibition that appears in Section was originally enacted in 1983, was renumbered in 1989, and was re-enacted and codified in The Act carries administrative, civil and criminal penalties for using bingo proceeds in political activities. Under Section , any violation of the Act can result in suspension or revocation of a bingo license. Under Section , violators are subject to administrative fines. And under Sections (a)(4) and (b), violation of the use of proceeds restrictions can result in both revocation of the charity s license, and a Class A misdemeanor punishable by up to a year in jail. Bingo charities, or their employees, have been threatened with criminal prosecution and have actually been prosecuted under Section of the Act The Commission 4 requires all licensed charities to submit quarterly reports of bingo revenues and expenditures and occasionally performs financial audits of those charities. 16 Tex. Admin. Code , Upon reviewing such reports and/or performing the audits, the Commission has on many occasions determined that certain expenditures are unlawful under Subchapter J of the Act. In that event, the Commission takes administrative action against the 3 Subsection (1) of Sec prohibits use of bingo funds to support or oppose a candidate for office. The Supreme Court has previously found restrictions on individual contributions to candidates to be valid. Buckley v. Valeo, 424 U.S. 1, 29, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976). Plaintiffs do not challenge this portion of the statute. 4 The Texas Lottery Commission took over the role of regulating bingo from the Texas Alcoholic Beverage Commission ( TABC ) in TABC inherited that responsibility from the Texas Comptroller in References in this Paragraph to the Commission includes all three of these agencies. 6

7 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 7 of 23 charities, including disallowing the expenditures, requiring some form of restitution, imposing a civil penalty, and/or suspending or revoking the charity s bingo license. The precise nature and extent of the Commission s administrative enforcement of these provisions will be learned in discovery At all times relevant to this Complaint, Plaintiffs and/or their subsidiaries were (and are) duly qualified holders of licenses to conduct charitable bingo in the State of Texas. Plaintiffs have a current desire and need to use a portion of their bingo revenues to engage in political advocacy specifically including advocacy regarding anticipated legislation that will have a significant impact on Texas charities that derive income from bingo. However, Plaintiffs are unable to by operation of Section of the Act. B. Uneven Playing Field; Risk to Future of Bingo 5.5. As regards the expenditure of legal gambling proceeds for political activities, Texas law discriminates between for-profit entities that conduct gambling, and not-for-profit entities. One example is the Texas Racing Act, which permits pari-mutuel gambling at licensed, for-profit horse and dog racetracks. Tex. Civ. Stat. art. 179e. The Racing Act contains no provision restricting the use of racing proceeds to influence legislation or otherwise participate in the political process. By contrast, both the Bingo Enabling Act and the Charitable Raffle Enabling Act contain express prohibitions on political uses of charitable funds. Tex. Occ. Code , Unlike with certain Federal tax exemptions, the restriction on political uses of nonprofit funds is not justified by the fact that the government does not have to subsidize political speech. See, e.g., Regan v. Taxation With Representation of Washington, 461 U.S. 540, , 103 S.Ct. 1997, 76 L.Ed.2d 129 (1983) (rejecting IRC 501(c)(3) nonprofit s bid to use tax deductible contributions to support substantial lobbying activities, because Congress is not obliged to subsidize lobbying). Here, unlike Regan, no public subsidy is at issue. 7

8 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 8 of The fact that Texas allows for-profit gambling enterprises to use their revenue to influence the political process, and not nonprofit organizations, skews the process in favor of forprofit businesses. Thus, if (and when) the Texas Legislature comes to consider the future of bingo and other forms of gambling, the playing field will be heavily tilted in favor of for-profit gambling The State of Texas faces an unprecedented fiscal deficit estimated as high as $18 billion in the coming biennium. 6 One of the ideas widely circulated to address this problem is to sell or authorize casino or other forms of gambling licenses. 7 In fact, the July 8, 2010 meeting agenda for the Texas House Committee on Licensing and Administrative Procedures includes a discussion of [g]aming and the expansion of gambling in Texas. 8 Plaintiffs use of bingo funds to influence any such legislation is currently prohibited by Sec (3) In the event legislation is enacted to permit additional forms of gambling in Texas, this may (or may not) require a submission to the citizens of an amendment to the Texas Constitution, which currently prohibits most forms of gambling. Tex. Const. Art. III, 47 (providing that the Legislature shall pass laws prohibiting lotteries and gift enterprises other than bingo, charitable raffles, and the State Lottery). The Texas Attorney General has repeatedly held that under this provision, the Texas Constitution would have to be amended to allow various forms of gambling. Tex. Op. Att y Gen. Nos. DM-302 (1994) (slot machines); GA-0103 (2003); GA-0358 (2005) (state-operated video lottery terminals); GA-0541 (2007) (electronic pull-tab 6 Texas is Facing $18 Billion Budget Shortfall, HOUSTON CHRONICLE, May 12, 2010 (available online at ) (last visited 6/9/2010). 7 Lawmaker Says Gambling Discussion Should be Out in the Open, AUSTIN AMERICAN-STATESMAN, May 5, 2010 (available online at ) (last visited 6/18/2010); What are the Odds?, TEXAS TRIBUNE, Apr. 12, 2010 (available online at ) (last visited 6/18/2010). 8 Posted agenda available at (last visited 6/9/2010). 8

9 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 9 of 23 bingo); GA-0592 (2008) (state-operated raffle). The Texas Constitution can only be amended by a vote of the citizens. Tex. Const. Art. XVII, 1. Accordingly, a second campaign in the form of a constitutional amendment vote will likely be required before more forms of gambling may be legalized in Texas. Plaintiffs use of bingo funds to support or oppose such a measure is currently prohibited by Sec (2) Charities that rely on bingo revenues to support their activities are one of the groups in the greatest position to gain or lose, depending on the outcome of anticipated gambling legislation. If, for example, a measure is passed that permits casinos or similar facilities across Texas, but which leaves bingo halls alone, this would very realistically be the end of bingo in many parts of the State. 9 On the other hand, bingo and the charities it supports could greatly benefit if the charities were permitted to offer additional types of games as part of a proposed gambling bill. Therefore it is no exaggeration to say that the life of Texas charitable bingo is on the line during the next legislative session. C. Plaintiffs; Standing; Case or Controversy Requirement In order to challenge a statute on First Amendment grounds in Federal court, a plaintiff must first satisfy the Constitution s case or controversy requirement. U.S. Const. Art. III, 2. When a plaintiff faces a credible threat of prosecution under a criminal statute he has standing to mount a pre-enforcement challenge to that statute. Doe v. Bolton, 410 U.S. 179, 188, 93 S.Ct. 739, 35 L.Ed.2d 201 (1973). A non-moribund statute that facially restrict[s] expressive activity by the class to which the plaintiff belongs presents such a credible threat, and a case or 9 Statewide, bingo revenues have declined or stagnated since the introduction of the Texas Lottery in Experience by bingo charities in other states is that when other forms of gambling are allowed in, bingo withers away. See As Casinos Lure Bingo Players, Charities Cry Foul, NEW YORK TIMES, Mar. 12, 1993 (available online at casinos lure bingo players charities cryfoul.html ) (last visited 6/9/2010). 9

10 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 10 of 23 controversy thus exists in the absence of compelling evidence to the contrary. New Hampshire Right to Life PAC v. Gardner, 99 F.3d 8, 15 (1 st Cir. 1996). This presumption is particularly appropriate when the presence of a statute tends to chill the exercise of First Amendment rights. Wilson v. Stocker, 819 F.2d 943, 946 (10th Cir.1987) All named Plaintiffs, or their subsidiaries or adjuncts, are qualified nonprofit organizations licensed to conduct bingo in the State of Texas. They are, therefore, within the class of persons subject to the challenged statute, Tex. Occ. Code Unquestionably, the two portions of Sec at issue in this action (supporting or opposing a measure submitted to a vote of the people, and influencing or attempting to influence legislation) are within the core of protected speech under the First Amendment. CarePartners, LLC v. Lashaway, 545 F.3d 867, (9 th Cir. 2008), cert. denied, 129 S.Ct. 2382, 173 L.Ed.2d 1294 (2009) (retaliation based on political advocacy, including lobbying, strikes at the heart of the First Amendment ). Nor does the fact that the restriction in question prohibits the use of a particular source of funds for advocacy as opposed to the advocacy itself remove this statute from First Amendment protections. See generally, Citizens United v. Federal Election Com n, 130 S.Ct. 876 (2010) (striking down ban on use of corporate treasury funds for political advocacy). Therefore, the class to which Plaintiffs belong is burdened by a facial restriction on its freedom of speech Plaintiff Amvets Post 52 has expressed a clear intent to engage in political advocacy but for the challenged restriction. Amvets Post 52 desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Amvets Post 52 desires to be involved in the 10

11 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 11 of 23 campaign to support or oppose that amendment. In addition, Amvets Post 52 desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Amvets Post 52 receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Amvets Post 52 is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore Amvets Post 52 suffers from a real chill on its First Amendment rights by virtue of Sec Plaintiff Amvets Post 52, Aux. has expressed a clear intent to engage in political advocacy but for the challenged restriction. Amvets Post 52, Aux. desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Amvets Post 52, Aux. desires to be involved in the campaign to support or oppose that amendment. In addition, Amvets Post 52, Aux. desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Amvets Post 52, Aux. receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Amvets Post 52, Aux. is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore Amvets Post 52, Aux. suffers from a real chill on its First Amendment rights by virtue of Sec Plaintiff Amvets Dept. of Texas is the parent organization of Amvets Post 52, Amvets Post 52, Aux., and numerous other posts licensed to conduct charitable bingo in Texas. Posts within Amvets Of Texas have expressed a clear intent to engage in political advocacy but for the challenged restriction. Posts within Amvets Dept. of Texas desire to expend funds to 11

12 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 12 of 23 influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, posts within Amvets Dept. of Texas desire to be involved in the campaign to support or oppose that amendment. In addition, posts within Amvets Dept. of Texas desire to participate in the political process to advance their own agendas in matters unrelated to bingo. Posts within Amvets Dept. of Texas receive a substantial amount of their operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree they feel appropriate. However, posts within Amvets Dept. of Texas are unwilling to simply break the law and thereby put their bingo license, and possibly the freedom of their members, at risk. Therefore posts within Amvets Dept. of Texas suffer from a real chill on their First Amendment rights by virtue of Sec Plaintiff Redmen Tribe No. 17 has expressed a clear intent to engage in political advocacy but for the challenged restriction. Redmen Tribe No. 17 desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Redmen Tribe No. 17 desires to be involved in the campaign to support or oppose that amendment. In addition, Redmen Tribe No. 17 desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Redmen Tribe No. 17 receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Redmen Tribe No. 17 is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore Redmen Tribe No. 17 suffers from a real chill on its First Amendment rights by virtue of Sec

13 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 13 of Plaintiff Redmen Tribe No. 21 has expressed a clear intent to engage in political advocacy but for the challenged restriction. Redmen Tribe No. 21 desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Redmen Tribe No. 21 desires to be involved in the campaign to support or oppose that amendment. In addition, Redmen Tribe No. 21 desires to participate in the political process to advance its own agenda in matters unrelated to bingo. A Redmen Tribe No. 21 receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Redmen Tribe No. 21 is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore Redmen Tribe No. 21 suffers from a real chill on its First Amendment rights by virtue of Sec Plaintiff Redmen Tribe No. 5 has expressed a clear intent to engage in political advocacy but for the challenged restriction. Redmen Tribe No. 5 desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Redmen Tribe No. 5 desires to be involved in the campaign to support or oppose that amendment. In addition, Redmen Tribe No. 5 desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Redmen Tribe No. 5 receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Redmen Tribe No. 5 is unwilling to simply break the law and thereby put 13

14 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 14 of 23 its bingo license, and possibly the freedom of its members, at risk. Therefore Redmen Tribe No. 5 suffers from a real chill on its First Amendment rights by virtue of Sec Plaintiff Adapt of Texas has expressed a clear intent to engage in political advocacy but for the challenged restriction. Adapt of Texas desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Adapt of Texas desires to be involved in the campaign to support or oppose that amendment. In addition, Adapt of Texas desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Adapt of Texas receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Adapt of Texas is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore Adapt of Texas suffers from a real chill on its First Amendment rights by virtue of Sec Plaintiff Temple BPOE No. 138 has expressed a clear intent to engage in political advocacy but for the challenged restriction. Temple BPOE No. 138 desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Temple BPOE No. 138 desires to be involved in the campaign to support or oppose that amendment. In addition, Temple BPOE No. 138 desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Temple BPOE No. 138 receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is 14

15 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 15 of 23 appropriate. However, Temple BPOE No. 138 is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore BPOE No. 138 suffers from a real chill on its First Amendment rights by virtue of Sec Plaintiff Bryan BPOE No. 859 has expressed a clear intent to engage in political advocacy but for the challenged restriction. Bryan BPOE No. 859 desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Bryan BPOE No. 859 desires to be involved in the campaign to support or oppose that amendment. In addition, Bryan BPOE No. 859 desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Bryan BPOE No. 859 receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Bryan BPOE No. 859 is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore Bryan BPOE No. 859 suffers from a real chill on its First Amendment rights by virtue of Sec Plaintiff Austin BPOE No. 201 has expressed a clear intent to engage in political advocacy but for the challenged restriction. Austin BPOE No. 201 desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Austin BPOE No. 201 desires to be involved in the campaign to support or oppose that amendment. In addition, Austin BPOE No. 201 desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Austin BPOE No. 201 receives a substantial amount of its operating expenses from the 15

16 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 16 of 23 conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Austin BPOE No. 201 is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore Austin BPOE No. 201 suffers from a real chill on its First Amendment rights by virtue of Sec Plaintiff Great Council is the parent organization of Redmen Tribe No. 17, Redmen Tribe No. 21, Redmen Tribe No. 5 and numerous other organizations licensed to conduct charitable bingo in Texas. The organizations within Great Council have expressed a clear intent to engage in political advocacy but for the challenged restriction. The organizations within Great Council desire to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, the organizations within Great Council desire to be involved in the campaign to support or oppose that amendment. In addition, the organizations within Great Council desire to participate in the political process to advance their own agendas in matters unrelated to bingo. The organizations within Great Council receive a substantial amount of their operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree they feel appropriate. However, the organizations within Great Council are unwilling to simply break the law and thereby put their bingo license, and possibly the freedom of their members, at risk. Therefore the organizations within Great Council suffer from a real chill on their First Amendment rights by virtue of Sec Plaintiff VFW, Texas is the parent organization of 128 local VFW posts licensed to conduct charitable bingo in Texas. Posts within VFW, Texas have expressed a clear intent to engage in political advocacy but for the challenged restriction. Posts within VFW, Texas desire 16

17 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 17 of 23 to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, posts within VFW, Texas desire to be involved in the campaign to support or oppose that amendment. In addition, posts within VFW, Texas desire to participate in the political process to advance their own agendas in matters unrelated to bingo. Posts within VFW, Texas receive a substantial amount of their operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree they feel appropriate. However, posts within VFW, Texas are unwilling to simply break the law and thereby put their bingo license, and possibly the freedom of their members, at risk. Therefore posts within VFW, Texas suffer from a real chill on their First Amendment rights by virtue of Sec Plaintiff Anna Fire & Rescue has expressed a clear intent to engage in political advocacy but for the challenged restriction. Anna Fire & Rescue desires to expend funds to influence the upcoming legislation regarding gambling in Texas, which affects the future of bingo. In addition, in the event an amendment to the Texas Constitution is submitted to a vote of the public regarding bingo or other forms of gambling, Anna Fire & Rescue desires to be involved in the campaign to support or oppose that amendment. In addition, Anna Fire & Rescue desires to participate in the political process to advance its own agenda in matters unrelated to bingo. Anna Fire & Rescue receives a substantial amount of its operating expenses from the conduct of bingo and cannot afford to participate in the political process to the degree it feels is appropriate. However, Anna Fire & Rescue is unwilling to simply break the law and thereby put its bingo license, and possibly the freedom of its members, at risk. Therefore Anna Fire & Rescue suffers from a real chill on its First Amendment rights by virtue of Sec

18 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 18 of A credible threat of both criminal and administrative prosecution exists with respect to all Plaintiffs. The statute in question is not moribund. Defendants, their agents and employees, regularly audit bingo licensee s books and bring licensing actions against charities deemed to have violated the expenditure restrictions in the Act. Defendants have expressed no intent to refrain from pursuing such action against charities that use bingo funds in a manner currently prohibited by Section Accordingly, Plaintiffs have standing to challenge the statute and the U.S. Constitution s case or controversy requirement is satisfied. VI. CLAIMS FOR RELIEF A. First and Fourteenth Amendment Violation: Facial Restriction on Speech 6.1. Laws that burden political speech are subject to strict scrutiny, which requires the government to prove that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest. Citizens United, 130 S.Ct. at The prohibition on expenditure of bingo funds for legislative or electoral activities is unquestionably a burden on political speech. No compelling interest exists to justify this burden. Particularly objectionable to Plaintiffs is the statute s implication that charities are not competent to determine for themselves whether advancing their political views constitutes an appropriate use of bingo funds. See Buckley, 424 U.S. at 57: The First Amendment denies government the power to determine that spending to promote one's political views is wasteful, excessive, or unwise The prohibition on use of bingo funds to support or oppose a measure submitted to public vote, or to influence legislation, constitutes an abridgement of Plaintiffs rights of free speech and denies them due process of law, all in violation of 42 U.S.C and the First and Fourteenth Amendments of the Constitution of the United States. Plaintiffs have been, and are 18

19 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 19 of 23 being, injured and damaged by the impermissible burden placed on their right to participate in the political process. The harm suffered by Plaintiffs is immediate and ongoing, and Plaintiffs have no adequate remedy at law. B. First and Fourteenth Amendment Violation: Discrimination Among Viewpoints 6.4. In addition to prohibiting restrictions based on the content of speech, the First Amendment also protects from discrimination between different viewpoints. As the Supreme Court recently stated: Prohibited, too, are restrictions distinguishing among different speakers, allowing speech by some but not others. See First Nat. Bank of Boston v. Bellotti, 435 U.S. 765, 784, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978). As instruments to censor, these categories are interrelated: Speech restrictions based on the identity of the speaker are all too often simply a means to control content. Quite apart from the purpose or effect of regulating content, moreover, the Government may commit a constitutional wrong when by law it identifies certain preferred speakers. By taking the right to speak from some and giving it to others, the Government deprives the disadvantaged person or class of the right to use speech to strive to establish worth, standing, and respect for the speaker's voice. The Government may not by these means deprive the public of the right and privilege to determine for itself what speech and speakers are worthy of consideration. Citizens United, 130 S.Ct. at By prohibiting charities but not for-profit enterprises from expending lawful gambling proceeds for legislative or electoral activities, the government has created a favored class of speaker and an unfavored class. As discussed above, the harm the unfavored class (nonprofits) is exposed to is not merely hypothetical. Bingo, and the charities the game supports, are at great risk in the upcoming legislative session. The restriction on use of bingo money to weigh in on the future of gambling in Texas by lobbying, letter-writing, leafleting, get-out-the- 19

20 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 20 of 23 vote campaigns or other activities that cost money may well determine the outcome of this widely-anticipated legislation The disparate treatment between speakers charitable bingo organizations, versus their for-profit gaming cousins constitutes an abridgement of Plaintiffs rights of free speech and denies them due process of law and equal protection under the law, all in violation of 42 U.S.C and the First and Fourteenth Amendments of the Constitution of the United States. Plaintiffs have been, and are being, injured and damaged by the impermissible burden placed on their right to participate in the political process. The harm suffered by Plaintiffs is immediate and ongoing, and Plaintiffs have no adequate remedy at law. C. Request for Preliminary Injunction 6.7. Plaintiffs move this Court for a preliminary injunction precluding Defendants, their agents, servants, employees and all persons in active concert and participation with them from (1) enforcing, attempting to enforce, or threatening to enforce Section (2) or (3) of the Texas Bingo Enabling Act; (2) taking or threatening to take any action against Plaintiffs or any other licensed bingo organization based solely or partly on their use of bingo revenues to influence legislation or support or oppose a measure submitted to a public vote; or (3) referring or threatening to refer a case for criminal prosecution against Plaintiffs or any other licensed bingo organization, or their employees or volunteers, based solely or partly on their use of bingo revenues to influence legislation or support or oppose a measure submitted to a public vote This injunction requested is required because the statute in question operates as an impermissible chilling effect on Plaintiffs right to free speech, and in particular, their ability to participate unreservedly in the upcoming political debate that may determine the future of bingo in Texas. 20

21 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 21 of There is a substantial likelihood that Plaintiffs will succeed on the merits of this suit to have the statute in question declared unconstitutional. The statute is a facial burden on free speech without compelling justification, and it unconstitutionally discriminates between and among viewpoints of different speakers No significant harm will be caused to the Defendants by prohibiting them from burdening Plaintiffs political activity. The public debate would be furthered, and the public interest served, by the entry of the preliminary injunction requested. D. Declaratory Judgment Pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. 2201, Plaintiffs seek a declaration that subsections (2) and (3) of Section , Texas Occupations Code, are facially unconstitutional in violation of the First and Fourteenth Amendments to the United States Constitution A case of actual controversy exists with respect to the present claims. Plaintiffs are actually (and not merely subjectively) burdened in the exercise of their free speech by operation of the complained-of statute. Plaintiffs have present, substantial intent to engage in the prohibited conduct i.e., to use bingo revenues to participate in political activities and would do so, but for the restriction For the foregoing reasons, this Court should declare the rights of Plaintiffs under the First and Fourteenth Amendments, which prevail over State law under the Supremacy Clause. Plaintiffs request that this Court find Section (2) and (3) of the Act in violation of the United States Constitution and declare these provisions null and void. E. Permanent Injunction 21

22 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 22 of Pursuant to 42 U.S.C and Fed R. Civ. Pro. 65, upon final hearing, Plaintiffs request a final and permanent injunction precluding Defendants, their agents, servants, employees and all persons in active concert and participation with them from (1) enforcing, attempting to enforce, or threatening to enforce Section (2) or (3) of the Texas Bingo Enabling Act; (2) taking or threatening to take any action against Plaintiffs or any other licensed bingo organization based solely or partly on their use of bingo revenues to influence legislation or support or oppose a measure submitted to a public vote; or (3) referring or threatening to refer a case for criminal prosecution against Plaintiffs or any other licensed bingo organization, or their employees or volunteers, based solely or partly on their use of bingo revenues to influence legislation or support or oppose a measure submitted to a public vote The use and the threatened use of Section of the Bingo Enabling Act deprive Plaintiffs of their rights under the First Amendment and the due process clause of the Fourteenth Amendment to the U.S. Constitution Plaintiffs have no plain, adequate, or complete remedy at law against the enforcement of the statute by Defendants. Injunctive and declaratory relief from this Court is the only relief that can adequately protect the rights of Plaintiffs and their employees and volunteers. V. PRAYER FOR RELIEF Plaintiffs request that this Court grant: A) A preliminary injunction restraining Defendants, their agents, servants and employees and anyone acting in concert with them in the manner stated above. B) A declaratory judgment that Section (2)-(3) of the Bingo Enabling Act is unconstitutional on its face. 22

23 Case 1:10-cv SS Document 1 Filed 06/25/10 Page 23 of 23 C) An order permanently enjoining Defendants, their successors, their agents, and all persons acting in concert with them who have knowledge of the injunction from in any way enforcing or threatening to enforce Section (2) and (3) of the Bingo Enabling Act. D) Reasonable attorney s fees for the prosecution of this action under 42 U.S.C E) All other relief that is just and proper. Respectfully submitted, /s/ Stephen Fenoglio Stephen Fenoglio State Bar No W. 12 th Street Austin, Texas Tel: (512) Fax: (512) Anatole Barnstone State Bar # West 12 th Street Austin, TX Phone: (512) Fax: 512) /s/ Anatole Barnstone Anatole Barnstone ATTORNEYS FOR PLAINTIFFS 23