IN THE CIRCUIT COURT OF LOWNDES COUNTY, ALABAMA by lyrics321

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									            IN THE CIRCUIT COURT OF LOWNDES COUNTY, ALABAMA


CORNERSTONE COMMUNITY,                        )
OUTREACH, INC.,                               )
                                              )
       Plaintiff,                             )
                                              )
v.                                            )       Civil Action No.: CV-09-900019
                                              )
BOB RILEY, GOVERNOR,                          )
STATE OF ALABAMA;                             )
DAVID BARBER, SPECIAL                         )
PROSECUTOR FOR TASK FORCE                     )
ON ILLEGAL GAMBLING PER                       )
GOVERNOR’S EXECUTIVE                          )
ORDER #44; EMORY FOLMAR,                      )
ADMINISTRATOR ALABAMA                         )
BEVERAGE CONTROL BOARD;                       )
COL. CHRISTOPHER MURPHY,                      )
DIRECTOR, DEPARTMENT                          )
OF PUBIC SAFETY,                              )
                                              )
Defendants.                                   )

                                             ORDER

       During the pre-dawn hours of March 19, 2009, Governor Bob Riley’s Task Force on

Illegal Gambling (“the Task Force”) conducted a raid at the White Hall Entertainment Center

(“White Hall EC”), which is owned and operated by the Plaintiff Cornerstone Community

Outreach, Inc. (“Cornerstone”). Approximately fifty members of the Task Force conducted the

raid with the assistance of prisoners on loan from the Department of Corrections. Upon entry into

the building, several of the armed officers had their weapons drawn. As a result of the raid, the

Task Force seized over 100 gaming machines, computers, software, books, records,

approximately $535,000 in cash and other items. At 1:30 PM on the same date, the Plaintiff,

Cornerstone, filed in the Circuit Court of Lowndes County its first pleadings seeking a temporary

restraining order, preliminary and permanent injunctive relief, declaratory relief and other relief.


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Freedom Trail Ventures, Ltd. (“FTV”) later sought to intervene in this matter as a Plaintiff

claiming that it had a property interest in a portion of the items seized. Cornerstone later

amended its original complaint. Cornerstone and FTV (collectively the Plaintiffs) sought the

return of the items seized during the raid claiming, among other things, that the seized items

were not illegally held by Cornerstone and that there had been an illegal search and defective

search warrant. The Court granted FTV’s motion to intervene for the purpose of the emergency

relief sought.

       This matter comes before the Court on Plaintiffs’ motion for a temporary restraining

order and for preliminary injunction, a motion to quash the search warrant under which the Task

Force conducted its raid and motions to recover the seized property. Specifically, Plaintiffs seek

preliminary injunctive relief to restore the status quo of the White Hall EC prior to the raid by

requiring the Task Force to return all items seized during the raid and further enjoining the Task

Force from further raids and seizures until the ultimate issue of the legality of the gaming

operation in place at the White Hall EC is determined. Plaintiffs further seek the return of all

items seized during the raid on the additional ground that the search warrant under which the raid

and seizure was conducted, was illegally and improperly obtained and executed.

       On March 25 and 26, the Court conducted a full evidentiary hearing at which time all

Parties presented witnesses, documentary evidence and argument to the Court. Upon review of

the filings of the Parties, consideration of the testimony of the witnesses and their demeanor, the

evidence admitted during the hearing and arguments of legal counsel for the Parties, the Court

does hereby rule as follows:




                                                2
                                         Preliminary Injunction

          In order to be entitled to a preliminary injunction, a plaintiff must show each of the

following elements: (1) that the plaintiff has a reasonable chance of success on the ultimate

merits of the case; (2) that the plaintiff has no adequate remedy at law; (3) that without the

injunction the plaintiff would suffer immediate and irreparable injury; and (4) that the hardship

imposed on the defendant by the injunction would not unreasonably outweigh the benefit

accruing to the plaintiff. Woodward v. Roberson, 789 So.2d 853, 856 (Ala. 2001).

          Reasonable Chance of Success on the Merits

          In order to be entitled to a preliminary injunction, the Plaintiff must first show that it has

a reasonable chance of success on the merits of the case.

           According to the Special Prosecutor for the Task Force, David Barber, the

          Task Force’s mission is, contrary to a lot of public sentiment and comments I’ve
          heard, is not to go out and shut down all of these places one at a time. My charge
          from the Governor was to find an appropriate case to get to the Alabama appellate
          court to get a ruling on whether or not electronic bingo is legal or not.

[Plaintiffs’ Exhibit 3A].1 It could reasonably be inferred from the Special Prosecutor’s own

words that the issue of the legality of electronic bingo remains unresolved and that the Task

Force was charged with the mission of finding a case, which would, once and for all, address the

issue of whether electronic bingo is legal in the State of Alabama.

          Although lotteries are unconstitutional under Alabama law,2 Cornerstone operates the

White Hall EC under the authority of Amendment 674 to the Alabama Constitution, which

provides that “[t] he operation of bingo games for prizes or money by nonprofit organizations for

1
  Mr. Barber’s comments as recorded in the Exhibit are consistent with his comments to the Court during
conference calls with legal counsel as the Court attempted to encourage settlement and/or schedule a hearing
on pending motions.
2
    Article IV, Section 65 of the Alabama Constitution prohibits lotteries in the State of Alabama.

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charitable, educational or other lawful purposes shall be legal in the Town of White Hall….”3

Contrary to certain other local amendments which limit “bingo games” to paper bingo, 4 no such

limitation relates to the “bingo games” authorized by Amendment 674.

        In support of their request for injunctive relief, Plaintiffs introduced a 2004 press release

from Attorney General Troy King that was issued following his “unprecedented, hands-on

evaluation and review of gambling occurring in Alabama.” [Plaintiffs’ Exhibit 4]. This exhibit

demonstrates that the highest law enforcement officer in the State of Alabama opined that

electronic bingo which meets certain criteria (which criteria appear to be satisfied by the

machines at issue in this case), constitute the game of bingo under Alabama law, and thus are

legal. It appears that Attorney General King is not alone in his opinion that non-paper bingo

qualifies as bingo under certain Amendments to the Alabama Constitution allowing for “bingo

games”. In Opinion 2004-35 of the Alabama Attorney General, then Attorney General Bill Pryor

found that “media bingo” is legal in Jefferson County under its local Constitutional Amendment,

despite the fact that it simply allows for the play of “bingo games”.

        Prior to the Governor’s creation of his Special Task Force on Illegal Gambling, Governor

Riley announced a plan to “end gambling loopholes”. In a press release from the Governor’s

Office admitted into evidence, Governor Riley and Attorney General Troy King announced on

February 7, 2006 their plan to “end gambling loopholes.” [Plaintiffs’ Exhibit 18]. One aspect of



3
  It was undisputed that Bingo is a form of lottery that otherwise would be illegal in White Hall but for
Amendment 674. The Governor’s Executive Order creating the Task Force in fact agreed and stated
that “bingo is a form of lottery….” [Plaintiffs’ Exhibit 9].
4
  For example, Constitutional Amendment 508 legalizes “bingo games” in Calhoun County. The
implementing act for Amendment 508 specifically defines “bingo” as “a game of chance played with
cards printed with five rows of five squares each.” Ala. Act 96-962 § 1(1). Similarly, Amendment
506 legalizes “bingo games” in Etowah County, yet its implementing act defines “bingo” as a game
played “on a card or paper sheet.” Ala. Act. 89-463, § 2(1).
                                                    4
the plan was to propose a constitutional amendment, which would “ban the use of electronic

devices in playing bingo under existing local amendments, limiting the games that are authorized

to traditional paper bingo.” [Id.]. Two days after the Governor issued his press release, 2006

Alabama Senate Bill No. 441 was introduced. Among other things, Part V of proposed Bill No.

441 would have amended Section 65 of the Alabama Constitution by inserting the following

additional language: “no constitutional amendment currently in effect or subsequently ratified

shall authorize any person or entity to use an electronic device to engage in bingo.” It would not

be unreasonable to assume from the foregoing that based on the aspects of the plan’s particulars

there was a belief that there was an existing need for a Constitutional Amendment to outlaw

electronic bingo.

       Plaintiff’s expert, Joe Valandra, provided a description of the historical and technological

progression of the game of bingo and testified that the server based games being played at the

White Hall Facility were in fact bingo, and thus not illegal slot machines under Alabama law.

Defendant’s expert, Robert Sertell, provided his contrary opinion that bingo was not being

played on the machines at White Hall and that instead, the machines were illegal slot machines.

However, on cross examination, Mr. Sertell testified, that bingo is a lottery and that the

electronic machines located at White Hall EC, if used to play bingo exclusively, may not

necessarily be slot machines.

       The Task Force contends that Cornerstone has violated Alabama Code § 13A-12-27,

which makes it illegal for a person to possess a slot machine. The term “slot machine” is a

defined term under the Code and is defined as “[a] gambling device that ….” Ala. Code § 13A-

12-20 (10). Therefore, in order to be an illegal slot machine as contended by the Task Force, the




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machines at the White Hall facility must first satisfy the definition of a “gambling device”. A

“gambling device” is statutorily defined as

       Any device, machine, paraphernalia or equipment that is normally used or usable
       in the playing phases of any gambling activity, whether that activity consists of
       gambling between persons or gambling by a person involving the playing of a
       machine. However, lottery tickets, policy slips and other items used in the playing
       phases of lottery and policy schemes are not gambling devices within this
       definition.

Ala. Code § 13A-12-27(5) (emphasis added). From the reading of the statute one could possibly

arrive at the conclusion that items used in the playing phase of (bingo) are not gambling devices

and thus are not illegal slot machines.5 Perhaps the issue to be ultimately determined could be

best stated as follows: If bingo is being played on a machine that would otherwise meet the

statutory requirements for a slot machine, is it still a slot machine?

       Based on the foregoing, along with all other evidence submitted, it is the judgment of the

Court that the first requirement for the issuance of a preliminary injunction has been met.

       Immediate and Irreparable Harm

       Following the Task Force’s raid, the White Hall EC was closed. Although there were

playing machines left behind, computers, servers, software, cash, and cash boxes were taken.

Although, admittedly the Special Prosecutor stated that it was not his intention to close the

facility, he did state that if White Hall EC did reopen they would do so at their peril thus leading

this Court to believe that, without court protection, there is a likelihood that the White Hall EC

would be re-raided during the pendency of these proceedings. See Defendants’ Opposition to

Plaintiff’s Request for a TRO and Preliminary Injunction, ¶s 18 and 19 (“Plaintiff could be back

5
  In a case from the highest court of New York, which may have relevance due to the fact that many
of Alabama’s anti-gambling laws are modeled after New York law, it was held that electronic video
lottery machines, linked together electronically, are “items” used in the playing phase of a lottery
scheme and therefore do not meet the definition of an illegal “slot machine”. Dalton v. Pataki, 835
N.E. 2d 1180 (N.Y. 2005).
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in business in a matter of days… if it desires, albeit at its own peril.” “Finally, the fact that

Plaintiff could be back in operation (if it chooses to accept the risk)….”).

        According to the record, Cornerstone is a charitable organization that provides economic

assistance and services to the citizens of Lowndes and surrounding counties. It does not appear

that Cornerstone has other meaningful sources of revenue absent that which is generated by the

White Hall EC. It therefore follows that absent a reopening; Cornerstone will be unable to meet

its financial obligations including $250,000.00 in grants it had committed to make prior to the

raid and seizure. It appears from the evidence and statements of counsel the beneficiaries of

grants from Cornerstone provide critical services to the citizenry of Lowndes County. In effect,

absent a re-opening, Cornerstone will be unable to pursue its mission.

        Based on the evidence presented, Plaintiffs have satisfied their burden of showing a threat

of immediate and irreparable harm.

        Inadequate Remedy at Law

        Defendants contend that Cornerstone’s adequate remedy at law is provided through “any

criminal prosecutions that may result from this investigation or during the State’s forfeiture

proceeding that will be initiated… once the current investigation is completed.” [Defendants’

Opposition to Plaintiff’s Request for a TRO and Preliminary Injunction, ¶ 6] (emphasis added).

However, by Defendants’ own admission, no criminal prosecution may ever be instituted

through which Cornerstone can seek its “adequate” legal remedy and, although the Defendants

maintain a forfeiture proceeding is inevitable, such proceeding will only be instituted at some

future date when the Task Force decides its investigation is complete.6               The uncertainty



6
  The Task Force’s professed intention to file a civil forfeiture cannot provide an adequate remedy in
light of the fact it has never been filed.


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regarding if or when the Task Force will institute any proceeding does not provide the Plaintiffs

with an adequate remedy at law where there is the threat of immediate, irreparable and

substantial harm as the Court finds in this case. This is true especially in light of the fact that

most, if not all, of the damages outlined above could never be recovered or remedied through

such a proceeding.7

        Plaintiffs, therefore, have shown through the evidence adduced that they lack an

adequate remedy at law.8

       Balancing Harm Versus Benefit

       Lastly, the Court must consider what is in the public interest and specifically look to

determine whether the hardship imposed on the Defendants by the proposed injunction would

unreasonably outweigh the benefit to the Plaintiffs from the injunction. As an initial matter,

there was undisputed testimony that server based gaming machines like those seized from the

White Hall facility are currently in use in many counties throughout the State of Alabama. In

light of Mr. Barber’s public pronouncement that it is not the mission of the Task Force to go

around shutting down these facilities one by one, it is difficult to conclude how allowing the

Plaintiffs to resume operation will harm the public interest.

       It has been represented to the Court that the employees of White Hall EC have been

displaced. While the White Hall EC employees are not parties to this action the Court finds it



7
  For example, the Governor and the members of the Task Force would likely contend they are
immune from any claim for money damages seeking to recover the lost profits being suffered by
Plaintiff. Even if the Defendants were not entitled to sovereign immunity and, therefore, Plaintiff
could sue them for money damages, much of the injury suffered by Plaintiffs (such as loss of goodwill
and the loss of opportunities to assist people in need) cannot be adequately compensated by money
damages.
8
 Defendants have not even argued that Plaintiffs have an adequate remedy at law relative to the
practical inability of Cornerstone to reopen Whitehall EC.
                                                  8
worthy to note that being jobless in a county that ranks among the poorest in the nation and that

has a double-digit unemployment does not bode well for anyone who is trying to support a

family.

          There is evidence in the record that the public has benefited from Cornerstone’s charity

and will continue to do so if Cornerstone should be allowed to resume operations.

          The Court can find no tangible harm to the Task Force if it is required to return the items

seized from the White Hall EC and is prevented from further interfering with Cornerstone’s

operation until a final decision on the merits can be obtained. Although the Task Force contends

that a granting of the injunctive relief sought will impair its investigation, there was no evidence

of how the investigation would be negatively impacted.

          The seized items have been under the possession and control of the Task Force since their

seizure. At hearing, the Defendant represented to the Court that no testing had been done on the

seized items, despite representations in pleadings that the machines “are still being analyzed” 9

and Mr. Barber’s indication to the Court during a scheduling telephone call on March 20th that a

week would be sufficient time to conduct the needed tests.10 While the Task Force should have

the right to pursue its investigation through the testing of the machines and servers seized, their

delay in doing so should not be visited upon the Plaintiffs.


9
    See Defendants’ Opposition to Plaintiff’s Request for a TRO and Preliminary Injunction, ¶s 20.
10
   In response to the Court’s questioning, Mr. Barber stated that testing was needed in order to
determine whether a game of chance was being played on the seized machines. Based on the
testimony of Plaintiff’s own expert, the Court does not believe that this is even a contested issue in this
case. Additionally, the search warrant prepared by the Task Force and presented to Judge Lovell
included a “seizure in place” option wherein the Task Force sought, as an alternative, to simply seize
the entire White Hall EC. Consistent with Mr. Barber’s representation regarding the length of time
needed to test the machines, the seizure in place option was only for ten days, within which time the
Task Force apparently believed it could perform whatever analysis was necessary to advance its
investigation. [Id.].

                                                    9
        It is therefore the judgment of the Court that the benefit of providing temporary relief to

the Plaintiff outweighs any potential harm that may accrue to the Defendant.

                                 Motion to Quash the Search Warrant

        Because the Court concludes that a Preliminary Injunction should issue in the matter as a

result of the foregoing analysis, the Court does not deem it necessary to reach the Plaintiff’s

motion to quash the search warrant. Albeit this finding however, it is the opinion of the Court

that there are significant legal issues on the legality of both the issuance and the execution of the

search warrant in this case.11

        Accordingly for the reasons set forth hereinabove, the Court hereby enters a Preliminary

Injunction in favor of Plaintiffs and against Defendants as follows:

        (1)     the Defendants are hereby directed and ordered to return to Cornerstone, at the

White Hall EC, White Hall, Lowndes County, Alabama all items seized during the March 19,

2009 raid within 5 days from the date of this Order12;

        (2)     so long as Cornerstone resumes its operations at the White Hall EC in a manner

which is consistent with its operation prior to the raid, the Defendants, their agents, servants and

assigns are preliminarily enjoined and prohibited from taking actions that interfere with

Plaintiffs’ operation at the White Hall EC pending the final outcome of this litigation;

        (3)     Plaintiffs are hereby ordered to reasonably maintain and preserve13 the machines

and servers related thereto seized during the raid pending the final outcome of this litigation; and


11
  The issues include whether or not the Special Prosecutor had lawful authority to undertake the
actions he initiated against the Plaintiff.
12
 The Court is delaying the return by 5 days to provide the Task Force with more time to perform
whatever testing it feels is necessary.
13
  In so doing, Plaintiffs are entitled to use the returned items in its operation in a manner that is
consistent with its operation prior to the raid.
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       (4)    Plaintiffs are hereby directed to provide security for costs, damages and expenses,

such security to be in a form to be approved by the Circuit Clerk of Lowndes County in the

amount of $10,000.00.

       The Court further notes that this case was assigned to the undersigned by the Chief

Justice of the Supreme Court of Alabama due to personal matters of the Circuit Judge for the

Second Judicial Circuit and the need to address Cornerstone’s requests and/or motions for

immediate relief. Defendant Barber acknowledged and agreed that Plaintiff was due and entitled

to a hearing on its requests and/or motions for emergency relief. The undersigned having now

addressed the motions and requests for temporary and immediate relief, this case is referred

back to the Chief Justice of the Supreme Court of Alabama for reassignment to the Circuit Judge

for the Second Judicial Circuit or for such other assignment and/or order as the Chief Justice

deems appropriate.

       It is hereby ORDERED that Defendants’ Motion for Recusal is denied.

       Done and ordered this the 28th day of March, 2009.



                                                   ___________________________
                                                   Mark Kennedy, Justice (RET)*

*Sitting by appointment of the Supreme Court as a Circuit Judge of the Second Judicial Circuit
of Alabama




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