NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, an unincorporated association; NATIONAL BASKETBALL ASSOCIATION, a joint venture; NATIONAL FOOTBALL LEAGUE, an unincorporated association; NATIONAL HOCKEY LEAGUE, an unincorporated association; OFFICE OF THE COMMISSIONER OF BASEBALL, an unincorporated association doing business as MAJOR LEAGUE BASEBALL;
GOVERNOR OF THE STATE OF NEW JERSEY; DAVID L. REBUCK, Director of the New Jersey Division of Gaming Enforcement and Assistant Attorney General of the State of New Jersey; FRANK ZANZUCCKI, Executive Director of the New Jersey Racing Commission UNITED STATES OF AMERICA (Intervenor in the District Court) NEW JERSEY THOROUGHBRED HORSEMEN'S ASSOCIATION, INC.; STEPHEN M. SWEENEY; SHEILA Y. OLIVER (Intervenors in District Court) Stephen M. Sweeney and Sheila Y. Oliver, Appellants NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, an unincorporated association; NATIONAL BASKETBALL ASSOCIATION, a joint venture; NATIONAL FOOTBALL LEAGUE, an unincorporated association; NATIONAL HOCKEY LEAGUE, an unincorporated association; OFFICE OF THE COMMISSIONER OF BASEBALL, an unincorporated association doing business as MAJOR LEAGUE BASEBALL; UNITED STATES OF AMERICA (Intervenor in the District Court)
GOVERNOR OF THE STATE OF NEW JERSEY; DAVID L. REBUCK, Director of the New Jersey Division of Gaming Enforcement and Assistant Attorney General of the State of New Jersey; FRANK ZANZUCCKI, Executive Director of the New Jersey Racing Commission NEW JERSEY THOROUGHBRED HORSEMEN'S ASSOCIATION, INC.; STEPHEN M. SWEENEY; SHEILA Y. OLIVER (Intervenors in District Court) New Jersey Thoroughbred Horsemen's Association, Inc., Appellant NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, an unincorporated association; NATIONAL BASKETBALL ASSOCIATION, a joint venture; NATIONAL FOOTBALL LEAGUE, an unincorporated association; NATIONAL HOCKEY LEAGUE, an unincorporated association; OFFICE OF THE COMMISSIONER OF BASEBALL, an unincorporated association doing business as MAJOR LEAGUE BASEBALL; UNITED STATES OF AMERICA (Intervenor in the District Court)
GOVERNOR OF THE STATE OF NEW JERSEY; DAVID L. REBUCK, Director of the New Jersey Division of Gaming Enforcement and Assistant Attorney General of the State of New Jersey; FRANK ZANZUCCKI, Executive Director of the New Jersey Racing Commission NEW JERSEY THOROUGHBRED HORSEMEN'S ASSOCIATION, INC.; STEPHEN M. SWEENEY; SHEILA Y. OLIVER (Intervenors in District Court) Governor of the State of New Jersey; David L. Rebuck and Frank Zanzuccki, Appellants
Argued: June 26, 2013
On Appeal from the United States District Court for the District of New Jersey (Civil Action No. 3-12-cv-04947) District Judge: Hon. Michael A. Shipp
Theodore B. Olson, Esq. [ARGUED] Matthew D. McGill, Esq. Ashley E. Johnson, Esq. Robert E. Johnson, Esq. Gibson Dunn & Crutcher, LLP John J. Hoffman, Esq. Christopher S. Porrino, Esq. Stuart M. Feinblatt, Esq. Peter M. Slocum, Esq. Office of the Attorney General of the State of New Jersey Richard J. Hughes Justice Complex Attorneys for Appellants Governor of the State of New Jersey, David L. Rebuck, Director of the New Jersey Division of Gaming Enforcement, and Frank Zanzuccki, Executive Director of the New Jersey Racing Commission.
Michael R. Griffinger, Esq. [ARGUED] Thomas R. Valen, Esq. Jennifer A. Hradil, Esq. Gibbons P.C. Attorneys for Intervenors Stephen Sweeney and Sheila Oliver.
Ronald J. Riccio, Esq. [ARGUED] Eliot Berman, Esq. McElory, Deutsch, Mulvaney & Carpenter LLP Attorneys for Intervenor New Jersey Thoroughbred Horsemen’s Association, Inc.
Paul D. Clement, Esq. [ARGUED] Candice Chiu, Esq. William R. Levi, Esq. Erin E. Murphy, Esq. Bancroft PLLC William J. O’Shaughnessy, Esq. Richard Hernandez, Esq. McCarter & English LLP Jeffrey A. Mishkin, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Attorneys for Appellees National Collegiate Athletic Association, National Basketball Association, National Football League, National Hockey League, and Office of the Commissioner of Baseball d/b/a Major League Baseball.
Paul J. Fishman, Esq. [ARGUED] Office of the United States Attorney District of New Jersey Peter J. Phipps, Esq. Scott McIntosh, Esq. United States Department of Justice Civil Division Attorneys for Intervenor United States of America.
Christopher S. Dodrill, Esq. Elbert Lin, Esq. Attorney General of West Virginia State Capitol Complex Attorneys for Amici Curiae States of West Virginia, Georgia, and Kansas, and the Commonwealth of Virginia in Support of Appellants and Reversal.
Before: FUENTES, FISHER, and VANASKIE, Circuit Judges.
FUENTES, Circuit Judge:
Betting on sports is an activity that has unarguably increased in popularity over the last several decades. Seeking to address instances of illegal sports wagering within its borders and to improve its economy, the State of New Jersey has sought to license gambling on certain professional and amateur sporting events. A conglomerate of sports leagues, displeased at the prospect of State-licensed gambling on their athletic contests, has sued to halt these efforts. They contend, alongside the United States as intervening plaintiff, that New Jersey's proposed law violates a federal law that prohibits most states from licensing sports gambling, the Professional and Amateur Sports Protection Act of 1992 (PASPA), 28 U.S.C. § 3701 et seq.
In defense of its own sports wagering law, New Jersey counters that the leagues lack standing to bring this case because they suffer no injury from the State's legalization of wagering on the outcomes of their games. In addition, alongside certain intervening defendants, New Jersey argues that PASPA is beyond Congress' Commerce Clause powers to enact and that it violates two important principles that underlie our system of dual state and federal sovereignty: one known as the "anti-commandeering" doctrine, on the ground that PASPA impermissibly prohibits the states from enacting legislation to license sports gambling; the other known as the "equal sovereignty" principle, in that PASPA permits Nevada to license widespread sports gambling while banning other states from doing so. The District Court disagreed with each of these contentions, granted summary judgment to the leagues, and enjoined New Jersey from licensing sports betting.
On appeal, we conclude that the leagues have Article III standing to enforce PASPA and that PASPA is constitutional. As will be made clear, accepting New Jersey's arguments on the merits would require us to take several extraordinary steps, including: invalidating for the first time in our Circuit's jurisprudence a law under the anti-commandeering principle, a move even the United States Supreme Court has only twice made; expanding that principle to suspend commonplace operations of the Supremacy Clause over state activity contrary to federal laws; and making it harder for Congress to enact laws pursuant to the Commerce Clause if such laws affect some states differently than others.
We are cognizant that certain questions related to this case—whether gambling on sporting events is harmful to the games' integrity and whether states should be permitted to license and profit from the activity—engender strong views. But we are not asked to judge the wisdom of PASPA or of New Jersey's law, or of the desirability of the activities they seek to regulate. We speak only to the legality of these measures as a matter of constitutional law. Although this "case is made difficult by [Appellants'] strong arguments" in support of New Jersey's law as a policy matter, see Gonzales v. Raich, 545 U.S. 1, 9 (2005), our duty is to "say what the law is, " Marbury v. Madison, 1 Cranch 137, 177 (1803). "If two laws conflict with each other, the courts must decide on the operation of each." Id. New Jersey's sports wagering law conflicts with PASPA and, under our Constitution, must yield. We will affirm the District Court's judgment.
I. LEGAL FRAMEWORK
Wagering on sporting events is an activity almost as inscribed in our society as participating in or watching the sports themselves. New Jersey tells us that sports betting in the United States—most of it illegal—is a $500 billion dollar per year industry. And scandals involving the rigging of sporting contests in the interest of winning a wager are as old as the games themselves: the infamous Black Sox scandal of the 1919 World Series, or Major League Baseball's ("MLB") lifetime ban on all-time hits leader Pete Rose for allegedly wagering on games he played in come to mind. And the recent prosecution of Tim Donaghy, a National Basketball Association ("NBA") referee who bet on games that he officiated, reminds us of problems that may stem from gambling.
However, despite its pervasiveness, few states have ever licensed gambling on sporting events. Nevada alone began permitting widespread betting on sporting events in 1949 and just three other states—Delaware, Oregon, and Montana—have on occasion permitted limited types of lotteries tied to the outcome of sporting events, but never single-game betting. Sports wagering in all forms, particularly State-licensed wagering, is and has been illegal elsewhere. See, e.g., 18 Pa. Cons. Stat. Ann. § 5513; Del. Code Ann. tit. 11, § 1401, et seq. Congress took up and eventually enacted PASPA in 1992 in response to increased efforts by states to begin licensing the practice.
A. The Professional and Amateur Sports Protection
Act of 1992
PASPA's key provision applies for the most part identically to "States" and "persons, " providing that neither may
sponsor, operate, advertise, or promote . . . a lottery, sweepstakes, or other betting, gambling, or wagering scheme based directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.
28 U.S.C. § 3702. The prohibition on private persons is limited to any such activity conducted "pursuant to the law or compact of a governmental entity, " id. § 3702(2), while the states are subject to an additional restriction: they may not "license or authorize by law or compact" any such gambling activities, id. §§ 3702(1), 3701.
PASPA contains three relevant exceptions—a "grandfathering" clause that releases Nevada from PASPA's grip, see id. § 3704(a)(2), a clause that permitted New Jersey to license sports wagering in Atlantic City had it chosen to do so within one year of PASPA's enactment, see id. § 3704(a)(3), and a grandfathering provision permitting states like Delaware and Oregon to continue the limited "sports lotteries" that they had previously conducted, see id. § 3704(a)(1). PASPA provides for a private right of action "to enjoin a violation [of the law] . . . by the Attorney General or by a . . . sports organization . . . whose competitive game is alleged to be the basis of such violation." Id. § 3703.
Only one Court of Appeals has decided a case under PASPA—ours. In Office of the Commissioner of Baseball v. Markell we held that PASPA did not permit Delaware to license single-game betting because the relevant grandfathering provision for Delaware permitted only lotteries consisting of multi-game parlays on NFL teams. 579 F.3d 293, 304 (3d Cir. 2009). This is the first case addressing PASPA's constitutionality.
The Act's legislative history is sparse but mostly consistent with the foregoing. The Report of the Senate Judiciary Committee makes clear that PASPA's purpose is to "prohibit sports gambling conducted by, or authorized under the law of, any State or governmental entity" and to "stop the spread of State-sponsored sports gambling." Sen. Rep. 102-248, at 4, reprinted in 1992 U.S.C.C.A.N. 3553, 3555 ("Senate Report"). The Senate Report specifically notes legislators' concern with "State-sponsored" and "State-sanctioned" sports gambling. Id. at 3555.
The Senate Report catalogues what the Committee believed were some of the problems arising from sports gambling. Importantly, the Committee noted its concern for "the integrity of, and public confidence in, amateur and professional sports" and its concern that "[w]idespread legalization of sports gambling would inevitably promote suspicion about controversial plays and lead fans to think 'the fix was in' whenever their team failed to beat the point-spread." Id. at 3556. The Senate Report also stated its concurrence with the then-director of New Jersey's Division of Gaming Enforcement's statement that "most law enforcement professionals agree that legalization has a negligible impact on, and in some ways enhances, illegal markets." Id. at 3558. This is so because "many new gamblers will . . . inevitably . . . seek to move beyond lotteries to wagers with higher stakes and more serious consequences." Id.
The Senate Report also explains the Committee's conclusion that "[s]ports gambling is a national problem" because "[t]he moral erosion it produces cannot be limited geographically" given the thousands who earn a livelihood from professional sports and the millions who are fans of them, and because "[o]nce a State legalizes sports gambling, it will be extremely difficult for other States to resist the lure." Id. at 3556. Finally, it notes that PASPA exempts Nevada because the Committee did not wish to "threaten [Nevada's] economy, " or of the three other states that had chosen in the past to enact limited forms of sports gambling. Id. at 3559.
B. Sports Gambling in New Jersey Since PASPA Was Enacted
Although New Jersey in its discretion chose not to avail itself of PASPA's exemption within the one-year window, "[o]ver the course of the next two decades . . . the views of the New Jersey voters regarding sports wagering evolved." Br. of Appellants Sweeney, et al. 4. In 2010, the New Jersey Legislature held public hearings during which it heard testimony that regulated sports gambling would generate much-needed revenues for the State's casinos and racetracks, and during which legislators expressed a desire to "to stanch the sports-wagering black market flourishing within [New Jersey's] borders." Br. of Appellants Christie, et al. 13 ("N.J. Br."). The Legislature ultimately decided to hold a referendum which would result in an amendment to the State's Constitution permitting the Legislature to "authorize by law wagering. . . on the results of any professional, college, or amateur sport or athletic event." N.J. Const. Art. IV, § VII, ¶ 2 (D), (F). The measure was approved by the voters, and the Legislature later enacted the law that is now asserted to be in violation of PASPA—the "Sports Wagering Law, " which permits State authorities to license sports gambling in casinos and racetracks and casinos to operate "sports pools." N.J.S.A. 5:12A-1 et seq.; see also N.J.A.C. § 13:69N-1.1 et seq. (regulations implementing the law).
II. PROCEDURAL HISTORY
The NBA, MLB, the National Collegiate Athletic Association ("NCAA"), the National Football League ("NFL"), and the National Hockey League ("NHL") (collectively, the "Leagues"), sued New Jersey Governor Chris Christie, New Jersey's Racing Commissioner, and New Jersey's Director of Gaming Enforcement (the "State" or "New Jersey"), under 28 U.S.C. § 2703, asserting that the Sports Wagering Law is invalidated by PASPA. The New Jersey Senate Majority Leader Stephen Sweeney and House Speaker Sheila Oliver intervened as defendants, alongside the New Jersey Thoroughbred Horsemen's Association, the owner of the Monmouth Park Racetrack, a business where sports gambling would occur under the Sports Wagering Law (the "NJTHA") (collectively, "Appellants").
The State moved to dismiss for lack of standing and the District Court ordered expedited discovery on that question. After the completion of discovery and oral arguments, the District Court concluded that the Leagues have standing. Nat'l Collegiate Athletic Ass'n v. Christie, No. 12-4947, 2012 WL 6698684 (D.N.J. Dec. 21, 2012) ("NCAA I").
With the constitutionality of PASPA then squarely at issue, the District Court invited the United States to intervene pursuant to 28 U.S.C. § 2403. The District Court ultimately upheld PASPA's constitutionality, granted summary judgment to the Leagues, and enjoined the Sports Wagering Law from going into effect. Nat'l Collegiate Athletic Ass'n v. Christie, __ F.Supp.2d __, 2013 WL 772679 (D.N.J. Feb. 28, 2013) ("NCAA II"). This expedited appeal followed.
III. JURISDICTION: WHETHER THE LEAGUES HAVE STANDING
The District Court had subject-matter jurisdiction pursuant to 28 U.S.C. § 1331, and we have appellate jurisdiction over its final judgment under § 1291. Our jurisdiction, however, is limited by the Constitution's "cases" and "controversies" requirement. U.S. Const., art. III, § 2. To satisfy this jurisdictional limitation, the party invoking federal court authority must demonstrate that he or she has standing to bring the case.
The Leagues argue they have standing because their own games are the subject of the Sports Wagering Law. They also contend that the law will increase the total amount of gambling on sports available, thereby souring the public's perception of the Leagues as people suspect that games are affected by individuals with a perhaps competing hidden monetary stake in their outcome. Appellants counter that the Leagues cannot show a concrete, non-speculative injury from any potential increase in legal gambling.
The District Court granted summary judgment to the Leagues, reasoning that Markell supports a holding that the Leagues have standing, and that reputational injury is a legally cognizable harm that may confer standing. It also found sufficient facts in the record to conclude that the Sports Wagering Law will result in an increase in fans' negative perceptions of the Leagues. We review de novo the legal conclusion that the Leagues have standing, and we review for clear error any factual findings underlying the District Court's determination. Marion v. TDI Inc., 591 F.3d 137, 146 (3d Cir. 2010).
A. The Effect of Markell
Markell, like this case, was a lawsuit by the Leagues to stop a state from licensing single-game betting on the outcome of sporting events. In Markell we "beg[a]n [our analysis], as always, by considering whether we ha[d] jurisdiction to hear [the] appeal, " and later concluded that we did have jurisdiction. 579 F.3d at 297, 300. But, contrary to the Leagues' suggestion, our analysis was limited to whether we had appellate jurisdiction under 28 U.S.C. § 1292(a). See id. We did not explicitly consider Article III standing, and a "drive-by jurisdictional ruling, in which jurisdiction has been assumed by the parties . . . does not create binding precedent." United States v. Stoerr, 695 F.3d 271, 277 n.5 (3d Cir. 2012) (internal quotation marks and alterations omitted). Therefore, we will not rely on Markell for our standing analysis.
B. Standing Law Generally
Under the familiar three-part test, to establish standing, a plaintiff must show (1) an "injury in fact, " i.e., an actual or imminently threatened injury that is "concrete and particularized" to the plaintiff; (2) causation, i.e., traceability of the injury to the actions of the defendant; and (3) redressability of the injury by a favorable decision by the Court. Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009).
Causation and redressability may be met when "a party . . . challenge[s] government action that permits or authorizes third-party conduct that would otherwise be illegal in the absence of the Government's action." Nat'l Wrestling Coaches Ass'n v. Dep't of Educ., 366 F.3d 930, 940-41 (D.C. Cir. 2004). Here, the Leagues do not purport to enjoin third parties from attempting to fix games. The Leagues have sued to block the Sports Wagering Law, which they assert will result in a taint upon their games, and is a law that by definition constitutes state action to license conduct that would not otherwise occur. Under the reasoning of National Wrestling Coaches, causation and redressability are thus satisfied, and all arguments implicitly aimed at those two prongs are suspect.
Accordingly, we focus on the injury-in-fact requirement, the "contours of [which], while not precisely defined, are very generous." Bowman v. Wilson, 672 F.2d 1145, 1151 (3d Cir. 1982). Indeed, all that Article III requires is an identifiable trifle of injury, United States v. Students Challenging Regulatory Agency Procedures, 412 U.S. 669, 690 n.14 (1973), which may exist if the plaintiff "has . . . a personal stake in the outcome of [the] litigation." The Pitt News v. Fisher, 215 F.3d 354, 360 (3d Cir. 2000); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 n.1 (1992) (noting that to satisfy the injury-in-fact requirement the "injury must affect the plaintiff in a personal and individual way"). To meet this burden, the Leagues must present evidence "in the same way as [for] any other matter on which [they] bear the burden of proof." Lujan, 504 U.S. at 561.
C. Whether the Sports Wagering Law Causes the Leagues An Injury In Fact
As noted, the Leagues offer two independent bases for standing: that the Sports Wagering Law makes the Leagues' games the object of state-licensed gambling and that they will suffer reputational harm if such activity expands. We address each in turn.
1. The Leagues are essentially the object of the Sports Wagering Law
Injury in fact may be established when the plaintiff himself is the object of the action at issue. Id. Thus, the Leagues are correct that if the Sports Wagering Law is directed at them, the injury-in-fact requirement is satisfied.
Fairly read, however, the Sports Wagering Law does not directly regulate the Leagues, but instead regulates the activities that may occur at the State's casinos and racetracks. We thus hesitate to conclude that the Leagues may rely solely on the existence of the Sports Wagering Law to show injury. But that is not to say that we are glib with respect to one of the main purposes of the law: to use the Leagues' games for profit. Cf. NFL v. Governor of Del., 435 F.Supp. 1372, 1378 (D. Del. 1972) (Stapleton, J.) (explaining that Delaware's sports lottery sought to use the NFL's "schedules, scores and public popularity" to "mak[e] profits [Delaware] [c]ould not make but for the existence of the NFL"). The Sports Wagering Law is thus, in a sense, as much directed at the Leagues' events as it is aimed at the casinos. This is not a generalized grievance like those asserted by environmental groups over regulation of wildlife in cases where the Supreme Court has found no standing, such as in Lujan or Summers. The law here aims to license private individuals to cultivate the fruits of the Leagues' labor.
Appellants counter that the Leagues' interest in not seeing their games subject to wagering is a non-cognizable "claim for the loss of psychic satisfaction." N.J. Br. at 31 (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 107 (1998)). But the holding in Steel Company was that a claim for psychic satisfaction did not present a redressable injury. In that case, a private plaintiff sought a payment into the U.S. Treasury by a private company that had violated federal law, and asserted that such was a redressable injury because the plaintiff would feel "psychic satisfaction" in seeing the payment made. See Steel Co., 523 U.S. at 107. The case is thus inapposite here, where redressability is established because the Leagues assert harm from the very government action they seek to enjoin—the enforcement of the Sports Wagering Law. Moreover, the Leagues do not assert merely psychic, but reputational harm, a very real and very redressable injury.
Appellants also argue that because the Leagues do not have a proprietary interest in the outcomes of their games they may not seek to prevent others from profiting from them. This contention relies on the holding in NFL v. Governor of Delaware, that a Delaware lottery based on the outcome of NFL games did not constitute a misappropriation of the NFL's property. 435 F.Supp. at 1378-79. But here the Leagues do not complain of an invasion of any proprietary interest, but only refer to the fact of appropriation of their labor to show that the Sports Wagering Law is directed at them.
2. Reputational Harm as Injury In Fact
The Leagues may also meet their burden of establishing injury from a law aimed at their games by proving that the activity sanctioned by that law threatens to cause them reputational harm amongst their fans and the public.
(a) Reputation Harm Is a Legally Cognizable Injury
As a matter of law, reputational harm is a cognizable injury in fact. The Supreme Court so held in Meese v. Keene, where it concluded that a senator who wished to screen films produced by a foreign company had standing to challenge a law requiring the identification of such films as foreign "political propaganda" because the label could harm his reputation with the public and hurt his chances at reelection. 481 U.S. 465, 473-74 (1987). Essentially, the senator challenged his unwanted association with an undesirable label. Our cases have also recognized that reputational harm is an injury sufficient to confer standing. See, e.g., Bowers v. Nat'l Collegiate Athletic Ass'n, 475 F.3d 524, 542-43 (3d Cir. 2007) (concluding that an attorney has standing to challenge a public reprimand because the sanction "affect[s] [his] reputation"); Doe v. Nat'l Bd. of Med. Exam'rs, 199 F.3d 146, 153 (3d Cir. 1999) (holding ...