Johnson v. Collins Entertainment Co.

199 F.3d 710 (1999)

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Johnson v. Collins Entertainment Co.

United States Court of Appeals for the Fourth Circuit
199 F.3d 710 (1999)

  • Written by Brett Stavin, JD

Facts

Joan Johnson and other South Carolina residents (collectively, Johnson) (plaintiffs) were habitual video-poker players. Johnson filed a lawsuit in South Carolina state court against Collins Entertainment Co. and a number of other companies engaged in the video-poker industry (collectively, Collins) (defendants), alleging violations of state law and the federal Racketeer Influenced and Corrupt Organizations Act (RICO). Johnson claimed that Collins’s alleged violations of South Carolina’s video-poker laws caused them to become addicted to the game, and that Johnson should be entitled to injunctive relief and damages. Johnson’s claims largely revolved around the argument that Collins violated South Carolina law by exceeding the statutory $125 daily cap on payouts. Johnson argued that the $125 cap was on absolute payouts, whereas Collins argued that the cap only prohibited paying the player out more than $125 above the amount deposited. Collins removed the case to federal court based on the federal RICO claims. Johnson moved for a preliminary injunction to enjoin Collins from exceeding the $125 daily payout cap. Collins moved for abstention on the basis that the exercise of federal court jurisdiction would interfere with South Carolina’s regulatory scheme regarding video poker. South Carolina regulated the video-poker industry through comprehensive legislative, administrative, and judicial mechanisms. There were licensing requirements, reporting standards, and restrictions on machine locations, the number of machines per location, and hours of operation. Additionally, state law prohibited cash payouts in excess of $125 per customer per day, although the South Carolina attorney general opined that the statutory limit was ambiguous and subject to multiple interpretations. The district court denied Collins’s motion for abstention, and Collins appealed.

Rule of Law

Issue

Holding and Reasoning (Wilkinson, C.J.)

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