APPEAL FROM FRANKLIN CIRCUIT COURT. HONORABLE THOMAS D. WINGATE, JUDGE. ACTION NO. 08-CI-01409.
ORAL ARGUMENT AND BRIEF FOR APPELLANT: John L. Tate, Louisville, Kentucky.
BRIEF FOR APPELLANT: Ian T. Ramsey, Bethany A. Breetz, Chadwick A. McTighe, Louisville, Kentucky; A. Jeff Ifrah, Washington, D.C.
ORAL ARGUMENT AND BRIEF FOR APPELLEE: D. Eric Lycan, Lexington, Kentucky.
BRIEF FOR APPELLEE: William H. May, III, William C. Hurt, Jr., Lexington, Kentucky.
BEFORE: ACREE, CHIEF
JUDGE; JONES AND MAZE, JUDGES.
The Appellee, the Commonwealth of Kentucky ex rel., J. Michael Brown, Secretary of the Justice and Public Safety Cabinet (the Commonwealth), initiated this action in Franklin Circuit Court seeking forfeiture of 141 internet domain names it claimed were used illegally for gambling in the Commonwealth. The Appellant, Interactive Gaming Counsel (IGC), a trade association comprised of various entities involved in the internet gaming industry, moved the Franklin Circuit Court to allow it to intervene on behalf of the owners of the domain names. On September 12, 2011, the Franklin Circuit Court denied IGC's motion after concluding that IGC had failed to satisfy all the prerequisites for associational standing. IGC now appeals from the September 12, 2011, order. For the reasons more fully explained below, we reverse.
I. Procedural & Factual Background
This case has a long, complex, and somewhat tortured procedural history. For the purpose of brevity, we recount only the facts and procedural history most relevant to understanding and appropriately analyzing the narrow associational standing issue before us.
On August 26, 2008, the Commonwealth filed an in rem civil action in the Franklin Circuit Court seeking forfeiture to the Commonwealth of 141 internet domain names it alleged were illegal gambling devices, and therefore subject to forfeiture pursuant to KRS 528.100 and KRS 500.090. On the Commonwealth's motions, the trial court sealed the case, conducted an ex parte hearing, and issued a seizure order for the domain names. The trial court then unsealed the case.
After allegedly learning of the seizures from media accounts, IGC moved the trial court to allow it to intervene in the forfeiture action so that it could contest the forfeitures on behalf of its members, some of whom allegedly claimed an ownership interest in a portion of the seized domain names. Specifically, IGC requested intervention so that it could assert with respect to the entire forfeiture that: (1) the trial court lacked jurisdiction; (2) domain names are not " property" subject to forfeiture; (3) the domain names do not constitute a " gambling device or gambling record" as required by KRS Chapter 528; and (4) poker is not gambling under KRS Chapter 528. In addition to contesting IGC's arguments on the merits, the Commonwealth countered that IGC did not have standing to intervene in the civil forfeiture action.
The trial court conditionally granted IGC's motion to intervene for the purpose of allowing the parties to file briefs on the issues that IGC raised as well as on the issue of IGC's standing to intervene in the forfeiture action. In an October 16, 2008, opinion and order, the trial court found that it had subject matter jurisdiction over the civil forfeiture action and in rem jurisdiction over the 141 domain names, which the trial court classified as property subject to seizure and forfeiture as " gambling devices." The trial court then retroactively denied IGC's motion to intervene on the basis that IGC had not demonstrated that it was an indispensable party.
IGC, among other entities, then sought a writ of prohibition from this Court. IGC asked us to enter a writ prohibiting the trial court from proceeding with the forfeiture. Interactive Media Entm't and Gaming Ass'n, Inc. v. Wingate, No. 2008-CA-2036-OA, 2009 WL 142995 (Ky. App. Jan. 20, 2009), rev'd Com. ex rel. Brown v. Interactive Media Entm't and Gaming Ass'n, Inc., 306 S.W.3d 32 (Ky. 2010) (hereinafter iMega I ). After reviewing the matter, a panel of this Court concluded that the internet domain names were not " gambling devices" within the statutory definition of KRS 528.010(4). Id. As such, this Court concluded that the trial court lacked jurisdiction to conduct a forfeiture of the domain names and entered an order prohibiting the trial court from enforcing its order seizing the 141 domain names and from conducting a scheduled forfeiture hearing. Id.
The Commonwealth appealed our ruling to the Kentucky Supreme Court. iMega I, 306 S.W.3d at 34-35. The Supreme Court noted that many compelling arguments had been put before it for affirming the writ. Id. at 35. However, it ultimately reversed and vacated our decision granting the writ on the basis that none of the parties before it had demonstrated standing to challenge the trial court. Id. at 36. Of relevance, the Supreme Court held that IGC could not demonstrate associational standing without at least putting forth some evidence to establish that its members included entities with an interest in the domain names at issue. Id. at 37-40. The Court then instructed the parties that the petition could be re-filed with the Court of Appeals, if a party with standing came forward. Id. at 40.
Thereafter, IGC filed a renewed motion with this Court supported by evidence allegedly establishing that its members included owners of the seized domain names. Interactive Media Entm't and Gaming Ass'n, Inc. v. Wingate, 320 S.W.3d 692 (Ky. 2010) (hereinafter iMega II ). This Court recommended that the writ petition be transferred to the Kentucky Supreme Court. Id. The Kentucky Supreme Court accepted transfer and issued an opinion clarifying its prior opinion. Id. The Court clarified that the trial court was in the best position to determine whether IGC had established associational standing and the applicability of associational standing to this in rem proceeding. Id. at 696.
Thereafter, as directed, the parties returned to the trial court for a determination on the associational standing issue. The trial court issued an opinion and order on September 12, 2011, finding that IGC presented sufficient evidence that at least one of its members, Pocket Kings Ltd., is one of its members and is the owner of fulltiltpoker.com, one of the domain names at issue. The trial court further concluded that IGC's actions in this litigation are germane to its purpose. Nevertheless, the trial court concluded that IGC could not establish ...