Title: Cape Fear River Watch v. N.C. Envtl. Mgmt. Comm’n

State: north-carolina

Issuer: North Carolina Supreme Court

Document:

NO. COA14-85 
NORTH CAROLINA COURT OF APPEALS 
Filed: 5 September 2014 
 
 
SANDHILL AMUSEMENTS, INC.  
AND GIFT SURPLUS, LLC, 
 
Plaintiffs, 
 
 
 
 
v. 
 
Onslow County 
No. 13 CVS 3705 
SHERIFF OF ONSLOW COUNTY,  
NORTH CAROLINA, ED BROWN, in  
his official capacity; and 
DISTRICT ATTORNEY FOR THE FOURTH 
PROSECUTORIAL DISTRICT  
OF THE STATE OF NORTH CAROLINA, 
ERNIE LEE, in his official 
capacity, 
Defendants. 
 
 
 
 
 
 
 
Appeal by defendant from orders entered on 4 November 2013 by 
Judge Jack Jenkins in Onslow County Superior Court.  Heard in the 
Court of Appeals 8 May 2014. 
 
Onslow County Attorney, by Lesley F. Moxley; and Turrentine 
Law Firm, PLLC, by S.C. Kitchen, for Defendant-Appellant. 
 
Daughtry, Woodard, Lawrence & Starling, by Kelly K. Daughtry; 
and Hyler & Lopez, P.A., by Stephen P. Agan and George B. 
Hyler, Jr., for Plaintiffs-Appellees. 
 
 
HUNTER, JR., Robert N., Judge. 
 
 
Onslow County Sheriff Ed Brown (“Sheriff Brown”) appeals from 
orders entered on 4 November 2013 denying his motions to dismiss 
under Rule 12 as well as granting a preliminary injunction in favor 
-2- 
 
 
of plaintiffs Sandhill Amusements, LLC (“Sandhill”) and Gift 
Surplus, LLC (“Gift Surplus”) (collectively “Plaintiffs”).1   
We agree with Sheriff Brown that this Court has jurisdiction 
to determine his interlocutory appeal of the motions to dismiss 
because his defense of sovereign immunity affects a substantial 
right warranting immediate review.  We vacate certain portions of 
the preliminary injunction that affect a substantial right and 
dismiss Sheriff Brown’s appeal from the remaining portions of that 
order.  On the merits of the motions to dismiss, we affirm the 
trial court. 
I. Facts & Procedural History 
On 2 July 2013, Alcohol Law Enforcement (“ALE”) Special Agent 
Kenny Simma (“Agent Simma”), Assistant Supervisor Keith Quick 
(“Agent Quick”), and Onslow County Sheriff’s Office Sergeant John 
Matthews (“Sgt. Mathews”), in response to complaints that certain 
video gaming machines (hereinafter “kiosks”) were providing money 
payouts, visited a business in the Rhodestown area of Onslow 
County.  The business that Sgt. Matthews and the ALE agents visited 
                     
1 Gift Surplus is a Georgia corporation licensed to do business in 
North Carolina.  Gift Surplus licenses the kiosks at issue in this 
case.  Gift Surplus’s kiosks are “sweepstakes promotion devices 
used to promote the sale of gift cards and e-commerce business.”  
Sandhill Amusement, Inc. (“Sandhill”), distributes the kiosks in 
Onslow County and surrounding areas.   
 
-3- 
 
 
was located in a building with blacked-out windows lacking any 
exterior sign displaying the name of the business.  Sgt. Matthews 
and the ALE agents peered inside through a crack in the tint and 
knocked on the door.  A male unlocked and opened the door and 
allowed Sgt. Matthews and the ALE agents inside.  Agent Simma said 
that inside 
[t]he only things in the business was [sic] a 
counter 
with 
two 
Megatouch 
video 
poker 
machines on the counter, a pool table, I think 
a jukebox.  I can’t remember if it was three 
or four of these specific devices we’re 
referring to, and a claw machine that -- like 
you see at Walmart, you put a quarter in and 
try to pick up a stuffed animal, and a pool 
table.   
 
Later the business’s proprietor arrived and showed Sgt. Matthews 
and the ALE agents how the machines worked.   
The kiosks each include a 19” touch-screen display, an audio 
speaker, a control panel with “print ticket and play buttons,” a 
receipt printer, and a currency acceptor.  The kiosks allow patrons 
the opportunity to purchase gift certificates that may be used at 
Gift Surplus’s online store, www.gift-surplus.com.  When a patron 
inserts currency into the kiosk, a receipt is printed with 
equivalent credits ($1 is equivalent to 100 sweepstakes entries).  
The receipts printed also contain a “quick response code,” which 
users may scan to enter a weekly drawing on the Gift Surplus 
-4- 
 
 
website.  Patrons may also use the kiosk to request a free entry 
request code, which allows for 100 free sweepstakes entries.   
The kiosks contain five game themes: “Silver Bar Spin,” “Truck 
Stop,” “Lucky Shamrock 2,” “Magic Tricks,” and “Candy Money.”  Nick 
Farley (“Mr. Farley”), an expert in gaming machines and software, 
described these game as follows: 
Each of the aforementioned game themes offer 
several play levels which the participant may 
choose.  A single finite pool is allocated to 
each play level for each game theme.  Game 
play for these themes may be accomplished one 
of two ways:  
 
(1) By pressing the “REVEAL” button an entry 
is drawn from the corresponding theme/play 
level finite pool. The potential value is 
shown to the participant, and they are 
prompted to “Press SKIP or ANIMATE.”  Pressing 
either button will reveal a reel outcome.  If 
the entry had no winning prize, a non-winning 
reel combination is displayed and either the 
play ends (if the “SKIP” button was pressed), 
or the participant is given the chance to 
nudge one of the three reels either up or down 
to 
another 
non-winning 
outcome 
(if 
the 
“ANIMATE” button was pressed). If the entry 
has a winning prize, a non-winning reel 
outcome is displayed and the participant must 
make a decision to nudge one of the three reels 
either up or down to align a winning 
combination corresponding to the prize value 
previous shown.  
 
(2) Alternatively, a participant may initiate 
the play by pressing the “ANIMATE” or “PLAY” 
button.  A game initiated by pressing either 
the “ANIMATE” or “PLAY” button will not show 
the potential win value, but rather simply 
-5- 
 
 
display a non-winning reel outcome which the 
player must then make a decision to nudge one 
of the three reels either up or down to align 
a winning combination. 
 
Regardless of the method the player uses to 
initiate play, the potential prize-value is 
determined by the entry revealed.  Whether the 
potential prize is awarded is dependent upon 
the participant successfully nudging the 
correct reel in the correct direction to 
obtain a winning combination of symbols. 
Should a player fail to nudge the correct reel 
in the correct direction to obtain a winning 
combination, the potential prize is forfeited.   
 
Agent Simma later told his supervisor about his visit and 
expressed his opinion that the kiosks were illegal video 
sweepstakes machines.  The ALE agents later returned and took 
photographs and videos of the kiosks.  Agent Simma then sent the 
videos to Deputy Director Mark Senter at ALE headquarters, who 
also felt that the kiosks in Rhodestown violated the statutes 
regulating video sweepstakes machines.  After receiving the ALE 
agents’ report, District Attorney Ernie Lee and Sheriff Brown 
composed a letter to Richard W. Frye (“Mr. Frye”), President of 
Sandhill (hereinafter “innocent owner letter”).  The letter 
informed Mr. Frye that the kiosks would be seized as evidence and 
that the person/persons in possession would be criminally charged.  
Mr. Frye testified that Sandhill removed kiosks from two Onslow 
County locations and opted not to place kiosks in five other Onslow 
-6- 
 
 
County locations after receiving the innocent owner letter.   
On 27 September 2013, Sandhill and Gift Surplus filed a joint 
Complaint and Motion for Preliminary Injunctive Relief against 
Sheriff Brown in his official capacity.  The complaint alleged 
that Plaintiffs were suffering irreparable injury from the loss of 
revenues and profits resulting from the innocent owner letter 
issued by Sheriff Brown stating that the Plaintiffs’ kiosks were 
illegal.  Plaintiffs alleged that, since Sheriff Brown issued this 
letter, existing retail outlets that used Plaintiffs’ products 
have removed the kiosks, refused to install the kiosks, or gave 
Plaintiffs notice that they intended to remove the kiosks.  
Plaintiffs also attached the affidavit and report of Mr. Farley, 
who opined that the kiosks operated based on skill and dexterity, 
rather than mere chance.   
Plaintiffs’ complaint sought the issuance of (i) preliminary 
and permanent injunctions prohibiting Defendants from removing the 
kiosks from any establishment in North Carolina and from issuing 
warnings and citations to such facilities; (ii) preliminary and 
permanent injunctions prohibiting Defendants from forcing or 
coercing a North Carolina retailer to remove Plaintiffs’ kiosks; 
(iii) a preliminary injunction prohibiting Defendants from making 
or issuing statements outside of the litigation stating that the 
-7- 
 
 
kiosks were illegal; and (iv) a declaratory judgment after a full 
hearing that declared the kiosks and Plaintiffs’ marketing system 
are “not prohibited gambling, lottery or gaming products.”   
On 9 October 2013, Sheriff Brown filed motions to dismiss for 
lack of subject matter jurisdiction under N.C. R. Civ. P. 12(b)(1), 
lack of personal jurisdiction under N.C. R. Civ. P. 12(b)(2), 
failure to state a claim upon which relief may be granted under 
N.C. R. Civ. P. 12(b)(6), and failure to bring suit on behalf of 
the real party in interest under N.C. Gen. Stat. § 1-57 (2013).   
On 11 October 2013, the trial court held a hearing concerning 
Sheriff Brown’s motion to dismiss and Plaintiffs’ motion for 
injunctive relief.  On 4 November 2013, Judge Jenkins entered an 
order relying in part on the expert witness’s opinions that denied 
Sheriff Brown’s motion to dismiss and granted Plaintiffs’ motion 
for a preliminary injunction.  In its orders, the trial court held 
that there was a likelihood that the Plaintiffs would prevail in 
that: 
(a) Gift Surplus System v1-01.1 and the Gift 
Surplus computer kiosk operated by Gift 
Surplus, LLC, conduct a valid sweepstakes 
within the applicable law. 
 
(b) The Gift Surplus System v1-01.1 and the 
Gift Surplus computer kiosk operated by Gift 
Surplus, 
LLC, 
in 
promotion 
of 
their 
sweepstakes 
are 
dependent 
on 
skill 
or 
dexterity as required under North Carolina 
-8- 
 
 
statutory law. 
 
(c) The Gift Surplus System v1-01.1 and the 
Gift Surplus computer kiosk operated by Gift 
Surplus, LLC, is a lawful promotional device 
for the sale of gift certificates and 
operation of their promotional sweepstakes.  
 
The trial court also held that the suit was not barred by the 
doctrine of sovereign immunity and that Defendant had failed to 
show that Plaintiffs’ claim should be dismissed under Rule 
12(b)(1), Rule 12(b)(2), Rule 12(b)(6), or N.C. Gen. Stat. § 1-
57.  Accordingly, the trial court denied Defendant’s motion to 
dismiss and granted Plaintiffs’ request for the issuance of a 
preliminary injunction.  Under the preliminary injunction, Sheriff 
Brown was: 
a. Restrained and enjoined from using North 
Carolina General Statutes Sections 14-292, 14-
293, 14-301, 14-306.1A, and 14-306.4 to 
prohibit the Plaintiffs from displaying, 
selling, operating or promoting the Gift 
Surplus System v1-01.1 and the Gift Surplus 
computer kiosk and sweepstakes promotion of 
the www.giftsurplus.com website and gift 
cards; and, 
 
b. Restrained and enjoined from compelling or 
attempting to compel, coerce[,] or persuade 
the Plaintiffs to remove the Gift Surplus 
System v1-01.1 and the Gift Surplus computer 
kiosks and equipment associated with the 
kiosks 
and 
sweepstakes 
from 
any 
retail 
establishment in Onslow County; and, 
 
c. Restrained and enjoined from citing or 
prosecuting 
the 
Plaintiffs 
for 
criminal 
-9- 
 
 
administrative offenses or violations by 
reason 
of 
such 
party’s 
display, 
sale, 
operation[,] or promotion of the Gift Surplus 
System v1-01.1 and the Gift Surplus computer 
kiosks and sweepstakes promotions of the 
www.gift-surplus.com website and gift cards in 
Onslow County. 
 
The trial court limited the applicability of the preliminary 
injunction to “those Onslow County places which are validly 
operating four or less Gift Surplus System v1-01.1/Gift Surplus 
computer kiosks. . . .”  Sheriff Brown filed timely written notice 
of appeal on 13 November 2013.   
II. Appellate Jurisdiction 
A judicial order is either interlocutory or the final 
determination of the rights of the parties.  N.C. R. Civ. P. 54(a).  
In Veazey v. Durham, 231 N.C. 357, 57 S.E.2d 377 (1950), our 
Supreme Court succinctly explained the difference between the two 
types of orders: 
A final judgment is one which disposes of the 
cause as to all the parties, leaving nothing 
to be judicially determined between them in 
the trial court. . . . An interlocutory order 
is one made during the pendency of an action, 
which does not dispose of the case, but leaves 
it for further action by the trial court in 
order to settle and determine the entire 
controversy. 
 
 
Id. at 361–62, 57 S.E.2d at 381 (citations omitted); see also Royal 
Oak Concerned Citizens Ass’n v. Brunswick Cnty, ___ N.C. App ___, 
-10- 
 
 
___, 756 S.E.2d 833, 835 (2014) (citations omitted).  Final 
judgments are appealable under N.C. Gen. Stat. § 7A-27 (2013).  
“Interlocutory orders may be appealed only where there has been a 
final determination of at least one claim” and the trial court 
certifies under N.C. R. Civ. P. 54(b) that “there is no just reason 
to delay the appeal” or, alternatively, if “delaying the appeal 
would prejudice a substantial right.”  White v. Carver, 175 N.C. 
App. 136, 139, 622 S.E.2d 718, 720 (2005) (citations, alterations, 
and quotation marks omitted) (“The reason for this rule is to 
prevent fragmentary, premature and unnecessary appeals by 
permitting the trial court to bring the case to final judgment 
before it is presented to the appellate courts.”); see also N.C. 
Gen. Stat. § 1-277 (2013). 
Sheriff Brown’s appeal from the order denying the motions to 
dismiss and granting the preliminary injunction is interlocutory 
since the trial court’s orders did not dispose of the case.  
Additionally, there was no Rule 54(b) certification by the trial 
court.  Accordingly, we consider whether Sheriff Brown’s asserted 
defense of sovereign immunity affects a substantial right.  
Whether an interlocutory order affects a substantial right 
“is determined on a case by case basis.”  McConnell v. McConnell, 
151 N.C. App. 622, 625, 566 S.E.2d 801, 803 (2002).  The appellant 
-11- 
 
 
bears the burden of establishing that a substantial right will be 
affected unless he is allowed an immediate appeal.  Embler v. 
Embler, 143 N.C. App. 162, 166, 545 S.E.2d 259, 262 (2001) 
(citations omitted).  “Our Supreme Court has defined ‘substantial 
right’ as a legal right affecting or involving a matter of 
substance as distinguished from matters of form: a right materially 
affecting those interests which a [person] is entitled to have 
preserved and protected by law: a material right.”  Royal Oak, ___ 
N.C. App. at ___, 756 S.E.2d at 835.   
“Essentially a two-part test has developed—the right itself 
must be substantial and the deprivation of that substantial right 
must potentially work injury . . . if not corrected before appeal 
from final judgment.”   Goldston v. Am. Motors Corp.,  326 N.C. 
723, 726, 392 S.E.2d 735, 736 (1990).  To prove that a substantial 
right is affected, an appellant must first prove that the right 
itself is substantial.  Id.  Second, an appellant “must demonstrate 
why the order affects a substantial right. . . .”  Hoke Cnty Bd. 
of Educ. v. State, 198 N.C. App. 274, 277–78, 679 S.E.2d 512, 516 
(2009) (emphasis in original). 
Sheriff Brown asserts that the rejection of his defense of 
sovereign immunity affects a substantial right.  Sheriff Brown 
also argues that the trial court’s issuance of the preliminary 
-12- 
 
 
injunction enjoins him from enforcing criminal laws and also 
affects a substantial right.  We address each in turn. 
A. Motions to Dismiss 
Sheriff Brown contends that the denial of his 12(b)(1), (2), 
and (6) motions to dismiss based on sovereign immunity affects a 
substantial right.  We agree.  
  
“The denial of a motion to dismiss is an interlocutory order 
which is not immediately appealable unless that denial affects a 
substantial right of the appellant.”  Carl v. State, 192 N.C. App. 
544, 550, 665 S.E.2d 787, 793 (2008).  “The appealing party bears 
the burden of demonstrating that the order from which he or she 
seeks to appeal is appealable despite its interlocutory nature.”  
Hamilton v. Mortg. Info. Servs., 212 N.C. App. 73, 77, 711 S.E.2d 
185, 189 (2011). 
This Court has “repeatedly held that appeals raising issues 
of governmental or sovereign immunity affect a substantial right 
sufficient to warrant immediate appellate review.”  Price v. Davis, 
132 N.C. App. 556, 558–59, 512 S.E.2d 783, 785 (1999).  “[W]hen 
[a] motion is made on the grounds of sovereign and qualified 
immunity,. . . a denial is immediately appealable, because to force 
a defendant to proceed with a trial from which he should be immune 
would vitiate the doctrine of sovereign immunity.”  Smith v. 
-13- 
 
 
Phillips, 117 N.C. App. 378, 380, 451 S.E.2d 309, 311 (1994).   
Here, we consider the denial of a motion to dismiss based on 
sovereign immunity and, accordingly, we must review whether 
Sheriff Brown is entitled to that defense.  Atl. Coast Conference 
v. Univ. of Maryland, ___ N.C. App. ___, ___, 751 S.E.2d 612, 617 
(2013) (“Defendants' underlying interest in asserting sovereign 
immunity is substantial . . . [.]”); Richmond Cnty. Bd. of Educ. 
v. Cowell, ___ N.C. App. ___, ___, 739 S.E.2d 566, 568 (2013), 
review denied, ___ N.C. ___, 747 S.E.2d 553 (2013). 
However, we note that “‘a motion to dismiss based on sovereign 
immunity is a jurisdictional issue [and] whether sovereign 
immunity is grounded in a lack of subject matter jurisdiction or 
personal jurisdiction is unsettled in North Carolina.’”  Atl. Coast 
Conference, ___ N.C. App. at ___, 751 S.E.2d at 617 (quoting M 
Series Rebuild, LLC v. Town of Mount Pleasant, ___ N.C. App. ___, 
___, 730 S.E.2d 254, 257 (2012) (alterations omitted)).  “[B]ecause 
our case law remains ambiguous as to the type of jurisdictional 
challenge presented by a sovereign immunity defense, the ability 
of a litigant raising the defense to immediately appeal may vary, 
to some extent, based on the manner in which the motion is styled.”  
Id.  As in Atl. Coast Conference, “we leave the type of 
jurisdictional challenge presented by a sovereign immunity claim 
-14- 
 
 
for resolution by a future court” and accept jurisdiction of 
Sheriff Brown’s appeal pursuant to the authority conferred by N.C. 
Gen. Stat. §§ 1–277(a) and 7A–27(d).  Id.  Accordingly, we now 
address whether sovereign immunity barred Plaintiffs’ action for 
declaratory judgment. 
i. Standard of Review 
The standard of review for the denial of a motion to dismiss 
on the basis of sovereign immunity is de novo.  White v. Trew, 366 
N.C. 360, 363, 736 S.E.2d 166, 168 (2013). 
 
“Under de novo review, we examine the case with new eyes.”  
State v. Young, ___ N.C. App. ___, ___, 756 S.E.2d 768, 779 (2014)  
“[D]e novo means fresh or anew; for a second time, and an appeal 
de novo is an appeal in which the appellate court uses the trial 
court’s record but reviews the evidence and law without deference 
to the trial court’s rulings.”  Parker v. Glosson, 182 N.C. App. 
229, 231, 641 S.E.2d 735, 737 (2007) (quotation marks and citations 
omitted). 
ii. Merits of Sovereign Immunity Defense 
“Under the doctrine of sovereign immunity, the State is immune 
from suit absent waiver of immunity.”2  Meyer v. Walls, 347 N.C. 
                     
2 Sheriff Brown does not argue that Plaintiffs failed to assert 
waiver of sovereign immunity in his brief.  When considering a 
motion to dismiss based on a defense of sovereign immunity, the 
-15- 
 
 
97, 104, 489 S.E.2d 880, 884 (1997).  Further 
when an action is brought against individual 
officers in their official capacities the 
action is one against the state for the 
purposes of applying the doctrine of sovereign 
immunity. . . .[I]f plaintiff’s complaint 
demonstrates that she has sued the defendants 
only in an official capacity, rather than as 
individuals, defendants would be potentially 
shielded from plaintiff’s cause of action by 
governmental immunity.   
 
Whitaker v. Clark, 109 N.C. App. 379, 381–82, 427 S.E.2d 142, 143–
44 (1993) (citations omitted).  Ultimately 
[t]he crucial question for determining whether 
a defendant is sued in an individual or 
official capacity is the nature of the relief 
sought, not the nature of the act or omission 
alleged.  If the plaintiff seeks an injunction 
requiring the defendant to take an action 
involving the exercise of a governmental 
power, the defendant is named in an official 
capacity.  If money damages are sought, the 
court must ascertain whether the complaint 
indicates that the damages are sought from the 
government 
or 
from 
the 
pocket 
of 
the 
individual defendant. If the former, it is an 
official-capacity claim; if the latter, it is 
an individual-capacity claim; and if it is 
both, then the claims proceed in both 
capacities. 
 
                     
complaint must allege a waiver, without which the complaint fails 
to state a cause of action.  Paquette v. Cnty. of Durham, 155 N.C. 
App. 415, 418, 573 S.E.2d 715, 717 (2002).  However, Sheriff Brown 
does not raise this issue on appeal nor does waiver appear to be 
addressed by either party or considered by the trial court.  
Accordingly we do not address this issue on appeal.  Abbott v. 
N.C. Bd. of Nursing, 177 N.C. App. 45, 47–48, 627 S.E.2d 482, 484–
85 (2006). 
-16- 
 
 
Meyer, 347 N.C. at 110, 489 S.E.2d at 887 (quotation marks and 
citations omitted). 
“The doctrine of sovereign immunity bars actions against 
public officials sued in their official capacities.  Sheriffs and 
deputy sheriffs are considered public officials for purposes of 
sovereign immunity.  Thus, sovereign immunity bars plaintiff’s 
claims against defendants in their official capacities.”  Phillips 
v. Gray, 163 N.C. App. 52, 56–57, 592 S.E.2d 229, 232 (2004) 
(citations omitted). 
Plaintiffs sued Sheriff Brown in his official capacity in 
accordance with White.  366 N.C. at 364, 736 S.E.2d at 169.  
Additionally, Plaintiffs seek “an injunction requiring the 
defendant to take an action involving the exercise of a 
governmental power,” which means that “the defendant is named in 
an official capacity.”  Meyer, 347 N.C. at 110, 489 S.E.2d at 887.  
From the foregoing, it appears that Plaintiffs’ claim should be 
dismissed, since sovereign immunity would typically bar claims 
against Sheriff Brown in his official capacity.   
 
However, this Court’s opinion in Am. Treasures, Inc. v. State, 
173 N.C. App. 170, 617 S.E.2d 346 (2005), controls this case.  Am. 
Treasures concerned a seller of long-distance pre-paid phone cards 
that included a free promotional scratch-off game piece.  Id. at 
-17- 
 
 
172–73, 617 S.E.2d at 348.  The plaintiff sold these cards through 
convenience stores and, eventually, ALE agents began “threatening 
to take action against the convenience stores’ licenses to sell 
beer and alcoholic beverages . . . on the grounds that the sale of 
plaintiff’s phone cards was illegal.”  Id. at 173–74, 617 S.E.2d 
at 348.  The plaintiff brought an action for declaratory judgment 
and injunctive relief against the State.  Id. at 174, 617 S.E.2d 
at 348. 
In Am. Treasures, this Court discussed McCormick v. Proctor, 
217 N.C. 23, 6 S.E.2d 870 (1940).  Am. Treasures, 173 N.C. App. at 
175, 617 S.E.2d at 349–50.  Specifically: 
In 
McCormick, 
law 
enforcement 
officers 
interfered with an owner’s possession of 
certain slot machines on the grounds that such 
machines were illegal.  Id., 217 N.C. at 24, 
6 S.E.2d at 871.  The trial court declined to 
restrain the interference on the grounds that 
the officers were engaged in the enforcement 
of criminal law and refused to hear evidence 
or find facts regarding the legality of the 
machines.  Id.  Citing the above principles, 
our Supreme Court reversed, holding that 
equity may nevertheless be invoked as an 
exception to those principles and may operate 
to “interfere, even to prevent criminal 
prosecutions, when this is necessary to 
protect effectually property rights and to 
prevent irremediable injuries to the rights of 
persons.” Id., 217 N.C. at 29, 6 S.E.2d at 
874. 
 
Id. at 175, 617 S.E.2d at 349 (emphasis added).  This Court in Am. 
-18- 
 
 
Treasures also discussed Animal Protection Society v. State, 95 
N.C. App. 258, 382 S.E.2d 801 (1989): 
Moreover, this Court has previously reviewed 
a trial court’s consideration of a prayer for 
declaratory and injunctive relief concerning 
the applicability of North Carolina’s bingo 
statutes to a charitable sales promotion 
without indicating the existence of any 
jurisdictional bar.  Animal Protection Society 
v. State, 95 N.C. App. 258, 382 S.E.2d 801 
(1989). 
  
Am. Treasures, 173 N.C. App. at 175–76, 617 S.E.2d at 349–50.  
Ultimately this Court relied on the two cases in holding that: 
the trial court’s exercise of jurisdiction 
under the facts of the instant case was 
proper. First, we find McCormick and Animal 
Protection Society are sufficiently similar to 
the facts of the instant case and are 
controlling on the issue of the trial court’s 
jurisdiction. 
Second, 
the 
declaratory 
judgment procedure is the only way plaintiff 
can protect its property rights and prevent 
ALE from foreclosing the sale of its product 
in convenience stores.   
 
. . . 
 
Accordingly, without seeking a declaratory 
judgment, 
plaintiff 
would 
be 
unable 
to 
effectively protect its property rights. 
Defendants’ 
jurisdictional 
argument 
is 
overruled. 
 
Id. at 176, 617 S.E.2d at 350 (emphasis added).   
Here, as in Am. Treasures, Plaintiffs face restrictions on 
their property rights resulting from Sheriff Brown’s transmission 
-19- 
 
 
of the innocent owner letter, which effectively barred any future 
sale and current placement of their kiosks.  Additionally, as in 
Am. Treasures, sovereign immunity acts as a bar to Plaintiffs’ 
ability to seek redress through monetary damages.  Without such 
redress, Plaintiffs have no viable option for protecting their 
property rights during this litigation.   
Accordingly, as (i) the facts at present are sufficiently 
similar to the controlling cases in this area and (ii) the 
declaratory judgment procedure is the only method by which 
Plaintiffs have recourse to protect their property interests in 
the kiosks, we hold that the trial court properly exercised 
jurisdiction and that sovereign immunity did not bar Plaintiffs’ 
claim for injunctive relief. We next address whether Sheriff 
Brown’s challenge to the trial court’s decision to issue a 
preliminary injunction is interlocutory. 
B. Preliminary Injunction 
The purpose of a preliminary injunction is 
ordinarily to preserve the status quo pending 
trial on the merits.  Its issuance is a matter 
of discretion to be exercised by the hearing 
judge after a careful balancing of the 
equities.  Its impact is temporary and lasts 
no longer than the pendency of the action. Its 
decree bears no precedent to guide the final 
determination of the rights of the parties. In 
form, purpose, and effect, it is purely 
interlocutory.  Thus, the threshold question 
presented by a purported appeal from an order 
-20- 
 
 
granting a preliminary injunction is whether 
the appellant has been deprived of any 
substantial right which might be lost should 
the order escape appellate review before final 
judgment. 
 
A.E.P. Indus., Inc. v. McClure, 308 N.C. 393, 400, 302 S.E.2d 754, 
759 (1983) (citation and internal quotation marks omitted); see 
also Bessemer City Express, Inc. v. City of Kings Mountain, 155 
N.C. App. 637, 639, 573 S.E.2d 712, 714 (2002); Little v. Stogner, 
140 N.C. App. 380, 383, 536 S.E.2d 334, 336 (2000) (“For a 
‘defendant to have a right of appeal from a mandatory preliminary 
injunction, ‘substantial rights’ of the appellant must be 
adversely affected.’” (quoting Dixon v. Dixon, 62 N.C. App. 744, 
744, 303 S.E.2d 606, 607 (1983)).  
A substantial right is affected when the trial court’s order 
prohibits the State from enforcing the law.  Beason v. State Dep’t 
of the Sec’y of State, ___ N.C. App. ___, ___, 743 S.E.2d 41, 44–
45 (2013) (“[T]he trial court found that respondent was improperly 
interpreting statutes it is responsible for enforcing.  Thus, we 
conclude that respondent suffers the risk of injury if we do not 
consider the merits of this interlocutory appeal. Therefore, we 
deny petitioner’s motion to dismiss.”); Johnston v. State, ___ 
N.C. App. ___, ___, 735 S.E.2d 859, 864 (2012), writ allowed, 
review on additional issues denied, 366 N.C. 562, 738 S.E.2d 360 
-21- 
 
 
(2013) and appeal dismissed, 366 N.C. 562, 738 S.E.2d 361 (2013) 
and aff’d, ___ N.C. App. ___, 749 S.E.2d 278 (2013). 
 
Sheriff Brown argues that his ability to enforce the law is 
impeded by the trial court’s grant of a preliminary injunction, 
and points our attention to Rockford-Cohen Grp., LLC v. N.C. Dep’t 
of Ins., ___ N.C. App. ___, 749 S.E.2d 469 (2013), which stated 
that “[w]hen an agent of the State that is charged with enforcing 
statutes chooses to appeal rulings limiting the enforcement of 
those statutes, the right to enforce the statute is substantial 
and the rulings are immediately appealable.”  Id. at ___, 
749 S.E.2d at 471.   
Rockford ultimately held that, because the defendant was not 
a state agency or agent of the State charged with enforcing the 
statutes, a substantial right was not affected.  Id. at ___, 749 
S.E.2d at 472.  This Court relied on Johnston and Gilbert v. N.C. 
State Bar, 363 N.C. 70, 76–77, 678 S.E.2d 602, 606 (2009) for this 
proposition.  This Court in Johnston held  
that the State has a substantial right to 
enforce the criminal laws of North Carolina 
and that this right is affected by a ruling 
declaring a statute, duly enacted by the 
General Assembly, to be unconstitutional.  The 
State 
has 
also 
demonstrated 
that 
the 
deprivation of that substantial right will 
potentially work injury if not addressed 
before appeal from a final judgment.  The 
trial court’s judgment prohibits the State 
-22- 
 
 
from prosecuting plaintiff for possession of 
a firearm. Further, it casts doubt upon every 
prosecution by the State throughout North 
Carolina under Article 54A of Chapter 14 of 
the General Statutes. 
 
Johnston, ___ N.C. App. at ___, 735 S.E.2d at 864. 
 
Here, the trial court’s grant of preliminary injunction 
violated the substantial right of Sheriff Brown in its sixth 
conclusion of law:  
6. The Gift Surplus System v1-01.1 and the 
Gift Surplus computer kiosk promote the sale 
of products through a lawful sweepstakes under 
North Carolina law.   
 
In essence, this conclusion of law determines that these particular 
kiosks fit within the statutory framework and does so unnecessarily 
at the preliminary injunction stage.  In Beason, this Court held 
that “[t]he substantial basis of this appeal involves the trial 
court’s order concluding that the alleged violations respondent 
fined petitioner for were not actually violations.”  Beason, ___ 
N.C. App. at ___, 743 S.E.2d at 45 (emphasis added).  Here, the 
trial court does the same thing, since it declares that Plaintiffs 
were operating a “lawful sweepstakes” and, thus, finds that the 
Sheriff threatened to prosecute actions that were not actually 
violative of the statutes.  This broad wording in the sixth 
conclusion 
of 
law 
goes 
much 
further 
than 
the 
equitable 
consideration of “likely to prevail on the merits.”  Instead, this 
-23- 
 
 
conclusion of law makes a declaration concerning the lawfulness of 
these kiosks and would “cast doubt upon every prosecution by the 
State throughout North Carolina . . . .”  Johnston, ___ N.C. App. 
at ___, 735 S.E.2d at 864. 
 
Similarly, in the decretal section of the order, the trial 
court ordered that “[t]he Preliminary Injunction . . . is 
specifically enforceable in those Onslow County places which are 
validly operating four or less Gift Surplus System v1-01.1/Gift 
Surplus computer kiosks at one location or on one site.”  The trial 
court’s use of “validly” within the preliminary injunction, 
similar to its use of “lawful” in its sixth conclusion of law, 
exceeds the scope of a preliminary injunction, as use of the term 
“valid” may imply within the preliminary injunction that 
Plaintiff’s kiosks are “legally sufficient” within the applicable 
statutes.  Black’s Law Dictionary 1690 (9th ed. 2009).  Such a 
conclusion would also cast doubt on prosecutions undertaken by 
Sheriff Brown and impede his ability to enforce the law. 
As these portions of the preliminary injunction go beyond 
maintaining the status quo by declaring that Plaintiffs’ conduct 
was lawful or valid, these portions affect Sheriff Brown’s 
substantial right to enforce the laws of North Carolina.  Thus, we 
exercise jurisdiction for the limited purpose of vacating the sixth 
-24- 
 
 
conclusion of law in its entirety and striking the word “validly” 
from the third item in the decretal section of the preliminary 
injunction. 
The remainder of the preliminary injunction does not 
implicate a substantial right in enforcing the statutes and simply 
maintained the status quo pending a trial on the merits.  Sheriff 
Brown was prohibited from enforcing certain statutes listed in the 
decretal section of the order (N.C. Gen. Stat. §§ 14-292, 14-293, 
14-301, 14-306.1A, and 14-306.4).  Additionally, the preliminary 
injunction was limited in its scope: the bar against enforcement 
extends 
only 
to 
“those 
Onslow 
County 
places 
which 
are 
. . . operating four or less Gift Surplus System v1-01.1/Gift 
Surplus computer kiosks at one location or on one site.”  The order 
also has no effect “on any individuals or entities who are not a 
party hereto, or on the parties hereto upon the trial or ultimate 
disposition of this matter.”  Simply, Sheriff Brown was not 
enjoined from enforcing the criminal laws of North Carolina by the 
remainder of the trial court’s preliminary injunction; Sheriff 
Brown was enjoined from enforcing certain criminal laws against 
parties to the litigation until the resolution of this case.3  The 
                     
3 This Court has found that enforcing the statutes against an 
individual affects a substantial right warranting immediate 
review, but has done so with permanent injunctions or final orders 
-25- 
 
 
remainder of the preliminary injunction preserves the status quo 
and “all parties remain free to fully litigate the merits of the 
case in the correct procedural context before the trial 
court . . . .”  CB & I Constructors, Inc. v. Town of Wake Forest, 
157 N.C. App. 545, 550, 579 S.E.2d 502, 505 (2003).  The remainder 
of the preliminary injunction does not affect a substantial right.  
As the remainder does not affect a substantial right, we do not 
have jurisdiction to consider this interlocutory appeal, so the 
remainder of Sheriff Brown’s appeal is dismissed.   
We next turn to the justiciability argument advanced by 
Sheriff Brown in opposition to Plaintiffs’ request for a 
declaratory judgment. 
C. Justiciability of Declaratory Judgment Claim 
The North Carolina Declaratory Judgment Act provides that  
Any person interested . . . whose rights, 
status or other legal relations are affected 
by a statute, municipal ordinance, contract or 
franchise, may have determined any question of 
construction or validity arising under the 
                     
concerning enforcement of a particular statute or regulation.  See, 
e.g., Gilbert, 363 N.C. at 75, 678 S.E.2d at 605 (“Although we 
express no opinion as to the merits of defendant's Gilbert III 
complaint, we note that the trial court order from which defendant 
appeals includes a permanent injunction enjoining defendant from 
prosecuting Gilbert III.” (emphasis added)); Beason, ___ N.C. App. 
at ___, 743 S.E.2d at 44–45 (considering an order that decided 
some of the petitioner’s claims and made definite statements that 
the petitioner’s actions were not violations of certain lobbying 
laws that respondent was responsible for enforcing). 
-26- 
 
 
instrument, statute, ordinance, contract, or 
franchise, and obtain a declaration of rights, 
status, or other legal relations thereunder. 
 
N.C. Gen. Stat. § 1-254 (2013).  Further, N.C. Gen. Stat. § 1-253 
(2013) provides trial courts with the “power to declare rights, 
status, and other legal relations, whether or not further relief 
is or could be claimed.”   
 
Our Supreme Court has “required that an actual controversy 
exist both at the time of the filing of the pleading and at the 
time of hearing” in declaratory judgment actions.  Sharpe v. Park 
Newspapers of Lumberton, Inc., 317 N.C. 579, 585, 347 S.E.2d 25, 
30 (1986).  Without an “actual controversy between the parties,” 
jurisdiction does not attach under the Declaratory Judgment Act.  
Fabrikant v. Currituck Cnty., 174 N.C. App. 30, 44, 621 S.E.2d 19, 
29 (2005).  An “actual controversy” must be more than a “mere 
difference of opinion between the parties” and this Court lacks 
the authority to render an advisory opinion that “the parties 
might, so to speak, put on ice to be used if and when occasion 
might arise.”  Id. (citations and quotation marks omitted).  
However, 
[a]lthough a declaratory judgment action must 
involve an actual controversy between the 
parties, plaintiffs are not required to allege 
or prove that a traditional cause of action 
exists 
against 
defendants 
in 
order 
to 
establish 
an 
actual 
controversy. 
 
A 
-27- 
 
 
declaratory judgment should issue (1) when it 
will serve a useful purpose in clarifying and 
settling the legal relations at issue, and (2) 
when it will terminate and afford relief from 
the uncertainty, insecurity and controversy 
giving rise to the proceeding. 
 
Goldston, 361 N.C. at 33, 637 S.E.2d at 881 (citations, quotation 
marks, and alterations omitted); see also Wake Cares, Inc., et al. 
v. Wake Cnty Bd of Educ., 190 N.C. App. 1, 12, 660 S.E.2d 217, 224 
(2008), aff’d, 363 N.C. 165, 675 S.E.2d 345 (2009) (holding that 
an actual controversy existed where plaintiffs, who were not 
charged with or threatened to be charged with a crime, were 
affected by several statutes and where a declaratory judgment 
“would terminate and afford relief from the uncertainty, 
insecurity, and controversy currently existing”).  Ultimately, 
plaintiffs in declaratory judgment actions are “not required to 
sustain actual losses in order to make a test case[,]” since that 
“‘requirement would thwart the remedial purpose of the Declaratory 
Judgment Act.’”  Charlotte-Mecklenburg Hosp. Auth. v. N.C. Indus. 
Comm’n, 336 N.C. 200, 214, 443 S.E.2d 716, 725 (1994), superseded 
by statute on other grounds as stated in Mehaffey v. Burger King, 
___ N.C. ___, ___, 749 S.E.2d 252, 256 (2013) (quoting Bland v. 
City of Wilmington, 278 N.C. 657, 659, 180 S.E.2d 813, 815 (1971)). 
 
Plaintiffs seek to determine whether the software and kiosks 
they operate comply with N.C. Gen. Stat. §§ 14-292, 14-293, 14-
-28- 
 
 
301, 14-306.1A, and 14-306.4 (2013), which regulate electronic 
sweepstakes machines.  Plaintiffs do not seek to determine the 
criminal culpability of their potential customers, and the courts 
retain the ability to grant a declaratory judgment when a 
“questioned statute relates to penal matters.”  Jernigan v. State, 
279 N.C. 556, 561, 184 S.E.2d 259, 263–64 (1971).  Simply put, 
“[w]hen a plaintiff has a property interest which may be adversely 
affected by the enforcement of the criminal statute, he may 
maintain an action under the Declaratory Judgment Act to determine 
the validity of the statute in protection of his property rights.”  
Id. at 561, 184 S.E.2d at 264; see also Calcutt v. McGeachy, 213 
N.C. 1, 2, 195 S.E. 49, 49 (1938) (allowing jurisdiction for a 
declaratory judgment action to test the constitutionality of a 
criminal statute “prohibiting the manufacture, sale, possession, 
and use of gambling devices”). 
The record tends to show a conflict between Sheriff Brown’s 
interpretation and Plaintiff’s interpretation of the relevant 
statutes.  Sheriff Brown sent an innocent owner letter declaring 
that the machines were illegal, while Plaintiffs countered with 
expert testimony asserting that the machines complied with the 
State’s recent statutory changes.  A declaratory judgment would 
help clarify the “legal relations at issue” and would remove 
-29- 
 
 
uncertainty from Plaintiffs’ continuing business interests.   
Sheriff Brown argues that “there is no actual controversy 
existing at the time of the hearing[.]”  This argument is premised 
on (a) Sheriff Brown having seized kiosks at a Rhodestown location 
rather than where Sandhill’s owner believed the machines actually 
were, which was in the Town of Holly Ridge, and (b) Sheriff Brown 
having removed the kiosks from the Rhodestown location prior to 
the hearing on the motion to dismiss.  Sheriff Brown cites 
Fabrikant for the proposition that the actual controversy must 
exist “at the time of the filing of the pleading and at the time 
of hearing.”  Fabrikant, 174 N.C. App. at 44, 621 S.E.2d at 29.   
However, Sheriff Brown’s office, through the transmission of 
the innocent owner letter, expressed doubts about the legality of 
“several video gaming machines associated with the web-site known 
as www.gift-Surplus.com.”  The hearing itself centered on the 
conflict concerning whether the kiosks at issue were illegal and 
the uncertainty concerning the legality of these kiosks ultimately 
impacts Plaintiffs’ ability to operate a business going forward.  
Additionally, Plaintiffs alleged in their complaint that, since 
Sheriff Brown issued the innocent owner letter, existing retail 
outlets that used Plaintiffs’ products had removed the kiosks or 
chosen not to use the kiosks due to the uncertainty surrounding 
-30- 
 
 
their legality.  From the foregoing, it is clear that a justiciable 
actual controversy, as required by the Declaratory Judgment Act, 
exists.  Accordingly, the trial court’s exercise of jurisdiction 
over the declaratory judgment claim was proper. 
Because we (a) hold that Sheriff Brown is not entitled to the 
defense of sovereign immunity on the Rule 12 motions, (b) dismiss 
Sheriff Brown’s appeal of the trial court’s grant of a preliminary 
injunction in part and strike portions of the preliminary 
injunction in part, and (c) find an actual case or controversy 
existed, we do not address Sheriff Brown’s remaining arguments on 
appeal. 
III. Conclusion 
In conclusion, (i) we hold that the trial court’s denial of 
Sheriff Brown’s motion to dismiss affected a substantial right; 
(ii) we affirm the trial court’s order denying Sheriff Brown’s 
motion to dismiss; (iii) we exercise limited jurisdiction to vacate 
portions of the preliminary injunction which exceed the scope of 
a preliminary injunction; and (iv) we dismiss Sheriff Brown’s 
appeal of the trial court’s grant of a preliminary injunction as 
interlocutory and not affecting a substantial right.   
AFFIRMED in part, VACATED in part, and DISMISSED in part. 
Judge ELMORE concurs.  
-31- 
 
 
Judge ERVIN dissents in a separate opinion.   
NO. COA14-85 
NORTH CAROLINA COURT OF APPEALS 
Filed:  5 September 2014 
 
SANDHILL AMUSEMENTS, INC. AND GIFT 
SURPLUS, LLC, 
 
Plaintiffs, 
 
 
 
 
v. 
Onslow County 
No. 13 CVS 3705 
 
 
SHERIFF OF ONSLOW COUNTY, NORTH 
CAROLINA, ED BROWN, in his official 
capacity; and DISTRICT ATTORNEY FOR THE 
FOURTH PROSECUTORIAL DISTRICT OF THE 
STATE OF NORTH CAROLINA, ERNIE LEE, in 
his official capacity,  
Defendants 
 
 
 
ERVIN, Judge, dissenting. 
 
 
Although I agree with my colleagues concerning the proper 
resolution of Defendant’s challenge to the denial of his motion to 
dismiss based upon governmental immunity and justiciabiity 
grounds, I am unable to agree with their determination that a 
portion of Defendant’s appeal from the issuance of the preliminary 
injunction did not affect a substantial right and is not subject 
to immediate appellate review in its entirety.  In addition, after 
evaluating 
the 
validity 
of 
Defendant’s 
challenge 
to 
the 
preliminary injunction on the merits, I believe that the trial 
court erred by issuing the preliminary injunction and that the 
portion of the trial court’s order preliminarily enjoining 
Defendant from engaging in certain enforcement-related activities 
-33- 
 
 
should be reversed in its entirety.  As a result, I concur in the 
Court’s opinion in part and dissent from the Court’s opinion in 
part. 
Appealability 
As a general proposition, “there is no right of immediate 
appeal from interlocutory orders and judgments,” Travco Hotels, 
Inc. v. Piedmont Natural Gas Co., Inc., 332 N.C. 288, 291, 420 
S.E.2d 426, 428 (1992) (citing Goldston v. American Motors Corp., 
326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990)), such as the one at 
issue here.  However, immediate appellate review of interlocutory 
orders is available “when the trial court enters a final judgment 
as to one or more, but fewer than all, claims or parties and 
certifies there is no just reason for delay” pursuant to N.C. Gen. 
Stat. § 1A-1, Rule 54(b), or when “the [interlocutory] order 
affects a substantial right under” N.C. Gen. Stat. § 1-277(a) and 
N.C. Gen. Stat. § 7A-27(b)(3).  Sharpe v. Worland, 351 N.C. 159, 
162, 522 S.E.2d 577, 579 (1999) (citing DKH Corp. v. Rankin-
Patterson Oil Co., 348 N.C. 583, 585, 500 S.E.2d 666, 668 (1998), 
and Oestreicher v. American Nat’l Stores, 290 N.C. 118, 121-22, 
225 S.E.2d 797, 800 (1976)).  In view of the fact that the trial 
court did not include, and could not properly have included, a 
certification pursuant to N.C. Gen. Stat. § 1A-1, Rule 54(b), in 
-34- 
 
 
its order, the only basis upon which this Court might have 
jurisdiction over Plaintiff’s appeal from that portion of the trial 
court’s order preliminarily enjoining Defendant from engaging in 
certain enforcement-related activities is in the event that that 
portion of the trial court’s order affects a substantial right. 
“The ‘substantial right’ test for appealability is more 
easily stated than applied.”  Bailey v. Goode, 301 N.C. 205, 210, 
270 S.E.2d 431, 434 (1980) (citing Waters v. Qualified Personnel, 
Inc., 294 N.C. 200, 208, 240 S.E.2d 338, 343 (1978)).  An 
interlocutory order “affects a substantial right” for purposes of 
N.C. Gen. Stat. § 1-277(a) and N.C. Gen. Stat. § 27(b)(3) in the 
event that it “deprive[s] the appealing party of a substantial 
right which will be lost if the order is not reviewed before a 
final judgment is entered.”  Cook v. Bankers Life & Cas. Co., 329 
N.C. 488, 491, 406 S.E.2d 848, 850 (1991) (citing Waters, 294 N.C. 
at 207, 240 S.E.2d at 343).  “Essentially a two-part test has 
developed--the 
right 
itself 
must 
be 
substantial 
and 
the 
deprivation of that substantial right must potentially work injury 
. . . if not corrected before appeal from final judgment.”  
Goldston, 326 N.C. at 726, 392 S.E.2d at 736.  A “substantial 
right” is “‘a legal right affecting or involving a matter of 
substance as distinguished from matters of form:  a right 
-35- 
 
 
materially affecting those interests which a [litigant] is 
entitled to have preserved and protected by law:  a material 
right.’”  Oestreicher, 290 N.C. at 130, 225 S.E.2d at 805 (quoting 
Webster’s Third New International Dictionary 2280 (1971)).  
“Whether an interlocutory ruling affects a substantial right 
requires consideration of ‘the particular facts of that case and 
the procedural context in which the order from which appeal is 
sought was entered.’”  N.C. Dep’t. of Transp. v. Rowe, 351 N.C. 
172, 175, 521 S.E.2d 707, 709 (1999) (quoting Waters, 294 N.C. at 
208, 240 S.E.2d at 343)). 
In the decretal paragraphs contained in its order, the trial 
court stated, in pertinent part, that: 
2. 
That 
Plaintiffs’ 
Motion 
for 
Preliminary Injunction should be and hereby is 
GRANTED, and that Defendant Ed Brown, Sheriff 
of Onslow County is hereby: 
 
a. 
Restrained and enjoined from using 
[N.C. Gen. Stat. §§] 14-292, 14-293, 
14-301, 14-306.1A, and 14-306.4 to 
prohibit 
the 
Plaintiffs 
from 
displaying, selling, operating or 
promoting the Gift Surplus System 
v1-01.1[] and the Gift Surplus 
computer 
kiosk 
and 
sweepstakes 
promotion 
of 
the 
www.giftsurplus.com 
website 
and 
gift cards; and  
 
b. 
Restrained 
and 
enjoined 
from 
compelling or attempting to compel, 
coerce or persuade the Plaintiffs to 
-36- 
 
 
remove the Gift Surplus System v1-
01.1 and the Gift Surplus computer 
kiosks and equipment associated 
with the kiosks and sweepstakes from 
any retail establishment in Onslow 
County; and  
 
c. 
Restrained and enjoined from citing 
or prosecuting the Plaintiffs for 
criminal administrative offenses or 
violations by reason of such party’s 
display, 
sale, 
operation, 
or 
promotion of the Gift Surplus System 
v1-01.1 
and 
the 
Gift 
Surplus 
computer kiosks and sweepstakes 
promotions 
of 
the 
www.gift-
surplus.com website and gift cards 
in Onslow County. 
 
3. 
The Preliminary Injunction set out 
in [Paragraph No. 2] above is specifically 
enforceable only in those Onslow County places 
which are validly operating four or less Gift 
Surplus System v1-01.1/Gift Surplus computer 
kiosks at one location or on one site. 
 
In other words, the clear import of the preliminary injunction 
provisions contained in the trial court’s order was to prevent 
Defendant and his agents from taking any steps to enforce the 
provisions of N.C. Gen. Stat. §§ 14-292, 14-293, 14-301, 14-306.1A, 
and 14-306.4 against the display, sale, operation, promotion of 
the equipment, computer programs, and websites in sites located in 
Onslow County at which no more than four kiosks were present.  As 
a result, every provision of the preliminary injunction had the 
effect of prohibiting Defendant from enforcing certain statutory 
-37- 
 
 
provisions as he understood them against Plaintiffs’ equipment and 
activities as the activities in question occurred at locations in 
Onslow County at which no more than four kiosks were present. 
As I read the relevant decisions, this Court has recognized 
that the entry of a preliminary injunction precluding a state or 
local agency from enforcing the law affects a substantial right 
and is immediately appealable.  Rockford-Cohen Group, LLC v. N.C. 
Dep’t. of Ins., __ N.C. App. __, __, 749 S.E.2d 469, 471 (2013) 
(stating that, “[w]hen an agency of the State that is charged with 
enforcing statutes chooses to appeal rulings limiting the 
enforcement of those statutes, the right to enforce the statute is 
substantial, and the rulings are immediately appealable”) (citing 
Johnston v. State, __ N.C. App. __, __, 735 S.E.2d 859, 864 (2012) 
(allowing an immediate appeal from an interlocutory order 
declaring that a statute, as applied to the plaintiff, was 
unconstitutional since that decision had the effect of permanently 
“enjoin[ing] the State from prosecuting plaintiff for violations 
of the” relevant statutory provisions), disc. review concerning 
additional issues denied, 366 N.C. 562, 738 S.E.2d 360 (2013), 
appeal dismissed, 366 N.C. 562, 738 S.E.2d 361 (2013), aff’d, __ 
N.C. App. __, 749 S.E.2d 278 (2013), and Gilbert v. N.C. State 
Bar, 363 N.C. 70, 76-77, 678 S.E.2d 602, 606 (2009) (allowing an 
-38- 
 
 
immediate appeal from an interlocutory order that “enjoin[ed] 
defendant from prosecuting” a related proceeding); see also Beason 
v. N.C. Dep’t. of Sec’y. of State, __ N.C. App. __, __, 743 S.E.2d 
41, 44-45 (2013) (stating that, “since respondent is charged with 
investigating violations of and enforcing” certain provisions of 
the lobbying laws, since “respondent’s right to carry out these 
duties is substantial,” and since “respondent’s ability to carry 
out its duties requires that it be able to act timely on 
allegations it believes constitute violations,” the respondent’s 
appeal from an interlocutory order enjoining the enforcement of 
those lobbying laws against the petitioner was subject to immediate 
appellate review).  I find no basis for departing from this well-
established line of precedent, as the Court’s opinion appears to 
do, in this case.  As a result, given that the preliminary 
injunction issued by the trial court prohibits Defendants from 
taking action to enforce the relevant gaming machine statutes as 
he understands them, I would hold that this Court has jurisdiction 
over Defendant’s appeal from the issuance of the preliminary 
injunction and proceed to address the validity of Defendant’s 
challenge to that portion of the trial court’s order on the merits. 
In its opinion, the Court concludes that a portion of the 
trial court’s preliminary injunction affects a substantial right 
-39- 
 
 
and should be invalidated and that a portion does not affect a 
substantial 
right 
and 
should 
remain 
undisturbed. 
 
More 
specifically, the Court concludes that the sixth conclusion of law 
contained in the trial court’s order should be vacated and that 
“validly” should be stricken from the third decretal paragraph on 
the grounds that these portions “go beyond maintaining the status 
quo.”  In reaching this conclusion, the Court relies on the  
Supreme Court’s statement in A.E.P. Indus., Inc. v. McClure, 308 
N.C. 393, 400, 302 S.E.2d 754, 759 (1983) (citation and quotation 
marks omitted), to the effect that “[t]he purpose of a preliminary 
injunction is ordinarily to preserve the status quo pending trial 
on the merits” and concludes that, because the relevant portions 
of the preliminary injunction order do more than serve the purpose 
of maintaining the status quo, they “affect Sheriff Brown’s 
substantial right to enforce the laws of North Carolina” and should 
be invalidated on appeal.  On the other hand, the Court appears to 
hold that the remainder of the preliminary injunction is so limited 
in scope and effect that it does not affect a substantial right 
and is not subject to immediate appellate review.  I do not believe 
that the Court’s approach to the resolution of this issue has any 
support in our “substantial right” jurisprudence as explained in 
decisions such as Gilbert, Johnston, and Beason. 
-40- 
 
 
As an initial matter, the Court’s analysis seems to indicate 
that the extent to which Defendant was entitled to appeal from the 
issuance of the preliminary injunction hinges upon the validity of 
the injunction itself.4  In other words, the Court seems to conclude 
that Defendant is entitled to immediate appellate review of the 
preliminary injunction to the extent, and only to the extent, that 
the trial court exceeded its authority in issuing the injunction 
in the first place.  I see no basis in our “substantial right” 
jurisprudence for equating a litigant’s ability to appeal from an 
interlocutory order with the litigant’s ability to prevail on the 
merits in the event that such an appeal was to be entertained.  
Instead, the extent to which this Court has jurisdiction to 
entertain an immediate appeal from an interlocutory order and the 
extent to which the trial court erred by entering the interlocutory 
order in question constitute two completely different issues that 
                     
4This aspect of the Court’s analysis is similar to the 
argument advanced in Plaintiff Sandhill Amusements’ brief, which 
suggests that the preliminary injunction does not affect a 
substantial right on the theory that, since Plaintiffs’ equipment 
and activities do not violate the applicable gambling statutes, 
Defendant has not been enjoined from properly enforcing the law.  
However, as is discussed in more detail in the text, the extent to 
which the substance of a party’s position on the merits is correct 
and the extent to which that party has a right to seek immediate 
appellate review from an interlocutory order are two separate, and 
essentially unrelated, questions. 
-41- 
 
 
have little or no relation to each other in the preliminary 
injunction context. 
Secondly, the Court’s appealability analysis appears to hinge 
on the assumption that we have jurisdiction over Defendant’s appeal 
from the trial court’s order to the extent, and only to the extent, 
that the trial court’s order disturbed the status quo.  More 
specifically, the Court states that the portion of the preliminary 
injunction that it does not believe to be subject to appellate 
review on an interlocutory basis “does not implicate a substantial 
right in enforcing the statutes and simply maintained the status 
quo pending a trial on the merits.”  Aside from the fact that the 
extent to which a particular order maintains or disturbs the status 
quo is not the sum total of the test employed for evaluating the 
merits of a trial court’s decision to issue a preliminary 
injunction, I am unable to find any support in our “substantial 
right” jurisprudence for the use of such a standard.  Simply put, 
I am not aware of any decision that finds or declines to find the 
existence of a “substantial right” sufficient to support the 
maintenance of an appeal from an interlocutory order based upon 
the extent to which the underlying order preserves or disturbs the 
status quo.  For that reason, I do not believe that the Court’s 
reference to the impact of the underlying preliminary injunction 
-42- 
 
 
on the status quo has any bearing on Defendant’s right to immediate 
appellate review of the preliminary injunction. 
Finally, the Court appears to conclude that Gilbert, 
Johnston, and Beason only authorize interlocutory appeals from 
orders that permanently, rather than preliminarily, enjoin state 
or local agencies or officials from enforcing the law against 
specific litigants.5  However, the Court’s interpretation of these 
cases is inconsistent with our statement of the applicable legal 
principle in Rockford-Cohen, a case that involved a challenge to 
the issuance of a preliminary injunction; has no support in their 
underlying logic, which assumes that an order precluding a state 
                     
5As we have already noted, the Court suggests that the fact 
that the preliminary injunction merely affects Defendant’s ability 
to enforce a limited number of statutory provisions against a 
limited number of persons in a limited geographic area militates 
in favor of a finding that a portion of the preliminary injunction 
does not affect a substantial right and appears to read Gilbert as 
distinguishing between injunctions that affect a defendant’s 
ability to enforce the laws generally and injunctions that affect 
a defendant’s ability to enforce the laws against specific 
litigants.  A similar argument resting on the scope of the 
preliminary injunction is advanced in the briefs submitted by 
Plaintiff Gift Surplus and Plaintiff Sandhill Amusements.  
However, since the orders at issue in Gilbert, Beason, and Johnston 
all precluded the relevant agency or official from enforcing 
specific statutory provisions against specific litigants in 
specific contexts, it is clear that such scope-related arguments 
have no support in our “substantial right” jurisprudence and that 
the Court’s emphasis upon these factors in declining to review a 
portion 
of 
the 
preliminary 
injunction 
rests 
upon 
our 
misapprehension of our “substantial right” jurisprudence. 
-43- 
 
 
or local official from enforcing the law affects a substantial 
right without in any way suggesting the existence of a temporal 
limitation on the applicability of that principle; and ultimately 
rests upon stray references to the permanence of the injunctions 
at issue in those cases that had no apparent impact upon the 
reasoning actually employed in holding that the orders challenged 
in those case were immediately appealable.6  As a result, since 
the preliminary injunction at issue in this case prohibits a state 
or local official from enforcing the law against Plaintiffs, since 
our decisions clearly allow immediate appellate review of such 
                     
6To be sure, Gilbert notes that the order from which the 
defendant appealed permanently enjoined it from prosecuting a 
separate proceeding.  Id. at 75, 678 S.E.2d at 605.  Similarly, 
the orders at issue in Beason, __ N.C. App. at __, 743 S.E.2d at 
44-45, and Johnston, __ N.C. App. at __, 735 S.E.2d at 864, involve 
permanent orders rather than preliminary injunctions.  However, 
nothing in the opinions in question in any way suggests that the 
fact that the injunctions or orders at issue in those cases were 
permanent rather than preliminary had any bearing on the Court’s 
appealability analysis.  Instead, the Court simply held that an 
injunction or order that precluded a state or local official from 
enforcing the laws affected a substantial right and was immediately 
appealable without in any way suggesting that a different principle 
would apply to preliminary, as compared to permanent, injunctions 
or orders.  As a result, while the Court has correctly identified 
a factual distinction between the relevant cases and this case, 
the logic upon which the Court based those decisions applies 
equally to permanent and preliminary injunctions or orders and 
nothing in the opinions in those cases in any way suggests that 
the outcome would have been different in the event that the bar to 
further enforcement had been preliminary rather than permanent in 
nature. 
-44- 
 
 
orders, and since the logic upon which the Court relies in reaching 
a different conclusion rests upon a misapprehension of our prior 
decisions concerning appealability issues, I would hold that this 
Court has jurisdiction over the entirety of Defendant’s challenge 
to the preliminary injunction and will now, in light of that 
conclusion, address Defendant’s challenge to the issuance of the 
preliminary injunction on the merits. 
Validity of the Preliminary Injunction 
“[A preliminary injunction] will be issued only (1) if a 
plaintiff is able to show likelihood of success on the merits of 
his case and (2) if a plaintiff is likely to sustain irreparable 
loss unless the injunction is issued, or if, in the opinion of the 
Court, issuance is necessary for the protection of a plaintiff’s 
rights during the course of litigation.”  Ridge Cmty. Investors, 
Inc. v. Berry, 293 N.C. 688, 701, 239 S.E.2d 566, 574 (1977).  
“[O]n appeal from an order of superior court granting or denying 
a preliminary injunction, an appellate court is not bound by the 
findings, but may review and weigh the evidence and find facts for 
itself.”  A.E.P. Indus., 308 N.C. at 402, 302 at 754, 760 (citation 
omitted).  Although appellate courts review orders granting or 
denying preliminary injunctions using a de novo standard of review, 
we have also noted that “a trial court’s ruling on a motion for a 
-45- 
 
 
preliminary injunction is presumed to be correct, and the party 
challenging the ruling bears the burden of showing it was 
erroneous.”  Analog Devices, Inc. v. Michalski, 157 N.C. App. 462, 
465, 579 S.E.2d 449, 452 (2003) (citation omitted).  For purposes 
of this case, the ultimate issue raised by Defendant’s challenge 
to the validity of the preliminary injunction is whether Plaintiffs 
have shown a likelihood of success on the merits and whether they 
are likely to sustain an irreparable injury in the event that they 
are deprived of injunctive relief prior to the completion of a 
trial on the merits.7 
According to N.C. Gen. Stat. § 14-306.4(b), “it shall be 
unlawful for any person to operate, or place into operation, an 
electronic machine or device to . . . [c]onduct a sweepstakes 
through the use of an entertaining display, including the entry 
process or the reveal of a prize.”  An “electronic machine or 
device” for purposes of N.C. Gen. Stat. § 14-306.4(b) is a piece 
of equipment “that is intended to be used by a sweepstakes entrant, 
that uses energy, and that is capable of displaying information on 
a screen or other mechanism.”  N.C. Gen. Stat. § 14-306.4(a)(1).  
                     
7In view of the fact that Defendant has not argued that 
Plaintiffs have shown the existence of the necessary irreparable 
injury, we will focus our discussion in the text on the extent to 
which Plaintiffs have shown that they are likely to succeed on the 
merits at trial. 
-46- 
 
 
Similarly, an “entertaining display” is defined as “visual 
information, capable of being seen by a sweepstakes entrant, that 
takes the form of actual game play, or simulated game play,” 
including “[a] video game based on or involving the random or 
chance matching of different pictures, words, numbers, or symbols 
not dependent on the skill or dexterity of the player” and “[a]ny 
. . . video game not dependent on skill or dexterity that is played 
while revealing a prize as the result of an entry into a 
sweepstakes.”  N.C. Gen. Stat. § 14-306.4(a)(3).  Finally, a 
“sweepstakes” is defined as “any game, advertising scheme or plan, 
or other promotion, which, with or without payment of any 
consideration, a person may enter to win or become eligible to 
receive any prize, the determination of which is based upon 
chance.”  N.C. Gen. Stat. § 14-306.4(a)(5).  As a result, given 
that the equipment and activities protected by the preliminary 
injunction clearly involve the use of electronic devices to engage 
in or simulate game play based upon which a participant may win or 
become eligible to win a prize, the only basis upon which 
Plaintiffs’ equipment and activities can avoid running afoul of 
N.C. Gen. Stat. § 14-306.4(b) is in the event that the game or 
simulated game involved is “dependent on skill or dexterity.” 
In its order, the trial court found as a fact that: 
-47- 
 
 
19. Nick Farley . . . testified on 
behalf of the Plaintiffs.  He was proffered 
and accepted as an expert witness in the field 
of gaming and software.8 
 
20. Prior to trial, Farley conducted a 
review 
and 
examination 
of 
the 
computer 
software program, Gift Surplus System v1-01-
1, developed by Gift Surplus, as well as the 
Gift Surplus computer kiosk, which resulted in 
a written report dated April 16, 2013 (a copy 
of which was received into evidence). 
 
21. In Farley’s uncontroverted opinion 
as evidenced by his report and testimony, the 
computer software program that operates the 
distribution of Gift Surplus sweepstakes 
entries and the video games used to reveal 
winning sweepstakes entries on the Gift 
Surplus Kiosk is a sweepstakes which operates 
in compliance with the generally accepted 
guidelines for operating sweepstakes in North 
Carolina and many other jurisdictions in the 
United States. 
 
22. Farley testified that, based on his 
expertise honed through years of experience 
and his thorough knowledge of the gaming 
machines and software, he understands the 
                     
8At this point, the trial court stated in Footnote No. 5 to 
its order that: “Nick Farley is the owner of Nick Farley & 
Associates, Inc., d/b/a Eclipse Compliance Testing, based in 
Salon, Ohio.  This is one of three firms in the country that 
provides technical consulting services for compliance of gaming 
machines with state and federal regulations.  Eclipse Compliance 
Testing consults with and has been hired by law enforcement, tribal 
and government regulatory agencies in 245 jurisdictions, as well 
as 
by 
regulated 
device 
manufacturers, 
regarding 
device 
classification and regulatory compliance.  The firm has been 
involved solely in the business of compliance and testing from 
2000 to present.  Mr. Farley has testified as an expert witness in 
these matters in federal, state and tribal courts both as a witness 
for the government and for the defense.” 
-48- 
 
 
meaning and interpretation of the words 
“skill” and “dexterity” as used by the 
industry in North Carolina and many other 
jurisdictions.9 
 
23. In Farley’s uncontroverted opinion 
as evidenced by his report and testimony, the 
Gift Surplus System v1-01-1, developed by Gift 
Surplus and used in the kiosk (Plaintiff’s 
Exhibit 1) is dependent on skill or dexterity 
in order to realize any prize or entitlement 
from the sweepstakes entries.10 
 
Based upon these and other findings, the trial court concluded as 
a matter of law that: 
6. 
The Gift Surplus System v1-01-1 and 
the Gift Surplus computer kiosk promote the 
                     
9At this point, in Footnote No. 6 to its order, the trial 
court stated that:  “In preparation for his testimony, Nick Farley 
was provided by counsel the definition of ‘skill or dexterity’ in 
statutes in the United States.  As noted in his testimony, Farley’s 
testimony was based partially upon the statutory definitions used 
around the country.” 
 
10At this point, in Footnote No. 7 to its order, the trial 
court stated that:  “Farley’s report found that a participant’s 
decision can be viewed as a strategic choice or tactic which will 
evolve into confidence with practice and experience.  Participants 
familiar with revealing sweepstakes entries through the game theme 
will develop an aptitude or ability to quickly recognize the 
correct reel and the correct skill moves to reveal a prize winning 
sweepstakes entry.  Experienced participants will demonstrate 
fluency in the execution of the learned past of recognizing and 
selecting the correct reel and making the correct skill move to 
reveal a potential winning outcome.  Further, if the participant 
takes no action to effectuate the outcome of the game, the 
participant will not be able to realize any potential prize 
associated with the sweepstakes entry because these systems will 
never display a winning sequence on the first sweepstakes entry 
presented.  Therefore, the kiosk games, per Farley, are dependent 
on skill or dexterity and not the element of chance.” 
-49- 
 
 
sale of products through a lawful sweepstakes 
under North Carolina law. 
 
. . . . 
 
8. 
There is a likelihood that the 
Plaintiffs will prevail in that: 
 
a. 
Gift Surplus System v1-01.1 and the 
Gift 
Surplus 
computer 
kiosk 
operated by Gift Surplus, LLC, 
conduct a valid sweepstakes within 
the applicable law. 
 
b. 
The Gift Surplus System v1-01.1 and 
the Gift Surplus computer kiosk 
operated by Gift Surplus, LLC, in 
promotion of their sweepstakes are 
dependent on skill or dexterity as 
required 
under 
North 
Carolina 
statutory law. 
 
c. 
The Gift Surplus System v1-01.1 and 
the Gift Surplus computer kiosk 
operated by Gift Surplus, LLC, is a 
lawful promotional device for the 
sale 
of 
gift 
certificates 
and 
operation 
of 
their 
promotional 
sweepstakes. 
 
As a result, the trial court determined that Defendant should be 
enjoined from taking any action against Plaintiffs’ equipment and 
activities based upon a determination that the extent to which a 
person received a prize for participating in the sweepstakes hinged 
upon that person’s skill or dexterity. 
 
The trial court’s conclusion that Plaintiffs’ equipment and 
activities involved a game whose outcome depended on skill or 
-50- 
 
 
dexterity rested upon acceptance of Mr. Farley’s testimony to the 
effect that the outcome of the games played utilizing Plaintiffs’ 
equipment depended on the player’s skill or dexterity.  Although 
the term “skill or dexterity” as used in N.C. Gen. Stat. § 14-
306.4 has not been statutorily defined, the meaning of the term in 
question, as used in Article 37 of Chapter 14 of the General 
Statues, a set of provisions governing gambling-related activities 
that includes N.C. Gen. Stat. § 14-306.4, has been addressed by 
this Court.  In light of that fact, the trial court should have 
determined 
whether 
Plaintiffs’ 
equipment 
and 
activities 
facilitated a game of “skill and dexterity” or a game of chance 
based upon the meaning of that term as used in North Carolina 
gambling-related cases rather than on the basis of the meaning of 
that term as used in other jurisdictions and in the gaming 
industry, which is the approach that the trial court found to have 
been adopted in Mr. Farley’s testimony.  Thus, in order to 
determine whether the trial court correctly found that Plaintiffs’ 
equipment and activities were lawful, we must first ascertain the 
difference between a game of skill and a game of chance as those 
terms are used in our gambling statutes and then determine which 
side of the resulting line Plaintiffs’ equipment and activities 
fall on. 
-51- 
 
 
In Collins Coin Music Co. of North Carolina, Inc. v. North 
Carolina Alcoholic Beverage Control Comm’n, 117 N.C. App. 405, 
408, 451 S.E.2d 306, 308 (1994), disc. rev. denied, 340 N.C. 110, 
456 S.E.2d 312 (1995), we stated that: 
A game of chance is “such a game as is 
determined entirely or in part by lot or mere 
luck, and in which judgment, practice, skill 
or adroitness have honestly no office at all, 
or are thwarted by chance.”  State v. Eisen, 
16 N.C. App. 532, 535, 192 S.E.2d 613, 615 
(1972) (citation omitted).  “A game of skill, 
on the other hand, is one in which nothing is 
left to chance, but superior knowledge and 
attention, or superior strength, agility and 
practice gain the victory.”  Id. at 535, 192 
S.E.2d at 615-16 (citation omitted).  In State 
v. Stroupe, 238 N.C. 34, 76 S.E.2d 313 (1953), 
a case involving the legality of the game of 
pool, our Supreme Court stated: 
 
It would seem that the test of the character 
of any kind of a game of pool as to whether it 
is a game of chance or a game of skill is not 
whether it contains an element of chance or an 
element of skill, but which of these is the 
dominating element that determines the result 
of the game, to be found from the facts of 
each particular kind of game.  Or to speak 
alternatively, whether or not the element of 
chance is present in such a manner as to thwart 
the exercise of skill or judgment. 
 
Id. at 38, 76 S.E.2d at 316-317. 
In light of this understanding of the meaning of the relevant 
statutory language, this Court considered whether a video poker 
game was one of skill or of chance, id. at 406, 451 S.E.2d at 307, 
-52- 
 
 
and determined that the game in question was one of chance rather 
than one of skill because, at least in part, almost all of the 
skill-related elements in an in-person poker game, including the 
use of psychological factors such as bluffing to prevail over an 
opponent, were absent from video poker.  Id. at 408, 451 S.E.2d at 
308.  In addition, we stated that: 
although a player’s knowledge of statistical 
probabilities can maximize his winnings in the 
short term, he cannot determine or influence 
the result since the cards are drawn at 
random.  In the long run, the video game’s 
program, which allows only a predetermined 
number of winning hands, negates even this 
limited skill element. 
 
Id. at 409, 451 S.E.2d at 308 (internal citation omitted).  As a 
result, the essential difference between a game of skill and a 
game of chance for purposes of our gambling statutes, including 
N.C. Gen. Stat. § 14-306.4, is whether skill or chance determines 
the final outcome and whether chance can override or thwart the 
exercise of skill. 
 
As was the case with the video poker game at issue in Collins 
Coin Music, the machines and equipment at issue here only permitted 
a predetermined number of winners.  For that reason, a player who 
plays after the predetermined number of winners has been reached 
will be unable to win a prize no matter how much skill or dexterity 
-53- 
 
 
he or she exhibits.11  In addition, use of the equipment at issue 
here will result in the playing of certain games in which the 
player will be unable to win anything of value regardless of the 
skill or dexterity that he or she displays.12  Finally, the extent 
to which the opportunity arises for the “nudging” activity upon 
which the trial court’s order relies in support of its 
determination that the equipment in question facilitated a game of 
“skill or dexterity” appears to be purely chance-based.  Although 
Mr. Farley persuaded the trial court that the outcome of the games 
facilitated by Plaintiffs’ equipment and activities depended on 
skill or dexterity, the only basis for this assertion was the 
player’s ability to affect the outcome by “nudging” a third symbol 
in one direction or the other after two matching symbols appeared 
at random on the screen.  Assuming for purposes of argument that 
this “nudging” process does involve skill or dexterity, I am unable 
to see how this isolated opportunity for such considerations to 
                     
11As Mr. Farley indicated, “[s]hould the random distribution 
of entries cause the payout rate to exceed a predetermined limit, 
prizes selected for distribution which exceed $200 will be returned 
to the pool and another prize will be selected to be revealed.” 
 
12Mr. Farley admitted on cross-examination that a number of 
screens will offer a “zero value prize” so that the participant 
cannot win anything of value regardless of his or her actions in 
the game and that “[w]hich entry is going to come out of the pool 
is determined by chance.” 
-54- 
 
 
affect the outcome overrides the impact of the other features 
which, 
according 
to 
the 
undisputed 
evidence, 
affect 
and 
significantly limit the impact of the player’s skill and dexterity 
on the outcome.  In light of these inherent limitations on a 
player’s ability to win based upon a display of skill and 
dexterity, an individual playing the machines and utilizing the 
equipment at issue simply does not appear to be able to “determine 
or influence the result over the long haul.”  Id. at 409, 451 
S.E.2d at 309 (citation omitted).  As a result, for all of these 
reasons, I am compelled by the undisputed evidence to “conclude 
that the element of chance dominates the element of skill in the 
operation” of Plaintiffs’ machines, id., a fact that demonstrates 
that Plaintiff is not likely to succeed on the merits at trial and 
that the trial court erred by preliminarily enjoining Defendant 
from enforcing the strictures of N.C. Gen. Stat. § 14-304.6(b) 
against Plaintiffs.  Thus, I believe that the trial court’s order 
should be reversed to the extent that it preliminarily enjoins 
Defendant from enforcing the provisions of N.C. Gen. Stat. § 14-
306.4 against Plaintiffs.13 
                     
13As a result of the fact that our resolution of the “skill 
or dexterity” issue for purposes of N.C. Gen. Stat. § 14-306.4 
applies equally to the other statutes that Defendant was enjoined 
from enforcing against Plaintiffs, we need not separately analyze 
-55- 
 
 
Conclusion 
Thus, while I agree with my colleagues that we have 
jurisdiction over Defendant’s challenge to the denial of his 
dismissal motion and that the trial court properly rejected 
Defendant’s governmental immunity and justiciability challenges to 
Plaintiffs’ complaint, I am unable to agree with their decision 
that only a portion of the trial court’s preliminary injunction 
order is subject to immediate appellate review and would further 
conclude, after examining the merits of Defendant’s challenge to 
the preliminary injunction, that, since Plaintiffs did not 
demonstrate a likelihood of success on the merits at trial, that 
portion of the trial court’s order preliminarily enjoining 
Defendant from enforcing various statutory provisions against 
Plaintiffs should be reversed.  As a result, I would affirm the 
trial court’s refusal to dismiss Plaintiffs’ complaint, reverse 
the trial court’s decision to issue a preliminary injunction 
against Defendant, and remand this case to the Onslow County 
Superior Court for further proceedings not inconsistent with this 
opinion and dissent from the Court’s decision to the extent that 
it reaches a contrary result. 
                     
the validity of the preliminary injunction under these additional 
statutory provisions.