IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA 16

- 161
Filed: 7 February 2017
Randolph County , No. 1 5 CVS 1733 T AND A AMUSEMENTS, LLC; and CRAZIE OVERSTOCK PROMOTIONS, LLC, Plaintiff s ,

v. PATRICK McCRORY, in his official capacity as Governor of the State of North Carolina ; FRANK L. PERRY, in his official capacity as Secretary of the North Carolina Department of Public Safety; MARK J. SENTER, in his official capacity as Branch Head of the Alcohol Law Enforcement Division ; JODY WILLIAMS , in his official capacity as the Chief of Police of the City of Asheboro, North Carolina; and MAYNARD B. REID, JR., in his official capacity as the Sheriff of Randolph County, Defendants.
Appeal by plaintiff

s from order entered 19 November 2015 by Judge Michael
D. Duncan in Randol ph County Superior Court

. Heard in the Court of Appeals 24 August 2016

. Morningstar Law Group , by William J. Brian, Jr. and Keith P. Anthony , for plaintiff s - appellant s
. Josh ua H. Stein , Attorney General, by Hal F. A skins, Special Deputy Attorney General, and J. Joy Strickland, Assistant Attorney General, for defendant s appellee s Patrick McCrory, Frank L. Perry, and Mark J. Senter

. Cranfill Sumner & Hartzog LLP, by Jaye E. Bingham

- Hinch and Patrick H. F l anagan, for defendant

- appell ee Jody Wi lliams

. No brief filed on behalf of defendan t

- appellee Maynard B. Reid, Jr.

DAVIS , Judge.T & A A MUSEMENTS , LLC V

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- This case requires us to revisit the issue of whether lawsuits brought by companies in the business of licensing and distributing promotional rewards

program s seek ing declarat ory and injunctive relief as to the legality of those

program s are barred by sovereign immunity or are otherwise nonjusticiable . Crazie Overstock Promotions, LLC (“Crazie Overstock”) and T and A Amusements, LLC (“T&A”) (collectively “Plaintiffs”) argue th at the trial court erred in dismissing their
amended complaint pursuant to Rules 12(b)(1), (2), and (6) of the North Carolina
Rules of Civil Procedure

. Because we conclude that Plaintiffs’ claims are neither barred by sovereign immunity nor nonjusticiable , we reverse the trial court’s order
and remand for further proceedings

.

Factual and Procedural Background
C razie Overstock, a retail er of various discount goods, l icenses “ retail
establishment s ” to promote and display its good s, which may then be purchased through Crazie Overstock’s website. Customers may purchase items through the
website with either a credit card or an electronic gift certificate. In order to
incentivize the sale of such gift certificates, Crazie Overstock has created a promotional rewards program (the “CO Rewards Program”)

. The CO Rewards Program allows customer s to receive a cer tain number of “g ame p oints” for each dollar of gift certificates they purchase through kiosk s located
in the r etail e stablishment s . Game p oints may then be used to play “ r eward g ames ”T & A A MUSEMENTS , LLC V

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- on machines in these establishments. The r eward g ames require no skill , and the ir
results are determined random ly

. Customers who are successful at r eward g ame s receive “ r eward p oints ” as a result . Reward p oints, in turn, may be used by the

customer to play a “ d exterity t est, ” which tests players’ hand

- eye coordination and reflexes by requiring them “to stop a simulated stopwatch within specified ranges

. ”
Customers who are su ccessful at the d exte rity t est then receive “ dexterity po ints, ” which may be redeemed for cash rewards.
T&A is a distributor for Crazie Overstock and, as such, is responsible for recruiting persons to operate r etail e stablishment s and for helping to set up and
service those e s tablishments. In the spring of 2015, T&A recruited an entity called Mighty Enterprises, LLC (“Mighty Enterprises”) to operate a store in Asheboro,
North Carolina

. The Mighty Enterprises s tore , which opened in May 2015 , offered the CO Rewards Program to its customers. Based on their knowledge that the Alcohol Law Enforcement D ivision (“ALE”) of the North Carolina Department of Public Safety and local law enforcement agencies had previously investigated other businesses offering similar promotional
rewards programs , the principals of Mighty Enterprises contacted the Asheboro Police Department and offered to conduct a demonstration of the CO Rewards Program in the hope of demonstrating that the program did not violate North
Carolina’ s gambling and sweepstake s statutes

.T & A A MUSEMENTS , LLC V

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- On 17 June 2015 , a demonstration of the CO Rewards Program was conducted for Detective Daniel Shropshire of the Asheboro Police Department and A gent Stephen Abernathy of ALE

. A fter the demonstration, the officers stated that they
would review the legality of the CO Rewards Program w ith their respective

super visors as well as the district attorney. On 25 June 2015, Detective Shropshire contacted Dawn Moffitt, a principal of Mighty Enterprises, to inform her that “ the City Police Chief, the ALE, the Office of the District Attorney, and the Randolph [County] Sheriff considered the CO Rewards Program to have the same elements of an illegal electronic sweepstakes which
violates both the Video Sweepstakes Law and the Gambling Statutes .” He also

warne d Moffitt that “if Mighty Enterprises did not cease all operations, including the CO Rewards Program[,] by June 30, 2015, she and the other principals and employees of Mighty Enterprises would be charged criminally, and

. . . the company’s equipment
and ot her personal property would be confiscated.” As a result, Mighty Enterprises
shut down its operation s until the legality of the CO Rewards Program could be
determined by a court

. On 20 August 2015, Plaintiffs filed the present action in Randolph County
Su perior Court requesting , inter alia , that the trial court (1) declare that the CO Rewards Program does not violate North Carolina law ; and (2) enjoin the d efendants
from taking law enforcement action against r etail e stablishments for offer ing the COT & A A MUSEMENTS , LLC V

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- Rewards Program. The complaint named as defendants Patrick McCrory, Governor of North Carolina; Frank L. Perry, Secretary of the North Carolina Department of Public Safety; Mark J. Senter, Branch Head of ALE ; Jody Williams , A sheboro Police
Chief ; and Mayn ard B. Reid, Jr., Sheriff of Randolph County (collectively “Defendants”). All of the defendants were sued solely in their official capacities

. Plaintiff s allege d in their amended complaint that “ALE and other state
officials desire to eradicate all electr onic sweepstakes or electronic rewards programs from the State of North Carolina, including the CO Rewards Program, without regard to whether such sweepstakes or rewards programs violate the Gambling Statutes or the Video Sweepstakes Statute, or other appl icable law.” Plaintiffs also asserted that ALE officers, in conjunction with local law enforcement agencies , have participated
in numerous raids of businesses offerin g rewards programs , resulting in both threatened and actual prosecutions. Plaintiff s fur ther allege d that “[a] s a direct result of threats by ALE and increased activity by ALE and other local and state officials, [T&A] and Crazie Overstock are being harmed because current and potential
Retail Establishments are afraid to offer the CO Rewards Program, even though that program complies fu lly with all applicable laws.” On 1 October 2015, Defendants McCrory, Perry, and Senter filed a motion to
dismiss pursuant to Rule 12 (b)(1) based on sovereign immunity and under Rule 12(b)(6) on the ground that the complaint failed to state a claim upon which reliefT & A A MUSEMENTS , LLC V

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- could be granted against them

. On 7 October 2015, Chief Williams filed a motion to
dismiss under Rules 12(b)(1) , (2), and (6) in which he asserted that Plaintiffs’ claims against him were “barred by sovereign and/or government immunity” and that
Plaintiffs had failed to show the existence of an actual controversy. A hearing on Defendants’ motions was held on 12 October 2015 before t he
Honorable Michael D. Duncan. The arguments at the hearing were lim ited to the
issues of whether Defendants were entitled to sovereign or governmental immunity and whether a justiciable controversy existed

. The trial court issued an order on 19
November 2015 granting Defendants’ motions and concluding that (1) dismissal of
Plaintiffs’ claims wa s proper under Rule 12(b)(6) ; and (2) “in the absence of any allegation of waiver, sovereign/governmental immunity bars the Plaintiff [s’] claims against all of the Defendants in this action pursuant both to Rule 12(b)(1) and Rule
12 (b)(2)

. . . . ” 1 Plaintiffs fi led a timely notice of appeal. Analysis
Plaintiff s argue o n appeal that the trial court erred in granting Defendants’ respective motions to dismiss because (1) neither sovereign nor governmental

1 Our review of the hearing transcript reveals that no arguments were made at the 12 October 2015 hearing on the issue of whether the CO Rewards Program actually violated any North Carolina statutes. Nor do the parties contend on appeal that the trial court’s ruling was based upon that issue. Accordingly, we construe the trial court’s order as based solely on the issue s of immunity and justiciability. See Myers v. McGrady , 170 N.C. App. 501, 509, 613 S.E.2d 334, 340 (2005) (“Where the record does not contain anything in the pleadings, transcripts, or otherwise, to indicate that an iss ue was presented to the trial court we refuse to address the issue for the first time on appeal.” (citation, quotation marks, ellipses, and brackets omitted)), rev’d on other grounds , 360 N.C. 460, 628 S.E.2d 761 (2006).T & A A MUSEMENTS , LLC V

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- immunity bar s this action; and (2) P laintiffs’ pleading s demonstrated the existence of a justiciable controversy. We address each of these issue s in turn. I. Sovereign Immunity Under the doctrine of sovereign immunity, “ a state may not be sued in its own
courts or el sewhere unless by statute it has consented to be sued or has otherwise waived its immunity from suit. ” N. C. Ins. Guar. Ass’ n v. Bd. of Tr s. of Guilford Tech. Cmty. Coll ., 364 N.C. 102, 107, 691 S.E.2d 694, 697 (2010) (citation omitted). This immunity enc ompasses “ subordinate division [s] of the state, or agenc[ies] exercising statutory governmental functions . . . .” Id. (citation omitted)

. Where, as here, public officials are sued in their official capacities, the claims against them are deemed to be claims against the entities for which they are employe d

. See Moore v. City of
Creedmoor , 345 N.C. 356, 367, 481 S.E.2d 14, 21 (1997) ( “[O]fficial

- capacity suits generally represent only another way of pleading an action against an entity of which

a n officer is an agent.” (citation and quotation marks omitted) )

. 2

2 As an initial matter, with regar d to Plaintiffs’ claims against Chief Williams, the parties disagree as to whether the State’s sovereign immunity

— if otherwise applicable in this case

— would cover him given that he is a local official rather than a State official. It is true that the doctrine of governmental immunity generally applies to local entities whereas sovereign immunity applies to State entities and that sovereign immunity is broader in scope than governmental immunity. See Craig v. New Hanover Cty. Bd. of Educ ., 363 N.C. 334, 33 5 n.1, 678 S.E.2d 351, 353 n.1 (2009) ( noting that immunity possessed by county agencies is “identified as governmental immunity, while sovereign immunity applie s to the State and its agencies”); Evans v. Hous. Auth. of City of Raleigh , 359 N.C. 50, 53, 602 S.E.2d 668, 670 (2004) (explaining that governmental and sovereign “ immunities do not apply uniformly ”). Plaintiffs argue that local law enforcement entities are not entitled to the State’s sovereign immunity even when sued for declaratory or inj unctive relief (rather than for monetary damages) in lawsuits arising from enforcement of state laws. However, we need not resolve this issueT & A A MUSEMENTS , LLC V

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- However, our Supreme Court has recognized the existence of a limited exception to sovereign immunity in certain cases where plaintiffs seek declaratory or injunctive relief against Sta te a gencies that act “in excess of the authority granted [to them ] under [a] statute and invade or threaten to invade personal or property rights of a citizen in disregard of the law. ” Charlotte

- Mecklenburg Hosp. A uth. v. N.C.
Indus. Comm’

n , 336 N.C. 200, 208, 443 S.E.2d 716, 721 (1994) , superseded by statute

on other grounds as stated in Mehaffey v. Burger King , 367 N.C. 120, 749 S.E.2d 252 (2013)

. North Carolina’s appellate court s have recently applied this principle in Sandhill Amusements, Inc. v. Sheri ff of Onslow C ounty , 236 N.C. App. 340, 762 S.E.2d 666 (2014), rev’d per curiam for the reasons stated in the dissent ing opinion , 368 N.C. 91, 773 S.E.2d 55 (2015) , which rejected a similar sovereign immunity argument raised by a defendant on analogous fac ts. In that case , one of the p laintiff s, Gift Surplus, LLC (“Gift Surplus”) , licensed t o retail stores certain “ sweepstakes promotion devices used to promote the sale of gift cards and e

- commerce business. ”
Sandhill Amusements , 236 N.C. App. at 341 n.1 , 762 S.E.2d at 669 n.1

. Through
kiosks provided by Gift Surplus, customers could purchase gift certificates to use in
Gift Surplus’s online store. When customer s bought these gift certificates, they also

because, for the reasons explained below, we hold that sovereign immunity does not serve as a bar to Plaintiffs’ claims in this action.T & A A MUSEMENTS , LLC V

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- received credits to play electronic games on the kiosks. The first phase of these games

was based purely on chance while the second phase required players to make a judgment regarding which way to turn a reel

. Id. at 343, 762 S.E.2d at 670. Another plaintiff, Sandhill Amusements, LLC (“Sandhill”) , was the distributor of Gift Surplus’s kiosks in the Onslow C ounty , North Carolina area. Id. at 344 n.1 , 762
S.E.2d at 669 n.1. After receiving complaints regarding these games, officers from the Onslow County Sheriff’s Office visited a store featuring Gift Surplus kiosk s and documented
how the machines worked. After subsequently receiving an opinion from ALE that
the kiosks were “ illegal video sweepstakes machines, ” the sheriff and the district attorney sent a letter to the owner of Sandhill warning h im that if the promotion was not stopped the kiosks would be seized as evidence and persons in possession of them
would be criminally prosecuted. Id. at 344 , 762 S.E.2d at 670. As a result of this letter, Sandhill remove d kiosks from two Onslow County lo cations and decide d not to

p lace kiosks in five other locations. Id.
Sandhill and Gift Surplus filed a law suit against the sheri ff and the district attorney 3 seeking a declaration that the promotion was “not prohibited gambl ing, lottery or gaming products” and an injunction against further enforcement action by
the defendants in relation to the promotion

. Id. at 344, 762 S.E.2d at 671. The sheriff

3 The plaintiffs subsequently dismissed the district attorney as a party to the action

.T & A A MUSEMENTS , LLC V

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- moved to dismiss under Rules 12(b)(1), (2), and (6) based in part on sovereig n immunity and the absence of a justiciable controversy

. The trial court denied the
motion to dis miss and entered a preliminary injunction barring the sheriff from initiating criminal action against the plaintiffs in connection with the promotion

. Id.

at 345, 762 S.E.2d at 671. In a divided opinion by this Court , the majority disagreed with the sheriff’s argument that the plaintiffs’ claims were barred by sovereign immunity , explaining
that because “the declaratory judgment procedure is the only method b y which Plaintiffs have recourse to protect their property interests in the kiosks, we hold that

. . . sovereign immunity did not bar Plaintiffs’ claim for injunctive relief.” Id. at 351,
762 S.E.2d at 675. After further determining that the plaintiffs h ad shown the existence of a just ic i able controversy , the majority considered the merits of the appeal
and ultimately affirmed in part and vacated in part the preliminary injunction that
the trial court had issued

. Id. at 357, 762 S.E.2d at 679.
The dissenting judge filed a separate opinion stating his agreement with the majority’s determination of the immunity and justiciability issue s but concluding that
the preliminary injunction should be vacated in its entire t y because the plaintiffs had
failed t o demonstrate a likelihood that they would ultimately be able to prove that
the promotion did not violate North Carolina’s sweepstakes statute. Id. a t 358, 762
S.E.2d at 679 ( Ervin, J., dissenting ).T & A A MUSEMENTS , LLC V

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- The State appealed to our Supreme Court, which r eversed the majority in a per curiam opinion “[f]or the reasons stated in the dissenting opinion[.]” Sandhill
Amusements , 368 N.C. at 91, 773 S.E.2d at 56. Accordingly, the determination that sovereign immunity did no t bar the plaintiffs’ claims

— which was agreed to by both the majority and the dissent and was left undisturbed by the Supreme Court

— continues to have precedential value and serves to foreclose Defendants’ sovereign immunity argument in the present case.
Defendant s argue , in the alternative, that even if sovereign immunity does not
serve as an absolute bar to this type of lawsuit , they are nevertheless entitled to immunity based on Plaintiffs ’ failure to expressly plead a waiver. See Can Am S.,
LLC v. State , 234 N.C. App. 119, 125, 759 S.E.2d 304, 309 (“ Sovereign immunity is not merely a defense to a cause of action; it is a bar to actions that requires a plaintiff to establish a waiver of immunity. ” (citation omitted)) , disc. review denied , 367 N.C. 791, 766 S.E.2d 624 (2014)

. Citing Phi lli

ps v. Orange C ounty Health Dep artment , 237 N.C. App. 249, 765 S.E.2d 811 (2014) , Plaintiffs respond by contending that because sovereign immunity does not apply at all in this context, it is illogical to require them to have pled a waiver of such immunity. See id. at 256

- 57, 765 S.E.2d at 817 (“It is true that plaintiffs failed to allege that [ the defendant] had waived

. . . immunity in their complaint.

. . .T & A A MUSEMENTS , LLC V

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- Although defendant enjoys

. . . immunity, such immunity does not bar the claims brought by plaintiffs in the instant case. Therefore, this argument is overruled. ”). However, we need not resolve th is issue because even assuming

— without deciding

— that such a pleading requirement existed, Plaintiffs met that burden in

paragra ph 89 of their amended complaint by alleging that “De fendants are not entitled to sovereign immunity . . . .” While Defendant s argue that the waiver language contained in this paragraph was legally insufficient because it failed to plead with specificity a recognized exception to sovereign immunity, we have previously held that “precise language alleging that the State has waived the defense of sovereign immunity is not necessary, but, rather, the complaint need only contain sufficient allegations to provi de a reasonable forecast of waiver.” Can Am S ., 234 N.C. App. at 125, 759 S.E.2d at 309 (citation, quotation marks, and brackets omitted) ; see also Fabrikant v. Currituck Cty ., 174 N.C. App. 30, 38, 621 S.E.2d 19, 25 (2005) ( “ [A] s long as the complaint contains sufficient allegations to provide a reasonable forecast of waiver, precise language alleging that the State has waived the defense of sovereign immunity is not necessary. ”). 4 Accordingly, even if Plaintiffs were , in fact, r equired to specifically plead a waiver of Defendants’ sovereign immunity in their complaint, they met that burden

4 We note that at oral argument counsel for Defendants w ere unable to state precisely how such a waiver allegation should have been worded in Pl aintiffs’ pleadings in order to properly allege a waiver of sovereign immunity

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- because the above

- quote d language in paragraph 89 in conjunction with the substantive allegations in their amended complaint clearly served to “ provide a
reasonable forecast of waiver.” See Can Am S ., 234 N.C. App. at 1 25, 759 S.E.2d at 309 (citation and quotation marks omitted )

. Thus, we hold that the trial court erred in dismissing this acti on based on sovereign immunity.
II. Justiciability Plaintiffs also argue that the trial co urt erred i n dismissing this action
pursuant to Rule 12(b)(6) based on their failure to present a justiciable controversy

. 5 Pursuant to the North Carolina Declaratory Judgment Act, “[a] ny person
. . . whose rights, s tatus or other legal relations are affected by a statute

. . . may have determined any question of construction or validity arising under the

. . . statute

. . .

a nd obtain a declaration of rights, status, or other legal relations thereunder. ” N.C.
Gen. S tat. § 1

- 254 (2015). In construing this statute, the Supreme Court has explained that

[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 declaratory judgment should issue (1) when

5 While the trial court appears to have viewed Rule 12(b)(6) as the appropriate provision of Rule 12 under which to dismiss a claim on nonjusticiab i lity grounds , the failure to present a justiciable controversy is actually an issue of subject matter jurisdiction and, therefore, with in the scope of Rule 12(b)(1). See Sharpe v. Park Newspapers of Lumberton, Inc ., 317 N.C. 579, 584, 347 S.E.2d 25, 29 (1986) (“[I] n order for a co urt to have subject matter jurisdiction to render a declaratory judgment, an actual controversy must exist between the parties . . . .”); Yeager v. Yeager , 228 N.C. App. 562, 565, 746 S.E.2d 427, 430 (2013) (“[A] trial court does not have subject matter ju risdiction over a non

justiciable claim.”).T & A A MUSEMENTS , LLC V

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- 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 v. State , 361 N.C. 26, 33, 637 S.E.2d 876, 881 (2006) ( internal citations, quotatio n marks, and brackets omitted). The Supreme Court has also stated that

“ [p ] laintiffs are not required to sustain actual losses in order to make a test case; such a requirement would thwart the remedial purpose of the Declaratory Judgment Act.”
Charlotte

- Mecklenburg Hosp. A uth. , 336 N.C. at 214, 443 S.E.2d at 725 (citation,
quot ati on marks, and brackets omitted).
W e have addressed on several prior occasions the issue of whether justiciable
controversies existed under the Declaratory Judgment Ac t where plaintiffs alleged that law enforcement agencies were improperly seeking to prohibit them from offering promotional rewards programs. Most recently, in Sandhill Amusements

— as discussed above

— a disagreement existed between the plaintiffs and the sheriff , the district attorney , and ALE regarding the legality of the kio sks that Gift Surplus
licensed and S andhill distributed to retail stores

. Sandhill Amusements , 236 N.C. App. at 356, 762 S.E.2d at 678. The controversy culminated in the sheriff an d district attorney sending the owner of Sandhill a letter threatening enforcement action

. Id.
T he majority in this Court h eld that a justiciable controversy existed given that
the plaintiffs’ allegations centered on “whether the kiosks at issue were illegal and the uncertainty concerning the legality of these kiosks ultimately impacts Plaintiffs’T & A A MUSEMENTS , LLC V

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- ability to operate a business going forward.” Id. at 357, 762 S.E.2d at 678. As further support for its conclusion that the plaintiffs’ claims were justiciable, the majority
noted that the “ P laintiffs alleged in their complaint that, since Sheriff Brown issued
the

. . . letter [threatening criminal action] , existing retail outlets that used Plaintiffs’ products had removed the kiosks or chosen not to use the kiosks due to the uncertainty surrounding their legality.” Id. 6 In making this determination, the majority relied upon our decision in American Treasures, Inc. v. State , 173 N.C. App. 170, 617 S.E.2d 346 (2005) . In tha t

case, the plaintiff

, Treasured Arts, Inc. (“ Treasured Arts”) , was in the business of selling pre - paid long

- distance phone cards , which it distributed through convenience

stores

. Attached to each phone card was a free promotional “scratch

- off” game piece that allowed purchasers to win cash awards. Although t he State did not actually bring

— or even threaten

— enforcement action against Treasured Arts itself , Treasured Arts received reports that ALE agents were threating to revoke the alcoholic beverage licenses of convenience stores carrying its phone cards on the ground that the accompanying promotional scratch

- off game constituted illegal gambling

. Id. at 17 3

- 7 4, 617 S.E.2d at 348.

6 The dissent in Sandhill Amusements

— which, as noted above, was adopted by our Supreme Court

— stated its agreement with the majority’s holding regarding the justiciability of the plaintiffs’ claims. See id. a t 358, 762 S.E.2d at 679 (Ervin, J., dissenting).T & A A MUSEMENTS , LLC V

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- The plaintiff brought a n action for declaratory and injunctive relief against the Governor, the Department of Crime Control and Public Safety, and ALE to determine the legality of the promotion. The t rial court entered an order declaring that the promotion did not constitute illegal gambling and enjoining the defendant s fr om interfer ing with the alcohol licenses or sale of Treasured Arts’ phone cards by
convenience stores

. Id. at 174, 617 S.E.2d at 349. On ap peal, this Court rejected the def endant s ’ argument that the plaintiffs had
failed to show a justiciable controversy

. We acknowledged that , as a general matter, “courts of equity are without jurisdiction to interfere by injunction to restrain a criminal prosecution for the violation of statutes

. . . whether it has been merely threatened or has already been commenced.” Id. at 175, 617 S.E.2d at 349 (citation, quotations marks, ellipses, and brackets omitted). However, citing our Supreme
Court’s decision in McCormick v. Proctor , 217 N.C. 23 , 6 S.E.2d 870 (1940) , we explain ed 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 irremed iable injuries to the rights of persons. ’ ” American Treasures , 173 N .C. App. at 175, 617
S.E.2d at 3 49 (quoting McCormick , 217 N.C. at 29, 6 S.E.2d at 874 )

. We ultimately concluded that the complaint in American Treasures presented

a justiciable controversy because “the declaratory judgment procedure is the only wayT & A A MUSEMENTS , LLC V

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- plaintiff can protect its property rights and prevent ALE from foreclosing the sale of its product in convenience stores.” Id. at 176, 617 S.E.2d at 350

. Moreover, we noted
that alth ough “[t]here is no indication in the record that a prosecution is pending against plaintiff,” the existence of a n actual prosecution was not necessary in order to present a justiciable controversy “in light of the State’s ability to curtail the sale of pl aintiff’s product by threatening retail stores with the loss of their alcohol licenses upon failure to cease such sales.” Id. 7 In the present case, Plaintiffs have presented a justiciable controversy for
reasons similar to those set forth in Sandhill Amus ements and American Treasures

. Plaintiffs are the licensor and distributor of the CO Rewards Program, which law
enforcement officers have determined to be in violat ion of North Carolina’s criminal
laws. M oreover, officers have threatened criminal enforce ment action against
establishments offering this promotion , and such threat s impede Plaintiffs’ ability to
license and distribute the p rogram. Therefore, the uncertainty as to whether the CO

7 There are a number of other reported decisions in which our appellate courts have reached the merits o f declaratory judgment claims involving the proper construction of North Carolina’s gambling statutes without first explicitly addressing the issue of justiciability. See, e.g. , Joker Club, L.L.C. v. Hardin , 183 N.C. App. 92 , 93 , 643 S.E.2d 626, 628 (2007) (declaratory judgment as to legality of poker club plaintiff planned to open); Collins Coin Music Co . of N. C. v. N. C. Alcoholic Beverage Control Comm’

n , 117 N.C. App. 405, 405, 451 S.E.2d 306, 307 (1994) (declaratory judgment regarding whether video games offered by plaintiff were illegal slot machines), disc. review denied , 340 N.C. 110, 456 S.E.2d 312 (1995); Animal Prot. Soc ’y of Durham, Inc. v. State , 95 N.C. App. 258, 262, 382 S.E.2d 801, 803 (1989) (declaratory and injunctive relief sought as to whether charitable sales promotion violated bingo s tatute). Defendants he re have failed to offer a ny valid explanation as to why the controversies existing in those cases were justiciable while the present action is not.T & A A MUSEMENTS , LLC V

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- Rewards Program violates North Carolina’s gambling and sweepstak es statutes

“ impacts Plaintiffs’ ability to operate a business going forward.” Sandhill
Amusements , 236 N.C. App. at 357, 762 S.E.2d at 678. Accordingly, we conclude that
because Plaintiffs have present ed a justiciable controversy , the trial court erred in granting Defendant s ’ motion s to dismiss on the ground of nonjusticiability

. 8
Conclusion For the reasons stated above, we reverse the trial court’s 19 November 2015 order and remand for further proceeding s not inconsistent with th is opinion.
REVERSED AND REMANDE D

. Judge s CALABRIA and TYSON concur.

8 We express no opinion on the ultimate issue in this litigation as to whether the CO Rewards Program is le gal under North Carolina law

.