Case Name: SANDHILL AMUSEMENTS, et al., Plaintiffs v. STATE OF NORTH CAROLINA; GOVERNOR BEVERLY PERDUE, in her official capacity; NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY, BRYAN E. BEATTY, in his official capacity; ALCOHOL LAW ENFORCEMENT DIVISION; DIRECTOR OF ALCOHOL ENFORCEMENT DIVISION, WILLIAM CHANDLER, in his official capacity, Defendants
Court: North Carolina Court of Appeals
Jurisdiction: North Carolina
Decision Date: 2012-03-06
Citations: 219 N.C. App. 362
Docket Number: No. COA11-301
Parties: SANDHILL AMUSEMENTS, et al., Plaintiffs v. STATE OF NORTH CAROLINA; GOVERNOR BEVERLY PERDUE, in her official capacity; NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY, BRYAN E. BEATTY, in his official capacity; ALCOHOL LAW ENFORCEMENT DIVISION; DIRECTOR OF ALCOHOL ENFORCEMENT DIVISION, WILLIAM CHANDLER, in his official capacity, Defendants
Judges: Judge McGEE concurs.
Reporter: North Carolina Court of Appeals Reports
Volume: 219
Pages: 362–369

Head Matter:
SANDHILL AMUSEMENTS, et al., Plaintiffs v. STATE OF NORTH CAROLINA; GOVERNOR BEVERLY PERDUE, in her official capacity; NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY, BRYAN E. BEATTY, in his official capacity; ALCOHOL LAW ENFORCEMENT DIVISION; DIRECTOR OF ALCOHOL ENFORCEMENT DIVISION, WILLIAM CHANDLER, in his official capacity, Defendants
No. COA11-301
(Filed 6 March 2012)
Gambling—sweepstakes—entertaining display—prohibition unconstitutional
An order dismissing a complaint that sought an injunction that its promotional sweepstakes did not violate any North Carolina gaming or gambling law was reversed where N.C.G.S. § 14-306.4, under which plaintiffs’ sweepstakes squarely fell, was held to be unconstitutional by Hest Technologies, Inc. v. State, No. COA11-459 (Filed 6 March 2012).
Judge HUNTER, Robert C. dissents.
Appeal by plaintiffs from order entered 29 November 2010 by Judge Paul C. Ridgeway in Wake County Superior Court. Heard in the Court of Appeals 25 October 2011.
Daughtry, Woodard, Lawrence & Starling, by Kelly K. Daughtry, for plaintiff-appellants.
Attorney General Roy Cooper, by Assistant Solicitor General John F. Maddrey and Special Deputy Attorney General Hal F. Askins, for defendant-appellees.

Opinion:
CALABRIA, Judge.
Sandhill Amusements, Inc., Carolina Industrial Supplies, J & F Amusements, Inc., J & J Vending, Inc., Matthews Vending Co., Patton Brothers, Inc., Trent Brothers Music Co., Inc., S & S Music Co., Inc., Old North State Amusements, Inc., and Uwharrie Fuels LLC (collectively "plaintiffs") appeal the trial court's order which granted defendants' motion to dismiss plaintiffs' complaint for failure to state a claim upon which relief could be granted and dissolved plaintiffs' preliminary injunction. We reverse.
Plaintiffs sell long distance telephone time in retail establishments throughout North Carolina. Plaintiffs' product is marketed through the use of a promotional sweepstakes system.
When plaintiffs' customers make a qualifying purchase of plaintiffs' products, they receive one or more sweepstakes entries. Alternatively, individuals may enter plaintiffs' sweepstakes without purchasing any of plaintiffs' products by completing an entry form available at each retail location. Free entries axe not treated any differently than entries accompanying a purchase.
After distributing the sweepstakes entry, the owner or employee of the retail establishment activates a "sweepstakes terminal" on which the sweepstakes player can play a video game. The video game reveals whether the consumer has won the sweepstakes prize.
On 18 March 2009, plaintiffs initiated a declaratory judgment action against defendants in Wake County Superior Court. Plaintiffs sought a declaration that its promotional sweepstakes did not violate any North Carolina gaming or gambling laws which were in effect at that time. Plaintiffs also sought injunctive relief to prevent defendants from attempting to enforce those laws against plaintiffs' sweep stakes systems. On 2 July 2009, plaintiffs obtained a preliminary injunction prohibiting defendants from taking any enforcement action against plaintiffs for the possession, use, or operation of the sweepstakes system. After the injunction was entered, plaintiffs continued to conduct their promotional sweepstakes.
On 20 July 2010, the North Carolina General Assembly enacted House Bill 80. This legislation amended the North Carolina General Statutes to include a provision which prohibited conducting or promoting any sweepstakes which utilized an "entertaining display." 2010 N.C. Sess. Laws 103 (codified as amended at N.C. Gen. Stat. § 14-306.4 (2011)). Plaintiffs' sweepstakes systems fell squarely within the ambit of the new N.C. Gen. Stat. § 14-306.4.
In response to the enactment of House Bill 80, plaintiffs amended their original complaint to include an allegation that N.C. Gen. Stat. § 14-306.4 was unconstitutional and, in the alternative, that plaintiffs were being selectively prosecuted. On 19 November 2010, defendants filed a motion to dismiss plaintiffs' complaint for failure to state a claim upon which relief could be granted pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. Defendants argued that N.C. Gen. Stat. § 14-306.4 was "constitutional in all respects" and that plaintiffs' sweepstakes operations were in violation of that law.
On 29 November 2010, the trial court conducted a hearing on defendants' motion. At the conclusion of the hearing, the trial court determined that N.C. Gen. Stat. § 14-306.4 was constitutional, dismissed plaintiffs' complaint in its entirety, and dissolved plaintiffs' preliminary injunction. The trial court entered a written order memorializing its decision that same day. Plaintiffs appeal.
In a decision filed today in Hest Technologies, Inc. v. State, No. COA11-459, _ N.C. App. _, _ S.E.2d _ (2012), this Court held that "the portion of N.C. Gen. Stat. § 14-306.4 which criminalizes the dissemination of a sweepstakes result through the use of an entertaining display must be declared void, as it is unconstitutionally over-broad." Since N.C. Gen. Stat. § 14-306.4 has been declared void as unconstitutionally overbroad, the trial court's order in the instant case must be reversed.
Reversed.
Judge McGEE concurs.
Judge HUNTER, Robert C. dissents by separate opinion.