NH Lottery Commission v. Rosen ( 2021 )

United States Court of Appeals
For the First Circuit
No. 19-1835
NEW HAMPSHIRE LOTTERY COMMISSION;
NEOPOLLARD INTERACTIVE LLC; POLLARD BANKNOTE LIMITED,
Plaintiffs, Appellees,
v.
JEFFREY ROSEN, Acting U.S. Attorney General;*
UNITED STATES DEPARTMENT OF JUSTICE; UNITED STATES,
Defendants, Appellants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Paul J. Barbadoro, U.S. District Judge]
Before
Lynch and Kayatta,
Circuit Judges.**
Jeffrey E. Sandberg, Attorney, Appellate Staff, Civil
Division, U.S. Department of Justice, with whom Ethan P. Davis,
Principal Deputy Assistant Attorney General, Hashim M. Mooppan,
Deputy Assistant Attorney General, and Scott R. McIntosh,
* Pursuant to Federal Rule of Appellate Procedure 43(c)(2),
Acting Attorney General Jeffrey Rosen has been substituted for
former Attorney General William P. Barr.
** Judge Torruella heard oral argument in this matter and
participated in the semble, but he did not participate in the
issuance of the panel's opinion in this case. The remaining two
panelists therefore issued the opinion pursuant to 28 U.S.C.
§ 46(d).
Attorney, Appellate Staff, Civil Division, were on brief, for
appellants.
Anthony J. Galdieri, Senior Assistant Attorney General, Civil
Bureau, with whom Gordon J. MacDonald, Attorney General, was on
brief, for appellee New Hampshire Lottery Commission.
Matthew D. McGill, with whom Theodore B. Olson, Lochlan F.
Shelfer, Joshua M. Wesneski, Debra Wong Yang, and Gibson, Dunn &
Crutcher LLP were on brief, for appellees NeoPollard Interactive
LLC and Pollard Banknote Limited.
Charles J. Cooper, David H. Thompson, Brian W. Barnes, J.
Joel Alicea, Nicole Frazer Reaves, and Cooper & Kirk, PLLC on brief
for Coalition to Stop Internet Gambling and National Association
of Convenience Stores, amici curiae.
Jonathan F. Cohn, Peter D. Keisler, Joshua J. Fougere,
Daniel J. Hay, Derek A. Webb, and Sidley Austin LLP on brief for
International Game Technology PLC, amicus curiae.
A. Jeff Ifrah, Andrew J. Silver, and Ifrah PLLC on brief for
iDevelopment and Economic Association, amicus curiae.
Kevin F. King, Rafael Reyneri, and Covington & Burling LLP,
on brief for Association of Gaming Equipment Manufacturers, amicus
curiae.
A. Michael Pratt, Elliot H. Scherker, Nicole Leonard Cordoba,
Greenberg Traurig, LLP and Greenberg Traurig, P.A. on brief for
The Commonwealth of Pennsylvania, amicus curiae.
Glenn J. Moramarco, Assistant Attorney General, John T.
Passante, Deputy Attorney General, and Gurbir S. Grewal, Attorney
General of New Jersey, on brief for the State of New Jersey, amicus
curiae.
Dana Nessel, Michigan Attorney General, Fadwa A. Hammoud,
Solicitor General, Melinda A. Leonard, Mark G. Sands, Donald S.
McGehee, Assistant Attorneys General, Jason Ravnsborg, Attorney
General, State of South Dakota, Dave Yost, Attorney General, State
of Ohio, Kathleen Jennings, Attorney General, State of Delaware,
Joshua H. Stein, Attorney General, State of North Carolina, Mark
R. Herring, Attorney General of Virginia, T.J. Donovan, Attorney
General, State of Vermont, Kevin G. Clarkson, Attorney General,
State of Alaska, Josh Kaul, Attorney General, State of Wisconsin,
Mary R. Harville, Senior Vice President, General Counsel &
Corporate Secretary, Kentucky Lottery Corporation, Phil Weiser,
Attorney General, State of Colorado, Keith Ellison, Attorney
General, State of Minnesota, Lawrence G. Wasden, Attorney General
of Idaho, Valerie Morozov, Legal Counsel, Rhode Island Dept. of
Revenue, Division of Lottery, William Tong, Attorney General of
Connecticut, Karl A. Racine, Attorney General for the District of
Columbia, Brian E. Frosh, Attorney General of Maryland, Alonda W.
McCutcheon, General Counsel, Tennessee Education Lottery
Corporation, on brief for the State of Michigan, Michigan Bureau
of State Lottery, and South Dakota, Ohio, Delaware, North Carolina,
Virginia, Vermont, Alaska, Wisconsin, Colorado, Minnesota, Idaho,
Connecticut, District of Columbia, Maryland, the Rhode Island
Department of Revenue, Division of Lottery, the Kentucky Lottery
Corporation, and the Tennessee Education Lottery Corporation,
amici curiae.
January 20, 2021
KAYATTA, Circuit Judge. In 2018, the Office of Legal
Counsel ("OLC") of the U.S. Department of Justice ("DOJ") issued
a legal opinion, adopted by DOJ, that all prohibitions in the Wire
Act of 1961, save one, apply to all forms of bets or wagers (the
"2018 Opinion"). The 2018 Opinion superseded an OLC opinion from
2011 concluding that the Wire Act's prohibitions were uniformly
limited to sports gambling (the "2011 Opinion"). Suffice it to
say, the more expansive construction of the Wire Act adopted in
2018 caused great consternation among the many states and their
vendors who, as the 2018 Opinion acknowledged, had "beg[u]n selling
lottery tickets via the Internet after the issuance of [the] 2011
Opinion." Not eager to scrap or shrink its lottery, the New
Hampshire Lottery Commission and one of its vendors, NeoPollard,1
commenced this action in February 2019, seeking relief under the
Declaratory Judgment Act and the Administrative Procedure Act.
The district court granted both requests, ruling that the Wire Act
is limited to sports gambling, as OLC initially opined.
The Attorney General, DOJ, and the United States
(collectively "the government") appealed the district court's
judgment. For the following reasons, we hold that the controversy
1 We refer to both Plaintiffs NeoPollard Interactive LLC and
its fifty-percent owner, Pollard Banknote Limited, collectively as
"NeoPollard."
– 4 –
before us is justiciable and that the Wire Act's prohibitions are
limited to bets or wagers on sporting events or contests. We
depart from the district court only by deciding that relief under
the Declaratory Judgment Act alone is sufficient.
I.
A.
In 1961, Congress passed the Wire Act. See 18 U.S.C.
§ 1084 (codifying Pub. L. No. 87-216, § 2, 75 Stat. 491, 491
(1961)). The subsection relevant for our purposes,
section 1084(a), reads:
Whoever being engaged in the business of
betting or wagering knowingly uses a wire
communication facility for the transmission in
interstate or foreign commerce of bets or
wagers or information assisting in the placing
of bets or wagers on any sporting event or
contest, or for the transmission of a wire
communication which entitles the recipient to
receive money or credit as a result of bets or
wagers, or for information assisting in the
placing of bets or wagers, shall be fined
under this title or imprisoned not more than
two years, or both.
The question the parties present to us is whether the
phrase "on any sporting event or contest" (the "sports-gambling
qualifier") qualifies the term "bets or wagers" as used throughout
section 1084(a).
Although Congress enacted the Wire Act in 1961, this
question seems not to have raised its head until after a
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substantial amount of commerce had moved to the internet four
decades later. In 2002, the Fifth Circuit opined in a private
civil suit that "[a] plain reading of the statutory language [of
the Wire Act] clearly requires that the object of the gambling be
a sporting event or contest." In re MasterCard Int'l Inc., 313
F.3d 257, 262 n.20 (5th Cir. 2002) (second alteration in original)
(quoting In re MasterCard Int'l Inc., Internet Gambling Litig.,
132 F. Supp. 2d 468, 480 (E.D. La. 2001)). In May 2005, the Deputy
Assistant Attorney General of DOJ's Criminal Division begged to
differ, issuing a letter to inform the Illinois Lottery
Superintendent that DOJ believed that prospective legislation
pending in the Illinois Senate to create a website where people
could purchase lottery tickets over the internet would violate
section 1084. DOJ explained its view that, although the purchase
of lottery tickets might be lawful in Illinois, "the acceptance of
wagers through the use of a wire communication facility by a
gambling business, including [one] operated by . . . a state, from
individuals located . . . within the borders of the state (but
where transmission is routed outside of the state) would violate
federal law." The letter equated the sale of lottery tickets with
the acceptance of wagers and deemed the interstate transmission of
such wagers violative of the Wire Act regardless of whether they
were placed on sporting events or contests.
– 6 –
Four years later, in December 2009, authorities from New
York and Illinois requested the views of DOJ's Criminal Division
on the legality of the states' plans to use the internet and
out-of-state transaction processing systems to sell lottery
tickets to adults within their states. The states pointed out
that their proposals had been designed to comport with the Unlawful
Internet Gambling Enforcement Act ("UIGEA"), 31 U.S.C. §§ 5361-
5367, and argued that the Wire Act did not bar their proposed
systems because section 1084(a) was limited to sports-related
gambling. In response, and in keeping with its 2005 letter to
Illinois, the Criminal Division opined that section 1084(a) was
not so limited and that the Act would prohibit the use of the
internet to transmit bets or wagers of any kind, even if the
transactions originated and ended within a single state. The
Criminal Division nevertheless noted the tension that this reading
of the statute created with the UIGEA, which explicitly excludes
from its prohibition of "unlawful Internet gambling" the "placing,
receiving, or otherwise transmitting a bet or wager where . . .
the bet or wager is initiated and received or otherwise made
exclusively within a single State," 31 U.S.C. § 5362(10)(B),
despite "[t]he intermediate routing of electronic data" through
other states, id. § 5362(10)(E). The Criminal Division noted the
"potential oddity" whereby the Wire Act's reference to "the use of
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interstate commerce" would criminalize otherwise lawful state-run,
in-state lottery transactions. For these reasons, the Criminal
Division sought guidance from OLC on whether the use of the
internet for in-state lottery sales with out-of-state processing
violated the Wire Act.
In its 2011 Opinion, OLC agreed with the Fifth Circuit,
concluding that "the Wire Act does not reach interstate
transmissions of wire communications that do not relate to a
'sporting event or contest'" and ultimately concluded that the
states' lottery-related proposals did not violate the Wire Act.
See Whether the Wire Act Applies to Non-Sports Gambling, 35 Op.
O.L.C. 134, 151 (2011) ("2011 Opinion").
So matters stood until 2017, when the Criminal Division
asked OLC to reconsider its position, which OLC did in a formal
opinion published in November 2018, superseding and replacing the
2011 Opinion. See Reconsidering Whether the Wire Act Applies to
Non-Sports Gambling, 42 Op. O.L.C. __, at *23, 2018 WL 7080165, at
*14 (Nov. 2, 2018) ("2018 Opinion").2 In the 2018 Opinion, OLC
2 Unlike in the 2011 Opinion, the Criminal Division's reasons
for requesting OLC's advice are not detailed in the 2018 OLC
Opinion itself. See 2018 Opinion at *1-2, 2018 WL 7080165, at *1.
NeoPollard's complaint states that news sources had reported that
OLC's 2018 Opinion came on the heels of lobbying efforts by the
Coalition to Stop Internet Gambling, an organization participating
as amicus curiae on behalf of the government in this case. See
Byron Tau & Alexandra Berzon, Justice Department's Reversal on
– 8 –
found the statutory language in section 1084(a) unambiguous and
its prohibitions plainly not limited to sports gambling, save for
the second prohibition contained in the first clause, which bars
"us[ing] a wire communication facility for the transmission in
interstate or foreign commerce of . . . information assisting in
the placing of bets or wagers on any sporting event or contest."
Id. at *2, *14, 2018 WL 7080165, at *1, *9 (quoting 18 U.S.C.
§ 1084(a)).3 OLC justified its reversal on the grounds that the
2011 Opinion did not devote adequate attention to either the text
of the statute or the canons of statutory construction, was "of
relatively recent vintage," and departed from DOJ's former
position. Id. at *21—22, 2018 WL 7080165, at *13. The 2018
Opinion noted that some reliance interests would be affected:
"Some States, for example, began selling lottery tickets via the
Internet after the issuance of our 2011 Opinion." Id. at *22,
2018 WL 7080165, at *14. But OLC concluded that "such reliance
interests [we]re [in]sufficient to justify continued adherence to
the 2011 opinion." Id. at *23, 2018 WL 7080165, at *14.
Online Gambling Tracked Memo from Adelson Lobbyists, Wall St. J.
(Jan. 18, 2019), https://www.wsj.com/articles/justice-
departments-reversal-on-online-gambling-tracked-memo-from-
adelson-lobbyists-11547854137.
3 The 2018 Opinion also found that the UIGEA, which Congress
enacted in 2006, did not modify or otherwise alter section 1084(a).
2018 Opinion at *18, 2018 WL 7080165, at *12.
– 9 –
In a subsequently issued memorandum, the Deputy Attorney
General instructed DOJ attorneys to "adhere to OLC's
interpretation, which represents the Department's position on the
meaning of the Wire Act." Rod Rosenstein, U.S. Dep't of Just.,
Applicability of the Wire Act, 18 U.S.C. § 1084, to Non-Sports
Gambling (2019) ("January 2019 Memo"). Addressing the reliance
interests, the memo stated:
As an exercise of discretion, Department of
Justice attorneys should refrain from applying
Section 1084(a) in criminal or civil actions
to persons who engaged in conduct violating
the Wire Act in reliance on the 2011 OLC
opinion prior to the date of this memorandum,
and for 90 days thereafter. A 90-day window
will give businesses that relied on the 2011
OLC opinion time to bring their operations
into compliance with federal law. This is an
internal exercise of prosecutorial
discretion; it is not a safe harbor for
violations of the Wire Act.
Id. DOJ subsequently extended the forbearance period several
times, most recently until December 1, 2020.
After this lawsuit commenced, the Deputy Attorney
General issued yet another memorandum, this time stating that the
2018 Opinion in fact "did not address whether the Wire Act applies
to State lotteries and their vendors" but that DOJ was "now
reviewing that question." Rod Rosenstein, U.S. Dep't of Just.,
Notice Regarding Applicability of the Wire Act, 18 U.S.C. § 1084,
to State Lotteries and Their Vendors (2019) ("April 2019 Memo").
– 10 –
Accordingly, DOJ granted a separate ninety-day forbearance period
specific to state lotteries and their vendors, which will begin
when DOJ publicly announces its position on the applicability of
the Wire Act to them. DOJ has not yet made such an announcement.
B.
Government-run lotteries apparently harken at least as
far back as colonial America, where the lottery "flourished as a
substitute for conventional methods of public and private
finance." Nat'l Inst. of L. Enf't & Crim. Just., U.S. Dep’t of
Justice, The Development of the Law of Gambling: 1776–1976, at 660
(1977). Forty-eight states or territories currently operate
lotteries. New Hampshire is among them. Through its Lottery
Commission ("NHLC"), it runs a traditional retailer-based lottery
at 1,400 sites across the state. Its business does not involve
placing bets or wagers on sporting events or contests. The NHLC's
profits are earmarked for the state's Education Trust Fund. See
N.H. Const. pt. 2, art. 6-b; N.H. Rev. Stat. Ann. § 284:21-j. In
the 2018 fiscal year, the NHLC contributed $87.2 million to this
fund. 4 All of the NHLC's lottery-related activities use the
4 Many other states, represented as amici in this case, rely
on substantial profits earned from lotteries that operate like New
Hampshire's. The Michigan Bureau of State Lottery along with
forty-six other government-operated lotteries collectively
generated more than eighty billion dollars in gross revenues in
2017, which went to fund a myriad of state programs.
– 11 –
internet or interstate wires. For its brick-and-mortar
operations, the state lottery relies on computer gaming and back-
office systems that manage lottery inventory and sales, which in
turn depend on out-of-state backup servers. Via its website and
various social media platforms, the NHLC communicates draw
results, advertises lottery games, and provides general
information.
After OLC issued the 2011 Opinion, New Hampshire began
operating its iLottery system, developed by NeoPollard. The
system allows players to engage in various types of games online.
Players pay for their wagers through an online account into which
they can deposit funds only when they are within the state's
borders. While the players themselves must be physically located
in New Hampshire for the entirety of the transaction, intermediate
routing of data or information ancillary to the transaction may
cross state lines.
The iLottery system is projected to generate six to eight
million dollars in revenue for New Hampshire in fiscal year 2021.
The NHLC predicts sales would drop precipitously if it could not
rely on the internet for its operations. It estimates its
withdrawal from multi-jurisdictional games like "Powerball" alone
would cost the state forty million dollars per year in education
funding. Without further guidance from DOJ, the NHLC expects
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banks to become unwilling to accept and process iLottery
transactions.
For its part, NeoPollard has invested tens of millions
of dollars into building its iLottery system, which it has also
configured for deployment in Michigan and Virginia.5 NeoPollard
claims that "the only way to ensure full compliance with the
interpretation of the Wire Act outlined in the . . . [2018 Opinion]
is to suspend the entirety of its iLottery operations in New
Hampshire, costing NeoPollard millions of dollars in investment-
backed expectations and player goodwill." If it continues to
operate iLottery in New Hampshire, "NeoPollard believes . . . it
faces imminent prosecution."
C.
On February 15, 2019, the NHLC filed its complaint
against the government along with a motion for summary judgment.
The NHLC requested a declaratory judgment that the Wire Act does
not extend to state-conducted lottery activities, an order setting
5
Other states, appearing before us as amici, have expanded
their online platforms further, legalizing and licensing
additional forms of online gambling. New Jersey, for example, has
rolled out the online gambling platform, iGaming. New Jersey
notes that from 2013 through 2016 the iGaming platform generated
$998.3 million in sales and $124.4 million in tax revenue.
Meanwhile, Pennsylvania represents that, because of the 2018
Opinion, it scaled back its online gaming infrastructure, leading
to an estimated one billion dollars in lost revenue for the state.
– 13 –
aside the 2018 Opinion pursuant to the Administrative Procedure
Act ("APA"), 5 U.S.C. § 706(2)(A), and injunctive relief. The
NHLC advanced two basic arguments: (1) the prohibitions of
section 1084(a) do not even apply to states; and (2) section 1084
is limited to sports gambling and thus does not extend to state-
conducted lottery activity.
On the same day the NHLC filed suit, NeoPollard also
filed a complaint and a concurrent motion for summary judgment.
NeoPollard sought a judgment declaring that the Wire Act is limited
to gambling on sporting events. The district court consolidated
the cases.6
The government moved to dismiss the complaint for lack
of standing and for failure to state a claim. See Fed. R. Civ.
6The district court denied motions from the iDevelopment
and Economic Association and the Commonwealth of Pennsylvania to
intervene as plaintiffs, as well as from the Coalition to Stop
Internet Gambling and the National Association of Convenience
Stores which sought to intervene as defendants, though the district
court allowed them to participate as amici curiae, along with the
State of New Jersey and the Michigan Bureau of State Lottery.
The Kentucky Lottery Corporation, the Tennessee Education
Lottery Corporation, the Virginia Lottery, the Rhode Island
Lottery, the Colorado State Lottery Division, the North Carolina
Education Lottery, the State of Delaware, the State of Idaho, the
State of Vermont, the State of Mississippi, the State of Alaska,
and the District of Columbia supported the Michigan Bureau of State
Lottery's memorandum of law, which in turn supported the
plaintiffs' motions for summary judgment.
– 14 –
P. 12(b)(1), (6). With the parties' consent, the district court
converted the motion into one for summary judgment. The
government, however, did not address the NHLC's argument that the
Wire Act does not even apply to states. Rather, in its reply
memorandum before the district court, the government attached the
Deputy Attorney General's April 2019 Memo, penned that same day,
which stated that the "[2018] OLC Opinion did not address whether
the Wire Act applies to State lotteries and their vendors" and
that DOJ was "now reviewing that question." April 2019 Memo.7
The April 2019 Memo also instructed DOJ attorneys to "refrain from
applying Section 1084(a) to State lotteries and their
vendors . . . until the Department concludes its review,"
following which states would have ninety days to conform their
operations to federal law. Id. Nevertheless, upon inquiry by the
district court, the government argued orally that states are
subject to the prohibitions of the Wire Act.
The district court denied the government's motion,
instead granting summary judgment to the plaintiffs. After
concluding that the plaintiffs had Article III standing, the court
determined that the 2018 Opinion "constitute[d] final agency
7 Twenty months later, the DOJ has not yet completed its
review, explaining at oral argument that it has had other
priorities.
– 15 –
action without an adequate alternative to APA review." N.H.
Lottery Comm'n v. Barr, 386 F. Supp. 3d 132, 146 (D.N.H. 2019).
The court also found that section 1084(a) applies only to bets or
wagers on sporting events or contests. Id. at 157. The court did
not address the NHLC's alternative argument that the Wire Act does
not apply to states. As for the remedy, the district court granted
the plaintiffs' request for declaratory relief and declared that
"§ 1084(a) of the Wire Act applies only to transmissions related
to bets or wagers on a sporting event or contest." Id. at 160.
It proceeded to "set aside" the erroneous 2018 Opinion under
section 706(2)(A) of the APA, as requested by the NHLC (and several
amici). Id. at 158–59. Finally, the court denied injunctive
relief. Id. at 159–60.
The government timely appealed. We have appellate
jurisdiction pursuant to 28 U.S.C. § 1291.
II.
A.
We first consider whether this case presents a
justiciable case or controversy. See U.S. Const. art. III, § 2.
Pre-enforcement review of a criminal statute implicates doctrines
of standing, ripeness, and (sometimes) mootness. This court
– 16 –
reviews these threshold questions de novo. Mangual v. Rotger-
Sabat, 317 F.3d 45, 56 (1st Cir. 2003).
1.
"The doctrine of standing gives meaning to the[]
constitutional limits [of Article III] by 'identify[ing] those
disputes which are appropriately resolved through the judicial
process.'" Susan B. Anthony List v. Driehaus, 573 U.S. 149, 157
(2014) ("SBA List") (third alteration in original) (quoting Lujan
v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)).
The burden lies with the plaintiff to show an injury in
fact that is "fairly traceable to the challenged action" and that
likely "will be redressed by a favorable decision." Massachusetts
v. U.S. Dep't of Health & Hum. Servs., 923 F.3d 209, 221–22 (1st
Cir. 2019) (quoting Lujan, 504 U.S. at 560). This case primarily
concerns the injury-in-fact requirement, there being no question
that injury, if any, can be traced directly to the government's
threatened enforcement of the Wire Act and can be redressed in
this action. See, e.g., SBA List, 573 U.S. at 158. To satisfy
standing, the injury in fact "must be concrete and particularized
and actual or imminent, not conjectural or hypothetical." Reddy
v. Foster, 845 F.3d 493, 500 (1st Cir. 2017) (internal quotation
marks omitted) (quoting SBA List, 573 U.S. at 158). "[A] future
injury" is imminent "if the threatened injury is certainly
– 17 –
impending, or [if] there is a substantial risk that the harm will
occur." Id. (second alteration in original) (internal quotation
marks omitted) (quoting SBA List, 573 U.S. at 158).
"In certain circumstances, 'the threatened enforcement
of a law' may suffice as an 'imminent' Article III injury in fact."
Id. (quoting SBA List, 573 U.S. at 158–59). "When an individual
is subject to such a threat, an actual arrest, prosecution, or
other enforcement action is not a prerequisite to challenging the
law." SBA List, 573 U.S. at 158 (first citing Steffel v.
Thompson, 415 U.S. 452, 459 (1974); and then citing MedImmune,
Inc. v. Genentech, Inc., 549 U.S. 118, 128–29 (2007)). We do not
"require a plaintiff to expose himself to liability before bringing
suit to challenge the basis for the threat." MedImmune, 549 U.S.
at 129. Although a plaintiff must demonstrate a "specific threat
of prosecution . . . , just how clear the threat of prosecution
needs to be turns very much on the facts of the case and on a
sliding-scale judgment that is very hard to calibrate." N.H. Hemp
Council, Inc. v. Marshall, 203 F.3d 1, 4–5 (1st Cir. 2000).
The plaintiffs here satisfy the injury-in-fact
requirement. It is uncontested that the plaintiffs use wire
communication facilities for the interstate transmission of bets
and wagers in the running of the New Hampshire lottery and iLottery
platform. The 2018 Opinion, which adopted a broad reading of
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activities prohibited by section 1084(a), expressly mentions such
lotteries, suggesting that Congress need amend the statute if it
wishes to protect reliance interests, including those of the
states. Removing any doubt regarding the enforcement of its new
view, DOJ's subsequent memoranda made clear that DOJ attorneys
must "adhere" to that view, and that any discretionary forbearance
was limited to a brief window of time.
We know, too, that when DOJ attorneys last held the view
expressed in the 2018 Opinion (between 2005 and 2011), DOJ had
prosecuted seventeen cases involving non-sports betting under the
Wire Act. That history of past enforcement against the same
conduct supports a finding of injury in fact for pre-enforcement
standing. See SBA List, 573 U.S. at 164 (finding that history of
"past enforcement against the same conduct is good evidence that
the threat of enforcement is not 'chimerical'" and therefore
reflects a substantial risk of harm (quoting Steffel, 415 U.S. at
459)). While the government points out that none of those pre-
2011 enforcement actions were brought against state lotteries, the
government has not articulated any reason why this is a distinction
that makes a difference. As NeoPollard puts it, the 2018 Opinion
did not "expressly state that it applies in northeastern states or
that it applies to corporations whose names end in 'd,' either,
but [DOJ] has given no reason to think that being a [lottery]
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vendor is any more useful a defense" against enforcement under the
government's reading of the statute.
In any event, the lack of current prosecutions against
state lotteries is not dispositive. See R.I. Ass'n of Realtors
v. Whitehouse, 199 F.3d 26, 32 (1st Cir. 1999). As evidenced by
DOJ's other prosecutions of non-sports betting, "the record
contains no realistic basis for a suggestion that the statutory
provision . . . has fallen into desuetude." Id. Here, DOJ
affirmatively warned a state that it believed selling lottery
tickets over the internet violated the Wire Act and, in the lead-
up to the 2011 Opinion, provided similar advice to inquiring
authorities from two states.
The government alternatively argues that even if DOJ had
effectively announced that the Wire Act applies to state lotteries,
that would not lead to a credible threat of prosecution against
New Hampshire's lottery specifically. We disagree, and our prior
decision in Hemp Council offers a helpful illustration.
There, Derek Owen, a New Hampshire state legislator, had
sought to pass a bill that would allow cultivation of "industrial
hemp" from the cannabis sativa plant. Hemp Council, 203 F.3d at
3. An official from the U.S. Drug Enforcement Administration
("DEA") testified during a hearing on the bill that the DEA viewed
the cultivation of cannabis sativa plants, regardless of the
– 20 –
grower's purpose, as the illegal manufacture of marijuana under
federal law. Id. After the bill was defeated, Owen and the New
Hampshire Hemp Council sought a declaratory judgment that
interpreted the Controlled Substances Act, 21 U.S.C. § 841(a)(1),
as not criminalizing "non-psychoactive" cannabis sativa. Id. at
3–4. This court found pre-enforcement standing because the DEA
had expressed its view that the conduct Owen sought to engage in
violated federal law. Id. at 5; accord Monson v. U.S. Drug Enf't
Admin., 589 F.3d 952, 958 (8th Cir. 2009).
The government attempts to distinguish Hemp Council
because here there is no history of prosecuting state lotteries.
But this court did not require the Hemp Council plaintiffs to prove
that Owen or industrial hemp producers more generally had been
previously prosecuted. 203 F.3d at 5; see also Blum v. Holder,
744 F.3d 790, 798 n.11 (1st Cir. 2014) (noting "the assumption
that the state will enforce its own non-moribund criminal laws,
absent evidence to the contrary"). Accordingly, we find the
situation before us analogous to Hemp Council, except that, unlike
in Hemp Council, the plaintiffs here have been openly engaging in
the conduct deemed criminal by OLC. The plaintiffs already have
it all on the line, so to speak. See MedImmune, 549 U.S. at 134("The rule that a plaintiff must destroy a large building, bet the
farm, or . . . risk treble damages and the loss of 80 percent of
– 21 –
its business before seeking a declaration of its actively contested
legal rights finds no support in Article III.").
In a similar vein, the government argues that the
plaintiffs cannot prove standing (or ripeness) because, according
to it, the April 2019 Memo clarifies that DOJ has no position on
whether section 1084(a) applies to state lotteries and that DOJ
making up its mind on this question is an unsatisfied precondition
to enforcement. See Reddy, 845 F.3d at 502 (finding a precondition
to enforcement -- a third party demarcating a buffer zone -- was
a "contingent future event[] that might not occur as anticipated,
or indeed may not occur at all" (alteration in original) (quoting
Texas v. United States, 523 U.S. 296, 300 (1998))). The government
attempts to equate its newly professed uncertainty about the Wire
Act's application with an "unambiguous disclaimer of coverage,"
which can undermine standing in pre-enforcement cases. Hemp
Council, 203 F.3d at 5; see also, e.g., Blum, 744 F.3d at 799 ("For
its part, the Government has disavowed any intention to prosecute
plaintiffs for their stated intended conduct because, in its view,
that conduct is not covered by [the statute].").
The April 2019 Memo does not undermine the plaintiffs'
claim of standing. The April 2019 Memo leaves in place all
provisions of the 2018 Opinion and the January 2019 Memo, but
grants a separate forbearance period to the enforcement of
– 22 –
section 1084(a) against state lotteries, "until [DOJ] concludes
its review," from which date the plaintiffs will have only ninety
days within which to comply. The government vaguely alludes to
the additional questions that would arise from enforcing the Wire
Act against state lotteries instead of a wholly private business.
Yet, in the district court, the government "rejected the only
argument put forward by the Lottery Commission that states are not
covered by the [Wire] Act, and it . . . otherwise failed to
identify any alternative legal theory as to why state actors might
be exempt." N.H. Lottery Comm'n, 386 F. Supp. 3d at 143. Most
notably, the government sticks to its position that the Wire Act
is unambiguous in its application to non-sports betting, and offers
no hint as to why that supposedly unambiguous text would not apply
to, for example, a private actor such as NeoPollard.
The government exacerbates the threat posed by its
prolonged coyness by limiting its professed forbearance to ninety
days from whatever date it decides to opine. A state-wide
operation integrating over a thousand retailers and multi-state
relationships to produce almost 100 million dollars in net revenue
does not strike us as an operation that can be easily wound-up in
ninety days. Nor can a state legislature plan sensibly if such a
relied-upon revenue stream finds itself suddenly subject to a
three-month closure notice. On such a record, the government
– 23 –
"must proffer more than a conclusory assertion of inapplicability
to convince us that the [plaintiffs] no longer face[] a credible
threat of prosecution." R.I. Ass'n of Realtors, 199 F.3d at 35.
2.
We next turn to ripeness. While standing is concerned
with "who" is bringing the challenge, ripeness is concerned with
"when" the challenge is brought. See McInnis-Misenor v. Me. Med.
Ctr., 319 F.3d 63, 69–70 (1st Cir. 2003). In the pre-enforcement
context, however, the doctrines of standing and ripeness tend to
overlap, so the preceding discussion largely applies here too.
See SBA List, 573 U.S. at 157 n.5; R.I. Ass'n of Realtors, 199
F.3d at 33.
Ripeness analysis requires consideration of "fitness"
and "hardship."8 See Reddy, 845 F.3d at 501 (citing Texas v.
United States, 523 U.S. at 300–01). Fitness involves issues of
"finality, definiteness, and the extent to which resolution of the
8 The fitness prong has both jurisdictional and prudential
components, while the hardship prong is solely prudential. Reddy,
845 F.3d at 501 (citing Roman Cath. Bishop of Springfield v. City
of Springfield, 724 F.3d 78, 89–90 (1st Cir. 2013)). The Supreme
Court has expressed doubt about whether the doctrine of prudential
ripeness is consistent with the settled principle that a federal
court has a "virtually unflagging" obligation to hear and decide
cases within its jurisdiction. SBA List, 573 U.S. at 167 (quoting
Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S.
118, 125–26 (2014)). We need not weigh in on this issue though,
because, as we will explain, the plaintiffs here have satisfied
the fitness and hardship prongs. See id.– 24 –
challenge depends upon facts that may not yet be sufficiently
developed," while hardship "typically turns upon whether the
challenged action creates a direct and immediate dilemma for the
parties." R.I. Ass'n of Realtors, 199 F.3d at 33 (quoting Ernst
& Young v. Depositors Econ. Prot. Corp., 45 F.3d 530, 535 (1st
Cir. 1995)). In the pre-enforcement context, a party's "concrete
plans to engage immediately (or nearly so) in an arguably
proscribed activity" gives a "precise shape to disobedience" and
provides a "specific legal question fit for judicial review," and
a showing that a "challenged statute, fairly read, thwarts" those
plans can demonstrate hardship. Id.Having maintained in its January memorandum that its
temporary discretionary forbearance is not "a safe harbor for
violations of the Wire Act," the government now argues that this
case was unripe when filed and that the April 2019 Memo confirmed
it. We disagree. As we have explained above, there is a
"substantial controversy" over the meaning of the Wire Act, as it
applies to the plaintiffs, "of sufficient immediacy and reality" --
prompted by DOJ's decision to seek reversal of OLC's 2011 position
on the Wire Act and to adopt in full the 2018 Opinion -- "to
warrant the issuance of the judicial relief sought." Reddy, 845
F.3d at 500 (internal quotation marks omitted) (quoting Lab. Rels.
– 25 –
Div. of Constr. Indus. of Mass., Inc. v. Healey, 844 F.3d 318, 326
(1st Cir. 2016)).
New Hampshire and its vendors should not have to operate
under a dangling sword of indictment while DOJ purports to
deliberate without end the purely legal question it had apparently
already answered and concerning which it offers no reason to expect
an answer favorable to the plaintiffs. According to NeoPollard's
affidavit, it would be impossible for it to comply with the plain
language of the 2018 Opinion without entirely shutting down the
NHLC's iLottery platform. Given the unequivocal position in the
2018 Opinion, and the pre-2011 response given by DOJ to inquiring
states, we cannot see why the plaintiffs should be forced to sit
like Damocles while the government draws out its reconsideration.
See Hemp Council, 203 F.3d at 5–6.
3.
Finally, we agree with the district court that the April
2019 Memo did not moot the case. See N.H. Lottery Comm'n, 386 F.
Supp. 3d at 143. The April 2019 Memo does not rescind the
government's adoption of the 2018 Opinion, nor does it offer the
plaintiffs solace that the credible threat of prosecution has
subsided.9 DOJ is explicit that the forbearance period is not a
9 Citing Anderson v. Green, 513 U.S. 557, 559 (1995) (per
curiam), the government frames the issue as one primarily about
– 26 –
"safe harbor for violations of the Wire Act," but merely an
"internal exercise of prosecutorial discretion." January 2019
Memo; see also City of Los Angeles v. Lyons, 461 U.S. 95, 101
(1983); R.I. Ass'n of Realtors, 199 F.3d at 36 ("[T]he only thing
standing in the way of a criminal prosecution is the State's
litigation position that it will voluntarily refrain from
enforcing the statute according to its plain language." (quoting
N.C. Right to Life, Inc. v. Bartlett, 168 F.3d 705, 711 (4th Cir.
1999))); id. ("[T]he only practical way for the Attorney General
to assuage a reasonable fear of prosecution would be to disclaim,
in categorical terms, any intent to enforce the
prohibition . . . ."). The government refuses to disavow
prosecuting state lotteries and their vendors for the conduct they
currently engage in.
ripeness as opposed to mootness. The government argues that the
district court only considered the April 2019 Memo as to mootness
and not as to ripeness, which the government says was improper
since it maintains that there was never a credible threat of
enforcement of section 1084(a) against the plaintiffs (and
therefore nothing to moot). Whatever one makes of this argument,
the district court did consider the April 2019 Memo as to standing,
which it noted overlaps with ripeness in the pre-enforcement
context. N.H. Lottery Comm'n, 386 F. Supp. 3d at 141 n.5, 143.
We have made similar observations, and, having already detailed
why there was a credible threat of prosecution against the
plaintiffs, we see no need to entertain this argument further.
– 27 –
For the foregoing reasons, we find the plaintiffs'
pre-enforcement challenge justiciable and turn next to the merits
and the relief granted.
B.
Both NHLC and NeoPollard brought claims under the
Declaratory Judgment Act and the APA. Because we conclude that
the plaintiffs are entitled to declaratory relief, we focus first
on that claim before briefly addressing the disposition of the APA
claim.
1.
The Declaratory Judgment Act provides that "[i]n a case
of actual controversy within its jurisdiction, . . . any court of
the United States . . . may declare the rights and other legal
relations of any interested party seeking such declaration,
whether or not further relief is or could be sought." 28 U.S.C.
§ 2201. "In Declaratory Judgment Act cases where jurisdiction is
exercised based on a threat of future injury," as here, "the
potential injury is typically legal liability on a set of already
defined facts, so that the Act merely 'defin[es] procedure' to
enable judicial resolution of a case or controversy that might
otherwise be adjudicated at a different time or in a slightly
different form." In re Fin. Oversight & Mgmt. Bd. for P.R., 916
F.3d 98, 112 (1st Cir. 2019) (alteration in original) (quoting
– 28 –
Aetna Life Ins. Co. of Hartford v. Haworth, 300 U.S. 227, 240
(1937)). Having already explained why the current controversy is
justiciable, we see no abuse of discretion in the district court's
willingness to entertain and resolve this controversy. So we
pivot to the merits of that controversy, which turn entirely on a
question of statutory interpretation, calling for our de novo
review. See Hernández-Miranda v. Empresas Díaz Massó, Inc., 651
F.3d 167, 170 (1st Cir. 2011).
2.
The parties invite us to view the text of the Wire Act
as having two key clauses, each defining two prohibited uses of
wire communication facilities:
Clause One
The transmission in interstate or foreign
commerce of bets or wagers or information
assisting in the placing of bets or wagers on
any sporting event or contest (emphasis
added).
Clause Two
The transmission of a wire communication which
entitles the recipient to receive money or
credit as a result of bets or wagers, or for
information assisting in the placing of bets
or wagers.
The parties' disagreement trains on how broadly to apply
the prepositional phrase "on any sporting event or contest" that
appears at the end of Clause One. The government argues that the
– 29 –
phrase qualifies only the second use of "bets or wagers" in
Clause One. The plaintiffs contend that the phrase qualifies both
uses of "bets or wagers" in Clause One, and that the term "bets or
wagers" as used in Clause Two is shorthand for that qualified
meaning in Clause One.
"[T]he plain meaning of a statute's text must be given
effect," though "[w]e focus on 'the plain meaning of the whole
statute, not of isolated sentences'" or phrases. Colón-Marrero
v. Vélez, 813 F.3d 1, 11 (1st Cir. 2016) (quoting Arnold v. United
Parcel Serv., Inc., 136 F.3d 854, 858 (1st Cir. 1998)). Words in
a statute are not islands but "must be read in their context and
with a view to their place in the overall statutory scheme." Food
& Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120,
133 (2000) (quoting Davis v. Mich. Dep't of Treasury, 489 U.S.
803, 809 (1989)).
Each party argues that application of its preferred
canon of construction requires its desired result. The government
supports its position for a limited application of the sports-
gambling qualifier by reference to the "rule of the last
antecedent." "The rule provides that 'a limiting clause or
phrase . . . should ordinarily be read as modifying only the noun
or phrase that it immediately follows.'" Lockhart v. United
States, 136 S. Ct. 958, 962 (2016) (quoting Barnhart v. Thomas,
– 30 –
540 U.S. 20, 26 (2003)); see also Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts 144 (2012); Jama v.
Immigr. & Customs Enf't, 543 U.S. 335, 342–43 (2005) (invoking the
last antecedent rule to prevent "stretch[ing] the modifier too
far" to apply to other numbered clauses within a subparagraph).
But see 2A Norman Singer & Shambie Singer, Sutherland on Statutes
and Statutory Construction § 47:33 (7th ed. 2020) ("[W]here the
sense of an entire act requires that a qualifying word or phrase
apply to several preceding or even succeeding sections, the
qualifying word or phrase is not restricted to its immediate
antecedent."). According to the government, because the sports-
gambling qualifier only appears in Clause One, and even then only
once, after the words "information assisting in the placing of
bets or wagers," it is limited to qualifying "bets or wagers" in
that one instance.
This is certainly a plausible proposition in the
abstract. But it does not end our inquiry. The last antecedent
rule is "not an absolute and can assuredly be overcome by other
indicia of meaning." Paroline v. United States, 572 U.S. 434, 447
(2014) (quoting Barnhart, 540 U.S. at 26); see also Cyan, Inc. v.
Beaver Cnty. Emps. Ret. Fund, 138 S. Ct. 1061, 1076–77 (2018)
("[W]e have not applied the rule when the modifier directly follows
a concise and 'integrated' clause." (quoting Jama, 543 U.S. at 344
– 31 –
n.4)); Buscaglia v. Bowie, 139 F.2d 294, 296 (1st Cir. 1943)
(declining to apply the last antecedent rule where doing so would
result in a construction "contrary to the natural or common sense
meaning of the statute"). Indeed, even the government's position
implicitly accepts the proposition that we should not apply the
rule "in a mechanical way where it would require accepting
'unlikely premises.'" Paroline, 572 U.S. at 447 (quoting United
States v. Hayes, 555 U.S. 415, 425 (2009)). Thus, for example,
even the government concedes that, in the phrase "bets or wagers
on any sporting event or contest," the sports-gambling qualifier
applies not just to "wagers" (the actual last antecedent) but also
to "bets."
For their part, the plaintiffs put forth the series-
qualifier canon to argue that "on any sporting event or contest"
should not be read as so confined and instead applies to both
prohibited transmissions in the first clause: "bets or wagers"
and "information assisting in the placing of bets or wagers."
§ 1084(a). According to the plaintiffs, a natural reading
suggests that "on any sporting event or contest" is as applicable
to the first reference to "bets or wagers" as it is to the second.
See Paroline, 572 U.S. at 447 ("When several words are followed by
a clause which is applicable as much to the first and other words
as to the last, the natural construction of the language demands
– 32 –
that the clause be read as applicable to all." (quoting Porto Rico
Ry., Light & Power Co. v. Mor, 253 U.S. 345, 348 (1920))).10 From
there, the plaintiffs posit that the statute's structure confirms
that the term "bets or wagers" as used throughout section 1084
means the same thing, i.e., "bets or wagers on any sporting event
or contest."
As the district court correctly concluded, the language
and syntax of section 1084(a) "prevents the first clause from being
a textbook application of either canon," and a third canon -- the
punctuation canon -- fails to save the day. N.H. Lottery Comm'n,
386 F. Supp. 3d at 150; see also id. at 149–50 ("Punctuation in a
legal text . . . will often determine whether a modifying phrase
or clause applies to all that preceded it or only to a part."
(quoting Scalia & Garner, supra, at 161)). The district court
explained:
10 The government's opening brief concedes that the
series-qualifier rule operates elsewhere in the statute:
[I]n the phrase "sporting event or contest,"
the word "'sporting' modifies both 'event' and
'contest.'" Likewise, within Offense 2, the
phrase "on any sporting event or contest"
modifies both "bets" and "wagers" within the
phrase: "assisting in the placing of bets or
wagers on any sporting event or contest."
See also 2011 Opinion at 150 n.11 (examining whether
"sporting" modifies only "event" and not "contest" and concluding
that it modifies both).
– 33 –
[A] comma before the conjunction "or"
separating the phrases "bets or wagers" and
"information assisting in the placing of bets
or wagers" would demonstrate that the rule of
the last antecedent applies. See 1A
Sutherland on Statutory Construction § 21:15
(comma separating two members of a list
indicates they are to be treated separately
rather than as a whole); cf. Lockhart, 136 S.
Ct. at 962 (applying rule of last antecedent
to statute that had commas separating each
antecedent). Without it, the appropriateness
of the last antecedent canon is unclear.
Conversely, a comma placed directly before the
phrase "on any sporting event or contest"
would confirm that the series-qualifier canon
applies. See 2A Sutherland on Statutory
Construction § 47:33 ("A qualifying phrase
separated from antecedents by a comma is
evidence that the qualifier is supposed to
apply to all the antecedents instead of only
to the immediately preceding one.").
Id. at 150; see Hayes, 555 U.S. at 423 (explaining that imprecise
punctuation did not counsel against the Court's decision to eschew
the last antecedent rule).
The fact that the text of Clause One accommodates
several possible readings does not mean that the statute entirely
lacks clarity on the issue at hand. To affirm the district court's
reading of the statute, we would need to find, among other things,
that Clause Two also can be read as limited to betting on sporting
events or contests.
– 34 –
Clause Two prohibits the transmission of a wire
communication that entitles the recipient to "receive money or
credit" either "as a result of bets or wagers" or "for information
assisting in the placing of bets or wagers." 18 U.S.C. § 1084(a).
The government argues that even if the sports-gambling qualifier
can be construed to apply to both prohibitions in Clause One,
Clause Two is safe from the qualifier's reach because there is no
reference to sporting events or contests within it and because
Clause Two is "grammatically independent of the first clause."
We have, however, what appears to be a clear example in
this very statute of Congress using shorthand to carry over a
phrase from Clause One to Clause Two, which may suggest a broader
pattern of borrowing by shorthand. The phrase "in interstate or
foreign commerce" qualifies "transmission" in Clause One but is
omitted from the text of Clause Two:
Whoever being engaged in the business of betting or
wagering knowingly uses a wire communication
facility for the transmission in interstate or
foreign commerce of bets or wagers or information
assisting in the placing of bets or wagers on any
sporting event or contest, or for the transmission
of a wire communication which entitles the
recipient to receive money or credit as a result of
bets or wagers, or for information assisting in the
placing of bets or wagers . . . .
Id. (emphases added). Few though -- and certainly not this court
-- would hesitate to find that Clause Two's "transmission" is
shorthand for "transmission in interstate or foreign commerce."
– 35 –
To read the statute otherwise would be to presume that Congress
understandably did not seek to prohibit use of the wires for
intrastate bets yet inexplicably sought to prohibit intrastate
activities necessary to such betting.
The government's only counter to this conclusion is that
Congress may have eliminated the interstate commerce qualifier in
Clause Two since that clause "more clearly" relates to economic
activity, making the phrase unnecessary to ensure the statute's
constitutionality. This argument, to put it mildly, gives the
statute a "curious reach." United States v. Bass, 404 U.S. 336,
340 (1971) (finding the phrase "in commerce or affecting commerce"
to apply beyond its nearest antecedent to all versions of the
offenses listed). Accepting it would require us to think that
Congress doubted that placing a bet was commerce that it could
regulate, yet was certain that an intrastate communication
entitling a bettor to be paid was commerce that Congress could
regulate. We think it much more likely, indeed obvious, that
Congress intended the term "transmission" in Clause Two to be
shorthand for the "transmission in interstate or foreign commerce"
described in Clause One. And that makes it more plausible that
the same drafters could have intended "bets or wagers" in
Clause Two to be a reference to the "bets or wagers on any sporting
event or contest" described in Clause One.
– 36 –
The government nevertheless maintains that, even if
Congress intended the interstate-commerce qualifier to apply
throughout section 1084(a), that intention is of limited relevance
to the sports-gambling qualifier because the two are "not parallel
phrases." The government emphasizes that, even assuming the
interstate-commerce qualifier is jurisdictional, the sports-
gambling qualifier is not and therefore the rationale for carrying
over that phrase is weaker. But our point here does not turn on
the particular rationale for finding that Congress must have
intended Clause Two to apply only to interstate transmissions.
The point instead is that Congress implemented that intent with
language that relies on an understanding of at least one Clause Two
term as a shorthand reference to a more fully described and
qualified Clause One term. In short, Congress's consistent
syntactic approach anticipated that a term, which is explicitly
qualified in one instance, could be read as similarly qualified in
other instances, at least where necessary to avoid odd and unlikely
results. Cf. Graham Cnty. Soil & Water Conservation Dist. v.
United States ex rel. Wilson, 545 U.S. 409, 418 (2005) (finding
evidence that Congress used a term "imprecisely" in one subsection
to reflect term's meaning in another).
So we turn next to another principle of statutory
construction: We do indeed prefer "the most natural reading" of
– 37 –
a statute, one that "harmonizes the various provisions in [it] and
avoids the oddities that [a contrary] interpretation would
create." Republic of Sudan v. Harrison, 139 S. Ct. 1048, 1057,
1060 (2019); see also Lockhart, 136 S. Ct. at 965 ("This Court has
long acknowledged that structural or contextual evidence may
'rebut the last antecedent inference.'" (quoting Jama, 543 U.S. at344 n.4)). Indeed, we have previously noted section 1084(a)'s use
of "somewhat imprecise, conversational, language" and rejected a
construction of it that "would lead to totally impractical
results." Sagansky v. United States, 358 F.2d 195, 201 (1st Cir.
1966). Here, the government's impractical interpretation of
section 1084 must give way to the plaintiffs' more natural reading.
The government's reading poses unharmonious oddities at
two levels. Take first Clause One. Under the government's
reading, anyone can transmit over the wires information assisting
someone in placing a bet or wager over the wires on a non-sporting
event, but the person receiving the assistance commits a crime if
he then places the bet or wager. In short, there is no congruity
between the two prohibitions in Clause One under the government's
reading. Conversely, if we read "on any sporting event or contest"
as qualifying both antecedents, harmony is restored: You cannot
use the wires to place a bet or wager on a sporting event, and you
– 38 –
cannot use the wires to send information assisting in placing that
bet or wager.
The government struggles to imagine some reason why
Congress would have opted for the asymmetry of broadly barring the
placing of bets or wagers while only narrowly barring assistance
in placing bets or wagers. The government goes so far as to hazard
that maybe information on how to place a bet or wager on a sporting
event is more important to placing the bet or wager. How that is
so (e.g., how one needs more assistance to bet on an NFL game than
on the Oscars) the government does not say. Instead, it rather
obscurely references "speech-related" concerns, implicitly
suggesting that gambling on a basketball game raises fewer "speech-
related" issues than gambling on whether it will snow on Christmas.
That the government posits such strained explanations in order to
make sense out of its reading tells much.
But, says the government, even if it would strain common
sense not to apply the sports-gambling qualifier to both
antecedents in Clause One, there is no reason to carry it down to
Clause Two. That brings us to the second level of oddity posed
by the government's reading of the statute: a lack of parallelism
between Clause One and Clause Two. If Clause One is limited to
sports betting (i.e., if it does not prohibit placing a bet on a
lottery outcome), why in the world would Congress in the very next
– 39 –
clause outlaw telling the winning lottery participant that he is
entitled to payment? Or to pay someone to assist lottery bettors?
The plaintiffs' reading (and the 2011 OLC reading) avoids any need
to answer such questions. Rather, reading the entire subsection
as related to sports gambling, each prohibition "serve[s] the same
end, forbidding wagering, information, and winnings transmissions
of the same scope." 2011 Opinion at 144. The sensible result is:
No person may send a wire communication that
places a bet on a sporting event or entitles
the sender to receive money or credit as a
result of a sports-related bet, and no person
may send a wire communication that shares
information assisting in the placing of a
sports-related bet or entitles the sender to
money or credit for sharing information that
assisted in the placing of a sports-related
bet.
Id.The lack of coherence in the government's proposed
reading becomes even more apparent when we return to the text and
consider the rest of section 1084. Section 1084(b) exempts from
liability transmissions "for use in news reporting of sporting
events or contests," and "transmission[s] of information assisting
in the placing of bets or wagers on a sporting event or contest
from a State or foreign country where betting on that sporting
event or contest is legal into [one] in which such betting is
[also] legal." 18 U.S.C. § 1084(b). Were the government correct,
this exemption's exclusive focus on sporting events would seem
– 40 –
odd. Why, for example, is there no exception for news reporting
on other events upon which people might bet? The government offers
no reason to explain such a distinction. Conversely, this
question does not even arise if one reads section 1084(a) as
limited to wagers and bets on sporting events and contests.
The government instead argues that section 1084(b)
supports its position because Congress repeated a sports-gambling
qualifier three times in section 1084(b), but only included the
qualifier once in section 1084(a). Thus, reasons the government,
Congress clearly intended a difference in meaning. See id.(excluding "transmission in interstate or foreign commerce of
information for use in news reporting of sporting events or
contests, or for the transmission of information assisting in the
placing of bets or wagers on a sporting event or contest from a
State or foreign country where betting on that sporting event or
contest is legal" (emphases added)). Furthermore, the government
argues, had the scope of section 1084(a) been restricted to sports
gambling, the inclusion of the sports-gambling qualifiers in
section 1084(b) would have been superfluous.
We agree with the government's premise that we should
"presume[] that Congress intended a difference in meaning" when it
"includes particular language in one section of a statute but omits
it in another." Digit. Realty Tr., Inc. v. Somers, 138 S. Ct.
– 41 –
767, 777 (2018) (quoting Loughrin v. United States, 573 U.S. 351,
358 (2014)). But that presumption carries little force when the
text itself offers a ready syntactic explanation for using
different language in different sections. As the district court
explained, unlike the consistent use of a single term ("bets or
wagers") in section 1084(a), section 1084(b) employs "diverse
phrases [that] are not susceptible to an abridged reference,"
thereby "requir[ing] that the modifier be repeated." N.H. Lottery
Comm'n, 386 F. Supp. 3d at 154. Section 1084(b) refers to "news
reporting of sporting events or contests," "bets or wagers on a
sporting event or contest," and "betting on that sporting event or
contest." § 1084(b) (emphases added). "[T]he varied syntax of
each item in the list makes it hard for the reader to carry
the . . . modifying clause across all three." Lockhart, 136 S.
Ct. at 963.
Even less convincing is the government's broader
argument that if the sports-gambling qualifier truly applied to
all prohibitions of section 1084(a), then any reference to sports
gambling in section 1084(b) would be superfluous. The government
does not explain how one could avoid reference to sports gambling
in section 1084(b) altogether. We struggle to imagine a way
ourselves. Such a task seems especially difficult when part of
section 1084(b) permits the transmission of information which
– 42 –
assists betting on a sporting event or contest but only where
"betting on that sporting event or contest" is legal. § 1084(b)
(emphasis added). In any event, while avoiding surplusage is
definitely preferred, "avoid[ing] surplusage at all costs" is not,
particularly where, as is the case here, syntax offers a good
reason for why the qualifier was repeated in section 1084(b) (and
we can't say we mind the added clarity). See Lockhart, 136 S. Ct.
at 966 (quoting United States v. Atl. Rsch. Corp., 551 U.S. 128,
137 (2007)).
The government offers a couple of other reasons why we
should prefer its reading over the plaintiffs'. Neither is
persuasive. The government states that it is "difficult to
credit" that Congress employed a shorthand when referring to "bets
or wagers." It proposes obvious alternatives Congress might have
used to more clearly express that "on any sporting event or
contest" applied to each reference to "bets or wagers." Of course,
we agree that there are many ways to improve the clarity of
section 1084(a), but that is true of most statutes. Bass, 404
U.S. at 344 ("[W]e cannot pretend that all statutes are model
statutes.").
Finally, the government points to Kellogg Brown & Root
Services, Inc. v. United States, 135 S. Ct. 1970 (2015), as support
for rejecting a consistent reading of "bets or wagers" throughout
– 43 –
section 1084(a). There, the Court rejected the petitioners'
argument to depart from the ordinary meaning of the term "pending"
as used in the False Claims Act, and to instead construe the word
as shorthand for "first-filed." Kellogg Brown & Root Servs., 135
S. Ct. at 1978–79; see also 31 U.S.C. § 3730(b)(5) ("When a person
brings an action . . . no person other than the Government may
intervene or bring a related action based on the facts underlying
the pending action." (emphasis added)). The Court pointed out
that a shorthand term typically provides an expedient way to
express "a lengthy or complex formulation" and "first-filed" is
"neither lengthy nor complex." Kellogg Brown & Root Servs., 135
S. Ct. at 1979. Presaging our focus on avoiding odd and unlikely
readings, the Court found that a reading applying the shorthand
"would lead to strange results that Congress is unlikely to have
wanted" and that the proposed definition "d[id] not comport with
any known usage of the term 'pending.'" Id. Here, by contrast,
"bets or wagers on any sporting event or contest" is a lengthier
term more readily calling for use of a shorthand reference. And,
more importantly, reading section 1084(a) as employing such a
reference avoids, rather than creates, "strange results that
Congress is unlikely to have wanted." Id.– 44 –
3.
As the foregoing discussion explains, we find the text
of section 1084 not entirely clear on the matter at hand, and we
find that the government's resolution of the Wire Act's ambiguity
would lead to odd and seemingly inexplicable results. Under the
government's view, either Congress outlawed lottery betting over
the wires while simultaneously allowing lotteries to provide
assistance over the wires in placing lottery bets, or Congress
allowed lottery betting over the wires while outlawing use of the
wires to tell the winner the results of his bet. Of course, if
Congress clearly enacted such an oddly designed statute, we would
have a different case. But the ambiguity we have discussed does
not provide sufficient comfort that Congress intended such a
dubious result.
The legislative history provides further support for our
judgment that Congress likely did not intend the strange results
inherent in the government's reading. In fact, the legislative
history contains strong indications that Congress did indeed train
its efforts solely on sports gambling. The statute as originally
presented to Congress plainly aimed only at sports gambling. The
language then contained only one clause, and it used commas to
clearly indicate its focus on sports gambling. See S. 1656, 87th
Cong. § 2 (Apr. 18, 1961) ("the transmission in interstate or
– 45 –
foreign commerce of bets or wagers, or information assisting in
the placing of bets or wagers, on any sporting event or contest");
The Attorney General's Program to Curb Organized Crime and
Racketeering: Hearings on S. 1653, S. 1654, S. 1655, S. 1656,
S. 1657, S. 1658, S. 1665 Before the S. Comm. on the Judiciary,
87th Cong. 277-79 (1961) (statement of Herbert Miller, Assistant
Att'y Gen., Crim. Div.) ("This bill, of course, would not cover
[gambling on other than a sporting event or contest] because it is
limited to sporting events or contests."); see also 2011 Opinion
at 141–47. The government argues that Congress broadened its aim
beyond sports gambling when the original draft was amended, most
particularly when the commas bracketing the words "or information
assisting in the placing of bets or wages" disappeared. But as
the district court explained, the absence of both commas merely
created an ambiguity. N.H. Lottery Comm'n, 386 F. Supp. 3d at
150. The Senate report describing the amendments offered no hint
that a major change was made or intended. See S. Rep. No. 87-588,
at 1-2 (1961); cf. City of Chicago v. Fulton, No. 19-357, 2021 WL
125106, at *4 (U.S. Jan. 14, 2021) (stating that "it would have
been odd for Congress to accomplish [an important change to a
statute] by simply adding" a short phrase that did "not naturally
comprehend" the suggested new meaning); Kellogg Brown & Root
Servs., 135 S. Ct. at 1977 ("Fundamental changes in the scope of
– 46 –
a statute are not typically accomplished with so subtle a move.").
And there is nothing in any of the committee reports to suggest
any reason at all for the inconsistent scope of the prohibitions
that the government's present position would require us to assume.
Such "silence in the legislative history . . . cannot defeat the
better reading of the text and statutory context." Encino
Motorcars, LLC v. Navarro, 138 S. Ct. 1134, 1143 (2018).
4.
We come to the end of our analysis. The text of the
Wire Act is not so clear as to dictate in favor of either party's
view. The government's reading of the statute, however, would
most certainly create an odd and unharmonious piece of criminal
legislation. Neither common sense nor the legislative history
suggests that Congress likely intended such a result. Like the
Fifth Circuit, and the district court in this case, we therefore
hold that the prohibitions of section 1084(a) apply only to the
interstate transmission of wire communications related to any
"sporting event or contest."
C.
We now turn to the relief granted by the district court.
By way of the Declaratory Judgment Act, the district court declared
"that § 1084(a) of the Wire Act, 18 U.S.C. § 1084(a), applies only
to transmissions related to bets or wagers on a sporting event or
– 47 –
contest." N.H. Lottery Comm'n, 386 F. Supp. 3d at 160. The
district court specified that the declaration "binds the United
States vis-à-vis NeoPollard and the [NHLC] everywhere the
plaintiffs operate or would be otherwise subject to prosecution."
Id. at 158. Neither party contests the scope of the district
court's declaration, and we agree that it is "responsive to the
pleadings and issues presented." Diaz-Fonseca v. Puerto Rico, 451
F.3d 13, 42 (1st Cir. 2006) (quoting St. Paul Fire & Marine Ins.
Co. v. Lawson Bros. Iron Works, 428 F.2d 929, 931 (10th Cir.
1970)).
The government urges the court to exercise its
discretion to withhold declaratory relief for many of the same
reasons it argues the case is non-justiciable. Having already
rejected these arguments above, we decline to do so. See
MedImmune, 549 U.S. at 129 ("The dilemma posed by that coercion -
- putting the challenger to the choice between abandoning his
rights or risking prosecution -- is 'a dilemma that it was the
very purpose of the Declaratory Judgment Act to ameliorate.'"
(quoting Abbott Lab'ys v. Gardner, 387 U.S. 136, 152 (1967))).
The district court also granted the plaintiffs relief
under the APA. While actions under the Declaratory Judgment Act
and the APA can be maintained together, see Abbott Lab'ys, 387
U.S. at 153; Bos. Redev. Auth. v. Nat'l Park Serv., 838 F.3d 42,
– 48 –
48 (1st Cir. 2016), we find it unnecessary here to determine
whether to "hold unlawful and set aside [an] agency action,"
5 U.S.C. § 706(2), where the remedy provided by the Declaratory
Judgment Act is adequate under the circumstances, see id. § 704
(providing for judicial review of "final agency action for which
there is no other adequate remedy in a court" (emphasis added)).11
Therefore, we vacate the district court's order only to the extent
that it grants relief under the APA.
III.
In conclusion, we find that the plaintiffs' claims are
justiciable and that the Wire Act applies only to interstate wire
communications related to sporting events or contests. Therefore,
we affirm the district court's grant of the plaintiffs' motions
for summary judgment and its denial of the government's motion to
dismiss and motion for summary judgment, but, given that
declaratory relief under the Declaratory Judgment Act is
sufficient, we vacate the district court's grant of relief under
the APA. Costs are awarded in favor of the appellees.
11 Recognizing that relief under the Declaratory Judgment
Act is discretionary, we make no comment on whether the statute
would provide an "other adequate remedy" if the district court had
declined to grant relief under it.
– 49 –