MT & M Gaming, Inc. v. City of Portland

544 November 3, 2016 No. 70

IN THE SUPREME COURT OF THE

STATE OF OREGON

MT & M GAMING, INC.,

a Washington corporation,

Petitioner on Review,

v.

CITY OF PORTLAND,

an Oregon municipal corporation,

Respondent on Review.

(CC 121114443; CA A154206; SC S063648)

On review from the Court of Appeals.*

Argued and submitted May 10, 2016.

Thomas R. Rask, III, Kell, Alterman & Runstein, L.L.P.,

Portland, argued the cause and filed the briefs for petitioner

on review.

Denis M. Vannier, Deputy City Attorney, Portland,

argued the cause and filed the brief for respondent on review.

Also on the brief was Harry Auerbach, Chief Deputy City

Attorney, Portland.

Thomas M. Christ, Portland, argued the cause and filed

the brief for amicus curiae ACLU Foundation of Oregon Inc.

Carl Sniffen, Salem, filed the brief for amicus curiae

League of Oregon Cities. Also on the brief was Sean E.

O’Day.

Before Balmer, Chief Justice, and Kistler, Walters,

Landau, Baldwin, and Brewer, Justices, and Shorr, Justice

pro tempore.**

WALTERS, J.

The judgment of the trial court and the decision of the

Court of Appeals are affirmed.

______________

**  Appeal from Multnomah County Circuit Court, Henry Breithaupt, Judge

pro tempore. 274 Or App 100, 360 P3d 611 (2015).

**  Nakamoto, J., did not participate in the consideration or decision of this

case.

Cite as 360 Or 544 (2016) 545

Case Summary: Plaintiff, a Washington corporation that operates a casino

in that state, brought an action against the city of Portland under ORS 28.020,

seeking declarations that certain practices the city had approved through its

social gaming permitting system were contrary to Oregon law. Plaintiff asserted

that it was adversely affected by the city’s issuance of permits to engage in those

practices to card rooms in Portland because persons who previously had patron-

ized its casino in Washington were choosing to gamble in city-permitted card

rooms in Portland instead. The city moved for summary judgment on the ground

that plaintiff lacked standing to bring the action. The trial court granted the

motion, holding that plaintiff lacked standing because its Washington casino

was not subject to the statutes that were the subject of its declaratory judgment

action. The Court of Appeals affirmed and plaintiff sought review, arguing that

there was no basis in the law for a standing requirement that plaintiffs be sub-

ject to any statute about which they seek a declaration under ORS 28.020. Held:

Although plaintiff was correct that there is no standing requirement that plain-

tiffs seeking to challenge a statute under the declaratory judgment act be sub-

ject to or assert interests that fall within the zone of interests the legislature

intended to protect by enacting the statute, plaintiff nevertheless failed to show,

as it must to establish standing under the declaratory judgment act, that its

interests that were affected by the statute were “legally recognized interests.”

The judgment of the trial court and the decision of the Court of Appeals are

affirmed.

546 MT & M Gaming, Inc. v. City of Portland

WALTERS, J.

This case concerns the standing requirements for

actions brought under the Uniform Declaratory Judgment

Act, ORS 28.010 to ORS 28.160, an action that is available

to “any person * * * whose rights, status or other legal rela-

tions are affected by” the law or legal instrument about

which the declaration is sought. ORS 28.020. Plaintiff, a

Washington corporation that operates a casino in that state,

brought an action against the city of Portland under that

act, seeking declarations that certain practices the city had

approved through its “social gaming” permitting system

were contrary to Oregon law. Plaintiff asserted that it was

adversely affected by the city’s issuance of permits to engage

in those gaming practices to establishments in Portland, in

that persons who previously had patronized its casino in

Washington now were choosing to gamble in city-permitted

card rooms in Portland instead. The city moved for sum-

mary judgment on the ground that plaintiff lacked stand-

ing, and the trial court granted the motion, reasoning that,

insofar as plaintiff’s Washington casino was not subject to

the “legal system” that was the object of the declaratory

judgment action, plaintiff had no “rights, status [or] other

legal relations” that could be adversely affected. The Court

of Appeals agreed, holding that, to establish standing under

the declaratory judgment act, a plaintiff must be subject to

the laws it asks the court to construe or must, at least, do

business or own property in Oregon. MT & M Gaming, Inc.

v. City of Portland, 274 Or App 100, 106, 360 P3d 611 (2015).

Plaintiff petitioned for review, arguing that the standing

requirement that the Court of Appeals had proposed has no

basis in the law. We allowed the petition.

Before this court, the city acknowledges the Court

of Appeals’ position but argues that plaintiff lacks stand-

ing for a somewhat different reason—that the interest that

plaintiff claims has been adversely affected by Oregon’s

social gaming statutes is not within the “zone of interests”

that those statutes seek to protect. The city thus argues

that this court should limit standing in a declaratory judg-

ment action to those persons who can demonstrate that

their interests are within the “zone of interests” that the

relevant statute seeks to protect. The city contends that

Cite as 360 Or 544 (2016) 547

federal courts and other jurisdictions have imposed that

standing requirement and that, in the interest of unifor-

mity, we should do so as well.

For the reasons that follow, we conclude that plain-

tiff is correct that the Court of Appeals overstated the stand-

ing requirement under the declaratory judgment act when

it said that a plaintiff must be “subject to” a statute that it

asks the court to construe or must do business in or own

property in Oregon. Instead, to have standing to bring a

declaratory judgment action construing a statute, a plaintiff

need only have a legally recognized interest that is affected

by the statute. We also conclude, however, that the city is

incorrect in suggesting that this court is required to recog-

nize the “zone of interest” test for standing or that the only

legally recognized interest that is cognizable for standing

purposes is an interest that is within the “zone of interests”

that the statute at issue is intended to protect. Although

some affected interests may be legally recognized precisely

because they are the direct object of or at least within

the broad purposes of a statute targeted in a declaratory

judgment action, other affected interests that do not bear

that kind of relationship to the statute also may be legally

recognized—and thus confer standing. Legal recognition

can come from a variety of sources, not only from the stat-

ute under construction or consideration. In this case, we

conclude that the interest that plaintiff relies on to estab-

lish standing—an interest in requiring Oregon establish-

ments to abide by social gaming laws to which plaintiff

itself is not subject—is not a legally recognized interest. It

is not an interest that is within the purposes of the social

gaming laws, it is not one that has been recognized by the

common law, and plaintiff has not sufficiently developed

any other argument for its legal recognition. Accordingly,

we affirm the decision of the Court of Appeals, albeit under

a different standing analysis than the one that that court

employed.

RELEVANT STATUTES AND ORDINANCES

Before we turn to the factual particulars, we

describe the relevant statutes and ordinances. Gambling is

unlawful in Oregon unless it is specifically authorized by

548 MT & M Gaming, Inc. v. City of Portland

law, and it is a crime to engage in or profit from unlaw-

ful gambling. ORS 167.117(24), ORS 167.122, ORS 167.127.

One kind of gambling that is specifically authorized by law

involves so-called “social games.” As relevant to this case, a

“social game” is,

“a game, other than a lottery, between players in a private

business, private club or place of public accommodation

where no house player, house bank or house odds exist and

there is no house income from the operation of the social

game.”

ORS 167.117(21)(b). Social games may be conducted in a pri-

vate business, private club, or place of public accommodation

only if authorized by a local ordinance. ORS 167.121.

The city of Portland has enacted an ordinance that

allows businesses and clubs to offer social games if they

obtain a permit from the city. Portland City Code 14A.70.050.

The city’s ordinance is consistent with the social games stat-

utes, in that it prohibits house players, house banks, house

odds, and house income from games. Portland City Code

§ 14A.70.040. The ordinance also imposes limitations that

are not part of the statutes, including a betting limit of one

dollar per game. Id.

FACTUAL AND PROCEDURAL BACKGROUND

We take the relevant facts, which are gener-

ally undisputed, from the summary judgment record. For

many years, the only entities that obtained permits under

Portland’s ordinance were private social and athletic clubs,

where the hosting of social games was a relatively insig-

nificant adjunct to the entities’ primary mission. In recent

years, however, the city has granted social gaming permits

to other private businesses which, at the time of their appli-

cations, signaled an intention to make gaming—in partic-

ular, poker—central to their businesses: Specifically, they

intended to host more or less continuous poker games and

tournaments, involving entry fees and/or “buy-ins,” although

they would also sell food and beverages and offer other activi-

ties. In their communications with the city, those businesses

explained that they would return all of the proceeds from

Cite as 360 Or 544 (2016) 549

players’ buy-ins to players in the form of winnings; how-

ever, they would charge a daily “membership fee” to anyone

entering the establishment, regardless of his or her partic-

ipation in the games or tournaments, and would keep that

income. The city seemingly accepted those arrangements as

consistent with the prohibition on “house income from the

operation of the social game,” ORS 167.117(21)(b). It issued

permits to the businesses, but warned them

“that any membership fee or cover charge must be charged

to all who enter the club or business (and not just to those

participating in social games), that the membership fee or

cover charge cannot be imposed for participation in social

games, and that the club or business must offer services or

activities in addition to social games if there is a member-

ship fee or cover charge.”

Plaintiff owns and operates a casino in

Washington—a state that does not have the same legal lim-

itations on gambling that Oregon has. Historically, plaintiff

has drawn many of its customers from the Portland area. In

recent years, however, plaintiff’s casino has experienced a

drop off in business, and plaintiff contends that at least part

of the decrease can be traced to the proliferation, in Portland,

of card rooms operating under city-issued social gaming

permits. Believing that those card rooms violate Oregon’s

statutory prohibition on “house income” from social games

by collecting daily membership fees or cover charges from

patrons, plaintiff filed the present declaratory judgment

action against the city, seeking a number of declarations

about the legality of the activities engaged in by card rooms

under social gaming permits issued by the city. In its com-

plaint, plaintiff alleged that the city had been issuing per-

mits to poker establishments that were violating the social

gaming laws by, among other things, charging daily “mem-

bership fees” and permitting patrons to tip house-provided

dealers. Plaintiff further alleged that the city had taken the

position that those practices did not violate Oregon’s social

gaming laws. Plaintiff sought a declaration that charging

any form of membership fee or cover charge in exchange for

the right to participate in a game of chance disqualifies the

arrangement from the statutory authorization for offering

550 MT & M Gaming, Inc. v. City of Portland

social games and constitutes a felony under Oregon law.1

Finally, relevant to the issue of its standing to bring the

action, plaintiff alleged that it was

“substantially and adversely affected in that a significant

portion of its patrons and customers have stopped attend-

ing plaintiff’s lawful operation, and have elected to attend

and participate in the unlawful operations of the estab-

lishments granted permits by the city. Plaintiff cannot

establish a similar operation in Portland—even with a per-

mit from the city—without violating Oregon law and the

Portland City Code.”

In its answer to the complaint, the city raised several affir-

mative defenses, including lack of standing and failure to

join necessary parties (specifically, the businesses that were

operating under social gaming permits from the city).

Plaintiff moved for partial summary judgment,

arguing that there was no genuine issue of material fact

with regard to certain of its allegations. In support of that

motion, plaintiff submitted various affidavits and docu-

ments, including—in apparent support of its allegations

directed at standing, quoted above—a senior executive’s

affidavit describing the downturn in business the casino had

recently experienced and explaining how plaintiff had deter-

mined that a portion of the downturn could be attributed

to the proliferation of Portland card rooms under the city’s

interpretation of the social gaming statute.

The city filed a cross-motion for summary judg-

ment on its standing and failure-to-join-necessary-parties

defenses. On the issue of standing, the city asserted that

plaintiff was required, but had failed, to show that it had

a legally cognizable interest under the social gaming stat-

utes that was adversely affected by the city’s interpreta-

tion of that statute. It explained that the statutes reflect a

legislative concern that gambling is detrimental to Oregon

citizens, and that the legislature was not concerned with

1

Plaintiff also sought declarations that paying a cover charge for the right to

participate in games constitutes unlawful gambling, that permitting or encour-

aging the tipping of dealers who are provided by the establishment disqualifies

the games from the social game exception, and that promoting games involv-

ing buy-ins in excess of one dollar per game violates the city’s social gaming

ordinance.

Cite as 360 Or 544 (2016) 551

whether Washington state casinos lose the patronage of

Oregon residents. Plaintiff responded that the premise

underpinning the city’s argument—that, in order to have

standing, a plaintiff must show that its affected interest is

one that the law at issue is specifically designed to protect—

lacks any basis in the law. However, in apparent response

to the state’s arguments on the issue of standing, plaintiff

sought leave to amend its complaint to include a request for

an alternative declaration that plaintiff could lawfully oper-

ate a business in Portland in the same manner as the city’s

other permittees.

Ultimately, the trial court granted summary judg-

ment for the city on the issue of standing,2 but it based its

decision on a somewhat different analysis than the one the

city had asserted. It appeared to acknowledge that, in the

declaratory judgment context, standing may be based on

some “practical adverse effect,” whether or not the interest

affected is one that the law at issue seeks to protect. It noted,

in particular, that “this can occur in the context of a govern-

ment regulatory system, * * * if one competitor in the system

does not comply with rules with which other competitors

must, at a cost, comply.” The trial court concluded, however,

that standing can exist in those circumstances only when

the plaintiff’s activities are conducted in the same “legal

system” as the plaintiff’s competitors: “The constitutions,

statutes, charters and ordinances about which this court

can speak do not offer any protection for the ‘rights, status

or other legal relations’ of plaintiff until and unless plaintiff

comes within the operation of those statutes, charters and

ordinances.” Given that there was no dispute that plaintiff’s

casino was subject to Washington’s, and not Oregon’s, gam-

bling laws, the trial court concluded that summary judg-

ment was warranted. The trial court also denied plaintiff’s

motion to amend its complaint, explaining that the city was

“entitled to an order and judgment on the pleadings that

were operative at the time of the motion, particularly with

respect to the relief requested.” The court thus issued a

2

Initially, the trial court granted summary judgment for the city without

specifying whether its decision was based on lack of standing or failure to join

necessary parties. After plaintiff offered to join the social gaming permittees as

parties, the trial court clarified that its decision was based on lack of standing.

552 MT & M Gaming, Inc. v. City of Portland

judgment denying plaintiff’s motion for partial summary

judgment, granting the city’s motion for summary judg-

ment, and dismissing plaintiff’s complaint with prejudice.

On plaintiff’s appeal, the Court of Appeals generally

agreed with the trial court’s position on the issue of standing.

It opined that standing to seek a declaration about the appli-

cation of an Oregon law under the declaratory judgment act

can be based on the law’s effect on the plaintiff’s economic

interests, but only if the economic effect is or relates to a

legally recognized interest. The Court of Appeals concluded

that, given that plaintiff “ha[d] not alleged that it does busi-

ness or owns property in Oregon, [was] not subject to the

laws it asks the court to construe and, in fact, ha[d] no legal

interests in the state,” it had failed to show that the alleged

harm to its economic interests was the kind of harm to a

“legally recognized interest” that is necessary to establish

standing under ORS 28.020. MT & M Gaming, 274 Or App

at 106.

ARGUMENTS IN THIS COURT

Before this court, plaintiff argues that the trial

court and Court of Appeals decisions are based on a mis-

understanding of the standing requirements for declar-

atory judgment actions. Plaintiff suggests, in particular,

that those courts wrongly believed that standing to bring

a declaratory judgment action based on real or threatened

economic effects of a law or interpretation thereof only

exists when the plaintiff itself is subject to the law. In its

response to plaintiff’s argument, the city distances itself to

some extent from the idea, expressed by the courts below,

that to have standing to challenge a law or its application

under the ORS 28.020, a plaintiff must be a person to whom

the law directly applies. It argues for a somewhat more lib-

eral rule—that the interest of the plaintiff that allegedly is

affected by the statute must fall within the “zone of inter-

ests” that the challenged statute seeks to protect. Applying

that rule, it argues that an out-of-state casino’s interest in

keeping its Portland-based customers—the interest that

plaintiff alleges is affected by the city’s interpretation and

application of the social gaming statutes—is outside of the

zone of interests implicated by those statutes.

Cite as 360 Or 544 (2016) 553

We thus are confronted with alternative theories

regarding the kind of interest that a plaintiff must assert

in order to have standing to challenge a statute, or a gov-

ernmental entity’s application or interpretation thereof,

under Oregon’s declaratory judgment act. Under the more

stringent theory, a plaintiff would have to be “subject to” the

statute—that is, the plaintiff’s affected interests must be

ones that the statute operates on directly and by design.

Under the more expansive theory, the relationship between

the statute and the affected interest can be somewhat looser:

The interest that is affected need only be within the “zone of

interests” that the legislature sought to protect by enacting

the statute—that is, within the statute’s broader objectives.

Both theories thus propose that, when a plaintiff contends

that its interests are affected by a statute about which it

seeks a declaration, the touted interests are only relevant,

for purposes of standing to bring the declaratory judgment

action, if, in either a narrow sense or in a broader one, they

are the statute’s intended objects. The validity of those pro-

posed criteria for standing under the declaratory judgment

statute is the central question in this case.

STANDING UNDER THE DECLARATORY

JUDGMENTS ACT

It is important to emphasize at this point that, in

Oregon, standing is not a generic concept but largely depends

on the statute under which the plaintiff seeks relief.3 Morgan

v. Sisters School District #6, 353 Or 189, 194, 301 P3d 419

(2013); Local No. 290 v. Dept. of Environ. Quality, 323 Or

559, 566, 919 P2d 1168 (1996); Eckles v. State of Oregon,

306 Or 380, 384, 760 P2d 846 (1988), appeal dismissed, 490

3

That is one reason for rejecting the idea, suggested by the Court of Appeals,

that standing might depend on whether a plaintiff does business or owns prop-

erty in Oregon. MT & M Gaming, 274 Or App at 106. As we explain below, a

plaintiff’s standing under Oregon’s declaratory judgment statute depends on he

or she having a legally recognized interest that is affected by the subject matter

of the declaration that is sought. It seems self-evident that a person who does not

own property or do business in Oregon may still have a legally recognized inter-

est in the meaning or application of an Oregon law. For instance, a Washington

resident who does not own property or do business in Oregon may have a legally

recognized interest in avoiding injury from toxic chemicals released by Oregon

polluters, and thus may have standing to seek a declaration, in Oregon, about an

Oregon agency’s interpretation of an Oregon environmental law.

554 MT & M Gaming, Inc. v. City of Portland

US 1032 (1989). Accordingly, when considering issues of

standing under a given statute, we do not rely on general

pronouncements about standing drawn from cases involving

different statutes. Neither do we consider federal notions of

standing that do not apply in Oregon. Local No. 290 at 566;

Rendler v. Lincoln Co., 302 Or 177, 180, 728 P2d 21 (1986);

Benton County v. Friends of Benton County, 294 Or 79, 82,

653 P2d 1249 (1982).

Here, standing under the declaratory judgment act

is at issue. The relevant provision of the act provides:

“Any person * * * whose rights, status or other legal rela-

tions are affected by a constitution, statute, municipal char-

ter, ordinance, contract or franchise may have determined

any question of construction or validity arising under any

such instrument, constitution, statute, municipal charter,

ordinance, contract or franchise and obtain a declaration of

rights, status or other legal relations thereunder.”

ORS 28.020. Thus, to bring a declaratory action regarding a

statute, a plaintiff must show that it is a “person” and that

it has some “right[ ], status or other legal relation[ ]” that is

“affected by” the statute.4

In Morgan, this court identified three considerations

that determine a plaintiff’s standing to bring a declaratory

judgment action, based on the wording of ORS 28.020 and

cases decided under the statute. First, the plaintiff must

establish that the challenged law causes “some injury to or

impact upon a legally recognized interest of the plaintiff’s,

beyond an abstract interest in the correct application or

the validity of [the] law.” 353 Or at 195. Although Morgan

does not explicitly make the point, that first requirement

effectively interprets the wording of ORS 28.020, reading

the phrase “rights, status or other legal relations” as refer-

ring to any “legally recognized interest.” That interpreta-

tion is apt, given the phrase’s reference to disparate con-

cerns (“rights,” “status” and “other * * * relations”) and the

4

Those requirements define both what is required for a plaintiff to obtain

an adjudication—standing—and what is required for a plaintiff to have a claim

for relief. See Eckles, 306 Or at 383-84 (explaining that this court uses the term

“standing” to refer to the right to obtain an adjudication of a claim and that

standing is logically considered prior to consideration of the merits of a claim).

Cite as 360 Or 544 (2016) 555

narrowing implication of the modifier “legal”: Any “interest”

may qualify as long as it is “legally recognized.”

The other two requirements for standing announced

in Morgan are drawn from prior standing cases decided

under the declaratory judgment act and are less closely tied

to the statute’s wording. In addition to showing an injury

or impact on a legally recognized interest, a plaintiff must

show that the claimed injury or impact is real or probable,

not hypothetical or speculative. Morgan, 353 Or at 195.

Finally, the plaintiff must show that a decision by the court

will in some sense rectify the injury, i.e., that it will have “a

practical effect on the rights that the plaintiff is seeking to

vindicate.” Id. at 197.

Notably, Morgan makes no mention of any addi-

tional requirements—for instance, a requirement that

plaintiffs be the intended beneficiaries, either in a narrow

or broad sense, of any statute or other law about which

they seek a declaration. Neither do any of this court’s other

standing cases under the declaratory judgment act refer to

such a requirement. The city suggests, however, that such

a requirement is implicit in the analysis in certain of our

cases, most notably Doyle v. City of Medford, 356 Or 336, 337

P3d 797 (2014).

In Doyle, persons who had retired from employ-

ment with the city of Medford sought a declaration under

ORS 28.020 about the effect of a statute, ORS 243.303(2),

which requires local governments to extend to their retirees

the same health insurance coverage they provide to their

employees “insofar as and to the extent possible.” The plain-

tiffs argued that Medford had breached its duty under that

statute by refusing to allow them to continue their health

insurance coverage after their retirement. Medford argued

that allowing retirees to continue their coverage was too

costly and therefore not “possible” and, thus, that it had had

not violated the statute. The issue of the plaintiffs’ stand-

ing to bring their declaratory judgment claim arose, and

this court analyzed the standing issue—applying the three

standing considerations identified in Morgan—as follows:

“The first consideration is that there must be some injury or

other impact upon a legally recognized interest beyond an

556 MT & M Gaming, Inc. v. City of Portland

abstract interest in the correct application or the validity

of a law. Plaintiffs here satisfy that requirement: They are

members of the class of persons to whom the duty imposed by

ORS 243.303(2) is owed, and they claim injuries based on

the city’s asserted violation of that duty. The second consid-

eration is that the injury must be real or probable, not hypo-

thetical or speculative. Plaintiffs also satisfy that require-

ment: There is a present and actual dispute between the

parties about the existence and scope of plaintiffs’ rights

and the city’s obligations under the statute. The third and

final consideration is that the court’s decision must have

a practical effect on the rights that the plaintiff is seek-

ing to vindicate. Again, that requirement is satisfied. A

judgment to the effect that plaintiffs are entitled to health

insurance benefits under the statute would afford plaintiffs

a judicial declaration of rights that, at least prospectively,

would vindicate their rights under ORS 243.303(2).”

356 Or at 372 (citations omitted; emphasis added).

The city argues that that analysis suggests that, to

have standing to bring a declaratory judgment action with

respect to a given statute, plaintiffs must show that the

statute directly applies to their asserted interests. It shows,

in the city’s view, that the right or interest plaintiffs seek to

vindicate must be one that arises “under the statute,” and

that plaintiffs must be a “member[ ] of the class of persons”

at which the statute is directed—either by imposing a duty

or creating a right or “legally recognized interest.”

The city confuses what is sufficient to support

standing to bring a declaratory judgment action with what

is necessary. The fact that this court concluded in Doyle that

the requirements for standing were satisfied in those cir-

cumstances does not mean that those are the only circum-

stances that will support standing to challenge a statute

under the declaratory judgment act. Other cases from this

court illustrate the point; League of Oregon Cities v. State of

Oregon, 334 Or 645, 56 P3d 892 (2002) is an example. In the

first of two actions that this court considered in that case,

multiple plaintiffs brought declaratory judgment actions

challenging Ballot Measure 7 (2000), a voter-approved ini-

tiative that required state and local governments to either

compensate landowners for regulations that affected the

Cite as 360 Or 544 (2016) 557

value of their land or waive application of the regulation with

respect to that land. The plaintiffs sought a judicial decla-

ration that the measure was invalid because it had not been

enacted in accordance with the requirements of the Oregon

Constitution. Id. at 649-51. Of the plaintiffs, only two were

found to have standing—a rancher who had testified that

the measure would cause the county to waive limitations on

development near his ranch, which would lead to increased

development to an extent that would threaten his ability

to continue ranching the land, and a town mayor who said

that his home would decrease in value if, in response to the

measure, the county waived regulations that prevented a

neighbor from developing a mine on her property. Id. at 659-

61. The initiative measure at issue did not apply to those

plaintiffs—at least not directly. They were not state or local

governments; neither were they landowners whose land val-

ues were directly and adversely affected by state and local

regulations. Instead, the plaintiffs alleged that their land

values and other financial interests were affected indirectly,

by the measure’s operation on state and local governments.

Yet, in the absence of any direct application of the measure

to those plaintiffs, this court concluded that the plaintiffs

had demonstrated that the measure would adversely affect

their “legally cognizable interests” and that the plaintiffs

therefore had standing.

Perhaps in recognition of cases like League of Oregon

Cities, the city instead suggests that the standing require-

ment for which it contends is more properly formulated as

a requirement that the right or interest that allegedly is

affected by the statute at issue be within the “zone of inter-

ests” that the statute seeks to protect. And it is true that

the result in League of Oregon Cities could be explained in

those terms: If one allows that Ballot Measure 7 (2000) gen-

erally was concerned with the economic impacts of land use

regulation on landowners, a landowner’s interest in having

neighboring lands regulated in a way that promotes his or

her own economic interests arguably could be viewed as

within the measure’s “zone of interests.” But, again, there

is nothing in League of Oregon Cities that suggests that the

court in that case decided the standing issue on the basis of

a “zone of interest” requirement. The most that can be said

558 MT & M Gaming, Inc. v. City of Portland

about the case is that it shows that a plaintiff whose inter-

ests do fall generally within the intended objectives of the

targeted statute has standing to bring a declaratory judg-

ment act with regard to the statute.

The city argues, however, that, because the federal

courts and some other jurisdictions have adopted a “zone of

interest” requirement to establish standing to challenge a

statute or an interpretation thereof through a declaratory

judgment action, this court should do so as well.5 It points to

ORS 28.150, which provides that the declaratory judgment

act should “be so interpreted and construed as to effectuate

its general purpose to make uniform the law of those states

which enact it, and to harmonize, as far as possible, with

federal laws and regulations on the subject of declaratory

judgments.” But that argument presumes that the stand-

ing issue here is, at bottom, simply a question of statutory

construction—that is, that there are no relevant principles

of standing beyond the declaratory judgment statutes them-

selves, in either Oregon or the law of other jurisdictions.

The validity of that presumption is questionable, at best,

and given the significant differences between our own gen-

eral approach to standing and that of other jurisdictions, it

behooves us to consider the origins and application of the

“zone of interest” requirement before adopting it as part of

declaratory judgment jurisprudence on the theory that ORS

28.150 requires it.

THE “ZONE OF INTEREST” FORMULATION

The “zone of interest” formulation first arose in

a United States Supreme Court case, in the context of an

action brought under 5 USC section 702, a provision of the

federal Administrative Procedures Act (APA) that grants

5

See, e.g., Lexmark International, Inc. v. Static Control Components, Inc.,

527 US __, 134 S Ct 1377, 1388-89, 188 L Ed 2d 392 (2014) (describing “zone

of interest” test as generally applicable tool for determining who may invoke a

statutory cause of action); Five Corners Family Farmers v. State of Washington,

173 Wash 2d 296, 302-03, 268 P3d 892 (2011) (“In order to establish that a par-

ty’s ‘rights, status or other legal relations’ are affected by a statute,” the party’s

asserted interest must be “arguably within the zone of interests to be protected

or regulated by the statute * * * in question”); Zehner v. Village of Marshall, 288

Wis 2d 660, 668, 709 NW2d 64 (2005) (“To have standing, a party must [have

an ] ‘interest [that] is arguably within the zone of interests’ that [the] statute or

constitution provision under which the claim is brought, seeks to protect”).

Cite as 360 Or 544 (2016) 559

standing to “any person” who is “aggrieved by agency action

within the meaning of a relevant statute.” A data processing

business had challenged a ruling of the Comptroller of the

Currency that allowed national banks to provide data pro-

cessing services, as an incident to their banking services,

to other banks and to their customers. The district court

dismissed the complaint for lack of standing, and the United

States Court of Appeals for the Eighth Circuit affirmed,

holding that the plaintiff business lacked standing because

it had no “private legal interest” in the ruling. Ass’n of Data

Processing Service Organizations, Inc. v. Camp, 406 F2d

837, 843 (8th Cir 1969). When the Eighth Circuit thus con-

cluded that the plaintiff’s standing depended on it having a

“private legal interest” that was affected, it was looking for

a legal right in a traditional, private rights sense—“one of

property, one arising out of contract, one protected against

tortious invasion, or one founded on a statute which con-

fers a privilege.” 406 F2d at 840 (quoting Tennessee Electric

Power Co. v. TVA, 306 US 118, 137-38, 59 S Ct 366, 83 L Ed

543 (1939)).

On review of the Eighth Circuit’s decision, the

United States Supreme Court rejected that “legal interest”

requirement and the associated private rights model as

appropriate criteria for standing under the APA. Ass’n of

Data Processing Service Organizations, Inc. v. Camp, 397 US

150, 90 S Ct 827, 25 L Ed 2d 184 (1970). It held that, instead,

to satisfy the “case or controversy” requirement of Article III

of the United States Constitution, an “injury in fact” was

required. In addition, the question of standing concerned

“whether the interest sought to be protected by the com-

plainant is arguably within the zone of interests to be pro-

tected or regulated by the statute or constitutional guar-

antee in question. Thus the Administrative Procedure Act

grants standing to a person ‘aggrieved by agency action

within the meaning of a relevant statute.’ That interest,

at times, may reflect ‘aesthetic, conservational, and recre-

ational’ as well as economic values.”

397 US at 153 (citations omitted). The court explained why

that broader concept of standing is particularly fitting for

claims that specific governmental actions are contrary to

statute: “Where statutes are concerned, the trend is toward

560 MT & M Gaming, Inc. v. City of Portland

enlargement of the class of people who may protest adminis-

trative action. The whole drive for enlarging the category of

aggrieved ‘persons’ is symptomatic of that trend.” Id. at 154.

Thus, after finding that the plaintiff had satisfied

what the court identified as the “case or controversy” require-

ment of Article III of the United States Constitution—injury

in fact—by showing it had lost revenue because of the activ-

ities that the Comptroller’s ruling allowed, the Supreme

Court in Data Processing applied a “zone of interest” test to

the plaintiff’s asserted interests. It concluded that the plain-

tiff’s interest in precluding banks from competing against

it in its business of providing a non-banking service to both

banks and consumers arguably was within the zone of inter-

ests protected by the Bank Service Corporation Act of 1962,

76 Stat 1132, 12 USC section1864, which limits the services

that bank service corporations can perform. The plaintiff

therefore had standing to bring its action. Id. at 157-58.

After Data Processing, some lower federal courts

began to apply the zone of interests test as a general restric-

tion on standing in all public law cases, identifying it as a

general “prudential” requirement. See, e.g., Idaho v. ICC,

35 F3d 585, 590 (DC Cir 1994) (applying zone of interest

requirement in examining standing to bring claims under

Endangered Species Act); Mount Graham Red Squirrel v.

Espy, 986 F2d 1568, 1581 (9th Cir 1993) (applying zone of

interest test to Arizona-Idaho Conservation Act; Dan Caputo

Co. v. Russian River County Sanitation Dist, 749 F2d 571,

574 (9th Cir 1984) (applying zone of interest test to citizen

suit provision of Clean Water Act).6 Notably, when used in

contexts other than the APA, the test often had the effect

of constricting, rather than enlarging, the category of per-

sons who otherwise would have standing under the relevant

statute: Statutes by their terms might give unrestricted

6

Other courts, including the U.S. Supreme Court on some occasions, declined

to apply the zone of interest test outside of the APA context. See, e.g., Wyoming

v. Oklahoma, 502 US 437, 112 S Ct 789, 117 L Ed 2d 1 (1992) (in Commerce

Clause challenge brought by the state of Wyoming against Oklahoma’s statute

requiring coal burning utilities to use ten percent Oklahoma coal, Wyoming was

found to have standing based on an injury in fact—falling tax revenues from coal

sales—without any consideration of whether that tax effect was within the zone

of interests protected by the Commerce Clause).

Cite as 360 Or 544 (2016) 561

access to a cause of action, but application of the zone of

interest test meant that only persons with certain types of

interests would be deemed to have standing. At one point,

the Supreme Court explained that, although the zone of

interest test in fact was a generally applicable prudential

requirement, Congress could legislatively negate its appli-

cation by broadly defining the class of persons who were

entitled to sue under the statute. Bennett v. Spear, 520 US

154, 163-64, 117 S Ct 1154, 137 L Ed 2d 281 (1997) (declin-

ing to apply zone of interest test to limit standing under

Endangered Species Act to persons alleging ecological inter-

ests, because statute provides for action by “any person”).

The Court justified that theory of legislative negation with

a presumption that Congress legislated “against the back-

ground of our prudential standing doctrine.” Id. at 163.

More recently, however, in Lexmark International,

Inc. v. Static Control Components, Inc., 527 US __, 134 S Ct

1377, 188 L Ed 2d 392 (2014), the Supreme Court rejected

the characterization of the zone of interest requirement as a

prudential doctrine and suggested that it is best understood

as an inquiry into statutory intent—“whether a legislatively

conferred cause of action encompasses a particular plain-

tiff’s claim.” 527 US at __, 134 S Ct at 1387. Although the

Court in Lexmark formally acknowledged the idea of legisla-

tive negation, it ultimately concluded that the zone of inter-

est test would apply even when the statute at issue, when

“read literally,” seemed to allow anyone who was “factually

injured” to sue. 134 S Ct at 1388. Thus, it appears that,

at least in the federal courts, the zone of interest test has

evolved into the presumed test by which a court determines

whether a party has standing and that that presumption

can rarely, if ever, be overcome.

A LEGALLY RECOGNIZED INTEREST IS REQUIRED

Having set out that brief history of the zone of

interest requirement in federal standing law, we turn to the

question of whether and how that requirement might relate

to a question of standing under our declaratory judgment

act. As an initial matter, we can dismiss outright the idea

that the requirement is specifically one of “federal law[ ] * * *

562 MT & M Gaming, Inc. v. City of Portland

on the subject of declaratory judgments,” with which, under

ORS 28.150, we must attempt to harmonize Oregon’s declar-

atory judgment statute. The foregoing history clearly shows

that the requirement is a matter of general federal standing

jurisprudence.

To the extent that the city is suggesting that Oregon

might have a similar general standing rule, applicable to

any statutory cause of action, either as a prudential mat-

ter or based on a presumption that the legislature legislates

against the backdrop of a zone of interest requirement, it

clearly is wrong. This court never has referred to such a

general standing requirement—prudential or otherwise—

in cases where the issue might be expected to arise. And,

in the absence of any statement about the requirement in

our cases, the usual justification for generally applying a

zone of interest requirement also is absent: One cannot pre-

sume that the legislature has been legislating with such a

requirement in mind.

The city suggests that a “zone of interest” require-

ment particular to the declaratory judgment act is implied

by the standing requirement, identified in Morgan, that the

application or interpretation of the law at issue cause “some

injury to or impact upon a legally recognized interest [of the

plaintiff’s], beyond an abstract interest in the correct appli-

cation or the validity of [the] law.” 353 Or at 195. The city

thus argues that, when a declaratory judgment claim relies

upon a statute, an interest asserted can only be “legally rec-

ognized” if it is in the zone of interests that the statute seeks

to protect.

The city’s suggestion raises an obvious question:

What did this court mean, in Morgan and other standing

cases under the declaratory judgment act that have used

the term, by a “legally recognized interest?” Id. To begin,

it is evident that the requirement is looking for something

more than a simple “injury in fact”: The injury must be to

an interest that is “legally recognized.” As a general prop-

osition, legal recognition can come from many sources—

statutes, constitutional provisions, regulations, local ordi-

nances, and the historical and evolving common law. Did

this court in Morgan, as the city suggests, use the phrase

Cite as 360 Or 544 (2016) 563

“legally recognized” to refer to something less than that full

range of possibilities when the declaratory judgment action

is directed at a statute? Did we mean that only interests

that are defined or recognized by the self-same statute are

relevant in that context? An examination of our standing

cases under the declaratory judgment act suggests that that

is not the case.

In the two declaratory judgment cases that we have

discussed thus far—Doyle and League of Oregon Cities, the

plaintiffs’ interests that allegedly were affected in fact were

legally recognized by the very statutes about which the

plaintiffs sought declarations. Doyle supports what would

seem to be obvious: that a person whose interests are the

very object of a statute at issue, viz., a person who, in effect,

is the statute’s intended beneficiary, has standing to seek a

declaration as to the statute’s validity, meaning or effects.

League of Oregon Cities shows that a person whose interests

are within the statute’s broader purposes or “zone of inter-

est,” but are not necessarily its direct object, also has stand-

ing to bring a declaratory judgment action with respect to

the statute.

Other cases show, however, that an affected inter-

est may be legally recognized by some source other than

the statute targeted in the declaratory judgment action.

In Eckles, an employer insured by SAIF was found to have

standing to seek declaratory relief with respect to a statute

that transferred SAIF funds to the state’s general fund, on

the theory that he had property rights in the SAIF fund and

that the transfer would impair his insurance contract with

SAIF. 306 Or at 380-86. This court explained that those

property and contract interests, which have their source

in the common law, provided a basis for standing under

the UDJA: “Whatever else may be included in the phrase

‘rights, status or other legal relations’ in ORS 28.020, the

phrase certainly includes property and contract rights.” Id.

at 385. While it might be possible, at this juncture, to craft

an argument that those property and contract rights were

within the broad purposes of the transfer statute at issue

and thus were legally recognized by that statute, the fact

remains that this court in Eckles expressed no interest in

the question.

564 MT & M Gaming, Inc. v. City of Portland

And, in Eckles, the court also called attention to

another line of cases in which this court has given legal

recognition to an interest other than an interest within the

broad purposes of the statute at issue—cases in which this

court has declared that a taxpayer’s interest in avoiding

excessive or improper taxes can support standing to seek a

declaration regarding the validity, meaning, or application

of a statute under the declaratory judgment act. Id. at 585.

In one case in that line, Hanson v. Mosser, 247 Or 1, 427

P2d 97 (1967), an unsuccessful bidder on a state contract

sought a declaration that the state’s award of the contract to

another bidder violated a state statute requiring that pub-

lic contracts be awarded to the “lowest responsible bidder.”

The court concluded the unsuccessful bidder had standing

to bring the action as a taxpayer “whose tax burden will be

augmented by unlawful expenditure of public funds.” 247

Or at 11. In another such case, Childs v. Marion County, 163

Or 411, 97 P2d 955 (1940), the court held that a taxpayer

had standing to seek a declaration that defendant govern-

ments were not following a statutorily-required lien foreclo-

sure procedure, because the taxpayer’s tax burden would

be increased by waste arising from improper procedure.

Although this court also has held that a bare allegation of

taxpayer status is insufficient, and that, to have standing,

plaintiffs must allege that they have suffered adverse tax

consequences as a result of the challenged governmental

action,7 this court’s recognition of “taxpayer standing” in

appropriate cases demonstrates the problem with the city’s

argument here. This court has not limited standing to those

instances in which plaintiffs can demonstrate that they are

the direct object of, or in which their asserted interests fall

within the broader purposes of, the statutes that they place

at issue. Rather, this court has recognized both that stand-

ing to challenge a statute under the declaratory judgment

act extends to all who allege and ultimately can demonstrate

a legally recognized interest that is affected by the relevant

statute, and that legal recognition can come from a variety

of sources, not only from the statute under consideration.

7

See Gruber v. Lincoln Hospital District, 285 Or 3, 8-9, 588 P2d 1281 (1970)

(without demonstrating how agreement affected tax liability, taxpayer did not

have standing to seek invalidation of hospital service agreement).

Cite as 360 Or 544 (2016) 565

PLAINTIFF’S INTEREST IS NOT

LEGALLY RECOGNIZED

With that understanding, we now must consider

whether the interest that plaintiff relied on in this case so

qualifies. Plaintiff essentially alleged and, in response to

the city’s motion for summary judgment offered evidence

of, a competitive injury—that it was adversely affected by

the city’s misapplication of the social gaming statutes “in

that a significant portion of its patrons and customers have

stopped attended plaintiff’s lawful operation, and have

elected to attend and participate in the unlawful operations

of the establishments granted permits by the city.”

Plaintiff has not, however, identified any basis for

concluding that that injury affects an interest that is legally

recognized within the meaning of the standing requirements

set out in Morgan. First, Oregon’s social gaming laws do not

seek to protect, or otherwise “recognize,” such an interest.

As the city correctly asserts, “Oregon’s gambling statutes,

and Portland’s social gaming ordinance, are not intended to

protect out-of-state gambling operations * * * against compe-

tition from locally-licensed social games.” Second, no prin-

ciple in Oregon’s common law tradition appears to protect

that particular competitive interest.8

As to other possibilities beyond those traditional

sources for legal recognition of the asserted competitive

interest, plaintiff has failed to sufficiently develop an argu-

ment that we find persuasive. Although this court’s deci-

sion in Hanson and certain Court of Appeals’ decisions may

suggest that some interests in fair competition (i.e., compe-

tition on equal terms) might support standing under the

declaratory judgment act,9 plaintiff’s asserted interest here

8

There are common law principles that might be said to give legal recogni-

tion to certain, more specific competitive interests—those relating to, for exam-

ple, trademark infringement, business defamation, and the like. None of those

are relevant to the present case.

9

The Court of Appeals appeared to recognize an interest in fair and equal

competition as sufficient to support standing under the declaratory judgment

act in Associated Reforestation Contractors, Inc v. Workers’ Compensation Bd.,

59 Or App 348, 650 P2d 1068 (1982) and Thunderbird Motel v. City of Portland,

40 Or App 697, 596 P2d 994 (1979). In Associated Reforestation Contractors, a

trade association of reforestation companies sought a declaratory judgment that

the defendant, a reforestation cooperative, was subject to the same workers’

566 MT & M Gaming, Inc. v. City of Portland

is not such an interest. Instead, plaintiff’s asserted inter-

est is anti-competitive: Plaintiff seeks an interpretation of

Oregon’s gambling and social gaming laws that would allow

it to maintain the competitive advantage that it enjoyed

when, under Washington law, it could conduct betting

games that its competitors, operating under the constraints

of Oregon law, could not obtain permits to conduct.

For the reasons stated, we agree with the trial

court’s and Court of Appeals’ ultimate conclusion that plain-

tiff lacked standing to bring this action. However, to reit-

erate, we base our conclusion on different reasoning. We

reject the idea that, to establish standing to seek a decla-

ration about a statute’s validity, meaning, or effect, a plain-

tiff must show that it is subject to the statute or that its

alleged interests are within the zone of interests that the

statute seeks to protect. Rather, to have standing to seek a

declaration with respect to a statute, a plaintiff must show

that it has a “legally recognized interest” that is adversely

affected by the statute. Morgan, 356 Or at 372. An affected

interest may be legally recognized by the very statute at

issue in the declaratory judgment action, but it also may be

legally recognized by other sources. In this case, plaintiff

lacked standing to seek a declaration about the meaning of

Oregon’s social gaming statutes because it failed to assert

or sufficiently develop an argument that its interest in the

interpretation of those statues is an interest that is legally

recognized by any source.10

compensation laws that burdened the trade association’s members. The Court

of Appeals concluded that, insofar as the defendant cooperative’s avoidance of

workers’ compensation insurance costs had allowed it to underbid the trade asso-

ciation’s members on reforestation contracts, the trade association had a “right,

status, or other legal relation” that was affected by the workers’ compensation

laws and, thus, it had standing to bring the declaratory judgment action. 59 Or

App at 351-52. In Thunderbird Motel, the Court of Appeals held that a hotel’s

interest in preventing a newly constructed competitor hotel from enjoying special

advantages conveyed to it in a contract with the City of Portland was one that

would support the hotel’s standing to seek a declaration that the contract with

the city violated Article XI, section 9, of the Oregon Constitution. 40 Or App at

700-03. Those cases do not assist plaintiff here, because the interest that plaintiff

asserts is essentially anti-competitive.

10

Plaintiff obliquely suggests that, in any event, it has standing to seek a

somewhat different declaration—that plaintiff may apply for and obtain a per-

mit from the city to operate a card room in Portland on the same terms that

city social gaming permittees have been operating. However, as described above,

Cite as 360 Or 544 (2016) 567

The judgment of the trial court and the decision of

the Court of Appeals are affirmed.

plaintiff did not include a prayer for that declaration in its original complaint, but

moved for permission to add it in an amended complaint, which motion the trial

court denied. In the absence of any argument that the trial court’s denial of the

motion to amend was an abuse of discretion, we will not consider that issue and,

thus, have no reason to consider whether plaintiff’s alternative prayer for relief

provided a basis for standing.