Appendix — South Carolina v. Holliday Amusement Co. of Charleston, Inc.

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APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

DECIDED MARCH 8, 2005

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 02-1122

HoLLipAY AMUSEMENT COMPANY OF CHARLESTON,

INCORPORATED; WARREN P. HOLLIDAY,

Plaintiffs-Appellants,

V.

STATE OF SOUTH CAROLINA; GRADY L. PATTERSON, JR., in his

official capacity as Treasurer of the State of South Carolina;

Jim Hopces, Governor of South Carolina; CHarLes M.

Conpon, Attorney General; Ropert M. Stewart, individually,

Defendants-Appellees.

Appeal from the United States District Court

for the District of South Carolina, at Charleston.

C. Weston Houck, District Judge.

(CA-01-210-2-12)

Argued: October 29, 2002

Decided: March 8, 2005

Before WIDENER, WILKINSON, and KING, Circuit

Judges.

2a

Appendix A

Vacated and remanded with instructions by published

opinion. Judge WIDENER wrote the opinion, in which Judge

WILKINSON and Judge KING concurred.

OPINION

WIDENER, Circuit Judge:

The plaintiffs are Warren P. Holliday and Holliday

Amusement Co., Inc., of which Warren Holliday is the sole

owner and operator (Holliday). On January 19, 2001,

Holliday filed a complaint in the United States District Court

for the District of South Carolina, Charieston Division

alleging that South Carolina’s enactment and enforcement

of 1999 S.C. Act No. 125, now codified as S.C.Code Ann.

§ 12-21-2710 (2000) (the Act), destroyed Holliday’s business,

resulting in an unconstitutional taking of his property in

violation of the Constitution and 42 U.S.C. § 1983. Holliday

sought declaratory and injunctive relief, or, in the alternative,

damages arising out the unconstitutional taking. On

December 21, 2001, the district court dismissed the action

based on its finding that the court lacked subject matter

jurisdiction because the major issues of the case had

previously been litigated in Westside Quik Shop, Inc. v.

Stewart, 534 S.E.2d 270 (2000), cert. denied, 531 U.S. 1029

(2000), thereby divesting the district court of jurisdiction

under the Kooker-Feldman doctrine.

Because we believe that Johnson v. De Grandy, 512 U.S.

997 (1994), decided that the Rooker-Feldman doctrine does

not apply when the party asserting the claim in federal court

3a

Appendix A

was not a party to the state proceedings, and because the

subsequent Supreme Court and Fourth Circuit cases citing

Johnson have continued to uphold this standard, we vacate

the district court’s decision.

I.

Since 1976, Warren Holliday has owned and operated

Holliday Amusement Co., Inc. in South Carolina, in which

he sold video gaming machines throughout the State. On

July 1, 1999, the State of South Carolina enacted S.C. Act

No. 125, which made possession of video gaming machines

illegal after July 1, 2000, and subjected the machines to

forfeiture and destruction by the State. S.C.Code Ann.

§ 12-21-2710 (2000). At the time the Act went into effect,

Holliday owned 532 operational video gaming machines.

Immediately following its enactment, owners and lessees of

video gaming machines filed suit in a South Carolina state

court challenging the constitutionality of the Act. Holliday

was not a party in the Westside Quik Shop, Inc. litigation,

but was a member of the South Carolina Coin Operators

Association which filed an amicus brief in the South Carolina

court.' See Brief of Amici Curiae S.C. Coin Operators Ass’n,

Inc., Westside Quik Shop, Inc. v. Stewart, 531 U.S. 1029

(2000) (00-433). The plaintiffs in Westside Quik Shop, Inc.

sought an injunction against enforcement of the Act, claiming

that it effected an unconstitutional taking of their property

1. Holliday claims that he could not have been a party to the

Westside Quik Shop, Inc. litigation because his claim would not have

been ripe for state court review during the pendency of that litigation.

Appellant’s Brief at 5, Holliday Amusement Co. v. South Carolina,

00-1122.

4a

Appendix A

without just compensation. Westside Quik Shop, Inc., 534

S.E.2d at 271.

The South Carolina Supreme Court found that the Act

did not constitute an unconstitutional taking without just

compensation, and because that court did not find a

Constitutional violation, it summarily disposed of the

plaintiff's 42 U.S.C. § 1983 claim. Westside Quik Shop, Inc.,

534 S.E.2d at 275. Thus, the court refused to enjoin

enforcement of the Act. The Act went into effect as of

July 1, 2000, as codified under S.C.Code Ann. § 12-21-2710.

On January 19, 2001, Holliday brought this action in

federal district court, claiming that enactment and

enforcement of the Act destroyed his business, resulting in

millions of dollars of uncompensated loss, which constituted

a taking in violation of the U.S. Constitution and 42 U.S.C.

§ 1983. He sought declaratory and injunctive relief, or,

alternatively, damages arising out of the alleged

uncompensated taking.

After reviewing the record of the Westside Quik Shop,

Inc. case, the district court granted the motion to dismiss for

lack of subject matter jurisdiction because it held the Rooker-

Feldman doctrine applied. Holliday appealed. We vacate and

remand.

On appeal, Holliday raises as the following principal

issue that the Rooker-Feldman doctrine is inapplicable

because Holliday was not a party to the Westside Quik Shop,

Inc. litigation. He argues that he could not have been because

his injury did not arise until after the South Carolina Supreme

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Appendix A

Court rendered its decision to enforce the Act, and Holliday’s

lawsuit is ripe for federal court review and federal court

ripeness requirements do not implicate the Rooker-Feldman

doctrine.

Expressing no opinion on the merits, we review de novo

the district court’s dismissal of Holliday’s claims for lack of

subject matter jurisdiction. See Evans v. B.F. Perkins Co.,

166 F.3d 642, 647 (4th Cir.1999); Guess v. Bd. Of Med.

Exam’rs of State of N.C., 967 F.2d 998, 1002 (4th Cir.1992).

Il.

The Rooker-Feldman doctrine is a jurisdictional rule

providing that lower federal courts generally cannot review

state court decisions; rather, jurisdiction “lies exclusively

with superior state courts, and, ultimately, the United States

Supreme Court.” See Allstate Ins. Co. v. W. Va. State Bar,

133 F.3d 813, 816 (4th Cir.2000). See also District of

Columbia Ct.App. v. Feldman, 460 U.S. 462, 482-86 (1983);

Rooker v. Fid. Trust Co., 263 U.S. 413, 415-16 (1923). Under

this doctrine, federal district courts are barred from

considering issues already presented by a party and decided

by a state court and also are barred from hearing

Constitutional claims that are “‘inextricably intertwined with’

questions [so] ruled upon by a state court.” Plyler v. Moore,

129 F.3d 728, 731 (4th Cir.1997). A federal claim is

considered to be “inextricably intertwined” with a state court

judgment when “the federal claim succeeds only to the extent

that the state court wrongly decided the issues before it.”

Allstate Ins. Co., 233 F.3d at 819.

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Appendix A

The first argument that Holliday asserts is that Rooker-

Feldman is inapplicable because Holliday was not a party in

the Westside Quik Shop, Inc. litigation. The Supreme Court

decided this issue in Johnson v. De Grandy, 512 U.S. 997

(1994) in favor of Holliday’s argument, and neither any

Supreme Court nor a fourth circuit decision since Johnson

has lessened the impact of that holding.

In Johnson, separate groups of Hispanic and black voters

claimed that Florida’s reapportionment plan establishing

legislative districts for the state Senate and House unlawfully

diluted the voting strength of Hispanics and blacks in

violation of § 2 of the federal Voting Rights Act of 1965.

In a review required by the State Constitution, initiated by

the Florida Attorney General, the Supreme Court of Florida,

by declaratory judgment, held the plan valid under federal

and state law. /n re: Constitutionality of SENATE JOINT

RESOLUTION 2G, SPECIAL APPORTIONMENT SESSION,

597 So.2d 276 (Fla.1992). The Florida court, however, also

acknowledged that time restraints prevented a full review

and authorized any “protestor” to bring a Voting Rights Act

challenge in that court. The plaintiffs, however, chose to bring

their § 2 claim in federal district court. The United States

also filed a similar complaint in the district court,

alleging a § 2 violation. After consolidating the actions, the

district court found in favor of the plaintiffs. Johnson, 512

U.S. at 1001-04. On appeal, the Court rejected the State’s

argument that the claims of the United States should have

been dismissed under the Rooker-Feldman rule because they

had already been litigated before the Supreme Court of

Florida. Johnson, 512 U.S. at 1005-06. Accordingly, the

Court denied the State’s argument that the federal

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Appendix A

government’s § 2 challenge should be dismissed under the

Rooker-Feldman doctrine. The Court explained that “because

the United States was not a party in the state court,” the

Rooker-Feldman doctrine did not apply and thus the United

States’ claim was not barred.

The Supreme Court in Johnson could hardly have stated

more clearly that the Rooker-Feldman doctrine did not apply

other than to parties in the state proceedings. And in the 14

subsequent Supreme Court cases which cite the Johnson

decision, none dilute this requirement.’ In the case at hand,

Holliday was not a party to the Westside Quik Shop, Inc. state

litigation.

This court also has not watered down that aspect of the

Rooker-Feldman discussion found in Johnson. We have cited

Johnson nine times, and have not disturbed the requirement

of participation in the state proceeding.’ In particular, two

2. See Vieth v. Jubelirer, 541 U.S. 267 (2004); Georgia v.

Ashcroft, 539 U.S. 461, 473, n. | (2003); Reno v. Bossier Parish

Sch. Bd., 528 U.S. 320, 368 (2000); Lopez v. Monterey County, 525

U.S. 266, 280 (1999); Lawyer v. DOJ, 521 U.S. 567, 570 (1997);

Abrams v. Johnson, 521 U.S. 74, 92 (1997); Reno v. Bossier Parish

Sch. Bd., 520 U.S. 471, 480 (1997); Bush v. Vera, 517 U.S. 952, 979

(1996); Shaw v. Hunt, 517 U.S. 899, 913 (1996); Morse v. Republican

Party, 517 U.S. 186, 232 (1996); City of Bridgeport v. Bridgeport

Coalition for Fair Representation, $12 U.S. 1283, 1283 (1994); Tyus

v. Bosley, 512 U.S. 1249 (1994); McWherter v. Rural W. Tenn.

African-American Affairs Council, 512 U.S. 1248, 1248 (1994);

Holder v. Hall, 512 U.S. 874, 908 (1994). We hasten to add that

these citations refer to the merits of Johnson, not Rooker-Feldman.

The fact remains that the Supreme Court has not altered its rule.

3. See Hall v. Virginia, 385 F.3d 421, 426 (4th Cir.2004);

Shooting Point, L.L.C. v. Cumming, 368 F.3d 379, 383 (4th Cir.2004);

(Cont'd)

8a

Appendix A

cases from this court specifically state that the Rooker-

Feldman doctrine is inapplicable in instances in which the

person asserting the claim in federal court was not a party to

the state proceeding. See, e.g., Barefoot v. City of Wilmington,

306 F.3d 113 (4th Cir.2002); Gross v. Weingarten, 217 F.3d

208 (4th Cir.2000).

In Barefoot v. City of Wilmington, this court held that

the district court had jurisdiction with respect to litigants

who were not parties to a state court proceeding, but held

that the Rooker-Feldman doctrine barred suit by those who

were parties because they “had a ‘reasonable opportunity’ to

litigate the constitutional issues in state court.” Barefoot, 306

F.3d at 121 (citations omitted). In Barefoot, several plaintiffs

brought suit in a North Carolina court against the city of

Wilmington, alleging that it had failed to comply with North

Carolina’s annexation statutes. After the state court decided

that the City had complied, some of the same plaintiffs who

were parties to the state court proceeding and a number of

new plaintiffs brought suit in federal court alleging that the

annexation statutes were unconstitutional. Barefoot, 306 F.3d

at 121. We decided that the plaintiffs who had been parties

(Cont’d)

United States v. Charleston County, 365 F.3d 341, 345 (4th Cir.2004);

Am. Reliable Ins. Co. v. Stillwell, 336 F.3d 311, 316 (4th Cir.2003);

Vulcan Chem. Techs., Inc. v. Barker, 297 F.3d 332, 338 (4th Cir.2002);

Gross v. Weingarten, 217 F.3d 208, 218, n. 3 (4th Cir.2000); Brown

& Root, Inc., v. Breckenridge, 211 F.3d 194, 198 (4th Cir.2000); Lewis

v. Alamance County, 99 F.3d 600, 604 (4th Cir.1996); Cane v.

Worcester County, 35 F.3d 921, 925 (4th Cir.1994). Hall, Charleston

County, Lewis and Cane do not mention the Rooker-Feldman

question, the others do.

9a

Appendix A

in the state suit were barred by the Rooker-Feldman doctrine

because they could have brought their Constitutional claims

in the state court proceeding, and thus were barred from

presenting this issue to the federal court. Barefoot, 306 F.3d

at 121. Those plaintiffs who were not parties in the state

court proceeding, however, were allowed to bring their

suit. “Claims by individuals not party to the state court

proceedings, however, are not barred.” Barefoot, 306 F.3d

at 120.

The case of Gross v. Weingarten arose out of a state

receivership in which the plaintiff challenged in a subsequent

case in the federal district court the admission of certain

evidence that was contradictory to a holding in the state

receivership proceeding. Gross, 217 F.3d at 217-18. This

court found that because the defendants who were offering

the evidence were not parties to the state proceeding, they

were not bound by the holding of the receivership proceeding

and were not barred by collateral estoppel. In so finding, the

court, rejected application of Rooker-Feldman to bar

admission of the evidence because the defendants were not

a party to the state court proceeding. Gross, 217 F.3d at

218 n.6. Citing Johnson, the court stated that “‘Rooker-

Feldman does not apply, however, when the person asserting

the claim in the federal suit was not a party to the state

proceeding.” Gross, 217 F.3d at 218 n.6.

Both Barefoot and Gross demonstrate this court’s

commitment to the requirement that, absent participation in

the state proceeding, a Rooker-Feldman objection to

jurisdiction is not well taken. Moreover, three other circuits

have adopted a rule, declining to apply the Rooker-Feldman

10a

Appendix A

doctrine when a federal court suit is brought by a party who

was not a party in the preceding state court action.’

We realize that the wording in Fe/dman, 460 U.S. at 486,

that “These allegations [complained of] are inextricably

intertwined with the District of Columbia Court of Appeals’

decisions, in judicial proceedings, to deny the respondents’

petitions,” has been variously construed in many cases, as

did the district court in this case: “Federal courts are generally

barred from not only considering issues actually presented

to and decided by [a] state court, but also hearing

constitutional claims that are inextricably intertwined with

questions ruled upon by a state court as when success on the

federal claim depends on a determination that the state court

wrongly decided the issues before it.” Nevertheless,

subsequent to the decision in Johnson, the decisions in this

circuit have uniformly followed the Johnson rule, that a party

to the proceeding in the state court may not subsequently

request a federal court to examine the same question, but a

non-party to the state court proceeding is not so bound.

If there is a fact situation in which a federal plaintiff who

was not a party to the state proceeding is nevertheless

inextricably intertwined with the state decision, we express

4. See Bennett v. Yoshina, 140 F.3d 1218, 1223-24 (9th

Cir.1998), cert. denied sub-nom. Citizens for a Constitutional

Convention v. Yoshina, 525 U.S. 1103 (1999); United States v. Owens,

54 F.3d 271, 274 (6th Cir.1995); Valenti v. Mitchell, 962 F.2d 288,

297-98 (3d Cir.1992); cf Wright & Miller, Federal Practice &

Procedure § 4469.1 (2002). The Sixth Circuit, in United States v.

Owens, explained this rational when it stated, “a party cannot be

said to be appealing a decision by a state court when it was not a

party to the case.” Owens, 54 F.3d at 274.

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Appendix A

no opinion as to that question, but we observe that no such

situation has been presented to us, at least since the decision

in Johnson, which we follow.

The second issue that Holliday asserts is that the Westside

Quik Shop, Inc. litigation made Holliday’s present suit ripe

pursuant to the ripeness doctrine, as established under

Williamson County Regional Planning Commission v.

Hamilton Bank of Johnson City, 473 U.S. 172 (1985).

Holliday makes this argument in an effort to avoid the

application of the Rooker-Feldman doctrine. Because we

have otherwise held that the Rooker-Feldman doctrine 1s

inapplicable we de aot reach this issue.

The judgment of the district court is vacated and the case

is remanded for further proceedings not inconsistent with

this opinion.

VACATED AND REMANDED WITH INSTRUCTIONS

12a

APPENDIX B — MINUTE ORDER OF THE DISTRICT

COURT FOR THE DISTRICT OF SOUTH CAROLINA,

CHARLESTON DIVISION FILED

DECEMBER 21, 2001

IN THE DISTRICT COURT OF THE

UNITED STATES

FOR THE DISTRICT OF SOUTH CAROLINA,

CHARLESTON DIVISION

Civil Action No. 2:01-0210-12

HOLLIDAY AMUSEMENT COMPANY, INC., AND

WARREN P. HOLLIDAY,

Plaintiff,

VS.

STATE OF SOUTH CAROLINA, GRADY L. PATTERSON,

JR., in his official capacity as Treasurer of the State of South

Carolina, and GOVERNOR JIM L. HODGES, ATTORNEY

GENERAL CHARLES M. CONDON, ROBERT M.

STEWART, individually,

Defendant.

MINUTE ORDER

This matter was before the Court upon defendants’

motion to dismiss.

13a

Appendix B

For the reasons stated from the bench at the conclusion

of oral argument, the motion is granted.

IT IS SOORDERED.

BY DIRECTION OF THE COURT

LARRY W. PROPES, Clerk

By s/ Gail S. Johnson

Gail S. Johnson

Deputy Clerk

Charleston, South Carolina

December 21, 2001

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APPENDIX C — EXCERPTS FROM TRANSCRIPT OF

PROCEEDINGS IN THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF SOUTH CAROLINA,

CHARLESTON DIVISION DATED DECEMBER 20,

2001 (JUDGE C WESTON HOUCK’S RULING)

* * *

THE COURT: All right. It seems to me that the

issues we have before us are very simple. It seems

to me very obvious that the Rooker-Feldman

doctrine applies.

Under Rooker-Feldman, as stated by the Fourth

Circuit, in Allstate Insurance Company vs. West

Virginia State Bar, 233 F.3d. 813,... federal

courts are generally barred from not only

considering issues actually presented to and

decided by state court, but also hearing

constitutional claims that are inextricably

intertwined with questions ruled upon by state

court, as when success on the federal claim

depends upon a determination that the state court

wrongly decided the issues before it.

And that’s precisely what we’ve got here. We may

have some minor issues in this case that are

different from what exists in the West Side Quik

Shop, Inc. case, which of course is reported at

[534 S.E.2d 270]. But the underlying points that

are raised in that case are identical to the issues

that will be presented in the instant case.

15a

Appendix C

And the only way that plaintiff could recover in

this case is for the Court to conclude that the major

issues decided in West Side Quik Shop, Inc. were

wrong. And I believe that under the circumstances

in this case, that case is controlling. That case calls

into play the Rooker-Feldman doctrine and causes

this court to lack . . . subject matter jurisdiction.

* * * *

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APPENDIX D — JUDGMENT OF THE UNITED

STATES DISTRICT COURT FOR THE DISTRICT OF

SOUTH CAROLINA, CHARLESTON DIVISION

FILED DECEMBER 21, 2001

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

Case Number: 2:01-210-12

HOLLIDAY AMUSEMENT COMPANY, INC., and

WARREN P. HOLLIDAY,

Plaintiffs,

VS.

STATE OF SOUTH CAROLINA, GRADY L. PATTERSON,

JR., in his official capacity as Treasurer of the State of South

Carolina, and GOVERNOR JIM L. HODGES, ATTORNEY

GENERAL CHARLES M. CONDON, ROBERT M.

STEWART, individually,

JUDGMENT IN A CIVIL CASE

[X] Decision by Court. This action came to a hearing before

the Court, the Honorable C. Weston Houck presiding. The

issues have been duly heard and a decision has been duly

rendered.

IT IS ORDERED AND ADJUDGED that the

defendants’, State of South Carolina, Grady L. Patterson, Jr.,

in his official capacity as Treasurer of the State of South

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Appendix D

Carolina, and Governor Jim L. Hodges, Attorney General

Charles M. Condon, Robert M. Stewart, individually, motion

to dismiss for lack of subject matter jurisdiction is granted

and this action is hereby dismissed.

LARRY W. PROPES, Clerk

By s/ Gail S. Johnson

Gail S. Johnson

Deputy Clerk

December 21, 2001

@

No. 04-1650

IN THE

Supreme Court of the United States

STATE OF SOUTH CAROLINA; GRADY L.

PATTERSON, JR., in his official capacity as Treasurer of

the State of South Carolina; JIM HODGES, Governor of

South Carolina; CHARLES M. CONDON, Attomey

General; and ROBERT M. STEWART, individually,

Petitioners,

Vv

HOLLIDAY AMUSEMENT COMPANY OF

CHARLESTON, INC. and WARREN P. HOLLIDAY,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR RESPONDENTS IN OPPOSITION

NANCIE G. MARZULLA

Counsel of Record

ROGER J. MARZULLA

MARZULLA & MARZULLA

1350 Connecticut Ave., N.W.

Suite 410

Washington, D.C. 20036

(202) 822-6760

QUESTION PRESENTED

Did the court of appeals correctly analyze the Rooker-

Feldman doctrine in this case, holding as this Court did in

Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S.

___, 125 S. Ct. 1517 (2005), that the doctrine does not bar

plaintiffs who were not parties in the state court proceeding

from bringing their constitutional claims to federal court?

CORPORATE DISCLOSURE STATEMENT

Holliday Amusement Company of Charleston, Inc. has

no parent corporation and no publicly held company owns

10% or more of its stock.

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TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases Page

Brown & Root, Inc. v. Breckenridge, 211 F.3d 194 (4th Cir.

| SEER ESt eee OS apnea Cir priintie Come prota vs Aor MUR ONT eee Mi ete tT Ta 11

District of Columbia Court of Appeals v. Feldman, 460 U.S.

eI ish chat eenichin cova sisiesla Ginseclisceakiibeuniaphnoiols 8, 10-11

Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S.

2: eee Mac RET AMA Pa sree etnincobinasdoessotosansnesobacente passim

Holliday Amusement Co. of Charleston v. South Carolina,

401 F.3d 534 (4th Cir. 2005). 0... eetecesceseeeees 5-6, 12-13

Johnson v. De Grandy, 512 U.S. 997 (1994) ........ 6, 9-10, 12

Rooker v. Fis}. Trust Co., 263 U.S. 413 (1923) ...8, 10, 11-12

Westside Quik shop, Inc. v. Stewart, 534 S.E.2d 270 (S.C.

2000), cert. denied, 121 S. Ct. 606 (2000) ........:.....3-4, 5, 12

Constitutions

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Se MP RG oc iscinesancdicesniccdedenneeieiaaabans 3-4

Statutes

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S.C. Code Ann. § 12-21-2710 (Law. Co-op. 2000).............. 3

S.C. Code Ann. § 12-21-2712 (Law. Co-op. 1999).............. 3

S.C. Code Ann. § 59-150-150 (Law. Co-op. 2001).............. 2

S.C. Code Ann. § 59-150-190 (Law. Co-op. 2001).............. 2

PE Fe es PARI ES ER i cicss nts snpinsnndsnccontnccinincsennneaonbin 3

iv

STATEMENT OF THE CASE

1. From 1976 through July 1, 2000, Plaintiff Holliday

Amusements Company, Inc., owned by Plaintiff Warren P.

Holliday (“Holliday”), conducted a highly successful

business in Charleston, South Carolina as a_video gaming

operator, arranging for the placement of video gaming

machines in various business locations throughout the state.

Compl. § 9. As of July 1, 2000, Plaintiff Holliday

Amusements owned 532 fully operational video gaming

machines, from which it derived substantial income. Jd. As

its President and sole shareholder, Plaintiff Warren P.

Holliday, derived his living from, and dedicated

substantially all of his labors to, the video gaming business

of Holliday Amusements. Jd. ¥ 12.

2. Since at least 1975, the operation of such video

gaming machines had been entirely lawful under the law of

the State of South Carolina, subject to licensing and

regulatory requirements imposed by the legislature. Jd.

10. All 532 video gaming machines owned by Plaintiff

Holiday Amusements Company were at all times duly

licensed by the State of South Carolina, and operated in full

compliance with all of the regulatory requirements imposed

by the State. Jd In May 2000, Plaintiff Holliday

Amusements renewed the licenses for all 532 of its

machines, paying a substantial fee to the State of South

Carolina of $984,000. Jd. 11.

3. In 2001, the State of South Carolina enacted

legislation establishing a State lottery or gaming program,

by which the State retained all gaming proceeds. S.C. Code

Ann. § 59-150-150 (Law. Co-op. 2001); S.C. Code Ann. §

59-150-190 (Law. Co-op. 2001). On July 1, 1999, the

legislature of the State of South Carolina passed legislation,

known as “Act 125,” outlawing the use of all private gaming

equipment. Compl. J 13; Act 125, 1999 S.C. Acts 1319;

S.C. Code Ann. § 12-21-2710 (Law. Co-op. 2000); S.C.

Code Ann. § 12-21-2712 (Law. Co-op. 1999). Under Act

125, on July 1, 2000, all privately owned video gaming

machines became unlawful for the first time in the State of

South Carolina, subject to confiscation and destruction, and

their possession or operation became a criminal offense,

subject to arrest and prosecution. Compl. | 13; Act 125, 199

S.C. Acts 1319; S.C. Code Ann. § 12-21-2710 (Law. Co-op.

2000); S.C. Code Ann. § 12-21-2712 (Law. Co-op. 1999).

4. Defendants’ enforcement of Act 125' eventually

caused Holliday to lose all economically beneficial use of all

' On May 25, 2000, the plaintiffs in Westside Quik Shop, Inc. v.

Stewart, 534 $.E.2d 270 (S.C. 2000), cert. denied, 121 S. Ct. 606

(2000); which included none of the plaintiffs in this lawsuit, filed an

action in the Common Pleas Court for Greenville County, South

Carolina, Thirteenth Judicial Circuit, seeking a temporary injunction

(together with permanent injunctive and declaratory relief) against

the enforcement of Act 125, set to take effect on June 30, 2000.

The Westside Quik Shop Plaintiffs sought to enjoin enforcement of

Act 125 on the grounds that such enforcement would result in the

taking of those plaintiffs’ property rights, in violation of the Just

Compensation Clauses of the Fifth Amendment and Article I,

of its video gaming machines, and resulted in a complete

cessation of its video gaming business built up over the

preceding 24 years. Compl. ¥ 14. As a result, the stock of

Holliday Amusements, all of which is owned by Plaintiff

Warren P. Holliday, was made entirely worthless. Jd. § 15.

5. On January 2, 2001, Holliday filed this lawsuit in the

U.S. District Court for the District of South Carolina,

Charleston Division, seeking compensation for the

infringement of its constitutionally protected property rights.

Holliday challenged the enforcement and application of Act

125, which destroyed Holliday’s business as an

Section 13 of the South Carolina Constitution and would also

violate 42 U.S.C. § 1983. See Westside Quik Shop, Inc. v. Stewart,

534 S.E.2d 270 (S.C. 2000), cert. denied, 121 S. Ct. 606 (2000).

The Westside Quik Shop litigation was an as-applied challenge

on behalf of four plaintiffs who sought a declaration from a state

court that enforcement of Act 125 would result in the

unconstitutional taking of their property. Because of its state-wide

implications and importance, the South Carolina Supreme Court

took the case in its original jurisdiction. The South Carolina

Supreme Court rejected the Westside Quik Shop plaintiffs’ claims,

holding: “We find the forfeiture of plaintiffs’ video gaming

machines, or their leasehold interest in these machines, is not a

compensable taking under either our Federal or State

Constitutions.” Westside Quik Shop, Inc. v. Stewart, 534 S.E.2d

270, 273-74 (S.C. 2000), cert. denied, 121 S. Ct. 606 (2000).

unconstitutional taking of private property and violation of

42 U.S.C. §1983. Id. FJ 25-32. Holliday sought declaratory

and injunctive relief, or in the alternative, damages arising

out of the unconstitutional taking. The district court

dismissed the action, holding that although Holliday was not

a party in the [Westside Quik Shop, Inc. v. Stewart, 534

S.E.2d 270 (S.C. 2000)] litigation, the Rooker-Feldman

doctrine divested it of jurisdiction because “federal courts

are generally barred from not only considering issues

actually presented to and decided by state court, but also

hearing constitutional claims that are inextricably

intertwined with questions ruled upon by state court, as

when success on the federal claim depends upon a

determination that the state court wrongly decided the issues

before it.” App. to Pet. for Cert. 14a.

6. The Court of Appeals for the Fourth Circuit vacated

the judgment of the district court, holding that the Rooker-

Feldman doctrine applied only “when the party asserting the

claim in federal court was not a party to the state

proceedings . . . because subsequent Supreme Court and

Fourth Circuit cases citing [Johnson v. De Grandy, 512 U.S.

997 (1994)] have continued to uphold this standard, we

vacate the district court’s decision.” Holliday Amusement

Co. of Charleston v. South Carolina, 401 F.3d 534, 535-36

(4th Cir. 2005); App. to Pet. for Cert. 2a-3a.

SUMMARY OF ARGUMENT

On March 30, 2005, this Court held that the Rooker-

Feldman doctrine is confined to cases brought by “state-

court losers complaining of injuries caused by state-court

judgments rendered before the federal district court

proceedings commenced and inviting district court review

and rejection of those judgments.” Exxon Mobil Corp. v.

Saudi Basic Indus. Corp., 544 U.S. __, 125 S. Ct. 1517,

1521-22 (2005). The decision of the court of appeals for

which South Carolina seeks review in this case reaches

exactly the same conclusion, although the Fourth Circuit

decision was rendered before the Exxon Mobil decision.

Here, since neither Mr. Holliday nor Holliday Amusements,

Inc. were parties in the State court action, neither Mr.

Holliday nor Holliday Amusements, Inc. had any right of

appeal of the State case, and neither could be the losing

parties in the State court case that South Carolina now says

triggers application of the Rooker-Feldman doctrine. Thus,

South Carolina’s attempt to bar Holliday’s lawsuit from

proceeding in district court lacks merit and does not warrant

this Court’s review.

ARGUMENT

1. The issue on which South Carolina seeks review in

this case was decided by this Court only three months ago in

Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S.

___, 125 S. Ct. 1517 (2005). In Exxon Mobil, this Court

held that the so-called Rooker-Feldman doctrine is narrowly

confined, and rejected a broad application of the doctrine to

plaintiffs in district court who were not parties to the prior