Holliday Amusement v. State of SC , 401 F.3d 534 ( 2005 )

Filed: March 23, 2005
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 02-1122
(CA-01-210-2-12)
HOLLIDAY AMUSEMENT COMPANY OF CHARLESTON,
INCORPORATED; WARREN P. HOLLIDAY,
Plaintiffs - Appellants,
versus
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,
Attorney General; ROBERT M. STEWART,
individually,
Defendants - Appellees.
O R D E R
The court amends its opinion filed March 8, 2005, as follows:
On page 6, last line of text before footnote 2 -- the word
“not” is inserted preceding the word “parties.”
On page 8, first full paragraph, line 7 -- the word “to” is
inserted following the word “presented,” and the language “but also
hearing constitutional claims that are inextricably intertwined
with questions ruled upon by a state court” is inserted following
the comma after the word “court.”
For the Court - By Direction
/s/ Patricia S. Connor
Clerk
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
HOLLIDAY AMUSEMENT COMPANY OF 
CHARLESTON, INCORPORATED; WARREN
P. HOLLIDAY,
Plaintiffs-Appellants,
v.
STATE OF SOUTH CAROLINA; GRADY
L. PATTERSON, JR., in his official  No. 02-1122
capacity as Treasurer of the State of
South Carolina; JIM HODGES,
Governor of South Carolina;
CHARLES M. CONDON, Attorney
General; ROBERT 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.
Vacated and remanded with instructions by published opinion. Judge
Widener wrote the opinion, in which Judge Wilkinson and Judge
King concurred.
2 HOLLIDAY AMUSEMENT v. STATE OF SO. CAROLINA
COUNSEL
ARGUED: Roger J. Marzulla, MARZULLA & MARZULLA, Wash-
ington, D.C., for Appellants. Robert Holmes Hood, HOOD LAW
FIRM, L.L.C., Charleston, South Carolina, for Appellees. ON
BRIEF: Nancie G. Marzulla, MARZULLA & MARZULLA, Wash-
ington, D.C., for Appellants. Deborah Harrison Sheffield, HOOD
LAW FIRM, L.L.C., Charleston, South Carolina; Charles M. Condon,
South Carolina Attorney General, Nathan Kaminski, Jr., Senior Assis-
tant Attorney General, OFFICE OF THE ATTORNEY GENERAL
OF SOUTH CAROLINA, Columbia, South Carolina, for Appellees.
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,
Charleston 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 dis-
missed 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
(S.C. 2000), cert. denied, 531 U.S. 1029 (2000), thereby divesting the
district court of jurisdiction under the Rooker-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 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.
HOLLIDAY AMUSEMENT v. STATE OF SO. CAROLINA 3
I.
Since 1976, Warren Holliday has owned and operated Holliday
Amusement Co., Inc. in South Carolina, in which he sold video gam-
ing 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 follow-
ing 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.1
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 plain-
tiffs in Westside Quik Shop, Inc. sought an injunction against enforce-
ment of the Act, claiming that it effected an unconstitutional taking
of their property without just compensation. Westside Quik Shop, Inc.,
534 S.E.2d at 271.
The South Carolina Supreme Court found that the Act did not con-
stitute 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 dis-
trict court, claiming that enactment and enforcement of the Act
destroyed his business, resulting in millions of dollars of uncompen-
sated loss, which constituted a taking in violation of the U. S. Consti-
tution and 42 U.S.C. § 1983. He sought declaratory and injunctive
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.
4 HOLLIDAY AMUSEMENT v. STATE OF SO. CAROLINA
relief, or, alternatively, damages arising out of the alleged uncompen-
sated 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 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 juris-
diction. 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).
II.
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, 233 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 con-
sidered to be "inextricably intertwined" with a state court judgment
when "the federal claim succeeds only to the extent that the state
HOLLIDAY AMUSEMENT v. STATE OF SO. CAROLINA 5
court wrongly decided the issues before it." Allstate Ins. Co., 233 F.3d
at 819.
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 John-
son v. De Grandy, 512 U.S. 997 (1994) in favor of Holliday’s argu-
ment, 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 Flor-
ida, by declaratory judgment, held the plan valid under federal and
state law. In 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, how-
ever, chose to bring their § 2 claim in federal district court. The
United States also filed a similar complaint in the district court, alleg-
ing 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 government’s § 2 chal-
lenge 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 require-
6 HOLLIDAY AMUSEMENT v. STATE OF SO. CAROLINA
2
ment. 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.3 In particular, two 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
2
See Veith v. Jubelirer, 541 U.S. 267 (2004); Georgia v. Ashcroft, 539
U.S. 461, 473, n.1 (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, 512
U.S. 1283, 1283 (1994); Tyus v. Bosley, 512 U.S. 1249, 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); 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. Ala-
mance 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.
HOLLIDAY AMUSEMENT v. STATE OF SO. CAROLINA 7
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." Bare-
foot, 306 F.3d at 121 (citations omitted). In Barefoot, several plain-
tiffs brought suit in a North Carolina court against the city of
Wilmington, alleging that it had failed to comply with North Caroli-
na’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 unconstitu-
tional. Barefoot, 306 F.3d at 121. We decided that the plaintiffs who
had been parties 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 plain-
tiffs 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 offer-
ing 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 applica-
tion 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
8 HOLLIDAY AMUSEMENT v. STATE OF SO. CAROLINA
Rooker-Feldman doctrine when a federal court suit is brought by a
party who was not a party in the preceding state court action.4
We realize that the wording in Feldman, 460 U.S. at 486, that
"These allegations [complained of] are inextricably intertwined with
the District of Columbia Court of Appeals’ decisions, in judicial pro-
ceedings, to deny the respondents’ petitions," has been variously con-
strued 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 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 other-
wise held that the Rooker-Feldman doctrine is inapplicable we do not
reach this issue.
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.
HOLLIDAY AMUSEMENT v. STATE OF SO. CAROLINA 9
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