MT & M Gaming, Inc. v. City of Portland ( 2016 )

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 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 standing for
a somewhat different reason—that the interest that plain-
tiff 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 judgment 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 federal courts and
Cite as 360 Or 544 (2016) 547
other jurisdictions have imposed that standing requirement
and that, in the interest of uniformity, 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 statute
under construction or consideration. In this case, we con-
clude that the interest that plaintiff relies on to establish
standing—an interest in requiring Oregon establishments
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 gam-
ing laws, it is not one that has been recognized by the com-
mon 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 generally undis-
puted, 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 insignificant 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 applications, signaled
an intention to make gaming—in particular, 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 activities. In their com-
munications with the city, those businesses explained that
they would return all of the proceeds from players’ buy-ins
Cite as 360 Or 544 (2016) 549
to players in the form of winnings; however, they would
charge a daily “membership fee” to anyone entering the
establishment, regardless of his or her participation 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 limitations 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, 323 Or
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. 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 not
violated the statute. The issue of the plaintiffs’ standing 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 seeking 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 vin-
dicate 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 stand-
ing to bring a declaratory judgment action with what is nec-
essary. The fact that this court concluded in Doyle that the
requirements for standing were satisfied in those circum-
stances does not mean that those are the only circumstances
that will support standing to challenge a statute under the
declaratory judgment act. Other cases from this court illus-
trate 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, mul-
tiple plaintiffs brought declaratory judgment actions chal-
lenging Ballot Measure 7 (2000), a voter-approved initiative
that required state and local governments to either com-
pensate landowners for regulations that affected the value
Cite as 360 Or 544 (2016) 557
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
party’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 pro-
tected 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
560 MT & M Gaming, Inc. v. City of Portland
statute: “Where statutes are concerned, the trend is toward
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 nonbanking 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
6
Other courts, including the United States Supreme Court on some occa-
sions, 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 10 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
statute: Statutes by their terms might give unrestricted
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)
(declining to apply zone of interest test to limit standing
under Endangered Species Act to persons alleging ecological
interests, because statute provides for action by “any per-
son”). The Court justified that theory of legislative negation
with a presumption that Congress legislated “against the
background 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
Cite as 360 Or 544 (2016) 563
this court in Morgan, as the city suggests, use the phrase
“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 382-86. 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
564 MT & M Gaming, Inc. v. City of Portland
remains that this court in Eckles expressed no interest in
the question.
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
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
statute, and that legal recognition can come from a variety
of sources, not only from the statute under consideration.
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 attending 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., com-
petition on equal terms) might support standing under
the declaratory judgment act,9 plaintiff’s asserted interest
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
566 MT & M Gaming, Inc. v. City of Portland
here is not such an interest. Instead, plaintiff’s asserted
interest is anti-competitive: Plaintiff seeks an interpre-
tation 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 con-
duct 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, 353 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
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’ compen-
sation laws that burdened the trade association’s members. The Court of Appeals
concluded that, insofar as the defendant cooperative’s avoidance of workers’ com-
pensation insurance costs had allowed it to underbid the trade association’s mem-
bers 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.
Cite as 360 Or 544 (2016) 567
interpretation of those statutes is an interest that is legally
recognized by any source.10
The judgment of the trial court and the decision of
the Court of Appeals are affirmed.
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,
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.