PEOPLE v. GREWAL

Appellant, John C. Stidman, Reply Brief on the Merits

Cal.February 19, 2015

Case No. 8217896 IN THE SUPREME COURTOF CALIFORNIA THE PEOPLE, CRC(,cR0. : Plaintiff and Respondent, YS SUPREME COURTV. FILED KIRNPAL GREWALet al., FEB 1 9 7015 Defendants and Appellants. Frank A. McGuire Clerk Deputy After a Decision By the Court of Appeal, Fifth Appellate District Consolidated Case Nos. F065450/F06545 1/F065689 Kern County Superior Court Case Nos. CV-276959, CV-276958, CV-276961 William D. Palmer, Judge PETITIONER’S REPLY BRIEF ON THE MERITS TORYE. GRIFFIN (186181) HUNT JEPPSON & GRIFFIN LLP 1478 Stone Point Dr., Suite 100 Roseville, CA 95661 - Telephone: (916) 780-7008 tgriffin@hjg-law.com Attorneysfor Defendant/Petitioner John Stidman Case No. 8217896 IN THE SUPREME COURT OF CALIFORNIA THE PEOPLE, Plaintiff and Respondent, v. KIRNPAL GREWALetal., Defendants and Appellants. After a Decision By the Court of Appeal, Fifth Appellate District Consolidated Case Nos. F065450/F06545 1/F065689 Kern County Superior Court Case Nos. CV-276959, CV-276958, CV-276961 William D. Palmer, Judge PETITIONER’S REPLY BRIEF ON THE MERITS TORY E. GRIFFIN (186181). HUNT JEPPSON & GRIFFIN LLP 1478 Stone Point Dr., Suite 100 Roseville, CA 95661 Telephone: (916) 780-7008 tgriffin@hjg-law.com Attorneysfor Defendant/Petitioner John Stidman Table of Contents I. INTRODUCTION 0.0. eeeeesceeecesessssesesesesesscesesseesscsaeseesscscesssecsseanenaess 1 Tl. LEGAL ARGUMENT1.0... ceecececcsssssssseseeseesseseescssccecsssacsvsessseseseaees 2 A. Respondent’s Attempts to Diminish the Significance of the Ruling in Trinkle II Miss the Mark........cccccccccsssccssessssesessecsesessecssccsscsssasssscacsessnsseneees 2 1. Prior to the Court of Appeal’s Decision, 7rinkle IT was the Controlling Law on the Issues in this Case ..0........ccccscccssessessseeceeseeeeeees 2 2. Respondent Fails to Demonstrate How, UnderTrinkle II, Petitioner’s Computers Were Illegal Slot Machines Under Penal Code SectiON 330D oo.eessceesseecesscestecseecsssssssesseseeseeesaecneeceecstestessssesssesaseseees 9 B. The Adoption of AB 1439 Into Law Forecloses ThePossibility of Future Public Harm Predicted by Respondent, and Crystallizes the Due Process Issues Before this COurt...........cccccsssessecsseeseeseescesessceccsesessesaceneas 10 C. Both Due Process and the Rule-of Lenity Preclude any Finding that Petitioner Violated Penal Code Section 330b...........cccsssesccssesssseseeseeeeees 12 1. Due Process Bars Any Retroactive Application of the Interpretation of Penal Code Section 330b as articulated by the Court Of Appeal...eeeesssseseessessseresesssceseseseseseseeseesesseseeeeeasseesessssceeceveneees 13 2. The Rule of Lenity Precludes Any Finding that Petitioner Violated Penal Code Section 330D ..0........eccsssessssssessessceseeessesssessssscsassscaceeaseetene 20 D. Reversal of the Court of Appeal’s Decision Would Not Sanction Illegal Conduct, But Rather Would Judicially Expand Penal Code Section 330b and Call Into Serious Question the Continuing Legality of Many Established Games ..........:ceccsesssssssssssssecsessssesecsecenseesseseecsucsessusesesecsseeaeves 22 WI. CONCLUSION0.ecececseeeseessesssssssseeesseseecssessesscsesscssssessessesseas 26 IV. CERTIFICATE OF WORD COUNT........cccccccsssssessesesssssereesssstescaces 27 Table of Authorities Cases Barberv. Jefferson County Racing Ass’n, Inc. (2006) 960 So.2d 599......... 6 Big Creek Lumber Co. v. County ofSanta Cruz, 38 Cal.4th 1139... 7 Bouie v. City ofColumbia (1963) 378 U.S. 347, 350-51...passim City ofBell Gardens v. County ofLos Angeles (1991) 231 Cal.App.3d 1563 sevaceeceacersceevenensccessssessecestseesceesseeseceseeesseesesessensssesseessecsssessesenscnscaeesueeeeseegaes 23 City ofCleveland v. Thorne (2013) 987 N.E.2d 731 .oecceecscssscscsssccsseseeeeeees 6 Clark v. Brown (9th Cir. 2005) 442 F.3d 708 oo... ccc ceccssecessesseseesresseseseenens 20 Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53.......... 21 FCC v, Fox (2012) 132 S. Ct. 2307 ooo cececccssessssesseesscesscecsecsesssesesessseesseess 12 LaGrand v. Stewart (9th Cir. 1998) 133 F.3d 1253 wo. cccecseeseseeseeeeeees 20 Mains v. Bd. OfBarber Examiners (1967) 249 Cal.App.2d 459... 23 Oxborrow v. Eikenberry (9th Cir. 1989) 877 F.2d 1395.0... .ccccsceseeseseeeee 20 People ex rel. Lockyer v. Pacific Gaming Technologies (2000) 82 Cal.App.4th 699 oooescsscssesssessssessessessesssesseeseseseessessessesessesnecseeens 4,5 People v. Grewal (2014) 224 Cal.App.4 527 ...ccccsssssssssscessesseseeseee 4,10, 21 People v. Vis (1966) 243 Cal.App.2d 549.0.ccccccssscssscessesseseesreesnesseeees 20 Pierce v. United States (1941) 314 U.S. 306 wo...cccecceeseesssseseseseeeseeeens 15 Score Family Fun Center, Inc. v. County ofSan Diego (1990) 225 CalApp.3d 1217oeecssesessceeccesseessessssessesssseaeessesssesseessesessensensesseess 4,5 Telesweeps ofButler Valley, Inc. v. Kelly (2012) 2012 WL 4839010.......... 6 Tibbetts v. Van de Kamp (1990) 222 Cal.App.3d 389 .......cceeseeseeeees 22, 23 Trinkle v. California State Lottery (2003) 105 Cal.App.4th............... passim Trinkle v. Stroh (1997) 60 CalApp.4th 771 o.....ccccccecssseeseeesscesesessesseenes 4,5 United States v. Davis (5™ Cir. 2012) 690 F.3d 330 vcesccccessesssessscessseeseeseeeeees 6 United States v. Lanier (1997) 520 U.S. 259 oo. cecccsesseesssceseseessenesesees 12, 13 United States v. McKelvey (Ast Cir. 2000) 203 F.3d 66..........ccseseceeeeees 18 United States v. McKie (3d Cir. 1997) 112 F.3d 626.0000... ccccceeeseeeees 17, 18 Wilkoffv. Superior Court (1985) 38 Cal.3d 345 .....cccccssccsscessessscccesssessceses 7 Statutes Business and Professions Code Section 17539.1 ooo... .eescessseeseeesseesssesseeeees 8 Business and Professions Code Section 17539.1(a)(12)........ccesscesesseeeeeeees 11 California Assembly Bill 1439.00...eee eccecccseesecessceeeeeceseeessesseesseeseeeees passim Penal Code Section 330D .0.........csesccessseesssessesssesesneessaeessneseceesseeeeaeeess passim Other Authorities Report on AB 1439 by Assembly Committee on Business, Professions and ConsumerProtection, April 29, 2014 oo.cecsscecesssseeeesseeesseeeeens 19, 20 Report on AB 1439 by Assembly Committee on Governmental Organization, April 23, 2014 oo.eee eseesesseceseresccesseeceeeeseeesseeeeesesensees 19 Petitioner John Stidman (“Petitioner”), by and throughhis attorneys, respectfully submits his Reply Brief on the Merits. I, INTRODUCTION Contrary to Respondent’s claim, Petitioner does not seek to havethis Court “re-write California’s slot machine and gambling device prohibitions to sanction their sweepstakes gaming schemesas a new,and unregulated, form ofillegal gambling.” (Respondent’s Br., at p. 2.) Rather, Petitioner simply asks this Court to adopt and apply the interpretation of Penal Code Section 330b as articulated in Trinkle v. California State Lottery (2003) 105 Cal.App.4th 1401 (“Trinkle IT’). Alternatively, Petitioner asks this Court to hold that the Court of Appeal’s ruling that Petitioner violated Penal Code Section 330b violates Petitioner’s due process rights and runs counterto the rule of lenity. Naturally, Respondent doesits best to minimize the impactof the holding in Trinkle II on this case, and attempts to pass off the holding of Trinkle IJ as one thatis limited to the specific facts of that case and need not be seriously analyzed any further. As hard as Respondent mighttry, however, it cannot escape the simple truth that Trinkle IT interpreted Penal Code Section 330b in a way that set precedent in California, and that Petitioner’s conduct did not violate Section 330b as interpreted in Trinkle I. Although Respondent never expressly says so, Respondent's argument therefore must be that the interpretation of Penal Code Section 330b articulated in Trinkle IJ was wrong, and that the contrary interpretation adopted by the Court of Appeal in this case is correct. The problem with this argumentis that, even if Respondentis correct that the court’s interpretation of Section 330b in Trinkle JJ was in error, Respondent cannot then legitimately argue that Petitioner, consistent with due process andthe rule of lenity, can be found to have violated Section 330b based on the Court of Appeal’s interpretation contrary to that established by Trinkle IT. Accordingly, and as demonstrated further below, the Court of Appeal’s decision must be reversed. H. LEGAL ARGUMENT A. Respondent’s Attempts to Diminish the Significance of_the Ruling in 7rinkle IT Miss the Mark 1. Prior to the Court of Appeal’s Decision, Trinkle IT was the Controlling Law on the Issues in this Case Respondent attempts to dismiss the import of the Court of Appeal’s decision in Trinkle IT, claiming that Trinkle IT “does not involve sweepstakes gambling machines,” but instead “merely examines the legality of selling state lottery tickets through ordinary vending machines.” (Respondent’sBr., at 2.) Respondent’s spin on Trinkle I/ is disingenuous, at best. Even the Court of Appeal below acknowledgedthat Trinkle I explicitly interpreted Penal Code Section 330b. The Court of Appeal also properly identified the core holding of Trinkle II as follows: “the Legislature linked the element of chanceto the operation of the machine, requiring that the machine itselfdetermine the element of chance and becomethe objectofplay,” and “[w]ithout the element of chance incorporatedinto the operation ofthe machine, the machineis nothing more than a vending machine which dispenses merchandise for consideration.” (/d. at 1410 [emphasis added].) Notwithstanding this explicit language and holding in Trinkle JI, Respondent would have this Court believe that the Court of Appeal’s decision here is entirely consistent with the decision in 7rinkle IT, and that both can be reconciled with one another based onthe facts. Respondent’s argument is wrongforat least two reasons. First, such argument is belied by the Court of Appeal’s ruling below, whichhadto explicitly reject the holding of Trinkle II in orderto reachits conclusion: [W]e disagree with Trinkle IT’s description ofthe manner in which the chance element mustbe realized in order to constitute a slot machine or device under section 330b. Specifically, Trinkle IT held that the chance element must be created by a randomizing process occurring at the moment the machine or device is being played. (Trinkle II, supra, at p. 1411.) As will be explained below, wethink that holding was in error. Since we disagree with Trinkle IJ on these 3 significant matters relating to the statutory elements, we adopt a different approach here than what was articulated in that case. (People v. Grewal (2014) 224 Cal.App.4" 527, 541.) Second, Respondent’s argument misconstrues what it claims to be the applicable law. Respondent claims that, notwithstanding the decision in Trinkle II, the established precedent for the sweepstakes at issue here is found in Trinkle v. Stroh (1997) 60 Cal.App.4th 771, People ex rel. Lockyer v. Pacific Gaming Technologies (2000) 82 Cal.App.4th 699, and Score Family Fun Center, Inc. v. County ofSan Diego (1990) 225 Cal.App.3d 1217. Respondent 1s wrong. | In Score Family Fun Center, the defendant argued that the device at issue was not a slot machine because even thoughthe elements of hazard and chance werepresent, the statute also required that the outcome be unpredictableto the user. According to the defendant, the outcome was mathematically predictable, so the device did not violate Section 330b. The court simply rejected the defendant’s argumentthat, to violate Section 330b, the results had to occur both by reason of hazard or chance and be unpredictable to the user. (/d. at 1221.) The court said nothing about whetherthe predictability of the outcome hadto belinked to the operation of the machine, which wasthe issue in 7rinkle II, andis the issue here. But, even so, it appears evident by the nature of the games involvedthat the operation of the device at issue did producethe result. Score Family Fun 4 Center, therefore, does not inform the issue here, and in no way conflicts with the holding in Trinkle II. Similarly, Trinkle v. Stroh involved a device that was physically attached and connected to a jukebox. That device “randomly flashed” when a customer played a song on the jukebox and,if all five lights randomly stopped on the samecolor, the customer would win a prize. Obviously, as pointed out in 7rinkle IT, the element of chance wasin this case was generated by the machineitself. The Trinkle v. Stroh decision, therefore, does not help Respondent, and again does not conflict with Trinkle IT. Finally, Respondent overplays the significance of the decision in Pacific Gaming Technologies. Respondent’s reliance on this decision hinges on cursory languagein a footnote, where the court noted that the device at issue had a “10 percent payoutstructure” with “predetermined winners” spread out over a period of time. (Respondent’s Brief, at p.22 [citing Pacific Gaming Technologies, 82 Cal.App.4th 699, 702 n. 4].) Nothing in the opinion in Pacific Gaming Technologies, however, - conclusively indicates that the device delivered the “predetermined winners”at predictable, non-random times. To the contrary, as stated by the court in 7rinkle IJ, the machines in question in Pacific Gaming Technologies and Trinkle v. Stroh were slot machines under Penal Code Section 330b “because the outcome was dependent on the element of 5 chance that was generated by the machines themselves.” (Trinkle II, 105 Cal.App.4th at 1410-11 (emphasis added).) Contrary to Respondent’s assertions, therefore, Pacific Gaming Technologies hardly can be called “well-established case law”standing for a contrary holdingto that articulated in Trinkle II, or otherwise “right on point as to Appellants’ sweepstakes schemes.” (Respondent’s Br., at pp. 22, 41.) The several federal and out ofstate decisions cited by Respondent also do not impactthe result. In United States v. Davis (5" Cir. 2012) 690 F.3d 330, Barber v. Jefferson County Racing Ass’n, Inc. (2006) 960 So.2d 599, and City ofCleveland v. Thorne (2013) 987 N.E.2d 731, the courts were analyzingthe legality of different sweepstakes systems under the laws of different states. In each case, the courts construed the language of the applicable state statutes, none of which was the same as Penal Code Section 330b. Moreover, unlike the situation here, none of these courts were confronted with a prior judicial decision stating that in orderto be a slot machine underthe applicable statute, the element of chance must be created by the machineitself. Consequently, none of these cases have any applicability here. Telesweeps ofButler Valley, Inc. v. Kelly (2012) 2012 WL 4839010 (M.D. Penn. October 12, 2012) is also unhelpful to Respondent. That case, in addition to being an unpublished federal district court decision, dealt with a statute prohibiting a “simulated gambling program.” (/d. at *1.) 6 That is a very different issue than the issue of whether the operators of the sweepstakesat issue here operated illegal slot machines within the meaning of Penal Code Section 330b. Consequently, based on the straightforward review ofthe applicable decisions,it is clear that 7rinkle IJ was the controlling law on the issue of whether the machineitself had to generate the element of chance and becomethe object of play in order for the device to be considered a slot machine. The Legislature’s response to the decision in Trinkle IT confirms this. Penal Code § 330b has been amended three timessince the decision in Trinkle ITI, yet on none of those occasions did the Legislature amend the statute in any way intendedto alter the decision in Trinkle IT. Had the Legislature disagreed with Trinkle I7’s interpretation of Section 330b, the Legislature had at least three opportunities to change the statute in response, but the Legislature did not do that. Nor does it appear from the legislative history that the Legislature ever even considered such an amendment. The Legislature’s failure to amend Section 330b following the decision in 7rinkle IZ, “while not conclusive, may be presumedto signify legislative acquiescence”in the Trinkle IJ decision. (Big Creek Lumber Co. v. County ofSanta Cruz, 38 Cal.4th 1139, 1156 (2006) (emphasis added); see Wilkoffv. Superior Court (1985) 38 Cal.3d 345, 353.) Respondent offers no argument to overcomethis presumption. The recent adoption of AB 1439 into law conclusively removes any 7 remaining doubt as to whether the Legislature approvesof the interpretation of Penal Code Section 330b announcedin TJrinkle IT. AB 1439, which was signed by Governor Brown and becamelaw on January 1, 2015 (codified at Business and Professions Code Section 17539.1), expressly makes the type of sweepstakes offered by so-called Internet cafés illegal. The bill adds specific provisions to the Business and Professions Code that directly prohibit the types of sweepstakes promotionsoffered by Internet cafés. Had the Legislature believed that the sweepstakes promotions offered by Internet cafés illegal under existing law, the Legislature again easily could have said so by disapproving the interpretation of Penal Code Section 330b as set forth in 7rinkle I, or by amending the language of Section 330b to make clear that the element of chance only had to be unpredictable to the player, as noted above. The Legislature, however, did not do that. So, once again, the Legislature expressly declined an opportunity to address Trinkle IPs interpretation of Penal Code Section 330b, even thoughvirtually all of the litigation in California related to Internet Cafés revolved around the question of whether the computer terminals used in such businesses constituted an illegal slot machine under Section 330b. Consequently, there can belittle doubt that the interpretation of Section 330b as set forth in Trinkle IT was, and remains, the controlling law on the issues in this case. Because Respondent never accepts Trinkle I] as a controlling precedent, it never attempts to explain how Petitioner’s conduct violates 8 Penal Code Section 330b based on the interpretation of that section set forth in Trinkle II. Even if Respondent attempted to makethat showing, such attempt would fail. 2. Respondent Fails to Demonstrate How, Under Trinkle II, Petitioner’s Computers Were Illegal Slot Machines Under Penal Code Section 330b Respondentfails to point to any evidencein the record that the computer terminals used by Petitioner contained any random number generator, or that the element of chance wasdictated by the machineitself. To the contrary, it is undisputed that the sweepstakesentries, as well as the order in which they were to be distributed, were all predetermined. The fact that the sweepstakes entries at some point long ago were “randomly arranged” does not, as Respondent seems to suggest, equate to a machine- generated random selection of a single game piece out of thousands of ~ gamepieces each time a customer plays the game. (Respondent’s Br., at 4.) Respondent’s apparentreliance on a statement from its investigator is also misplaced. That investigator stated: “Chance meansthereis a random element involved. This too, is part ofany sweepstakes game.” (Respondent’s Br., at 5 [citing Stidman CT 71-72] (emphasis in Respondent’s Brief).) This commentis of absolutely no significance to this Petition. First, it says nothing about the actual workings of the computer terminal. It is merely the opinion of an individual end-user, and thus 9 simply begs the question of whether Penal Code Section 330b should be interpreted as articulated in Trinkle IT, or as articulated by the Court of Appeal below. Second, if the investigator were correct that the element of randomnessis part of any sweepstakes game, then, under Respondent’s theory, any sweepstakes gamethat utilizes some form ofelectronic device to deliver or display the results — whetherit be a computer, a pda device, phone, or something else — then that device necessarily becomesanillegal slot machine. Such an absurd result cannotbe the law. Accordingly, there is no evidence in the record to support the conclusion that the devices at issue here met the definition ofa slot machine under Penal Code Section 330b as interpreted by Trinkle II. Because Trinkle J is the controlling law and property interprets Section 330b, the Court of Appeal’s ruling must be reversed. B. The Adoption of AB 1439 Into Law Forecloses The Possibility of Future Public Harm Predicted by Respondent, and Crvstallizes the Due Process Issues Before this Court Since Petitionerfiled his Opening Brief on the Merits, AB 1439 was signed by the Governor and becamelaw effective January 1, 2015. The passage ofAB 1439 changes the dynamicsofthis appeal. Asan initial matter, the passage of AB 1439 into law meansthat the impact of this Court’s decision on Internet Café businesses in Californiais, for all practical purposes, retroactive only. Reversing the decision in Grewalwill not, as Respondents seem to suggest, give Petitioner and others 10 in California the green light to operate Internet cafés in California. The Legislature, through the passage ofAB 1439, has done what a Legislature (not an appellate court) is supposed to doif it perceives a loophole in the law — enact a new law to close the perceived loophole. Here,the Legislature, through AB 1439, choseto directly and specifically prohibit the conduct at issue by making the following an unfair business practice: Using or offering for use any method intendedto be used by a person interacting with an electronic video monitor to simulate gambling or play gambling-themed gamesin a business establishment that (A) directly or indirectly implements the predetermination of sweepstakes cash, cash- equivalent prizes, or other prizes of value, or (B) otherwise connects a sweepstakes playeror participant with sweepstakes cash, cash-equivalentprizes, or other prizes of value. For the purposesof this paragraph, “business establishment” meansa businessthat has any financial interest in the conduct of the sweepstakesor the sale of the products or services being promoted by the sweepstakesatits physical location. This paragraph does not make unlawful game promotions or sweepstakes conducted byfor-profit commercial entities on a limited and occasionalbasis as an advertising and marketing tool that are incidental to substantial bona fide sales of consumer productsor services and that are not intended to provide a vehicle forthe establishmentofplaces of ongoing gambling or gaming. Bus. & Prof. Code § 17539.1(a)(12). The Legislature’s adoption of this statute effectively puts an end the Internet café business modelat issue before this Court, and nothing this Court could conceivably do in its opinion would sanction the continued operations of Internet cafés in California. Consequently, the catastrophic future harm to the public in the 11 event of a reversal, as predicted by Respondent,is no longer possible. The real impact of this Court’s decision will be whether Petitioner and others can be punished through substantialcivil fines or criminal prosecution for past conduct. As demonstrated below,in lightof all the facts and circumstancesofthis case, including the decision in Trinkle IJ and the Legislature’s implicit approval thereof, this Court cannot, consistent with due process and the rule of lenity, construe Penal Code Section 330b in the manner urged by Respondent. C. Both Due Process and the Rule of Lenity Preclude any Finding that Petitioner Violated Penal Code Section 330b It has long been established that due process requires fair notice of whatthe law requires or forbids. “The basic principle that a criminal statute must give fair warning of the conduct that makes a crime has often been recognized by this Court.” (Bouie v. City ofColumbia (1963) 378 U.S. 347, 350-51; see FCC v. Fox (2012) 132 S. Ct. 2307.) The United States Supreme Court has recognized “three related manifestations of the fair warning requirement.” (United States v. Lanier (1997) 520 U.S. 259, 266.) First, the vagueness doctrine bars enforcementof“a statute whicheither forbids or requires the doing of an act in terms so vague that men of commonintelligence must necessarily guessat its meaning anddiffer as to its application.” Connally v. General Constr. Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322 (1926); accord, Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903 (1983); Lanzetta v. New Jersey, 306 U.S. 451, 453, 59 S.Ct. 618, 619, 12 83 L.Ed. 888 (1939). Second, as a sort of “junior version of the vaguenessdoctrine,” H. Packer, The Limits of the Criminal Sanction 95 (1968), the canonofstrict construction of criminal statutes, or rule of lenity, ensures fair warning by so resolving ambiguity in a criminalstatute as to apply it only to conduct clearly covered. See, e.g., Liparota v. United States, 471 U.S. 419, 427, 105 S.Ct. 2084, 2089, 85 L.Ed.2d 434 (1985); United States v. Bass, 404 U.S. 336, 347-348, 92 S.Ct. 515, 522-523, 30 L-Ed.2d 488 (1971); McBoyle, supra, at 27, 51 S.Ct., at 341. Third, althoughclarity at the requisite level may be supplied by judicial gloss on an otherwise uncertain statute, see, e.g., Bouie, supra, at 357-359, 84 S.Ct., at 1704-1706; Kolender, supra, at 355-356, 103 S.Ct., at 1856-1858; Lanzetta, supra, at 455-457, 59 S.Ct., at 619- 621; Jeffries, Legality, Vagueness, and the Construction of Penal Statutes, 71 Va. L.Rev. 189, 207 (1985), due process bars courts from applying a novel construction ofa criminal statute to conductthat neither the statute nor any prior judicial decision hasfairly disclosed to be within its scope,see, e.g., Marks v. United States, 430 U.S. 188, 191-192, 97 S.Ct. 990, 992-993, 51 L.Ed.2d 260 (1977); Rabe v. Washington, 405 U.S. 313, 92 S.Ct. 993, 31 L.Ed.2d 258 (1972) (per curiam); Bouie, supra, at 353-354, 84 S.Ct., at 1702-1703; cf. U.S. Const., Art. I, § 9, cl. 3; id., § 10, cl. 1; Bouie, supra, at 353— 354, 84 S.Ct., at 1702-1703 (Ex Post Facto Clauses bar legislatures from making substantive criminal offenses retroactive). (Lanier, supra, 520 U.S. at 266.) Both the second and third manifestations of the fair warning requirement — the rule of lenity and rule against retroactive application of a novel interpretation of a criminal statute — are present here. And, both preclude any finding that Petitioner violated the law. 1. Due Process Bars Any Retroactive Application of the Interpretation of Penal Code Section 330b as articulated by the Court of Appeal In Bouie, the United States Supreme Court was confronted with the 13 issue of whethera criminal defendant could be found guilty for trespass. The applicable statute defined the prohibited conduct as “entry upon lands of another ... after notice from the owneror tenant prohibiting such an entry.” (/d. at 349.) The defendants argued that they received no notice from the owneror tenant prior to entering. They were convicted attrial, and those convictions were upheld by the South Carolina Supreme Court, which interpreted the statute to cover not only the act of entry on the premises of another after receiving notice not to enter, but also the act of remaining on the premises of anotherafter receiving notice to leave. (/d. at 350.) On certiorari to the United States Supreme Court, the defendants argued that they were unlawfully punished for conduct that was not criminal at the time they committed it, and that such punishmentviolated their nght to Due Process of law. The United States Supreme Court agreed, and reversed the convictions. The Court distinguished the case from situations where no fair notice exists because the statue as written was vague, and subject to differing interpretations. (/d. at 351-52.) Although that vagueness can result in lack offair notice, the Court noted the greater deprivation of the right to fair notice “where the claim is that a statute precise on its face has been unforeseeably andretroactively expanded by judicial construction....” (id. at 352.) The due process violation is “much greater” when, “because the uncertainty as to the statute’s meaning itself is not revealed until the 14 court’s decision, a person is not even afforded an opportunity” to speculate that the statute might be interpreted differently until the court’s decision. id.) “There can be no doubtthat a deprivation of the right to fair warning can result not only from vaguestatutory language but also from an unforeseeable and retroactive judicial expansion of narrow andprecise statutory language.” (/d. at 352.) “[J)udicial enlargementof a criminalact by interpretation is at war with the fundamental concept of the common law that crimes must be defined with appropriate definiteness.” (Id. (quoting Pierce v. United States (1941) 314 U.S. 306, 311.) “[A]n unforeseeable judicial enlargement of a criminalstatute, applied retroactively, operates preciselylike an ex postfacto law,” which the Constitution “forbids.” (Jd. at 353.) “Ifa state legislature is barred by the Ex Post Facto Clause from passing such law, it must follow that a State Supreme Court is barred by the Due Process Clause from achieving precisely the same result by judicial construction.” (/d.) Accordingly, when an “unforeseeable state-court construction of a criminalstatute is applied retroactively to subject a person to criminalliability for past conduct, the effect is to deprive him of due process oflaw in the sense of fair warning that his contemplated conduct constitutes a crime.” (/d. at 354-55.) Applying these principles, the Court found that because the interpretation of the trespass statute adopted by the South Carolina Supreme Court found no support in prior South Carolina decisions, the defendants 15 had no fair warning of the criminal prohibition under which they were convicted. (/d. at 359-61.) The Court therefore reversed the convictions as violating the defendants’ right to Due Processoflaw. Notably, in reaching this conclusion, the Court found its decision “confirmed”by the fact that, after the defendants’ conduct whichled to the charges against them, the South Carolina Legislature amendedthe trespass statute to makecriminal the actof failing and refusing to leave the premises _ after be requested to do so. (/d. at 361.) The Court interpreted the state legislature’s action as an admission that the state legislature, like the defendants, was not aware of any South Carolina authority criminalizing the defendants’ conduct. Asapplied here, Bouie compels the conclusion that Petitioner cannot, consistent with due process, be found in violation of Penal Code Section 330b. In light of the language of Section 330b, together with the interpretation of that section in Trinkle IJ and the California State Legislature’s multiple amendmentsto that section without changing or even commenting on the Trinkle 7 interpretation, Petitioner did not have fair notice that the conduct at issue here would be foundto violate Section 330b. No reading of 7rinkle IT would possibly lead a reasonable person to concludethat the element of “chance” that must exist for a device to be a slot machineis to be determined by the user’s subjective experience of the game. Instead, Petitioner had every reason to believe that the interpretation 16 of Section 330b as set forth in Trinkle IT, requiring that the machineitself generate the elementof chance, was the accepted law in California. Under that interpretation, Petitioner’s conduct was not unlawful. Also, as in Bouie, the Legislature’s adoption of AB 1439 in orderto close a perceived “loophole”in existing law further demonstrates that due process precludes any finding that Petitioner violated existing law. As noted in Bouie, this new law can be seen as an admission that no state law existed criminalizing the conduct at issue. Consistent with this concept, federal courts have found noviolation of a criminal statute where subsequent legislation was enacted to close a perceived “loophole”in the law. In United States v. McKie (3d Cir. 1997) 112 F.3d 626,the statute at issue was a provision allowing persons a 24-hour grace periodto register a newly acquired firearm (under Virgin Islands law). Defendants were arrested within 24 hours of purchasing the firearms andsoliterallyfell within the grace period. But the governmenturgedthe court to follow a Virgin Islands case that said the grace period was unavailableif the defendant did not intend to register within 24 hours. Another Virgin Islands case reached the opposite conclusion. The legislature then eliminated the grace period (after defendants’ alleged offense). In doing so, it noted the conflict between the two Virgin Islandsterritorial courts, and stated its intent to close the 24-hour “loophole.” The Third Circuit 17 discussedthis legislative history of the amendmentat length, and held that, becauseofthe rule that criminal statutes be construedstrictly, the legislative closure of the loophole meant that the convictions had to be reversed. (See id. at 632.) In United States v. McKelvey (1st Cir. 2000) 203 F.3d 66, the court interpreted a statute makingit illegal to possess photographs of minors engaged in sexually explicit conduct. Thestatute at issue madeit illegal to knowingly possess “3 or more books, magazines, periodicals, films, video tapes, or other matter....” (/d.) The defendant was caught possessing one negative strip containing more than three images, and the question was whether his conduct violated the statute. In finding that the conduct did not violate the statute, the court noted the rule that criminal statutes bestrictly construed, and gave significant weight to Congress’s view that it was closing a “loophole” in amendingthe statute. After quoting the legislative history in which a Congressmanreferred to a “loophole”in existing law, the First Circuit stated: “As the legislative history of the amendment demonstrates, Congress knew whatthe original statute required, and exercised its prerogativeto alter the statute so that conduct such as McKelvey's could be punished in the future. Fortunately for McKelvey, Congress did so after McKelvey's indictment.” (/d. at 72.) These federal cases are instructive becausethe legislative history of AB 1439 reflects the Legislature’s stated belief that the amendment would 18 resolve “a gray area” and close a “loophole” in the law related to the operation of sweepstakes cafés. Specifically, the author’s statement in support of AB 1439 states, in pertinent part, as follows: A loophole in the law has permitted internet gambling sweepstakesto operate in a “gray area” and evade law enforcement. These internet sweepstakesare thinly veiled gambling operations. The law must be updated to prohibit these activities and provide authorities with the necessary enforcementtools to regain local control of the public safety issues that arise because ofillegal internet gambling sweepstakes. Recently, there has been a growingproliferation of these gaming operations throughout the State. AB 1439 will close the loophole that has allowedthese illegal cafes to operate. (Report on AB 1439 by Assembly Committee on Business, Professions and ConsumerProtection, April 29, 2014; Report on AB 1439 by Assembly Committee on Governmental Organization, April 23, 2014.) In addition, the report by the Assembly Committee on Business, Professions and ConsumerProtection noted that the enactment of AB 1439 wasnecessary even in the face of the Court of Appeal’s decision in Grewal. It stated: Unfortunately, the recent caselaw may not be a complete solution to the problem. Someenterprising businesses may yet be temptedto slightly modify their sweepstakes software in order to claim that it no longer technically meets the definition of an illegal slot machine or device, therefore requiring a new court decision to prohibit the modification. Instead, this bill would cast a broader net and prohibit any contest or sweepstakes that use an interactive electronic video 19 monitor to simulate gambling or play gambling-themed games for cash or prizes. AB 1439is intended to close loopholes that would allow Internet cafés to continue operating sweepstakes while claiming the games did not meet the statutory elements ofa lottery. (Report on AB 1439 by Assembly Committee on Business, Professions and Consumer Protection, April 29, 2014,at p. 6.) Accordingly, any finding that Petitioner violated Penal Code Section 330b necessarily would rest on a retroactive judicial expansionof that statute, and would ignore the Legislature’s actions to close a “loophole”in the law, and thus would violate Petitioner’s due process rights. (Bouie, 378 U.S. at 350-362; see Clark v. Brown (9th Cir. 2005) 442 F.3d 708, 720 (“An unforeseeable judicial enlargement of a criminal statute, applied retroactively, violates the federal due process right to fair warning of what constitutes criminal conduct.”); LaGrand v. Stewart (9th Cir. 1998) 133 F.3d 1253, 1260 (“[T]he Due Process Clause... protects criminal defendants against novel developments in judicial doctrine.”’”); Oxborrow v. Eikenberry (9th Cir. 1989) 877 F.2d 1395, 1399 (“An unforeseeable, albeit legitimate, construction of a state law by the courts may notberetroactively applied to a defendant.”); People v. Vis (1966) 243 Cal.App.2d 549, 554.) 2. The Rule of Lenity Precludes Any Finding that Petitioner Violated Penal Code Section 330b Respondent arguesthat the rule of lenity does not apply because Penal Code Section 330bis unambiguous on its face. Respondent, 20 however, never directly addresses how therule of lenity analysis is impacted by the decision in Trinkle IZ. As explained, Trinkle ID's interpretation of Section 330b cannot be reconciled with the interpretation by the Court of Appeal here. As the Court of Appeal acknowledged, the two interpretations directly contradict one another. (Grewal, supra, 224 Cal.App.4th at 541.) In the face of Trinkle II, therefore, one of two situations was present — either (i) Trinkle II wasand still is the controlling law onthe issues germaneto this case, in which case Petitioner’s conduct waslegal; or(ii) the issue whether the element of chance hadto be created by the machine itself was ambiguousor unsettled after Trinkle IT, meaning that individuals at best were left to guess as to how Section 330b would be interpreted in the future as applied to the sweepstakes at issue. Underthe first scenario, the Court of Appeal’s decision must be reversed for the reasons stated above. Under the secondscenario, the rule of lenity indisputably applies, again requiring reversal. Ultimately, Respondent does not dispute that neither the Court of Appeal nor this Court has the “powerto rewrite the statute so as to makeit conform to a presumed intention which is not expressed.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 59.) In order for Respondentto prevail, therefore, this Court must not only concludethat the interpretation of Penal Code Section 330b articulated in Trinkle IT was 21 wrong, but must further conclude that it should have been obviousto Petitioner and the whole world that the interpretation of Section 330b set forth in Trinkle II was wrong. Becauseit far from obviousthat the decision in Trinkle II was wrong, especially given the Legislature’s failure to amend Section 330b onat least three separate occasions following the decision in Trinkle IT, as a matter of law due processandthe rule of lenity preclude any finding that Petitioner violated Section 330b based on the interpretation of that statute as articulated by the Court of Appeal. D. Reversal of the Court of Appeal’s Decision Would Not Sanction Illegal Conduct, But Rather Would Judicially Expand Penal Code Section 330b and Call Into Serious Question the Continuing Legality of Many Established Games Respondent is generally correct that California’s Penal Code provisions forbid a wide range of gambling devices. In accordance with fundamental rules of due process articulated above, however, California law contains many examples of gambling statutes being strictly construed to prohibit (and thus criminalize) only gaming activities that are expressly prohibited bystatute. (See Tibbetts v. Van de Kamp (1990) 222 Cal.App.3d 389, 393 (Because Texas Hold-em wasnot one of the gamesspecifically prohibited by the Legislature, it did not violate Penal Code § 330; “a card gameplayed for moneynotspecifically listed under section 330 and not played as a banking or percentage gameis not prohibited”) (emphasis added); City ofBell Gardens v. County ofLos Angeles (1991) 231 22 Cal.App.3d 1563, 1567-70 (pai gow doesnot violate Penal Code § 330 where the players act as bankers and are charged a flat fee to play).) By the same token, numerouscases cited by Respondentreflect situations where courts analyzed the specific workings of a device in comparison with the specific elements of the crime alleged. (Respondent’s Brief, at p. 16.) All of these decisions follow the fundamental rule of construction of criminal statutes: “‘A penal statute should not be interpreted to cover an alleged offense whichis not plainly within its terms.’” (Tibbetts, supra, 222 Cal.App.3d at 395 (quoting Mains v. Bd. OfBarber Examiners (1967) 249 Cal.App.2d 459, 466).) Moreover,all of these cases demonstrate that California’s anti- gaming lawshavehistorically been strictly construed to prohibit specific conduct, and that slight modifications of “traditional” gambling games have been found and accepted as perfectly legal. The sweepstakesat issue here is no different. Far from acting illegally to exploit a perceived “loophole,” Petitioner did what entrepreneurs legally have done for decades — used a modified form of entertainment that complies with California’s anti-gaming laws. If this Court were to interpret Section 330b as urged by Respondent, there can be no doubt that such decision would havethe effect of overruling Trinkle IT, thus makingillegal the Lottery Scratcher Vending Machinesas well as many other devices and sweepstakes promotions throughout 23 California. Although Respondent attempts to explain whythat is not the case, Respondent’s explanation misses the mark. Respondentclaimsthat the result of the operation of the Lottery Scratcher vending machineis entirely predictable to the user, since if a user purchases oneticket, that is exactly what the user gets. If the user purchasesfive (5) tickets, that again is exactly whatthe user gets. (Respondent’s Br., at p. 38.) But Respondent ignores that the sameis true for the sweepstakes. Every time the customerhits a button to reveal the next entry, he or she gets to see the result of exactly one entry. Respondent’s argumentuses the wrong analogy, and proves nothing. The question of whether the outcomeis subjectively predictable to the user does not depend on the predictability of the numberoftickets received, but rather the value of those tickets once the results are revealed. The user cannot predict this ahead of time, and must await the surprise once he or she scratches off the ticket to reveal the results. The sameis true in the sweepstakes at issue here — the user cannot predict the outcome ahead of time, but must wait for the result to be revealed on the computer screen. In both cases, however, the results of either the lottery ticket or the sweepstakes entry were determined andfixed long before they are delivered to and revealed by the user. Importantly, in both cases the patron obtains the chance to win a prize through outcome unpredictable to him orher. Thus,if the element of chance does not have to originate from the operation 24 of the machineitself, as urged by Respondent, then the Lottery Scratcher Vending Machines, like the sweepstakes terminals at issue here, are illegal slot machines. Indeed, while the Lottery enjoys a statutory exemption from the recently enacted AB 1439, it enjoys no such exemption from the prohibitions contained in Penal Code Section 330b. The impact on the Lottery of an interpretation of Penal Code Section 330b as urged by Respondent does not end with the Lottery’s Scratcher Vending Machines. The Lottery recently announcedits “Play at the Pump” game, described by the Lottery as follows: There’s a new convenient and fast wayto play your favorite California Lottery draw games. At select Los Angeles and Sacramento area locations, you can try your luck while you pump your gas. Whether your game is SuperLotto Plus, Powerball, or Mega Millions, all you have to do is swipe your debit or credit card at the gas pump and you might drive away with a lot more than a tank full of gas. (See http://www.calottery.com/lucky-retailers/more-ways-to-buy/play-at- the-pump.) Under the Court of Appeal’s decision below, the gas pumpin the Lottery’s new “Play at the Pump” gameis unquestionably anillegal slot machine within the meaning of Section 330b. The use of the debit card meets the “insertion” requirement, the patron is paying for a lottery ticket, and, by doing so, the patron obtains the chance to win a prize through outcome unpredictable to him or her. 25 Accordingly, the interpretation of Section 330b urged by Respondent indeed would have far ranging consequences, many of which are no doubt unintended and, more importantly, contrary to the Legislature’s intent. Il. CONCLUSION If particular conduct is not expressly prohibited by the Penal Code,it is the Legislature’s job to fix 1f, if it so desires. Asit turns out, the Legislature has donejust that in this context, through the enactment ofAB 1439, which becameeffective January 1, 2015. The Court of Appeal here went too far, and usurped the role of the Legislature by rejecting the established interpretation of Penal Code Section 330b set forth in 7rinkle IJ and adopting a new interpretation that statute. The Court of Appeal then violated Petitioner’s right to due process andthe rule of lenity by applying its new interpretation retroactively against Petitioner. The decision therefore must be reversed. Dated: February 18, 2015 HUNT JEPPSON & GRIFFIN, LLP Attorneys for Petitioner John Stidman 26 IV. CERTIFICATE OF WORD COUNT (California Rules of Court, Rule 8.204(c)(1) The text of this brief consists of 6,460 words as counted by Microsoft Word, the word-processing software used to generate this brief. - ay Dated: February 18, 2015 f__4 CL / Fory E. Gaiffin HUNT JEPPSON & GRIFFIN, LLP Attorneys for Petitioner John Stidman 27 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE CASE TITLE: People v. Grewal, et al. Court: Supreme Court of California CASENO. 8217896 I am a citizen of the United States, and I am employed in Placer County, State of California. Mybusiness address is 1478 Stone Point Drive, Suite 100, Roseville, CA 95661. I am over the age of 18 years and not a party to the above-entitled action. I am familiar with HUNT JEPPSON & GRIFFIN, LLP’S office practice whereby the mailis sealed, given the appropriate postage and placed in a designated mail collection area. Each day's mail is collected and deposited in the U.S. mailbox after the close of each day's business. On February 18, 2015, I served the following: PETITIONER’S REPLY BRIEF ON THE MERITS [X] on the party(ies) in this action by causing a true copy thereof to be placed in a sealed envelope with postage thereon fully prepaid and deposited in the designated area for outgoing U.S. Mail addressed as follows: [_| onthe party(ies) in this action by causing a true copy(ies) thereofto be delivered by hand as follows: [| on the party(ies) in this action by causing a true copy(ies) thereof to be delivered to Overnight Delivery in a sealed envelope(s) with receipts affixed thereto promising overnight delivery thereof addressed as follows: [_] on the party(ies) in this action by causing a true copy(ies) thereof to be delivered by causing a true copy(ies) thereof to be sent by facsimile transmission as follows: KamalaHarris John H. Weston Attorney General of the State of California G. Randall Garrou PO Box 944255 Jerome H. Mooney Sacramento, CA 94244-2550 Weston, Garrou & Mooney (Served pursuant to Business &Professions Wilshire Bundy Plaza Code §§ 17209 and 17536.5) 12121 Wilshire Bivd., Suite 525 Los Angeles, CA 90025 Attorneys for Defendants/Appellants Kirnpal Clerk of the Court Grewal and Phillip Ernest Walker Court of Appeal, Fifth Appellate District 2424 Ventura Street Fresno, CA, 93721 Lisa S. Green, District Attorney Gregory A. Pulskamp, Deputy District Attorney Clerk of the Court Kern County District Attorney’s Office Kern County Superior Court 1215 Truxtun Avenue 1415 Truxtun Avenue Bakersfield, CA 93301 Bakersfield, CA 93301 Attorney for the People of the State of California Praner nr Grpvice N o 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PEOPLE V. GREWAL,ET AL. CASE NO. 8217896 I declare under penalty of perjury underthe laws of the State of California that the foregoing is true and correct, and that this declaration is executed on February 18, 2015, at Roseville, California. PROOF OF SERVICE SARA SEBERGER AGE 3