IBiz LLC v. City of Hayward

Filing 44

Order by Hon. Samuel Conti granting in part and denying in part 13 Motion for Preliminary Injunction.(sclc2, COURT STAFF) (Filed on 7/18/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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IBiz, LLC,
Plaintiff,

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v.

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City of Hayward,
Defendant.

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Case No. C 13-1537 SC
ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF'S
MOTION FOR PRELIMINARY
INJUNCTION

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I.

INTRODUCTION
Now before the Court is Plaintiff IBiz, LLC's ("Plaintiff")

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motion for a preliminary injunction against Defendant City of

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Hayward ("Defendant" or "City").

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related to No. 13-1212 (the "Net Connection Case"), and the parties

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often incorporate documents from that case into their papers.

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Nos. 20 ("Opp'n"), 32 ("Reply").

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Court issued an order denying Net Connection's motion for a

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preliminary injunction in the Net Connection Case.

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Case, ECF No. 54 ("Net Connection Order").

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its findings from the Net Connection Order into this one.

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ECF No. 19 ("Mot.").

The case is

ECF

Concurrently with this Order, the

Net Connection

The Court incorporates

The parties also agreed to have this motion determined without

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oral argument,1 and the Court finds that decision appropriate per

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Civil Local Rule 7-1(b).

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the Court GRANTS Plaintiff's motion for a preliminary injunction

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and enters an injunction, detailed below.

For the reasons explained in this Order,

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6 II.

BACKGROUND

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The following facts are taken from the parties' briefs and

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accompanying declarations and requests for judicial notice, which

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the Court grants under Federal Rule of Evidence 201.

The parties

United States District Court

For the Northern District of California

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also incorporate some facts from the Net Connection Case, and since

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the two cases are so similar, the Court often refers to its Order

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discussing that case's more extensive record.
Plaintiff describes itself as an Internet café and business

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center, located in downtown Hayward.

Mot. at 3-4.

(The Court

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refers to Plaintiff's physical location as "IBiz Hayward").

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business is very much like Net Connection's: it sells computer

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rental time, which includes Internet access and an array of

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computer-based programs and services.

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2-3.

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sweepstakes program to promote its services.

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Connection Order at 3-4.

Its

See Net Connection Order at

Also like Net Connection, Plaintiff uses a promotional
Mot. at 4-5; Net

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While Plaintiff does not fully describe the process through

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which it obtained a business license from Defendant, the parties

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agree that Plaintiff somehow obtained one and that the situation is

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almost identical to Net Connection's.

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19-21; Net Connection Order at 5-7.

See Mot. at 7-8; Opp'n at
In other words, Plaintiff

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The Court did hold a two-day hearing on the preliminary
injunction in the Net Connection Case.
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applied for and obtained a license through the usual channels, as

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Net Connection did, and the Court presumes that this means

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Plaintiff's business license was also approved from a land use

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perspective.

See Net Connection Order at 5-7, 18-20.

Plaintiff is located in Hayward and is therefore subject to

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the same zoning laws and regulations as Net Connection.

Its case

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is therefore based on two ordinances that Defendant enacted between

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February and April 2013.

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was an interim urgency ordinance adopted on February 20, 2013 under

The first is Ordinance No. 13-03, which

United States District Court

For the Northern District of California

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California Government Code section 65858.

See Net Connection Order

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at 10.

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Ordinance No. 13-03 that the City Council unanimously adopted on

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April 2, 2013 after providing notice on March 22 and a hearing on

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April 2.

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see also Net Connection Order at 10-12.2

The second is Ordinance No. 13-05, which is an extension of

ECF No. 18 ("Pl.'s RJN") Ex. 2 ("Ordinance No. 13-05");

Ordinance No. 13-05, the extended Ordinance and the operative

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law at this point, has several relevant parts.

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No. 13-05 defines "Computer Gaming and Internet Access Businesses"

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as follows:

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. . . [A]n establishment that provides one
or
more
computers
or
other
electronic
devices for access to the World Wide Web,
Internet, e-mail, video games or computer
software programs that operate alone or
networked (via LAN, WAN, wireless access or
otherwise)
or
that
function
as
a
client/server
program,
and
which
seeks
compensation or reimbursement, in any form,
from users.
"Computer Gaming and Internet
Access Business" shall also be synonymous
with
a
personal
computer
("PC")
café,

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First, Ordinance

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The parties often refer to the two Ordinances, Nos. 13-03 and 1305, collectively. The Court occasionally does the same, though the
operative Ordinance here is Ordinance No. 13-05, and the Court
cites that Ordinance specifically when it is important to do so.
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Internet
café,
cyber
café,
sweepstakes
gaming facilities, business center, Internet
sales business and Internet center with
Internet sweepstakes-type games . . . .

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Ordinance No. 13-05 at 5.
The moratorium's scope, as to Computer Gaming and Internet

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Access Businesses, is set out here:
. . . [F]rom and after the effective date of
this Ordinance, no permit or any other
applicable license or entitlement for use,
including but not limited to, the issuance
of a business license, business permit,
building permit, use permit or zoning text
amendment shall be approved or issued for
the establishment or operation of Computer
Gaming and Internet Access Businesses in the
City of Hayward.
Additionally, Computer
Gaming and Internet Access Businesses are
hereby expressly prohibited in all areas and
zoning districts in the City.

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United States District Court

For the Northern District of California

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Id.
Ordinance No. 13-05 also declares Computer Gaming and Internet
Access Businesses to be nuisances:

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The establishment, maintenance or operation
of a Computer Gaming and Internet Access
Business as defined herein with[in] the City
limits of the City of Hayward is a public
nuisance.
Violations of this Ordinance may
be enforced by any applicable law, including
but
not
limited
to
injunctions,
administrative
citations
or
criminal
penalties.

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Id. at 6.
On April 5, 2013, shortly after the Court entered a temporary

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restraining order for Net Connection, Net Connection Case ECF No.

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13, Plaintiff sued Defendant, and one week later it amended its

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complaint.

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this case to the Net Connection Case on April 15, 2013, and on May

ECF Nos. 1 ("Compl"), 5 ("FAC").

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The Court related

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7, 2013, Plaintiff moved for a preliminary injunction.
In Plaintiff's FAC, it asserts nine causes of action against

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Defendant:

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(1) violation of procedural due process;
(2) violation of substantive due process;
(3) violation of equal protection based on
the Ordinance;
(4) violation of equal protection based on
allegedly discriminatory enforcement of the
California lottery statute, Cal. Pen. Code §
319;
(5) a facial challenge to Ordinance No. 1303 based on an alleged violation of the
First
Amendment
and
the
California
Constitution's free speech provisions;
(6) injunctive
relief
prohibiting
Defendant's enforcement of California's slot
machine and lottery statutes, Cal. Pen. Code
§§
330a,
330b,
330.1
(slot
machine
statutes), 319 (lottery statute);
(7) in the alternative, injunctive relief
prohibiting
threatened
ex
parte
mass
seizures of Plaintiff's computers;
(8) declaratory judgments that Plaintiff's
operation of business is permissible or a
legal
nonconforming
use,
and
that
its
sweepstakes
software
is
legal
and
permissible under California law; and
(9) petition for a writ of mandate and
stay.

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United States District Court

For the Northern District of California

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Compl. ¶¶ 37-125.

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21 III.

LEGAL STANDARD

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A plaintiff seeking a preliminary injunction must establish

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(1) that it is likely to succeed on the merits, (2) that it is

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likely to suffer irreparable harm absent preliminary relief, (3)

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that the balance of equities tips in its favor, and (4) that an

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injunction is in the public interest.

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Defense Council, Inc., 555 U.S. 7, 20 (2008).

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Winter v. Natural Resources

The Ninth Circuit has formulated a version of the preliminary

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injunction test in which "serious questions going to the merits"

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and a balance of hardships tipping toward the plaintiff can support

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the issuance of a preliminary injunction, so long as there is a

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likelihood of irreparable injury and the injunction is in the

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public interest (that is, so long as the plaintiff makes a showing

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on all four prongs of the Winter test).

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Rockies v. Cottrell, 632 F.3d 1127, 1131-33 (9th Cir. 2011).

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other words, under this formulation, a stronger showing under one

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factor could offset a weaker showing for another, but a plaintiff

United States District Court

For the Northern District of California

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must still satisfy every Winter factor.

See Alliance for the Wild
In

Id. at 1135.

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12 IV.

DISCUSSION

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A.

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Plaintiff's Claims 1-4, 6, 8, and 9 are virtually identical to

Claims 1-4, 8, and 9

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the claims at issue in the Net Connection Case.

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restate what it explained at length in the Net Connection Order,

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because the Court finds no material differences in the facts or law

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that the parties discuss in this case.

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The Court will not

The Court adopts its findings and reasoning from the Net

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Connection Order and finds that Plaintiff has failed to show a

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likelihood of success on Claims 1-4, 8, or 9 in its FAC, since, in

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summary, (1) Defendant did not act ultra vires, arbitrarily, or

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unreasonably in enacting the Ordinances or declaring Defendant's

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business a nuisance; (2) Defendant did not deny Plaintiff

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procedural due process; (3) Defendant did not violate Plaintiff's

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right to equal protection; and (4) the Court need not address any

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of Plaintiff's arguments about the California lottery or slot

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machine statutes, since a decision on those issues would not

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resolve any actual controversies and would result in the Court

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making an impermissible advisory ruling and deciding unnecessary

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issues of state law.

See Net Connection Order at 15-33.

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B.

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Plaintiff's Claims 5, 6, and 7 are not addressed in the Net

Claims 5-7

Ordinance.

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types of ex parte or summary mass seizures of computers from

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Plaintiff.

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United States District Court

Connection Order.

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For the Northern District of California

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Claim 5 is a First Amendment challenge to the

i.

Claims 6 and 7 request that the Court enjoin certain

Plaintiff's First Amendment Claim

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Plaintiff alleges that the Ordinance is facially invalid

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because it violates the First Amendment and California Constitution

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Article 1, section 2(a).

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Ordinance imposes an overbroad prohibition on any establishments

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that provide, in exchange for any form of consideration, Internet

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access via any type of computer or electronic device.

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contends that such a ban is as patently unconstitutional as a ban

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on a bookstore or library, since providing access to the Internet

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is an expressive activity related to the provision of communication

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services and information.

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assert its own First Amendment rights as well as those of parties

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not before the Court, including other business owners and

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customers.

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FAC ¶¶ 72-80.

Mot. at 18-19.

Plaintiff argues that the

Plaintiff

Plaintiff seeks to

Id.

The Court must determine whether Plaintiff is able to bring a

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facial challenge to the Ordinances before it can decide whether the

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Ordinances violate the First Amendment.

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reluctant to entertain facial challenges to laws because of the

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risks involved with potentially adjudicating the rights of parties

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Courts are ordinarily

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not before the court.

Brockett v. Spokane Arcades, Inc., 472 U.S.

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491, 503 (1985).

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in the First Amendment context because of the concern that "those

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who desire to engage in legally protected expression . . . may

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refrain from doing so rather than risk prosecution or undertake to

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have the law declared partially invalid."

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Massachusetts v. Oakes, 491 U.S. 576, 381 (1989); Roulette v. City

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of Seattle, 97 F.3d 300, 303 (9th Cir. 1996); cf. Broadrick v.

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Oklahoma, 413 U.S. 601, 612-13 (1973)) (holding that facial

However, this reluctance is somewhat diminished

Id.; see also, e.g.,

United States District Court

For the Northern District of California

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challenges were narrowly permissible when the challenged laws

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sought to regulate spoken words or expressive or communicative

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conduct).

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has standing to vindicate his own constitutional rights is called

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the overbreadth doctrine.

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Taxpayers for Vincent, 466 U.S. 789, 796-99 (1984).

This exception to the general rule that a litigant only

Members of the City Council of L.A. v.

Out of concern for the risk that the overbreadth doctrine

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might allow a standing exception to swallow the general rule, the

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Supreme Court has directed courts to weigh "the likelihood that the

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statute's very existence will inhibit free expression."

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799.

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overbreadth "must not only be real, but substantial as well, judged

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in relation to the statute's plainly legitimate sweep."

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(quoting Broadrick, 413 U.S. at 615) (internal quotation marks

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omitted).

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under the overbreadth doctrine, the challenged law "must have a

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close enough nexus to expression, or to conduct commonly associated

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with expression, to pose a real and substantial threat of the

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identified censorship risks."

Id. at

When conduct rather than speech is involved, a statute's

Id. at 799

Under this standard, for a challenge to be permissible

City of Lakewood v. Plain Dealer

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Publ'g Co., 486 U.S. 750, 760 (1988); see also Roulette, 97 F.3d at

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305.

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Defendant argues that Plaintiff has not shown a realistic

Amendment interests of parties not before the Court, because there

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is no evidence that Computer Gaming and Internet Access Businesses

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are the only means for people to engage in First Amendment-

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protected activity like accessing the Internet.

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Defendant adds that because Plaintiff charges for its services, the

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United States District Court

danger that the Ordinance will significantly compromise the First

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For the Northern District of California

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Court should be less inclined to find that Plaintiff's business is

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protected by the First Amendment.

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can bring this challenge because it is seeking both to assert its

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own rights and to challenge the statute's applicability to other

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parties.

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its services is irrelevant under the First Amendment.

Reply at 3-4.

Id.

Opp'n at 28.

Plaintiff responds that it

Plaintiff also states that charging for
Id.

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Ordinance No. 13-05 concerns conduct, not expression itself.

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By its terms, it concerns any "establishment that provides one or

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more computers or other electronic devices for access to the World

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Wide Web, Internet, e-mail, video games or computer software

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programs that operate alone or networked . . . or that function as

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a client/server program, and which seeks compensation or

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reimbursement, in any form, from users."

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It states that all such establishments, defined as "Computer Gaming

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and Internet Access Businesses" in the Ordinance, are summarily

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prohibited from operating in Hayward, and that all future licenses

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or permits relating to such businesses are to be denied.

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also declares these businesses to be nuisances.

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Therefore, the conduct in question is -- generally speaking -- the

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Ordinance No. 13-05 at 5.

Id.

It

Id. at 5-6.

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provision of access to computers and electronic devices for just

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about any reason whatsoever, in exchange for any type of

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consideration.

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See id.

The Court must consider whether this sort of conduct, the only

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conduct that the Ordinance is designed to impair, "is commonly

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associated with expression" such that the Ordinance's existence

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poses a risk to free expression.

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760; Broadrick, 413 U.S. at 615; Roulette, 97 F.3d at 305.

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Court finds that it is.

City of Lakewood, 486 U.S. at
The

The Ordinance is similar to the ordinance

United States District Court

For the Northern District of California

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addressed in City of Lakewood, 486 U.S. at 760-61, which gave a

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city's mayor the authority to grant or deny permits for newspaper

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racks and was found to be directed at expressive conduct.

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less like the ordinance at issue Roulette, 87 F.3d at 305, which

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banned sitting and lying on public sidewalks under certain

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conditions and was found not to concern typically expressive

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conduct.

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provision of access to the Internet and computers is conduct that

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might not carry a message itself but is nevertheless closely

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related to expression.

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Internet is subject to the same First Amendment scrutiny as print

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media, suggesting that providing access to the Internet would be

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associated with expression:

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It is

Like the provision of newspaper racks in a city, the

The Supreme Court has affirmed that the

This
dynamic,
multifaceted
category
of
communication includes not only traditional
print and news services, but also audio,
video,
and
still
images,
as
well
as
interactive, real-time dialogue.
Through
the use of chat rooms, any person with a
phone line can become a town crier with a
voice that resonates farther than it could
from any soapbox. Through the use of Web
pages, mail exploders, and newsgroups, the
same individual can become a pamphleteer.
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As the District Court found, "the content on
the
Internet
is
as
diverse
as
human
thought." We agree with its conclusion that
our cases provide no basis for qualifying
the level of First Amendment scrutiny that
should be applied to this medium.

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5

Reno v. ACLU, 521 U.S. 844, 870 (1997); see also Bernstein v. U.S.

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Dep't of State, 974 F. Supp. 1288, 1305-06, 1308 (N.D. Cal. 1997)

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(finding encryption software associated with expression).

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Moreover, Internet access aside, the Ordinance prohibits

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charging for access to "video games or computer software programs

United States District Court

For the Northern District of California

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that operate alone or networked," which encompasses a range of

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activities far beyond the sweepstakes promotions that Plaintiff

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purports to target here.

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obviously associated with expression, like word processing programs

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and slideshow software.

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The Ordinance excludes "Public Use or Internet Learning Centers"

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like schools, libraries, and nonprofits from its coverage, but

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there are no other exceptions or amortizations in the Ordinances.

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See Ordinance No. 13-05 at 5-6.

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broadly, covering a range of expression-related conduct.

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Defendant's arguments that the Ordinance was meant to target only

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sweepstakes providers suggests that it could have been much

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narrower.

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Many of these computing activities are

See Tr. at 53;

Ordinance No. 13-05 at 5.

The Ordinance therefore sweeps

Further, operation for profit has no effect on First Amendment

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protection.

Bookstores, movie theaters, and newsstands all operate

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for profit and are undisputedly protected under the First

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Amendment.

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(1952).

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the provision of access to means of expression, as opposed to the

Joseph Burstyn, Inc. v. Wilson, 343 U.S. 495, 501-02

Moreover, it makes no difference that the conduct here is

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expression itself (or even the consumption of it).

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that the prohibition targets only conduct commonly associated with

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expression.

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at 305.

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Amendment scrutiny.

City of Lakewood, 486 U.S. at 760; Roulette, 97 F.3d

The Court finds that the Ordinance is subject to First

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It is enough

a.

Content-Neutral Restrictions on Speech

The fact that conduct implicates or is associated with First

8

Amendment interests does not mean that the government cannot

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regulate it.

The question under the First Amendment is whether

United States District Court

For the Northern District of California

10

restrictions on conduct closely associated with expression are

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justified without reference to the content of the regulated speech,

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narrowly tailored to serve a significant governmental interest, and

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leave open ample alternative channels for communicating the

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information.

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(1989).

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regardless of whether (for example) the computer or device in

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question is used to operate a sweepstakes promotion or to read a

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news article.

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U.S. at 791-92 (content neutrality is evaluated in reference to

20

whether the government is targeting specific content).

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the Court must consider (1) what Defendant's interests are, and

22

whether they are significant; (2) whether the Ordinance is narrowly

23

tailored to effect those interests; and (3) whether there are

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alternative forums for expression in this case.

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at 791.

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27
28

Ward v. Rock Against Racism, 491 U.S. 781, 790-91

Ordinance No. 13-05 is content-neutral, since it applies

See Ordinance No. 13-05 at 5; see also Ward, 491

1.

Therefore

See Ward, 491 U.S.

Defendant's Interests

Defendant adopted the Ordinances to promote the public health,
safety, and welfare of Hayward by pausing development of certain

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1

types of new businesses, especially those providing sweepstakes,

2

whose legality and effect on Hayward remains undetermined.

3

Ordinance No. 13-05 at 1-4; Ordinance No. 13-03 at 1-2.

4

also wanted to avoid inviting problems it observed in other cities

5

from arising in Hayward.

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laudable government objectives, and cities have broad police powers

7

to effect these ends.

8

Consciousness, Inc., 452 U.S. 640, 649-51 (1981); see also Thain v.

9

City of Palo Alto, 207 Cal. App. 2d 173, 187 (Cal. Ct. App. 1962).

Id.

See

Defendant

Considerations like these are valid,

See Heffron v. Int'l Soc'y for Krishna

United States District Court

For the Northern District of California

10

Defendant's interest in ensuring that Hayward is home to safe

11

citizens and lawful businesses is significant, and the Court does

12

not find Defendant's reasons pretextual or unsupported by

13

reasonable considerations.

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15

2.

Narrow Tailoring

However, even though Defendant's interest is substantial, the

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Ordinance is not narrowly tailored.

17

"narrowly tailored," an ordinance need not be the least intrusive

18

means of achieving an end.

19

"substantially more speech than necessary" to reach that end, and

20

it may not "regulate expression in such a manner that a substantial

21

portion of the burden on speech does not serve to advance [a

22

municipality's] goals."

23

numerous and obvious less-burdensome alternatives, those options

24

may factor into a court's consideration of whether the fit between

25

ends and means is reasonable.

26

Inc., 507 U.S. 410, 417 n.13 (1993); Project 80's, Inc. v. City of

27

Pocatello, 942 F.2d 635, 638 (9th Cir. 1991).

Id.

Ward, 491 U.S. at 798.

To be

But it may not burden

Id. at 799-800.

Further, if there are

See Cincinnati v. Discovery Network,

28

13

The Ordinances are too broad.

1

Defendant's goals may be

2

significant, but its findings in support of the Ordinances point to

3

a far narrower solution than the one it enacted in Ordinance No.

4

13-03 and extended in Ordinance No. 13-05.

5

essentially to pause development of the rapidly growing subset of

6

Computer Gaming and Internet Access Businesses that provide

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sweepstakes promotions -- the only such businesses really at issue

8

in this case -- it could have prohibited those specifically.

9

Instead, Defendant has enacted an ordinance that burdens

If Defendant's goal was

United States District Court

For the Northern District of California

10

substantially more speech than is necessary by prohibiting any

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business from allowing any customer to pay to use a computer or

12

electronic device for practically any reason.

13

As written, the Ordinance burdens substantially more expressive

14

conduct than is relevant to Defendant's stated goals.

15

is obvious that many other ways of addressing the problem were

16

available to Defendant, suggesting that the means do not suit the

17

ends in this case.

18

narrowly tailored.

19
20

Ordinance No. 13-05.

Further, it

The Court finds that the Ordinances were not

3.

Alternative Forums

The First Amendment also requires that content-neutral time,

21

place, and manner restrictions leave open ample alternative

22

channels of communication.

23

not find that there are such alternative channels in this case.

24

a business wants to provide a computer or device to its customers

25

and charge for its access, it is forbidden to do so.

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13-05.

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institutions can continue to provide computer labs and lend

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laptops, for example, but no one else is permitted to do the same

Ward, 491 U.S. at 802.

The Court does
If

Ordinance No.

Schools, libraries, non-profits, and other such

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1

if they expect compensation or reimbursement.

2

alternative channels of communication both for businesses that want

3

to provide computer- or Internet-related services for their

4

customers, and for customers who would otherwise have had access to

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those services.

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b.

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Id.

This cuts off

Conclusion as to Plaintiff's First Amendment
Claim

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Largely because of the Ordinances' overbroad scope,

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Plaintiff's facial challenge to the Ordinances succeeds.

The Court

United States District Court

For the Northern District of California

10

finds that Ordinance No. 13-05's "Scope" section, Paragraph 1 of

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the "Definitions" section, and all of Section 4 are

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unconstitutional under the First Amendment.

13

limiting construction to the terms of the Ordinances: this is not a

14

case of statutory interpretation in which one reading of an

15

ordinance could rescue it from unconstitutionality.

16

413 U.S. at 613.

17

There is no reasonable

See Broadrick,

However, as Defendant notes, application of the overbreadth

18

doctrine is "strong medicine," and Ordinance No. 13-05 (again, the

19

operative law in this case since it extended Ordinance No. 13-03)

20

includes a severability clause.

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section, subsection, sentence, clause or phrase of this Ordinance

22

is for any reason held to be invalid or unconstitutional, such

23

decision shall not affect the validity of the remaining portions of

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this ordinance.").

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absent a narrowing construction.

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The problem is that the invalid portions of the Ordinance leave the

27

Ordinance with no meaning at all.

28

nothing.

Ordinance No. 13-05 at 6 ("If any

Such a clause could normally rescue a law even
See Brockett, 472 U.S. at 506.

It would cover nothing and do

Redrafting the Ordinance with a narrower scope -- for

15

1

example, one seeking to govern the specific type of harmful

2

activity that Defendant's findings and arguments seem to address --

3

could rescue the Ordinance, but the Court will not assume the

4

legislature's role here.

5

Defendant to amend the Ordinance.

6

A clearer and fairer result would be for

The Court finds, as discussed above, that Plaintiff has shown

7

likelihood of success under its First Amendment claim because it

8

has shown that the Ordinance is overbroad.

9

The Court also finds that Plaintiff would suffer irreparable

United States District Court

For the Northern District of California

10

harm to its First Amendment rights absent a preliminary injunction,

11

since the constitutional claim is tightly connected with the

12

deprivation of rights that Plaintiff fears.

13

Inc. v. Super Ct. of Cal., 739 F.2d 466, 472 (9th Cir. 1984) ("An

14

alleged constitutional infringement will often alone constitute

15

irreparable harm.").

16

Goldies' Bookstore,

Accordingly, the balance of equities tips toward Plaintiff

17

here, since Defendant has not shown that it has suffered any harm

18

as a result of Plaintiff's First Amendment-protected activities,

19

while Plaintiff could suffer the loss of its constitutional rights.

20

See id.

21

Finally, the Court finds that issuance of an injunction is in

22

the public interest in this case.

23

First Amendment principles is great; the enforcement of an

24

ordinance that violates the First Amendment would infringe the

25

rights of many members of the public not currently before the

26

Court; and Defendant has shown no harm to itself commensurate with

27

the broad prohibition on expression it has imposed.

28

v. First Jud. Ct. for Cnty. of Carson City, 303 F.3d 959, 974 (9th

16

The public interest in upholding

See Sammartano

1

Cir. 2002).

2

factors.

3

Plaintiff has therefore fulfilled all of the Winter

555 U.S. at 20.

Therefore the Court GRANTS Plaintiff's motion for a

4

preliminary injunction on First Amendment grounds.

This injunction

5

prohibits Defendant from enforcing the Ordinance to Computer Gaming

6

and Internet Access Businesses, as presently written, against any

7

Computer Gaming and Internet Access Business.

It does not enjoin

8

the enforcement of other laws or regulations.

The Court finds that

9

Plaintiff need not post a bond for this injunction, since

United States District Court

For the Northern District of California

10

maintaining the status quo will not burden Defendant.

11

Barahona-Gomez v. Reno, 167 F.3d 1228, 1237 (9th Cir. 1999).

12

c.

13
14

See

Plaintiff's Request for Injunctive Relief of
Threatened Summary or Ex Parte Seizures

Plaintiff also requests that the Court enjoin threatened

15

summary or ex parte mass seizures of Plaintiff's computers.

16

¶¶ 76-91.

17

both threatened seizures that would violate the First Amendment,

18

per the discussion above, as well as seizures pursuant to the state

19

summary seizure and gambling laws, Penal Code sections 330a, 330b,

20

331.1, 319, and 335a.

21

Compl.

Specifically, Plaintiff asks for injunctions covering

Plaintiff bases this request on the cease-and-desist letters

22

it received from Defendant, which state that Defendant will take

23

"any and all legal actions necessary" to prevent Plaintiff from

24

operating its business and sweepstakes promotion, including

25

"seizure and sale of all equipment use to aid, abet, or maintain

26

the nuisance," in reference to the Ordinances' nuisance section.

27

Mot. at 19.

28

Penal Code section 335a ("Section 335a"), which covers the seizure

Defendant responds that it has made no threats under

17

1

and destruction of lottery or gambling devices.

2

Defendant specifies that in referring to seizures and sales in its

3

cease-and-desist letters, it meant only the types of remedies a

4

court might impose upon Plaintiff.

5

Plaintiff's request for an injunction of seizures that would

6

violate the First Amendment, presumably because Defendant contends

7

(as discussed above) that the Ordinance is constitutional.

8

reply, Plaintiff asserts that Defendant's focus on Section 335a is

9

duplicitous, since Defendant's cease-and-desist letters promised

Id.

Opp'n at 29.

Defendant does not address

In its

United States District Court

For the Northern District of California

10

that Defendant would use all available remedies.

11

Plaintiff therefore asks for a blanket prohibition on all summary

12

or ex parte mass seizures.

13

Reply at 6.

Id.

First, the Court notes again that in neither this Order nor

14

the Net Connection Order does it make any finding about whether

15

Plaintiff's sweepstakes promotion or any other violates state law.

16

The posture of these cases does not properly raise the issue.

17

However, since Defendant claims that Section 335a is not at issue

18

at this point, the Court will hold it to its word and enjoin

19

Section 335a seizures for the purpose of preserving the status quo

20

until the parties are able to articulate how the Court is to reach

21

the issue of the sweepstakes promotions' legality, or until the

22

parties obtain some other judicial determination of that matter.

23

Second, the Court notes that in accordance with its findings

24

on the First Amendment in Section IV.a-b, supra, the Ordinance is

25

overbroad and cannot be enforced as written.

26

Court enjoins Defendant from undertaking any mass seizures under

27

the Ordinance, though as Plaintiff notes, carefully limited

28

seizures that do not deprive customers of computer and Internet

18

Accordingly, the

1

access might not violate the First Amendment.

Compl. ¶ 80.

2

narrow allowance may be subject to an adversarial hearing on

3

That

probable cause, which is not yet an issue before the Court.

4

Finally, the Court declines to grant Plaintiff's request that

5

the Court enjoin enforcement of the state lottery and slot machine

6

laws, Cal. Pen. Code §§ 330a, 330b, 331.1, 319.

7

laws are separate from the Ordinance, and questions of their

8

validity and enforcement are not before the Court at this time.

These criminal

9

United States District Court

For the Northern District of California

10

V.

CONCLUSION

11

As explained above, the Court GRANTS Plaintiff IBiz, LLC's

12

motion for a preliminary injunction on First Amendment grounds, and

13

also enters the limited injunctions concerning seizures as

14

described above.

15

injunction are insufficient as discussed in the Net Connection

16

Order, and to the extent that Plaintiff's motion is based on those

17

claims, it is DENIED.

18

///

19

///

20

///

21

///

22

///

23

///

24

///

25

///

26

///

27

///

28

///

Plaintiff's other grounds for a preliminary

19

1

Defendant City of Hayward and its agents, servants, employees,

2

and all persons in active concert and participation with them who

3

receive actual notice of this injunction are hereby restrained and

4

enjoined from enforcing City Ordinance No. 13-05, as presently

5

written, against any Computer Gaming and Internet Access Business,

6

and from instituting any summary or ex parte mass seizures of First

7

Amendment-protected material in relation to the Ordinance,

8

including seizures pursuant to California Penal Code section 335a.

9

This injunction does not limit narrow seizures that do not violate

United States District Court

For the Northern District of California

10

the First Amendment, and it does not enjoin the enforcement of

11

state criminal laws, including California Penal Code sections 330a,

12

330b, 331.1, and 319.

13
14

Plaintiff has the responsibility to serve the injunction in
such a manner to make it operative in contempt proceedings.

15
16

IT IS SO ORDERED.

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19

Dated: July 18, 2013
UNITED STATES DISTRICT JUDGE

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