Opinion Information Sheet

			

ZDI Gaming, Inc. v. State, No. 83745-7
Dissent by J.M. Johnson, J.

                                     No. 83745-7

       J.M. JOHNSON, J. (dissenting) -- In contrast to the majority's view, the 

question in this case is whether the Washington State Constitution prohibits 

the  legislature from adopting a statute granting exclusive jurisdiction to 

Thurston County Superior Court to review appeals of certain decisions of the 

Washington State Gambling Commission (Commission).  RCW 9.46.095

limits the superior court's       appellate jurisdiction rather than its original 

jurisdiction.  Additionally, sovereign immunity concerns attach where the 

state or one of its agencies is named as a party to the suit.  I would hold that 

RCW 9.46.095 does not violate the grant of general jurisdiction to superior 

courts found in article IV, section 6 of the Washington Constitution, and thus 

dissent.

       RCW 9.46.095 expressly  grants Thurston County Superior Court 

exclusive jurisdiction to review the decisions of the Commission and provides  

ZDI Gaming, Inc. v. State, No. 83745-7

that "[n]o court of the state of Washington other than the superior court of 

Thurston county shall have jurisdiction over any action or proceeding against 

the [C]ommission."       (Emphasis added.)  The Commission denied the 

application of ZDI Gaming Inc. to distribute its VIP (video interactive 

display)  electronic pull tab machine.  ZDI Gaming  filed in Pierce County 

Superior Court to seek review.  I would hold that Pierce County Superior 

Court lacked subject matter jurisdiction and dismiss the case.

1.     The History of Gambling in Washington

       I begin  my analysis by briefly noting the history of gambling in 

Washington State.      In 1889, our state constitution originally provided that 

"[t]he legislature shall never authorize any lottery . . . ."  Wash. Const. art. II, 

§ 24 (orig. text) (emphasis added), amended by Wash. Const. amend. 56.  In 

subsequent cases, we interpreted the term "lottery" broadly to encompass 

virtually any game involving "'prize, chance and consideration'" so long as it 

did not involve "'any substantial degree of skill or judgment . . . .'"  State ex 

rel. Evans v. Bhd. of Friends, 41 Wn.2d 133, 150, 247 P.2d 787 (1952) 

(quoting State v. Coats, 158 Or. 122, 132, 74 P.2d 1102 (1938)).

       In 1972, the people of the state of Washington amended the state 

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constitution to remove this broad and absolute prohibition.  Wash. Const. 

amend. 56.  The amended article II, section 24 permitted lotteries, but only 

where  affirmatively approved by a supermajority (i.e., 60 percent) of the 

legislature.  Wash. Const. art. II, § 24.  In light of this new constitutional 

authority, the legislature  enacted  the  gambling  act of  1973, chapter 9.46 

RCW.     Though the gambling act now authorizes some forms of gaming, it 

expressly recognizes the potential dangers presented by legalized gambling 

and requires that all such activities be "closely controlled . . . ."  RCW 

9.46.010.  Within this context, I turn to the issue presented.

2.     Subject Matter Jurisdiction over Claims against the Commission

       With respect to subject matter jurisdiction, the proper standard of 

review is de novo.  "Whether a court has subject matter jurisdiction is a 

question of law reviewed de novo."  Dougherty v. Dep't of Labor & Indus., 

150 Wn.2d 310, 314, 76 P.3d 1183 (2003) (citing Crosby v. Spokane County, 

137 Wn.2d 296, 301, 971 P.2d 32 (1999)).

       The term "subject matter jurisdiction" refers to the power of a court to 

hear a case.  Morrison v. Nat'l Austl. Bank Ltd., ___ U.S. ___, 130 S. Ct. 

2869, 2877, 177 L. Ed. 2d 535 (2010).  The subject matter jurisdiction of the

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ZDI Gaming, Inc. v. State, No. 83745-7

superior courts comes from either the Washington Constitution or the State's 

legislature.  Wash. Const. art. IV, § 6 (establishing jurisdiction of superior 

courts and authorizing jurisdiction "as may be prescribed by law"); see also

Residents Opposed to Kittitas Turbines v. State Energy Facility Site 

Evaluation Council, 165 Wn.2d 275, 295, 197 P.3d 1153 (2008) (stating that 

the legislature may confer limited appellate review of administrative decisions 

to the superior courts); Dougherty, 150 Wn.2d at 314 (describing legislation 

that grants appellate jurisdiction to the superior courts); Bellingham Bay Imp. 

Co. v. City of New Whatcom, 20 Wash. 53, 63, 54 P. 774 (holding that an act 

conferring appellate review of administrative decisions to the superior courts 

did not violate the Washington Constitution), aff'd on reh'g, 20 Wash. 231, 

55 P. 630 (1898).  The Washington Constitution distinguishes between two 

types of subject matter jurisdiction:  "original jurisdiction" and "appellate 

jurisdiction."  See     Wash.  Const. art. IV, § 6.  An appeal from                   an 

administrative agency invokes a superior court's appellate jurisdiction.  

Skinner v. Civil Serv. Comm'n, 168 Wn.2d 845, 850, 232 P.3d 558 (2010).  

"Because an appeal from an administrative body invokes the superior court's 

appellate jurisdiction, 'all statutory requirements must be met before 

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ZDI Gaming, Inc. v. State, No. 83745-7

jurisdiction is properly invoked.'"   Id. at 850 (internal quotation omitted)

(quoting  Fay v. Nw. Airlines, Inc., 115 Wn.2d 194, 197, 796 P.2d 412 

(1990)).

       In addition to these broad jurisdictional considerations, special 

sovereign immunity concerns attach where the state or one of its agencies is 

named as a party to the suit as well.  The state constitution provides that 

"[t]he legislature shall direct by law, in what manner, and in what courts, suits 

may be brought against the state."  Wash. Const. art. II, § 26. "It may be said 

without question that an action cannot be maintained against the state without 

its consent. . . .  Since the state, as sovereign, must give the right to sue, it 

follows that it can prescribe the limitations upon that right."  O'Donoghue v. 

State, 66 Wn.2d 787, 789, 405 P.2d 258 (1965). As we said regarding article

II, section 26:

       "the state being sovereign, its power to control and regulate the 
       right of suit against it is plenary; it may grant the right or refuse 
       it as it chooses, and when it grants it may annex such condition 
       thereto as it deems wise, and no person has power to question or 
       gainsay the conditions annexed."

State ex rel. Shomaker v. Superior Court, 193 Wash. 465, 469-70, 76 P.2d 

306 (1938) (quoting State ex rel. Pierce County v. Superior Court, 86 Wash.

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ZDI Gaming, Inc. v. State, No. 83745-7

685, 688, 151 P. 108 (1915)).          For these reasons, if the State chooses to 

subject itself to suit exclusively in Thurston County, then "when a suit against 

the state is commenced in a superior court outside of Thurston [C]ounty, such 

court does not have jurisdiction over the action."  State ex rel. Thielicke v. 

Superior Court, 9 Wn.2d 309, 311-12, 114 P.2d 1001 (1941).

       Thurston County Superior Court possesses exclusive appellate 

jurisdiction over challenges to the decisions of the Commission.  The 

Washington State gambling act provides:

       No court of the state of Washington other than the superior 
       court of Thurston county shall have jurisdiction over any action 
       or proceeding against the commission or any member thereof for 
       anything done or omitted to be done in or arising out of the 
       performance of his or her duties under this title:  PROVIDED, 
       That an appeal from an adjudicative proceeding involving a final 
       decision of the commission to deny, suspend, or revoke a license 
       shall be governed by chapter 34.05 RCW, the Administrative 
       Procedure Act.
RCW 9.46.095 (emphasis added).1                    ZDI Gaming challenged the 

1 ZDI Gaming also argues that RCW 9.46.095 provides an exception to the Thurston 
County jurisdictional requirement for licensing decisions.  This argument fails.  First, the 
Commission licenses gaming businesses; it does not license gaming equipment.  See WAC 
230-14-001 (defining "licensees" as "the business holding the punch board and pull-tab 
license."); see also WAC 230-14-045(1) (defining the requirements for "[a]uthorized pull-
tab dispensers"). Second, both the superior court and the Court of Appeals applied the 
jurisdictional provision and treated it as a venue provision with respect to ZDI Gaming's 
appeal.  The determination of the lower courts also warrants our review of this provision.

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ZDI Gaming, Inc. v. State, No. 83745-7

Commission's action in Pierce County Superior Court.  Due to the 

legislature's exclusive grant of jurisdiction to the superior court of Thurston 

County, the Pierce County Superior Court lacked subject matter jurisdiction 

over ZDI Gaming's appeal of the Commission's decision.  "When a court 

lacks subject matter jurisdiction, dismissal is the only permissible action the 

court may take."  Shoop v. Kittitas County, 149 Wn.2d 29, 35, 65 P.3d 1194 

(2003).  Because the court lacked jurisdiction, dismissal is the appropriate 

remedy.

       The Court of Appeals reached the opposite conclusion.  It incorrectly 

rewrote the legislature's term "jurisdiction" in RCW 9.46.095 to read 

"venue."  ZDI Gaming, Inc. v. Wash. State Gambling Comm'n, 151 Wn. 

App. 788, 801, 214 P.3d 938 (2009).  In arriving at this conclusion, the Court 

of Appeals relied heavily on this court's decisions in Dougherty and Shoop.  

Id. at 801-03.  The Court of Appeals interpreted Shoop to preclude "'any 

subject matter [jurisdiction] restrictions as among superior courts'" under 

article IV, section 6 of the Washington Constitution.  Id. at 803 (alteration in 

original) (quoting Shoop, 149 Wn.2d at 37).  Based on this principle, the 

court concluded that a "constitutional reading" of RCW 9.46.095 "suggests 

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ZDI Gaming, Inc. v. State, No. 83745-7

that the statute was intended to govern venue . . . ."  Id. at 804.

       The Court of Appeals misapplied the case law.  In Dougherty, we held 

that the filing requirements of a different statute, RCW 51.52.110, referred to 

venue and not to subject matter jurisdiction.  Dougherty, 150 Wn.2d at 320.  

Dougherty was an injured worker who filed an industrial insurance claim for 

worker's compensation.  Id. at 313.  The Department of Labor and Industries 
(Department) denied the claim.  Id.  The statute2 at issue in Dougherty

directed the claimant to file his appeal in his county of residence, the county 

where the injury occurred, or Thurston County.  Id.  at 315.  Dougherty 

appealed the Department's decision to Skagit County Superior Court, but he 

did not live in Skagit County, and the injury did not occur in Skagit County.  

Id. at 313.  The superior court granted the Department's motion to dismiss 

and the Court of Appeals affirmed, holding that Skagit County Superior Court 

2 The text of the statute at issue in Dougherty reads as follows:

           "In cases involving injured workers, an appeal to the superior court 
       shall be to the superior court of the county of residence of the worker or 
       beneficiary, as shown by the [Department of Labor and Industries'] 
       records, or to the superior court of the county wherein the injury occurred 
       or where neither the county of residence nor the county wherein the injury 
       occurred are in the state of Washington then the appeal may be directed to 
       the superior court for Thurston county."

Dougherty, 150 Wn.2d at 315 (quoting RCW 51.52.110).

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lacked subject matter jurisdiction.  Id. at 313-14.  We reversed the Court of 

Appeals, holding that RCW 51.52.110 referred to venue and that Skagit 

County Superior Court did not lack subject matter jurisdiction over 

Dougherty's appeal.  Id. at 320.

       The statute at issue in Dougherty            did not use either the term 

"jurisdiction" or "venue." Id. at 315.  After engaging in a conceptual analysis 

of the doctrines of jurisdiction and venue, we announced a general canon of 

statutory interpretation that "[u]nless mandated by the clear language of the 

statute, we generally decline to interpret a statute's procedural requirements 

regarding location of filing as jurisdictional."  Id. at 317 (emphasis added).  In 

the case at bar, the statute is very different.  The statute expressly reserves all 

"jurisdiction" over actions against the Commission to Thurston County 

Superior Court.  RCW 9.46.095 ("No court of the state of Washington other 

than the superior court of Thurston county shall have jurisdiction over any 

action or proceeding against the commission . . . ." (emphasis added)).  

Because the clear language of the statute addresses jurisdiction, the 

interpretive canon announced in Dougherty does not apply.

       Only a few months prior to the decision in Dougherty, we decided 

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ZDI Gaming, Inc. v. State, No. 83745-7

Shoop.  In Shoop, we held that the requirements of the statute there at issue, 

former  RCW 36.01.050 (1997),3 related only to venue and not to subject 

matter jurisdiction.  Shoop, 149 Wn.2d at 37.  Shoop brought a personal 

injury claim against several unnamed defendants and Kittitas County.  Id. at 

32.  The statute at issue in Shoop directed the plaintiff to commence her 

action against Kittitas County in either Kittitas County or one of the two 

nearest counties.  Id. at 35.  The two nearest counties were Yakima County 

and Grant County.  Id. at 32.  Shoop brought her suit in King County.  Id.  

Kittitas County moved to dismiss for lack of subject matter jurisdiction.  Id.  

The superior court granted the motion and the Court of Appeals reversed.  Id. 

at 32-33.  We affirmed the Court of Appeals, holding that the requirements of 

former  RCW 36.01.050 (1997) relate to venue rather than subject matter 

jurisdiction.  Id. at 37-38.

3 The text of the statute at issue in Shoop reads as follows:

       "(1) All actions against any county may be commenced in the superior 
       court of such county, or in the superior court of either of the two nearest 
       counties . . . .

       "(2) The determination of the nearest counties is measured by the travel 
       time between county seats using major surface routes, as determined by the 
       office of the administrator for the courts."

Shoop, 149 Wn.2d at 35 (alteration in original) (quoting former RCW 36.01.050 (1997)).

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       The primary issue in Shoop was our previous holding in Cossel v. 

Skagit County, 119 Wn.2d 434, 834 P.2d 609 (1992), overruled by Shoop v. 

Kittitas County, 149 Wn.2d 29, 65 P.3d 1194 (2003).  In Cossel, we held that 

a predecessor statute, former RCW 36.01.050 (1963), restricted the subject 

matter jurisdiction of the superior courts.  Shoop, 149 Wn.2d at 34.  In 

Shoop's case, the Court of Appeals distinguished Cossel on grounds that the 

1997 legislative amendments transformed former RCW 36.01.050 (1997) into 

a venue rather than a jurisdictional statute.  Id. at 35.  We disagreed with the 

Court of Appeals'         conclusion that the 1997 legislative amendments 

transformed the statute.  Id. at 36-37.  Nonetheless, we affirmed the Court of 

Appeals.  Id. at 37.  Though Cossel's              jurisdictional reading of RCW 

36.01.050 (1997) still controlled, such a reading would violate article IV, 

section 6 of the Washington Constitution.  Id.  To avoid this constitutional 

problem, we overruled Cossel and construed the statute as a restriction on 

venue rather than jurisdiction.  Id.  In short, Shoop               overruled  Cossel, 

determined that a jurisdictional reading of former  RCW 36.01.050 (1997) 

violated the state constitution, and, for that reason, construed the statute as a 

restriction on venue rather than a limit on subject matter jurisdiction.  Id.

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ZDI Gaming, Inc. v. State, No. 83745-7

       This case does not raise the constitutional issues at stake in Shoop.  

Shoop involved constitutional original jurisdiction of a superior court.  Id. at 

32.  So long as the amount in controversy surpasses the jurisdictional 

threshold, a superior court's original jurisdiction comes directly from the state 

constitution.  Wash. Const. art. IV, § 6 ("The superior court shall have 

original jurisdiction in all cases at law . . . and in all other cases in which the 

demand or the value of the property in controversy amounts to three thousand 

dollars or as otherwise determined by law . . . .").  While the legislature can 

restrict the superior court's jurisdiction by changing the amount-in-

controversy requirement or abolishing the substantive law for a particular 

type of common law tort claim (see  Dougherty, 150 Wn.2d at 314), the 

legislature cannot otherwise restrict the type of tort controversy that a 
superior court may adjudicate.4

       In contrast to Shoop, the present case involves legislatively created

appellate jurisdiction of a superior court to review an administrative agency 

4 See 1 Wilfred J. Airey, A History of the Constitution and Government of Washington 
Territory 466 (June 5, 1945) (unpublished Ph.D. dissertation, University of Washington) 
(on file with Washington State Law Library) (stating that the Constitutional Convention of 
1889 fixed the jurisdiction of the Washington courts and that "[t]he superior courts were 
always to be open and to have original jurisdiction in practically all types of criminal, civil, 
and probate cases if the amount in civil actions exceeded $100").

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decision.  Appellate jurisdiction over administrative decisions is a creature of 

statute.  Residents Opposed to Kittitas Turbines, 165 Wn.2d at 295.  "This 

court has consistently held that a right of direct review in superior court of an 

administrative decision invokes the limited appellate jurisdiction of the 

court."  Id. at 294.  The state constitution does not expressly provide for this 

type of appellate jurisdiction; however, "[a]llowing only limited appellate 

review over administrative decisions,           rather than original or appellate 

jurisdiction as a matter of right, 'serves an important policy purpose in 

protecting the integrity of administrative decisionmaking.'"  Id. at 295 

(quoting King County v. Wash. State Boundary Review Bd., 122 Wn.2d 648, 

668, 860 P.2d 1024 (1993)).  "The legislature may confer such limited 

appellate review by statute."  Id.

       With respect to the Commission, the legislature clearly determined that 

Thurston County Superior Court possesses exclusive jurisdiction.  Thus, 

Pierce County Superior Court lacked subject matter jurisdiction.  Shoop has 

defined the remedy:  "When a court lacks subject matter jurisdiction, 

dismissal is the only permissible action the court may take."  149 Wn.2d at 

35.

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                                      Conclusion

       I would hold that, under RCW 9.46.095 as written by the legislature, 

the  Thurston County Superior Court possesses exclusive subject matter 

jurisdiction to review Commission orders.  Because the  Pierce County 

Superior Court lacked subject matter jurisdiction, I would dismiss the case.

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ZDI Gaming, Inc. v. State, No. 83745-7

AUTHOR:

        Justice James M. Johnson

WE CONCUR:

        Chief Justice Barbara A. Madsen                  Gerry L. Alexander, Justice Pro Tem.

        Justice Mary E. Fairhurst

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