A three judge panel of the 9th Circuit Court of Appeals last week overturned an earlier ruling that Hustler owner Larry Flynt’s lawsuit to expand his casino business out of California was barred by a statute of limitations.
The 2-1 ruling gives Flynt standing to challenge a state law that bans residents who have a Golden State casino license from investing more than 1 percent in casinos outside of the state. The law was intended to thwart mob investment in gaming. Hustler founder Flynt owns the Hustler Casino and Larry Flynt’s Luck Lady Casino in Gardena. His lawsuit claims he has missed out on changes to profit from investment opportunities because the 1986 law is, he claims outdated and unconstitutional.
Flynt and co-plaintiffs Haig Kelegian Sr. and Haig Kelegian Jr. initially sued in 2016 only to have their case dismissed by a federal judge who said their claims fell outside of a two-year statute of limitations. They appealed.
The seed of the case derives from a $210,000 fine issued to the younger Kelegian in 2014 because of his ownership in a casino outside of California. To renew licenses at his two California properties he was forced to divest the out-of-state holdings. The lawsuit followed in 2016.
Although the state successfully argued that the lawsuit fell outside of the statute of limitations, the appeals court ruled that the law’s enforce “inflicts a continuing or repeated harm.”
Writing for the majority Judge Diarmuid F. O’Scannlain declared, “That all three licensees continue to be precluded from exploring other investment opportunities is not a consequence of the commission’s decision, as the dissent would have us conclude, but rather a result of the continued existence of the statutes themselves and the realistic threat of future enforcement.”
