LITTLE ROCK — The state Lottery Commission cannot be sued by a North Little Rock company that claims to have trademarked the lottery’s name before the lottery existed, the state Supreme Court ruled Thursday.
In a 4-3 decision, the high court dismissed a lawsuit by Alpha Marketing alleging that exclusive rights to the terms "Arkansas Lottery," "Arkansas Lotto" and "Lottery Arkansas" because it has owned trademarks for them since before the Arkansas Scholarship Lottery launched in 2009 — and as far back as 1994 for two of the terms.
Pulaski County Circuit Judge Wendell Griffen last year denied a motion by the state attorney general’s office, which is defending the Lottery Commission in the suit, to dismiss the suit on the argument that the Lottery Commission has immunity from civil suits as a state agency. On Thursday a majority of the Supreme Court justices decided to reverse Griffen’s ruling.
"We hold that the commission is an entity of the state entitled to the defense of sovereign immunity," Justice Josephine Linker Hart wrote in the majority opinion.
State Lottery Director Bishop Woosley said he was "very pleased" with the ruling.
"We always felt like the claim had no merit, and thankfully the court agreed with us. Hopefully we can put this past us and move on," he said.
David Gershner, attorney for Alpha Marketing, said he was disappointed with the ruling but that his client may pursue the issue in another forum.
"Right now the only other options we’re considering are possibly the Arkansas Claims Commission or potentially federal court," he said.
The Arkansas Constitution states that "the state of Arkansas shall never be made defendant in any of her courts." Alpha Marketing argued that the Lottery Commission waived its right to immunity because in its original answer to the lawsuit, the commission asked the court to declare Alpha Marketing’s trademarks invalid, thereby becoming a moving party seeking specific relief and unable to claim immunity.
The Supreme Court rejected that argument, noting that the commission later withdrew that request.
Alpha Marketing also argued that the Arkansas Administrative Procedures Act allows a state agency to be sued if it has unlawfully, unreasonably or capriciously failed, refused or delayed to act.
The company said the attorney general’s office in 2009 sent owner Ed Dozier a letter threatening legal action if he continued to use the lottery-related terms he had trademarked, and later sent another letter informing him that there would be no legal action at that time. In oral arguments before the Supreme Court earlier this month, an attorney for Alpha Marketing compared the letters to the actions of "a schoolyard bully."
The Supreme Court said Thursday in its majority opinion that the Administrative Procedures Act applies only to rule-making procedures and does not apply to the present case. It also said there was no failure to act because the lottery commission did act when it sent, through the attorney general’s office, a letter threatening legal action.
Alpha Marketing also argued that the attorney general’s letter constituted an illegal taking of intellectual property. The Supreme Court said in its majority opinion that "the undisputed facts demonstrate that the attorney general’s office effectively retracted the alleged threat to take Alpha’s property."
Joining Hart in the majority opinion were Chief Justice Jim Hannah, Justice Karen Baker and Special Justice J. Shepherd Russell III, filling in for Justice Cliff Hoofman, who did not participate. Russell wrote in a separate opinion that he agreed with the majority’s conclusion but was not convinced that the Lottery Commission had waived immunity even in its first answer to the lawsuit.
Justices Donald Corbin, Paul Danielson and Courtney Hudson Goodson dissented.
Danielson wrote an opinion in which he said it was "abundantly clear" that the Lottery Commission had waived immunity by asking the circuit judge to rule Alpha Marketing’s trademarks invalid.
"Once the state has sought specific relief, the defense of sovereign immunity has been waived, period. It cannot be ‘unwaived’ by simply pleading sovereign immunity in a subsequent pleading!" Danielson wrote.
Goodson wrote an opinion in which she said that allowing a litigant to waive immunity and then retract it "would effectively write the law of waiver out of existence."