                    FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

VICKI B. LEE; DARRELL E. LEE,             
               Plaintiffs-Appellants,
                 v.
STEPHEN S. WALTERS, BRAD                         No. 03-35102
HIGBEE, GEORGE RANKIN, RICHARD
REID, and LAURA A. FINE (in their                 D.C. No.
                                               CV-95-00274-JMS
individual and official capacities
as members of the Oregon Racing                   OPINION
Commission), and JOANNE
MCADAM (in her individual
capacity only),
             Defendants-Appellees.
                                          
         Appeal from the United States District Court
                  for the District of Oregon
        Janice M. Stewart, Magistrate Judge, Presiding

                   Submitted March 9, 2005*
                       Portland, Oregon

                    Filed December 29, 2005

       Before: Procter Hug, Jr., Stephen Reinhardt, and
                Jay S. Bybee, Circuit Judges.

               Opinion by Judge Reinhardt;
  Partial Concurrence and Partial Dissent by Judge Bybee



  *This panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).

                                16797
16800                      LEE v. WALTERS




                             COUNSEL

Kathryn H. Clarke, Portland, Oregon, for the plaintiffs-
appellants.

Hardy Myers, Attorney General for the State of Oregon, Mary
H. Williams, Solicitor General for the State of Oregon, and
Daniel J. Casey, Assistant Attorney General, Salem, Oregon,
for the defendants-appellees.


                             OPINION

REINHARDT, Circuit Judge:

   After a series of disputes involving the licensing and
financing of The New Portland Meadows, Inc. (TNPM), a
horse racing operation partially owned by Vicki and Darrell
Lee, the Lees filed a section 1983 action in the district court
against Stephen S. Walters, Brad Higbee, George Rankin,
Richard Reid, Laura Fine and Joanne McAdam, all members
of the Oregon Racing Commission (ORC). The Lees’ com-
plaint alleged, inter alia, that a provision in the Oregon statute
pursuant to which they had been ordered excluded from the
Portland Meadows track by the ORC violated due process
because it was unconstitutionally vague. On summary judg-
ment, the magistrate judge1 agreed that the provision was
  1
    Pursuant to Federal Rule of Civil Procedure 73 and Title 28 U.S.C.
section 636(c), the parties consented to have the case heard by a magis-
trate judge.
                          LEE v. WALTERS                        16801
invalid and, on that basis, ruled that the entire statute, Oregon
Revised Statutes section 462.080(1), was void for vagueness.
However, at trial the Lees did not prevail on any of their dam-
ages claims, and they appealed the district court’s judgment.
In order to resolve some of these claims, it is necessary to
determine the validity of the exclusion orders.

   We vacate the district court’s ruling that section 462.080(1)
is unconstitutionally vague because, after holding one of its
provisions unconstitutional, the court failed to sever that pro-
vision as required by Oregon law. On appeal, it is not neces-
sary to decide any constitutional question. The Lees’
exclusion orders were based upon two separate grounds, one
of which was a violation of another provision of the statute —
a provision that has not been challenged. We uphold the
exclusion orders on the basis of the unchallenged provision
and therefore need not reach the issue of whether the chal-
lenged provision is constitutional.2

        FACTUAL AND PROCEDURAL HISTORY

   At all times relevant to this action, the Lees co-owned, with
Gene Ferryman, TNPM, a closely-held corporation with a
perpetual lease on Portland Meadows, a race track in Port-
land, Oregon.

   The ORC is the state administrative agency responsible for
regulating the horse racing industry in Oregon. The agency
licenses, inspects and supervises all race meets and monitors
track finances. As a condition of receiving its race meet
license from the ORC, TNPM was required to maintain sev-
eral bank accounts, including a Mutuel Clearing Account, into
which gross receipts from pari-mutuel wagering were depos-
ited, and a Purse Account, out of which purses were paid to
winning horses. During the relevant time period, former Ore-
  2
   In a separate memorandum disposition filed concurrently herewith, we
address the remainder of the issues involved in the Lees’ appeal.
16802                  LEE v. WALTERS
gon Administrative Rule 462-37-155(28) required race tracks
to maintain in their Purse Accounts “sufficient funds to cover
all monies due horsemen in regard to purses, stakes, rewards,
claims and deposits.” It is not clear from the record to what
extent applicable statutes and administrative rules regulated
the commingling of funds from the various accounts.

   In the early 1990’s, TNPM began to experience financial
difficulties. In February, 1993, the owners of Portland Mead-
ows won a $165,000 judgment in state court against TNPM
for unpaid rent. While reviewing TNPM’s finances in order
to determine whether it could satisfy the judgment, Darrell
Lee discovered that Ferryman had for several months been
funneling TNPM funds into a private account. On March 4,
1993, after Ferryman had refused to return the money, the
Lees withdrew $165,000 from TNPM’s Mutuel Clearing
Account and $55,000 from its Purse Account. They used the
withdrawn money to satisfy the state court judgment and pay
overdue taxes.

   The next day, having discovered the Lees’ withdrawals
from the two accounts, the ORC convened an emergency
meeting over which McAdam presided. The commission con-
cluded that the Lees’ use of the funds from the Mutuel Clear-
ing and Purse Accounts was improper and, pursuant to section
462.080(1), ordered them excluded from Portland Meadows.
Section 462.080(1) states:

    The Oregon Racing Commission may exclude from
    any and all race courses any person whom the com-
    mission deems detrimental to the best interest of rac-
    ing or any person who willfully violates any
    provision of this chapter or any rule or order issued
    by the commission or any person who has been
    found guilty of violating any laws of this state,
    another state or the United States related to gambling
    or wagering or which adversely reflects on the per-
    son’s honesty. The commission may take such action
                             LEE v. WALTERS                           16803
      without first providing a hearing and without being
      subject to either criminal or civil liability. However,
      if no hearing is provided, then, within 10 days after
      the board’s action and upon demand of the aggrieved
      party, the commission shall grant a hearing as pro-
      vided in ORS chapter 183, except that such hearing
      shall take place no later than 20 days following
      demand.

The statute thus provides three grounds for exclusion from
racing venues: the ORC may exclude (1) any person it “deems
detrimental to the best interest of racing,” (2) “any person
who willfully violates any provision of this chapter or any
rule or order issued by the commission,” and (3) “any person
who has been found guilty of violating any laws of this state,
another state or the United States related to gambling or
wagering or which adversely reflects on the person’s hones-
ty.” The ORC explained Darrell Lee’s exclusion as follows:
“This Order is based on the finding by the commission that
Lee’s conduct has been detrimental to the best interests of rac-
ing or he has willfully violated provisions of statutes relating
to racing, or the Rules of Racing approved by the Commis-
sion.” Thus, Darrell Lee was ordered excluded pursuant to the
first and second grounds enumerated in the statute.3 Vicki
Lee’s exclusion order contained nearly identical language.

   On March 9, 1993, after they tried unsuccessfully several
times to retrieve their personal belongings from Portland
Meadows, the Lees petitioned for review of their exclusion
orders in state court. On March 15, an Oregon circuit court
judge issued a preliminary injunction enjoining, with several
conditions, the enforcement of Darrell Lee’s exclusion order.
  3
    Although the exclusion orders stated that the Lees were excluded based
upon the first or the second ground, the orders listed five statutes and rules
that each of the Lees “has violated” by withdrawing the funds. Thus, even
if the ORC relied on only one of the two grounds, it is clear that it relied
upon the second.
16804                    LEE v. WALTERS
The subsequent state court litigation between the parties
resolved a number of issues but left several others, including
the constitutionality of section 462.080(1), unresolved. No
party contends that the prior litigation in state court has a pre-
clusive effect on this court’s review of the constitutionality of
section 462.080(1) or the validity of the exclusion orders.

   On March 6, 1995, the Lees filed a complaint in district
court alleging several section 1983 claims arising principally
from their exclusion from Portland Meadows. In their second
amended complaint, they alleged, inter alia, that section
462.080(1) was unconstitutional on its face because the “det-
rimental to the best interest of racing” provision was imper-
missibly vague. The district court, after considering cross-
motions for summary judgment, ruled that the challenged pro-
vision rendered the entirety of section 462.080(1) unconstitu-
tional. On that basis, the district court found the exclusion
orders invalid. Four of the Lees’ section 1983 claims subse-
quently went to trial. Following a jury trial, the district court
entered judgment in favor of the defendants. The Lees
appealed.

                          ANALYSIS

   At summary judgment, the Lees challenged the constitu-
tionality of Oregon Revised Statutes section 462.080(1). The
district court, in finding section 462.080(1) void for vague-
ness, ruled that because the “detrimental to the best interest of
racing” provision was not defined by the statute or the appli-
cable administrative rules, it “falls into the category of stat-
utes that invite arbitrary enforcement.” The district court
reasoned that, although the ORC may have excluded the Lees
on the basis of the improper withdrawal of funds from the
TNPM accounts,

    it also could be due to the alleged personal animosity
    between the ORC and Darrell Lee. The problem is
    that under ORS 462.080(1), the ORC appears to
                           LEE v. WALTERS                        16805
      have the authority to exclude Darrell Lee, or anyone
      else, because of that animosity, or because of speech,
      or for virtually any reason at all, as long as the ORC
      concludes that the exclusion would be “in the best
      interests of racing.”

   [1] However, in its summary judgment order the district
court ruled that section 462.080(1) was facially unconstitu-
tional in its entirety without considering whether the purport-
edly infirm “detrimental to the best interest of racing”
provision could be severed from the remainder of the statute.4
Whether a statutory provision is severable is a question of
state law. Dep’t of Treasury v. Fabe, 508 U.S. 491, 509-10
(1993). In Oregon, there is a presumption of severability:

      It shall be considered that it is the legislative intent,
      in the enactment of any statute, that if any part of the
      statute is held unconstitutional, the remaining parts
      shall remain in force unless:

      (1)   The statute provides otherwise;

      (2) The remaining parts are so essentially and
      inseparably connected with and dependent upon the
      unconstitutional part that it is apparent that the
      remaining parts would not have been enacted with-
      out the unconstitutional part; or

      (3) The remaining parts, standing alone, are incom-
      plete and incapable of being executed in accordance
      with the legislative intent.

Or. Rev. Stat. § 174.040; see also Tilbury v. Multnomah
County, 902 P.2d 577, 580 (Or. 1995).
  4
   The Lees have not argued that the second and third grounds for exclu-
sion in section 462.080(1) are vague or otherwise independently subject
to constitutional challenge for any independent reason.
16806                       LEE v. WALTERS
   [2] Here, none of the three exceptions applies. First, section
462.080(1) does not provide that parts found to be unconstitu-
tional are not severable. Second, the remaining two grounds
for exclusion, including one of the grounds relied upon in the
Lees’ exclusion orders, are not “so essentially and inseparably
connected” to the ground of “detrimental to the best interest
of racing” that it is apparent that the legislature would not
have enacted the statute without the purportedly infirm provi-
sion. Third, the remaining grounds for exclusion standing
alone are complete and capable of being executed in accor-
dance with the legislative intent of the statute. Thus, under
Oregon state law, having concluded that the “detrimental to
the best interest of racing” provision was unconstitutional, the
district court was obligated to sever that provision from the
remainder of section 462.080(1). Because it failed to do so, its
ruling on the constitutionality of section 462.080(1) was erro-
neous.

   [3] Upon reviewing the Oregon statute and the Lees’ exclu-
sion orders, we conclude that we need not reach any constitu-
tional question. The orders were based upon the Lees’
improper use of funds and explicitly relied upon an unchal-
lenged ground for exclusion set forth in a different provision
of the statute: “any person who willfully violates any provi-
sion of this chapter or any rule or order issued by the commis-
sion.” The orders held that the Lees had violated, inter alia,
ORC regulations governing the distribution of the race track’s
account funds. See n.3 supra.

   [4] Because we can affirm the Lees’ exclusion orders on
the basis of the unchallenged provision, without reaching the
constitutionality of the “detrimental to the best interest of rac-
ing” provision, we decline to consider the question of the con-
stitutionality of the statute, and hold that the Lees’ exclusion
from Portland Meadows was permissible.5 “A fundamental
  5
    As the district court correctly found with respect to the procedural due
process claim, the Lees introduced no evidence that created a genuine
issue of material fact.
                              LEE v. WALTERS                          16807
and longstanding principle of judicial restraint requires that
courts avoid reaching constitutional questions in advance of
the necessity of deciding them.” Lyng v. Northwest Indian
Cemetery Protective Ass’n, 485 U.S. 439, 445 (1988); see
also United States v. Sandoval-Lopez, 122 F.3d 797, 802 n.9
(9th Cir. 1997) (“We avoid constitutional questions when an
alternative basis for disposing of the case presents itself.”).

   [5] The district court’s ruling with respect to the constitu-
tionality of Oregon Revised Statutes section 462.080(1) is
vacated. Its ruling regarding the exclusion orders is reversed.
We hold the exclusion orders to be lawful.

  VACATED IN PART; REVERSED AND REMANDED
IN PART.



BYBEE, Circuit Judge, concurring in part and dissenting in
part:

  I concur in part and dissent in part. On appeal, the Lees
present both a facial and an as-applied challenge to Oregon
Revised Statute § 462.080(1).1 The majority concludes that
  1
   OR. REV. STAT. § 462.080(1) provides:
      The Oregon Racing Commission may exclude from any and all
      race courses any person whom the commission deems detrimen-
      tal to the best interest of racing or any person who willfully vio-
      lates any provision of this chapter or any rule or order issued by
      the commission or any person who has been found guilty of vio-
      lating any laws of this state, another state or the United States
      related to gambling or wagering or which adversely reflects on
      the person’s honesty. The commission may take such action with-
      out first providing a hearing and without being subject to either
      criminal or civil liability. However, if no hearing is provided,
      then, within 10 days after the board’s action and upon demand of
      the aggrieved party, the commission shall grant a hearing as pro-
      vided in ORS chapter 183, except that such hearing shall take
      place no later than 20 days following demand.
16808                   LEE v. WALTERS
the Lees’ as-applied challenge fails because the Commission
offered alternative grounds for its decision and the constitu-
tionality of at least one of those was not challenged. I join the
majority opinion on this point. Inexplicably, however, the
majority declines to decide the merits of the Lees’ facial chal-
lenge because it finds that the magistrate judge, having con-
cluded that the “detrimental to the best interest of racing”
provision was facially void for vagueness, should have sev-
ered the unconstitutional provision to preserve the statute’s
constitutionality. See OR. REV. STAT. § 174.040. There is no
need to determine whether the magistrate judge failed to
sever: Once the majority concludes that section 462.080(1)
was constitutionally applied here, it necessarily answers
whether the statute is unconstitutional on its face. It is not. I
dissent because our jurisprudence demands that we reverse,
and not merely vacate, the magistrate judge’s holding that
section 462.080(1) is unconstitutional on its face.

   The magistrate judge concluded that section 462.080(1)
was facially unconstitutional because the provision that autho-
rizes the Commission to exclude any person whom it finds
“detrimental to the best interest of racing” vested “unbridled
discretion in the ORC.” The magistrate judge based her con-
clusion on a series of cases addressing facial challenges to
criminal statutes that regulated conduct related to First
Amendment activity and concluded that section 462.080(1)
“invites arbitrary enforcement and does not meet even the
more lax scrutiny applied to statutes proscribing civil penal-
ties.” See Smith v. Goguen, 415 U.S. 566, 568 (1974) (invali-
dating a statute attaching criminal liability to anyone “who
treats contemptuously the flag of the United States”); see also
Nunez v. City of San Diego, 114 F.3d 935, 938 (9th Cir. 1997)
(invalidating a city ordinance making it unlawful for minors
to “loiter, wander, idle, stroll, or play” after curfew).

  The majority concludes that the magistrate judge failed to
sever the statute, as required by Oregon law. But Oregon law
does not permit severing provisions that are merely subject to
                         LEE v. WALTERS                    16809
constitutional challenge. Rather, it permits severance only
when a part of the statute is actually held to be unconstitu-
tional. Oregon Revised Statute § 174.040 provides:

    It shall be considered that it is the legislative intent,
    in the enactment of any statute, that if any part of the
    statute is held unconstitutional, the remaining parts
    shall remain in force unless:

    (1)   The statute provides otherwise;

    (2) The remaining parts are so essentially and
    inseparably connected with and dependent upon the
    unconstitutional part that it is apparent that the
    remaining parts would not have been enacted with-
    out the unconstitutional part; or

    (3) The remaining parts, standing alone, are incom-
    plete and incapable of being executed in accordance
    with the legislative intent.

OR. REV. STAT. § 174.040 (emphasis added). The majority
does not hold any part of the statute unconstitutional. Instead,
the majority assumes that if the “detrimental to the best inter-
est of racing” provision was unconstitutional, the magistrate
judge should have severed it. Perhaps the magistrate judge
should have severed that provision; but we have the merits of
her decision before us. I would reverse the magistrate judge
because she incorrectly concluded that the statute was uncon-
stitutional on its face, not because she failed to sever the stat-
ute.

  Our precedents clearly provide that, to advance a facial
challenge to the constitutionality of a civil statute, the Lees
“must demonstrate that there is no set of circumstances in
which the statute could be applied in a constitutionally valid
manner.” United States v. Bynum, 327 F.3d 986, 990 (9th
Cir.) (citing United States v. Salerno, 481 U.S. 739, 745
16810                   LEE v. WALTERS
(1987)), cert. denied, 540 U.S. 908 (2003); see also Hotel &
Motel Ass’n v. City of Oakland, 344 F.3d 959, 971-72 (9th
Cir. 2003), cert. denied, 542 U.S. 904 (2004); S.D. Myers,
Inc. v. City and County of Santa Barbara, 253 F.3d 461, 467-
68 (9th Cir. 2001). We apply a less rigorous standard of
review to vagueness challenges that do not argue that the stat-
ute regulates First Amendment-related conduct. Nevertheless,
even “a party challenging the facial validity of an ordinance
on vagueness grounds outside the domain of the First Amend-
ment must demonstrate that ‘the enactment is impermissibly
vague in all of its applications.’ ” Hotel & Motel Ass’n, 344
F.3d at 972 (quoting Village of Hoffman Estates v. Flipside,
Hoffman Estates, Inc., 455 U.S. 489, 495 (1982)). Here, the
Lees have not alleged that section 462.080(1) is unconstitu-
tionally vague because it regulates conduct protected by the
First Amendment and have not demonstrated that the statute
is impermissibly vague in all its applications.

   The majority grounds its refusal to consider the facial chal-
lenge in the doctrine of constitutional avoidance, citing the
following language from our decision in United States v.
Sandoval-Lopez, 122 F.3d 797, 802 n.9 (9th Cir. 1997): “We
avoid constitutional questions when an alternative basis for
disposing of the case presents itself.” While I agree with the
majority that there is an alternative basis for disposing of the
as-applied challenge, there is no alternative basis for dispos-
ing of the facial challenge. Indeed, there is no reason for
refusing to reverse the magistrate judge’s judgment outright:
the majority’s opinion proves that section 462.080(1) is capa-
ble of constitutional application. The magistrate judge’s con-
clusion that section 462.080(1) is unconstitutional on its face
is demonstrably wrong.

  The majority simply vacates the entirety of the magistrate
judge’s ruling on the facial challenge without engaging in an
analysis of its merits. I would apply the facial challenge test
required by the Supreme Court in Salerno and Hoffman
Estates, as we have done previously in Bynum, Hotel & Motel
                        LEE v. WALTERS                    16811
Ass’n, and S.D. Myers. I conclude that the Lees cannot sus-
tain a facial challenge, and I would reverse that portion of the
judgment.

  I respectfully dissent.
