                                  No. 3–09–1056

                           Opinion filed January 27, 2011
______________________________________________________________________________

                     IN THE APPELLATE COURT OF ILLINOIS

                                THIRD DISTRICT

                                   A.D., 2011

EMPRESS CASINO JOLIET                           ) Appeal from the Circuit Court
CORPORATION, an Illinois Corporation,           ) of the 12th Judicial Circuit,
DES PLAINES DEVELOPMENT LIMITED )                 Will County, Illinois
PARTNERSHIP, an Illinois Limited Partnership )
d/b/a Harrah’s Casino Cruises Joliet,           )
HOLLYWOOD CASINO-AURORA, INC., an )
Illinois Corporation, and ELGIN RIVERBOAT )
RESORT-RIVERBOAT CASINO, an Illinois )
General Partnership d/b/a Grand Victoria Casino,)
                                                )
         Plaintiffs-Appellants,                 )
                                                )
         v.                                     )
                                                )
ALEXI GIANNOULIAS, in His Official              ) No. 09-CH-112
Capacity as Treasurer of the State of Illinois, )
and ILLINOIS RACING BOARD,                      )
                                                )
         Defendants-Appellees                   )
                                                )
(Balmoral Racing Club, Inc., an Ohio            )
Corporation; Maywood Park Trotting              )
Association, Inc., an Illinois Corporation;     )
Arlington Park Racecourse, LLC,                 )
an Illinois Corporation; and Hawthorne          )
Race Course, Inc., an Illinois Corporation,     ) Honorable
                                                ) Barbara Petrungaro,
         Intervenor Defendants-Appellees).      ) Judge, Presiding.
______________________________________________________________________________

      PRESIDING JUSTICE CARTER delivered the judgment of the court, with opinion.
      Justice Lytton and Schmidt concurred in the judgment, with opinion.
______________________________________________________________________________

                                   OPINION
       Plaintiffs, four state-licensed riverboat casinos (the casinos), brought suit against the State

Treasurer and the Illinois Racing Board (collectively referred to as the state defendants) challenging

the constitutionality of Public Act 95-1008 (Pub. Act 95-1008, §10 (eff. Dec. 15, 2008)), which

required the casinos to pay 3% of their adjusted gross receipts (AGR) into a fund to be distributed

to the state’s horse racing tracks. Four owners of horse racing tracks in this state and the Illinois

Harness Horsemen’s Association (collectively referred to as the racetracks) were allowed to intervene

in the suit. The state defendants and the racetracks filed motions to dismiss the complaint pursuant

to sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 2008)).

The trial court granted the motions to dismiss. The casinos appeal.

                                               FACTS

       In December of 2008, the governor signed Public Act 95-1008 (the 2008 Act) into law. The

Act required that the riverboat casinos of the state pay 3% of their AGR into the Horse Racing Equity

Trust Fund on a daily basis for a three-year period to be distributed to the horse racing tracks in the

state for various specified purposes. Pub. Act 95-1008, §10 (eff. Dec. 15, 2008) (amending 230

ILCS 10/7 (West 2006)). Casinos with 2004 AGR under $200 million were exempt from the tax.

Pub. Act 95-1008, §10 (eff. Dec. 15, 2008) (amending 230 ILCS 10/7 (West 2006)). In passing the

Act, the legislature found that riverboat gambling had damaged the horse racing industry in the state

by luring away gambling dollars and that the 3% tax was necessary to reverse the damage. See Pub.

Act 95-1008, §1 (eff. Dec. 15, 2008). Of the nine riverboat casinos in the state, only four had AGR

in excess of $200 million in 2004 or in 2007. Those casinos, the plaintiffs in the present case, were

all located in the upper portion of the state. The remaining five riverboat casinos, which were located

downstate, did not have AGR in excess of $200 million in 2004 or in 2007.


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       In January of 2009, the casinos filed a complaint for declaratory and injunctive relief,

challenging the constitutionality of the 2008 Act. The casinos sought a declaration that the Act was

unconstitutional and a permanent injunction against the imposition or collection of the 3% tax. The

casinos paid the tax under protest pursuant to the State Officers and Employees Money Disposition

Act (30 ILCS 230/2(a) (West 2008)). The state defendants were named as defendants in the

complaint and the racetracks were allowed to intervene.

       The initial complaint in this case was later amended. The amended complaint (hereinafter

referred to as the complaint) alleged, among other things, that the 2008 Act violated the uniformity

clause of the Illinois Constitution (Ill. Const. 1970, art. IX, §2) in that there was no real and

substantial difference between the casinos that were required to pay the 3% tax and those that were

not. The casinos alleged further that the classification could not be based upon neutral principles,

such as the ability to pay the tax, because the legislature used the 2004 AGR to create the

classification for the 2008 Act, despite the legislature’s knowledge that circumstances had

significantly changed and that the casinos were facing a large decline in AGR due to a smoking ban

and poor economic conditions. The complaint noted that the 2008 Act was the second time that the

legislature imposed a 3% tax on the casinos to subsidize the racetracks. In 2006, the legislature

passed Public Act 94-804 (the 2006 Act), which imposed a 3% tax on the riverboat casinos of the

state, whose 2004 AGR was over $200 million, to be paid on a daily basis for a two-year period.

Pub. Act 94-804, §1(5) (eff. May 26, 2006) (amending 230 ILCS 10/7 (West 2004)). The 2008 Act

was essentially identical to the 2006 Act. The casinos previously challenged the constitutionality of

the 2006 Act and alleged in that case, among other things, that the 2006 Act violated the uniformity

clause. The trial court found that the 2006 Act was unconstitutional. The supreme court reversed


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the trial court, however, and found that the use of 2004 AGR was reasonable and that the 2006 Act

did not violate the uniformity clause. See Empress Casino Joliet Corp. v. Giannoulias, 231 Ill. 2d

62, 78-80 (2008) (Empress I).

        The state defendants and the racetracks filed motions to dismiss the complaint pursuant to

sections 2-615 and 2-619, alleging collectively that the casinos were barred by the holding in Empress

I from raising the same uniformity-clause challenge to the 2008 Act and that there was no legal merit

to the casinos’ uniformity-clause challenge. The trial court granted the motions to dismiss on the

basis of collateral estoppel. It was not quite clear from the trial court’s order, however, whether the

trial court granted dismissal pursuant to section 2-615, section 2-619, or both. The casinos appealed.

                                                ANALYSIS

        On appeal, the casinos argue that the trial court erred in granting the motions to dismiss their

complaint for declaratory and injunctive relief. The casinos assert that their complaint was sufficient

to establish that the tax classification contained in the Act is arbitrary and unreasonable and that it

violates the uniformity clause of the Illinois Constitution. The state defendants and the racetracks

collectively argue that the trial court’s ruling was proper and should be affirmed, either on the merits

or on the basis of collateral estoppel. 1

        A motion to dismiss filed pursuant to either section 2-615 or section 2-619 of the Code of

Civil Procedure admits all well-pled facts in the complaint and the reasonable inferences to be drawn

from those facts. In re Chicago Flood Litigation, 176 Ill. 2d 179, 184 (1997). When ruling upon

either type of motion to dismiss, the trial court must interpret all pleadings and supporting documents


        1
            Only the racetracks argue collateral estoppel as a basis for affirming the trial court’s

ruling on appeal.

                                                      4
in the light most favorable to the nonmoving party. Chicago Flood Litigation, 176 Ill. 2d at 189.

A trial court’s ruling granting either type of motion to dismiss is subject to de novo review on appeal

(Chicago Flood Litigation, 176 Ill. 2d at 189) and may be affirmed on any basis supported by the

record (Material Service Corp. v. Department of Revenue, 98 Ill. 2d 382, 387 (1983)).

        The constitutionality of a statute is also subject to de novo review on appeal. Empress I, 231

Ill. 2d at 69. “ ‘Statutes bear a presumption of constitutionality, and broad latitude is afforded to

legislative classifications for taxing purposes.’ ” Empress I, 231 Ill. 2d at 69 (quoting Allegro

Services, Ltd. v. Metropolitan Pier & Exposition Authority, 172 Ill. 2d 243, 250 (1996)). A party

challenging a nonproperty tax classification has the burden to rebut the presumption of

constitutionality and to clearly establish that the statute is unconstitutional by showing that the statute

is arbitrary or unreasonable. Empress I, 231 Ill. 2d at 69. A reviewing court has a duty to uphold

a statute as constitutional whenever it is reasonably possible to do so. Empress I, 231 Ill. 2d at 69.

        The uniformity clause, contained in article IX, section 2, of the Illinois Constitution, provides:

                        “In any law classifying the subjects or objects of non-property taxes or fees,

                the classes shall be reasonable and the subjects and objects within each class shall be

                taxed uniformly. Exemptions, deductions, credits, refunds and other allowances shall

                be reasonable.” Ill. Const. 1970, art. IX, §2.

The uniformity clause provides for a broader limitation on legislative power to classify for

nonproperty tax purposes than the limitation that is provided for by the equal protection clause.

Empress I, 231 Ill. 2d at 72-73. In a uniformity-clause challenge, however, the scope of a court's

inquiry is relatively narrow. Empress I, 231 Ill. 2d at 73. A court is not required to have proof of

perfect rationality as to every taxpayer. Empress I, 231 Ill. 2d at 73. “The uniformity clause was not


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designed as a straitjacket for the General Assembly. Rather, the uniformity clause was designed to

enforce minimum standards of reasonableness and fairness as between groups of taxpayers.” Geja's

Café v. Metropolitan Pier & Exposition Authority, 153 Ill. 2d 239, 252 (1992).

         To survive a uniformity-clause challenge, “ ‘a nonproperty tax classification must (1) be based

on a real and substantial difference between the people taxed and those not taxed, and (2) bear some

reasonable relationship to the object of the legislation or to public policy.’ ” Empress I, 231 Ill. 2d

at 69 (quoting Arangold Corp. v. Zehnder, 204 Ill. 2d 142, 153 (2003)). When a plaintiff challenges

a legislative classification, he has the burden of showing that the classification is arbitrary or

unreasonable. Geja's Café, 153 Ill. 2d at 248. If a set of facts can reasonably be conceived that

would sustain the legislative classification, the classification must be upheld. Geja's Café, 153 Ill. 2d

at 248. In a uniformity-clause challenge, the plaintiff is not required to negate every conceivable basis

that might support the tax classification. Empress I, 231 Ill. 2d at 72. Rather, once the plaintiff has

established a good-faith uniformity-clause challenge, the burden shifts to the taxing body to produce

a justification for the tax classification. Empress I, 231 Ill. 2d at 72. If the taxing body does so, the

burden shifts back to the plaintiff to persuade the court that the justification is insufficient, either as

a matter of law or as unsupported by the facts. Empress I, 231 Ill. 2d at 72. If the plaintiff fails to

meet that burden, judgment is proper for the taxing body as a matter of law. Empress I, 231 Ill. 2d

at 72.

         In the present case, as with Empress I, the parties do not dispute that the Act creates two

classifications: (1) all casinos, and (2) casinos with 2004 AGR of over $200 million. The question

before this court is whether those two classifications are arbitrary or unreasonable so as to render the

Act unconstitutional under the uniformity clause. See Empress I, 231 Ill. 2d at 73. The justification

for the two classifications is that casinos with 2004 AGR of over $200 million are better able to

                                                    6
absorb the tax that is imposed by the 2008 Act. Since a justification has been produced, it is

incumbent upon the casinos to establish that the justification is insufficient as a matter of law or that

it is unsupported by the facts. The casinos have failed in that burden.

        It is clear from the record that regardless of whether the 2004 AGR is used or the 2007 AGR,

the same four casinos, located upstate, exceeded the $200 million level, and the five remaining

casinos, located downstate, did not exceed the $200 million level. Those same four casinos have been

the highest grossing casinos in Illinois for the past several years prior to the enactment of the 2008

Act. Thus, the legislature’s determination that those four casinos were in the best position to absorb

the tax for three years following the enactment of the 2008 Act was not arbitrary or unreasonable.

As our supreme court noted in Empress I, it would be impractical, inconceivable, and logistically

impossible to try to measure the casinos’ AGR at the time that the tax is to be paid since the casinos

are required to pay the tax on a daily basis. See Empress I, 231 Ill. 2d at 79. The legislature had to

pick a measuring point. The use of the 2004 AGR by the legislature as the measuring point for the

2008 Act was not unreasonable, especially because in this case, as the legislature pointed out in

enacting the 2008 Act, the supreme court had just upheld the use of the 2004 AGR as the measuring

point for the 2006 Act, which for the most part was identical to the 2008 Act. See Pub. Act 95-1008,

§1 (eff. Dec. 15, 2008). In addition, there was no significant difference between the 2004 AGR and

the 2007 AGR, as the same four casinos would still have been the only casinos subject to the tax if

the most recent annual figures, the 2007 AGR, had been used. The casinos’ argument to the contrary

in this case advocates the use of a different measuring point that would consider circumstances that

arose after the passing of the 2008 Act and the impact of those circumstances on the casinos at the

time the tax is to be paid. As noted above, however, our supreme court specifically rejected that

argument in Empress I and found it to be impractical, inconceivable, and logistically impossible. See

                                                   7
Empress I, 231 Ill. 2d at 79, 896 N.E.2d at 290. In addition, it is clear that when the 2008 Act was

passed, the legislature had considered the changes in the economic climate as it related to the casinos.

It is not our role here to determine whether the 2008 Act is wise or whether a better tax line could

have been drawn. See Empress I, 231 Ill. 2d at 74; Geja's Café, 153 Ill. 2d at 252. Rather, our role

in this case is to determine if the 2008 Act is constitutional. See Empress I, 231 Ill. 2d at 74. We

find that the 2008 Act in this case does not violate the uniformity clause.

       Having determined that the casinos’ uniformity-clause challenge cannot be sustained on the

merits, we need not determine whether the casinos’ challenge is also barred under the doctrine of

collateral estoppel. See Material Service Corp., 98 Ill. 2d at 387.

       For the foregoing reasons, we affirm the judgment of the circuit court of Will County.

       Affirmed.




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