Note

The Nullity Doctrine

The Federal Rules of Civil Procedure permit litigants to make changes to the substance of their initial pleading. Those changes raise a constitutional question when the initial pleading fails to establish a constitutionally required element of a federal court’s jurisdiction: May the court permit the change, or must it dismiss the complaint as a nullity? The federal circuit courts are split in their answers to that question, with some circuits even issuing internally inconsistent holdings under different procedural rules. But regardless of the procedural rule at issue, the answer should be the same: Article III’s jurisdictional requirements do not prohibit procedural moves from curing a jurisdictional defect. Taking that position, this Note contributes the only thorough analysis of the so-called “nullity doctrine” and its vices and, in the process, clarifies the relationship between Article III’s jurisdictional requirements and the procedural rules that effectuate them.

Introduction

Federal court litigants routinely change the substance of their initial pleading, often through amendment, supplementation, or party substitution. But otherwise routine changes raise a constitutional question when the original complaint fails to establish a constitutionally required element of the court’s jurisdiction. In those cases, courts must determine if the complaint must be dismissed without further action, or if the jurisdictional defect can be remedied. Some courts permit the jurisdictional defect to be remedied through an applicable Federal Rule of Civil Procedure. Other courts hold that the complaint is a legal nullity that must be dismissed—a position often referred to as the “nullity doctrine.”1 1.See, e.g., 13A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3531 n.61 (3d ed. Supp. 2022) (using the term “‘nullity’ doctrine”); Fund Liquidation Holdings LLC v. Bank of Am. Corp., 991 F.3d 370, 386 (2d Cir. 2021) (rejecting the “so-called ‘nullity doctrine’”).Show More Though at first glance the nullity doctrine has some formalistic appeal, a closer look reveals the nullity doctrine as an overly technical and mistaken application of Article III’s jurisdictional requirements—most commonly that of Article III standing.2 2.Two comments on the scope of this Note. First, though the nullity doctrine appears in both constitutional and statutory jurisdictional contexts, this Note deals only with constitutionally defective allegations of jurisdiction and uses the term “nullity doctrine” only in that context. However, this Note’s rejection of the nullity doctrine’s constitutional applications applies with equal force to statutory applications. Second, though the term “standing” has both constitutional and sub-constitutional applications, this Note will use the term exclusively in reference to Article III standing.Show More This Note is the first significant contribution to the academic literature to take that closer look.3 3.The Boston College Law Review published a brief commentary on a nullity doctrine case in 2020. Rory T. Skowron, Comment, Whether Events After the Filing of an Initial Complaint May Cure an Article III Standing Defect: The D.C. Circuit’s Approach, 61 B.C. L. Rev. E. Supp. II.-230 (2020). This Note takes a significantly more comprehensive approach to both the nullity doctrine’s manifestations under multiple federal rules and the nullity doctrine’s interaction with Article III.Show More

The reasoning in support of the nullity doctrine is straightforward. The plaintiff who filed suit failed to plead a constitutionally required element of the court’s jurisdiction. As a result, the court lacks jurisdiction. Because the court lacks jurisdiction, the court cannot entertain a motion to amend or supplement the complaint or to substitute a proper party. And because the jurisdictional defect is constitutional, the Federal Rules of Civil Procedure cannot operate to retroactively cure the defect, even though some of those rules permit pleading changes to relate back to the time the suit was filed. Accordingly, permitting amendment or supplementation of the complaint or a party substitution would amount to an expansion of the court’s subject matter jurisdiction, which on their own terms the federal rules cannot do.4 4.Fed. R. Civ. P. 82 (“These rules do not extend or limit the jurisdiction of the district courts . . . .”).Show More Thus, there is no suit at all—the complaint is a nullity that must be dismissed, and the plaintiff must refile.

Despite that syllogism’s intuitive appeal, there are powerful counterarguments.5 5.This Note does not argue that the nullity doctrine is incorrect because of its formalism, but rather that Article III does not require the nullity doctrine’s formalist approach. This Note takes no position on the utility of formalism as such.Show More The nullity doctrine operates to bar a suit that would ultimately be proper (if there is no proper suit then the dismissal is unremarkable). That renders the nullity doctrine an empty procedural formality. Further, Article III does not regulate the minutiae of federal court procedure—the federal rules do that. And there is no constitutionally prescribed moment that a lawsuit is initiated—where a federal rule permits an amendment, supplementation, or party substitution to relate back to the time of filing, Article III’s jurisdictional requirements do not bar relation back. Regardless, pleading changes do not appear to be an exercise of “judicial Power” within Article III’s meaning, and instead look more like the incidental authority federal courts use to stay executions, award costs, and vacate lower court judgments even where they lack (or are unsure of) jurisdiction. And the nullity doctrine’s principal sub-constitutional support—the judge-made time of filing rule—does not prevent jurisdictional cures to relate back to the time the suit was filed. In fact, though the Supreme Court has never directly addressed the nullity doctrine, Supreme Court dicta expressly reject it and many of the Court’s related cases weigh heavily against it.

The federal circuit courts are split on how to treat facially deficient complaints and the procedural rules that could operate to cure the deficiency, most commonly Rule 15’s amendment and supplementation provisions6 6.Fed. R. Civ. P. 15(a) (“A party may amend its pleading once as a matter of course . . . .”); Fed. R. Civ. P. 15(c) (“[a]n amendment to a pleading relates back to the date of the original pleading when . . . the amendment changes the party” and other conditions obtain); Fed. R. Civ. P. 15(d) (court may permit a supplemental pleading even where the original pleading “is defective in stating a claim or defense”).Show More and Rule 17(a)(3)’s party substitution provision.7 7.Fed. R. Civ. P. 17(a)(3) (“The court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to . . . be substituted into the action.”).Show More The U.S. Courts of Appeals for the Second, Sixth, and Ninth Circuits are split with respect to Rule 17(a)(3)—the Sixth and Ninth Circuits adopting the nullity doctrine and the Second Circuit rejecting it. The Seventh, Ninth, District of Columbia, and Federal Circuits are split with respect to Rule 15—the Federal Circuit adopting the nullity doctrine under Rule 15(a) and the other circuits rejecting it under several of Rule 15’s other provisions. Complicating matters, several circuit courts have issued contradictory holdings with respect to different procedural rules. Despite the Federal Circuit’s adoption of the nullity doctrine under Rule 15(a), the same court rejected the nullity doctrine under Rule 15(d). And despite the Ninth Circuit’s adoption of the nullity doctrine under Rule 17(a)(3), the Ninth Circuit rejected the nullity doctrine under Rules 15(b) and 15(d).

Those courts and panels that have rejected the nullity doctrine have the better position. The nullity doctrine’s central premise—that Article III controls what is ultimately a procedural issue—is incorrect. Article III controls the types of suits that a federal court has the power to resolve, not the methods by which those suits come before a court. We have a lengthy body of procedural rules precisely because Article III does not regulate the types of procedural intricacies implicated by the nullity doctrine.

Despite some courts’ differential treatment of the nullity doctrine under different procedural rules, the nullity doctrine’s claimed constitutional justifications would apply with equal force to any procedural rule that permits a change to a pleading. And because those constitutional justifications do not stand up to scrutiny, the nullity doctrine should be rejected across the board, regardless of the procedural rule at issue. The Supreme Court should grant certiorari in an appropriate case to clarify the relationship between Article III and the procedural rules that operate in its trial courts, and to resolve this trans- and intra-circuit split, which implicates everyday procedural moves under some of the most commonly invoked federal rules.

This Note will make that argument in several parts. Part I will describe in greater depth the circuit split and the varying procedural rules and factual scenarios at issue in the nullity doctrine cases. Part II will examine the nullity doctrine’s claimed constitutional underpinnings and will argue that the pleading changes that the nullity doctrine precludes are not exercises of “judicial Power” within Article III’s meaning. Part III will argue that the time of filing rule does not compel adoption of the nullity doctrine, and in the process will detail Supreme Court decisions that weigh against the nullity doctrine, including Supreme Court dicta expressly rejecting it. Part III will be followed by a brief conclusion.

  1.  See, e.g., 13A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3531 n.61 (3d ed. Supp. 2022) (using the term “‘nullity’ doctrine”); Fund Liquidation Holdings LLC v. Bank of Am. Corp., 991 F.3d 370, 386 (2d Cir. 2021) (rejecting the “so-called ‘nullity doctrine’”). ↑

  2.  Two comments on the scope of this Note. First, though the nullity doctrine appears in both constitutional and statutory jurisdictional contexts, this Note deals only with constitutionally defective allegations of jurisdiction and uses the term “nullity doctrine” only in that context. However, this Note’s rejection of the nullity doctrine’s constitutional applications applies with equal force to statutory applications. Second, though the term “standing” has both constitutional and sub-constitutional applications, this Note will use the term exclusively in reference to Article III standing. ↑

  3.  The Boston College Law Review published a brief commentary on a nullity doctrine case in 2020. Rory T. Skowron, Comment, Whether Events After the Filing of an Initial Complaint May Cure an Article III Standing Defect: The D.C. Circuit’s Approach, 61 B.C. L. Rev. E. Supp. II.-230 (2020). This Note takes a significantly more comprehensive approach to both the nullity doctrine’s manifestations under multiple federal rules and the nullity doctrine’s interaction with Article III. ↑

  4.  Fed. R. Civ. P. 82 (“These rules do not extend or limit the jurisdiction of the district courts . . . .”). ↑

  5.  This Note does not argue that the nullity doctrine is incorrect because of its formalism, but rather that Article III does not require the nullity doctrine’s formalist approach. This Note takes no position on the utility of formalism as such. ↑

  6.  Fed. R. Civ. P. 15(a) (“A party may amend its pleading once as a matter of course . . . .”); Fed. R. Civ. P. 15(c) (“[a]n amendment to a pleading relates back to the date of the original pleading when . . . the amendment changes the party” and other conditions obtain); Fed. R. Civ. P. 15(d) (court may permit a supplemental pleading even where the original pleading “is defective in stating a claim or defense”). ↑

  7.  Fed. R. Civ. P. 17(a)(3) (“The court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to . . . be substituted into the action.”). ↑

A Clash of Constitutional Covenants: Reconciling State Sovereign Immunity and Just Compensation

When two bedrock constitutional guarantees come in conflict, which one prevails? This Note explores the clash between state sovereign immunity and the right to just compensation in inverse condemnation actions. When a state physically invades private property without providing remuneration, plaintiffs rightly take to federal court, asserting their entitlement to just compensation. Yet, state sovereign immunity shields the state from liability—permitting a work-around of the Fifth Amendment. Recognizing this conflict, the federal circuit courts have devised a clever, albeit faulty, solution. Relying on a law review article and dicta, the circuit courts have held that state sovereign immunity can bar inverse condemnation suits in federal courts so long as the state courts theoretically remain open to adjudicate the claims. Yet, as this Note will demonstrate, such an approach is unmoored from precedent and practicability. A proper solution is called for. This Note will discuss alternate ways out of the clash and will ultimately recommend a novel approach: private officer suits with a relaxed qualified immunity bar. As real-world people continue to face permanent damage to their property at the hands of the state, while being deprived of a constitutional guarantee to just compensation, this Note seeks to solve a timely and pressing dilemma.

Introduction: The Clash

Two concepts abound in Anglo-American jurisprudence that shape the contours of sovereign power: state sovereign immunity and the right to just compensation. The first recognizes a supreme authority; the other imposes a limitation on authority. Both are deeply entrenched in the common law.1 1.Alden v. Maine, 527 U.S. 706, 715 (1999) (“When the Constitution was ratified, it was well established . . . that the Crown could not be sued without consent in its own courts.”); Sinnickson v. Johnson, 17 N.J.L. 129, 145 (N.J. 1839) (“[I]t seems to have been considered a settled principle of universal law, that the right to compensation, is an incident to the exercise of [the eminent domain] power: that the one is so inseparably connected with the other, that they may be said to exist not as separate and distinct principles, but as parts of one and the same principle.”).Show More Yet, while other seemingly contradictory constitutional provisions leave room for “play in the joints”2 2.Locke v. Davey, 540 U.S. 712, 712 (2004).Show More between them, ensuring both principles are upheld, in many situations state sovereign immunity and the right to just compensation present a zero-sum game. Either the state must consent (or be forced to consent) to liability, or the person whose property has been taken must forego a constitutionally guaranteed remedy of just compensation.3 3.U.S. Const. amend. V; Chi., Burlington & Quincy R.R. Co. v. City of Chicago, 166 U.S. 226, 241 (1897) (incorporating the Amendment against the states).Show More

This circumstance is limited to when a taking is disputed—that is, when the state acts in such a way that deprives the plaintiff of her property or destroys her property, but that is not a formal exercise of the eminent domain power.4 4.Eric Berger, The Collision of the Takings and State Sovereign Immunity Doctrines, 63 Wash. & Lee L. Rev. 493, 501 (2006).Show More Even though the plaintiff can try to enjoin the government to stop the activity, she at least will suffer a temporary taking for which she is entitled to compensation.5 5.First Eng. Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 306–08 (1987).Show More And often, the government activity will result in permanent damage. Yet, state sovereign immunity will likely bar any action for damages in federal court, and the plaintiff will be deprived of just compensation.6 6.Berger, supranote 4, at 502.Show More She will find herself completely without a federal remedy.

An illustration will ground the point. Recently, confronting a history of heavy rainfall that impeded evacuation efforts during severe weather events, the Texas Department of Transportation installed an impenetrable concrete median in the middle of Interstate 10.7 7.Devillier v. Texas, No. 20-cv-00223, 2021 WL 1200893, at *1 (S.D. Tex. Feb. 22, 2021).Show More The barrier “effectively created a dam” by “barricading all rainfall on the northside” of the Interstate, so as to allow future travelers to use the southernmost lanes for evacuation.8 8.Id.Show More When heavy rainfall occurred again, the State’s plan was successful: a significant quantity of water accumulated against the northernmost side of the dam.9 9.Id.Show More But, then, with nowhere to drain, the water flooded and destroyed private property to the north of the Interstate.10 10.Id.Show More When the owners brought suit, acknowledging the public benefit of the dam but asserting their constitutional guarantee to just compensation, the State of Texas raised its hands, claiming sovereign immunity.11 11.Id.at *6. Although the magistrate judge found Texas waived its immunity by removing the suit to federal court, this issue is disputed and will not always arise in a proceeding where a state is more careful.Show More The matter is on appeal, but, under current understandings of state sovereign immunity, whether or not the plaintiffs will be able to recover is far from clear.12 12.The U.S Court of Appeals for the Fifth Circuit’s subsequent denial of rehearing en banc inspired a fascinating dissent by Judge Oldham highlighting many of the dangers discussed in this Note, as well as tangential dangers beyond the scope of this Note. See Devillier v. State, 63 F.4th 416, 426–41 (5th Cir. 2023) (Oldham, J., dissenting from the denial of rehearing en banc).Show More

This Note will focus on similar plights—claims of a right to just compensation after an “inverse condemnation” by the state.13 13.SeeUnited States v. Clarke, 445 U.S. 253, 255 (1980) (explaining the difference between inverse condemnation and formal eminent domain).Show More This Note limits its understanding of “inverse condemnation” to situations where private property is physically harmed or physically invaded. This Note will not focus on “regulatory takings,” where a government ordinance so diminishes the value of property that it can be called a “taking.”14 14.See, e.g., Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992).Show More

The Supreme Court has yet to issue a holding on which age-old provision must yield in these cases: state sovereign immunity or the right to just compensation.15 15.But seeFirst Eng.Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 316 n.9 (1987) (acknowledging the clash between sovereign immunity and just compensation and noting that “the Constitution . . . dictates the remedy for interference with property rights amounting to a taking”); infraSection III.A.Show More In fact, the Court has expressly ducked resolving the clash.16 16.The Court in Palazzolo v. RhodeIsland, 533 U.S. 606 (2001), neglected to address an argument presented in an amicus brief that sovereign immunity always trumps the just compensation guarantee. See Amicus Brief of the Board of County Commissioners of the County of La Plata, Colorado in Support of the Respondents State of Rhode Island, et al., Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (No. 99-2047), 2001 WL 15620, at *20–21.Show More In the Court’s October 2020 Term, it did hold that states surrendered their sovereign immunity in the “plan of the Convention” when the federal eminent domain power is being used against a state.17 17.PennEast Pipeline Co. v. New Jersey, 141 S. Ct. 2244, 2263 (2021).Show More But the Supreme Court has not decided whether state sovereign immunity gives way in a case where a private plaintiff brings suit against a state. In addressing this conflict, the federal circuit courts have adopted a Solomonic approach. Relying on a due process analogy18 18.Reich v. Collins, 513 U.S. 106 (1994).Show More and a law review article,19 19.Richard H. Seamon, The Asymmetry of State Sovereign Immunity, 76 Wash. L. Rev. 1067 (2001).Show More these courts have held that state sovereign immunity bars a claim for inverse condemnation in federal court, so long as the state courts theoretically remain open to adjudicate federal takings claims.20 20.DLX, Inc. v. Kentucky, 381 F.3d 511, 527 (6th Cir. 2004) (citing Reich, 513 U.S. at 110); Jachetta v. United States, 653 F.3d 898, 909 (9th Cir. 2011); Seven Up Pete Venture v. Schweitzer, 523 F.3d 948, 956 (9th Cir. 2008); Hutto v. S.C. Ret. Sys., 773 F.3d 536, 552 (4th Cir. 2014); Williams v. Utah Dep’t of Corr., 928 F.3d 1209, 1213 (10th Cir. 2019); Frein v. Pa. State Police, 47 F.4th 247, 257 (3d Cir. 2022).Show More Yet, for reasons outlined below, this approach is unmoored from reason, history, and Supreme Court precedent. This Note will offer potential ways out of the thicket that are superior to the current approach of the lower federal courts. In so doing, this Note makes a few novel contributions. It is the first to point out the fallibilities with the circuit courts’ approach to just compensation suits against states. It is also the first to examine a range of new potential solutions to a clash that continues to evolve. Finally, it is the first to recommend a relaxation of qualified immunity’s “clearly established” bar in order to allow inverse condemnation plaintiffs to recover from public officials.

This Note proceeds as follows. Part I will discuss the histories of state sovereign immunity and just compensation provisions. Part II will discuss the recent approach of the circuit courts in inverse condemnation suits against states and point out why this approach is in error. Part III will offer novel potential answers. Part IV will conclude.

  1.  Alden v. Maine, 527 U.S. 706, 715 (1999) (“When the Constitution was ratified, it was well established . . . that the Crown could not be sued without consent in its own courts.”); Sinnickson v. Johnson, 17 N.J.L. 129, 145 (N.J. 1839) (“[I]t seems to have been considered a settled principle of universal law, that the right to compensation, is an incident to the exercise of [the eminent domain] power: that the one is so inseparably connected with the other, that they may be said to exist not as separate and distinct principles, but as parts of one and the same principle.”). ↑
  2.  Locke v. Davey, 540 U.S. 712, 712 (2004). ↑
  3.  U.S. Const. amend. V; Chi., Burlington & Quincy R.R. Co. v. City of Chicago, 166 U.S. 226, 241 (1897) (incorporating the Amendment against the states). ↑
  4.  Eric Berger, The Collision of the Takings and State Sovereign Immunity Doctrines, 63 Wash. & Lee L. Rev. 493, 501 (2006). ↑
  5.  First Eng. Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 306–08 (1987). ↑
  6.  Berger, supra note 4, at 502. ↑
  7.  Devillier v. Texas, No. 20-cv-00223, 2021 WL 1200893, at *1 (S.D. Tex. Feb. 22, 2021). ↑
  8.  Id. ↑
  9.  Id. ↑
  10.  Id. ↑
  11.  Id. at *6. Although the magistrate judge found Texas waived its immunity by removing the suit to federal court, this issue is disputed and will not always arise in a proceeding where a state is more careful. ↑
  12.  The U.S Court of Appeals for the Fifth Circuit’s subsequent denial of rehearing en banc inspired a fascinating dissent by Judge Oldham highlighting many of the dangers discussed in this Note, as well as tangential dangers beyond the scope of this Note. See Devillier v. State, 63 F.4th 416, 426–41 (5th Cir. 2023) (Oldham, J., dissenting from the denial of rehearing en banc). ↑
  13.  See United States v. Clarke, 445 U.S. 253, 255 (1980) (explaining the difference between inverse condemnation and formal eminent domain). ↑
  14.  See, e.g., Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992). ↑
  15.  But see First Eng. Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 316 n.9 (1987) (acknowledging the clash between sovereign immunity and just compensation and noting that “the Constitution . . . dictates the remedy for interference with property rights amounting to a taking”); infra Section III.A. ↑
  16.  The Court in Palazzolo v. Rhode Island, 533 U.S. 606 (2001), neglected to address an argument presented in an amicus brief that sovereign immunity always trumps the just compensation guarantee. See Amicus Brief of the Board of County Commissioners of the County of La Plata, Colorado in Support of the Respondents State of Rhode Island, et al., Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (No. 99-2047), 2001 WL 15620, at *20–21. ↑
  17.  PennEast Pipeline Co. v. New Jersey, 141 S. Ct. 2244, 2263 (2021). ↑
  18.  Reich v. Collins, 513 U.S. 106 (1994). ↑
  19.  Richard H. Seamon, The Asymmetry of State Sovereign Immunity, 76 Wash. L. Rev. 1067 (2001). ↑

  20.  DLX, Inc. v. Kentucky, 381 F.3d 511, 527 (6th Cir. 2004) (citing Reich, 513 U.S. at 110); Jachetta v. United States, 653 F.3d 898, 909 (9th Cir. 2011); Seven Up Pete Venture v. Schweitzer, 523 F.3d 948, 956 (9th Cir. 2008); Hutto v. S.C. Ret. Sys., 773 F.3d 536, 552 (4th Cir. 2014); Williams v. Utah Dep’t of Corr., 928 F.3d 1209, 1213 (10th Cir. 2019); Frein v. Pa. State Police, 47 F.4th 247, 257 (3d Cir. 2022). ↑

Reconsidering The Legal Definition of Gambling: A Resuscitation of the Gambling Instinct Test

The modern chance-based test for gambling is fundamentally flawed. It is descriptively inaccurate, difficult to apply, and easily circumvented. Despite these shortcomings, the test is by-and-large the only test employed for the identification of gambling activity. But this was not always the case. In the first part of the twentieth century, some courts employed a competing test that looked to the underlying psychological phenomenon rather than the mechanical form of the activity. This Note advocates for a re-adoption of that test. The modern test, originally put forth as the definition of a lottery, was never intended to be a test for gambling. Over time, courts warped this definition to the point where many forms of gambling could reasonably be deemed a “lottery,” blurring the distinctions between gambling and lotteries to such a degree that some states’ highest courts have held that the two terms are synonymous.

The competing test—referred to by modern academics as “the Gambling Instinct Test”—has been understudied and mischaracterized by the literature. Admittedly, the decisions applying the test were unstructured in their analysis; however, closer examination of those cases reveals that the test can be distilled into two steps: (1) whether there exists a contingent contract, and (2) whether the prospect of receiving a return of disproportionate value induced the gambling party into conveying her consideration. As so refined, resuscitation of the Gambling Instinct Test would bring the legal doctrine in lockstep with medical conceptions of gambling. Given the explosion of gambling activity in recent years, such a change has never been more necessary.

Introduction

As one of the traditional vices, gambling has long been regulated by governments.1 1.See Nat’l Inst. L. Enf’t & Crim. Just., U.S. Dep’t of Just., The Development of the Law of Gambling: 1776–1976, at 4–13 (1977) [hereinafter Development of the Law of Gambling].Show More During the post-medieval period in England, gambling in and of itself was not unlawful, but the law tried to address its collateral consequences, such as the disruption of the public peace and members of the aristocracy gambling away their estates.2 2.Id. at 39–41, 240.Show More In early colonial America, the justification for and degree of regulation varied widely, from the wholesale condemnation of gambling as a form of idleness in Puritan Massachusetts, to more permissive laws in the southern colonies that only dealt with the evils of gambling as they arose.3 3.See I. Nelson Rose, Gambling and the Law: The Third Wave of Legal Gambling, 17 Vill. Sports & Ent. L.J. 361, 368–74 (2010).Show More Since those early days, gambling has twice gone through cycles of legalization and prohibition.4 4.Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1481 (2018). Thirty-six states and the District of Columbia have legalized sports betting since that decision, and a number of other states are currently in the process of legalization. Will Yakowicz, Where Is Sports Betting Legal? A Guide to All 50 States, Forbes (Jan. 9, 2023, 12:48 PM), https://www.forbes.com/sites/willyakowicz/2022/01/07/where-is-sports-betting-legal-americ‌a-2022/ [https://perma.cc/Y67H-4SNL].Show More Given the rapid legalization of sports betting at the state level that has occurred in the years following the Supreme Court’s landmark decision that a federal statute’s prohibition on state authorization of sports betting violated the anti-commandeering principle,5 5.See Rose, supra note 4, at 374–75 (tracing the third wave of legal gambling back to the early 1930s).Show More we appear to be approaching the crest of what one prominent gambling law scholar terms “the third wave of legal gambling.”6 6.Roland J. Santoni, An Introduction to Nebraska Gaming Law, 29 Creighton L. Rev. 1123, 1129 (1996) (citing examples of such cases from a number of states); D.A. Norris, Annotation, What Are Games of Chance, Games of Skill, and Mixed Games of Chance and Skill, 135 A.L.R. 104, 107 (1941) (“In construing statutes or ordinances prohibiting gaming, gambling, or gambling devices wherein nothing is said about chance or a game of chance or skill, many courts have required, inter alia, the element of chance to be involved.”).Show More

Although gambling in the modern-day United States is primarily defined by statute, courts, “concerned that clever operators would find ways to subvert the [statutory] prohibitions,” have frequently held that a game or activity constituted gambling if the three elements of the common law definition—Prize/Chance/Consideration—were present.7 7.See, e.g., N.J. Stat. Ann. § 2C:37-1(b) (West 2023).Show More Many modern state statutes now utilize this definition, often with slight variations.8 8.See 347 U.S. 284, 290 (1954).Show More However, this definition should not apply to all forms of gambling—nor was it originally intended to. The case most often cited in support for this definition, FCC v. American Broadcasting Co., was defining a “lottery, gift enterprise, or similar scheme,” not gambling writ large.9 9.See, e.g., Phalen v. Virginia, 49 U.S. (8 How.) 163, 168 (1850) (“Experience has shown that the common forms of gambling are comparatively innocuous when placed in contrast with the wide-spread pestilence of lotteries.”).Show More Historically, lotteries have been recognized as a distinct form of gambling, not as an interchangeable term.10 10.Anthony N. Cabot, Glenn J. Light & Karl F. Rutledge, Alex Rodriguez, a Monkey, and the Game of Scrabble: The Hazard of Using Illogic to Define the Legality of Games of Mixed Skill and Chance, 57 Drake L. Rev. 383, 390–91 (2009) [hereinafter Cabot et al., Mixed Skill and Chance]; Anthony N. Cabot & Louis V. Csoka, The Games People Play: Is It Time for a New Legal Approach to Prize Games?, 4 Nev. L.J. 197, 202 (Winter 2003–2004) [hereinafter Cabot & Csoka, The Games People Play].Show More Accordingly, in using this definition to evaluate all forms of gambling, courts have stretched and twisted the three elements in order to fit their intuitions of whether a gambling-like activity should be prohibited or not.

Chance is the most consistently problematic element from this definitional framework. The prevailing test for the chance element is the Dominant Factor Test: if the winner is determined predominantly by chance, as opposed to skill, then the activity is gambling.11 11.For instance, Haralabos Voulgaris has made millions as both a professional sports bettor and poker player, and he parlayed his success using statistical models in sports gambling into becoming the Director of Quantitative Research and Development for the Dallas Mavericks. See Marton, Haralabos Voulgaris’s Life: Biggest Profits, Losses, Private Life & Net Worth, So Much Poker (Aug. 20, 2020), https://somuchpoker.com/haralabos-voulgaris-life-biggest-profits-losses-private-life-net-worth/ [https://perma.cc/Z9CU-JKNQ].Show More Although appealing at first glance, the chance/skill dichotomy is a nebulous concept. Various paradigmatic forms of gambling, such as poker and sports wagering, have such a material skill component that highly skilled gamblers have been able to make a substantial living off of their pursuits.12 12.See Las Vegas Hacienda, Inc. v. Gibson, 359 P.2d 85, 87 (Nev. 1961).Show More On the other hand, certain “games of skill”—such as common carnival games or hole-in-one contests—can be structured so as to create games where the luck component predominates over the skill component, even for the most skilled participants.13 13.See, e.g., Indoor Recreation Enters. v. Douglas, 235 N.W.2d 398, 400–01 (Neb. 1975) (upholding a ruling that chess and checkers—paradigmatic examples of games of skill—are games of chance).Show More Even outside of these edge cases, the chance element has proved to be sufficiently confusing for courts in the analog context.14 14.See Yash Nair, What Does RNG Mean in Gaming?, DOT Esports (July 12, 2022, 11:16 AM), https://dotesports.com/general/news/what-does-rng-mean-in-gaming [https://perma.cc/H2DH-XLU7] (describing how video games use random number generators in which an algorithm decides a number value that determines certain in-game outcomes).Show More Given the importance of random number generation to the outcome of e‑sports contests, the chance element is bound to cause even greater confusion in the coming years.15 15.Anthony N. Cabot, Glenn J. Light & Karl F. Rutledge, Economic Value, Equal Dignity and the Future of Sweepstakes, 1 UNLV Gaming L.J. 1, 10–15 (2010) [hereinafter Cabot et al., Future of Sweepstakes] (citing FCC v. Am. Broad. Co., 347 U.S. 284, 296 (1954)).Show More

The other two elements, consideration and prize, have seen difficulties as well. Although consideration is a well‑defined concept in contract law, the Supreme Court in FCC v. American Broadcasting Co. departed from the so-called “contract theory” of consideration in favor of what is now referred to as the Economic Value Test, which many states have subsequently adopted.16 16.See Cabot et al., Future of Sweepstakes, supra note 16, at 23–36.Show More There has been continual debate and disagreement over how to evaluate non-monetary consideration and the possibility of free entry under this test.17 17.See Mark D. Griffiths, Is the Buying of Loot Boxes in Video Games a Form of Gambling or Gaming?, 22 Gaming L.R. 52, 53 (2018). The loot box mechanism works as follows: “Players use real money to buy virtual in-game items and can redeem such items by buying keys to open the boxes where they receive a chance selection of further virtual items.” Id. at 52.Show More Prize has come under less scrutiny historically, but has recently come to the forefront in the debate over whether video game loot boxes should be considered gambling schemes.18 18.U.K. Gambling Commission, Virtual Currencies, eSports and Social Casino Gaming – Position Paper ¶ 3(17)–(18) (2017), https://assets.ctfassets.net/j16ev64qyf6l/4A644HIpG1‌g2ymq11HdPOT/ca6272c45f1b2874d09eabe39515a527/Virtual-currencies-eSports-and-soci‌al-casino-gaming.pdf [https://perma.cc/2HL8-E9FX] (“Where prizes are successfully restricted for use solely within the game, such in-game features would not be licensable gambling, notwithstanding the elements of expenditure and chance.”).Show More The U.K. Gambling Commission declined to designate these loot boxes as a form of gambling because they did not view the in-game items awarded as prizes to have any real-life value outside of the game.19 19.The Federalist No. 37, at 180 (James Madison) (George W. Carey & James McClellan eds., 2001).Show More Though the current definition of gambling can be summed up in a pithy phrase, its application in practice misses the forest for the trees.

A critical threshold in any system of regulation is the identification of the regulated activity. The modern application of Prize/Chance/Consideration has often resulted in normative policy judgments being made simultaneously with the classification of the activity—a fundamental misstep. Although we may now find that the outright prohibition of vices like gambling creates more harms than it prevents, we, as James Madison once warned, “ought not to assume an infallibility in rejudging the fallible opinions of others.”20 20.See Cabot et al., Mixed Skill and Chance, supra note 11, at 393–94.Show More Separating classification from moralization would better allow a regulatory scheme to adjust to changes in information, custom, and societal attitudes.

In lieu of the modern framework, this Note advocates for a modern revitalization of the Gambling Instinct Test, which simply looks to whether the activity in question triggers one’s gambling instinct.21 21.See Jim Leitzel, Regulating Vice, in The Handbook of Deviance 45, 46 (Erich Goode ed., 2015).Show More The Gambling Instinct Test is a superior doctrine because it homes in on the central harm‑causing mechanism of gambling. Like other vices, gambling is “prone to excess” and “particularly likely to compromise rational decision-making,” even amongst non-addicted adults.22 22.213 N.W. 335, 339 (Wis. 1927).Show More As described in City of Milwaukee v. Johnson:

The machine makes an appeal to the gambling instinct, because the player has constantly before him the chance that the next play will assure him of the right on the next succeeding play to secure from 2 to 20 trade checks. Were it not for this appeal to the gambling instinct, these machines, which attempt to adhere to the letter of the law while violating its spirit, would never have been placed upon the market.23 23.See Cabot et al., Future of Sweepstakes, supra note 16, at 4–5.Show More

The Gambling Instinct Test is typically associated with the deontological view of gambling: that gambling is a sin and inconsistent with a moral society.24 24.See, e.g., Mills-Jennings of Ohio, Inc. v. Dep’t of Liquor Control, 435 N.E.2d 407, 409–10 (Ohio 1982) (detailing Ohio’s shift away from an anti-gambling public policy).Show More This test, peaking in usage in the 1930s, has mostly fallen out of favor since the 1950s, alongside the broad changes to society’s moral judgment of gambling that occurred in that time period.25 25.See Cabot et al., Mixed Skill and Chance, supra note 11, at 394.Show More The Gambling Instinct Test has also been criticized for being a highly subjective test that “can vary widely in its application to particular games.”footnote_id_27_26 In light of these considerations, it may seem counterintuitive that this test would be a good fit for the modern era, where paternalistic legislation of morality is increasingly disfavored and more objective judicial methodologies are preferred. However, a broad, flexible definition better enables a smart, robust system of regulation than the illogical application of the current doctrine.

The Gambling Instinct Test is justly maligned for its subjectivity. This Note attempts to ameliorate this defect by providing more color to what it means to “appeal to the gambling instinct,” first by delving deep into the cases which applied this test, and then by drawing from empirical research to find evidentiary indicators of when that instinct is being stimulated. But before doing so, some background on the current doctrinal definition is needed.

  1.  The earliest English anti-gambling statute was enacted by King Richard II in 1388. R. Randall Bridwell & Frank L. Quinn, From Mad Joy to Misfortune: The Merger of Law and Politics in the World of Gambling, 72 Miss. L.J. 565, 622–23 (2002) (citing 1388, 12 Rich. 2 c. 6 (Eng.)). Records from third-century India indicate that there was a governmental department responsible for the regulation of gambling during the reign of Chandragupta Maurya. Ronald J. Rychlak, Lotteries, Revenues and Social Costs: A Historical Examination of State-Sponsored Gambling, 34 B.C. L. Rev. 11, 16 (1992) (citing Will Durant, Our Oriental Heritage 444 (1954)); Vincent A. Smith, The Oxford History of India 78 & n.2 (1919) (citing Arthasāstra bk. 3, ch. 20). ↑
  2.  See Nat’l Inst. L. Enf’t & Crim. Just., U.S. Dep’t of Just., The Development of the Law of Gambling: 1776–1976, at 4–13 (1977) [hereinafter Development of the Law of Gambling]. ↑
  3.  Id. at 39–41, 240. ↑
  4.  See I. Nelson Rose, Gambling and the Law: The Third Wave of Legal Gambling, 17 Vill. Sports & Ent. L.J. 361, 368–74 (2010). ↑
  5.  Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1481 (2018). Thirty-six states and the District of Columbia have legalized sports betting since that decision, and a number of other states are currently in the process of legalization. Will Yakowicz, Where Is Sports Betting Legal? A Guide to All 50 States, Forbes (Jan. 9, 2023, 12:48 PM), https://www.forbes.com/sites/willyakowicz/2022/01/07/where-is-sports-betting-legal-americ‌a-2022/ [https://perma.cc/Y67H-4SNL]. ↑
  6.  See Rose, supra note 4, at 374–75 (tracing the third wave of legal gambling back to the early 1930s). ↑
  7.  Roland J. Santoni, An Introduction to Nebraska Gaming Law, 29 Creighton L. Rev. 1123, 1129 (1996) (citing examples of such cases from a number of states); D.A. Norris, Annotation, What Are Games of Chance, Games of Skill, and Mixed Games of Chance and Skill, 135 A.L.R. 104, 107 (1941) (“In construing statutes or ordinances prohibiting gaming, gambling, or gambling devices wherein nothing is said about chance or a game of chance or skill, many courts have required, inter alia, the element of chance to be involved.”). ↑
  8.  See, e.g., N.J. Stat. Ann. § 2C:37-1(b) (West 2023). ↑
  9.  See 347 U.S. 284, 290 (1954). ↑
  10.  See, e.g., Phalen v. Virginia, 49 U.S. (8 How.) 163, 168 (1850) (“Experience has shown that the common forms of gambling are comparatively innocuous when placed in contrast with the wide-spread pestilence of lotteries.”). ↑
  11.  Anthony N. Cabot, Glenn J. Light & Karl F. Rutledge, Alex Rodriguez, a Monkey, and the Game of Scrabble: The Hazard of Using Illogic to Define the Legality of Games of Mixed Skill and Chance, 57 Drake L. Rev. 383, 390–91 (2009) [hereinafter Cabot et al., Mixed Skill and Chance]; Anthony N. Cabot & Louis V. Csoka, The Games People Play: Is It Time for a New Legal Approach to Prize Games?, 4 Nev. L.J. 197, 202 (Winter 2003–2004) [hereinafter Cabot & Csoka, The Games People Play]. ↑
  12.  For instance, Haralabos Voulgaris has made millions as both a professional sports bettor and poker player, and he parlayed his success using statistical models in sports gambling into becoming the Director of Quantitative Research and Development for the Dallas Mavericks. See Marton, Haralabos Voulgaris’s Life: Biggest Profits, Losses, Private Life & Net Worth, So Much Poker (Aug. 20, 2020), https://somuchpoker.com/haralabos-voulgaris-life-biggest-profits-losses-private-life-net-worth/ [https://perma.cc/Z9CU-JKNQ]. ↑
  13.  See Las Vegas Hacienda, Inc. v. Gibson, 359 P.2d 85, 87 (Nev. 1961). ↑
  14.  See, e.g., Indoor Recreation Enters. v. Douglas, 235 N.W.2d 398, 400–01 (Neb. 1975) (upholding a ruling that chess and checkers—paradigmatic examples of games of skill—are games of chance). ↑
  15.  See Yash Nair, What Does RNG Mean in Gaming?, DOT Esports (July 12, 2022, 11:16 AM), https://dotesports.com/general/news/what-does-rng-mean-in-gaming [https://perma.cc/H2DH-XLU7] (describing how video games use random number generators in which an algorithm decides a number value that determines certain in-game outcomes). ↑
  16.  Anthony N. Cabot, Glenn J. Light & Karl F. Rutledge, Economic Value, Equal Dignity and the Future of Sweepstakes, 1 UNLV Gaming L.J. 1, 10–15 (2010) [hereinafter Cabot et al., Future of Sweepstakes] (citing FCC v. Am. Broad. Co., 347 U.S. 284, 296 (1954)). ↑
  17.  See Cabot et al., Future of Sweepstakes, supra note 16, at 23–36. ↑
  18.  See Mark D. Griffiths, Is the Buying of Loot Boxes in Video Games a Form of Gambling or Gaming?, 22 Gaming L.R. 52, 53 (2018). The loot box mechanism works as follows: “Players use real money to buy virtual in-game items and can redeem such items by buying keys to open the boxes where they receive a chance selection of further virtual items.” Id. at 52. ↑
  19.  U.K. Gambling Commission, Virtual Currencies, eSports and Social Casino Gaming – Position Paper ¶ 3(17)–(18) (2017), https://assets.ctfassets.net/j16ev64qyf6l/4A644HIpG1‌g2ymq11HdPOT/ca6272c45f1b2874d09eabe39515a527/Virtual-currencies-eSports-and-soci‌al-casino-gaming.pdf [https://perma.cc/2HL8-E9FX] (“Where prizes are successfully restricted for use solely within the game, such in-game features would not be licensable gambling, notwithstanding the elements of expenditure and chance.”). ↑
  20.  The Federalist No. 37, at 180 (James Madison) (George W. Carey & James McClellan eds., 2001). ↑
  21.  See Cabot et al., Mixed Skill and Chance, supra note 11, at 393–94. ↑
  22.  See Jim Leitzel, Regulating Vice, in The Handbook of Deviance 45, 46 (Erich Goode ed., 2015). ↑
  23.  213 N.W. 335, 339 (Wis. 1927). ↑
  24.  See Cabot et al., Future of Sweepstakes, supra note 16, at 4–5. ↑
  25.  See, e.g., Mills-Jennings of Ohio, Inc. v. Dep’t of Liquor Control, 435 N.E.2d 407, 409–10 (Ohio 1982) (detailing Ohio’s shift away from an anti-gambling public policy). ↑

  26.  See Cabot et al., Mixed Skill and Chance, supra note 11, at 394. ↑

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