The Kentucky Supreme Court ruled today that two groups purporting to represent several offshore Internet gambling sites whose domains were the subject of a state seizure in September 2008, did not have standing in the litigation. The domains that Kentucky is seeking to seize include absolutepoker.com, bodoglife.com, goldencasino.com, sportsbook.com, playersonly.com, sportsinteraction.com, mysportsbook.com, linesmaker.com and vicsbingo.com.
The case arises from an order by a Kentucky circuit court approving the seizure of 141 online gambling domains from their registered owners and transferring them to the government of Kentucky. The online gambling sites sought and obtained a writ of prohibition against the seizure from the Kentucky Court of Appeals. However, the registrants of the domains were not the writ applicants - instead they were represented by trade associations (Interactive Gaming Council and Interactive Media Entertainment & Gaming Association) and the domains themselves. The trade associations and domains sought to intervene and dismiss the seizure. The circuit court denied all motions to intervene or dismiss and scheduled a forfeiture hearing where the domain registrants could prove their innocence. The trade associations and domains sought and obtained a writ of prohibition enjoining the forfeiture. The government then successfully applied to vacate the writ of prohibition to the Kentucky Supreme Court.
The Kentucky Supreme Court vacated the writ on the basis that it was obtained by parties who lacked standing. The litigation could only be defended by those having an interest in the property - namely, the domain registrants or owners. Thus far, no party with standing representing the domains has appeared at the original proceedings, the writ petition or the appeal.
On the issue of standing, the domain owners argued that: (a) a domain is property that can represent and defend itself in law; and (b) trade associations have associational standing.
With respect to the former, the Court held that the argument was frivolous, and further, that lawyers for the domain owners confused the nature of in rem litigation.
"It has long been recognized in Kentucky, as well as elsewhere, that in in rem litigation, only those with an interest in property, such as current owners, have an interest in the litigation...The property does not have an interest in itself and, therefore, does not have any interest in the litigation...An Internet domain name does not have an interest in itself any more than a piece of land is interested in its own use. Just as with real property, a domain name cannot own itself; it must be owned by a person or legally recognized entity..A writ of prohibition, just like any other judicial remedy, may only be sought by a party with a judicially recognizable interest."
With respect to the doctrine of associational standing, the two gaming associations refused to identify which domains or domain owners they represented. The Court held that in Kentucky, an association can only have standing if its members could have sued in their own right. Since the two gaming associations could not identify any of their members, they could not establish an associational standing in the litigation and the writ petition should never have been approved. Due to the incapacity of the domains to legally contest their own seizure and the inability of the gaming associations to litigate on behalf of anonymous parties, the writ was vacated.