## Facts

- Reece and Janice Powers operated R & J Partnership, Ltd., a retail and web-based business that rented and sold gambling-related equipment (including poker tables and chips).
- Two charitable organizations rented equipment from the Powers business for charitable gambling events: a Monte Carlo night and a Texas Hold ’em poker tournament.
- In addition to renting equipment, the Powers defendants volunteered to help the charities with event tasks such as advertising, signing up participants, and assisting with operation of the events.
- The State of Ohio, through the Attorney General, sued the Powers defendants alleging violations of Ohio’s Gambling Act (R.C. 2915.01 et seq.) and Charitable Organizations Act (R.C. 1716.01 et seq.) based on the defendants’ involvement with the charities’ gambling events.
- The State sought injunctive relief barring the Powers defendants from assisting charitable organizations in connection with these gambling events.
- The trial court initially issued a temporary restraining order, but after an evidentiary hearing it denied a preliminary injunction, finding little likelihood of success on the merits and that the balance of harms did not support further injunctive relief.
- As to the Gambling Act allegations, the trial court found the defendants likely had not violated the statute because the charities had not compensated the defendants for advertising or operating the charities’ gambling activity.
- As to the Charitable Organizations Act allegations, the trial court found the defendants likely had not violated the statute because they were unpaid solicitors.
- On appeal, the State argued that Reece Powers functioned as a fiduciary for the charities and breached duties by charging excessive fees and misusing charitable funds.
- The State highlighted an alleged increase in poker-table rental cost from $50 to $150, but the evidence showed the rental charge depended on expected event size and the tournament fit the higher-rate category.
- The State challenged an advertising charge of nearly $7,600 for flyers prepared by Reece’s son, but did not submit comparable pricing evidence to show the amount was unreasonable.
- The State asserted Reece set registration fees and dictated event expenses, but the record did not support those assertions and the charities expressed satisfaction with the events’ results.
- The State alleged personal purchases using charitable money, but did not connect the disputed expenditures to charitable funds from the events.
- The evidence showed Reece borrowed $1,500 from tournament proceeds and gave it to his son for a car-related expense, and the son promptly repaid the charity.

## Issues

1. Whether the trial court abused its discretion by denying a preliminary injunction on the ground that the State failed to show a substantial likelihood of success on its Ohio Gambling Act claims.
2. Whether the trial court abused its discretion by denying a preliminary injunction on the ground that the State failed to show a substantial likelihood of success on its Charitable Organizations Act theory, including the claim that Reece Powers acted as a fiduciary and breached duties to the charities.
3. Whether the trial court abused its discretion in weighing the remaining preliminary-injunction considerations (including irreparable harm and the balance of harms) and concluding that further injunctive relief was not warranted.

## Decision

- The court of appeals affirmed the order denying the State’s request for a preliminary injunction.
- The court held the trial court acted within its discretion in finding the State had not shown a sufficient likelihood of success on the merits of alleged Gambling Act violations where the record supported that the defendants were not paid to advertise or operate the charities’ gambling activity.
- The court held the trial court acted within its discretion in finding the State had not shown a sufficient likelihood of success on Charitable Organizations Act or fiduciary-breach theories given the lack of proof of unreasonable charges, unsupported claims of control over charity finances, and the failure to tie questioned expenditures to charitable funds.
- The court held the trial court did not act unreasonably in concluding that the balance of harms did not justify restricting the defendants’ business activities through preliminary injunctive relief.

## Legal Principles

- A preliminary injunction is an extraordinary remedy; the movant must show (among other things) a substantial likelihood of success on the merits, irreparable injury if relief is denied, that the threatened injury outweighs harm to the nonmoving party, and that the public interest favors relief.
- A trial court’s ruling granting or denying a preliminary injunction is reviewed for abuse of discretion; an appellate court will not reverse unless the decision is unreasonable, arbitrary, or unconscionable.
- At the preliminary stage, a court may deny relief where the movant’s proof is speculative or where key statutory elements (such as compensated participation in another’s gambling activity) are not supported by the record.
- Under Ohio’s charitable-solicitation framework, the State must show facts supporting that a defendant falls within regulated solicitor/fundraiser categories or otherwise violated statutory duties; unpaid volunteer activity, without more, may not satisfy that showing.
- Allegations framed as fiduciary breaches in connection with charitable events require evidentiary support, including proof that charges were excessive in context or that money tied to charitable activity was actually diverted or misused; unsupported accusations and unconnected expenditures are insufficient for preliminary relief.
- In weighing the balance of harms, a court may consider the breadth of the requested restraint and the impact on an ongoing business when the likelihood of success and evidence of ongoing wrongdoing are weak.

## Conclusion

The appellate court affirmed the denial of a preliminary injunction because the trial court reasonably concluded that the State had not shown a substantial likelihood of proving that the Powers defendants violated Ohio’s Gambling Act or Charitable Organizations Act, and the State’s fiduciary-misconduct allegations lacked record support tying disputed fees or spending to unlawful conduct or charitable funds, making the balance of harms unfavorable to further injunctive relief at the preliminary stage.


State ex rel. Dann v. R & J Partnership, Ltd., 2007 WL 4615956 (2007)