Superior Court of Massachusetts, Suffolk, Business Litigation Session
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION TO DISMISS
Janet L. Sanders, Justice
This action arises from a decision by the Massachusetts Gaming Commission (the Commission) to award a license to Wynn MA, LLC (Wynn) to operate a casino in Everett. As part of that process, the Commission determined that the City of Boston was not a " host community" under the Massachusetts Expanded Gaming Act (the Gaming Act), then " dedesignated" Boston as a " surrounding community" when the City refused to participate in arbitration. In a wide-ranging complaint, 153 pages long, Boston alleges numerous acts of wrongdoing by the Commission that date back to the earliest phase of the licensing process, attacking not only the licensing decision but also the Commission's determination that Wynn was a suitable candidate to begin with. The relief that Boston seeks is also comprehensive: it asks this Court not only to vacate the Commission's determination about Boston's host community status but also to set aside the award to Wynn and to disqualify all Commission members from future proceedings.
Now before the Court is the Commission's Motion to Dismiss Boston's Amended Complaint pursuant to Mass.R.Civ.P. 12(b)(6) and 12(b)(1). The Commission makes many legal arguments in support of its Motion, among them that the complaint was filed too late and that the Gaming Act itself precludes any judicial review. Although unpersuaded by these arguments, this Court nevertheless concludes that the Motion must be Allowed . Boston has standing to make a legal challenge only to the extent that it has suffered an injury that falls within the " zone of interests" protected by the Gaming Act, and that injury is limited to the host community/surrounding community decisions of the Commission. As to that legal challenge (and assuming all allegations in the Complaint to be true), this Court concludes that the Commission correctly applied the Gaming Act and enforced regulations validly promulgated thereunder. Finally, the count that seeks to disqualify all commissioners contains only legal conclusions and broad generalities, and is not supported by factual allegations sufficient to " raise a right to relief above the speculative level." Iannacchino v. Ford Motor Co., 451 Mass. 623, 636, 888 N.E.2d 879 (2008), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Accordingly, as to those counts for which it has standing, the City of Boston has failed to state a claim upon which relief may be granted.
In reaching the conclusion that it does, this Court has applied the Gaming Act and its regulations to the allegations set forth in Boston's Amended Complaint (the Complaint). It has not been an easy task. There is no judicial precedent for interpreting the Gaming Act, given its recent vintage. As to the Complaint, it is peppered with adjectives and adverbs, characterizing the Commission's proceedings as " corrupt, " and a " costly charade, " its decisions the result of " machinations, " " predetermined outcomes, " and " mock" hearings. These inflammatory descriptions tend only to obscure the factual allegations, which this Court must assume to be true for purposes of this Motion.
The Gaming Act and its Regulations
In a separate decision issued this same date, this Court provided a comprehensive description of the Gaming Act, which it incorporates here by reference. Revere v. Massachusetts Gaming Comm'n, SUCV2014-3253-BLS 2. Certain sections of the Act are of particular relevance to Boston's claims. They are as follows.
The Gaming Act was enacted in 2011 and codified at G.L.c. 23K. It is administered by the Commission, which consists of five Commissioners appointed by the Governor, Attorney General, and the Treasurer. They are required by statute to have some expertise in criminal investigation and law enforcement, corporate finance and securities, and legal and policy issues. G.L.c. 23K, § 3(a). As stated in G.L.c. 23K, § 1, " the power and authority of the commission shall be construed as broadly as necessary for the implementation, administration and enforcement" of the Gaming Act. See also G.L.c. 23K, § 4 (the Commission " shall have all powers necessary or convenient to carry out and effectuate its [the Act's] purposes"). The Commissioners are subject to strict statutory ethical standards, the state conflict of interest law (Chapter 268A), and an Enhanced Code of Ethics. G.L.c. 23K, § 3(m), (u).
The Gaming Act authorizes the Commission to award three licenses to operate casinos with gaming tables and slot machines (the Category 1 Licenses) in each of three regions of the Commonwealth (Regions A, B, and C). G.L.c. 23K, § 19(a). Region A includes Suffolk, Middlesex, Essex, Norfolk, and Worcester Counties. Id. This lawsuit concerns the award to Wynn of a Category 1 License for Region A.
The Gaming Act and its regulations establish a two-phase application process for Category 1 Licenses. G.L.c. 23K, § 12; 205 C.M.R. § 110.01. The first phase is known as the " Request for Application Phase 1" (RFA-1), and begins when the Commission receives a Phase I application from each applicant that must make several disclosures. 205 C.M.R. § 111.00 et seq. In this phase, the Commission determines whether an applicant is " suitable" for a license following an investigation conducted by the Investigations and Enforcement Bureau (IEB), a law enforcement agency within the Commission. G.L.c. 23K, § 12(a); 205 C.M.R. § 115.03-05. When evaluating suitability, the Commission must assess the overall reputation of the applicant, considering among other things the applicant's integrity, honesty, and good character. G.L.c. 23K, § 12(a). The Commission must deny a gaming license application if the applicant: a) has been convicted of a felony or other crime involving embezzlement, theft, fraud or perjury; b) has submitted a false or misleading application; c) has engaged in a pattern of misconduct that makes the applicant unsuitable for a license; or d) has affiliates or close associates that would not qualify for a license or whose relationship with the applicant could be injurious to the Commonwealth's interests. G.L.c. 23K, § 16(a). These same factors apply equally to any entity or individual " with a financial interest in the business of the gaming licensee or applicant for a gaming license or who is a close associate of a gaming licensee." G.L.c. 23K, § 14(a). If these other entities or persons with such an interest are themselves unsuitable, then the applicant is not suitable either. Id.
Only those applicants found to be suitable may proceed to the second phase, known as the " Request for Application Phase 2" (RFA-2). See 205 C.M.R. § 110.01(2). In RFA-2, the applicant submits another application that focuses on the site, design, operation and other attributes of the gaming establishment, including the mitigation of adverse impacts. Among other things, a completed RFA-2 application must contain a copy of a " host community" agreement as well as a certificate showing that the host community voted in favor of the license in a referendum. 205 C.M.R. § 119.01(4), (7); G.L.c. 23K, § 15(8), (13). A " host community" is defined as " a municipality in which a gaming establishment is located or in which an applicant has proposed locating a gaming establishment." G.L.c. 23K, § 2. That same provision of the Gaming Act defines a " gaming establishment" to include not only the areas of the premises where gaming is conducted but also " any other nongaming structure related to the gaming area [which] may include, but shall not be limited to, hotels, restaurants or other amenities." Id. A host community agreement sets forth the community impact fee that will be paid to the host community and the mitigation measures planned to minimize negative impacts from the development and operation of the proposed gaming establishment. G.L.c. 23K, § 15(8).
The RFA-2 application must also include copies of any " surrounding community" agreements the applicant entered into prior to submission. 205 C.M.R. § 119.01(8). " Surrounding communities" are defined as " municipalities in close proximity to a host community which the commission determines experience or are likely to experience impacts from which the transportation infrastructure provides ready access to an existing proposed gaming establishment." G.L.c. 23K, § 2. Unlike host communities, surrounding communities are not entitled to vote for or against the casino by way of a referendum. They are nevertheless entitled to mitigation of the casino's potential negative impacts; those mitigation measures are expressed in the agreements that the surrounding communities enter into with the license applicant. G.L.c. 23K, § 15(9).
As part of the RFA-2 process, the Commission must determine the location of the " gaming establishment, " which in turn determines which municipality is a " host community" under the Gaming Act. The Commission is also responsible for formally designating which municipalities are " surrounding communities." Those municipalities that have already entered into surrounding community agreements with the license applicant are automatically designated as such. G.L.c. 23K, § 17(a). Those that have not entered into such agreements can petition the Commission for surrounding community status. 205 C.M.R. § 125.01(2). If the Commission determines that a municipality is a surrounding community, the applicant must negotiate a signed agreement with that municipality within 30 days of the determination. G.L.c. 23K, § 17(a). If no agreement is reached by the 30-day deadline, the Commission's regulations require the applicant and the municipality to enter into arbitration where a panel chooses between competing " best and final offers" given by the applicant and affected municipality. See 205 C.M.R. § 125.01(6)(b), (c). Where a municipality refuses to participate in the arbitration process, the Commission may, pursuant to a regulation that it enacted, find that the municipality has waived its designation as a surrounding community. 205 C.M.R. § 125.01(6)(a)(2).
When considering the merits of an RFA-2 application and deciding who among the competing applicants should receive a gaming license, the Commission considers whether the applicant satisfies sixteen minimum requirements for a license and whether it advances nineteen other objectives. G.L.c. 23K, § § 15, 18. These objectives include " promoting local businesses, " " building a gaming establishment of high caliber with a variety of quality amenities, " " providing a high number of quality jobs, " and " gaming support of the host and surrounding communities." G.L.c. 23K, § 18(2), (5), (12), (19). The Commission has " full discretion as to whether to issue a license." G.L.c. 23K, § 17(g). An applicant " shall not be entitled to any further review if denied by the commission." Id. See also 205 C.M.R. § 102.07 and St. 2011, c. 194, Preamble.
Award of the Region A Category 1 License
As to how the Commission came to award Wynn a gaming license, this Court has looked to the Complaint itself. The gist of the Complaint is that the Commission unlawfully manipulated the gaming license process to favor Wynn. Significantly, the Complaint incorporates by reference some 84 attached exhibits, several of them generated by or filed with the Commission over the eighteen months that it determined first who was a suitable candidate for the Region A license and then which of two candidates found to be suitable (Wynn or Mohegan Sun, LLC) should be awarded a license. Where the Complaint cites these exhibits, this Court has relied on the documents themselves, not the ...