Superior Court of Massachusetts, Suffolk, Business Litigation Session
City of Revere et al.
Massachusetts Gaming Commission et al Opinion No. 132488
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTIONS 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, Massachusetts. In so doing, the Commission chose Wynn over Mohegan Sun Massachusetts, LLC (Mohegan), which had proposed a casino in Revere. In separate but virtually identical complaints, Mohegan, together with the City of Revere and the International Brotherhood of Electrical Workers, Local 103 (IBEW-103), seeks to vacate the Commission's decision pursuant to G.L.c. 30A, § 14 and G.L.c. 249, § 4. Specifically, they allege that the Commission improperly favored Wynn during the license application process and failed to apply the standards for granting a gaming license enumerated in the Massachusetts Expanded Gaming Act (the Gaming Act). Plaintiffs also bring claims under G.L.c. 231A, § 1 seeking a declaration that, to the extent the Gaming Act or the Commission's regulations prohibit judicial review, the statute is unconstitutional. Finally, Louis Ciarlone, Ronald Hills, Debra A. Santa Anna, and Elaine Leto, each members of IBEW-103 (collectively, the Individuals), separately bring a claim against the Commission asserting that it violated the Open Meeting Law, G.L.c. 30A, § § 18-25, while conducting the licensing proceedings.
The claims brought by Revere, IBEW-103, and the Individuals are set forth in a Second Amended Complaint filed October 16, 2014. The claims by Mohegan are asserted by way of an Intervenor's Complaint filed on February 6, 2015. Now before the Court is a Motion to Dismiss the claims asserted in both sets of complaints pursuant to Mass.R.Civ.P. 12(b)(6) and 12(b)(1).
As to the Second Amended Complaint, this Court concludes that Revere and IBEW-103 do not have standing to bring any of their claims since they do not allege an injury within the " zone of interest" protected by the Gaming Act. As to the separate claim alleging a violation of the Open Meeting Law, the Second Amended Complaint does not contain sufficient factual allegations " to raise a right of relief above the speculative level." Iannacchino v. Ford Motor Co., 451 Mass. 623, 636, 888 N.E.2d 879 (2008), quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 555-57, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Accordingly, the defendants' Motion to Dismiss the Second Amended Complaint is ALLOWED .
As to the Intervenor's Complaint brought by Mohegan, this Court concludes that Mohegan may not challenge the Commission's licensing decision under G.L.c. 30, § 14, but can do so under G.L.c. 249, § 4. Because the constitutional claim is made only if this Court were to deny any judicial review, that claim is now moot. Accordingly, the defendants' Motion to Dismiss the Intervenor's Complaint is ALLOWED in part and DENIED in part. This case thus survives only as a claim made by Mohegan under G.L.c. 249, § 4.
The following is taken from the two complaints and other materials appropriate for judicial notice.
The Gaming Act and its Regulations
In November 2011, the Legislature enacted the Gaming Act, codified at G.L.c. 23K, permitting casino gambling in the Commonwealth for the first time in the state's history. The Gaming Act sets forth a comprehensive regulatory scheme that governs the issuance of gaming licenses. To implement this regulatory scheme, the Gaming Act created the Commission, which consists of five Commissioners. The Commissioners must have some expertise in criminal investigations and law enforcement, corporate finance and securities, and legal and policy issues. G.L.c. 23K, § 3(a). They are also subject to strict statutory ethical standards, the state conflict of interest law (c. 268A), and an Enhanced Code of Ethics intended to be stricter than c. 268A. G.L.c. 23K, § 3(m), (u). In addition to these ethical rules, the Commission must comply with the Open Meeting Law, which mandates that all meetings of a public body be open to the public. See G.L.c. 23K, § § 18, 20(a).
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). Region A includes Suffolk, Middlesex, Essex, Norfolk, and Worcester Counties. G.L.c. 23K, § 19(a). The Commission may also award one statewide license to operate a gaming establishment with only slot machines (the Category 2 License). Id. at § 20(a). The decision which is the subject of this lawsuit is the award of a Category 1 license for Region A.
The Gaming Act and its regulations establish a two phase application process for Category 1 Licenses. Id. at § 12; 205 C.M.R. § 110.01. The first phase, known as the " Request for Application Phase 1" (RFA-1), 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, an investigation is 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. The IEB submits a written report to the Commission that provides findings and recommendations on the suitability of the license applicant. Id. Following the submission of this report, the Commission holds either a public hearing or an adjudicatory proceeding. It then issues a written determination of suitability. 205 C.M.R. § 115.04-05.
When evaluating suitability, the Commission must assess the overall reputation of the applicant. In making that assessment, it must consider the following factors: the applicant's integrity, honesty, good character, and reputation; its financial stability; its business practices; its history of compliance with gaming license requirements in other jurisdictions; and the suitability of all parties in interest to the gaming license, including affiliates and close associates. 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 Applicants Phase 2" (RFA-2). See 205 C.M.R. § 110.01(2). In RFA-2, the applicant submits another application. G.L.c. 23K, § § 12, 17; 205 C.M.R. § 119.01. This second application is:
designed to require applicants to demonstrate that they have thought broadly and creatively about creating an innovative and unique gaming establishment that will create a synergy with, and provide a significant and lasting benefit to, the residents of the host community, the surrounding communities, the region, and the Commonwealth of Massachusetts, and will deliver an overall experience that draws both residents and tourists to the gaming establishment and Commonwealth of Massachusetts.
205 C.M.R. § 119.01. To that end, the RFA-2 application 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 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). Unlike host communities, surrounding communities are not entitled to vote for or against the casino in a referendum. They are nevertheless entitled to mitigation of the casino's potential negative impacts as expressed in surrounding community agreements entered into with the license applicant. G.L.c. 23K, § 15(9).
The Commission is responsible for formally designating the surrounding communities of the proposed gaming establishment. G.L.c. 23K, § 17(a). Those municipalities that have already entered into a surrounding community agreement with the license applicant are automatically designated as such. If a municipality does not have such an agreement when the RFA-2 application is filed, it may 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. ...