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City of Revere v. Massachusetts Gaming Commission

Supreme Judicial Court of Massachusetts, Suffolk

March 10, 2017

CITY OF REVERE & others [1]
v.
MASSACHUSETTS GAMING COMMISSION.

          Heard: December 5, 2016.

         Civil action commenced in the Superior Court Department on October 16, 2014. A motion to dismiss the intervener's complaint and a motion to dismiss the plaintiffs' second amended complaint were heard by Janet L. Sanders, J.

         The Supreme Judicial Court granted an application for direct appellate review, and following the order by Sanders, J., for entry of final judgment, the Supreme Judicial Court granted a second application for direct appellate review.

          Kenneth S. Leonetti & Christopher E. Hart (Michael Hoven also present) for the intervener.

          Patricia L. Davidson for city of Revere.

          David S. Mackey (Mina S. Makarious & Melissa C. Allison also present) for the defendant.

          Present: Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

          BOTSFORD, J.

         This case concerns the process by which the Massachusetts Gaming Commission (commission) awarded a gaming license in late 2014 to Wynn MA, LLC (Wynn). The plaintiffs - an unsuccessful applicant for the license, the city that would have hosted the unsuccessful applicant, a labor union, and individual citizens -- filed two complaints in the Superior Court that alleged numerous defects in the commission's process for awarding the license to Wynn. The commission filed motions to dismiss both complaints. A judge in the Superior Court allowed the motions on all but one count of one of the complaints, permitting only the unsuccessful applicant's claim for certiorari review to survive. The parties now appeal various aspects of the judge's decision. For the reasons discussed below, we affirm in part, reverse in part, and remand the case for further proceedings.

         Background.

         1. Gaming in Massachusetts.

         In November, 2011, the Legislature enacted St. 2011, c. 194, An Act establishing expanded gaming in the Commonwealth (act).[2] Section 16 of the act created the gaming commission and set forth standards under which applicants could obtain a license from the commission to operate a gaming establishment. See G. L. c. 23K, inserted by St. 2011, c. 194, § 16. The act describes two types of licenses. The one at issue here, a "category 1 license, " permits the operation of "a gaming establishment with table games and slot machines." See G. L. c. 23K, § 2. The act authorizes the commission to issue up to one such license in "region A, " which encompasses the counties of Suffolk, Middlesex, Essex, Norfolk, and Worcester. G. L. c. 23K, § 19 (a) (1).

         The license application process relevant to this case unfolded in two phases, as contemplated by the commission's regulations. See 205 Code Mass. Regs. § 110.01 (2012). Applicants were required first to demonstrate their suitability and eligibility based on criteria described in G. L. c. 23K, §§ 12 and 15. Only those applicants deemed suitable by the commission proceeded to the second phase, in which the commission considered the applicant's entire application. See G. L. c. 23K, § 12 (c0 . In this phase, the commission evaluated the applicants based on nineteen statutory criteria and issued a corresponding statement of findings. See G. L. c. 23K, § 18. The criteria required the commission to evaluate how well the applicants would advance a broad array of objectives, ranging from promoting local businesses and using sustainable development principles to maximizing revenues received by the Commonwealth and mitigating the potential impacts of gaming on host and surrounding communities. See id.

         Ultimately, the license application process challenged in this case came down to a choice between two applicants -- Wynn, which proposed a casino in Everett, and Mohegan Sun Massachusetts, LLC (Mohegan Sun), which proposed a casino in Revere. In September, 2014, the commission awarded the license to Wynn. In November, 2014, the commission issued a thirty-six-page written determination, with accompanying exhibits, explaining its evaluation of the competing applications. This determination formally awarded the license to Wynn and denied the application of Mohegan Sun.

         2. Alleged defects in the licensing process.

         In October, 2014, the city of Revere (city), the International Brotherhood of Electrical Workers Local 103 (union), and four union members (individual plaintiffs) brought suit in the Superior Court against the commission. In early 2015, these plaintiffs filed a second amended complaint. At around the same time, Mohegan Sun filed a motion to intervene and a complaint in intervention. The motion to intervene was allowed without opposition.

         The second amended complaint and Mohegan Sun's complaint in intervention contain four virtually identical counts. In the first two counts, Mohegan Sun, the city, and the union seek review and reversal of the commission's award of the gaming license to Wynn under G. L. c. 30A, § 14 (count I), and under G. L. c. 249, § 4 (count II). Concerning counts I and II, they allege, for example, that the commission in its agreement to award the license to Wynn failed to include several commitments or conditions required by the act relating to environmental requirements, neighboring community obligations and investor suitability; failed to give proper weight to host and surrounding community agreements, adopted an improper arbitration regulation, failed to properly consider various mitigation plans, and accepted incorrect employment estimates; treated Wynn and Mohegan Sun differently, with inequitable results for Mohegan Sun, in part by using differing grading procedures, inconsistently applying the statutory requirement that license applicants have no affiliates or close associates who would not qualify for a license, and engaging in improper ex parte communications with Wynn; and failed properly to take into account the suitability (in particular, the criminal history) of certain individuals allegedly involved in the transaction in which Wynn purchased the land for its casino. They also allege that Wynn failed properly to disclose its involvement in an ongoing criminal investigation as required by the act.

         In count III of the respective complaints, Mohegan Sun, the city, and the union seek a declaratory judgment pursuant to G. L. c. 231A, § 1, to the effect that the act is unconstitutional as applied and that, to the extent the act precludes judicial review, it violates the constitutional guarantee of due process and also separation of powers principles. In count IV, the plaintiffs allege that the commission's regulations implementing the act are ultra vires and unconstitutional.

         Finally, in the second amended complaint only, the individual plaintiffs seek relief under the open meeting law, G. L. c. 30A, § 23 (count V). Essentially, count V alleges that a quorum of the commission engaged in deliberations that should have taken place in a public meeting, including during the recess of a public meeting and on other occasions. Additional allegations in the complaints are discussed where relevant infra.

         3. Procedural history.

         In July, 2015, the commission moved to dismiss both complaints. In December, 2015, the motion judge allowed the motion to dismiss the second amended complaint. The judge ruled that counts I through IV of that complaint must be dismissed under Mass. R. Civ. P. 12 (b) (1), 365 Mass. 754 (1974), for lack of standing because the city and the union are not within the "zone of interests" that the act arguably protects. She also ruled that the individual plaintiffs' allegations regarding the open meeting law failed to rise above the speculative level, and therefore could not survive a motion to dismiss under Mass. R. Civ. P. 12 (b) (6) for failure to state a claim.

         With respect to Mohegan Sun's complaint in intervention, the motion judge allowed the motion to dismiss count I, ruling that § 17 (g) of the act expressly precludes judicial review under G. L. c. 30A, § 14. However, she denied the motion with respect to count II, concluding that Mohegan Sun satisfied the prerequisites for certiorari review. Because this ruling permitted a form of judicial review of the commission's region A decision, the judge dismissed as moot counts III and IV of Mohegan Sun's complaint seeking declaratory relief.

         The commission filed a notice of appeal with respect to Mohegan Sun's surviving count II, claiming that the doctrine of present execution authorizes interlocutory review. After entry of final judgment the plaintiffs filed their own notice of appeal. This court allowed applications for direct appellate review of both the commission's and the plaintiffs' appeals.

         Standard of review.

         This court reviews orders on motions to dismiss de novo. Shapiro v. Worcester, 464 Mass. 261, 266 (2013). For purposes of that review, we accept as true the facts alleged in the plaintiffs' complaints and any exhibits attached thereto, drawing all reasonable inferences in the plaintiffs' favor. Burbank Apartments Tenant Ass'n v. Kargman, 474 Mass. 107, 116 (2016).

         Discussion.

         The parties' appeals raise several issues, which we address in the following order. First, we consider the claims raised by Mohegan Sun and the commission concerning the motion judge's dismissal of Mohegan Sun's claim under G. L. c. 30A, § 14, and the judge's determination that certiorari review of the commission's decision is available. We also review, briefly, the judge's dismissal of Mohegan Sun's claims for declaratory relief in counts III and IV of the complaint. We next address the claims of the city and the union that the judge erred in ruling that they lacked standing to challenge the commission's decision. Finally, we consider the open meeting law claim of the individual plaintiffs.

         1. Claims of Mohegan Sun and the commission.

         a. Judicial review under G. L. c. 30A, § 14.

         General Laws c. 30A, § 14, provides for judicial review of an agency decision in an adjudicatory proceeding, "[e]xcept so far as any provision of law expressly precludes" it. G. L. c. 30A, § 14, first par. Section 17 (g) of the act, in turn, provides that "[t]he commission shall have full discretion as to whether to issue a license. Applicants shall have no legal right or privilege to a gaming license and shall not be ...


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