Massachusetts SJC Allows for Limited Judicial Review of Gaming Decisions by Unsuccessful License Applicants

Casino and Gambling  •  Goodwin Gaming  •  Massachusetts Gaming

In a unanimous decision issued on Friday, authored by outgoing Justice Margot Botsford, Massachusetts’s highest court allowed Mohegan Sun’s challenge to the state Gaming Commission’s 2014 award of a gaming license to competing bidder Wynn MA, LLC, while disallowing similar challenges to the decision brought by the City of Revere (which hoped to serve as host community had Mohegan won the license) and the International Brotherhood of Electrical Workers Local 103 (whose members hoped to benefit from the award of the license to Mohegan as well).  In doing so, however, the Court emphasized that the Commission’s decision to award the license to Wynn would receive only limited and highly deferential review by Massachusetts courts, and it is unclear whether Mohegan’s challenge to the license award ultimately will prove successful.

Background

The case, City of Revere v. Massachusetts Gaming Commission, arises from the Commission’s decision to award a so-called “category 1 license” (allowing the operation of a gaming establishment with table games and slot machines) for the region of Massachusetts comprising Suffolk, Middlesex, Essex, Norfolk and Worcester Counties.  Under Massachusetts law, such licenses are to be awarded by the Gaming Commission following a competitive license application process, in which applicants for the license must first demonstrate their suitability and eligibility to receive the license based on statutory criteria that take into account a broad array of objectives, including promoting local businesses and sustainable development, maximizing revenues received by Massachusetts from the proposed establishment, and mitigating potential adverse impacts from the proposed establishment on host and surrounding communities.  In this case, the competitive bidding process eventually came down to a choice between Mohegan (which proposed to open a gaming facility in Revere) and Wynn (which proposed a facility to be sited in Everett).  Wynn (and Everett) won.

Mohegan, Revere and the union brought suit in Superior Court, challenging the Commission’s decision to award the license to Wynn.  More specifically, they alleged that the process by which the Commission awarded the license was contrary to law because (among other reasons) the Commission failed to include several legally required commitments or conditions relating to environmental requirements, neighboring community obligations and investor suitability.  The Commission moved to dismiss the suit, arguing that a Massachusetts statute, G. L. c. 23K, § 17(g), precludes any judicial review of the Commission’s licensing decisions by providing that applicants “shall have no legal right or privilege to a gaming license and shall not be entitled to any further review if denied by the commission” (emphasis added).  A Superior Court judge held that the Commission’s argument was correct insofar as review was sought under Massachusetts’s Administrative Procedures Act, G. L. c. 30A, but even so held that judicial review of the Commission’s licensing decision could be had by way of an action in the nature of certiorari, see G. L. c. 249, § 4.  The Commission lodged an interlocutory appeal and the SJC allowed direct appellate review.

The SJC’s Decision

The Court first considered whether judicial review was available under the APA, which allows for such review in agency adjudicatory proceedings “[e]xcept so far as any provision of law expressly precludes” that review.  G. L. c. 30A, § 14.  Agreeing with the Superior Court, the SJC held that the statutory provision relied on by the Commission does exactly that:  “Even if we assume, for purposes of argument, that the commission’s licensing proceeding qualified as an ‘adjudicatory proceeding’ within the meaning of G. L. c. 30A”—an issue that the SJC’s opinion suggests is not free from doubt—“the language in § 17(g) evinces a clear legislative intent to ‘expressly preclude[]’ judicial review of commission licensing decisions,” regardless of who seeks to challenge them.

With respect to the availability of certiorari review, however, the Court held (again in agreement with the Superior Court) that § 17(g) does not contain the kind of “unmistakabl[y]” clear language that the SJC has required for the Legislature to preclude review by that avenue, whose long history “provides an independent basis for certiorari review outside the scope of § 17(g) and G. L. c. 30A, § 14.”  The Court went on to hold that Mohegan’s certiorari claim was timely and met the other necessary prerequisites for certiorari relief (i.e., a judicial or quasi judicial proceeding from which there is no other reasonably adequate remedy, and a substantial injury or injustice arising from that proceeding).

Even so, the Court took pains to emphasize that, given § 17(g)’s obvious purpose “to sharply curtail the availability of judicial review of commission licensing decisions,” “the standard of review for a certiorari action should be extremely deferential to the commission” here.  The Court also noted that the relevant statutory scheme, “[i]n essence,” “places a number of ‘unreviewable policy considerations’ … squarely in the hands of the commission,” rendering any second-guessing of these “highly discretionary determinations … inappropriate.”  At the same time, the Court noted that some of Mohegan’s allegations—e.g., that the Commission violated statutory requirements, ignored statutory criteria that are required to be considered, and gave favorable treatment to Wynn in contravention of the Gaming Law—could potentially be a basis for setting aside the Commission’s licensing decision as “arbitrary and capricious.”  The Court did not, however, express any view as to the merits of Mohegan’s claims.

The certiorari challenges asserted by Revere and the union did not fare as well:  the SJC agreed with the Superior Court that these plaintiffs lacked standing to challenge the Commission’s decision awarding the license to Wynn because they fell outside the “zone of interests” protected by the Gaming Law.  More specifically, the Court reasoned that the benefits or harms that flow from the Commission’s licensing decisions most directly and primarily affect license applicants, and only indirectly and secondarily affect host communities and other stakeholders like the union.  Given the more attenuated nature of the city’s interest, the Court reasoned that the importance of respecting § 17(g)’s statutory purpose of curtailing judicial review and the litigation burdens it entails weighs in favor of limiting standing to bring certiorari claims only to dissatisfied applicants.

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