Caesars Massachusetts Management Co. v. Crosby
2015 U.S. App. LEXIS 2296
1st Cir.2015Background
- Massachusetts Gaming Commission (Commission) and its Investigations and Enforcement Bureau (IEB) investigated Caesars (a casino qualifier for Sterling Suffolk Racecourse's application) and issued a public report finding Caesars unsuitable, likely dooming SSR's license application.
- IEB's four stated concerns: Caesars' licensing tie to Gansevoort (alleged Russian organized-crime ties), hiring of Mitchell Garber (linked to companies with DOJ non-prosecution agreements), litigation history with a high-roller (Watanabe), and Caesars' heavy leverage.
- Chairman Stephen Crosby disclosed a prior business relationship with Paul Lohnes (an owner of competing Wynn site), recused from voting, but Caesars alleges Crosby steered process to favor Wynn and Lohnes and pressured IEB conduct.
- Caesars sued under 42 U.S.C. § 1983 (official- and individual-capacity due process and equal protection claims) and asserted a state-law tortious-interference claim; district court dismissed federal claims and declined supplemental jurisdiction over the state claim.
- On appeal, the First Circuit affirmed dismissal, holding Caesars failed to allege a cognizable protected property interest for due process and that class-of-one equal protection does not reach discretionary state licensing decisions like casino approvals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Caesars alleged a protected property interest for procedural/substantive due process | Caesars: its contract with SSR (and implied rights in licensing process) created a protectable entitlement to the expected license benefit. | Defendants: casino licensing is discretionary under state law; no entitlement exists to a license or to others’ contractual expectations. | Held: No protected property interest; due process claims dismissed. |
| Whether private contract (Caesars–SSR) yields property interest against third-party state action | Caesars: private-contract expectation is property protected from state interference. | Defendants: expectation depends on state licensing discretion; Massachusetts law denies such entitlement when grant is discretionary. | Held: Contract expectation not a protectable property interest here. |
| Whether a class-of-one Equal Protection claim exists for allegedly arbitrary, discriminatory licensing actions | Caesars: it was singled out and treated worse to favor Wynn; class-of-one theory applies (Olech). | Defendants: licensing involves broad discretionary, subjective judgment; Engquist limits class-of-one when government action is discretionary. | Held: Engquist bars class-of-one in this discretionary licensing context; equal protection claims dismissed. |
| Whether federal-court dismissal requires declining supplemental jurisdiction over state tort claim | Caesars: federal claims support jurisdiction to adjudicate state claim. | Defendants: federal claims removed; district court should dismiss state claim if federal claims are dismissed. | Held: District court properly declined supplemental jurisdiction; state claim dismissed without prejudice. |
Key Cases Cited
- Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (procedural due process requires a protected property interest)
- Engquist v. Oregon Dep’t of Agric., 553 U.S. 591 (limits class-of-one equal protection when government action is discretionary)
- Vill. of Willowbrook v. Olech, 528 U.S. 562 (class-of-one equal protection theory articulated)
- Abdow v. Attorney General, 11 N.E.3d 574 (Mass. 2014) (Mass. S.J.C. rejected property interest in casino license expectations)
- Town of Castle Rock v. Gonzales, 545 U.S. 748 (benefits not protected entitlements when granted in official discretion)
- Kennie v. Natural Res. Dep’t of Dennis, 889 N.E.2d 936 (Mass. 2008) (distinguishes protected entitlement to make lawful improvements from discretionary permits)
- Centro Medico del Turabo, Inc. v. Feliciano de Melecio, 406 F.3d 1 (1st Cir. 2005) (substantive due process requires protected property interest)
- Redondo-Borges v. U.S. Dep’t of Hous. & Urban Dev., 421 F.3d 1 (1st Cir. 2005) (mere breach of contract does not equal unconstitutional deprivation)
- Paul Sardella Constr. Co. v. Braintree Hous. Auth., 329 N.E.2d 762 (Mass. App. Ct. 1975) (discussed implied-contract bids for public contracts; later distinguished by Abdow)