419 F.Supp.3d 176
D. Mass.2019Background:
- SSR owned Suffolk Downs and contracted to lease it to Mohegan Sun Massachusetts (MSM) for a revenue-share; SSR alleges it lost expected profits when Wynn MA received the Region A, Category 1 gaming license instead of MSM.
- FBT Everett Realty owned the Everett Site; some FBT principals had criminal histories (notably Lightbody and DeCicco) and later created backdated documents that concealed ownership interests.
- Wynn Resorts/Wynn MA (with Steve Wynn, Kimmarie Sinatra, and Matthew Maddox involved) entered an option to buy the Everett Site, allegedly agreed to accept false/backdated FBT paperwork, and submitted suitability materials to the Massachusetts Gaming Commission (MGC).
- SSR alleges defendants made false statements to the MGC, engaged in ex parte contacts, failed to disclose investigations, and otherwise corrupted the licensing process; Wynn MA was awarded the license in 2014 and purchased the Everett Site.
- SSR brought federal RICO claims (predicate acts: violations of the Massachusetts Gaming Act, mail/wire fraud, honest-services fraud, Travel Act violations) plus Massachusetts Chapter 93A and tort claims; the district court dismissed the federal RICO claims with prejudice for failure to plead a RICO “pattern” and dismissed state claims without prejudice.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether false statements to the MGC (violations of the Massachusetts Gaming Act) qualify as RICO predicate acts | These statutory violations are fraud aimed at obtaining a gambling license and thus are racketeering predicates | Such licensing misrepresentations are not "gambling" or property-related and therefore not proper RICO predicates | Court held MA Gaming Act violations can qualify as RICO predicates (and Travel Act predicates) because they target securing a gambling operation license |
| Whether mail/wire fraud predicates were adequately pleaded (i.e., obtaining money or property) | SSR: MSM (or the private competitor) was the real victim and the License is property in the hands of a private applicant | Defendants: Cleveland and Berroa bar treating a state license as property for mail/wire fraud; plaintiff’s victim theory is foreclosed | Court concluded Cleveland/Berroa undermine SSR’s mail/wire fraud theory; mail/wire fraud predicates were not adequately pleaded for the state-licensing theory |
| Whether honest-services fraud (kickback to Mayor DeMaria) was pleaded with required quid pro quo | SSR: a 3% non‑equity interest/gratuity to pass proceeds to the mayor and subsequent favorable municipal acts support an honest-services scheme | Defendants: no quid pro quo or contemporaneous official-act agreement; allegations show at most an unlawful gratuity | Court held allegations failed Rule 9(b) and McDonough-style quid pro quo requirements — honest-services fraud not adequately pleaded |
| Whether the alleged predicate acts establish a RICO "pattern" (relatedness and continuity) | SSR: multiple predicates and continued misconduct (Macau, Nevada, sexual-misconduct cover-up, municipal influence) show related acts and risk of repetition | Defendants: predicates are a single, time-limited scheme to secure one license affecting a narrow set of victims; no threat of future repetition | Court held RICO pattern not satisfied (no open- or closed-ended continuity); RICO claims dismissed with prejudice. State claims dismissed without prejudice; anti‑SLAPP motion denied as moot |
Key Cases Cited:
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (RICO requires a "pattern" of racketeering activity)
- H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (relatedness and continuity tests for RICO pattern)
- Cleveland v. United States, 531 U.S. 12 (state licenses generally are regulatory, not property for mail fraud)
- United States v. Berroa, 856 F.3d 141 (First Circuit applying Cleveland to bar similar mail/wire fraud theory)
- Home Orthopedics Corp. v. Rodriguez, 781 F.3d 521 (closed-continuity factors and single-scheme limitations)
- Efron v. Embassy Suites (P.R.), Inc., 223 F.3d 12 (civil RICO pattern requirement and conspiracy claim dependency)
- Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (standing/causal link in civil RICO context)
- Rodriguez v. Doral Mortg. Corp., 57 F.3d 1168 (dismissal of federal claims early ordinarily triggers dismissal of supplemental state claims)
- In re Biogen Inc. Sec. Litig., 857 F.3d 34 (denial of leave to amend where plaintiff had prior opportunity)
- United States v. Nardello, 393 U.S. 286 (interpretation of Travel Act predicates)