Aladdin Hotel Corp. v. Nevada Gaming Commission

• Citation: 637 F.2d 582
• Decision Date: 05 June 1980
• Docket Number: No. 79-3497,79-3497
• Parties: ALADDIN HOTEL CORPORATION et al., Plaintiffs-Appellees, and Josephine Alexander d/b/a Hairem Beauty and Barber Shop et al., Plaintiffs- Intervenors, v. NEVADA GAMING COMMISSION et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 582

637 F.2d 582

ALADDIN HOTEL CORPORATION et al., Plaintiffs-Appellees,

and

Josephine Alexander d/b/a Hairem Beauty and Barber Shop et

al., Plaintiffs- Intervenors, v. NEVADA GAMING COMMISSION et al., Defendants-Appellants.

No. 79-3497.

United States Court of Appeals, Ninth Circuit.

June 5, 1980.

Richard H. Bryan, Atty. Gen., Carson City, Nev., argued, for defendants-appellants; Nancy S. Roberts, San Francisco, Cal., and Raymond D. Pike, Edward R. Kane, Las Vegas, Nev., on brief.

Richard Wright, Stanford J. Rosen, Rosen, Remcho, Henderson, San Francisco, Cal., argued, for plaintiffs-appellees; Dennis M. Sabbath, Las Vegas, Nev., on brief.

Appeal from the United States District Court for the District of Nevada.

Before TANG, SCHROEDER and POOLE, Circuit Judges.

SCHROEDER, Circuit Judge:

This is an appeal from a preliminary injunction entered by the Nevada district court barring revocation of the Aladdin Hotel Corporation's gaming license by the Nevada Gaming Commission in order to permit the owners of the casino a reasonable time to find a purchaser for the hotel. We reverse the district court's order for lack of federal jurisdiction.

In March, 1979, the Nevada Gaming Control Board initiated efforts to revoke the Aladdin's gaming license following the Corporation's conviction of federal felony offenses. Pursuant to Nev.Rev.Stat. § 463.312(9), the Commission entered an emergency order which suspended Aladdin's gaming license but permitted continued gaming upon certain conditions pending action on a formal administrative complaint seeking revocation.

On June 11, 1979, the Aladdin and Holding Corporation of America (HCA) executed an agreement calling for sale of the casino and resort to HCA. On June 14, 1979, the date set for hearing on the administrative complaint, the Aladdin and the Gaming Control Board entered into an agreement, accepted by the Commission, to the effect that the Aladdin would forego procedural rights accorded a gaming licensee by Nevada statute in return for the opportunity to attempt to sell the casino to a purchaser found suitable for licensing by the Commission.

Shortly after the Commission entered this order, however, HCA withdrew its application for a gaming license and cancelled its proposed purchase of the Aladdin. The Commission then notified the Aladdin that it planned to meet on August 6, 1979, for the purpose of revoking the Aladdin's gaming license. The Commission met on that date and revoked the license.

On the same day, the Aladdin and its owners appeared in federal district court and obtained a temporary restraining order barring revocation and keeping the casino open. Aladdin's complaint for an injunction alleged that it had found another prospective purchaser for the hotel, that it was in full compliance with the Commission's June order, that the closure of the hotel would result in great hardship and irreparable harm, and that the corporation and its owners were "entitled to a reasonable period of time to find, with the exercise of due diligence, a bona fide purchaser for their property" and to have the applications processed by the Commission. The complaint further alleged that the failure of the Commission to permit them a reasonable period of time to find a purchaser and to process the applications denied due process of law.

The district court held a hearing in which the Gaming Commission took the position that the stay of license revocation to which the parties agreed in June was conditioned on the completion of the HCA transaction, and that when that transaction failed, immediate revocation was appropriate. Aladdin urged that the agreement and order permitted it a reasonable time to secure a purchaser and was not conditioned solely upon the approval of HCA. The merits of the dispute thus turn upon an interpretation of the June agreement and order. On August 10, 1979, the district court entered a preliminary injunction staying any revocation of the Aladdin gaming license and closure of the casino for six months, or until the merits of the case could be decided. ¹ This appeal by the Gaming Commission followed.

We need not dwell on the evidence presented before the trial court concerning the June agreement itself. The essential question raised by Aladdin was whether it was entitled to a reasonable period of time to find a purchaser. The dispositive question in this appeal is whether the trial court had jurisdiction to consider that question.

This action is brought under 42 U.S.C. § 1983 and jurisdiction is said to be predicated on 28 U.S.C. § 1343 relating to actions for deprivation of federal rights. In its supplemental brief addressed to the jurisdictional question which the Court requested, Aladdin maintains that the issue is one of due process. Yet there is no authority for the proposition that the holder of a license is entitled, as a matter of due process, to a reasonable time to dispose of its assets prior to revocation. The line of cases upon which Aladdin relies relate solely to the question of whether a licensee is entitled to a hearing prior to revocation. Thus, in Bell v. Burson, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971), it was held that due process requires a hearing before revocation of a driver's license. In Barry v. Barchi, 443 U.S. 55, 99 S.Ct. 2642, 61 L.Ed.2d 355 (1979), a holder of a horse trainer's license was held to have a sufficient property interest in that license to entitle him to a prompt hearing after suspension. In Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972), and Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972), the Court held that if the government assures continued employment to a professor, and the professor may not be discharged without cause, there is a federally enforceable right to a due process hearing on the reasons for the discharge.

The federal question in all of those cases was the existence of a right to a due process hearing. There may well have been federal questions concerning whether Aladdin had a federally protected property interest in its license and whether it was therefore entitled to a hearing as a matter of due process prior to either revocation or suspension of that license. As pointed out in the dissent, the district court orally pointed out that, notwithstanding the August 6, 1979, Commission meeting, there had been no such hearing held that met due process standards. This conclusion was reasonable. However, the appropriate relief would have been merely to require the Commission to give Aladdin that hearing and the necessary accompanying procedural safeguards. Such questions, however, were not the questions raised in the complaint or upon which the injunction was based. Rather, Aladdin asserted an alleged right to maintain its license and the operations of the casino for a reasonable period of time. The sole basis for that contention was not the Constitution or any federal statute, but its interpretation of the June agreement and order. As Aladdin concedes in its supplemental brief addressed to the jurisdictional question, the proper interpretation of the Commission's order and the underlying agreement of the parties are questions of state law. We decline to hold that any dispute over the operation or interpretation of a license granted by a state agency gives rise to federal jurisdiction to decide questions which are purely matters of state law.

Aladdin stresses the irreparable hardship which will result if the casino is closed and Aladdin were to be successful in its claims in state court, pointing out that injunctive relief is apparently not available in the state courts. Nev.Rev.Stat. § 463.315(5), (13); State Gaming Control Board v. Eighth Judicial District Court, 82 Nev. 38, 409 P.2d 974 (1966). However, while irreparable harm is a prerequisite to the issuance of injunctive relief, it alone does not confer federal jurisdiction to hear questions of state law absent a specific grant of federal jurisdiction. E. g., 28 U.S.C. §§ 1331, 1332, 1343.

In its supplemental brief to this Court Aladdin urged another ground to support its claim to federal jurisdiction. In April, 1979, the Nevada Legislature passed a statute, commonly known as Senate Bill 500, which expressly authorized the Nevada Gaming Commission to permit a licensee whose license was subject to revocation to continue gaming operations under a court-appointed supervisor pending sale. Aladdin argues that, as part of the June agreement and order, the Gaming Commission agreed that it would in good faith consider whether the provisions of S.B. 500 should be applied to Aladdin. Aladdin argues that, in addition to denying a reasonable time for the sale, the Commission also failed to give good faith consideration to application of S.B. 500 and that this conduct also denied it due process.

This issue was not presented in the complaint. There is, moreover, no contention in this Court that, independent of the negotiations between Aladdin and the Commission, there was any right enforceable under federal law to have the provisions of S.B. 500 applied. Here again Aladdin's argument boils down to the proposition that, simply by virtue of the state's alleged agreement relating to a license there exists a federally protected right to enforce that agreement in federal court. As indicated above, there is no merit in that position.

The orders for preliminary injunction entered by the district court on August 14, 1979, and February 12, 1980, are reversed and the matter is remanded with instructions to dismiss the complaint.

POOLE, Circuit Judge, concurring in part and dissenting in part:

I concur in reversing the preliminary injunction orders of the district court, but respectfully dissent from the majority's conclusion that the action should be dismissed for lack of jurisdiction.

I believe the district court acquired and retained jurisdiction to consider appellees' claims. Their...