Keystone Redevelopment Partners, LLC v. Decker
| Citation | 674 F.Supp.2d 629 |
| Decision Date | 16 December 2009 |
| Docket Number | No. 1:08-cv-2265.,1:08-cv-2265. |
| Parties | KEYSTONE REDEVELOPMENT PARTNERS, LLC., Plaintiff, v. Thomas DECKER, et al., Defendants, and HSP Gaming, L.P., Intervenor/Defendant. |
| Court | U.S. District Court — Middle District of Pennsylvania |
Abram D. Burnett, David R. Overstreet, John P. Krill, Jr., K & L Gates LLP, Harrisburg, PA, for Plaintiff.
Barbara A. Zemlock, James J. Kutz, John W. Dornberger, Post & Schell P.C., R. Douglas Sherman, Pennsylvania Gaming Control Board, Harrisburg, PA, for Defendants.
Frederic Warren Jacoby, Stephen A. Cozen, Cozen and O'Connor, Charles J. Hardy, Richard A. Sprague, Thomas E. Groshens, Thomas A. Sprague, Sprague & Sprague, Philadelphia, PA, Jennifer M. McHugh, Cozen O'Connor, West Conshohocken, PA, Scot R. Withers, William H. Lamb, Lamb McErlane PC, West Chester, PA, for Intervenor/Defendant.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
Currently pending before the Court are two motions to dismiss the amended complaint of Plaintiff Keystone Redevelopment Partners, LLC ("Keystone"). Both motions to dismiss (collectively, "the Motions"), filed by Intervenor/Defendant HSP Gaming L.P. ("HSP") and the Board Defendants respectively,1 were filed on March 27, 2009. (Doc. 51) (the "HSP Motion"); (Doc. 53) (the "Board Motion"). For the following reasons, we shall grant in part and deny in part the Motions.
On December 18, 2008, Plaintiff Keystone initiated the instant action by filing a complaint against numerous members, past and present, of the PGCB. (Doc. 1). On January 9, 2009, HSP lodged a motion to intervene pursuant to Federal Rule of Civil Procedure 24, (Doc. 10), which we granted by way of our February 18, 2008 Order, (Doc. 37). On March 18, 2009, Keystone filed an amended complaint. (Doc. 46). On March 27, 2009 the HSP and Board Motions were filed accompanied by supporting briefs. (Docs. 51-54). On April 28, 2009 Keystone filed a joint brief in opposition to both motions. (Doc. 61). On May 11, 2009, both HSP and the Board Defendants filed reply briefs. (Docs. 62, 63). On May 22, 2009, after receiving permission from the Court, Keystone filed a surreply brief addressing the Board Defendants' reply brief. (Doc. 67). Accordingly, having been fully briefed, the Motions are ripe for disposition.
In considering a motion to dismiss pursuant to Rule 12(b)(6), courts "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n. 7 (3d Cir.2002)).
A Rule 12(b)(6) motion tests the sufficiency of the complaint against the pleading requirements of Rule 8(a). Rule 8(a)(2) requires that a complaint contain a short and plain statement of the claim showing that the pleader is entitled to relief, "in order to give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. A plaintiff must make "a `showing' rather than a blanket assertion of an entitlement to relief," and "without some factual allegation in the complaint, a claimant cannot satisfy the requirement that he or she provide not only `fair notice,' but also the `grounds' on which the claim rests." Phillips, 515 F.3d at 232 (citing Twombly, 550 U.S. at 555 n. 3, 127 S.Ct. 1955). "[A] complaint must allege facts suggestive of [the proscribed] conduct," and the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 563 n. 8, 127 S.Ct. 1955). Therefore, "stating a claim requires a complaint with enough factual matter (taken as true) to suggest the required element." Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at 555 n. 3, 127 S.Ct. 1955).
On the other hand, "a complaint may not be dismissed merely because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits." Id. at 231 (citing Twombly, 550 U.S. at 554-56, 563 n. 8, 127 S.Ct. 1955). Rule 8 "does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Id. at 234.
In resolving a motion to dismiss, the court may consider "matters of public record, orders, exhibits attached to the complaint, and items appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1385 n. 2 (3d Cir.1994).
Pennsylvania's Race Horse Development and Gaming Act, 4 Pa.C.S. §§ 1101 et seq. (the "Gaming Act"), authorized five stand-alone slot machine facilities in the Commonwealth, with two such facilities to be specifically located in Philadelphia. 4 Pa. C.S. § 1304(b). In December 2005, Keystone was one of five entities3 that submitted applications for the Philadelphia slot machine licenses. The PGCB held hearings related to the applications, (see Amend. Compl. ¶ 19), and received evidence comparing an applicant to its competitors, as authorized by 58 Pa.Code § 441a.7.(n). On December 20, 2006, after having considered the proposals, presentations, and evidence proffered by all applicants, the PGCB rendered its decision, and on February 1, 2007 it issued an Adjudication and Order (the "Adjudication") memorializing the reasons therefor.
In the Adjudication, the PGCB noted that while a Keystone affiliate, Trump Entertainment Resorts, owned several casinos in Atlantic City, "neither HSP nor [PEDP had] ties to any casino properties in Atlantic City, New Jersey." (Adjudication, Rec. Doc. 11-3 at p. 100). Such an affiliation was an important consideration for the PGCB in light of New Jersey's much lower tax rates on gaming revenues. (Adjudication, Doc. 11-3, pp. 99-100).4 To this end, the PGCB explained that "if a casino operator in Philadelphia also owned a casino in Atlantic City," there was the potential for (Adjudication, Rec. Doc. 11-3 at pp. 99-100).
While the PGCB purportedly considered a multitude of factors in rendering its decision, an affiliation with an Atlantic City casino was one such factor that was construed negatively against an applicant.5 (Id. 100). Specifically, the PGCB stated:
While the Board believes that each applicant desires to make a profit in Philadelphia if granted a license, the Board also is cognizant of its duty to license casinos in Philadelphia which are in the best interests of the Commonwealth and Philadelphia. The Board finds it credible that owners of casinos in both locations may attempt to use the Philadelphia property as a gambling-incubator to gain new customers who will then be lured to its Atlantic City properties where it can earn a much larger profit on every dollar gambled. Likewise, the Board finds applicants without Atlantic City connections are more strongly motivated to compete directly against the Atlantic City competition because they have no interest in diverting patrons to the casino which has a better tax structure for the casino. Additionally, evidence has been introduced that the Trump Entertainment properties in Atlantic City have undergone bankruptcy reorganizations in order to rebuild and revitalize them. The Board believes this further supports its decision to choose other applicants who do not have other facilities so close to Philadelphia which may lure patrons to Atlantic City to assist in the rebuilding and revitalization of properties there. Therefore, the Board finds that licensing casinos in Philadelphia which do not have common ownership with Atlantic City facilities are more likely to further the interests of the Commonwealth and the public which stands to benefit through increased revenues obtained by the Pennsylvania properties.
Id. 100-01. Ultimately, the PGCB voted unanimously to approve the license applications of PEDP.6 (Amend. Compl. ¶ 17). In doing so, the Board unanimously voted to deny the Category 2 license applications of Keystone, Riverwalk, and Pinnacle.
Despite the fact that § 1204 of the Gaming Act provided the right of direct appeal to the Pennsylvania Supreme Court, 4 Pa. C.S. § 1204, Keystone elected not to appeal the PGCB's licensing decision. Riverwalk, however, did lodge such an appeal, which was ultimately denied by the Pennsylvania Supreme Court on July 17, 2007. See Riverwalk Casino, LP v. Pennsylvania Gaming Control Bd., 592 Pa. 505, 926 A.2d 926 (2007).7
In lieu of exercising its right of appeal or intervening in Riverwalk's appeal, Keystone elected to challenge the PGCB's licensing decision by instituting the instant federal lawsuit on December 18, 2008.8 As aforestated, it...
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