Papas v. Michigan Gaming Control Bd., Docket No. 243989.

• Decision Date: 18 September 2003
• Docket Number: Docket No. 243989.
• Citation: 257 Mich. App. 647,669 N.W.2d 326
• Parties: Dimitrios PAPAS, Ted Gatzaros, Viola Papas and Maria Gatzaros, Plaintiffs-Appellees, v. MICHIGAN GAMING CONTROL BOARD, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

669 N.W.2d 326

257 Mich. App. 647

Dimitrios PAPAS, Ted Gatzaros, Viola Papas and Maria Gatzaros, Plaintiffs-Appellees, v. MICHIGAN GAMING CONTROL BOARD, Defendant-Appellant.

Docket No. 243989.

Court of Appeals of Michigan.

Submitted May 13, 2003, at Detroit.

Decided August 5, 2003, at 9:00 a.m.

Released for Publication September 18, 2003.

Kienbaum Opperwall Hardy & Pelton, P.L.C. (by Thomas G. Kienbaum, Theodore R. Opperwall, and Jay C. Boger) (Patricia J. Boyle, of counsel), Birmingham, for the plaintiff's.

Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and Eric J. Eggan and John M. Cahill, Assistant Attorneys General, for the defendant.

Before: COOPER, P.J., and SAWYER and ZAHRA, JJ.

ZAHRA, J.

Defendant, the Michigan Gaming Control Board, a state agency having regulatory authority over the non-Indian casinos located in the city of Detroit, appeals by leave granted from an order of the circuit court denying defendant's motion for summary disposition and granting plaintiffs' motion for partial summary disposition. Plaintiffs are owners of several Detroit restaurants, a conference center, and a hotel. Plaintiffs' businesses provided casino patrons with food or hotel accommodations in exchange for casino-issued coupons. Plaintiffs' businesses would present the coupons to the casinos for payment for the goods or services provided to the casinos' patrons. The issue presented in this case is whether defendant has exclusive jurisdiction over matters involving the licensing and regulation of the gaming industry, including the determination whether plaintiffs are casino "suppliers" subject to regulation and licensing under the Michigan Gaming Control and Revenue Act, M.C.L. § 432.201 et seq. We conclude that defendant does have exclusive jurisdiction over the matters involved in this case. We reverse.

I. Facts and Procedure

Plaintiffs were at one time part-owners of the entity that owns and operates the Greektown Casino. As prospective casino owners, plaintiffs applied for licensing as required by the act. When doubt arose regarding whether plaintiffs' application was going to be approved, plaintiffs arranged to sell their interest in the casino to their partner, the Sault Ste. Marie Tribe of Chippewa Indians. Plaintiffs retain ownership, however, of several businesses near the Greektown Casino, including Pegasus Taverna, Fishbone's Rhythm Kitchen Cafe, the International Business and Conference Center, and the Atheneum Hotel. The act requires that any person or business providing goods or services to a casino must be licensed as a casino supplier. M.C.L. § 432.207a. However, the act also provides some exemptions from the supplier licensing requirements. One of the exemptions is the "field of commerce" exemption adopted by the board in Resolution and Order No. 2000-02, adopted June 13, 2000. In that resolution, the board acknowledged that it is a common marketing practice of casinos to reward their patrons with complimentary amenities such as lodging and other related hospitality and entertainment services in order to attract business. However, because the casinos are initially housed in temporary facilities that do not permit them to provide such amenities, casinos are forced to rely on outside vendors. Resolution 2000-02 indicates that the board has the discretion to exempt these vendors from the ordinary supplier licensing requirements until permanent casino facilities are completed. Among the vendors listed as eligible for the exemption are "theatres, ballrooms, halls, arenas, parks, stadia, golf courses, and other entertainment, recreational and sports facilities located in the State of Michigan." In addition, the resolution indicates that the board may exempt the following:

Hotels, motels or other lodging facilities, located within the State of Michigan, which regularly offer rooms to the general public to the extent that they provide lodging and other hospitality facilities and services to casino patrons that are directly purchased or reimbursed by a licensed casino. This exemption includes all goods and services ordinarily available to the provider's customers, including, but not limited to, food and beverage services, ... [and] convention and banquet services.

In order to qualify for the field of commerce exemption, a business is required to file a written request and related disclosure forms with the board. The board reserves the right to evaluate each request and to deny a request whenever it determines that denial is necessary to protect the public interest or accomplish the purposes of the act.

In August 2000, plaintiff's submitted field of commerce exemption requests for each of their four businesses. Plaintiffs represented that they were supplying goods and services to casinos and provided copies of agreements between themselves and Greektown Casino. On February 7, 2001, the board denied the exemption requests on the ground that plaintiff's failed to pass their background checks when they applied for a casino license, and this fact could require the board to find them unsuitable for licensure. Because plaintiff's represented that they were supplying goods and services to a casino on a regular basis, the board directed them to apply for supplier licenses within thirty days.

Plaintiffs did not appeal this decision, nor did they submit the required supplier license applications within thirty days. As a result, their vendor identification numbers were inactivated and the casino operators were prohibited from doing business with them. A March 9, 2001, letter advised plaintiff's that their businesses could be placed back on the active vendor list if they submitted completed applications for supplier licenses. Plaintiffs never did so. Instead, two of plaintiffs' businesses, the Atheneum Hotel and International Market Place, contracted with Detroit Hospitality, L.L.C., a licensed casino supplier, to provide hospitality, entertainment, and other complimentary services to Detroit casinos.

On July 25, 2001, the Atheneum submitted another field of commerce exemption request, which included a copy of the agreement entered into between the Atheneum and Detroit Hospitality. In its request, the Atheneum explained that it did not have a contract with any Detroit casino and that it did not consider itself to be a casino supplier under the terms of the act. The Atheneum further stated that it had a contract with Detroit Hospitality, under which it provided hotel, lodging, banquet, food, beverage, conference facilities, and other related goods and services to customers referred to it by Detroit Hospitality, and that it had no control over whether those customers were casino patrons.

Plaintiffs, through the Atheneum and International Market Place, performed under their contracts with Detroit Hospitality until July 31, 2001, at which time Detroit Hospitality notified plaintiff's that the contracts were being terminated on the basis of a directive from defendant. On August 2, 2001, the Atheneum and International Market Place sent letters to defendant, which included a "Vendor Notification and Disclosure Form." Each of the Vendor Notification and Disclosure Forms indicated that the form must be completed by any vendor providing nongaming related goods or services for a casino or casino enterprise. The forms noted that they should not be sent to defendant, but that the information must be submitted to the casino or casino enterprise for processing, and that the casino or casino enterprise was responsible for forwarding the requested information to defendant. Although neither form identified which of the casino or casino enterprises were to be provided services, each form included Greektown; Detroit Entertainment, L.L.C.; and MGM Grand Detroit, L.L.C., and questioned whether the vendor had a direct contract with the casino or casino enterprise. In the forms, both the Atheneum and International Market Place indicated that there was not a direct contract with either a casino or a casino enterprise.

On September 5, 2001, defendant sent a letter to International Market Place acknowledging that defendant received the submission of a Vendor Notification & Disclosure Form for International Market Place. The letter also indicated that the "request" would not be processed further because Detroit Hospitality had terminated its agreement with International Market Place on August 1, 2001.¹

On January 10, 2002, defendant sent the Atheneum a letter, which included a copy of a January 9, 2002, order denying the Atheneum's request for an exemption from the supplier licensing requirements. Defendant found that Detroit Hospitality entered into the agreement with the Atheneum in order to acquire hotel, lodging, and related hospitality services from the Atheneum for the complimentary use and benefit of Greektown Casino patrons, and that such services were reimbursed and paid for by the casino through Detroit Hospitality. Defendant determined that the Atheneum was a supplier of hotel, lodging, and related hospitality services to Greektown Casino and that the Atheneum was subject to the supplier licensing requirements. Defendant further determined that licensing was deemed necessary because the individuals having an ownership interest and the officers and directors of the Atheneum were previously investigated and found to have several "serious apparent deficiencies" that could require defendant to find them unsuitable for licensure, and that the individuals withdrew their application for a casino license before defendant made a final determination regarding the "alleged apparent deficiencies" and lack of suitability for a license. Defendant also found that the Atheneum offered no evidence that the "alleged apparent deficiencies" were corrected.

Thereafter, plaintiffs initiated a lawsuit in circuit court entitled "Complaint for Declaratory Judgment, Injunctive Relief, Mandamus and/or Superintending...