Riverwalk Casino v. Pa Gaming Control Bd.

• Decision Date: 17 July 2007
• Docket Number: No. 27 MM 2007.,27 MM 2007.
• Citation: 926 A.2d 926
• Parties: RIVERWALK CASINO, L.P., Petitioner, v. PENNSYLVANIA GAMING CONTROL BOARD, Respondent. Philadelphia Entertainment and Development Partners, L.P., Intervenor. HSP Gaming, L.P., Intervenor.
• Court: Pennsylvania Supreme Court

926 A.2d 926

RIVERWALK CASINO, L.P., Petitioner, v. PENNSYLVANIA GAMING CONTROL BOARD, Respondent Philadelphia Entertainment and Development Partners, L.P., Intervenor HSP Gaming, L.P., Intervenor.

No. 27 MM 2007.

Supreme Court of Pennsylvania.

Argued May 15, 2007.

Decided July 17, 2007.

Arthur Michael Brown, Esq., Levine, Staller, Sklar, Chan, Brown & Donnelly, P.A., Atlantic City, New Jersey; Jennifer M. McHugh, Esq., Stephen A. Cozen, Esq., F. Warren Jacoby, Esq., F. Warren Jacoby, Esq., Cozen O'Connor, Philadelphia; William H. Lamb, Esq., Scot Russel Withers, Esq., Lamb McErlane, P.C., West Chester; Richard A. Sprague, Esq., Charles J. Hardy, Esq., Thomas A. Sprague, Esq., Sprague & Sprague, Philadelphia, for HSP Gaming L.P.

Michael Kenneth Coran, Esq., Glenn Aaron Weiner, Esq., Joseph Paul Bradica, Esq., Klehr, Harrison, Harvey, Branzburg & Ellers, L.L.P., Philadelphia, for Philadelphia Entertainment and Development Partners, L.P.

Gregory P. Miller, Esq., Miller, Alfano & Raspanti, P.C., Philadelphia; John M.

Donnelly, pro hac vice Levine, Staller, Sklar, Chan, Brown & Donnelly, P.A., Atlantic City, New Jersey; John Thomas Ward, pro hac vice, William H. Murphy, Jr., pro hac vice, Andrew J. Toland, III, pro hac vice, William H. Murphy & Associates, P.A., for Riverwalk Casino, L.P.

Richard Douglas Sherman, Esq., Francis T. Donaghue, Esq., PA Gaming Control Board; Linda S. Lloyd, Esq.; Lawrence T. Hoyle, Jr., Esq., Hoyle, Fickler Herschel & Mathes, L.L.P., Harrisburg, for Pennsylvania Gaming Control Board.

BEFORE: CAPPY, C.J., and CASTILLE, EAKIN, BAER, BALDWIN and FITZGERALD, JJ.

OPINION

Chief Justice CAPPY.

This is the appeal of Riverwalk Casino, LP from the Order and Adjudication dated February 1, 2007 of the Pennsylvania Gaming Control Board. The Board's Order and Adjudication approved the applications for Category 2 Slot Machine licenses in the City of Philadelphia of HSP Gaming, LP and Philadelphia Entertainment & Development Partners, LP (PEDP). The Board denied the applications for licensure submitted by Keystone Redevelopment Partners, PNK Pinnacle Entertainment, and Riverwalk Casino, LP.¹

This Court has exclusive jurisdiction over the appeal pursuant to Section 1204 of the Pennsylvania Race Horse Development and Gaming Act, 4 Pa.C.S. §§ 1101-1904. Section 1204 provides:

The Supreme Court of Pennsylvania shall be vested with exclusive appellate jurisdiction to consider appeals of any final order, determination or decision of the board involving the approval, issuance, denial or conditioning of a slot machine license. Notwithstanding the provisions of 2 Pa.C.S. Ch. 7 Subch. A (relating to judicial review of Commonwealth agency action) and 42 Pa.C.S. § 763 (relating to direct appeals from government agencies), the Supreme Court shall affirm all final orders, determinations or decisions of the board involving the approval, issuance, denial or conditioning of a slot machine license unless it shall find that the board committed an error of law or that the order, determination or decision of the board was arbitrary and there was capricious disregard of the evidence.

4 Pa.C.S. § 1204.

We have defined a "capricious disregard" of the evidence to exist "when there is a willful and deliberate disregard of competent testimony and relevant evidence which one of ordinary intelligence could not possibly have avoided in reaching a result." Arena v. Packaging Sys. Corp., 510 Pa. 34, 507 A.2d 18, 20 (1986); see also Wintermyer v. WCAB (Marlowe), 571 Pa. 189, 812 A.2d 478 (2002). Furthermore, under the capricious disregard standard, the agency's determination is given great deference, and relief will be rarely warranted. Wintermyer, 812 A.2d at 484.² Under this standard, an appellate tribunal is not to substitute its judgment for that of the lower tribunal and the standard "is not to be applied in such a manner as would intrude upon the agency's fact-finding role and discretionary decision-making authority." Id. at 487-88.

The Gaming Act authorized the Board to issue two Category 2 licenses in the City of Philadelphia, a city of the first class. 4 Pa.C.S. § 1304(b). Three categories of slot machines are authorized under the Act. 4 Pa.C.S. § 1301. A Category 1 license authorizes the placement and operation of slot machines at existing horse racing tracks; a Category 2 license authorizes the placement and operation of slot machines in stand-alone facilities; and a Category 3 license authorizes the placement and operation of slot machines in resort hotels. 4 Pa.C.S. §§ 1302-1305. Within Category 2 licenses, the Board is authorized to award two facilities in a city of the first class, one facility in a city of the second class, and the remaining two facilities in a revenue — or tourism-enhanced location. 4 Pa.C.S. § 1304(a)(1).

On December 28, 2005, Riverwalk submitted an application to the Board for a Category 2 Slot Machine License pursuant to the Gaming Act. Applications for licenses were submitted by four other entities— Keystone Redevelopment Partners, PNK Pinnacle Entertainment, HSP Gaming LP, and Philadelphia Entertainment and Development Partners.

The license applications were reviewed and investigated by the Board, through its Bureau of Licensing, Bureau of Investigation and Enforcement, and Bureau of Corporate Compliance and Internal Controls. The Board conducted public input hearings in Philadelphia on the Category 2 license applications on April 10, 11, and 12, 2006. The applicants made presentations during the hearings, and 118 individuals spoke at the hearings to voice their opinions regarding gaming and the proposed projects. During the period for public comment, the Board received 302 written comments from the public regarding the proposals.

On November 13, 14, and 15, 2006, the Board conducted final licensing hearings for the Philadelphia applicants. The applicants were permitted to present the testimony of witnesses during the hearing and to submit documentary and demonstrative evidence. Following the hearings, the applicants were provided with an opportunity to submit a written brief to the Board by December 8, 2006, and to present oral argument on December 19, 2006.

On December 20, 2006, the Board held a public meeting to vote on the applications for the Category 2 Slot Machine Licenses that had been submitted. The Board voted to deny the license applications of Riverwalk, Keystone Redevelopment Partners, and PNK Pinnacle Entertainment.³ The license applications of HSP Gaming and PEDP were approved.⁴

On February 1, 2007, the Board issued its Order and Adjudication. The Board set forth detailed findings of fact, conclusions of law, and discussion of the proposals submitted by the applicants. The Board summarized the reasons for approving the license applications of HSP and PEDP as follows:

After reviewing the entire evidentiary record for each of the five (5) applicants, the Board has determined that HSP Sugarhouse and Philadelphia Entertainment and Development Partners, Foxwoods, represent the best fit following a complete review of all applicants for Category 2 licensure in the City of Philadelphia. In reaching this conclusion, the Board has examined and weighed the various factors cited above. However, there were several factors that, in the Board's opinion, made HSP and Philadelphia Entertainment's projects stand out above the remaining applicants.

First, both HSP and Philadelphia Entertainment are located on the riverfront and have excellent design plans for their facilities. Neither have riparian rights issues because if they are not successful in securing riparian rights, they both have alternate plans to build quality facilities without the need for these rights. The synergy provided by the riverfront locations and the proximity to Center City and the downtown area were positive factors.

Second, the location of each facility, as it relates to the other, creates the most advantageous locations. Both locations are largely separated from primary residential areas by Interstate 95 and it is anticipated that a significant amount of the patrons coming to the casinos will use Interstate 95 to access the sites. In addition, siting one location in the North Delaware Avenue corridor and the other location farther south and below the Ben Franklin Bridge, will spread out the patron traffic and avoid the traffic congestion that having two casino sites located close together would invariable [sic] bring to Philadelphia.

Additionally, HSP has the least community opposition voiced to the Board concerning its proposed project, HSP plans to have an interim facility that will be in operation within twelve (12) months of licensure, its partners have experience in the gaming industry, and HSP has made a significant commitment to the community. Philadelphia Entertainment has a strong partner in Foxwoods, an investment grade business with years of experience in the gaming industry, in [sic] has diversity in its ownership and at least forty-two percent (42%) of the profits will flow to irrevocable trusts to be used for charitable purposes in the Philadelphia area. Finally, neither HSP nor Philadelphia Entertainment has ties to any casino properties in Atlantic City, New Jersey which could provide competition to lure customers to another site.

While all the factors set forth in the Act were examined and considered by the Board when reaching its decision to award HSP and Philadelphia Entertainment the available slot machine licenses, these were factors which made these two projects stand out in the crowd.

Adjudication of the Pennsylvania Gaming Control Board in the Matters of the Applications for Category 2 Slot Machine Licenses in the City of the First Class, Philadelphia at 80-82 (footnote deleted).

On March 2, 2007, Riverwalk filed a Petition for Review, challenging the Board's Order and Adjudication. HSP Gaming and PEDP subsequently filed notices of intervention pursuant to ...