Rosenthal v. State of Nev., Civ. No. LV 79-39 RDF.
| Decision Date | 06 May 1981 |
| Docket Number | Civ. No. LV 79-39 RDF. |
| Citation | 514 F. Supp. 907 |
| Parties | Frank ROSENTHAL, Plaintiff, v. The STATE OF NEVADA; Nevada Gaming Commission; State Gaming Control Board; Peter Echeverria, as a former member of the Nevada Gaming Commission; Harry Reid, as a member of the Nevada Gaming Commission; Frank Schreck, as a former member of the Nevada Gaming Commission; George C. Swarts, as a member of the Nevada Gaming Commission; Jack Walsh, as a member of the Nevada Gaming Commission; Clair Haycock, as a member of the Nevada Gaming Commission; Walter Cox, as a member of the Nevada Gaming Commission; Philip Hannifin, as a former member of the State Gaming Control Board; Roger Trounday, as a member of the State Gaming Control Board; Jack Stratton, as a member of the State Gaming Control Board; John Does I-C; and A&B Companies I-C, inclusive, Defendants. |
| Court | U.S. District Court — District of Nevada |
Oscar B. Goodman of Goodman, Oshins, Brown & Singer, Las Vegas, Nev., for plaintiff.
Richard Bryan, Atty. Gen., State of Nev., Carson City, Nev., for defendants.
A. J. Hicks, Sp. Deputy Atty. Gen., Reno, Nev., for defendants State of State Gaming Control Board, Peter Echeverria, Philip Hannifin, Jeff Silver, Roger Trounday and Jack Stratton.
Peter Echeverria, Sp. Deputy Atty. Gen., Reno, Nev., for defendants Nevada Gaming Commission, Harry Reid, Frank Schreck, George Swarts, Jack Walsh, Clair Haycock and Walter Cox.
Raymond D. Pike, Deputy Atty. Gen., Carson City, Nev., for all named defendants by Nikolas L. Mastrangelo, Deputy Atty. Gen., Gaming Division, Carson City, Nev.
The plaintiff, Frank Rosenthal, brought this suit on March 13, 1979, against the defendants State of Nevada, the Nevada Gaming Commission, certain members and former members of the Nevada Gaming Commission, the State Gaming Control Board, and certain members and former members of the State Gaming Control Board. The plaintiff alleges that the actions of the defendants deprived him of his rights under Article IV, § 2, and under the First, Fifth and Fourteenth Amendments of the United States Constitution. The plaintiff claims that this Court has jurisdiction under Title 28 U.S.C. § 1343(3) and under Title 42 U.S.C. § 1983.
In 1974, Frank Rosenthal was executive consultant to the Chairman of the Board of the Argent Corporation, a holding company, which owned three major hotel-casinos in Clark County. At this time, the plaintiff had been issued a "work permit" as a gaming employee pursuant to Nevada Revised Statute 463.335 (1973).1 In January of 1975, the plaintiff was required to apply for a gaming license as a "key employee" for the Argent Corporation. A "key employee" is one who, in the opinion of the Nevada Gaming Commission, "has the power to exercise a significant influence over the licensee's operation of a gaming establishment" and may be required to apply for a license. NRS 463.165(1) (1977). The plaintiff was denied a gaming license by the Nevada Gaming Commission in January of 1976. In effect at the time was Nevada Gaming Regulation 5.011(6) and NRS 463.595 (1975).2 When read together, they precluded any person who had been found unsuitable for licensing from being employed or connected with a licensed establishment in any capacity. This would include any job as a "gaming employee" under a valid work permit and not just a job as a "key employee" subject to licensing. The effect of this statute and regulation was to automatically revoke the plaintiff's work permit which he had validly obtained. In the case of State v. Rosenthal, 93 Nev. 36, 559 P.2d 830, at 836-37 (Nev.1977) (Rosenthal I), appeal dismissed, 434 U.S. 803, 98 S.Ct. 32, 54 L.Ed.2d 61 (1977), the Nevada Supreme Court upheld the denial of the license by the Nevada Gaming Commission finding that the plaintiff was accorded procedural due process in his hearing before the Commission, under Article 1, Section 8, of the Nevada Constitution, which provides in pertinent part, "No person shall .... be deprived of life, liberty, or property, without due process of law." Id. at 835. The Court further held that in applying for a license, the plaintiff had no interest which would be guaranteed federally protected constitutional rights. Id. at 836. However, the Court did hold that NGC Reg. 5.011(6) and NRS 463.595 (1975) were unconstitutional because they automatically deprived the plaintiff his work permit to work as a gaming employee without due process, i. e., without prior notice and an opportunity to be heard. The Court concluded that Frank Rosenthal could continue to hold a work permit as a gaming employee. Id. at 837.
In 1977, the Nevada Legislature passed certain statutes to specifically embody the concept of NGC Reg. 5.011(6) in that anyone found unsuitable for a gaming license was not to be employed by or have contractual relations with a licensed establishment, except as an entertainer. NRS 463.165 (1977); NRS 463.560 (1977).3
After the decision of Rosenthal I, the plaintiff became Food and Beverage Director and, later, Entertainment Director for the Stardust Hotel, which was owned by Karat, Inc., a subsidiary of the Argent Corporation. Believing that Rosenthal continued to significantly influence gaming, the Nevada Gaming Commission again directed that the plaintiff submit an application to be licensed as a key employee in June of 1978. The Gaming Control Board and the Gaming Commission, meeting in joint session, denied Rosenthal a license. Again, the effect of this decision under Nevada law was to automatically revoke the plaintiff's work permit and to effectively deny the plaintiff the right to be employed by a licensed establishment. NRS 463.165 (1977); NRS 463.560 (1977).
The plaintiff then sought relief in Nevada courts before bringing this action in this court. The plaintiff filed a complaint on December 27, 1978, in the Eighth Judicial District Court of Nevada and sought declaratory relief, injunctive relief, and judicial review of the decision of the Nevada Gaming Commission. The plaintiff alleged that the hearings before the State Gaming Control Board and the Nevada Gaming Commission were a sham and conducted in a manner to deprive him of his right to due process of law. Also, the plaintiff alleged that the provisions of NRS 463.165 (1977) and NRS 463.560 (1977) became operative and thereby automatically deprived him of his work permit without a due process hearing. No claim was specifically made under Title 42 U.S.C. § 1983 in the state court action.4 Also, no members or former members of the Nevada Gaming Commission or the State Gaming Control Board were parties in the state court suit and no damages were sought in that suit. The Eighth Judicial District Court of Nevada refused to grant any relief. Rosenthal v. Nevada, No. A185069 (Dist.Ct.Nev. Feb. 16, 1979). The district court held that the plaintiff was not denied due process in the hearings before the State Gaming Control Board and the Nevada Gaming Commission and that the plaintiff's work permit had expired. Id.
The plaintiff then brought this action pursuant to Title 42 U.S.C. § 1983, seeking general damages, punitive damages and injunctive relief. Here, again, the plaintiff alleges that he was deprived of his work permit without due process of law pursuant to NRS 463.165 and that this denies him his rights under Article IV, § 2, and under the Fifth and Fourteenth Amendments to the United States Constitution. Additional facts were alleged that the plaintiff had also been precluded from broadcasting his television show from the grounds of the Stardust Hotel pursuant to the decision of the Nevada Gaming Commission and the provisions of NRS 463.165 (1977). The plaintiff alleges that this violates his First Amendment rights to free speech. Also, certain members and former members of the Nevada Gaming Commission and the State Gaming Control Board were added as defendants in this action.
The plaintiff subsequently appealed the decision of the Eighth Judicial District Court to the Nevada Supreme Court. On the appeal, the Nevada Supreme Court upheld the district court in that the plaintiff was a "key employee" subject to the licensing requirement. Rosenthal v. Nevada, Nev., 620 P.2d 874, 876 (Nev.1980) (Rosenthal II). However, the Nevada Supreme Court rejected the finding that the plaintiff's work permit had expired. The Court held that NRS 463.165 (1977) and NRS 463.560 (1977), which automatically revoked the plaintiff's work permit, were also inform for want of procedural due process. The Court concluded that the plaintiff could continue to enjoy a work permit as a gaming employee. Id.
The defendants originally brought a motion to dismiss on April 5, 1979. After some delay, this Court ordered that additional briefs be filed with the Court in light of the decision of the Nevada Supreme Court in Rosenthal II. The plaintiff argues that he is entitled to pursue his damage claims against the various defendants because the Nevada Supreme Court found that his constitutional rights had been violated when his work card was automatically terminated under Nevada law. The plaintiff now concedes, and this Court holds, that the plaintiff's claims for equitable relief have been rendered moot by time and the decision in Rosenthal II, supra. Cf. Hall v. Beals, 396 U.S. 45, 90 S.Ct. 200, 24 L.Ed.2d 214 (1969); Friends of Earth, Inc. v. Bergland, 576 F.2d 1377 (9th Cir. 1978). The defendants reassert their motion to dismiss pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, for failure to state a claim upon which relief can be granted. The defendants argue that plaintiff's damage claims are precluded by the doctrine of res judicata and recognized governmental immunities under § 1983.
Where a federal constitutional claim is based on the same asserted wrong as was the subject of a state action, res judicata will bar the federal...
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