Gattineri v. Wynn MA, LLC ( 2023 )

United States Court of Appeals
For the First Circuit
No. 22-1117
ANTHONY GATTINERI,
Plaintiff, Appellant,
v.
WYNN MA, LLC; WYNN RESORTS LIMITED,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor, IV, U.S. District Judge]
Before
Barron, Chief Judge,
Lynch and Gelpí, Circuit Judges.
Stephen F. Gordon, with whom Todd B. Gordon, Robert A.
DiSorbo, Kevin A. Robinson, and The Gordon Law Firm LLP were on
brief, for appellant.
Samuel M. Starr, with whom Caitlin A. Hill and Mintz, Levin,
Cohn, Ferris, Glovsky & Popeo, P.C. were on brief, for appellees.
March 22, 2023
GELPÍ, Circuit Judge. The appeal before us asks that we
opine on a topic that raises important questions of Massachusetts
state law and public policy: the regulation of gambling licenses
in the Commonwealth. The story begins with an option contract for
the purchase of land for the construction of the Encore Boston
Harbor resort and casino in Everett, Massachusetts (owned by
Wynn MA, LLC, which, in turn, is wholly owned by Wynn Resorts,
Limited). The contract, between Encore and FBT Realty, LLC
("FBT"), of which Appellant Anthony Gattineri ("Gattineri") is a
46.69% owner, gave Encore the option to purchase the land from FBT
for $75 million should the Massachusetts Gaming Commission
("Commission") grant Encore a gaming license. After some back and
forth, the Commission ultimately conditioned the grant of the
license on a $35 million purchase price for the sale of the land
(a $40 million reduction from the original agreed-upon amount) and
signed certification by each member of FBT that they were the sole
owners of the company (after concerns were raised that someone
with a criminal background also had an ownership interest in FBT).
All FBT members signed the required certification, except
Gattineri, who for months refused to sign. In June 2014, however,
a representative for Wynn MA, LLC and Wynn Resorts, Limited
(together, "Wynn Defendants") allegedly presented him an offer:
Wynn Defendants would "make him whole" if he signed the
certification. Gattineri ultimately accepted the offer (in an
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alleged contract we term the "San Diego Agreement") and executed
the required certification, and Wynn Defendants obtained the
license; but, according to Gattineri, he was never "made whole."
Gattineri consequently sued Wynn Defendants in the
U.S. District Court for the District of Massachusetts, alleging
(1) breach of contract, (2) common law fraud, and (3) unfair
and/or deceptive trade practices in violation of state law. Wynn
Defendants sought summary judgment, which the district court
granted on all counts, finding, among other things, no valid or
enforceable contract. Gattineri appeals, raising a number of
alleged errors. We reject flatly two arguments of error he makes.
As to his claim of improper ex parte communication, he has failed
to show any prejudice stemming from the communications between the
district court’s clerk and the defendants. As to his claim that
the doctrine of in pari delicto defeats Wynn Defendants' arguments
based on illegality, we reject the argument. We do find that some
of the alternative grounds on which the district court granted
summary judgment to Wynn Defendants do not justify entry of summary
judgment because they implicate genuine disputes as to material
facts. As to the core argument by Wynn Defendants (which affects
all claims) that the San Diego Agreement is unenforceable as
contrary to state law and/or as a violation of public policy, we
conclude those questions are best certified to the Massachusetts
Supreme Judicial Court ("SJC").
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I. Background
The civil appeal before us involves a dispute arising
out of the sale of a tract of land in Everett and Boston (the
"Parcel") for the construction of the Encore Boston Harbor. Before
the resort and casino was built, the Parcel was owned by FBT, a
limited liability company owned by Paul Lohnes, The DeNunzio
Group, LLC (owned by Dustin DeNunzio, Manager of FBT), and
Appellant Gattineri.
We rehearse the facts, which are undisputed, unless
otherwise noted, as the district court found them and in the light
most favorable to the non-moving party, Gattineri. Thompson v.
Gold Medal Bakery, Inc., 989 F.3d 135, 138 (1st Cir. 2021).
A. Facts
1. Parties and Relevant Non-Parties
We begin by outlining the players in this suit. Appellee
Wynn MA, LLC is a Nevada limited liability company -- wholly owned
by its sole member, Appellee Wynn Resorts, Limited -- with a
principal place of business in Nevada. Wynn Resorts, Limited is
a publicly traded Nevada corporation also with a principal place
of business in Nevada. Wynn MA, LLC owns the Encore Boston Harbor.
In January 2013, Encore filed for a Region A Category 1 gaming
license to operate a resort in Massachusetts with the Commission,
as required by state law.
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Robert DeSalvio joined Wynn Resorts Development, LLC as
Senior Vice President of Development in March 2014.1 He reported
to Matthew Maddox, Chief Financial Officer, and Kim Sinatra, Senior
Vice President and General Counsel, both at Wynn Resorts, Limited.
2. FBT Membership Concerns
During the licensing process, the Commission became
troubled by FBT's membership makeup at the time of the Option
Agreement, discussed infra. According to FBT, FBT was owned only
by Gattineri, who held a 46.69% ownership interest; DeNunzio; and
Lohnes. However, the Commission expressed concerns that Charles
Lightbody, a convicted felon and associate of La Cosa Nostra, might
have had an ownership interest in FBT.
The Investigations and Enforcement Bureau ("IEB") of the
Commission, which conducts suitability investigations of all
applicants for gaming licenses, conducted such an investigation of
FBT and Wynn MA, LLC. On July 10, 2013, Massachusetts State Police
officers interviewed Gattineri about his membership, and on
August 1, 2013, Kevin Tourek, Compliance Officer at Wynn Resorts,
Limited, sent a letter to DeNunzio stating:
Certain regulatory concerns have been
expressed with respect to the ownership of
[FBT]. On January 17, 2013, you advised Kim
Sinatra in writing that the sole equity owners
of FBT were yourself, Paul Lohnes and Anthony
Gattineri. Can you please confirm any other
1 DeSalvio became Encore's President in March 2018, years
after the alleged San Diego Agreement took place.
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direct or indirect equity participants since
FBT took title to the property, indicating the
period of ownership of each person? We would
appreciate your response on or before August
10, 2013.
A few days later, DeNunzio replied:
I write in response to your letter dated
August 1, 2013. On October 9, 2009, [FBT] was
organized by the filing of a Certificate of
Organization with the Massachusetts Secretary
of State. On October 15, 2009, FBT recorded
the deed to the Everett property. The direct
or indirect ownership of FBT since FBT took
title is as follows: The owners of FBT in
2009 and 2010 were Paul Lohnes, Anthony
Gattineri, Gary DeCicco and Charles Lightbody.
In 2011, The DeNunzio Group, LLC became an
additional owner of FBT. Dustin DeNunzio is
the 100% owner of The DeNunzio Group, LLC.
Gary DeCicco agreed to relinquish the extent
of his ownership interest in FBT in early
2012. Prior to the execution of the [O]ption
[A]greement with Wynn on December 19, 2012,
Charles Lightbody also agreed to transfer all
of his ownership interest in FBT to Anthony
Gattineri. Since before December 19, 2012,
and through the present, the sole equity
owners (direct or indirect) of FBT have been
Paul Lohnes, Anthony Gattineri and The
DeNunzio Group, LLC.
On September 5, 2013, Gattineri was served with a subpoena for
testimony and records relating to the interest in FBT between him
and Lightbody, and on October 15, 2013, Gattineri asserted his
Fifth Amendment rights when the IEB attempted to interview him.
Gattineri states that he obtained Lightbody's 12.05% membership
interest in FBT via a Memorandum of Transfer and Promissory Note
for $1.7 million.
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On December 6, 2013, the IEB issued its Suitability
Report, which set forth "the findings of fact relative to [the
suitability] investigation" and included "concerns regarding the
sellers of the property for the proposed casino site."
3. The Parcel
The Parcel at issue was the subject of an Option
Agreement signed by Encore, represented by Maddox, and FBT on
December 19, 2012. Through this agreement, Encore received the
option to purchase the Parcel from FBT for $75 million. FBT was
required to cooperate in the casino-licensing process: "Seller
and its Affiliates shall, at their sole cost and expense,
reasonably cooperate with Purchaser with respect to any
information it reasonably requires to complete the Casino
Application and respond to any such inquiries throughout the
licensing process." "Affiliate" was defined as "any Person, any
other Person which, directly or indirectly, Controls, is
Controlled by, or is under common Control with, such original
Person." The Option Agreement further provided:
Seller represents and warrants to Purchaser
that Seller and, to the best of Seller's
knowledge, all Persons associated with Seller
are willing to file all necessary applications
to obtain whatever Approvals from the Gaming
Regulatory Agencies may be required of such
Persons in connection with this Agreement. To
the best of Seller's knowledge, neither Seller
nor any Person associated with Seller has ever
engaged in any conduct or practices which any
of the foregoing Persons should reasonably
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believe would cause such Person to be denied
any such Approvals.
"Approvals" was defined as:
[A]ll approvals, consents, licenses, permits,
authorizations, orders, franchises,
accreditations, certificates, variances,
declarations, concessions, entitlements,
waivers, exemptions waivers and similar items,
including, without limitation, any license or
approval under M.G.L. Chapter 91, a
determination under the Massachusetts
Environmental Policy Act ("MEPA"), or an Army
Corp of Engineer's Permit under the Federal
Clean Water Act.
Because the Parcel required environmental remediation at the time
that Encore and FBT entered into the agreement, the Option
Agreement also required FBT to complete environmental cleanup
activities, termed the "Seller's Environmental Obligations." As
outlined by the district court,
the Option Agreement required[:] (1) Seller to
diligently pursue, at the Seller's sole
expense, a "Permanent Solution to any Releases
of Oil and Hazardous Material at and From the
Property" as soon as possible prior to
closing; (2) Seller to reimburse Purchaser for
reasonable out-of-pocket costs in the event of
the Seller's breach; and (3) both parties to
come to a mutually acceptable cost-sharing
agreement related to the sharing of "any
incremental costs" resulting from any releases
of oil and hazardous material from the
property.
Gattineri v. Wynn MA, LLC, No. CV 18-11229-FDS, 2022 WL 123892, at
*3 (D. Mass. Jan. 13, 2022).
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However, on November 11, 2013, because, according to
DeNunzio, the parties could not agree on a "mutually acceptable
Environmental Cost-Sharing Agreement," DeNunzio emailed Jacqui
Krum, Senior Vice President at Wynn MA, LLC, announcing the
"termination of the Option Agreement." It should be noted that
Gattineri was copied on several emails negotiating the
environmental clean-up obligations. On November 15, 2013,
Gattineri informed his personal attorney, Daniel Doherty, that he
"ha[d] no intention of cost sharing 30,000,000 [sic] for clean up
because they want to disturb waterside . . . . Wynn and us are not
anywhere near on the same page . . . ."
4. The Ninth Amendment to the Option Agreement
As negotiations regarding FBT's environmental
remediation obligations continued, on November 21, 2013, Paul
Feldman, FBT's attorney, emailed Wynn Defendants the following
offer: "Price is reduced to $31 million; Wynn takes over 100% of
environmental and receives an assignment of the Pharmacia Judgment
[a court judgment concerning environmental cleanup
responsibilities]." Per DeNunzio, FBT and Wynn MA, LLC did not
agree on FBT's environmental remediation obligations -- including
how the Pharmacia Judgment would be allocated -- in the original
Option Agreement and thus could not quantify the amount.
As a result of these discussions, on November 26, 2013,
Encore and FBT entered into a Ninth Amendment to the Option
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Agreement providing that (1) both parties agreed "to amend the
Agreement on the terms and conditions set forth below including,
without limitation, to reduce the Purchase Price" to $35 million;
(2) "[i]n all events [FBT's] monetary obligation for the Phase III
Scope of Work shall not exceed" $10 million, meaning that
$10 million of the purchase price would be set aside to pay for
the Seller's environmental obligations and certain reports
required by the Massachusetts Department of Environmental
Protection; and (3) should FBT complete any of the work outlined
in another section of the agreement prior to closing, the
$10 million should be reduced as such. Gattineri did not sign the
Ninth Agreement -- since he disagreed with the $40 million price
reduction -- but could not prevent FBT from entering into the
agreement.
5. The Commission's Approval of the Ninth Amendment
On December 5, 2013, Wynn MA, LLC submitted a petition
to the Commission requesting review of their "proposed resolution
to concerns raised by the [IEB] . . . about undisclosed interests
in FBT," stating in part:
5. Wynn commissioned an appraisal of the fair
market value of the Property with the
following assumptions: (i) that the Property
would not be used for gaming purposes and
(ii) that the environmental condition of the
Property would be suitable for general
commercial use. Based on the foregoing
assumptions, the appraisal valued the Property
at [$35 million].
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6. Wynn and FBT amended the Option Agreement
to reduce the Purchase Price to [$35 million],
the appraised value of the Property based upon
the relevant assumptions.
7. With respect to the required environmental
remediation, Wynn and FBT agree that
environmental remediation necessary to bring
the Property into regulatory compliance and
make the Property suitable for general
commercial purposes is approximately
[$10 million]. Therefore, pursuant to the
terms of the revised Option Agreement, if Wynn
exercises the option, Wynn will deposit [$10
million] of the Purchase Price into an escrow
account to be used for Phase III environmental
remediation. To the extent that the actual
amount of the Phase III remediation is less
than [$10 million], any remaining amounts will
be paid to FBT.
Consequently, the Commission held a public hearing to consider the
proposal and approved the new $35 million purchase price:
COMMISSIONER MCHUGH: All right. So then, I
move that the [C]ommission accept the
resolution proposed by Wynn Mass to the issues
that arose out of the land transaction about
which we've heard today, with the essential
ingredients that were outlined.
That is that the sale price be 35 -- no more
[than] $35 million with the $10 million
proviso for cleanup cost, net -- net of the
$10 million or whatever portion of that needs
to be spent on -- on cleanup costs, number
one.
Number two, that the three members of FBT,
LLC, who are nominally going to receive the
proceeds be required to sign a document saying
that they are the exclusive recipients of the
proceeds, and that they do that on a notarized
document under oath.
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Moreover, the Commission directed the IEB "to deliver its entire
file . . . to the U.S. attorney, the district attorney for Suffolk
County, and the attorney general." Gattineri learned of the
Commission's decision, including the condition that all three FBT
members sign a document under oath (the "Certificate") confirming
that they would be the exclusive recipients of the proceeds, on
December 13, 2016, from his personal attorneys, Jeffrey Doherty
and Bradford Bailey. While Lohnes and DeNunzio signed the
Certificate on December 23, 2013, stating the following, Gattineri
refused to do so:
The undersigned, being duly sworn, state and
reaffirm, that to the best of their knowledge,
the Representations of Seller set forth in
Section 5 of the Ninth Amendment to Option
Agreement dated November 26, 2013, by and
between FBT Everett Realty, LLC, a
Massachusetts limited liability company
("Seller") and Wynn MA, LLC, a Nevada limited
liability company ("Purchaser") as follows:
5. Representations of Seller. To induce
Purchaser to execute, deliver and perform its
obligations under the Agreement, Seller hereby
represents the following on and as of the
Amendment Effective Date and on and as of the
Closing Date:
Schedule 3 [listing Lohnes, Gattineri, and The
DeNunzio Group, LLC] is a true and accurate
list of (i) each person with a legal or
beneficial ownership interest direct or
indirect, in Seller (a "Beneficiary"),
(ii) the percentage interest in Seller of each
such Beneficiary, and (iii) the address of
each Beneficiary. Neither Seller nor any
Beneficiary has made, or has any agreement
whether oral or written to make any payments
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to any other person or entity from the
proceeds of the Agreement including, without
limitation, any of the option payments made
pursuant to Section 2.2 or any portion of the
Purchase Price.
6. Ongoing Negotiations with Gattineri
Gattineri remained steadfast in his refusal to sign the
Certificate unless he was compensated, which became an issue for
Wynn Defendants, who required his signature to obtain the gaming
license.
On January 24, 2014, Feldman, FBT's counsel, forwarded
an email from Doherty, Gattineri's personal counsel, to Wynn
representatives, outlining Gattineri's interests:
I have talked with Anthony. He still wants to
be bought out permanently at his share of
$75,000,000. The cram down to FMV has him
entrenched. He thinks FBT has been played. I
can't disagree with him. If the GC wants his
signature, then the deal goes back to
$75,000,000. They can't have it both ways.
Whether you agree with him or not, doesn't
matter. That is what he wants.
Among the recipients was Steve Tocco, one of Wynn Defendants'
outside consultants.
According to Gattineri, from March 2014 to June 2014,
Wynn Defendants, primarily via DeSalvio, their representative,
engaged him in a series of negotiations to obtain his signature.
On April 14, 2014, he met with DeSalvio and Tocco for the first
time. DeSalvio informed him that he had been tasked with obtaining
his signature. On April 15, 2014, he spoke to DeSalvio over the
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phone to discuss his share of the $40 million price reduction. On
April 18, 2014, Gattineri, DeSalvio, Tocco, and Doherty again met
and discussed the Certificate and Gattineri's share of the
$40 million price reduction. A month later, on May 17, 2014,
Gattineri spoke to DeSalvio over the phone about the Certificate.
A few weeks later, on June 6, 2014, Gattineri again met with
DeSalvio, Tocco, and Doherty to discuss the Certificate and
Gattineri's share of the $40 million price reduction. Gattineri
again refused to sign unless he was paid his percentage of the
price reduction.
7. The Alleged San Diego Agreement
Finally, on June 14, 2014, Gattineri met with DeSalvio
at the Westgate Hotel in San Diego, California, where they
allegedly verbally agreed to the San Diego Agreement. Gattineri
contends that after DeSalvio represented that he had authority to
enter into an agreement with him, they agreed to the following:
"If Anthony Gattineri signed the required [C]ertificate and Wynn
obtained the casino license for a casino on the FBT property, Wynn
would 'make Anthony Gattineri whole.'" Per Gattineri, "making him
whole" would involve Wynn paying him approximately $19 million:
Q. Did you and Mr. DeSalvio talk about a
particular amount?
A. I think I said it was around $19 million or
19 million. I didn't know the exact dollar.
Q. How did you make the calculation?
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A. Well, I took the $75 million, and I
multiplied it, obviously, by around 48
percent, and I came up with around 18 and a
half, $19 million.
Q. Did you have a specific amount that you and
Mr. DeSalvio had discussed?
A. Not to the penny.
Q. To the dollar?
A. I think what I said, it was around
$19 million or that comment.
According to Gattineri, the $19 million calculation was his 46.69%
portion of the $40 million reduction -- $18,676,000 -- not taking
into account FBT's environmental-cleanup obligation under the
original Option Agreement:
Q. And -- and how were you going to calculate
what that means to make you whole? What --
what were you going to do?
A. I would probably just do some simple math
and have someone with a better math background
than I am, I'm not very good with math. And
calculate the, whatever, the 46.7 at
$75 million and that's what I'm owed. That's
what I need to make me whole.
Q. What adjustment would you make for the
seller's obligation under the original option
agreement to perform environmental work?
A. I wouldn't be doing any of that. I think
-- I think Wynn -- I think Wynn knew the
environmental issue. I don't really know what
they were doing with Monsanto and the
agreements they were making. I have no idea.
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Q. You have no idea what obligations FBT
assumed under the original option agreement
for seller's environmental clean up?
A. I don't recall if, if we were responsible
for any of it or it was -- it seemed like it.
I have no idea how much the money was.
Gattineri further specified that this was not the only way to make
him "whole," rather:
Q. That was one of the ways to make you whole
would be that Wynn possibly would buy real
estate that you had an interest in?
A. Yeah, they have a real estate division
under some development company that they could
do it that way.
Q. So they could buy the property?
A. I don't know how they do. They know how to
do it they said.
Q. Is that one of the things that you and Mr.
DeSalvio talked about, the possibility that
after you got cleared of the investigation
that if you had other real estate in the
greater Boston area perhaps Wynn could become
a purchaser of that real estate; is that
something you guys talked about in San Diego?
A. We talked about it at different times. If
I was cleared and found 100[%] exonerated and
not guilty, you could definitely get something
done.
Q. And one of the ways to get something done
might have been that Wynn could buy some
property that you had for sale in the area?
A. Very possibly be that. That would be up to
them. They have all kinds of ways to do it.
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On June 14, 2014, a few hours after his meeting with DeSalvio,
Gattineri signed the Certificate. Four days later, Doherty sent
the Commission a copy of the Certificate. In September 2014, the
Commission granted Encore the gaming license, leading to the
purchase of the Parcel for $35 million. Gattineri did not receive
the $19 million that he claims he is owed.
8. Gattineri's Indictments
On October 1, 2014, Gattineri, DeNunzio, and Lightbody
were indicted in the U.S. District Court for the District of
Massachusetts for wire fraud and conspiracy to commit wire fraud;
more specifically, for conspiring to defraud Wynn Defendants and
the Commission by covering up Lightbody's financial interest in
the Parcel. Id. at *8. A couple of weeks later, Gattineri was
indicted in Massachusetts state court for impeding a gaming
investigation, conspiracy, and tampering with evidence. Id.
However, Gattineri was acquitted of all federal charges on
April 29, 2016, following a jury trial, and his state-court case
ended when the prosecution entered a nolle prosequi on
September 29, 2016. Id.
9. The Chapter 93A Demand Letter
In April 2018, Wynn Defendants received a demand letter
from Gattineri's attorneys alleging that they had violated
Massachusetts General Laws Chapter 93A by engaging in "unfair
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and/or deceptive trade practices" and had breached the following
contract with Gattineri:
[O]n June 14, 2014 . . . Wynn, through its
duly authorized representative Robert
DeSalvio, offered Anthony Gattineri to "make
him whole" on Anthony Gattineri's loss of
$18,676,000 (46.69% of $40 million) if
(a) Anthony Gattineri signed a
Certificate that Wynn needed to present to the
Massachusetts Gaming Commission . . . in
order for Wynn to obtain a casino license for
the FBT property in Everett . . . upon which
Wynn had an Option to Purchase; and
(b) So long as Anthony Gattineri had
committed no crime in connection with the sale
of the FBT Property to Wynn.
In June 2018, Gattineri filed this suit against Wynn Defendants
alleging (1) breach of contract; (2) common law fraud; and
(3) unfair and/or deceptive trade practices in violation of
Chapter 93A, section 11 of the Massachusetts General Laws, arguing
that Wynn Defendants "fail[ed] to make him whole" because they did
not pay him "his 46.69% share of the $40 million price reduction
windfall that [they] received" and seeking nearly $19 million in
damages.
10. The District Court's Communication with Wynn
Defendants
During the course of the suit, Wynn Defendants filed a
motion for summary judgment. In support thereof, they included
(1) a memorandum of law, (2) a statement of undisputed material
facts, and (3) a declaration containing forty exhibits. Included
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in these exhibits were Exhibit 16, containing excerpts of the
December 12, 2019 deposition of Daniel Doherty, and Exhibit 38,
containing excerpts of the October 23, 2020 deposition of
Gattineri. The statement of undisputed material facts included a
paragraph stating, "Mr. Gattineri did not agree to sign the
Certificate during the breakfast meeting in San Diego, but a few
hours after the San Diego Meeting, Mr. Gattineri notified Mr.
DeSalvio that he would sign the Certificate." The statement cited
page 73 of Volume II of Gattineri's deposition (Exhibit 38);
however, that specific page was left out of Exhibit 38. About a
month later, Gattineri filed an opposition to the motion for
summary judgment, a statement of material facts in dispute, and
thirty-three additional exhibits. While Gattineri's Exhibit 2
contained counter-designated excerpts from Gattineri Volume II, he
did not include page 73 from Gattineri Volume II as part of
Exhibit 2, nor did he dispute or object to Wynn Defendant's
citation to page 73 in his statement of material facts in dispute.
As such, no party filed full transcripts of Gattineri Volume II.
Shortly thereafter, Wynn Defendants filed their reply, and a
hearing on the motion for summary judgment was held on December 23,
2020.
Although not reflected in the district court docket, a
year later, the district court courtroom clerk emailed Wynn
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Defendants' counsel, without including Gattineri's counsel, the
following:
The law clerk for the judge was wondering if
they could have a copy of the entire
deposition from exhibit 16 [Daniel Doherty's
deposition] on D. 135. As well as Gattineri
Vol II transcript which I believe is
Exhibit 38. You can email it to me by pdf if
that works. Your help is much appreciated.
Consequently, Wynn Defendants' counsel replied with the requested
exhibits (Exhibit 16 and 38). At this point, Gattineri's counsel
was unaware of this communication.
In January 2022, the district court granted summary
judgment on all three counts in favor of Wynn Defendants. The
grant cited four pages of Gattineri Volume II (page 32, 73, 112,
and 113), all of which were cited in Wynn Defendants' statement of
undisputed material facts and were included in Exhibit 38, except
page 73. Id. at *7-8. The text accompanying the citation to
page 73 read: "Gattineri did not agree to sign the Certificate
during the meeting in San Diego. However, a few hours after the
meeting, he notified DeSalvio that he would sign the Certificate.
(Gattineri Dep. Tr. II:73; Hill Dec. Ex. 5, DeSalvio Dep. Tr. 76)."
Id. at *8.
Thereafter, Gattineri filed this appeal. While amassing
the contents of the joint appendix for appeal, Gattineri's counsel
learned of the email string between the courtroom clerk and Wynn
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Defendants' counsel and that the full transcripts of the two
depositions had been provided to the district court.
B. Procedural History
As aforementioned, the district court ultimately granted
summary judgment in favor of Wynn Defendants and concluded that
(1) the alleged San Diego Agreement constitutes an "unenforceable
illegal contract" under Chapter 23K of the Massachusetts
General Laws; (2) an essential term of the alleged San Diego
Agreement -- the amount Gattineri would be paid in exchange for
his signature -- was too indefinite and uncertain to form a valid
contract; (3) Gattineri's supposed reliance on Wynn Defendants'
representations was too unreasonable, foreclosing a claim for
common law fraud; and (4) Gattineri's Chapter 93A claim was barred
because it is "wholly derivative" of his breach-of-contract and
common-law fraud claims. Id. at *10, 13, 14. This timely appeal
followed.
II. Discussion
On appeal, Gattineri requests reversal based on an
alleged taint caused by the ex parte communication between the
district court courtroom clerk and Wynn Defendants' counsel and
contends that the district court erred in granting Wynn Defendants'
motion for summary judgment. We ultimately reject Gattineri's
improper ex parte communication claim and in pari delicto argument,
conclude that there are genuine disputes of material facts related
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to his contract and fraud claims, and finally determine that
whether Gattineri's claims can succeed hinges on whether the San
Diego Agreement is unenforceable as contrary to state law and/or
as a violation of public policy. Because the enforceability of
the agreement is dispositive of this case, we certify the questions
outlined below to the SJC.
A. Alleged Taint
We begin with the claim regarding the alleged taint.
Gattineri contends that the district court courtroom clerk's
communication with Wynn Defendants' counsel violated the
prohibition on ex parte communications in Canon 3(A)(4) of the
Code of Conduct for United States Judges and that the district
court's citation to page 73 provides adequate proof to warrant
reversal. Wynn Defendants counter that reversal is not required
because the communication was purely administrative and did not
provide any procedural, substantive, or tactical advantage to Wynn
Defendants, and because Gattineri has not pointed to any prejudice
suffered. We agree with Wynn Defendants that Gattineri has utterly
failed to show prejudice.
Canon 3(A)(4) prohibits ex parte communications except
for "scheduling, administrative, or emergency purposes" so long as
the "communication does not address substantive matters and the
judge reasonably believes that no party will gain a procedural,
substantive, or tactical advantage as a result of" said
- 22 -
communication. Code of Conduct for U.S. Judges, Canon 3(A)(4).
While Gattineri argues that the communication runs afoul of the
canon, it simply "makes no difference on . . . appeal whether the
district court violated the pertinent canon unless that violation
somehow could have tainted the judgment from which [Gattineri]
appeals," Law Offs. of David Efron v. Matthews & Fullmer L. Firm,
782 F.3d 46, 55 (1st Cir. 2015), and he has failed to make such a
showing here.
The information taken from these documents ("Gattineri
did not agree to sign the Certificate during the meeting in San
Diego. However, a few hours after the meeting, he notified
DeSalvio that he would sign the Certificate.") does not play a
significant role in the arguments now before us and was previously
included in Wynn Defendants' statement of undisputed facts, which
Gattineri at no point challenged. See L.R., D. Mass. 56.1
("Material facts of record set forth in the statement required to
be served by the moving party will be deemed for purposes of the
motion to be admitted by opposing parties unless controverted by
the statement required to be served by opposing parties.");
Schiffmann v. United States, 811 F.3d 519, 525 (1st Cir. 2016)
(noting non-movant's failure to challenge fact means fact is
"deemed admitted"). Neither party disputes that Gattineri
originally refused to sign the Certificate, nor that he later
agreed to do so. Even if we were to consider the full transcript
- 23 -
of both depositions substantively, Gattineri leaves us to guess as
to how they might have provided a "procedural, substantive, or
tactical advantage" to Wynn Defendants, especially where the
district court cited only to a single page. See, e.g., Law Offs.
of David Efron, 782 F.3d at 55 (rejecting a claim of prejudice
where the appellant "point[ed] to no . . . plausible [taint due to
an ex parte communication], and instead merely assert[ed] in a
conclusory form that such a supposed violation infringed on his
due process rights"). We refuse to do such guesswork.
Gattineri also argues that the district court must have
conducted and been influenced by an "apparently negative[] review"
of the emailed material because, in denying a motion by Wynn
Defendants to strike portions of an affidavit submitted by
Gattineri during summary judgment briefing, the court "expressed
a 'serious question concerning [Mr.] Gattineri's credibility.'"
(Alteration in original.) This argument takes the district court's
statement out of context. Wynn Defendants' motion to strike
invoked the "sham affidavit rule," seeking to strike portions of
Gattineri's affidavit that were allegedly contradicted by
statements Gattineri had made in his deposition. See, e.g.,
Escribano-Reyes v. Pro. HEPA Certificate Corp., 817 F.3d 380, 386
(1st Cir. 2016) (explaining "sham affidavit rule" prohibits a party
from creating conflict and resisting summary judgment with an
affidavit that contradicts its unambiguous responses to questions
- 24 -
asked during discovery). The "credibility" language Gattineri
quotes in his brief appeared in the district court's discussion of
a specific "discrepancy" between Gattineri's deposition testimony
and his summary judgment affidavit that, the court concluded,
"raise[d] a serious question concerning Gattineri's credibility"
but did not warrant striking the relevant part of the affidavit.
The court did not express a generalized concern about Gattineri's
credibility or reference the deposition materials introduced
through the ex parte communication. Nothing in the district
court's reasoning suggests that those materials played any role in
its decision on the motion, which was favorable to Gattineri.
Because Gattineri has failed to show prejudice, his
claim fails.
B. Breach of Contract
Having rejected Gattineri's improper ex parte
communication claim, we next turn to Gattineri's breach of contract
argument.
"We review a district court's grant of summary judgment
de novo." Triangle Cayman Asset Co. v. LG & AC, Corp., 52 F.4th
24, 32 (1st Cir. 2022). Summary judgment "is appropriate only if
'there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.'" Id. (quoting
Fed. R. Civ. P. 56(a)). A genuine dispute is one that "would
permit a rational factfinder to resolve the issue in favor of
- 25 -
either party," and a material fact is one that has the "potential
to affect the outcome of the suit under the applicable law."
Joseph v. Lincare, Inc., 989 F.3d 147, 157 (1st Cir. 2021) (first
quoting Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8
(1st Cir. 1990); and then quoting Cherkaoui v. City of Quincy, 877
F.3d 14, 23 (1st Cir. 2017)). We further "draw[] all reasonable
inferences in favor of the non-moving party," here, Gattineri.
Doe v. Trs. of Bos. Coll., 892 F.3d 67, 79 (1st Cir. 2018) (quoting
Roman Cath. Bishop of Springfield v. City of Springfield, 724 F.3d
78, 89 (1st Cir. 2013)).
In federal diversity cases, state law supplies the
substantive rules of decision, and the parties agree that
Massachusetts law controls. Erie R.R. Co. v. Tompkins, 304 U.S.
64, 78 (1938); see also Cochran v. Quest Software, Inc., 328 F.3d
1, 6 (1st Cir. 2003) ("It is settled in this circuit that when the
parties have reached a plausible agreement about what law governs,
a federal court sitting in diversity jurisdiction is free to forgo
independent inquiry and accept that agreement.").
In granting summary judgment in favor of Wynn
Defendants, the district court found that the alleged San Diego
Agreement is unenforceable because (1) it is an "illegal
contract," and, "even if it were not," (2) "the terms are not
sufficiently definite or certain to form the basis of a valid
contract." Gattineri, 2022 WL 123892, at *10. As to the legality
- 26 -
of the contract, it is unclear as a matter of law whether the
contract is indeed illegal because that matter rests on unresolved
issues of Massachusetts law. Since we cannot determine whether
the contract is enforceable, we certify these issues to the SJC.
See infra II.F. As to the validity of the contract, we agree with
Gattineri that one of the grounds on which the district court
relied in granting summary judgment -- Wynn Defendants' argument
that the contract was not sufficiently definite or certain -- was
legally insufficient because there are material facts in genuine
dispute.
To put forth a viable breach of contract claim under
Massachusetts law, Gattineri "must prove that a valid, binding
contract existed, the defendant breached the terms of the contract,
and [he] sustained damages as a result of the breach." Brooks v.
AIG SunAmerica Life Assurance Co., 480 F.3d 579, 586 (1st Cir.
2007). A valid contract exists where all the essential terms are
"definite and certain so that the intention of the parties may be
discovered, the nature and extent of their obligations
ascertained, and their rights determined." Cygan v. Megathlin,
96 N.E.2d 702, 703 (Mass. 1951) (emphasis added).
At the summary judgment stage and on appeal, Wynn
Defendants dispute whether a valid contract existed, arguing that
they are entitled to summary judgment on the contract claim because
"a material term in the alleged San Diego Agreement -- the amount
- 27 -
that would make [Gattineri] 'whole' -- is indefinite and
uncertain." Gattineri counters that prior to the San Diego
Agreement, Wynn Defendants were well aware that the amount that
would "make him whole" was his percentage (46.69%) of the price
reduction ($40,000,000), in essence, $18,676,000. The district
court disagreed with Gattineri, finding the alleged agreement
vague since "there is no evidence that [Gattineri] and DeSalvio
even discussed" what it would mean to "make him whole" and
"Gattineri . . . testified that he did not know how the price would
be adjusted to take into account the environmental-cleanup
obligation that FBT had under the original Option Agreement."
Gattineri, 2022 WL 123892, at *12. On appeal, Gattineri claims
that the record does not support such a finding. Viewing the
record in the light most favorable to Gattineri, as we do at the
summary judgment stage, we conclude that Gattineri has enough
evidence to persuade a reasonable jury that "making him whole" had
a definite meaning because (1) the only material term, the
approximately $18,676,000 that would make Gattineri "whole," was
definite and certain and (2) the parties negotiated with the
understanding that the environmental cleanup costs would not
factor into this calculation.
First, the record contains evidence via affidavit,
deposition, and email tethering "making Gattineri whole" to his
percentage of the price reduction such that a reasonable factfinder
- 28 -
could conclude that "making Gattineri whole" had a definite
meaning. For instance, in Gattineri's affidavit -- accompanying
his opposition to Wynn Defendants' summary judgment motion -- he
states that in the months preceding the alleged San Diego
Agreement, he met with DeSalvio multiple times and expressed his
"desire to be made whole on [his] percentage of the $40 [m]illion
price reduction." (Emphasis added.) On April 15, 2014, "DeSalvio
called [Gattineri] to discuss the Certificate and [his] share of
the $40 million price reduction." (Emphasis added.) Three days
later, another meeting was held where Gattineri "made it
clear . . . that [he] would not sign anything unless [he] was made
whole on [his] percentage of the price reduction." (Emphasis
added.) About a month later, Gattineri and DeSalvio again spoke
about the Certificate. A few weeks later, Gattineri again refused
to sign the Certificate "unless [he] was made whole on [his]
percentage of the $40 [m]illion price reduction." (Emphasis
added.) Further, Wynn Defendants were aware of this percentage
since FBT's counsel forwarded to Wynn representatives an email
from Gattineri's personal counsel to FBT's counsel stating that
Gattineri "still wants to be bought out permanently at his share
of $75,000,000." While DeSalvio, who had been in alleged
negotiations with Gattineri, was not copied on this email, Tocco,
who had accompanied DeSalvio to meetings with Gattineri on at least
three occasions, was copied. This supports a reasonable inference
- 29 -
that DeSalvio knew the amount that would "make Gattineri whole"
either because the parties discussed that figure at the meetings
that Tocco attended or because Tocco knew and told DeSalvio.
While Wynn Defendants would have us believe that the
alleged San Diego Agreement was reached in a vacuum and hence that
the amount that would "make Gattineri whole" was not certain,
taking the evidence in the light most favorable to Gattineri, the
series of conversations that led to Gattineri's signature suggest
otherwise. See Simons v. Am. Dry Ginger Ale Co., 140 N.E.2d 649,
652 (Mass. 1957) (finding essential terms sufficiently definite in
part because "[t]he parties had been engaged in dealings with each
other over a considerable period of time"). Given Wynn Defendants'
dire need to secure Gattineri's signature and the number of
conversations that led up to the alleged San Diego Agreement, a
reasonable factfinder could conclude that the parties were clear
on what it would take to "make Gattineri whole."
Wynn Defendants contend that the amount was undefined
because when Gattineri was asked, in his deposition, whether he
and DeSalvio had discussed a "specific" amount that he would need
in exchange for his signature, he stated that they had not
discussed a figure "to the penny." But Gattineri also provided
evidence in his deposition that he and DeSalvio had discussed the
amount necessary to "make him whole" in terms of the percentage of
the price reduction -- a concrete, readily calculable figure --
- 30 -
and calculated that amount to be "around $19 million." See id.("[A] contract is not to be held unenforceable 'if, when applied
to the transaction and construed in the light of the attending
circumstances,' the meaning can be ascertained with reasonable
certainty."). Moreover, Wynn Defendants were in receipt of the
email from Gattineri's personal counsel specifying that he sought
"his share of $75,000,000." Taken together, these pieces of
evidence could lead a reasonable factfinder to conclude that
"making Gattineri whole" had a definite meaning.
Second, Wynn Defendants argue that the alleged San Diego
Agreement is also "indefinite and uncertain" because a second
material term was unknown: "the cost of FBT's environmental cleanup
obligations, a cost which would have reduced the amount that FBT
would have received under the original Option Agreement and was,
according to FBT's Manager, never quantified." But even if the
term was unknown, the record reveals that Gattineri and DeSalvio
did not consider this cost in negotiating the amount needed to
"make him whole." As Gattineri argues, they could not have since
DeSalvio was unaware of these obligations. According to his
deposition, DeSalvio had never seen the Option Agreement, much
less read it, and only learned of the Certificate requirement and
the $40 million reduction "[f]rom a meeting with Kim Sinatra." If
DeSalvio was unaware of the Option Agreement's contents, and thus
FBT's environmental obligations, he could not have had this
- 31 -
quantity in mind during his many negotiations with Gattineri. Wynn
Defendants do not dispute this argument. As such, a reasonable
factfinder could conclude that the parties mutually understood the
San Diego Agreement's only material term to be the amount needed
to "make Gattineri whole" and as already explained, a reasonable
factfinder could conclude that that amount was sufficiently
definite and certain to survive summary judgment.
Wynn Defendants aptly point out that Gattineri testified
that there may have been other ways to "make him whole," such as
buying real estate in which he had an interest. It therefore
follows, they argue, that the amount it would take to "make him
whole" must be uncertain and indefinite. But this is not the only
conclusion. Rather, a reasonable factfinder could conclude that
the amount in real estate that Wynn Defendants would need to
purchase to "make him whole" should equal his percentage of the
price reduction. In other words, the amount is certain and
definite -- $18,676,000 -- but the method of payment is flexible.
Thus, because there are genuine issues of material fact
in dispute, we part ways with the district court's reasoning.
Summary judgment may ultimately be appropriate, but we are unable
to answer this question until we hear from the SJC on the certified
questions we pose.
- 32 -
C. Common Law Fraud
The district court also granted summary judgment for
Wynn Defendants on Gattineri's common law fraud claim. Like
Gattineri's breach of contract claim, we review the decision de
novo, drawing all reasonable inferences in favor of the non-moving
party, Gattineri, Trs. of Bos. Coll., 892 F.3d at 79, and because
we are sitting in diversity, state law applies, Cochran, 328 F.3d
at 6.
To prove a claim for common law fraud under Massachusetts
law, a party must "show[] that (1) the defendant made a 'false
representation of a material fact with knowledge of its falsity
for the purpose of inducing [the plaintiff] to act thereon';
(2) the plaintiff 'relied upon the representation as true and acted
upon it to his [or her] detriment'; and (3) such 'reliance was
reasonable under the circumstances.'" H1 Lincoln, Inc. v. S. Wash.
St., LLC, 179 N.E.3d 545, 560 (Mass. 2022) (alterations in the
original) (quoting Rodi v. S. New Eng. Sch. of L., 532 F.3d 11, 15
(1st Cir. 2008)). Further, "the reasonableness of a party's
reliance is ordinarily a question of fact for the jury." Rodi,
532 F.3d at 15. However, it "can be a question of law where the
undisputed facts permit only one conclusion" such that "no rational
jury could [find] reasonable reliance." Cumis Ins. Soc'y, Inc. v.
BJ's Wholesale Club, Inc., 918 N.E.2d 36, 50 (Mass. 2009).
- 33 -
The district court found, as a matter of law, that
Gattineri could not have reasonably relied on Wynn Defendants'
representations because an essential term of the agreement -- what
would "make Gattineri whole" -- was "imprecise," "undecided," and
"entirely unclear." Gattineri, 2022 WL 123892, at *13. We
disagree.
As discussed supra, the record contains evidence tying
what would "make Gattineri whole" to his percentage of the price
reduction, such that a reasonable factfinder could conclude that
what would "make Gattineri whole" would be approximately
$18,676,000. The fact that DeSalvio represented Wynn Defendants
in the negotiations with Gattineri and was unaware that
environmental cleanup costs could be factored into the final
purchase price belies the district court's finding that the amount
owed to Gattineri, $18,676,000, was imprecise, undecided, or
entirely unclear. This is especially the case since a factfinder
may consider the context surrounding a representation in
determining whether a party's reliance was reasonable. See McEvoy
Travel Bureau, Inc. v. Norton Co., 563 N.E.2d 188, 194 (Mass. 1990)
(finding party's reliance reasonable in part given "long existing
relationship between the parties"). Gattineri did not request to
be "made whole" once and in a vacuum. Instead, he repeatedly
linked "making him whole" with the percentage of the price
reduction in the various meetings he had with DeSalvio leading up
- 34 -
to the alleged San Diego Agreement. We simply cannot ignore this
context.
The district court failed to take context into
consideration and instead incorrectly relied on Masingill v. EMC
Corp., 870 N.E.2d 81, 91 (Mass. 2007). But Masingill is readily
distinguishable. First, the alleged promise in that case
contradicted the terms of a written contract. See id. at 91. Wynn
Defendants have not argued that that is the case here. Second,
the surrounding circumstances make the alleged promise in this
case more definite than the one in Masingill. There, the plaintiff
alleged that a corporation's agent had misrepresented to her that
she would be "made whole" if she left her then-employer to work
for a different company. See id. at 87, 91. While the SJC found
the statement "too vague to support the cause of action," it
underscored that in reaching this conclusion it considered the
evidence in its entirety, not just that statement alone. Id. at
91 ("The evidence does not offer any definition or further
explanation of the term 'make you whole' sufficiently precise to
determine what the representation meant."). The SJC further noted
that when Masingill was asked at trial whether the company's agent
had ever "told [her] what he meant" by "make you whole," Masingill
responded, "[n]o." Id. at 91 n.24. Unlike in Masingill, Gattineri
repeatedly tied his percentage of the $40 million price reduction
with being "made whole" and even put forth the number $19 million.
- 35 -
As such, a reasonable factfinder could conclude that sufficient
"definition or further explanation" existed to make Gattineri's
reliance reasonable.
Thus, because a reasonable factfinder could find that
what would "make Gattineri whole" was sufficiently clear, the
district court's entry of summary judgment for Wynn Defendants was
not warranted. Again, summary judgment may ultimately be justified
on this claim, but this conclusion turns on the SJC's response to
the questions we certify below.
D. Chapter 93A
As we have explained above, we differ with the district
court's conclusion that the material terms of the San Diego
Agreement were not sufficiently definite and certain to form the
basis of a valid contract. Moreover, we certify the other grounds
on which the district court determined that the San Diego Agreement
is unenforceable. See infra II.F. The district court did not
reject Gattineri's 93A claim on any ground that we reject at this
stage; but because whether the alleged contract is unenforceable
affects this claim, we await the SJC's answer to our questions
before addressing it in full.
E. In Pari Delicto
Before discussing the legality of the alleged San Diego
Agreement, we first dispose of Gattineri's in pari delicto
argument. He contends that even if the alleged San Diego Agreement
- 36 -
is illegal, it should still be enforced because the parties are
not in pari delicto, or at equal fault. Instead, he argues that
he is entitled to equitable relief because he was excusably
ignorant of the fact that the San Diego Agreement was potentially
violative of Massachusetts law and "excusable ignorance
allows . . . courts to enforce a contract . . . where one party
was more likely than the other to have knowledge that the contract
in question was potentially violative of a statute." We are
unpersuaded.
The in pari delicto defense is limited to "those
situations in which (i) the plaintiff, as compared to the
defendant, bears at least substantially equal responsibility for
the wrong he seeks to redress and (ii) preclusion of the suit would
not interfere with the purposes of the underlying law or otherwise
contravene the public interest." Nisselson v. Lernout, 469 F.3d
143, 152 (1st Cir. 2006); see Bateman Eichler, Hill Richards, Inc.
v. Berner, 472 U.S. 299, 310-11 (1985).
We reject Gattineri's arguments. Gattineri was in pari
delicto with Wynn Defendants because he knew everything that he
needed to know to deduce that the San Diego Agreement may violate
public policy. He was aware of the Commission's decision to
require the Certificate, knew the Commission was concerned about
the sale of the Parcel (indeed, he was interviewed by the
Massachusetts State Police and was subpoenaed for testimony before
- 37 -
the agreement was signed), understood the Commission's signature
requirement was meant to assuage those concerns, recognized that
the gaming industry is highly regulated, and was being advised by
counsel at all pertinent steps. Taken together, this should have
given Gattineri pause as to whether the San Diego Agreement would
be legally enforceable. Gattineri maintains that Wynn Defendants
were far more experienced in the gaming industry, and he trusted
that they would negotiate an agreement that was legal, but as a
sophisticated businessman who was being advised by counsel, he
cannot hide behind Wynn Defendants to claim excusable ignorance.
There is simply no triable issue of differential knowledge that
would make the doctrine of in pari delicto applicable here.
F. Legality of the Alleged San Diego Agreement
Having rejected some of the alternative grounds on which
the district court granted summary judgment, we next address the
legality of the alleged San Diego Agreement. This question is
dispositive of this suit. If the agreement violates state law or
public policy, Gattineri's contract and fraud claims cannot move
forward. Ultimately, we conclude that no controlling SJC precedent
exists to guide our analysis and thus certify the questions
outlined below to the SJC.
Under Massachusetts law, a contract is unenforceable if
"illegality constitutes an essential element of the contract."
Health Care Collection Servs., Inc. v. Protocare, Inc., No. CIV.
- 38 -
A. 92-12634-Z, 1995 WL 96911, at *2 (D. Mass. Feb. 24, 1995) (first
citing Green v. Richmond, 337 N.E.2d 691, 695 (Mass. 1975),
abrogated on other grounds by Wilcox v. Trautz, 693 N.E.2d 141(Mass. 1998); and then citing Zytka v. Dmochowski, 18 N.E.2d 332,
334 (Mass. 1938), abrogated on other grounds by Wilcox, 693 N.E.2d
141). A contract can be deemed illegal if it expressly violates
a statute or, even if it does not, if finding it unenforceable is
"necessary to accomplish the statute's objectives." Baltazar
Contractors, Inc. v. Town of Lunenburg, 843 N.E.2d 674, 677 (Mass.
App. Ct. 2006); see also Serv. Emps. Int'l Union v. Dep't of Mental
Health, 63 N.E.3d 1097, 1102 (Mass. 2016) ("[W]hether a contract
made in violation of a statute is rendered void ab initio, i.e.,
treated as having no force or effect, depends upon the language of
the statute and the nature of the violation.").
In other words, Massachusetts law will not enforce
contracts that disregard public policy, Trs. of Cambridge Point
Condo. Tr. v. Cambridge Point, LLC, 88 N.E.3d 1142, 1150 (Mass.
2018), where "public policy" "refers to a court's conviction,
grounded in legislation and precedent, that denying enforcement of
a contractual term is necessary to protect some aspect of the
public welfare," Beacon Hill Civic Ass'n v. Ristorante Toscano,
Inc., 662 N.E.2d 1015, 1017 (Mass. 1996). "The test is, whether
the underlying tendency of the contract under the conditions
described was manifestly injurious to the public interest and
- 39 -
welfare." Id. (quoting Adams v. East Boston Co., 127 N.E. 628,
631 (Mass. 1920)). However, "[t]he grounds for a public policy
exception must be clear in the acts of the Legislature or the
decisions of [a Massachusetts] court." Cambridge Point, LLC, 88
N.E.3d at 1150 (quoting Miller v. Cotter, 863 N.E.2d 537, 547
(Mass. 2007)).
Here, we are asked to determine first, whether the
alleged contract violates Chapter 23K of the Massachusetts General
Laws and second, if not, whether it nonetheless violates
Massachusetts public policy, rendering it unenforceable.
Chapter 23K sections 21(b) and (c) provide in relevant part:
(b) No person shall transfer a
gaming license, a direct or indirect real
interest, structure, real property, premises,
facility, personal interest or pecuniary
interest under a gaming license issued under
this chapter or enter into an option contract,
management contract or other agreement or
contract providing for such transfer in the
present or future, without the notification
to, and approval by, the [C]ommission.
. . .
(c) The [C]ommission may include any
reasonable additional requirements to the
license conditions.
Mass. Gen. Laws ch. 23K, § 21(b), (c) (emphases added).
The district court found that the alleged San Diego
Agreement constitutes an "unenforceable illegal contract" under
Chapter 23K for two reasons. First, because the Commission
"specific[ally] approv[ed]" a "price reduction to 'no more [than]
- 40 -
$35 million,'" and the alleged San Diego Agreement "effectively
reinstat[es] the $75 million purchase price with respect to
Gattineri without the Commission's approval." Gattineri, 2022 WL
123892, at *11 (third alteration in the original). Second, because
the "basis of the agreement [was] Gattineri's signing of the
[C]ertificate, which was a requirement mandated by the Gaming
Commission," and using the signing of the [C]ertificate as
consideration for a contract, constitutes an "other agreement" for
the "transfer" of a "personal or pecuniary interest under a gaming
license," id., in direct violation of Chapter 23K since it was
made "without[] notification to, and approval by, the
[C]ommission" as required by the statute, id. (first alteration in
original) (quoting Mass. Gen. Laws. ch. 23K, § 21(b), (c)).
Gattineri argues on appeal that the alleged contract is
not illegal.2 It does not violate Chapter 23K, he posits, because
he is not bound by section 21(b) of the Gaming Act. In fact, he
is "not bound by any requirement from the Commission," he contends,
Gattineri also argues that the district court reached the
2
conclusion that the alleged San Diego Agreement violated the
statute based on disputed material facts. We reject this
reasoning. The district court relied on the language of the
Commission in approving the Ninth Amendment, the terms of the
alleged San Diego Agreement, and the plain language of the
statute -- none of which were in dispute -- in making its
determination. Because the district court's conclusion was a pure
question of law, the crux of the issue lies in whether the district
court's interpretation of the Gaming Act was accurate, not on
disputed facts.
- 41 -
because he is not a licensee, nor was he a party to the Ninth
Amendment. Pointing to the "under a gaming license" language in
the statute, he argues that he does not fall within the class of
people the statute seeks to cover since he himself had no interest
in obtaining a gaming license.
Wynn Defendants counter that the alleged contract not
only violates Chapter 23K but also contravenes public policy. As
to the statutory violation, they counter that Gattineri is covered
by the statute because, although not a licensee, the plain language
of sections 21(b) and (c) covers "person[s]" more generally since
it dictates that "no person" shall enter into an "agreement"
without the Commission's approval. Mass. Gen. Laws. ch. 23K,
§ 21(b). Gattineri, they argue, is certainly a "person" who
engaged in an alleged agreement (the San Diego Agreement) that was
not approved by the Commission. They further contend that even if
that were not the case, whether Gattineri can be considered a
licensee is irrelevant because the Commission imposed conditions
on Wynn Defendants and these conditions should cover any
transactions they engaged in, in relation to the license they
sought, including a side deal with Gattineri. Additionally, they
assert that the side deal violates public policy because it
"thwart[s] the Legislature's express statutory purpose" -- "to
ensure public confidence in the integrity of the licensing
process" -- by going against the Commission's "broad authority to
- 42 -
condition the casino license on a reduced purchase price for the
Parcel, and restrict the recipients of the sale proceeds." This
type of agreement, Wynn Defendants argue, "is precisely the kind
of conduct the Legislature sought to prevent in enacting the Gaming
Act."
Thus, the questions before us are ones of statutory
construction of state law and of Massachusetts public policy. In
essence, the parties ask us to determine whether (1) the regulation
of a side deal and the purchase price of a parcel of land between
two private parties, in light of potential concealed, criminal
ownership interests and/or environmental concerns, expressly
violates Chapter 23K; or, whether, in the alternative, (2) this
"underlying tendency of the contract . . . was manifestly
injurious to the public interest and welfare," Beacon, 662 N.E.2d
at 1017, as to be against public policy under the acts of the
legislature or decisions of the Massachusetts courts.
While we would generally look to the text of the statute,
intent of the legislature, and case law to address these issues,
our de novo examination of the statutory scheme and the lack of
precedent available to guide our analysis leads us to conclude
that the best course to resolve these questions is to certify this
issue. VanHaaren v. State Farm Mut. Auto. Ins. Co., 989 F.2d 1,
3 (1st Cir. 1993) ("Absent controlling state court precedent, a
federal court sitting in diversity may certify a state law issue
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to the state's highest court."); see e.g., Bos. Gas Co. v. Century
Indem. Co., 529 F.3d 8, 15 (1st Cir. 2008) (certifying question
because court "found no controlling SJC precedent on
the . . . question and the issue is determinative of the scope of
[the] claim)," certified question answered, 910 N.E.2d 290 (Mass.
2009).
Massachusetts SJC Rule 1:03 provides that the SJC "may
answer questions of law certified to it" where the question "may
be determinative of the cause then pending in the certifying court
and . . . it appears to the certifying court [that] there is no
controlling precedent in the decisions of [the SJC]." Mass. S.J.C.
R. 1:03. That is certainly the case here. There is no question
that the questions we certify are determinative of the issues
before us, so we next address the text of the Gaming Act and lack
of precedent.
1. The Gaming Act
Looking to the text of the Gaming Act, it is unclear how
much authority the Massachusetts legislature sought to give the
Commission. Enacted in 2011, the Gaming Act created a structured
process for licensing and regulating casino and slots gambling in
Massachusetts, thereby authorizing these activities for the first
time in the Commonwealth. Mass. Gen. Laws. ch. 23K; see Abdow v.
Att'y Gen., 11 N.E.3d 574, 577 (Mass. 2014) (summarizing text of
the Gaming Act). In doing so, the Gaming Act created and
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authorized the Massachusetts Gaming Commission -- comprised of
five appointed Commissioners with expertise in criminal
investigation and law enforcement, corporate finance and
securities, and legal and policy issues -- to issue two types of
licenses to operate gaming establishments. Mass. Gen. Laws.
ch. 23K, § 3. It also established the IEB as the primary
enforcement agent endowed with "such law enforcement powers as
necessary to effectuate the purposes" of the Gaming Act. Id.
§ 6(a)-(b).
On the one hand, sections of the Gaming Act seem to grant
the Commission extensive authority to administer gaming in the
Commonwealth. For instance, section 21 -- which outlines the form
of gaming and conditions for licensees -- appears to give the
Commission wide latitude in restricting the issuance of licenses
since subsection (c) allows the Commission to "include any
reasonable additional requirements to the license conditions."
Id. § 21(c) (emphasis added). This language suggests that,
notwithstanding the conditions already listed, the Commission
should be entitled to institute any other restrictions it deems
necessary. Similarly, section 17 -- which explains how the
Commission should process applications -- gives the Commission
"full discretion as to whether to issue a license," id. § 17(g)
(emphasis added), and "sharply curtail[s] the availability of
judicial review of [C]ommission licensing decisions . . . thereby
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vest[ing] a tremendous amount of discretion in the [C]ommission,"
City of Revere v. Mass. Gaming Comm'n, 71 N.E.3d 457, 471
(Mass. 2017). What is more, section 4, outlining the powers of
the Commission, explicitly states that "[t]he [C]ommission shall
have all powers necessary or convenient to carry out and effectuate
its purposes including, but not limited to, the power
to: . . . limit, condition, restrict, revoke or suspend a license,
registration, finding of suitability or approval, or fine a person
licensed, registered, found suitable or approved for any cause
that the [C]ommission deems reasonable." Mass. Gen. Laws. ch. 23K,
§ 4(15) (emphasis added). Further, section 1, which lists
Chapter 23's findings and declaration, ends by stating that "the
power and authority granted to the [C]ommission shall be construed
as broadly as necessary for the implementation, administration and
enforcement" of the Gaming Act. Id. § 1(10) (emphasis added).
These provisions, included in key sections of the Gaming Act, seem
to serve as catchall provisions giving the Commission authority to
place restrictions on side deals and the purchase price of land,
and to place conditions on certain applicants (i.e., perhaps
greater restrictions on those with potential criminal
backgrounds).
On the other hand, the Gaming Act's policy objectives
could be interpreted as placing limits on what otherwise might be
considered broad authority, but the intent of the Commonwealth
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legislature remains unclear. Section 1 provides that the
"paramount policy objective" of the Gaming Act is to "ensur[e]
public confidence in the integrity of the gaming licensing process
and in the strict oversight of all gaming establishments through
a rigorous regulatory scheme." Id. § 1(1) (emphasis added). In
other words, even if we agree that the Commission does have
extensive authority to regulate side deals (which we do not hold
here), this authority is limited to that which ensures public
confidence in licensing (or perhaps another policy objective we
may find in the Act). Thus, our task is to determine whether the
restrictions here ensure public confidence. But policy arguments
do not "line up solely behind one solution," Bos. Gas Co., 529
F.3d at 14, and the parties do not point to any case law in either
federal or state court interpreting section 21, the breadth of the
authority of the Commission, or Massachusetts's public policy on
these issues. The only case that does tangentially touch on these
issues (discussed below) further complicates our inquiry but does
not resolve it.
2. Lack of Precedent
Published after the district court issued its decision
and Gattineri filed this appeal (but before oral argument), FBT
Everett Realty, LLC v. Mass. Gaming Comm'n, 187 N.E.3d 373 (Mass.
2022), further muddles the district court's interpretation of
section 21, rather than resolve the issues before us. There, the
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SJC considered a suit by FBT against the Commission to recover the
lost $40 million premium from the sale of the Parcel, alleging
tortious interference with contract and a regulatory taking. Id.
at 378. The SJC held that the state court properly dismissed the
tortious inference claim but reversed the court's grant of summary
judgment on the regulatory takings claim because the lower court
failed to consider the "economic impact and the character of the
government action," two of the three factors in the multifactor
test for a regulatory taking. Id. at 382, 392. Ultimately, the
SJC did not hold for either party and instead concluded that
"summary judgment [could not] be granted on [the] record" as there
were "material disputed facts on exactly what the [C]ommission
expected or required Wynn [MA, LLC] to do, and what [it] did on
its own initiative." Id. at 378.
While FBT does not resolve the issues before us, the SJC
did raise noteworthy concerns regarding the conduct of the
Commission, illustrating the importance of certifying our
questions. For instance, in assessing the economic impact and
character of the government action, the SJC noted that some of the
Commission's actions were "highly unusual [in] character." Id. at
388. While not directly addressing the text of Chapter 23K, the
court questioned the fact that the Commission (1) did not fully
investigate "the possibility that someone with a criminal
background" may have had an "undisclosed ownership interest in the
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[P]arcel" or (2) consider other options in resolving this issue
such as "refus[ing] to consider Wynn's bid altogether" or
"reject[ing] Wynn's bid if it could not resolve the ownership issue
to [the Commission's] satisfaction," before it approved a
significantly reduced purchase price for the Parcel -- a
"multimillion-dollar windfall at the expense of another private
party." Id. at 386-87. While the SJC did note that the
"[C]ommission ha[s] broad discretion in addressing its concerns
about potential concealed, criminal ownership interests in FBT,"
it did not provide guidance as to the boundaries of that
discretion, nor did it hold that the Commission had the power to
"punish one party for its lack of candor," "ensure [that] such
persons do not reap a financial windfall from the award of a gaming
license," or "address the public perception that this was even a
possibility." Id. at 387 (emphasis added).
Gattineri argues3 that FBT should control our decision
in this contract dispute. Nonetheless, FBT does not resolve this
case since it was adjudicated at the summary judgment stage viewing
the facts in the light most favorable to the non-moving party,
FBT; did not ultimately resolve the dispute as a matter of law
given the limited record; and contrary to Gattineri's assertion,
made no holding as to the legality of side deals in connection
Gattineri made this argument at oral argument and in his
3
reply brief, submitted after FBT was published.
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with the statute and parties now in question. The cause of action
in FBT is simply not the one before us. Even though FBT does not
resolve our case, it does counsel in favor of certification. We
simply cannot ignore that the SJC found "extraordinary" the
"[c]onditioning [of] the grant of a governmental license [the
gaming license at issue here] on the renegotiation of a transaction
between private parties [Wynn Defendants and FBT] in this way, so
as to effectively transfer $40 million dollars from one [party,
here FBT] to another [Wynn Defendants]." Id.
3. Questions Certified
We must underscore that the issues before us involve
important questions of state law and public policy with significant
implications, not only for the parties before us, but also for
other industries in the state, such as online gambling and horse
racing, among others. "Given the social evils associated with
gambling and the state's revenue interests, the state's choice of
means in the selection of licensees is entitled to prevail," Medina
v. Rudman, 545 F.2d 244, 251 (1st Cir. 1976), and so too the
highest court's (the SJC) careful balancing of the legislature's
statutory scheme.
This case then meets the requirements set forth in SJC
Rule 1:03. Mass. S.J.C. R 1.03. We recognize that our answering
the important policy questions raised in this appeal "may offend
the comity due to local courts, since [Massachusetts] courts have
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never addressed this specific issue." Santiago-Hodge v. Parke
Davis & Co., 859 F.2d 1026, 1033 (1st Cir. 1988). Thus, the
questions specified below will be referred to the Massachusetts
SJC for its consideration. We have addressed all other issues,
confirming that the certified issues do affect the ultimate
outcome. The questions are as follows:
1) Is the San Diego Agreement unenforceable
because it violates Section 21 of the Gaming
Act?
2) If not, is the San Diego Agreement
unenforceable for reasons of public policy of
ensuring public confidence in the integrity of
the gaming licensing process and in the strict
oversight of all gaming establishments through
a rigorous regulatory scheme?
We also welcome any additional observations about relevant
Massachusetts law that the SJC may wish to provide.
The clerk of this court is directed to forward to the
SJC, under the official seal of this court, a copy of the certified
questions and our decision in this case, along with a copy of the
briefs and appendices filed by the parties in this case. We retain
jurisdiction over this appeal and will frame our ultimate decision
and judgment after receiving such guidance on the certified
questions as the SJC may be prepared to give. No costs will be
taxed at this stage of the proceedings, but the issue may be
revisited after we receive the answer to the certified questions.
It is so ordered.
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