Keystone Redevelpment Partners v. Jeffrey Coy ( 2011 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 10-1054
_______________
KEYSTONE REDEVELOPMENT PARTNERS, LLC
v.
THOMAS DECKER, MARY DIGIACOMO COLINS;
RAYMOND S. ANGELI, JEFFREY W. COY,
JOSEPH W. MARSHALL, III, KENNETH T. MCCABE,
and SANFORD RIVERS, all named in their individual
capacities as members of the Pennsylvania Gaming
Control Board in December, 2006; and GREGORY C. FAJT;
RAYMOND S. ANGELI; JEFFREY W. COY; JAMES B.
GINTY; KENNETH T. MCCABE; SANFORD RIVERS and
GARY A. SOJKA, all named in their official capacities as
current members of the Pennsylvania Gaming Control Board
v.
HSP GAMING, L.P.
(Intervenor in District Court)
Thomas Decker, Mary DiGiacomo Colins,
Raymond S. Angeli, Jeffrey W. Coy, Joseph W. Marshall III,
Kenneth T. McCabe and Sanford Rivers,
Appellants
_______________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(Civil Action No. 08-CV-2265)
District Judge: Honorable John E. Jones III
_______________
Argued
November 16, 2010
Before: AMBRO, FISHER, and GARTH, Circuit Judges
(Opinion filed : January 7, 2011)
David R. Overstreet, Esq. (Argued)
John P. Krill, Jr., Esq.
Abram D. Burnett, III, Esq.
Anthony R. Holtzman, Esq.
K&L Gates LLP
17 North Second Street, 18th Floor
Harrisburg, PA 17101
Counsel for Appellee
James J. Kutz, Esq.
Barbara A. Zemlock, Esq.
John W. Dornberger, Esq.
Post & Schell, P.C.
17 North 2th Street, 12th Floor
Harrisburg, PA 17101
R. Douglas Sherman, Esq.
Pennsylvania Gaming Control Board
303 Walnut Street/Strawberry Square
Verizon Tower, 5th Floor
Harrisburg, PA 17101
Ralph G. Wellington, Esq. (Argued)
Nancy Winkleman, Esq.
Joseph Anclien, Esq.
Joseph J. Langkamer, Esq.
Schnader Harrison Segal & Lewis, LLP
1600 Market Street, Suite 3600
2
Philadelphia, PA 19103
Counsel for Appellants
William H. Lamb, Esq.
Scot R. Withers, Esq.
Lamb McErlane, PC
24 East Market Street
P.O. Box 565
West Chester, PA 19381
Stephen A. Cozen, Esq.
F. Warren Jacoby, Esq.
Jennifer M. McHugh, Esq.
Cozen O‟Connor
1900 Market Street
Philadelphia, PA 19103
Thomas E. Groshens, Esq. (Argued)
Richard A. Sprague, Esq.
Thomas A. Sprague, Esq.
Charles J. Hardy, Esq.
Sprague & Sprague
Wellington Building.
135 South 19th Street
Philadelphia, PA 19103
Counsel for Intervenor-Appellant HSP Gaming, L.P.
Barbara Adams, Esq.
Gregory Dunlap, Esq.
33 Market Street, 17th Floor
Harrisburg, PA 17120
Counsel for Amicus Edward G. Rendell, Governor of
Pennsylvania
_______________
OPINION OF THE COURT
_______________
3
GARTH, Circuit Judge
In this appeal, we consider whether the former
members of the Pennsylvania Gaming Control Board are
immune from suits brought against them in their individual
capacities based on their decisions to grant gaming licenses to
certain applicants other than appellee Keystone
Redevelopment Partners, LLC (Keystone). We conclude that
they are entitled to absolute, quasi-judicial immunity.
Accordingly, we will reverse the decision of the District
Court.
I.
In 2004, the Pennsylvania General Assembly enacted
the Pennsylvania Race Horse and Gaming Act, 4 Pa. Cons.
Stat. §§ 1101-1906, which created the Pennsylvania Gaming
Control Board (“Gaming Board” or “Board”) to license a
limited number of gaming entities within the Commonwealth.
4 Pa. Cons. Stat. §§ 1201, 1202. The Gaming Board is
comprised of seven voting members,1 three of whom are
appointed by the Governor and four of whom are appointed
by four different members of the General Assembly. Id. §
1201(b). The voting members serve fixed terms of office --
three years for gubernatorial appointees, two years for
legislative appointees -- and may only be removed for
“misconduct in office, willful neglect of duty or conduct
evidencing unfitness for office or incompetence,” or a
1
Three ex officio members -- the Secretary of
Revenue, Secretary of Agriculture, and the State Treasurer --
also sit on the Board, but are not permitted to vote. Id. §
1201(e).
4
conviction for certain criminal offenses. Id. § 1201(b.1), (d).
They are prohibited from political activity and from making
or soliciting political contributions. Id. § 1202.1(c)(5).
The Gaming Board‟s procedure for considering license
applications is governed by express statutory and regulatory
guidelines, which include the following:
Before conducting a licensing hearing, the Board must
hold at least one public input hearing at which
witnesses may testify and the opportunity for public
comment is afforded. Id. § 1205(b).
A licensing hearing is held for each of the applicants.
The Board must give notice of the hearing to the
parties, 2 Pa. Cons. Stat. § 504, and make a schedule
of the hearings available to the public, 58 Pa. Code §
441a.7(a).
The Bureau of Investigations and Enforcement (BIE),
an agency created by, but independent from, the
Board, 4 Pa. Cons. Stat. § 1202(b)(25), performs
background checks on each applicant and delivers a
report to the Board “relating to the applicant‟s
suitability for licensure,” id. § 1517(a.1)(2).
A member of the Board must “[d]isclose and recuse
himself from any hearing or other proceeding in which
the member‟s objectivity, impartiality, integrity or
independence of judgment may be reasonably
questioned due to the member‟s relationship or
association with a party connected to any hearing or
proceeding or a person appearing before the board.” 4
Pa. Cons. Stat. § 1202.1(c)(3). In addition, no member
may engage in ex parte communication regarding a
pending matter. Id. § 1202.1(c.1). However, §
1202.1(e) defines “ex parte communication” to
exclude “off-the-record communications by or
5
between a member or hearing officer of the board . . .
prior to the beginning of the proceeding solely for the
purpose of seeking clarification or correction to
evidentiary materials intended for use in the
proceedings,” as well as “communications between
the board or a member and the office of chief counsel”
of the BIE.
At least thirty days before the initial license hearing,
each applicant must file with the Board, and serve on
all other applicants for the same license, “a
memorandum identifying all evidence it intends to use
in support of its presentation before the Board,” 58 Pa.
Code § 441a.7(i), including any materials about which
an expert witness will testify, id. § 441a.7(i)(4).
Evidence that has not been identified in that manner
may only be admitted later: 1) in response to a request
from the Board, id. § 441a.7(m)(1); 2) “if the issue
could not have been reasonably anticipated by the
applicant,” id. § 441a.7(m)(2); or 3) to “present
evidence which sets forth a comparison between the
applicant and other applicants within the same
category with respect to the standards and criteria” for
receiving a license, id. § 441a.7 (n).
At the licensing hearing,
o the applicant has a right to counsel, 2 Pa. Cons.
Stat. § 502;
o the Board may subpoena documents and
witnesses, 4 Pa. Cons. Stat. § 1202(b)(7);
o the applicant may present documentary and
testimonial evidence, 58 Pa. Code § 441a.7(i);
o all witnesses must be sworn, id. at § 441a.7(q);
6
o the Board or Chief Enforcement Counsel, an
agent of the BIE, may examine or question the
applicant or applicant‟s witnesses, id. §
441a.7(p); and
o the record must be transcribed, id. § 441a.7(v).
Although there is no opportunity to cross-examine
competitors‟ witnesses, an applicant may raise
objections to competitors‟ hearings, id. § 441a.7(t),
and, after filing notice with the Board and on the
competitors, present evidence comparing its
application to those of competitors, id. § 441a.7(n). In
addition, after submitting their applications, applicants
are given the opportunity to make final oral remarks
before the Board, id. § 441a.7(w), and file a post-
hearing brief addressing competitors‟ applications for
the license, id. § 441a.7(u).
The Board must grant licenses to the applicants who
best demonstrate, by clear and convincing evidence,
their suitability for licensure based on certain
enumerated factors, id. § 441a.7(d), which relate
generally to: (a) the location and quality of the
proposed facility; (b) the potential for economic
development and new job creation, especially for
Pennsylvania residents; (c) a plan for diversity in
employment and contracting, (d) the history of the
applicant in developing tourism facilities, meeting
commitments to local agencies and community-based
organizations, dealing with its employees, and
complying with the law; and (e) the degree to which
potential adverse effects on the public resulting from
the project will be mitigated. 4 Pa. Cons. Stat. §
1325(c).
The Board must issue a final order and written
decision, 58 Pa. Code § 441a.7(x), which contains
7
factual findings and the reasons for the Board‟s
determination, 2 Pa. Cons. Stat. § 507. Unsuccessful
applicants have the right to appeal to the Pennsylvania
Supreme Court. 4 Pa. Cons. Stat. § 1204; 58 Pa. Code
§ 441a.7(y).
II.
In December 2005, appellee Keystone was one of five
entities to apply for one of two Category 2 slot-machine
licenses available for the City of Philadelphia. After holding
public and licensing hearings for each applicant, at a
December 20, 2006, public meeting, the Gaming Board
unanimously voted to grant licenses to Foxwoods and to
intervenor HSP Gaming, and to deny the other three entities‟
applications, including Keystone‟s. The Board detailed its
factual findings and offered the reasons for its votes in a 113-
page written decision.
In discussing one of the multiple factors weighing
against Keystone‟s application, the Board explained as
follows:
The evidentiary record
establishes that Keystone‟s parent
company, Trump Resorts, owns
three Atlantic City casinos . . . .
[Competitors] HSP/Sugarhouse,
Riverwalk and Philadelphia
Entertainment/Foxwoods do not
own or control any Atlantic City
properties. The Board has
considered the fact of competing
Atlantic City properties as a
negative factor for licensure in
Philadelphia. While the Board
believes that each applicant
desires to make a profit in
8
Philadelphia if granted a license,
the Board also is cognizant of its
duty to license casinos in
Philadelphia which are in the best
interests of the Commonwealth
and Philadelphia. The Board
finds it credible that owners of
casinos in both locations may
attempt to use the Philadelphia
property as a gambling-incubator
to gain new customers who will
then be lured to its Atlantic City
properties where it can earn a
much higher profit on every dollar
gambled [due to the lower tax
rate]. Likewise, the Board finds
applicants without Atlantic City
connections are more strongly
motivated to compete directly
against the Atlantic City
competition because they have no
interest in diverting patrons to the
casino which has a better tax
structure for the casino.
Additionally, evidence has been
introduced that the Trump
Entertainment properties in
Atlantic City have undergone
bankruptcy organizations in order
to rebuild and revitalize them.
The Board believes this further
supports its decision to choose
other applicants who do not have
other facilities so close to
Philadelphia which may lure
patrons to Atlantic City to assist
in the rebuilding and revitalization
of properties there. Therefore, the
9
Board finds that licensing casinos
in Philadelphia which do not have
common ownership with Atlantic
City facilities are more likely to
further the interests of the
Commonwealth and the public
which stands to benefit through
increased revenues obtained by
the Pennsylvania properties.
(App. 194-95.) Ultimately, while the Board found that each
of the applicants was “eligible and suitable for licensure
under the terms of the [Race Horse and Gaming] Act,” it
concluded that Foxwoods and HSP Gaming “were the
applicants which possessed the projects which the Board
evaluated, in its discretion, to be the best projects for
licensure under the criteria of the Act.” (App. 101.)
Only one of the unsuccessful applicants, Riverwalk
Casino, LP, exercised its statutory right to appeal to the
Pennsylvania Supreme Court. The Court affirmed the order
of the Gaming Board, holding, among other things, that the
Board “serves as a quasi-judicial body with fact-finding and
deliberative responsibilities.” Riverwalk Casino, LP v. Pa.
Gaming Control Bd., 926 A.2d 926, 935 (Pa. 2007).
On March 18, 2009, Keystone filed an amended
complaint in the District Court for the Middle District of
Pennsylvania against the members of the Gaming Board --
those currently serving, in their official capacities, in addition
to those serving on December 2006, in their individual
capacities -- seeking relief under 42 U.S.C. § 1983 for alleged
violations of its constitutional rights under the Commerce
Clause of Article I, Section 8, the First Amendment, and the
Equal Protection Clause of the Fourteenth Amendment.
Keystone asserted that the Gaming Board had reached its
licensing determination based on an illegally discriminatory
consideration, namely, that Keystone, due to its operation of
10
gaming facilities in Atlantic City, might divert commerce to
New Jersey rather than foster local economic interests.
Keystone demanded relief in the form of declaratory,
injunctive, and monetary relief and attorneys‟ fees.
On March 27, 2009, the Gaming Board defendants and
intervenor HSP Gaming moved to dismiss the complaint
pursuant to Fed. R. Civ. P. 12(b)(6) on the basis that, inter
alia, the Board members were entitled to quasi-judicial
immunity (absolute immunity) or, in the alternative, qualified
immunity. In a December 16, 2009, Memorandum and
Order, the District Court dismissed Keystone‟s claims against
the current Gaming Board members on ripeness grounds, but
denied the motions to dismiss with respect to Keystone‟s
claims against the former Board members.2 Keystone Redev.
Partners, LLC v. Decker, 674 F. Supp. 2d 629, 668 (M.D. Pa.
2009).
In first addressing the Board Defendants‟ invocation of
quasi-judicial immunity, the District Court declined to defer
to the Pennsylvania Supreme Court‟s determination in
Riverwalk Casino that, based on state case law, the Gaming
Board is a quasi-judicial body. Id. at 657. Instead, the
District Court found that, based on the factual averments
contained in Keystone‟s complaint, the Board‟s hearings,
while akin to judicial proceedings in certain respects,
appeared to lack some indicia of adversarial contests -- in
particular, prohibitions on ex parte communications,
opportunities for cross-examination, and the ability to
challenge proffered evidence. Id. at 659. Therefore, the
Court held that without development of an evidentiary record,
2
Throughout this opinion, for ease of reference, we
collectively refer to the members of the former Board and
intervenor HSP Gaming as “Board Defendants.”
11
it could not resolve the question of quasi-judicial immunity.
Id.Turning to the issue of qualified immunity, the Court
concluded that Keystone, by alleging that the Board
Defendants had deliberately favored local interests at the
expense of out-of-state competitors, had sufficiently pled
violations of “clearly established rights” protected under the
Constitution‟s Commerce Clause and the Equal Protection
Clause for which relief could be granted. Id. at 660-67.
Accordingly, the Court held that the Board Defendants were
not entitled to qualified immunity, and denied their motions
to dismiss Keystone‟s complaint on those grounds. Id. at
667-68.
The Board Defendants appealed to this Court for
review of the District Court‟s denial of their motion to
dismiss on the basis of quasi-judicial and/or qualified
immunity.
III.
We have jurisdiction over the order denying official
immunity under the collateral order doctrine of 28 U.S.C. §
1291. Dotzel v. Ashbridge, 438 F.3d 320, 324 (3d Cir. 2006)
(citing Mitchell v. Forsyth, 472 U.S. 511, 526-27 (1985),
among others).
When considering an appeal from a denial of a motion
to dismiss, this Court exercises plenary review, accepting as
true “[t]he facts alleged in the complaint and the reasonable
inferences that can be drawn from those facts.” Farber v. City
of Paterson, 440 F.3d 131, 134 (3d Cir. 2006). In considering
the propriety of the District Court‟s ruling, this Court “may
also consider matters of public record, orders, exhibits
attached to the complaint and items appearing the record of
the case.” Oshiver v. Levin, Fishbein, Sedran & Berman, 38
F.3d 1380, 1384 n.2 (3d Cir. 1994).
12
A.
Quasi-judicial immunity attaches to public officials
whose roles are “„functionally comparable‟ to that of a
judge.” Hamilton v. Leavy, 322 F.3d 776, 785 (3d Cir. 2003)
(quoting Butz v. Economou, 438 U.S. 478, 513 (1978)). Such
immunity “flows not from rank or title or location within the
Government, but from the nature of the responsibilities of the
individual official.” Cleavinger v. Saxner, 474 U.S. 193, 201
(1985) (citation and internal quotation marks omitted). Thus,
in evaluating whether quasi-judicial immunity grants
immunity to a particular official, a court inquires into “the
official‟s job function, as opposed to the particular act of
which the plaintiff complains.” Dotzel, 438 F.3d at 325;
Gallas v. Supreme Court of Pa., 211 F.3d 760, 769 (3d Cir.
2000) (“[O]ur analysis must focus on the general nature of the
challenged action, without inquiry into such „specifics‟ as the
[official‟s] motive or the correctness of his or her decision.”
(citing Mireles v. Waco, 502 U.S. 9, 13 (1991))).
In Cleavinger, the Supreme Court offered a non-
exhaustive list of six factors “characteristic of the judicial
process” that it had identified in Butz as relevant to a
determination of whether an official enjoys quasi-judicial,
and thus absolute, immunity:
(a) the need to assure that the
individual can perform his
functions without harassment or
intimidation; (b) the presence of
safeguards that reduce the need
for private damages actions as a
means of controlling
unconstitutional conduct; (c)
insulation from political
influence; (d) the importance of
precedent; (e) the adversary
13
nature of the process; and (f) the
correctability of error on appeal.
474 U.S. at 202 (citing Butz, 438 U.S. at 512). This Court
has accordingly adopted the Butz factors outlined in
Cleavinger as the touchstones of its quasi-judicial immunity
inquiry. Dotzel, 438 F.3d at 325-37 (holding that members of
a municipal board of supervisors were immune from suit
brought against them in their official capacities).
Dotzel‟s analysis, which is informed by the
instructions of Butz and Cleavinger, as we are, has the same
application to the Pennsylvania Gaming Control Board as it
did to the Dotzel zoning officials. There can be no distinction
among them when applying the Butz factors.3 We therefore
3
The distinction that Judge Fisher, our dissenting
colleague, draws between adjudicating rights and
adjudicating privileges is untenable for two reasons.
First, the zoning board in Dotzel was sued for its
decision to deny a conditional-use permit, which, if granted,
confers on the grantee a license, not a right, to use her land in
a particular fashion. The denial of that license in Dotzel, a
determination that we believed warranted quasi-judicial
immunity, is no different from the denial of a license to
operate slot machines that gives rise to this case.
Second, federal courts have uniformly concluded that
state licensing bodies charged with deciding whether to award
discretionary licenses are entitled to quasi-judicial immunity.
Burnett v. McNabb, 565 F.2d 398, 400 (8th Cir. 1977)
(County Beer Board granting conditional beer license); Kraft
v. Jacka, 669 F. Supp. 333, 337 (D. Nev. 1987) (State
Gaming Commission denying gaming license); Hamm v.
Yeatts, 479 F. Supp. 267, 271-72 (W.D. Va. 1979) (State
Alcoholic Beverage Commission denying beer license);
Brown v. DeBruhl, 468 F. Supp. 513, 519 (D.S.C. 1979)
14
analyze the quasi-judicial immunity question in this case by
applying the Butz factors.
1. The need to assure that the function can be
performed without harassment or intimidation
In Butz, the Supreme Court recognized that
administrative law judges, like other judges, must be
extended quasi-judicial immunity so that they “can perform
their respective functions without harassment or intimidation”
from dissatisfied parties, such as “an individual targeted by an
administrative proceeding [who] will act angrily and may
seek vengeance in the courts,” or a “corportation [that] will
muster all of its financial and legal resources in an effort to
prevent administrative sanctions.” 438 U.S. at 512, 515. In
Dotzel, we concluded that members of a municipal board of
governors, as arbiters of local zoning disputes, would be
subject to those same risks of harassment and intimidation.
As we explained,
zoning disputes can be among the
most fractious issues faced by
municipalities, and the risk of
threats and harassment is great.
The monetary stakes are often
quite high, especially in
commercial cases like this one,
making the possibility of liability
an especially potent adversary of
objectivity. . . . “[T]he public
interest requires that persons
serving on planning boards
considering applications for
(State Alcohol Beverage Control Commission denying liquor
license).
15
development act with
independence and without fear
that developers, who will
frequently have significant
financial resources and the ability
to litigate, not bring them to court.
The possibility of facing
expensive litigation as a result of
making a decision on an
application for development may
in a subtle way impact on the
decision making process.”
438 F.3d at 325-26 (quoting Bass v. Attardi, 868 F.2d
45, 50 n.11 (3d Cir. 1989)).
Keystone argues that the Board Defendants are not
subject to a significant risk of harassment and intimidation
because they can only deprive applicants of financial
opportunities, not liberty or property interests, and they can
only award a limited number of licenses, which reduces the
number of potentially vindictive, disappointed applicants. The
Board Defendants, pointing to the four suits that have been
brought against the Gaming Board arising from its December
2006 licensing decision, assert that gaming license applicants‟
extensive financial resources make them more likely to
initiate subsequent litigation to hold Board members liable for
an adverse licensing ruling.
We conclude that this factor weighs in favor of
immunity for the Board Defendants. The financial interests at
stake are extremely large: all applicants must be able to afford
a $50 million license fee, 4 Pa. Const. Ann. § 1209(a), and
each of the December 2006 applicants had annual revenues in
excess of $300 million. Keystone itself spent $10 million
alone on its application, and in its presentation to the Gaming
Board, it unveiled plans for a $444.8 million gaming project.
After Keystone lost out on the license, it initiated three
16
separate lawsuits, including this one. “„When millions may
turn on regulatory decisions [as in this case], there is a strong
incentive to counter-attack.‟” Butz, 438 U.S. at 515 (quoting
Expeditions Unlimited Aquatic Enters., Inc. v. Smithsonian
Inst., 566 F.2d 289, 293 (D.C. Cir. 1977)). It is plain that,
much as in Dotzel, “the monetary stakes are . . . high,” the
applicants “have significant financial resources and the ability
to litigate,” and thus “[t]he possibility of facing expensive
litigation as a result of making a decision on an application . .
. may in a subtle way impact on the decision making
process.” 438 F.3d at 325-26.
Our conclusion regarding this factor is buttressed by
the reasoning of the District Court of Nevada, which, in
holding that absolute immunity extended to members of the
Nevada Gaming Control Board against claims arising from
their licensing decisions, aptly described the unique concerns
of retaliation facing members of a gaming licensing
commission:
In this important area of public
interest where the decisions made
by these individuals often involve
millions of dollars and the
reputation of a whole state, there
is a danger that a person who
receives an adverse decision will
retaliate and seek vengeance in
the courts. The discretion and
judgment of these officials in
initiating administrative
proceedings and in deciding
matters of great public importance
might be affected if their
immunity from damages arising
from those decisions was less than
complete.
17
Kraft v. Jacka, 669 F. Supp. 333, 337 (D. Nev. 1987) (quoting
Rosenthal v. State of Nevada, 514 F. Supp. 907, 914 (D. Nev.
1981)) (internal citations and quotation marks omitted).
Those concerns are equally applicable to the Pennsylvania
Gaming Control Board, and we are satisfied that the Board
Defendants cannot exercise their judgment without fear of
intimidation if their immunity from personal liability is not
assured.
2. The presence of institutional safeguards against
improper conduct
In fashioning the prevalence of the factors pronounced
by Butz, the more the activity looks judicial, the more weight
is to be given to officials‟ freedom from personal liability.
In Butz, the Supreme Court opined that a finding of
immunity for administrative judges was supported by the fact
that “agency adjudication contain[s] many of the same
safeguards as are available in the judicial process,” noting in
particular that “[t]he proceedings are adversary in nature”;
“they are conducted by a trier of fact insulated from political
influence”; “[a] party is entitled to present his case by oral or
documentary evidence”; “the transcript of testimony and
exhibits together with the pleadings constitute the exclusive
record for decision”; “[t]he parties are entitled to know the
findings and conclusions on all of the issues of fact, law, or
discretion presented on the record”; and the administrative
judge “may issue subpoenas, rule on proffers of evidence,
regulate the course of the hearing, and make or recommend
decisions.” 438 U.S. at 513. These safeguards were found to
be present in Dotzel, just as they are relevant here. In
particular, in Dotzel there were requirements for (1) notice to
the parties and the public, (2) public hearings, (3) specific
procedures for conducting hearings, (4) the right to counsel,
(5) the use of subpoenas and oaths, (6) the issuance of written
decision, and (7) the preparation of transcripts. 438 F.3d at
326.
18
Here, consistent with Butz and Dotzel, the Gaming
Board must (1) give notice to the parties, 2 Pa. Cons. Stat. §
504, and the public, 58 Pa. Code § 441a.7(a); (2) hold public-
input hearings, 4 Pa. Cons. Stat. 1205(b); and (3) abide by
specific procedures for conducting hearings, 58 Pa. Code §
441a.7; (4) the applicants are entitled to counsel, 2 Pa. Cons.
Stat. § 502; (5) the Board may subpoena witnesses and
documents, 4 Pa. Cons. Stat. § 1202(b)(7), and accept only
sworn testimony, 58 Pa. Code § 447(q); (6) the Board must
issue a written decision, id. § 441a.7(x); and (7) the record
must be transcribed, id. § 447(v). This factor weighs in favor
of immunity for the Board Defendants, just as it did for the
public officials in Dotzel.
3. The degree of insulation from political influence
The Butz Court deemed probative to the question of
immunity whether the process of adjudication at issue “is
structured so as to assure that the hearing examiner exercises
his independent judgment on the evidence before him, free
from pressures by the parties or other officials within the
agency.” 438 U.S. at 513.
Voting members of the Gaming Board serve fixed
terms, 4 Pa. Cons. Stat. § 1201(d); may only be removed for
“misconduct in office, willful neglect of duty or conduct
evidencing unfitness for office or incompetence,” or a
criminal conviction, id. § 1201(b.1); are prohibited from
political involvement, id. § 1202.1(c)(5); and must recuse
themselves if their impartiality is called into question, id. §
1202.1(c)(3). Keystone points out that the ex officio members
of the Gaming Board (the Pennsylvania Secretary of
Revenue, Secretary of Agriculture, and Treasurer) are by
definition not barred from political activity. The statutory
scheme, however, mitigates any impropriety by denying those
members -- as distinct from the voting members -- the ability
to vote in licensing decisions. Id. § 1201(e). Accordingly,
we conclude that the Board is adequately insulated from
19
political pressures, thereby satisfying this element of quasi-
judicial immunity.4
4. The use of precedent in resolving controversies
Although the Butz Court did not expound on the
application of this factor, this Court in Dotzel inferred “the
relevant question . . . to be whether the Board's decisions are
purely discretionary, or are constrained by outside law.” 438
F.3d at 326-27. Since it was “not clear to what extent the
Board refers to its own prior determinations in reaching
decisions,” the Dotzel Court instead considered the fact that
“the Board is required by statute to consider in its
deliberations the land-use standards set out in the relevant
zoning ordinance, and to explain its reasoning in written
opinions,” as decisive of this factor. Id. at 327.
The Board Defendants‟ brief recognizes that the Board
Defendants did not rely on past precedents because there was
no past precedent -- the December 2006 licensing decision
represented the Board‟s first written opinion on a license
application. Because the licensing decision of the nascent
Gaming Board was the first of its kind, we instead view as
probative of this factor the existence of requirements that the
record be transcribed, that the Board issue a written decision
and final order, and that the Board employ “a cognizable
burden of proof.” Cleavinger, 474 U.S. at 206.
4
Judge Fisher, our dissenting colleague, suggests that even
though the Board members serve for a set term of years, they
are still subject to political pressure to decide licensing
applications in a particular way if they wish to ensure their
reappointment. That line of reasoning would similarly deny
elected state judges absolute immunity, a proposition that we
cannot, and do not, endorse. See Tobin for Governor v. Ill.
State Bd. of Elections, 268 F.3d 517, 526 (7th Cir. 2001);
Brown v. Griesenauer, 970 F.2d 431, 439 (8th Cir. 1992).
20
Here, the Gaming Board is required by law to reach its
decisions based on certain statutorily delineated criteria
relating to each applicant‟s eligibility and suitability for
licensing. 4 Pa. Cons. Stat. Ann. §§ 1302-1305, 1325(c); 58
Pa. Code § 441a.7(e)-(h). As we have noted, in determining
whether each applicant has satisfied those criteria, the Board
is required to employ a “clear and convincing evidence”
standard. 58 Pa. Code § 441a.7(d). As is evident in the
Board‟s written decision in this case, fulfillment of those
criteria serves as a basis of comparison for deciding between
the applicants. The Board also is mandated to issue a written
decision accompanying its final order. We are satisfied that
this factor also supports quasi-judicial immunity.
5. The adversarial nature of the process
The Butz Court recognized that certain facets of the
adversarial process “enhance the reliability of information
and the impartiality of the decisionmaking process”: (1)
“[a]dvocates are restrained not only by their professional
obligations, but by the knowledge that their assertions will be
contested by their adversaries in open court,” (2) “jurors are
carefully screened to remove all possibility of bias,” and (3)
witnesses are . . . subject to the rigors of cross-examination
and the penalty of perjury.” 438 U.S. at 512. In Dotzel,
which we read as applying here, we found that the
proceedings at issue were “adversarial as a matter of law”
because (1) “all interested parties [must] be given notice and
an opportunity to attend,” (2) ex parte contacts were
prohibited, (3) witnesses could be cross-examined, and (4) the
parties could challenge proffered evidence. 438 F.3d at 327.
The District Court here denied immunity to the Board
Defendants because Keystone‟s averments, which alleged that
ex parte communication was permitted at the licensing
hearings, among other averments, “cast substantial doubt as
to the adversarial nature of the proceedings.” Keystone, 674
F. Supp. 2d at 629.
21
We observe that in applying for a license to the
Gaming Board, almost all of the adversarial elements this
Court identified in Dotzel are met at Gaming Board licensing
hearings. The applicants must be given “reasonable notice of
a hearing and an opportunity to be heard,” 2 Pa. Cons. Stat. §
504; are entitled to object to rulings made by the Board in
competitors‟ hearings as well as their own, 58 Pa. Code §
441a7(t); and may challenge competitors‟ evidence and
applications by presenting comparative evidence, briefs, and
oral argument, id. § 441a7(n), (u), (w). In addition, Gaming
Board members are largely proscribed from ex parte
communications, participation in which is usually grounds for
recusal, 4 Pa. Cons. Stat. § 1202.1(c), (c.1), (c.2), although
such communications are permitted 1) between the Board and
certain executive officers to the extent necessary to clarify or
correct evidentiary materials or 2) between the Board and the
office of chief counsel of the BIE. Id. § 1202.1(e).
Contrary to the District Court‟s determination, those
limited exceptions to the blanket ban on ex parte contacts do
not affect the Board members‟ eligibility for quasi-judicial
immunity. See, e.g., Brokaw v. Mercer Cnty., 235 F.3d 1000,
1015-16 (7th Cir. 2000); J.R. v. Wash. Cnty., 127 F.3d 919,
925-26 (10th Cir. 1997).
Keystone also identifies two hallmarks of the
adjudicatory process that are absent from licensing
proceedings before the Gaming Board. First, Keystone
claims that an applicant is not entitled to test the veracity of
background information relating to each applicant, which the
Board may consider in reaching its determination. 58 Pa.
Code § 441a7(r). That concern, however, is tempered by the
requirements that the Board must give notice of the contents
of any non-confidential information, 4 Pa. Const. Stat. §
1206(g); “[t]he Board may request that an applicant respond
to inquiries related to confidential information during a
licensing hearing to promote transparency in the regulation of
gaming in this Commonwealth,” 58 Pa. Code § 441a7(r); and
22
the applicant may object to any ruling by the Board, id. §
441a.7(t).
It is undisputed that applicants here have no right to
cross-examination. Some courts have concluded that while
the absence of a right to cross-examination may support a
finding that a given proceeding is non-adversarial, see
Cleavinger, 474 U.S. at 206, this does not determine the issue.
In considering the requirement for permitting cross-
examination in order to immunize officials under the quasi-
judicial status asserted here by the Board Defendants, our
sister circuits have held that the other factors of weighing
evidence, issuing written decisions, administering oaths, and
the like, are sufficient. See Beck v. Tex. State Bd. of Dental
Exam‟rs, 204 F.3d 629, 636 (5th Cir. 2000) (holding that state
dental board disciplinary proceedings were adversarial, thus
supporting finding of quasi-judicial immunity for board
members, because dentist had rights to present evidence and
to counsel, and board administered oaths to witnesses and
made evidentiary rulings); Dunham v. Wadley, 195 F.3d
1007, 1011 (8th Cir. 1999) (concluding that members of
veterinary licensing board were entitled to immunity, without
mentioning whether right of cross-examination existed at
licensing hearings, because “board weighed evidence, made
factual determinations, determined sanctions, and issued
written decisions”); see also Franklin v. Shields, 569 F.2d
784, 796, 798 (4th Cir. 1977) (deciding pre-Butz that
members of parole board were entitled to quasi-judicial
immunity even though prisoners did not have rights to call or
cross-examine witnesses at parole hearings).
Moreover, not every Butz factor must be satisfied for
an official to be entitled to quasi-judicial, absolute immunity.
Miller v. Davis, 521 F.3d 1142, 1145 (9th Cir. 2008); Beck,
204 F.3d at 635 (noting that when analyzing Butz factors,
“[n]o one factor is controlling”). It follows that the District
Court erred by denying the Board members immunity on the
23
basis of considerations related to the adversariness factor
alone. See Keystone, 674 F. Supp. 2d at 659,
6. The availability of appellate review
In Dotzel, this Court recognized that “[a] formal
appellate procedure is probably the single most court-like
feature a government body can have,” explaining that many
of the procedural safeguards integral to the quasi-judicial
immunity analysis “exist largely to facilitate appellate
review,” and noting that “it is a hallmark of courts, unlike
legislature and executives, that (with one exception) they do
not consider themselves to be either final or infallible.” 438
F.3d at 327. We agree.
Under 4 Pa. Cons. Ann. § 1204, unsuccessful gaming
license applicants may appeal as of right to the Pennsylvania
Supreme Court; that Court, in turn, “shall affirm all final
orders, determinations or decisions of the board . . . 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.” To facilitate
any appeal, the Board must transcribe the hearings, 58 Pa.
Code § 441a.7(v), and issue a written decision, id. §
441a.7(x). It is clear that Keystone had a right to appeal the
Gaming Board‟s decision to the Pennsylvania Supreme Court,
which it chose not to exercise. Therefore, as the District
Court similarly concluded, Keystone, 674 F. Supp. 2d at 659,
this factor also supports immunity for the Board Defendants. 5
5
In Riverwalk Casino, LP v. Pa. Gaming Control Bd.,
926 A.2d 926, 935 (Pa. 2007), the Supreme Court of
Pennsylvania held, as we have noted earlier, that the
Pennsylvania Gaming Control Board (the Board Defendants
here) is a quasi-judicial body. Therefore, under the authority
of Butz, 438 U.S. 478, the members of that body would be
entitled to absolute immunity from personal liability.
24
In sum, we hold that the Butz factors, on balance,
clearly support quasi-judicial immunity for members of the
Pennsylvania Gaming Control Board.
B.
Finally, we disagree with the District Court‟s
conclusion that additional factual development is necessary.
As we acknowledged in Dotzel, deciding whether to extend
quasi-judicial immunity to an official involves a “legal
determination” that focuses on “the legal and structural
components of the job function, as opposed to detailed facts
about specific acts and mental states.” 438 F.3d at 325.
Here, as in Dotzel, it is evident that, based on the relevant
statutory and regulatory provisions governing Gaming Board
hearings, the Board serves a quasi-judicial function, which
entitles a Board member to “immunity from suit rather than a
mere defense to liability.” Mitchell, 472 U.S. at 526.
We conclude that an overall consideration and
weighing of the factors required by Butz to establish quasi-
judicial, absolute immunity for the licensing decisions of the
Board Defendants have been more than met. In light of our
conclusion, we need not reach or address the parties‟
arguments concerning qualified immunity.
IV.
We will reverse the decision of the District Court and
direct that the District Court on remand enter an order
dismissing all counts against the Board Defendants.
25
FISHER, Circuit Judge, concurring and dissenting.
Though I agree with the judgment to reverse and
remand the District Court’s decision, I disagree with my
colleagues’ broad interpretation of quasi-judicial immunity. I
therefore write separately.
The majority holds that the Pennsylvania Gaming
Control Board’s (“Board”) decision to grant two Category 2
gaming licenses was a judicial act subject to absolute
immunity. This expands the notion of “judicial.” The
Supreme Court has “been quite sparing in [its] recognition of
absolute immunity, . . . and h[as] refused to extend it any
further than its justification would warrant.” Burns v. Reed,
500 U.S. 478, 486-87 (1991) (quotation marks and citations
omitted). Today’s decision exceeds the traditional limitations
of absolute immunity, creating another barrier to the remedies
secured by Section 1983 for deprivations of constitutional
rights.
I would instead decide this case on the ground of
qualified immunity and hold that the Board members did not
deprive Keystone of a well-established constitutional right.
For this reason, I agree with our decision to reverse the
District Court. But we need not expand the narrow contours
of absolute immunity to reach this result. “Absolute
immunity . . . is strong medicine, justified only when the
danger of [officials’ being] deflect[ed from the effective
performance of their duties] is very great.” Forrester v.
White, 484 U.S. 219, 230 (1988) (quotation marks and
citation omitted) (modifications in original). There is little
reason to hold that the Board members, and similarly-situated
executive officials, “may with impunity discharge their duties
in a way that is known to them to violate the United States
Constitution or in a manner that they should know
transgresses a clearly established constitutional rule.” Butz v.
Economou, 438 U.S. 478, 507 (1978).
I.
Keystone brings this action under 42 U.S.C. § 1983,
which is written in broad terms. A decision to grant the
Board absolute immunity must comport with Section 1983. It
applies to “[e]very person” acting under color of state law
who deprives any other person in the United States of “rights,
privileges, or immunities secured by the Constitution and
laws.” 42 U.S.C. § 1983. Absolute immunity is nowhere
mentioned in the statute, but it was “solidly established at
common law” at the time of passage. Pierson v. Ray, 386
U.S. 547, 553-54 (1967). The “legislative record gives no
clear indication that Congress meant to abolish wholesale all
common-law immunities.” Id. at 554. Absolute immunity
therefore rests upon a finding that Congress did not intend to
abrogate the common-law traditions. In deciding whether
immunity applies, “our role is to interpret the intent of
Congress in enacting § 1983, not to make a freewheeling
policy choice.” Malley v. Briggs, 475 U.S. 335, 342 (1986);
see also Burns, 500 U.S. at 497 (Scalia, J., concurring and
dissenting) (stating that “we have . . . thought a common-law
tradition (as of 1871) to be a . . . necessary one” for absolute
judicial immunity under § 1983 (emphasis in original));
Tower v. Glover, 467 U.S. 914, 920 (1984) (“If an official
was accorded immunity from tort actions at common law
when the Civil Rights Act was enacted in 1871, the Court
next considers whether § 1983’s history or purposes
2
nonetheless counsel against recognizing the same immunity in
§ 1983 actions.”). At the time of passage, “the touchstone for
[absolute immunity’s] applicability was performance of the
function of resolving disputes between parties, or of
authoritatively adjudicating private rights.” Burns, 500 U.S.
at 500 (Scalia, J., concurring and dissenting) (citing Steele v.
Dunham, 26 Wis. 393, 396-97 (1870); Wall v. Trumbull, 16
Mich. 228, 235-37 (1867); Barhyte v. Shepherd, 35 N.Y. 238,
241-42 (1866)); see also Antoine v. Byers & Anderson, Inc.,
508 U.S. 429, 435-36 (1993).
Absolute judicial immunity was extended to
administrative bodies in Butz, 438 U.S. 478. But it was only
extended to administrative bodies that fulfill a judicial
function. The Court established an exception to the “general
rule [of qualified immunity] for executive officials charged
with constitutional violations” in holding “that there are some
officials whose special functions require a full exemption
from liability.” Butz, 438 U.S. at 508; Forrester, 484 U.S. at
227 (“[I]mmunity is justified and defined by the functions it
protects and serves, not by the person to whom it attaches.”
(emphasis in original)).
The Board’s decision to issue gambling licenses is
fundamentally different from a judicial decision. Though
steeped in formality, the discretionary act of issuing a
gambling license to some of several applicants is not the
fulfillment of a judicial function. The functional approach to
quasi-judicial immunity requires that “[w]hen judicial
immunity is extended to officials other than judges, it is
because their judgments are ‘functional[ly] comparab[le]’ to
3
those of judges.” Antoine, 508 U.S. at 436 (modifications in
original) (quoting Imbler v. Pachtman, 424 U.S. 409, 423
n.20 (1976)). To determine whether an act is “judicial,” we
must look to the “nature of the act itself, i.e., whether it is a
function normally performed by a judge, and to the
expectations of the parties, i.e., whether they dealt with the
[body] in [its] judicial capacity.” Stump v. Sparkman, 435
U.S. 349, 362 (1978). The Board is directed by statute to base
its decision upon “whether the issuance of a license will
enhance tourism, economic development or job creation [and]
is in the best interests of the Commonwealth.” 4 Pa. Cons.
Stat. Ann. § 1325(a). Exercising discretion to choose two of
five applicants for a license, based on these policy reasons, is
not a function “normally performed by a judge.” Judges do
not award licenses to competing applicants based on policy
preferences. They do not invite public comments and conduct
open meetings with members of the public. In holding
otherwise, my colleagues’ construction of absolute quasi-
judicial immunity fails to conform to the common law
traditions of absolute immunity.
Moreover, the decision fails to meet the “touchstone”
of serving “the function of resolving disputes between parties,
or of authoritatively adjudicating private rights.” Antoine,
508 U.S. at 435-36 (quoting Burns, 500 U.S. at 500 (Scalia,
J., concurring and dissenting)). The majority glosses over the
fact that the proceedings before the Board were not
adversarial. In previous cases finding quasi-judicial
immunity, administrative bodies served a judicial function:
they either resolved a dispute or authoritatively adjudicated
4
private rights.1 For example, in Butz, the Department of
Agriculture sought to revoke or suspend a business license by
alleging that it failed to meet minimum financial
requirements. 438 U.S. at 481. It was an adjudication
between an agency and a private company in which the right
to conduct business was in dispute. The closest case on point
1
The majority opinion refers to two district court cases from the
Ninth Circuit that involve a gaming commission but are not
entirely on point. In a case similar in name but not in substance,
the Nevada Gaming Commission initiated suspension
proceedings against a gaming employee and denied him a
license, revoking his work permit and frustrating “the right to be
employed by a licensed establishment.” Rosenthal v. Nevada,
514 F. Supp. 907, 911 (D. Nev. 1981); see also Romano v.
Bible, 169 F.3d 1182, 1187 (9th Cir. 1999) (holding that the
Nevada Gaming Commission was subject to absolute immunity
because it was sufficiently adversarial in nature and adjudicated
disciplinary proceedings against licensees). The Nevada
Gaming Commission proceeding is a clear case of a dispute
between parties and an authoritative adjudication of a right. The
only case which can be construed to support the majority’s
holding is Kraft v. Jacka, 669 F. Supp. 333 (D. Nev. 1987),
where the district court held that the Nevada Gaming
Commission’s decision to deny a gaming license was protected
by absolute immunity and qualified immunity. The court
applied both absolute and qualified immunity, thereby failing to
resolve whether denying a license to operate a gaming facility
is properly considered a judicial function.
5
from our Circuit is Dotzel v. Ashbridge, 438 F.3d 320 (3d Cir.
2006), where a board of supervisors denied an application for
a zoning permit by applying a discrete set of legal
requirements. We held that the board of supervisors was
sufficiently judicial and granted it absolute quasi-judicial
immunity. What, in part, distinguishes the board of
supervisors in Dotzel from the Board in this case is that the
board of supervisors adjudicated a private right, namely, the
right to use one’s land. Dotzel had a legal right to his land
and sought to exercise his right to use it for mining purposes.
The Board, by contrast, did not adjudicate any private
rights. Unlike the board of supervisors in Dotzel, the Board
did not authoritatively determine what Keystone or any of the
other four applicants could do with their property. Instead,
the five applicants sought a privilege. Multiple businesses
applied for two casino licenses, and the Board made a
discretionary decision, based on policy determinations, to
issue the privilege to some and not to others. It was akin to a
government agency awarding contracts after a formal bidding
process. The distinction between the board proceedings in
Dotzel and the Board proceedings in this case is fundamental.
In failing to take note of it, the majority risks an expansion of
absolute immunity to government functions that are not
properly regarded as judicial in nature.
I disagree with the majority’s application of two
additional Butz factors: the Board’s insulation from political
influence and its use of precedent in making decisions. An
administrative body shares the characteristics of the judiciary
if it is insulated from political influence. See, e.g., Butz, 438
6
U.S. at 512. The majority concludes that “the Board is
adequately insulated from political pressures.” Maj. Op. at
22. In Dotzel, we stated that “the key question for our inquiry
is . . . whether the Board members here can be removed from
office based on the substance of their official work.” 438
F.3d at 326. But in this case, the “for cause” provision is not
the key question because the short appointment terms fail to
insulate the Board members from political influence. The
appointing authorities may decide not to reappoint Board
members based on the substance of their work. The
gubernatorial appointees serve terms of three years, and the
legislative appointees serve terms of two years. 4 Pa. Cons.
Stat. Ann. § 1201(d). This means that Board members are
likely to mold the substance of their work to fit the political
views of the appointing authorities.
We must also look to how the Board’s decision-
making procedures are structured to determine if it is
insulated from political influence. Any action by the Board
involving the “approval, issuance, denial or conditioning of
any license . . . require[s] a qualified majority vote consisting
of at least one gubernatorial appointee and the four legislative
appointees.” Id. § 1201(f)(1). This means that the
“legislative appointees were granted what amounts to a veto
power on the Board.” Riverwalk Casinos, LP v. Pa. Gaming
Control Bd., 926 A.2d 926, 953 (Pa. 2007) (Castille, J.,
dissenting). The combination of the legislature’s veto power
on the Board and the two-year appointment term reveals that
the legislature exerts indirect control over the Board’s
decisions.
7
Finally, the Board acts in an entirely discretionary
manner and is not sufficiently bound by precedent or law to
be regarded as judicial in nature. In Dotzel, we understood
the question of whether precedent is used in resolving
controversies to “be whether the Board’s decisions are purely
discretionary, or are constrained by outside law.” 438 F.3d at
326-27. We paid notice that the board of supervisors was
“required by statute to consider in its deliberations the land-
use standards set out in the relevant zoning ordinance, and to
explain its reasoning in written opinions.” Id. at 327. The
Board is required to issue written opinions, 4 Pa. Cons. Stat.
Ann. § 441a.7(u), and to consider the basic eligibility of each
applicant. Id. § 1325(b). Beyond this, though, the Board’s
decision is entirely discretionary. The Act states that the
Board “may” base its decision on several factors:
(1) The location and quality of the proposed
facility, including, but not limited to, road and
transit access, parking and centrality to market
service area.
(2) The potential for new job creation and
economic development which will result from
granting a license to an applicant.
(3) The applicant's good faith plan to recruit,
train and upgrade diversity in all employment
classifications in the facility.
8
(4) The applicant's good faith plan for
enhancing the representation of diverse groups. .
..
(5) The applicant's good faith effort to assure
that all persons are accorded equality of
opportunity in employment and contracting. . . .
(6) The history and success of the applicant in
developing tourism facilities ancillary to
gaming development if applicable to the
applicant.
(7) The degree to which the applicant presents a
plan for the project which will likely lead to the
creation of quality, living-wage jobs and full-
time permanent jobs for residents of this
Commonwealth generally and for residents of
the host political subdivision in particular.
(8) The record of the applicant and its developer
in meeting commitments to local agencies,
community-based organizations and employees
in other locations.
(9) The degree to which potential adverse
effects which might result from the project,
including costs of meeting the increased
demand for public health care, child care, public
transportation, affordable housing and social
services, will be mitigated.
9
(10) The record of the applicant and its
developer regarding compliance with [Federal,
State, and local labor laws.]
(11) The applicant's record in dealing with its
employees and their representatives at other
locations.
Id. §1325(c). In its sole discretion, the Board can base its
decision on all, some, or none of the factors. In Dotzel, the
board of supervisors was “required by statute to consider in its
deliberations the land-use standards set out in the relevant
zoning ordinance.” 438 F.3d at 327. But the Gaming Act
states that “[t]he board shall in its sole discretion issue, renew,
condition or deny a slot machine license.” 4 Pa. Cons. Stat.
Ann. § 1325(a) (emphasis added). Furthermore, there is
nothing directing the Board to consider its previous decisions.
Though there were no prior decisions for the Board members
to cite in the Board’s Philadelphia licensing decision, there is
nothing to indicate that the Board operates by use of
precedent in making decisions. In fact, the highly
discretionary nature of the proceedings indicates that
decisions are to be made on a case-by-case basis. And this
makes sense, given that the Board is not fulfilling a judicial
function, but is applying policy preferences to determine the
best applicants for casino licenses.
The general rule is to limit the application of absolute
immunity to narrow circumstances and to apply qualified
immunity to executive officials. Harlow v. Fitzgerald, 457
U.S. 800, 807 (1982) (“For executive officials in general . . .
10
our cases make plain that qualified immunity represents the
norm.”). Butz represents an exception for executive officials
who fulfill a judicial function. The majority focuses on the
formalities surrounding the Board’s decision and fails to take
note of the nature of the decision itself. Deciding the
worthiest candidates for business licenses based on policy
preferences is categorically not a judicial function. Following
the majority’s logic, as long as an executive officer’s
decision, whether it be issuing business licenses or granting
contracts for paper supplies, is embedded in a sufficiently
formal procedure, we must grant that officer absolute
immunity. This is contrary to Supreme Court precedent,
which requires us to look to “the nature of the act itself.”
Stump, 435 U.S. at 362. The Board members’ position is that
they are absolutely immune from any liability, even if they
violate one’s constitutional rights and they do so knowingly
and deliberately. But in holding that the Board members are
immune, the majority risks upsetting the protections
embodied in Section 1983. “Under the criteria developed by
precedents of th[e Supreme] Court, § 1983 would be drained
of meaning were we to hold that the acts of a governor or
other high executive officer have ‘the quality of a supreme
and unchangeable edict.’” Scheuer v. Rhodes, 416 U.S. 232,
248 (1974) (quoting Sterling v. Constantin, 287 U.S. 378, 397
(1932)).
Our system of jurisprudence rests on the
assumption that all individuals, whatever their
position in government, are subject to federal
law: ‘No man in this country is so high that he
is above the law.’ . . . In light of this principle,
11
. . . officials who seek absolute exemption from
personal liability for unconstitutional conduct
must bear the burden of showing that public
policy requires an exemption of that scope.
Butz, 438 U.S. at 506 (quoting United States v. Lee, 106 U.S.
196, 220 (1882)). The Board members fail to meet the burden
of showing that “public policy requires an exemption” from
such a foundational principle of governance. Id. For these
reasons, I respectfully disagree with the majority’s decision.
The Board is not an exception to the rule of qualified
immunity.
II.
I believe that we should have decided this case on the
ground of qualified immunity and held that the Board
members did not deprive Keystone of a clearly-established
constitutional right. Whether the Board members should
receive qualified immunity is subject to a two-pronged test: a
court evaluating a claim of qualified immunity “must first
determine whether the plaintiff has alleged the deprivation of
an actual constitutional right at all, and if so, proceed to
determine whether that right was clearly established at the
time of the alleged violation.” Conn v. Gabbert, 526 U.S.
286, 290 (1999). The test reflects “the balance that [the
Court’s] cases strike between the interests in vindication of
citizens’ constitutional rights and in public officials’ effective
performance of their duties.” Davis v. Scherer, 468 U.S. 183,
195 (1984). Keystone claims that the Board members
violated its rights protected by the Commerce Clause and the
12
Equal Protection Clause. Neither claim of a constitutional
deprivation was clearly established.2
Government officials who perform discretionary duties
are “shielded from liability for civil damages insofar as their
conduct does not violate clearly established statutory or
constitutional rights of which a reasonable person would have
known.” Harlow, 457 U.S. at 818. This “generally turns on
the ‘objective legal reasonableness’ of the action . . . assessed
in light of the legal rules that were ‘clearly established’ at the
time [the action] was taken.” Anderson v. Creighton, 483
U.S. 635, 639 (1987) (quoting Harlow, 457 U.S. at 819).
A.
Under the Commerce Clause, Congress has the power
to “regulate Commerce . . . among the several States.” U.S.
Const. art. I, § 8, cl. 3. This clause has an implied
requirement—the Dormant Commerce Clause—that the states
not “mandate differential treatment of in-state and out-of-state
economic interests that benefits the former and burdens the
latter.” Granholm v. Heald, 544 U.S. 460, 472 (2005)
2
The two prongs of the qualified immunity test may be handled
in any order. “The judges of the district courts and the courts of
appeals should be permitted to exercise their sound discretion in
deciding which of the two prongs of the qualified immunity
analysis should be addressed first in light of the circumstances
in the particular case at hand.” Pearson v. Callahan, 129 S. Ct.
808, 818 (2009).
13
(quotation marks and citation omitted). In Dennis v. Higgins,
the Court held that “individuals injured by state action that
violates this [negative] aspect of the Commerce Clause may
sue and obtain injunctive and declaratory relief” and that this
“amounts to a ‘right, privilege, or immunity’ under [Section
1983].” 498 U.S. 439, 447 (1991).
Dormant Commerce Clause analysis consists of two
steps: “whether ‘heightened scrutiny’ applies, and, if not, then
. . . whether the law is invalid under the Pike [v. Bruce
Church, Inc., 397 U.S. 137, 142 (1970),] balancing test.”
Cloverland-Green Spring Dairies, Inc. v. Pa. Milk Mktg. Bd.,
462 F.3d 249, 261 (3d Cir. 2006). Heightened scrutiny
applies when a law “discriminates against interstate
commerce” in purpose or effect. C & A Carbone, Inc. v.
Town of Clarkstown, 511 U.S. 383, 390 (1994). If heightened
scrutiny does not apply, then we consider the Pike balancing
test: “whether the ordinance imposes a burden on interstate
commerce that is ‘clearly excessive in relation to the putative
local benefits.’” C & A Carbone, Inc., 511 U.S. at 390 (citing
Pike, 379 U.S. at 142).
The Board stated in its written decision that it
“considered the fact of competing Atlantic City properties as
a negative factor for licensure in Philadelphia.” (App. at
A194.)
The Board finds it credible that owners of
[Atlantic City] casinos . . . may attempt to use
the Philadelphia property as a gambling-
incubator to gain new customers who will then
14
be lured to its Atlantic City properties where it
can earn a much larger profit on every dollar
gambled. Likewise, the Board finds applicants
without Atlantic City connections more strongly
motivated to compete directly against the
Atlantic City competition because they have no
interest in diverting patrons to the casino which
has a better tax structure for the casino.
(Id. at A194.) And it goes on to note why Keystone’s
ownership of a casino in Atlantic City serves as a negative
factor.
Additionally, evidence has been introduced that
the Trump Entertainment properties in Atlantic
City[, the parent company of Keystone,] have
undergone bankruptcy reorganizations in order
to rebuild and revitalize them. The Board
believes this further supports its decision to
choose other applicants who do not have other
facilities so close to Philadelphia which may
lure patrons to Atlantic City to assist in the
rebuilding and revitalization of properties there.
(Id. at A194.) The Board concludes by stating that it “finds
that licensing casinos in Philadelphia which do not have
common ownership with Atlantic City facilities are more
likely to further the interests of the Commonwealth and the
public which stands to benefit through increased revenues
obtained by the Pennsylvania properties.” (Id. at A194-95.)
15
The Board’s decision meets both steps of Dormant
Commerce Clause analysis. First, the Board did not
discriminate against interstate commerce because it did not
impose an absolute barrier to entry of any out-of-state casinos.
Cf. Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 40 (1980).
In Dean Milk Co. v. City of Madison, the Court held that a
denial of a license to sell milk in conformity with a scheme to
exclude out-of-state milk “erect[ed] an economic barrier
protecting a major local industry against competition from
without the State” and “plainly discriminate[d] against
interstate commerce.” 340 U.S. 349, 354 (1951). Here, the
Board did not erect a barrier to out-of-state competition. It
merely considered Keystone’s ties to Atlantic City as a
negative factor—one of many factors it considered in the
course of its decision. In fact, the two companies that
received licenses had extensive out-of-state ties. HSP
Gaming is headquartered in Delaware, and Foxwoods is
affiliated with a company that owns a large gaming facility in
Connecticut. Therefore, the Board’s decision was unlike
previous findings of discriminatory intent, where states
established absolute barriers to interstate commerce.
Second, the Board’s decision furthers important state
interests that outweigh any incidental burdens on interstate
commerce. The decision advanced four state interests:
(1) the procurement of “a significant source of revenue to the
Commonwealth”; (2) “provid[ing] broad economic
opportunities to the citizens of th[e] Commonwealth”;
(3 ) “ p re v e n t[ing] possible m o nopolization ” ; a n d
(4) “enhanc[ing] the further development of the tourism
market.” 4 Pa. Cons. Stat. Ann. § 1102. States have a
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legitimate interest “in maximizing the financial return to an
industry within it.” Pike, 397 U.S. at 143. Considering
applicants’ ties to Atlantic City as a negative factor due to
concerns that it may draw customers away from the state does
not constitute a “clearly excessive” burden on interstate
commerce. C & A Carbone, Inc., 511 U.S. at 390. The
Board’s decision does not inhibit Keystone or any other
Atlantic City casino from attracting Pennsylvania customers.
And it does not impose a heavy burden on out-of-state
applicants for casino licenses, especially considering that the
two successful applicants had significant out-of-state ties.
Hence, the Board did not violate the Dormant Commerce
Clause and did not deprive Keystone of a constitutionally-
protected right.
The Board members should also be held immune
because there was not “sufficient precedent at the time of the
action, factually similar to the plaintiff’s allegations, to put
[the] defendant on notice that his or her conduct is
constitutionally prohibited.” McKee v. Hart, 436 F.3d 165,
171 (3d Cir. 2006) (quotation marks and citation omitted).
There is insufficient precedent that the mere consideration of
a company’s out-of-state ties as a negative factor—not a
barrier—by an administrative agency violates the Dormant
Commerce Clause, especially where the factors of site
location and previous experience carried dispositive weight in
determining the Board’s decision. Hence, even if the Board’s
action did constitute a deprivation of a constitutional right, the
lack of clarity in Dormant Commerce Clause jurisprudence
prohibited the Board members from being on notice that the
use of a negative factor in reaching a discretionary policy
17
determination deprived Keystone of its rights under the
Commerce Clause.
B.
The Equal Protection Clause of the Fourteenth
Amendment, § 1, directs that no state shall “deny to any
person within its jurisdiction the equal protection of the laws.”
U.S. Const. amend. XIV, § 1. This “does not forbid all
classifica tio n s” but “ sim ply ke e ps gove rnm e nta l
decisionmakers from treating differently persons who are in
all relevant respects alike.” Nordlinger v. Hahn, 505 U.S. 1,
10 (1992). The District Court held that Keystone “sufficiently
alleged that the [Board] applied the Gaming Act in a way that
was designed to benefit in-state business to the detriment of
out-of-state competitors.” Keystone Redevelopment Partners,
LLC v. Decker, 674 F. Supp. 2d 629, 667 (M.D. Pa. 2009).
The class of casinos with out-of-state ties is not a suspect
class, and both parties agree that rational basis review should
be applied.
Rational basis review requires us to consider whether
“there is a plausible policy reason for the classification.”
Nordlinger, 505 U.S. at 11 (citation omitted). Two questions
must be addressed: “first, whether at least one of the purposes
of the classification involves a legitimate public interest and,
second, whether the classification is rationally related to the
achievement of that purpose.” Hancock Indus. v. Schaeffer,
811 F.2d 225, 237 (3d Cir. 1987). In making these
determinations, we exercise deference and grant discretion to
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the states. See Pers. Adm’r of Mass. v. Feeney, 442 U.S. 256,
272 (1979).
Keystone challenges the Board’s use of the Atlantic
City factor.3 As stated above, the Board advanced four
purposes for the classification: (1) “the procurement of a
significant source of revenue to the Commonwealth”;
(2) “providing broad economic opportunities to the citizens of
th [ e ] C o m m o n w e a lth ” ; (3 ) “ p re v e n tin g p o ss ib le
monopolization”; and (4) “enhancing the further development
of the tourism market.” Appellant’s Br. at 50-51. These
purposes derive from the Pennsylvania Race Horse
Development and Gaming Act. See 4 Pa. Cons. Stat. Ann.
§ 1102.
Purposes (1), (2), and (4) can be boiled down to the
purpose of promoting domestic industry and the state revenue
and tourism that will be derived therefrom. Though states
have an undoubtedly legitimate interest in raising revenue and
3
The classification between Atlantic City casinos and non-
Atlantic City casinos does not derive from legislation but is
created by the Board in reaching its decision. Rational basis
review is usually conducted on legislative categories. But it is
nevertheless proper here. In a slightly analogous case, a board
was alleged to have “utilized an implicit classification in
administering its zoning ordinance.” Sylvia Dev. Corp. v.
Calvert Cnty., 48 F.3d 810, 821 (4th Cir. 1995). There, the
court conducted rational basis review of the category, which was
created by the board.
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promoting domestic commerce, it is not a “general rule that
promotion of domestic industry is a legitimate state purpose
under equal protection analysis.” Metro. Life Ins. Co. v.
Ward, 470 U.S. 869, 876 (1985). The Board’s aim of
promoting domestic industry cannot be legitimate if it is
“purely and completely discriminatory, designed only to favor
domestic industry within the State.” Id. at 878.
But the Board’s aim was not solely to favor domestic
industry within the State. One of the Category 2 licenses
went to an out-of-state casino, and the other went to a casino
with extensive out-of-state ties. In Metropolitan Life, the
Court was concerned with a different form of discrimination:
a state tax that was categorically higher for all out-of-state
businesses. And since Metropolitan Life, the decision has
been “sharply limited to its facts.” Trojan Techs., Inc. v.
Pennsylvania, 916 F.2d 903, 915 (3d Cir. 1990). Here, the
Board was motivated by an interest in promoting local
commerce, revenue, and tourism. Moreover, the Board had
the legitimate purpose of reducing the possibility of local
monopolization. Unlike Metropolitan Life where the state
imposed a blanket impediment against interstate commerce,
the Board weighed a factor against casinos located nearby
based on concerns of local commerce. The Board’s use of the
Atlantic City factor is rationally related to the achievement of
legitimate public interests, and it passes rational basis review.
III.
I believe that the majority’s broad construction of
absolute quasi-judicial immunity is in conflict with Section
20
1983 and Supreme Court jurisprudence. The Board members
are executive officials, and we should apply qualified
immunity to their actions. For this reason, I respectfully
disagree with my colleagues. But I concur in the judgment to
reverse and remand the District Court’s decision, believing
that the Board members did not deprive Keystone of clearly-
established constitutional rights.
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