Lucky Chances, Inc. v. Cal. Gambling Control Com. ( 2024 )

Filed 10/28/24 (see dissenting opinion)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
LUCKY CHANCES, INC. et al., C087061
Plaintiffs and Appellants, (Super. Ct. No.
34201780002549CUWMGDS)
v.
CALIFORNIA GAMBLING CONTROL
COMMISSION,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Sacramento County, Michael
P. Kenny, Judge. Affirmed as modified.
Buchalter, Robert S. McWhorter, and Efrat M. Cogan for Plaintiffs and Appellants.
Rob Bonta, Attorney General, T. Michelle Laird, Acting Senior Assistant Attorney
General, Bart E. Hightower, Deputy Attorney General, for Defendant and Appellant.
1
After a hearing before an administrative law judge (ALJ) who issued a proposed
decision concluding no cause for discipline or license denial was established, the
California Gambling Control Commission (Commission) rejected the ALJ’s proposed
decision and renewed, with additional conditions, the gambling licenses of Lucky
Chances, Inc., Rommel Medina, and Ruell Medina (collectively, Licensees). The
Commission also suspended the licenses for 14 days, but stayed the suspension and
ordered Licensees to pay a monetary penalty in lieu of suspension of 50 percent of Lucky
Chances Casino’s average daily gross gaming revenue under California Code of
Regulations, title 4, section 12554, subdivision (d)(7). The Commission’s decision was
based on its finding that Rene Medina, a disqualified person, had material involvement
with their licensed gambling operation, and the ownership and management thereof. 1
The trial court issued a peremptory writ of administrative mandamus ordering the
Commission to set aside the monetary penalty and to reconsider the penalty or discipline
in light of the court’s decision and order that a monetary penalty in lieu of suspension is
limited to $20,000 per violation.
On appeal, Licensees argue the imposition of any discipline was unauthorized. In
its cross-appeal, the Commission contends the trial court erroneously construed
California Code of Regulations, title 4, section 12554, subdivision (d)(7) as being subject
to the limit on fines set forth in Business and Professions Code section 19930,
subdivision (c). 2
We conclude the imposition of additional license conditions was authorized based
on the Commission’s findings, but California Code of Regulations, title 4, section 12554,
subdivision (d) could not be used to impose discipline because the Commission did not
1 We will hereafter refer to the Medinas by their first names to avoid confusion. No
disrespect is intended.
2 Undesignated statutory references are to the Business and Professions Code.
2
find Licensees violated any relevant law, regulation, or previously imposed license
condition.
We will modify the judgment granting the peremptory writ of administrative
mandamus to order the Commission to reconsider the discipline imposed under
California Code of Regulations, title 4, section 12554, subdivision (d) in a manner
consistent with this opinion instead of the trial court’s order. We will affirm the judgment
as modified.
I. BACKGROUND
In enacting the Gambling Control Act (the Act) (§ 19800 et seq.) the Legislature
declared as follows: “Public trust that permissible gambling will not endanger public
health, safety, or welfare requires that comprehensive measures be enacted to ensure that
gambling is free from criminal and corruptive elements, that it is conducted honestly and
competitively, and that it is conducted in suitable locations.” (§ 19801, subd. (g).)
Further, “[a]ll gambling operations, all persons having a significant involvement in
gambling operations, [and] all establishments where gambling is conducted . . . must be
licensed and regulated to protect the public health, safety, and general welfare of the
residents of this state as an exercise of the police powers of the state.” (Id., subd. (i).)
Because the Act is an exercise of the police power of the state, it “shall be liberally
construed to effectuate those purposes.” (§ 19971.)
Lucky Chances Casino is a 60-table card room in Colma (License No. GEGE-
001108). Lucky Chances Casino contains a restaurant and administrative, accounting,
and human resources offices, all located off of the gambling floor. The Act requires the
owner of a gambling enterprise to obtain a state gambling license. (§ 19851.) Lucky
Chances Casino is owned by Lucky Chances, Inc. (License No. GEOW-002757). If the
owner of a gambling enterprise is a corporation, each officer, director, and shareholder
must also be licensed. (§ 19852, subd. (a).) Rene owned and operated Lucky Chances
Casino until he sold Lucky Chances, Inc. to his sons, Rommel and Ruell. Rene is
3
disqualified from licensure because he has been convicted of felony tax evasion. (§
19859, subd. (c)(1).) Rommel and Ruell each own half of the shares of Lucky Chances,
Inc. and hold license numbers GEOW-001326 and GEOW-001327.
On October 1, 2013, Lucky Chances, Inc. was issued an owner’s gambling license
with five conditions:
“1. Rene Medina shall be prohibited from entering, being present in, or in any
way patronizing (a) the areas within Lucky Chances Casino in which controlled gambling
is conducted and (b) any other areas related to the gambling operation, such as count and
surveillance rooms, including all of the 2nd floor.
“2. All future shareholders, corporate officers, key employees, and work permit
holders shall be informed of the prohibition (as identified in condition number one) . . . .
“3. Ruell Medina and Rommell [sic] Medina, licensed as shareholders in Lucky
Chances, Inc. shall each be individually responsible for ensuring that all conditions
placed on the Lucky Chances license are fully complied with, including but not limited to
duties placed upon the General Manager.
“4. If Rene Medina is observed at any time by any employee entering, or being
present in, (a) the areas within Lucky Chances Casino in which controlled gambling is
conducted or (2) any other areas related to the gambling operation, such as count and
surveillance rooms, including all of the 2nd floor, the General Manager or manager in
charge shall [notify the Commission and the Department of Justice, Bureau of Gambling
Control].
“5. Any communication between Rene Medina and any shareholder or employee
of Lucky Chances concerning the operation of the Lucky Chances card room business
shall be disclosed.”
In October 2014, the Bureau of Gambling Control began investigating a complaint
that Rene was still running Lucky Chances Casino and that casino employees were being
used during normal work hours to work on his home. (See § 19930, subd. (a)
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[authorizing investigations by the Department of Justice].) In August 2015, the Bureau of
Gambling Control filed an accusation against Lucky Chances, Inc., Rommel, and Ruell
alleging causes of action for discipline based on violations of license conditions three and
five. (See § 19930, subd. (b) [authorizing Department of Justice to file an accusation
with the Commission after investigation].) Licenses are valid for a period of two years
after the date of issuance. (§ 19876, subd. (a).) As such, the issue of the renewal of the
licenses came on for hearing while the accusation was pending, and the Commission
referred the matter to an evidentiary hearing to be consolidated with the accusation. The
accusation was amended to add a statement of issues. The operative accusation and
statement of issues alleges four causes of action for discipline or denial of the application
for renewal based on: (1) involvement of a disqualified person in Lucky Chance’s
business and financial affairs; (2) violation of license condition five; (3) violation of
license condition three; and (4) providing false or misleading information as to material
facts regarding qualification criteria, failure to reveal facts material to license
qualification, and failure to timely report possible violations of the Act.
The ALJ heard the matter and issued a proposed decision concluding no cause for
discipline or denial was established. With respect to the first cause of action, the ALJ
specifically stated the evidence did not establish any material involvement by a
disqualified person in “gaming operations.” The ALJ proposed dismissing the accusation
and renewing the licenses.
The Commission rejected the ALJ’s proposed decision and decided the case on the
record and additional briefing. As the ALJ had, the commission concluded the evidence
did not establish the second, third, or fourth causes of action for discipline or denial.
With respect to the second cause of action, the Commission explained that
communications between Rene and the payroll and maintenance employees and
supervisors of Lucky Chances Casino regarding construction, maintenance, and
furnishing of his private home did not “concern the operations of the Lucky Chances card
5
room business” and thus did not violate condition five. Because the third cause of action
alleged that license condition three was violated because neither Ruell nor Rommel took
sufficient action to ensure compliance with condition five, the Commission explained that
the failure to prove a violation of license condition five meant the evidence did not
establish that license condition three had been violated.
With respect to the fourth case of action, the Commission found that Rommel and
Ruell failed to disclose that Rene used Lucky Chances, Inc.’s wholesale license, but
concluded the evidence did not establish this failure to report “resulted in a violation of
the Gambling Control Act.” The Commission also found Rommel and Ruell failed to
disclose that Lucky Chances, Inc.’s employees were being used for Rene’s benefit, but
because Rommel testified he was unaware of this information until the October 2014
compliance inspection, the evidence did not establish that Rommel and Ruell’s failure to
disclose this information “resulted in a violation of the Gambling Act.”
With respect to the first cause of action, however, the Commission found “[t]he
evidence established material involvement with a licensed gambling operation, and the
ownership or management thereof, by a disqualified person, Rene Medina.” Specifically,
the Commission found that “[b]y directing Lucky Chances [Casino’s] employees,
including payroll and maintenance staff, to perform services and purchase furnishings for
his home, Rene. . . was materially involved, and exercised managerial and ownership
control over the finances and personnel of Lucky Chances [Casino], a licensed gambling
operation.”
The Commission suspended the licenses for 14 days. It then stayed the suspension
and ordered Licensees to pay a monetary penalty in lieu of suspension pursuant to
California Code of Regulations, title 4, section 12554, subdivision (d)(7)(A) of 50
percent of Lucky Chances Casino’s average daily gross gaming revenue.
With respect to the statement of issues, the Commission found Licensees had met
their burden of proving qualifications for licensure but imposed additional license
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conditions based on Licensees’ failure to disclose Rene’s use of Lucky Chances, Inc.’s
wholesale license, their relationship and association with Rene, and their failure to
exercise reasonable oversight over their payroll and maintenance departments in relation
to those departments’ interaction with Rene. Under the new conditions, Rene is
“prohibited from entering, being present in, or in any way patronizing any areas of Lucky
Chances [Casino’s] property.” (Italics added.) He is also prohibited from having any
direct or indirect communication with any employee or owner of Lucky Chances Casino,
except he may communicate with his immediate family members on matters that do not
relate to any part of Lucky Chances, Inc.’s business.
Licensees filed a petition for writ of administrative mandamus (Code Civ. Proc.,
§ 1094.5) in the trial court challenging the Commission’s decision.
The trial court granted Licensees’ petition in part and denied it in part. The court
found substantial evidence supported the Commission’s finding of material involvement
by a disqualified person in the management and oversight of “Lucky Chances’ (a
gambling operation) employees and affairs sufficient to constitute a violation of the
Gambling Control Act.” However, it found the Commission abused its discretion in
imposing a fine in excess of the statutory limit imposed by section 19930, subdivision (c)
and referenced in California Code of Regulations, title 4, section 12554, subdivision
(d)(7). The court entered judgment accordingly and issued a peremptory writ of
administrative mandamus ordering the Commission to set aside the monetary penalty and
to reconsider the penalty or discipline in light of the court’s decision.
Licensees appealed and the Commission filed a cross appeal.
II. DISCUSSION
A. Standard of Review
Because Licensees’ claims raise pure questions of law regarding the Commission’s
authority under the Act, our standard of review is de novo. (Bostean v. Los Angeles
Unified School Dist. (1998) 63 Cal.App.4th 95, 107-108; California Teachers Assn. v.
7
Butte Community College Dist. (1996) 48 Cal.App.4th 1293, 1299.) “ ‘We consider first
the words of a statute, as the most reliable indicator of legislative intent.’ [Citation.] In
doing so, we give the words ‘their usual and ordinary meaning,’ viewed in the context of
the statute as a whole. [Citation.] As part of this process, ‘ “ ‘[every] statute should be
construed with reference to the whole system of law of which it is a part so that all may
be harmonized and have effect.’ ” ’ [Citation.] [¶] When the language of a statute is
ambiguous—that is, when the words of the statute are susceptible to more than one
reasonable meaning, given their usual and ordinary meaning and considered in the
context of the statute as a whole—we consult other indicia of the Legislature’s intent,
including such extrinsic aids as legislative history and public policy. [Citations.] If there
is no ambiguity, ‘ “ ‘ “we presume the Legislature meant what it said and the plain
meaning of the statute governs.” ’ ” ’ ” (Union of Medical Marijuana Patients, Inc. v.
City of San Diego (2019) 7 Cal.5th 1171, 1184.)
“In determining whether an agency has incorrectly interpreted the statute it
purports to implement, a court gives weight to the agency’s construction.” (Western
States Petroleum Assn. v. Board of Equalization (2013) 57 Cal.4th 401, 415.) “How
much weight to accord an agency’s construction is ‘situational,’ and greater weight may
be appropriate when an agency has a ‘ “comparative interpretive advantage over the
courts,” ’ as when ‘ “the legal text to be interpreted is technical, obscure, complex, open-
ended, or entwined with issues of fact, policy, and discretion.” ’ ” (American Coatings
Assn. v. South Coast Air Quality Management Dist. (2012) 54 Cal.4th 446, 461.) Another
relevant consideration is whether “the agency ‘has consistently maintained the
interpretation in question.’ ” (Yamaha Corp. of America v. State Bd. of Equalization
(1998) 19 Cal.4th 1, 13.) The Commission has not demonstrated any construction of its
authority under the Act that is entitled to significant weight. “Nevertheless, the proper
interpretation of a statute is ultimately the court’s responsibility.” (American Coatings
Assn. v. South Coast Air Quality Management Dist., supra, at p. 462.)
8
B. Authority to Impose Discipline
Licensees raise various challenges to the Commission’s authority to impose
discipline without finding a violation of the Act or a nexus between Rene’s conduct and
gambling operations. In particular, Licensees contend the Commission did not base its
disciplinary finding on any enforcement provisions of the Act. Rather, its findings with
respect to the first cause of action relied on a provision of the Act relating to
administrative responsibilities—section 19823. The Commission contends this argument
is barred because it was not raised at the administrative hearing or in the trial court.
Because this is a pure question of law, we may consider the issue for the first time on
appeal. (Gilliland v. Medical Bd. of California (2001) 89 Cal.App.4th 208, 219.) We
also find good cause to do so. After the trial court proceedings, this court decided
Swallow v. California Gambling Control Com. (2022) 77 Cal.App.5th 1037. In Swallow,
the Commission explained its position that “penalties are unlimited under [section 19930,
subdivision (c)]. In addition, the Commission claim[ed] fines are imposed for specific
violations of the Act and regulations, whereas monetary penalties are imposed for
activities that do not violate express provisions of the Act and regulations.” (Id. at p.
1046, italics added.) This court disagreed, explaining, “The statutory and regulatory
framework of the Act and regulations does not support the Commission’s interpretation.”
(Ibid.) Neither the trial court nor the parties had the benefit of Swallow and its implicit
suggestion that the Commission lacks authority to impose penalties without finding a
violation of an express provision of the Act or regulation prior to this appeal. We address
that suggestion now.
“[T]he internal organization of a code may aid in understanding a statute’s purpose
[citation], and chapter and section headings in the codes may be considered in
determining legislative intent.” (In re Mark B. (2007) 149 Cal.App.4th 61, 76.) Section
19823 is part of Article 2 of the Act—entitled “Administration.” Other parts of this
article create the Commission and confer its jurisdiction. (§§ 19811, 19812, 19814,
9
19815.) Section 19823 provides, in relevant part: “The responsibilities of the
commission include . . . [¶] . . . [¶] [a]ssuring that there is no material involvement,
directly or indirectly, with a licensed gambling operation, or the ownership or
management thereof, by unqualified or disqualified persons.” 3 (§ 19823, subd. (a)(2),
italics added.)
Licensees contend section 19823 does not set a standard of conduct upon which
the Commission may find a violation. Licensees also argue section 19823 is not an
enforcement provision and does not give reasonable notice of any standard of conduct.
Licensees liken this case to Medical Board v. Superior Court (Liskey) (2003) 111
Cal.App.4th 163, 174 (Liskey), which explained, in part, that “[a] statute authorizing the
[Medical] Board [of California] to impose discipline against a medical license must
include some reasonably clear identification of the basis for imposing that discipline.” 4
While the Commission’s decision does not expressly state which statute it believes
Licensees violated (if any), both sections 19823 and 19824 are identified as legal
authority for its decision. As we will discuss in further detail in the context of the
monetary penalty imposed, we agree with the suggestion that Licensees do not “violate”
3 Section 19826, subdivision (b) similarly provides that the Department of Justice’s
responsibilities include “monitor[ing] the conduct of all licensees and other persons
having a material involvement, directly or indirectly, with a gambling operation or its
holding company, for the purpose of ensuring that licenses are not issued or held by, and
that there is no direct or indirect material involvement with, a gambling operation or
holding company by ineligible, unqualified, disqualified, or unsuitable persons.”
4 The Liskey court also explained, “[T]o justify the imposition of discipline, there must
be some nexus between an act or omission and the professional’s fitness or competence to
practice.” (Liskey, supra, 111 Cal.App.4th at p. 174.) The origin of this requirement is
the notion that “a statute can constitutionally bar a person from practicing a lawful
profession only for reasons related to his fitness or competence to practice that
profession.” (Newland v. Board of Governors (1977) 19 Cal.3d 705, 711.) Licensees
attempt to rely on this concept without establishing an analogous constitutional right is at
play with respect to gambling licenses.
10
section 19823 and the statute does not reasonably indicate to licensees that they can be
charged with violating it directly. It is a statute relating to the Commission’s performance
of its duties under the Act.
Nonetheless, the Commission is tasked under section 19823 with “[a]ssuring that
there is no material involvement, directly or indirectly, with a licensed gambling
operation, or the ownership thereof, by . . . disqualified persons.” (§ 19823, subd. (a)(2).)
But this statute does not specify how the Commission should fulfill its responsibilities.
We conclude one possibility is by exercising its powers, such as those set forth in section
19824: “The commission shall have all powers necessary and proper to enable it fully
and effectually to carry out the policies and purposes of this chapter, including, without
limitation, the power to do all of the following: [¶] . . . [¶] (b) For any cause deemed
reasonable by the commission, deny any application for a license, permit, or approval
provided for in this chapter or regulations adopted pursuant to this chapter, limit,
condition, or restrict any license, permit, or approval, or impose any fine upon any person
licensed or approved.” Likewise, under section 19856, subdivision (c), “[i]n reviewing
an application for any license,” the Commission is required to consider “whether issuance
of the license will undermine public trust that the gambling operations with respect to
which the license would be issued are free from criminal and dishonest elements and
would be conducted honestly.”
Together, these statutes suggest the Commission may, as a general matter,
condition a license to prevent involvement by a disqualified person consistent with its
responsibilities under the Act. As such, we disagree with Licensees’ broad assertion that
findings based on section 19823 provide no legal basis to impose any form of discipline
at all. We will now address in more detail whether the Commission’s findings were
legally sufficient to authorize the new license conditions imposed or the penalty in lieu of
suspension under California Code of Regulations, title 4, section 12554, subdivision
(d)(7).
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1. New License Conditions
Licensees contend that even if section 19823 provided grounds for discipline,
there was no basis to conclude Rene was “materially” involved with a “licensed gambling
operation” or “the ownership or management thereof” as those terms are used in the Act.
The Commission found that “[b]y directing Lucky Chances’ employees, including payroll
and maintenance staff, to perform services and purchase furnishings for his home, Rene
. . . was materially involved, and exercised managerial and ownership control over the
finances and personnel of Lucky Chances, a licensed gambling operation.” Under the
Act, a “gambling operation” is defined as “exposing for play one or more controlled
games that are dealt, operated, carried on, conducted, or maintained for commercial
gain.” (§ 19805, subd. (q).) In contrast, a “ ‘[g]ambling enterprise’ means a natural
person or an entity, whether individual, corporate, or otherwise, that conducts a gambling
operation and that by virtue is required to hold a state gambling license under this
chapter.” (Id., subd. (m).) Licensees argue there was no finding that Rene was involved
with a “gambling operation” as defined by the Act, and imposing discipline based on acts
and omissions that did not involve “gambling operations” is not authorized by statute.
This argument ignores the fact that section 19823 charges the Commission with
“[a]ssuring that there is no material involvement, directly or indirectly, with a licensed
gambling operation, or the ownership or management thereof, by unqualified or
disqualified persons.” (§ 19823, subd. (a)(2), italics added.) It is therefore broad enough
to cover the situation at hand even if we narrowly define the “licensed gambling
operation” to include only Lucky Chances Casino’s gambling activities. 5 We disagree
5 The Commission counters that the broader phrase “licensed gambling operation,” must
refer to the licensed entity itself. It contends the phrase “gambling operation,” despite the
definitions set forth in section 19805, is “also used in the Act to connote, more broadly,
an entity akin to the licensed gambling enterprise itself.” We need not resolve this issue.
12
with Licensees’ assertion that the trial court ignored the requirement that prohibited
involvement be “material.” As the trial court concluded, Rene’s “ability to direct Lucky
Chances employees to perform work at his home, while being paid by Lucky Chances,
indicates a significant involvement in the management of Lucky Chances.” The
additional conditions imposed with the license renewal thus appear to be within the
Commission’s powers under the Act to impose as they are aimed at assuring that a
disqualified individual does not have any direct or indirect material involvement with the
ownership of a licensed gambling operation.
2. Penalty In Lieu of Suspension
We conclude, however, that because Licensees could not violate section 19823
itself, an alleged violation of this statute cannot form the basis for the imposition of
discipline under California Code of Regulations, title 4, section 12554, subdivision (d).
This regulation provides, in relevant part: “Upon a finding of a violation of the Act, any
regulations adopted pursuant thereto, any law related to gambling or gambling
establishments, violation of a previously imposed disciplinary or license condition, or
laws whose violation is materially related to suitability for a license, registration, permit,
or approval, the Commission may do any one or more of the following: [¶] . . . [¶]
(2) Suspend the license, registration, or permit;” or “(7) Order the holder to pay a
monetary penalty in lieu of all or a portion of a suspension.” (Code of Regs., tit. 4,
§ 12554, subd. (d), italics added.) Because section 19823 is a statute that defines the
Commission’s responsibilities, and does not prescribe conduct for licensees, we agree
with Licensees that they cannot be found to “violate” it.
Curiously, our dissenting colleague never explains how licensees can violate
section 19823. Rather, our dissenting colleague suggests we have found no violation of
any relevant law. (Dis. opn. post, at p. 1.) That was not our role in this administrative
proceeding. Rather, it was the Commission’s role and the Commission’s decision is not
susceptible to the suggestion that it found a violation of any other statute, regulation, or
13
previously imposed condition. On appeal, however, the Commission argues sections
19920 and 19922 subsume the prescription against the involvement of unsuitable persons
in gambling enterprises set forth in section 19823 and “are expressly set forth as bases for
discipline.” Section 19920 provides: “It is the policy of the State of California to require
that all establishments wherein controlled gambling is conducted in this state be operated
in a manner suitable to protect the public health, safety, and general welfare of the
residents of the state. The responsibility for the employment and maintenance of suitable
methods of operation rests with the owner licensee, and willful or persistent use or
toleration of methods of operation deemed unsuitable by the commission or by local
government shall constitute grounds for license revocation or other disciplinary action.”
Section 19922 provides: “No owner licensee shall operate a gambling enterprise in
violation of any provision of this chapter or any regulation adopted pursuant to this
chapter.” While the accusation cited these statutes, the Commission’s decision does not
mention them.
We conclude the decision is not susceptible to the interpretation that the
Commission found a violation of either statute or imposed any discipline based on such a
finding. Additionally, we disagree with the suggestion that sections 19920 or 19922
transform the Commission’s general responsibilities under section 19823 into provisions
that can be violated by a licensee within the meaning of the regulation at issue. We also
observe that the Commission did not find Licensees violated any of the previous license
conditions that appear to have been imposed to ensure that a disqualified person was not
involved with the gambling operation. Likewise, Licensees were accused in count four
of failing to timely report possible violations of the Act, but the Commission concluded
the evidence did not support this allegation. The Act and its implementing regulations do
not make it reasonably clear that a licensee could be found to “violate” any provision of
the Act based on the findings made by the Commission in this proceeding. (See Liskey,
supra, 111 Cal.App.4th at p. 174 [“A statute authorizing the [Medical] Board [of
14
California] to impose discipline against a medical license must include some reasonably
clear identification of the basis for imposing that discipline”].) As such, imposition of
discipline, including the penalty in lieu of suspension, was not authorized by California
Code of Regulations, title 4, section 12554, subdivision (d) in this proceeding.
III. DISPOSITION
The judgment granting the peremptory writ of mandamus is modified to order the
Commission to reconsider the discipline imposed under California Code of Regulations,
title 4, section 12554, subdivision (d) in a manner consistent with this opinion instead of
the trial court’s order. As modified, the judgment granting the petition in part and
denying it in part is affirmed. Lucky Chances, Inc., Rommel Medina, and Ruell Medina
shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).)
/S/
RENNER, Acting P. J.
I concur:
/S/
KRAUSE, J.
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MESIWALA, J., Dissenting.
A convicted felon used his unique position as the former owner of the casino and
as the father of the current owners of the casino to direct casino staff to: (1) clean, polish
furniture, perform yardwork, paint a wine cellar, and provide similar labor at his newly
constructed Woodside home at casino expense; and (2) purchase furnishings for the new
Woodside home at discount prices using the casino’s seller’s permit. This occurred over
an extended period, despite the casino’s awareness of the intent by the California
Gambling Control Commission to ensure the felon father’s separation from casino
operations, as demonstrated by the commission’s imposition of extensive license
conditions on the casino.
The majority concludes these circumstances did not amount to a violation of any
of the following: (1) the Gambling Control Act (Bus. & Prof. Code, § 19800 et seq.) 1;
(2) any “law related to gambling or gambling establishments”; or (3) a law “materially
related to suitability for a license.” (Cal. Code Regs., tit. 4, § 12554, subd. (d).) I
disagree.
A primary goal of the Gambling Control Act is ensuring that casinos are separated
from criminal and corruptive elements. (§ 19801, subd. (g).) The Gambling Control Act
makes it the responsibility of the California Gambling Control Commission to ensure
there is no material involvement by felons with casino operations and empowers the
commission “without limitation,” to take “actions deemed to be reasonable to ensure that
[convicted felons are not] associated with controlled gambling activities.” (§§ 19823,
subd. (b); 19824, subd. (d).)
1 Statutory references are to the Business and Professions Code.
1
The majority’s conclusion is inconsistent with: (1) the broad powers of the
California Gambling Control Commission; (2) the declaration that the Gambling Control
Act “is an exercise of the police power of the state for the protection of the health, safety,
and welfare of the people of the State of California, and shall be liberally construed to
effectuate those purposes” (§ 19971, italics added); and (3) our obligation to harmonize
statutory provisions to carry out the overriding legislative purpose of the statutory scheme
as a whole (Elsner v. Uveges (2004) 34 Cal.4th 915, 933).
The majority notes that a provision of the Gambling Control Act – section 19920 –
makes willful or persistent use or toleration of unsuitable operation methods, as
determined by the California Gambling Control Commission, grounds for disciplinary
action. But the majority then concludes that section 19920 does not support the
California Gambling Control Commission’s exercise of discipline here because: (1) “the
[c]ommission’s decision does not mention” section 19920; and (2) section 19920 cannot
“transform the [c]ommission’s general responsibilities under section 19823 into
provisions that can be violated by a licensee within the meaning of the regulation at
issue.” This conclusion is at odds with the court’s duty to harmonize the statutory
scheme.
The majority’s narrow construction of “violations” that warrant discipline may
also lead to unintended consequences. It may prevent the California Gambling Control
Commission’s exercise of discipline in other cases where offensive acts or omissions are
not explicitly delineated in statute, regulation, and conditions. (See Shea v. Board of
Medical Examiners (1978) 81 Cal.App.3d 564, 575 [it is unnecessary for governing
statute to enumerate specific acts of unprofessional conduct]; Rand v. Board of
Psychology (2012) 206 Cal.App.4th 565, 582 [professionals are expected to recognize
conduct that breaches the profession’s ethical code or is unbecoming of the profession].)
Finally, the majority concludes that the California Gambling Control Commission
can impose discipline here, but not the discipline outlined in the regulation that lists the
2
commission’s disciplinary options. Although imposing license conditions is listed in that
regulation (Cal. Code Regs., tit. 4, § 12554, subd. (d)(4)), the majority reasons that the
California Gambling Control Commission can still impose those conditions here because
of the commission’s general statutory power to “condition” a license for any cause
deemed reasonable. (§ 19824, subd. (b).) But that general statutory power is “without
limit” and therefore includes the broader power to discipline for any cause deemed
reasonable. The majority’s construction creates an unnecessary line between the powers
of the California Gambling Control Commission under the Gambling Control Act and its
powers under its own regulations.
For these reasons, I would affirm the commission’s authority to impose discipline
under California Code of Regulations, title 4, section 12554, subdivision (d).
/S/
MESIWALA, J.
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