Title: Kuna Boxing Club, Inc. v. The Idaho Lottery Commission Suspension of bingo license

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 34886 
 
KUNA BOXING CLUB, INC., a nonprofit  
corporation,    
                                                    
          Plaintiff-Appellant,                      
                                                    
v.                                                  
                                                    
THE IDAHO LOTTERY COMMISSION  
and THE IDAHO LOTTERY, 
                                                    
          Defendants-Respondents.                            
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Boise, November 2008 Term 
 
2009 Opinion No.  4  
 
Filed:  January 21, 2009 
 
Stephen Kenyon, Clerk 
 
Appeal from the District Court of the Fourth Judicial District of the State of  
Idaho, Ada County.  Honorable Patrick H. Owen, District Judge. 
 
The decision of the district court is affirmed. 
 
Lynn E. Thomas and Iver J. Longeteig, Boise, for appellant.  
 
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondent.   
 
                     _______________________________________________ 
 
HORTON, Justice 
This appeal arises from an order issued under the Idaho Administrative Procedure Act 
(APA) suspending a bingo license.  Kuna Boxing Club, Inc. (Kuna Boxing) appeals the district 
court’s decision upholding the Idaho Lottery Commission’s (Commission) emergency 
suspension of Kuna Boxing’s bingo license.  We affirm.   
I. FACTUAL AND PROCEDURAL BACKGROUND 
Philip Whiting is the president of Kuna Boxing.  Whiting filed an application for a bingo 
license on behalf of Kuna Boxing on February 7, 2006.  The Commission denied the application 
on February 23, 2006 because of Whiting’s and Kuna Boxing’s connection to the Snake River 
Association of the USA Amateur Boxing Federation (USA Boxing).  The Commission had 
previously revoked USA Boxing’s bingo license for violating I.C. § 67-7709(1)(b).1  Whiting 
                                                 
1 Idaho Code § 67-7709(1)(b) provides in relevant part that “[a] licensed authorized organization shall keep and 
account for all checks and withdrawal slips, including voided checks and withdrawal slips.” 
1 
was the president of USA Boxing at the time of the violation.  In order to understand the instant 
case, it is necessary to review the circumstances surrounding the revocation of USA Boxing’s 
bingo license.       
Sons and Daughters of Idaho, Inc. (S & D) and USA Boxing were nonprofit 
organizations licensed to conduct bingo games.  The organizations conducted bingo through their 
bingo committees, both of which consisted of the same two persons, Bill Tway and Bob Ford.  
The bingo games took place at a facility in Garden City informally known as “Big Bucks 
Bingo.”  Sons & Daughters of Idaho, Inc. v. Idaho Lottery Comm’n, 144 Idaho 23, 25, 156 P.3d 
524, 526 (2007).  The organizations rented the building and non-gaming equipment from Z & J 
Services, Inc. (Z & J), a for-profit corporation owned by Tway and Ford.  S & D and USA 
Boxing failed to provide the Commission with physical copies of canceled checks associated 
with their bingo operations when the Commission inspected the financial records of both 
organizations.  Id.  The Commission subsequently revoked the bingo licenses from both 
organizations for failure to keep and account for all checks as required by I.C. § 67-7709(1)(b).  
Id. at 26, 156 P.3d at 527.  Both organizations appealed the Commission’s decision to the district 
court, which affirmed the Commission on August 17, 2005.  Id.   
While S & D and USA Boxing appealed the district court’s decision to this Court, 
Whiting filed an application for a bingo license on behalf of Kuna Boxing, which the 
Commission denied.  Kuna Boxing appealed the Commission’s denial of its application, 
resulting in an evidentiary hearing before a hearing officer on March 29, 2006.  The hearing 
officer recommended that the Commission grant Kuna Boxing’s application for a bingo license.  
The hearing officer concluded that while I.C. § 67-7712 permits the Commission to suspend or 
revoke a bingo license if the licensee or any person connected with the licensee has violated any 
provision of chapter 77, title 67 of Idaho Code, the statute does not authorize the Commission to 
deny an application for a bingo license for those reasons. 
The Commission reviewed the hearing officer’s recommendations on November 20, 
2006.  The Commission adopted the hearing officer’s findings of fact and conclusions of law and 
recommended order and issued Kuna Boxing a bingo license.  Having done so, the Commission 
then sua sponte suspended Kuna Boxing’s bingo license pursuant to the emergency powers 
conferred by I.C. § 67-5247.  The suspension was entered because Kuna Boxing was 
“connected” to individuals or organizations that had violated I.C. § 67-7709(1)(b), which 
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constituted grounds for suspension or revocation of Kuna Boxing’s bingo license under I.C. § 
67-7712.  On December 8, 2006, Kuna Boxing objected to the action, characterizing it as a 
“revocation” of its bingo license, and demanded an evidentiary hearing before the Commission.  
Rather than conducting an evidentiary hearing, the Commission set the matter for oral argument 
and allowed both parties to submit briefs.  The Commission scheduled the oral argument for 
March 13, 2007. 
In the interim, on February 23, 2007, this Court issued its decision in Sons & Daughters 
of Idaho, Inc. v. Idaho Lottery Comm’n, 144 Idaho 23, 156 P.3d 524 (2007).  This Court held 
that the Commission did not err when it concluded that S & D and USA Boxing failed to keep 
and account for all checks.  Id. at 27, 156 P.3d at 528.  This Court also held that both 
organizations were indirectly compensating Z & J in violation of I.C. §§ 67-7709 and 67-7711.  
Id. at 31, 156 P.3d at 532.  Therefore, we affirmed the Commission’s decision revoking S & D’s 
and USA Boxing’s bingo licenses.  Id. at 32, 156 P.3d at 533.   
On March 13, 2007, the Commission heard Kuna Boxing’s objection to the suspension of 
its bingo license.  However, counsel for Kuna Boxing did not appear at oral argument and 
Whiting addressed the Commission instead.  Counsel for Kuna Boxing mistakenly believed the 
oral argument was scheduled for later that day.  On April 30, 2007, the Commission issued a 
final order affirming the emergency suspension of Kuna Boxing’s bingo license.  Kuna Boxing 
appealed to the district court, which affirmed the decision of the Commission.  Kuna Boxing has 
timely appealed. 
II. STANDARD OF REVIEW 
When a district court acts in its appellate capacity under the APA, this Court reviews the 
agency record independently of the district court’s decision.  Sons & Daughters, 144 Idaho at 26, 
156 P.3d at 527 (citing Cooper v. Bd. of Prof. Discipline of Idaho State Bd. of Med., 134 Idaho 
449, 454, 4 P.3d 561, 566 (2000)).  The standard of judicial review of an agency action is 
governed by statute.  A reviewing court must uphold an agency’s order unless the agency’s 
decision (1) violates statutory or constitutional provisions;  (2) exceeds the agency’s statutory 
authority;  (3) is made upon unlawful procedure;  (4) is not supported by substantial evidence in 
the record;  or (5) is arbitrary, capricious, or an abuse of discretion.  Id.; I.C. § 67-5279(3).     
This Court defers to the agency’s findings of fact unless they are clearly erroneous and will not 
substitute its judgment for that of the agency as to the weight of the evidence.  Id. 
3 
This Court exercises free review of questions of law, although agencies are sometimes 
entitled to deference on questions of statutory construction.  Id.  Because the Commission has 
been entrusted with administration of the bingo statutes, this Court may defer to the 
Commission’s interpretation of the statutes so long as that interpretation is reasonable and not 
contrary to the express language of the statute.  Id. (citing J.R. Simplot Co. Inc. v. Idaho State 
Tax Comm’n, 120 Idaho 849, 862, 820 P.2d 1206, 1219 (1991)).  Nevertheless, “the ultimate 
responsibility to construe legislative language to determine the law” rests with the judiciary, and 
the underlying consideration whether to grant such deference is to ascertain and give effect to 
legislative intent.  Mason v. Donnelly Club, 135 Idaho 581, 583, 21 P.3d 903, 905 (2001); 
Simplot, 120 Idaho at 853-54, 820 P.2d at 1210-11.  Accordingly, the Commission’s construction 
of the bingo statutes is entitled to deference to the extent supported by the rationales for such 
deference.  Sons & Daughters, 144 Idaho at 26, 156 P.3d at 527 (citing Simplot, 120 Idaho at 
862-66, 820 P.2d at 1219-23). 
III. ANALYSIS 
 
Kuna Boxing raises two issues on appeal: (1) whether the Commission complied with 
statutory requirements under the APA when it suspended Kuna Boxing’s bingo license; and (2) 
whether the Commission violated Kuna Boxing’s right to procedural due process when it 
suspended Kuna Boxing’s bingo license.  We affirm the Commission decision suspending Kuna 
Boxing’s bingo license and hold that any error on the part of the Commission did not rise to the 
level of a violation of Kuna Boxing’s due process rights. 
A. The Commission failed to comply with statutory requirements when it suspended 
Kuna Boxing’s bingo license, but the error was harmless. 
 
Kuna Boxing argues that there was no danger to the public health, safety, or welfare 
justifying the Commission’s emergency suspension of its bingo license and that the Commission 
failed to follow the statutory procedures for postdeprivation hearings.  The Commission argues 
that the connection between Kuna Boxing and USA Boxing, a known violator of the bingo 
statutes, justified the emergency suspension of Kuna Boxing’s bingo license.  The Commission 
also argues that Kuna Boxing participated in a predeprivation evidentiary hearing and no further 
evidentiary hearing was required after the Commission suspended its bingo license.   
1. The Commission’s emergency action suspending Kuna Boxing’s bingo license 
was a response to an immediate danger to the public health, safety, or welfare. 
 
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Kuna Boxing argues that the suspension of its bingo license was not justified by an 
immediate danger to the public health, safety, or welfare.  Kuna Boxing further argues that the 
Commission’s order did not specify the nature of the claimed threat to the public welfare.  We 
conclude that the Commission did not err when it decided that the instant case presented a 
situation involving an immediate danger to the public health, safety, or welfare.  We also 
conclude that the Commission specified the immediate danger in its order suspending Kuna 
Boxing’s bingo license. 
Idaho Code § 67-5247(1) governs an agency’s power to act through an emergency 
proceeding, which provides the following:  
An agency may act through an emergency proceeding in a situation 
involving an immediate danger to the public health, safety, or welfare requiring 
immediate agency action. The agency shall take only such actions as are 
necessary to prevent or avoid the immediate danger that justifies the use of 
emergency contested cases. 
 
The Commission suspended Kuna Boxing’s bingo license because it was connected to an 
individual or organization that violated a provision of the statutes governing bingo games and 
this connection posed an immediate danger to the public health, safety, or welfare.  Idaho Code § 
67-7712(2) provides in relevant part: 
Any license issued pursuant to this chapter shall be suspended or revoked 
by the state lottery if it is found that the licensee or any person connected with the 
licensee has violated any provision of this chapter or any rule of the lottery 
commission or ordinance of a county adopted pursuant to this chapter. 
 
The Commission suspended Kuna Boxing’s bingo license because of its connection to Whiting 
and USA Boxing.  Whiting was the president of Kuna Boxing at the time it applied for a bingo 
license.  Whiting was also the president of USA Boxing at the time it violated I.C. § 67-
7709(1)(b), which requires that a licensed organization keep and account for all checks.  See 
Sons & Daughters, 144 Idaho at 27, 156 P.3d at 528 (holding that the Commission “did not 
abuse its discretion in determining that [USA Boxing] failed to keep and account for all 
checks.”).  
 
Kuna Boxing argues that Whiting was not responsible for the statutory violation by USA 
Boxing and that Whiting did not personally violate any statutes.  Therefore, Whiting was not a 
person connected with Kuna Boxing that had violated any provision of the statutes governing 
bingo gaming.  Idaho Code § 67-7702(13) provides in relevant part:  
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“Person” shall be construed to mean and include an individual, 
association, corporation, club, trust, estate, society, company, joint stock 
company, receiver, trustee, assignee, referee or any other person acting in a 
fiduciary or representative capacity, whether appointed by a court or otherwise, 
and any combination of individuals.  
 
The plain language of I.C. § 67-7712(2) requires the Commission to suspend a bingo license if 
any person connected with the licensee has violated any provision of chapter 77, title 67 of Idaho 
Code.  For purposes of I.C. § 67-7712(2), the definition of a “person” includes corporations.  
USA Boxing, a nonprofit corporation, violated I.C. § 67-7709(1)(b).  This begs the question:  
Was USA Boxing “connected” to Kuna Boxing for purposes of I.C. § 67-7712(2)?   
 
The most obvious connection between Kuna Boxing and USA Boxing is Whiting, who 
served as president of both organizations.2  Kuna Boxing also planned to lease the Big Bucks 
Bingo facility from Z & J just as USA Boxing had done previously.3  Further, the public policy 
considerations relating to regulation of bingo operations inform this Court’s decision on whether 
Kuna Boxing and USA Boxing are connected.   
Our Constitution provides in relevant part:  “Gambling is contrary to public policy and is 
strictly prohibited except for the following: . . . Bingo and raffle games that are operated by 
qualified charitable organizations in the pursuit of charitable purposes if conducted in conformity 
with enabling legislation.”  Idaho Const. art. III, § 20.  Idaho Code § 67-7701 identifies the 
policy considerations underlying regulation of bingo games and raffles:    
It is hereby declared that all bingo games and raffles in Idaho must be 
strictly controlled and administered, and it is in the public interest for the state to 
provide for the administration of charitable bingo games and raffles to protect the 
public from fraudulently conducted bingo games and raffles, to assure that 
charitable groups and institutions realize the profits from these games, to prohibit 
professionals conducting bingo games or raffles for fees or a percentage of the 
profit and to provide that all expenditures by a charitable organization in 
conducting bingo games and raffles are in the best interest of raising moneys for 
charitable purposes. 
 
Given the strong public policy supporting the regulation of bingo gaming and the 
connections between Whiting, Kuna Boxing, and USA Boxing, we find no error in the 
Commission’s conclusion that Kuna Boxing and USA Boxing are “connected” for purposes of 
                                                 
2 Whiting manages the books for Kuna Boxing but not USA Boxing. 
3 This Court previously found that the lease arrangement between USA Boxing and Z & J constituted indirect 
compensation to the owners of Z & J, which is prohibited by I.C. § 67-7711(3).  Sons & Daughters, 144 Idaho at 30, 
156 P.3d at 531. 
 
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I.C. § 67-7712(2) and that emergency action was warranted because of an immediate danger to 
the public health, safety, or welfare.  This conclusion is consistent with the public’s interest in 
the strict regulation of bingo games in order to protect the public from fraud and protect the 
interests of the charitable groups and institutions for whom the money is being raised.   
Kuna Boxing also argues that the Commission’s order did not specify the nature of the 
claimed threat to the public welfare, as required by statute.  Idaho Code § 67-5247 specifies the 
requirements an agency must follow when issuing an emergency order, which provides in 
relevant part: 
(2)  The agency shall issue an order, including a brief, reasoned statement 
to justify both the decision that an immediate danger exists and the decision to 
take the specific action. When appropriate, the order shall include findings of fact 
and conclusions of law. 
 
The Commission provided the requisite “brief, reasoned statement” specifying the nature of the 
threat to the public welfare in its order suspending Kuna Boxing’s license.  The Commission 
concluded that Kuna Boxing’s license was subject to suspension because of the connection 
between Kuna Boxing and USA Boxing.  The Commission specifically stated:  “[Kuna 
Boxing’s] retention of its license, in light of the connection to USA Boxing, poses an immediate 
threat to the public health, safety, or welfare and, as such, constitutes grounds for emergency 
action pursuant to Idaho Code § 67-5247.”  Accordingly, we find no error in the Commission’s 
decision to suspend Kuna Boxing’s bingo license.   
2. The Commission did not follow the statutory procedures outlined in I.C. § 67-
5247 after issuing its emergency order, but the error was harmless. 
 
Kuna Boxing argues that the Commission did not hold an evidentiary hearing after 
suspending its bingo license as required by I.C. § 67-5247.  The Commission argues that such an 
evidentiary hearing was unnecessary because Kuna Boxing participated in an evidentiary hearing 
before the Commission suspended its bingo license.  Idaho Code § 67-5247 requires that “[a]fter 
issuing an order pursuant to this section, the agency shall proceed as quickly as feasible to 
complete any proceedings that would be required if the matter did not involve an immediate 
danger.”  Idaho Code § 67-7712(3) specifies the procedures the Commission must follow after 
suspending a bingo license:  
If the [Commission] . . . suspend[s] a [bingo] license, it shall give the . . . licensee fifteen 
(15) calendar days’ written notice of its intended action stating generally the basis for its 
action.  Within the fifteen (15) calendar day notice period, the . . . licensee shall indicate 
its acceptance of the decision of the [Commission] or shall request a hearing to be held in 
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the same manner as hearings in contested cases pursuant to chapter 52, title 67, Idaho 
Code. 
 
Additionally, I.C. § 67-5254 provides, in relevant part, that “[a]n agency shall not revoke, 
suspend, modify, annul, withdraw or amend a license . . . unless the agency first gives notice and 
an opportunity for an appropriate contested case in accordance with the provisions of this chapter 
or other statute.”  Idaho Code § 67-5242 sets the requirements for a contested case hearing, and 
provides in relevant part:  
(3)  At the hearing, the presiding officer: 
 
(a)  Shall regulate the course of the proceedings to assure that there is a 
full disclosure of all relevant facts and issues, including such cross-
examination as may be necessary. 
 
(b)  Shall afford all parties the opportunity to respond and present 
evidence and argument on all issues involved, except as restricted by a 
limited grant of intervention or by a prehearing order. 
 
The Commission did not afford Kuna Boxing a postdeprivation hearing that complied 
with these statutory requirements.  After the Commission suspended Kuna Boxing’s bingo 
license, by way of letter, Kuna Boxing requested that the Commission conduct an evidentiary 
hearing into the issue whether a public emergency justified the suspension of its license.  Kuna 
Boxing contested the Commission’s conclusion that Kuna Boxing is connected to Whiting and 
USA Boxing.  Rather than setting the matter for an evidentiary hearing, the Commission 
permitted Kuna Boxing to submit briefs and appear before the Commission for an oral 
argument.4  This was error on the part of the Commission.  The oral argument did not provide 
Kuna Boxing the opportunity to respond and present evidence on the issue of the suspension of 
its bingo license.     
Although the Commission’s decision was “made upon unlawful procedure,” I.C. § 67-
5279(2)(c), we are required to affirm the agency’s action “unless substantial rights of the 
appellant have been prejudiced.”  I.C. § 67-5279(4).  We conclude that Kuna Boxing was not 
prejudiced by the Commission’s failure to comply with the statutory requirement to conduct a 
postdeprivation evidentiary hearing. 
                                                 
4 Counsel for Kuna Boxing did not appear at the oral argument because he erroneously believed the argument 
started at 1:00 p.m. instead of 10:30 a.m. on March 13, 2007.  
 
8 
Kuna Boxing participated in an evidentiary hearing prior to its suspension before a 
hearing officer after the Commission denied its application for a bingo license.  Kuna Boxing 
was able to respond and present evidence concerning Whiting and Kuna Boxing’s connection to 
USA Boxing.  This is the same issue upon which Kuna Boxing claims entitlement to a 
postdeprivation evidentiary hearing.  Kuna Boxing has not identified additional evidence it 
would have submitted at a postdeprivation evidentiary hearing.  Rather, in its briefing before this 
Court, Kuna Boxing asserts “[t]here was no ‘new evidence’ favoring Kuna Boxing thata [sic] 
needed to be presented.  The evidence of record established that there was no basis for 
emergency action.”  Under these circumstances, we find that Kuna Boxing has failed to 
demonstrate that its substantial rights have been prejudiced.   
B. The Commission did not violate Kuna Boxing’s right to procedural due process 
when it did not allow Kuna Boxing to participate in a postdeprivation evidentiary 
hearing. 
 
Kuna Boxing argues that the Due Process Clause of the U.S. Constitution required that 
the Commission conduct an evidentiary hearing after the Commission suspended its bingo 
license.  The Commission argues that Kuna Boxing participated in a predeprivation evidentiary 
hearing before a hearing officer and no additional postdeprivation hearing was necessary.  We 
conclude that the Commission did not violate Kuna Boxing’s right to procedural due process.   
“Suspension of issued licenses . . . involves state action that adjudicates important 
interests of the licensees. In such cases the licenses are not to be taken away without that 
procedural due process required by the Fourteenth Amendment.”  Bell v. Burson, 402 U.S. 535, 
539 (1971).  Due Process is a flexible concept that varies with the particular situation.  Courts 
must weigh several factors to determine what procedural protections the U.S. Constitution 
requires in a particular case.  Courts must consider: (1) the private interest affected by the official 
action; (2) the risk of an erroneous deprivation of such interest through the procedures used, and 
the probable value, if any, of additional or substitute procedural safeguards; and (3) the State’s 
interest, including the function involved and the fiscal and administrative burdens that the 
additional or substitute procedural requirement would entail.  Zinermon v. Burch, 494 U.S. 113, 
127 (1990) (quoting Mathews v. Eldridge, 424 U.S. 319, 335 (1976)).  Under this test, the federal 
constitution usually requires that a person receive some kind of hearing before the State deprives 
a person of liberty or property.  Id.  In some circumstances, however, a statutory provision for a 
postdeprivation hearing satisfies the requirements of due process.  Id.  at 128.   
9 
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Although we acknowledge that Kuna Boxing had an interest in a bingo license worthy of 
due process protection, the second factor identified above compels our decision.  In this case, 
there is simply no risk of an erroneous deprivation of Kuna Boxing’s interest in the bingo 
license.  We reach this conclusion because Kuna Boxing, at the previous evidentiary hearing, had 
the opportunity to contest all adverse evidence and submit all evidence in its favor relating to the 
connection between Kuna Boxing, Whiting, and USA Boxing.  In light of Kuna Boxing’s 
concession that there was no new or additional evidence that would have been presented at a 
postdeprivation hearing, the outcome of a second hearing would have been identical to the first:  
a finding that Kuna Boxing is connected to Whiting and USA Boxing and thus, subject to 
suspension or revocation of its bingo license.  Accordingly, we conclude that the Commission 
did not violate Kuna Boxing’s right to procedural due process.   
IV. CONCLUSION 
We conclude that the Commission erred when it did not provide Kuna Boxing with a 
postdeprivation evidentiary hearing but the error did not result in prejudice of substantial rights 
nor did it violate Kuna Boxing’s right to procedural due process.  Therefore, the decisions of the 
district court and the Commission are affirmed. 
 
 
Justices BURDICK, J. JONES, W. JONES and Justice Pro Tem TROUT, CONCUR.