EMERALD CASINO, INC., Plaintiff, vs. AARON JAFFE, CHARLES GARDNER,

EUGENE WINKLER, and JEANNETTE TAMAYO, Defendants.

Case No. 05 C 4077

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF

ILLINOIS, EASTERN DIVISION

2005 U.S. Dist. LEXIS 24261

October 17, 2005, Decided

SUBSEQUENT HISTORY: Reconsideration denied by

Casino v. Jaffe, 2005 U.S. Dist. LEXIS 27001 (N.D. Ill.,

Nov. 9, 2005)

PRIOR HISTORY: Emerald Casino, Inc. v. Ill. Gaming

Bd., 346 Ill. App. 3d 18, 803 N.E.2d 914, 2003 Ill. App.

LEXIS 1581, 281 Ill. Dec. 293 (Ill. App. Ct. 1st Dist.,

2003)

COUNSEL: [*1] For Emerald Casino Inc, an Illinois

corporation, Plaintiff: Robert A. Clifford, John T.

Karnezis, Kevin P. Durkin, Michael Sean Krzak, Clifford

Law Offices, P.C., Chicago, IL.

For Jaffe, in his Official Capacity as Chairman of the

Illinois Gaming Board, Defendant: Ronald Anthony

Rascia, Andrew William Lambertson, Katherine Harvie

Laurent, Rachel Jana Fleischmann, Illinois Attorney

General's Office, Chicago, IL.

For Charles Gardner, in his Official capacity as a

Member of the Illinois Gaming Board, Eugene Winkler,

in his Official capacity as a member of the Illinois

Gaming Board, Jeanette Tamayo, in her Official capacity

as Interim Administrator of the Illinois Gaming Board,

Defendants: Ronald Anthony Rascia, Andrew William

Lambertson, Katherine Harvie Laurent, Rachel Jana

Fleischmann, Illinois Attorney General's Office, Chicago,

IL.

JUDGES: MATTHEW F. KENNELLY, District Judge.

OPINION BY: MATTHEW F. KENNELLY

OPINION

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Emerald Casino, Inc. holds a license to operate a

riverboat casino in Illinois. It originally operated a casino

in East Dubuque, but ceased operations in 1997. In 1999,

the Illinois legislature [*2] enacted a statute which had

the effect of allowing Emerald to apply to the Illinois

Gaming Board (which regulates casino gambling) for

relocation and renewal of its license upon obtaining the

okay from the municipality where it wished to relocate.

The statute also provided that licenses so renewed would

be for a maximum of four years.

Emerald obtained approval from the Village of

Rosemont, and, in September 1999, it applied to the

Board for renewal of its license and relocation to that

municipality. In March 2001, the Board denied Emerald's

request and issued a disciplinary complaint seeking to

revoke Emerald's license on various grounds. Emerald

filed suit in state court, seeking a writ of mandamus

requiring the Board to approve the renewal and relocation

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application. The Board prevailed at the trial level in July

2002, but in December 2003, the decision was reversed

on appeal, with the Illinois Appellate Court holding that

the 1999 statute required the Board to grant Emerald's

application. The court noted in its decision that the statute

did not prevent the Board from seeking revocation of

Emerald's license.

In the interim, involuntary bankruptcy proceedings

were filed against [*3] Emerald, and the case was

eventually converted to a Chapter 11 reorganization.

During the pendency of the case, Emerald entered into an

agreement with the Board to stay the administrative

proceedings on the revocation complaint for a limited

period. That period ended in early 2003, and the Board

announced that the revocation proceedings would

resume. Emerald sought an injunction in the bankruptcy

court on the grounds that resumption would violate the

automatic stay provision of the Bankruptcy Code, but the

bankruptcy judge denied the request, and the ruling was

affirmed on appeal by another judge of this Court.

Emerald's plan of reorganization contemplated an

auction of its license, and an entity called Isle of Capri

was the successful bidder. The Illinois Attorney General

raised various concerns about Rosemont and Isle of

Capri. The Board entered into an agreement to stay the

revocation proceeding for another limited period. In April

2005, however, the Board (which in the interim had

several new members appointed) announced that the

proceeding would resume, before a new ALJ, Abner

Mikva.

In June 2005, the state court judge presiding over

Emerald's mandamus action entered an order [*4]

directing the Board to grant Emerald's application for

relocation and renewal. The Board did so, but it renewed

the license for four years from September 1999, the date

of Emerald's application, and thus effectively granted an

already-expired license. Emerald contended that this did

not comply with the Appellate Court's mandate, but the

trial judge disagreed. Emerald appealed; the appeal is

currently pending before the Illinois Appellate Court.

In the meantime, ALJ Mikva resumed the

evidentiary hearing on the revocation proceeding. At the

time the present suit was filed, the hearing was in

progress but had not yet concluded. At present, as the

Court understands it, the evidence has closed, and a

ruling is likely to be forthcoming in the near future.

Emerald filed the present suit against the chairman,

two members, and the interim administrator of the Board,

seeking to enjoin the revocation proceeding. Emerald

contends that the Board's pursuit of those proceedings

violates its rights under the Equal Protection and Due

Process Clauses of the Fourteenth Amendment as well as

the First Amendment. Specifically, Emerald alleges that it

has been treated differently than others similarly [*5]

situated based on what it characterizes as "wholly

illegitimate animus" toward Emerald based on its

decision to relocate to Rosemont; that the Board's actions

have been arbitrary and motivated by ill will and bias;

and that the Board has acted in retaliation for Emerald's

decision to associate itself with Rosemont.

Defendants have moved to dismiss Emerald's claims

on a number of grounds, but for present purposes the

Court need only address one of them: defendants'

argument that the Court should abstain from intervening

in the ongoing Gaming Board proceedings pursuant to

Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S.

Ct. 746 (1971). Under the Younger abstention doctrine,

which is based on the principles of federalism and

comity, federal courts must refrain from enjoining

ongoing state judicial and quasi-judicial proceedings

when important state interests are involved. Abstention is

required when there is an ongoing state proceeding that is

judicial in nature, implicates important state interests, and

offers a fair opportunity for review of federal

constitutional claims, absent extraordinary circumstances

that make abstention appropriate. See, e.g., Middlesex

County Ethics Comm. v. Garden State Bar Ass'n, 457

U.S. 423, 432, 73 L. Ed. 2d 116, 102 S. Ct. 2515 (1982);

[*6] Green v. Benden, 281 F.3d 661, 666 (7th Cir.

2002).

It is undisputed that the Gaming Board's revocation

proceeding involving Emerald's license is judicial in

nature and that it implicates an important state interest.

Emerald argues, however, that the proceeding does not

afford an adequate opportunity to assert its federal

claims. Specifically, Emerald contends it has been

stymied from offering before ALJ Mikva evidence to

support its claims that the Board has demonstrated a bias

toward Emerald and its planned association with the

Village of Rosemont.

Emerald contends that ALJ Mikva has made it clear

that he does not intend to address Emerald's

constitutional claims, and that the Board cannot be

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expected to adjudicate fairly the claim it is biased.

Judicial review of the ALJ's and the Board's

determinations, however, may constitute an adequate

opportunity for a litigant to raise federal constitutional

challenges. See Ohio Civil Rights Comm'n v. Dayton

Christian Schools, Inc., 477 U.S. 619, 629, 91 L. Ed. 2d

512, 106 S. Ct. 2718 (1986); Green, 281 F.3d at 666;

Majors v. Engelbrecht, 149 F.3d 709, 713 (7th Cir.

1998). Illinois law permits Emerald to [*7] bring its

constitutional challenges along with its claim for

administrative review. See Stykel v. City of Freeport, 318

Ill. App. 3d 839, 848-50, 742 N.E.2d 906, 914-15, 252 Ill.

Dec. 368 (2001), cited in Green, 281 F.3d at 667; Bd. of

Educ. of Rich Twp. High School Dist. No. 227 v. Brown,

311 Ill. App. 3d 478, 488, 724 N.E.2d 956, 964-65, 244

Ill. Dec. 68 (2000).

1 Emerald points out that what Illinois

permits is assertion of a § 1983 claim as part of a suit in

conjunction with the claim for administrative review, see

Stykel, 318 Ill. App. 3d at 850, 742 N.E.2d at 915, and it

argues that it should be permitted to choose a federal

rather than a state forum to present its § 1983 claims. See

Emerald Resp. at 17. Green makes it clear, however, that

the opportunity to assert a § 1983 claim in state court as

part of an administrative review action constitutes an

adequate opportunity that requires abstention under

Younger. Green, 281 F.3d at 667.

1 The reviewing trial court arguably has the

authority to admit, in support of the constitutional

claims, evidence that was not before the

administrative agency. Cf. Stykel, 318 Ill. App. 3d

at 850, 742 N.E.2d at 915 (stating that trial court

has "original jurisdiction" over constitutional

claims). But even if this is not the case, there is no

question that the reviewing court may remand the

case to the agency for farther proceedings if the

record is insufficient to permit a ruling on the

constitutional claims. See Bd. of Educ. of Rich

Twp. High Sch. Dist. No. 227, 311 Ill. App. 3d at

488, 724 N.E.2d at 965.

[*8] ALJ Mikva has sustained objections to the

admission of some, but not all, of the evidence offered by

Emerald that is pertinent to its constitutional claims.

Emerald argues that this shows it is not getting and will

not get a fair opportunity to assert those claims in a state

forum. But the materials submitted to this Court reflect

that where the ALJ has excluded evidence, he has

permitted Emerald to make a record via offers of proof.

In addition, the record reflects that ALJ Mikva issued

subpoenas to all but one witness on Emerald's list that it

said it wanted to call. The one exception was defendant

Jaffe, the Board's chairman. Emerald indicated that it

wanted to question Jaffe at the hearing to determine the

reasons for his decision to resume the revocation

proceeding. ALJ Mikva denied the request, finding that

Emerald had offered no evidence that would support a

finding of bias on Jaffe's part and that he was aware of no

basis to allow the head of an administrative agency to be

questioned regarding the reasons for his decision. Even

so, the ALJ granted Emerald's request to submit an offer

of proof as to how Jaffe would testify. Emerald says this

is not an adequate alternative, [*9] but on the present

record the Court can make no such finding.

Under the circumstances, the Court concludes that

Emerald will have an adequate opportunity to raise its

constitutional claims as part of its claim for judicial

review of the Board's determination - assuming Emerald

ends up losing at the administrative level, which is by no

means clear. It is certainly possible that later

developments will prove the Court wrong, but if Emerald

is foreclosed from presenting its constitutional claims in

state court, presumably it will then be able to refile its

federal suit. 2 The hypothetical possibility that this might

take place, however, is not a basis to decline abstention.

Cf. Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 15, 95 L. Ed.

2d 1, 107 S. Ct. 1519 (1987) (if litigant has not attempted

to present federal claims in related state court

proceedings, federal court should assume state

procedures afford adequate remedy absent unambiguous

evidence to the contrary); Green, 281 F.3d at 666 (same).

2 Emerald is cautioned, however, that it cannot

withhold or soft-pedal its claims in the state

forum and expect to assert them here later. A

litigant cannot avoid Younger by withholding

defenses from a state proceeding and then

pursuing federal litigation once the state case

ends. See, e.g., Nelson v. Murphy, 44 F.3d 497,

502 (7th Cir. 1995).

[*10] Emerald also contends that extraordinary

circumstances make abstention inappropriate. It argues

that it has made a sufficient showing of bad faith and bias

on the part of the Board. An exception to Younger exists

when the state proceeding is conducted in bad faith or is

motivated by a desire to harass. See Younger, 401 U.S. at

49, 54; see also, e.g., Crenshaw v. Supreme Court of Ind.,

170 F.3d 725, 729 (7th Cir. 1999). Emerald argues that if

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a state administrative proceeding is infected by bias, the

litigant's right of state court judicial review, even if it is

on a de novo basis, does not take the case outside this

exception. But conclusory assertions of bias or

harassment are insufficient to bring the bad faith

exception into play. See, e.g., Crenshaw, 170 F.3d at

729; Pincham v. Judicial Inquiry Bd., 872 F.2d 1341,

1349 (7th Cir. 1989). Rather, a party claiming that

extraordinary circumstances make abstention

inappropriate must demonstrate the existence of those

circumstances. Green, 281 F.3d at 667; see also,

Ramsden v. AgriBank, FCB, 214 F.3d 865, 871 (7th Cir.

2000). [*11]

Emerald's claim of bias and bad faith is not

sufficiently supported to undercut the case for Younger

abstention. As defendants argue, most of the matters cited

by Emerald in support of its bias / bad faith claim consist

of actions by the Board that purportedly exceeded its

authority understate law. In particular, Emerald contends

that Illinois law did not authorize the Board to investigate

and institute a revocation proceeding against Emerald

after it submitted its application for renewal of its license.

But the Illinois Appellate Court, in its 2003 ruling that

Emerald was entitled to renewal, made it clear that the

statute upon which it relied did not "prevent[] the Board

from moving to revoke Emerald's license. In fact, the

Board began revocation proceedings on March 6, 2001

.... The legislature did not intend to tinker with the

Board's authority to revoke Emerald's license ...."

Emerald Casino, Inc. v. Ill. Gaming Bd., 346 Ill. App. 3d

18, 34, 803 N.E.2d 914, 926, 281 Ill. Dec. 293 (2003).

Emerald also cites the Board's grant of its renewal

application retroactive to 1999, which as we previously

noted effectively made the renewed license expire upon

its grant. But a state court [*12] judge - who Emerald

does not hint was in any way biased - ruled that the

Board's decision complied with the mandate of the

Appellate Court. Though that decision is on appeal, under

the circumstances the Board's decision cannot be cited as

evidence of bias or bad faith.

At oral argument on the present motion, Emerald's

counsel also cited the lack of an explanation for the

Board's decision to reopen the license revocation

proceeding. We briefly review the circumstances

disclosed by the record submitted to the Court. After the

Board selected Isle of Capri following the

previously-described auction for the Emerald license, the

Illinois Attorney General raised objections. Following the

lack of a response by the Board, the Attorney General

prepared to resume the revocation proceeding and

ultimately filed suit in state court seeking a determination

of whether the Board could drop the proceeding without

the Attorney General's consent. Around that same time,

several members of the Board resigned; they were

replaced with new members in March 2005. Shortly

thereafter, in April 2005, the new Board decided to

resume the revocation proceeding. These circumstances,

at least those disclosed in the [*13] present record, do

not support a finding of bad faith or bias on the part of

the Board; rather, the explanation may be as simple as the

fact that the Board now has new membership.

In a status report submitted pursuant to the Court's

directive following oral argument on the motion to

dismiss, Emerald appears to suggest that the fact that the

ALJ permitted certain lines of questioning suggests a bias

in the administrative proceeding that cannot be cured by

judicial review. Specifically, Emerald cites the fact that

the ALJ has permitted questioning about purported

association of Rosemont's mayor with various persons

allegedly involved in organized crime; contributors to the

mayor's campaign; and various other matters concerning

Rosemont and the mayor. Emerald also cites the ALJ's

admission in evidence of a short excerpt from an FBI

surveillance tape in which alleged organized crime

members supposedly suggested involvement in a

Rosemont-based casino.

The Court cannot conclude that the conduct of the

proceedings to date gives rise to an inference of bias

against Emerald or, as Emerald contends, an improper

bias against its association with the Village of Rosemont.

It would be inappropriate [*14] for the Court to make a

determination regarding the veracity of the allegations

about Rosemont advanced during the administrative

hearing or how, if at all, those allegations bear on the

matters to be decided by the ALJ and the Board, and thus

we do not do so. But we cannot say that the decision to

admit evidence claimed to show an organized-crime

connection to officials of the relatively small town where

a casino operated under Emerald's license would be

located is indicative of bias or bad faith on the part of the

ALJ or the Board. Moreover, as noted by Emerald in its

status report, the ALJ also admitted evidence offered by

Emerald that it contends refutes the allegation of an

organized-crime connection to Rosemont and its officials.

Under the circumstances, the ALJ's decisions to admit or

exclude certain evidence do not support the claim of bias

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or bad faith.

For these reasons, the Court concludes that Emerald

has failed to show extraordinary circumstances that

would make abstention inappropriate.

Conclusion

For the reasons stated above, the Court grants

defendants' motion to dismiss plaintiff's claims on

Younger abstention grounds [docket # 14-1]. Plaintiff's

motion [*15] for a preliminary injunction is therefore

denied [# 10-1]. The Clerk is directed to enter judgment

dismissing this action. The status and ruling date of

October 18, 2005 is vacated.

Date: October 17, 2005

/s/ Matthew F. Kennelly

MATTHEW F. KENNELLY

United States District Judge

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