Court Opinion

ID: 217471
Source: CourtListenerOpinion
Date Created: 2011-05-25 19:53:14+00
Date Added: 2024-06-11T17:28:32.573805
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                            No. 10-1511

THEODORE TSORAS,

                Plaintiff - Appellant,

           v.

JOSEPH MANCHIN, III, Governor; JOHN C. MUSGRAVE, West
Virginia Lottery Commission Director; MICHAEL A. ADAMS, West
Virginia Lottery Commission Member; KENNETH L. GREEAR, West
Virginia Lottery Commission Member; BILL CLAYTON, West
Virginia Lottery Commission Member; DAVID MCCORMICK, West
Virginia Lottery Commission Member; DON LUCCI, West Virginia
Lottery Commission Member,

                Defendants - Appellees.

Appeal from the United States District Court for the Northern
District of West Virginia, at Wheeling.     Frederick P. Stamp,
Jr., Senior District Judge. (5:08-cv-00121-FPS)

Argued:   March 23, 2011                      Decided:   May 25, 2011

Before WILKINSON, SHEDD, and DUNCAN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Theodore Levette Tsoras, ROBINSON LAW OFFICES, Wheeling,
West Virginia, for Appellant. David Lee Wyant, BAILEY & WYANT,
PLLC, Wheeling, West Virginia, for Appellees.   ON BRIEF: April
J. Wheeler, BAILEY & WYANT, PLLC, Wheeling, West Virginia, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

       The    West       Virginia    Lottery      Commission       rejected        Theodore

Tsoras’s      gambling        license    application         because       he     had     been

convicted of gambling-related offenses.                     Tsoras then challenged

that denial in a § 1983 action.                     The district court dismissed

the suit.         For the reasons that follow, we affirm.

                                             I.

       Theodore         Tsoras     applied    for       a   West       Virginia     Lottery

Racetrack Table Games Act license.                      On November 13, 2007, the

West    Virginia         Lottery    Director      denied      Tsoras’s          application

because      he    was    statutorily    ineligible         for    a    license.         West

Virginia      Code        §   29-22C-15(a)(3)           states     that     the         “[t]he

commission may not grant any license” to someone who “[h]as been

convicted of a . . . gambling-related offense.”                          Tsoras had been

convicted         of     multiple    gambling-related            offenses,        including

aiding and abetting an illegal gambling business, aiding and

abetting interstate transportation in gambling in racketeering

enterprises, and aiding and abetting in transmission of wagering

information.

       Tsoras appealed the denial and received an administrative

hearing.          At this hearing, Tsoras argued that the “may not”

language      in       West   Virginia   Code       §   29-22C-15(a)(3)           indicated

discretion and that he was fit to obtain a license despite his

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prior    convictions.             He   also    advanced         due   process      and    equal

protection arguments.              The hearing examiner recommended that the

West     Virginia        Lottery       Commission         affirm      the   denial.         The

Commission held a hearing on the matter and affirmed the denial

on April 25, 2008.

       At    that     point,     Tsoras    had       the    option     of     appealing     the

Commission’s decision through the state court system.                                    See W.

Va. Code § 29-22C-17.              But he instead chose to file this § 1983

action       in    federal     court.          The    district        court    granted      the

defendants’         motion   to    dismiss,         but    it   declined      to   reach    the

merits      of     the   state     licensing         dispute.         Rather,      the    court

reasoned that the Commission’s decision had preclusive effect on

Tsoras’s claims and that Tsoras was improperly attempting to

appeal from the state court system to federal court.                                     Tsoras

appealed to this court.

                                               II.

       The        district   court       did     not       abuse      its   discretion       in

declining to inject itself into the middle of a state licensing

proceeding.          The district court rested its holding principally

on preclusion grounds, but we may affirm on any ground supported

by the record.            See Pitt County v. Hotels.com, L.P., 553 F.3d

308, 311 (4th Cir. 2009).

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                                                A.

       As      an        initial     matter,        West      Virginia     offers      a       fair

adjudicatory scheme for resolving gambling licensing disputes.

This    system           comports    with    the       requirements       of   due    process.

Tsoras      benefited        from     these     impartial        procedures      during         his

licensing adjudication.

       Tsoras’s administrative hearing before the hearing examiner

had     many        of     the     same   procedural           protections      as    judicial

proceedings.             Those who appear before the hearing examiner may

have an attorney represent them.                        See W. Va. Code R. § 179-2-6.

They    may     submit       briefing        and       present   oral     argument        to    the

hearing examiner.                 See W. Va. Code R. § 179-2-8.                  There is an

opportunity to engage in discovery before the hearing.                                     See W.

Va. Code R. § 179-2-4.                The hearing itself has evidentiary rules

that permit only reliable evidence.                        See W. Va. Code R. § 179-2-

8.     And at the hearing, parties are permitted to call witnesses,

present evidence, and propose conclusions of law and findings of

fact.       See id.

       Tsoras made full use of these procedural protections.                                     He

was represented by counsel.                    He fully presented both his state

law     and     constitutional            claims         through     briefing        and       oral

argument.           At the hearing, Tsoras testified on his own behalf

and    entered           eleven    documents        into      evidence.        And   he     later

submitted       proposed          findings     of      fact    and   conclusions      of       law.

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Although Tsoras did not prevail, it cannot be said that his

hearing was anything less than fair.

       Beyond       the    procedural       protections            at    the       administrative

hearing, the fact that there are multiple layers of review of

the    initial      licensing         denial   is     in     itself      indicative             of   the

soundness      of    the       administrative         scheme.           After        the    Director

denied Tsoras a gambling license, that decision went through two

layers of review, one before the hearing examiner and one before

the    full      Commission.               Tsoras       availed          himself           of    these

opportunities to present the arguments and evidence supporting

his position.

       When    Tsoras          did   not   prevail      at    either          juncture          in   the

administrative process, he had yet an additional opportunity to

appeal, this time to the West Virginia court system.                                      See W. Va.

Code    §§    29-22C-17;         29A-5-4.        West       Virginia          Code    §    29-22C-17

states: “Any person aggrieved by a final order or decision of

the    commission         in    a    contested       case    may    file       a     petition        for

appeal in the Circuit Court of Kanawha County within thirty days

after the person received notice of the final order or decision,

as provided in section four, article five, chapter twenty-nine-a

of this code.”            This appeal to the state court system affords de

novo review of questions of law, which would certainly include

Tsoras’s        constitutional             arguments.                   See        Carpenter          v.

Cicchirillo, 662 S.E.2d 508, 511 (W. Va. 2008).                                 This option for

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state court review offered Tsoras a third opportunity to make

his case.

                                                 B.

       Although the way was open for Tsoras to appeal through the

West Virginia court system, he did not avail himself of this

opportunity.       Instead, he sought to bypass the state appeal and,

in    effect,    appeal   the    state           agency’s      decision     to   a   federal

district       court.     Such       a       course         fractured    West    Virginia’s

interests in maintaining the integrity of its gambling licensing

scheme and preventing the piecemeal litigation of denials of

licensing applications.

       Gambling    regulation        is      an       area    where     states   have   much

expertise and competence, and it lies at the core of a state’s

police power.       The Supreme Court has long recognized a state’s

special interests in regulating gambling: “The police power of

the    state    extends   to     .       .   .       the    prohibition    of    lotteries,

gambling, [and] horse-racing . . . .”                         Crutcher v. Commonwealth,

141 U.S. 47, 61 (1891); see also Ah Sin v. Wittman, 198 U.S.

500, 505-06 (1905) (“The suppression of gambling is concededly

within the police powers of a state . . . .”).                               Indeed, “the

police power embraces regulations . . . in the interest of the

public health, morals, or safety.”                         Chicago & Alton Railroad Co.

v. Tranbarger, 238 U.S. 67, 77 (1915).                           And the regulation of

gambling is aimed at these exact concerns.                        See United States v.

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Edge   Broadcasting         Co.,    509    U.S.     418,    426   (1993);     Posadas   de

Puerto Rico Associates v. Tourism Co. of Puerto Rico, 478 U.S.

328, 341 (1986).

       This court has echoed these sentiments: “The regulation of

gambling enterprises lies at the heart of the state's police

power.       Formulations          of   that       power    underscore       the   state's

paramount interest in the health, welfare, safety, and morals of

its citizens.         The regulation of lotteries, betting, poker, and

other games of chance touch all of the above aspects of the

quality      of     life    of     state      citizens.”          Johnson    v.    Collins

Entertainment        Co.,     Inc.,     199    F.3d      710,   720   (4th    Cir.   1999)

(internal         citations      omitted);         see   also     Casino     Ventures   v.

Stewart, 183 F.3d 307, 310 (4th Cir. 1999) (“Because [gambling]

restrictions are aimed at promoting the welfare, safety, and

morals of South Carolinians, they represent a well-recognized

exercise of state police power.”).

       Tsoras’s insistence on a federal forum here ignores the

fact that there are some cases in which federal courts “must

decline to interfere with the proceedings or orders of state

administrative agencies.”                 New Orleans Public Service, Inc. v.

Council of New Orleans, 491 U.S. 350, 361 (1989).                           Specifically,

federal courts must try to avoid the “[d]elay, misunderstanding

of   local    law,     and    needless        federal      conflict   with     the   State

policy, [that] are the inevitable product of [a] double system

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of review.”       Burford v. Sun Oil Co., 319 U.S. 315, 327 (1943).

Tsoras    seeks   to    fracture   West      Virginia’s   gambling    licensing

scheme, producing just such a double system of review, one that

would “disrupt[] . . . state efforts to establish a coherent

policy . . . and threaten[] the creation of a patchwork of

inconsistent enforcement efforts.”              Johnson, 199 F.3d at 723.

Not only would such a result create needless confusion, it would

also cast aside the principles of federalism and comity that the

Supreme Court has admonished us to consider in precisely this

context.     See Quackenbush v. Allstate Ins. Co., 517 U.S. 706,

728 (1996).

     West Virginia provided Tsoras with a more than adequate

forum for his gambling license dispute, and he has given us no

reason to doubt the fairness or competence of the West Virginia

court    system   in    this   area.    In    these   circumstances,    we    can

hardly   fault    the   district   court      for   declining   to   review   the

merits of the case.

                                       III.

     As an alternate ground of affirmance, we hold that Tsoras’s

constitutional claims are without merit.              See Wagner v. Wheeler,

13 F.3d 86, 91 (4th Cir. 1993).               Tsoras first argues that West

Virginia Code § 29-22C-15(a) violates the Due Process Clause by

automatically denying him a license solely on the basis of his

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previous gambling convictions even though he might otherwise be

qualified.       He    next   argues   that     §§    29-22C-15    and    29-22C-16

violate the Equal Protection Clause in two ways.                    The statutes

grant licenses to other similarly situated applicants who have

not been convicted of gambling-related crimes, and they give

discretion regarding the revocation of licenses already issued

to people who then commit a gambling-related offense.

      These arguments are insubstantial.                 Those who have been

convicted of gambling-related offenses are not a suspect class,

and no fundamental right is at issue here.                 Accordingly, Tsoras

must prove that West Virginia had no rational basis for singling

out   gambling   offenders      during    the    initial   licensing       process.

See In re Premier Automotive Services, Inc., 492 F.3d 274, 283

(4th Cir. 2007); Hawkins v. Freeman, 195 F.3d 732, 739 (4th Cir.

1999) (en banc).       He cannot meet this burden.

      It is entirely rational for West Virginia to deny gambling

licenses to gambling offenders.               The state had every right to

exercise its police power to prohibit those who had demonstrated

a disregard for its gambling laws from receiving a privilege

under those laws and gaining access to more opportunities for

misconduct.       It    is    also   within     the   state’s     power    to   make

revocation as a result of a gambling conviction discretionary

for those who had already received a license, even though it is

an absolute bar for those applying for a license.                         Licensees

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have   a   track   record    that    new    applicants    do    not.      And   for

licensees with a long history of compliance, revocation may not

be the appropriate punishment.              In sum, West Virginia’s policy

of denying gambling licenses to those who have run afoul of the

gambling    laws   comports    with    constitutional          requirements     and

affords    an   additional   basis    on    which   to   affirm    the   district

court.

                                      IV.

       For the foregoing reasons, the judgment of the district

court is

                                                                         AFFIRMED.

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