Court Opinion

ID: 4459319
Source: CourtListenerOpinion
Date Created: 2019-11-26 21:10:17.813897+00
Date Added: 2024-06-11T14:51:42.868325
License: Public Domain

[Cite as Smith v. Ohio Casino Control Comm., 2019-Ohio-4870.]

                            IN THE COURT OF APPEALS OF OHIO

                                 TENTH APPELLATE DISTRICT

Vanessa Smith,                                       :

                Appellant-Appellee,                  :
                                                                    No. 19AP-237
v.                                                   :           (C.P.C. No. 18CVF-2953)

Ohio Casino Control Commission,                      :          (REGULAR CALENDAR)

                Appellee-Appellant.                  :

                                       D E C I S I O N

                                 Rendered on November 26, 2019

                On brief: Brandon M. Smith and John A. Izzo, for appellant-
                appellee. Argued: Brandon M. Smith.

                On brief: Dave Yost, Attorney General, and Joseph E.
                Schmansky, for appellee-appellant. Argued: Joseph E.
                Schmansky.

                  APPEAL from the Franklin County Court of Common Pleas
SADLER, J.
        {¶ 1} Appellee-appellant, Ohio Casino Control Commission ("commission"),
appeals from a decision of the Franklin County Court of Common Pleas reversing the
decision of the commission and remanding the matter to the commission to conduct a new
hearing on the application of appellant-appellee, Vanessa Smith, to renew her casino
gaming employee license. For the reasons that follow, we reverse.
I. FACTS AND PROCEDURAL HISTORY
        {¶ 2} On November 4, 2013, the commission issued a casino gaming employee
license to Smith. R.C. 3772.15, governing license renewal, provides in relevant part as
follows:
No. 19AP-237                                                                              2

               (A) Unless a license issued under this chapter is suspended,
               expires, or is revoked, the license shall be renewed for three
               years, as determined by commission rule, after a
               determination by the commission that the licensee is in
               compliance with this chapter and rules authorized by this
               chapter and after the licensee pays a fee. * * *
               (B) A licensee shall undergo a complete investigation at least
               every three years, as determined by commission rule, to
               determine that the licensee remains in compliance with this
               chapter.
               (C) Notwithstanding division (B) of this section, the
               commission may investigate a licensee at any time the
               commission determines it is necessary to ensure that the
               licensee remains in compliance with this section.
       {¶ 3} On July 28, 2016, Smith filed with the commission her application for
renewal of her casino gaming employee license. On April 12, 2017, the commission sent
Smith a Notice of Opportunity for Hearing ("NOH"), pursuant to R.C. 3772.04, 119.07, and
Ohio Adm.Code 3772-22-01, it intended to deny her application to renew her casino gaming
employee license. The reasons listed in the NOH were that Smith submitted a casino
gaming employee license application that contained false information or failed to set forth
all the information required by the commission, in violation of R.C. 3772.10 and 3772.131
and Ohio Adm.Code 3772-8-02 and 3772-8-05, and failed to timely notify the commission
of information impacting her suitability to obtain or maintain a casino gaming employee
license, in violation of R.C. 3772.10 and Ohio Adm.Code 3772-8-04. The April 12, 2017
NOH further alleged that Smith "failed to establish, by clear and convincing evidence, [her]
suitability for licensure as a casino gaming employee, as required by R.C. 3772.10 and Ohio
Adm. Code 3772-8-05." (Apr. 12, 2017 Notice at 3.) The NOH listed numerous traffic
violations, including driving while intoxicated, civil judgments, wage garnishments, and a
bankruptcy that Smith had failed to disclose on her application.
       {¶ 4} On September 7, 2017, a hearing examiner conducted an evidentiary hearing
on Smith's application. The hearing officer issued a report and recommendation on
October 17, 2017.     The hearing officer concluded: "The Commission proved by a
preponderance of the evidence the occurrence of all of the factual matters alleged in the
NOH." (Oct. 17, 2017 Report & Recommendation at 21.) The hearing officer's report also
contained the following conclusions:
No. 19AP-237                                                                                        3

               3. Ms. Smith's failure to disclose on her renewal application
               nine instances of past criminal conduct * * * constitute nine
               separate violations of R.C. 3772.10(F) and 3772.131(D) and
               Ohio Adm. Code 3772-8-02(C).
               4. Ms. Smith's "No" response to Question No. 16 (B) on her
               renewal application * * * was false and, therefore, a violation
               of R.C. 3772.10(C)(2).
               5. Ms. Smith's failure to disclose on her renewal application
               five instances of civil complaints that resulted in liens and/or
               judgments against her * * * constitute five separate violations
               of R.C. 3772.10(F) and 3772.131(D) and Ohio Adm. Code
               3772-8-02(C).
               6. Ms. Smith's "No" response to Question No. 18 on her
               renewal application, regarding whether her wages or other
               earnings had been subject to garnishment in the last ten years
               * * * was false and, therefore, a violation of R.C. 3772.10(C)(2).
               7. Ms. Smith's failure to disclose a wage garnishment entered
               against her in September, 2009 in Cleveland Municipal Court
               * * * constitutes a violation of R.C. 3772.10(F) and 3772.131(D)
               and Ohio Adm. Code 3772-8-02(C).
               8. Ms. Smith's failure to make a timely report to the
               Commission of five different required reporting events * * *
               constitute five separate violations of R.C. 3772.19(C)(5) and
               Ohio Adm. Code 3772-8-04.
               ***
               10. Nine instances of criminal conduct by Ms. Smith
               documented in the record * * *, taken together, support the
               Commission's determination that she is unsuitable for
               licensure.
               11. Ms. Smith's history of civil litigation and liens and/or
               judgments, including one garnishment and one bankruptcy
               * * *, taken together, support the Commission's
               determination that she is unsuitable for licensure.1
(Oct. 17, 2017 Report & Recommendation at 21-23.)
       {¶ 5} In addition to the above, the hearing officer also stated: "When the totality
of these circumstances are considered together, it is clear that Ms. Smith has failed to
establish her suitability for a renewal license by clear and convincing evidence, as required

1 The hearing officer expressly identified the corresponding findings of fact that supported the legal
conclusion.
No. 19AP-237                                                                                                  4

by R.C. 3772.10 and Ohio Adm. Code 3772-8-05."                              (Oct. 17, 2017 Report &
Recommendation at 17.)
        {¶ 6} On March 21, 2018, the commission issued an order which adopted the
hearing officer's report and recommendation "without modification" and denied Smith's
application for renewal of her casino gaming employee license. (Mar. 21, 2018 Order at 2.)
Pursuant to R.C. 119.12, Smith timely appealed the commission's order to the court of
common pleas.
        {¶ 7}    On March 22, 2019, the trial court issued a decision reversing the
commission's order and remanding the matter to the commission for a new hearing. The
trial court found the commission's "report and resulting order on its face conflates the
burdens of proof and production between the participating parties, a new hearing
opportunity must be afforded to [Smith] whereby the Commission is duly assigned the
burden of proof by a preponderance of the evidence." (Mar. 22, 2019 Decision at 12.)
Having determined that a new hearing before the commission was required because the
commission applied the wrong burden of proof, the trial court did not consider the merits
of Smith's claim that the commission's order was not supported by reliable, probative, and
substantial evidence and was not in accordance with law.2
        {¶ 8} The commission timely appealed to this court from the decision of the
common pleas court.
II. ASSIGNMENT OF ERROR
        {¶ 9} The commission assigns the following as trial court error:
                 The trial court erred by reversing and remanding this case
                 back to Appellant, the Ohio Casino Control Commission, for
                 purposes of conducting a new adjudication hearing.
III. STANDARD OF REVIEW
        {¶ 10} Appeals from adjudications of the commission are governed by R.C. 119.12.
Zingale v. Ohio Casino Control Comm., 8th Dist. No. 101381, 2014-Ohio-4937. R.C.
119.12(A)(1) provides "any party adversely affected by any order of an agency issued

2The notice of appeal sets forth the following grounds for appeal: "I. The Order of the Commission should be
reversed on the basis that the Order is not supported by reliable, probative and substantial evidence and is not
otherwise in accordance with law; II. The Notice of Opportunity for a Hearing was flawed; III. Ms. Smith's
due process rights were violated; and IV. The renewal application's instructions are vague." The trial court
rejected the grounds alleged in II, III, and IV.
No. 19AP-237                                                                                 5

pursuant to an adjudication denying * * * the issuance or renewal of a license * * * may
appeal from the order of the agency to the court of common pleas." "An appeal from an
order * * * issued by any of the following agencies shall be made to the court of common
pleas of Franklin county: * * * the Ohio casino control commission." R.C. 119.12(A)(2)(b).
       {¶ 11} The standard of review applied by the court of common pleas in an appeal
from a commission adjudication is governed by R.C. 119.12(M), which reads in pertinent
part as follows:
               The court may affirm the order of the agency complained of in
               the appeal if it finds, upon consideration of the entire record
               * * *, that the order is supported by reliable, probative, and
               substantial evidence and is in accordance with law. In the
               absence of this finding, it may reverse, vacate, or modify the
               order or make such other ruling as is supported by reliable,
               probative, and substantial evidence and is in accordance with
               law.
       {¶ 12} "The common pleas court's 'review of the administrative record is neither a
trial de novo nor an appeal on questions of law only, but a hybrid review in which the court
"must appraise all the evidence as to the credibility of the witnesses, the probative character
of the evidence, and the weight thereof." ' " Dept. of Youth Servs. v. Grimsley, 10th Dist.
No. 18AP-546, 2019-Ohio-888, ¶ 9, quoting Lies v. Ohio Veterinary Med. Bd., 2 Ohio
App.3d 204, 207 (1st Dist.1981), quoting Andrews v. Bd. of Liquor Control, 164 Ohio St.
275, 280 (1955). "On questions of law, the common pleas court conducts a de novo review,
exercising its independent judgment in determining whether the administrative order is
' " in accordance with law." ' " Grimsley at ¶ 9, quoting Ohio Historical Soc. v. State Emp.
Relations Bd., 66 Ohio St. 3d 466, 471 (1993), quoting R.C. 119.12.
       {¶ 13} An appeal by the agency from an adverse ruling of the trial court is governed
by R.C. 119.12(N), which provides: "An appeal by the agency shall be taken on questions of
law relating to the constitutionality, construction, or interpretation of statutes and rules of
the agency, and, in the appeal, the court may also review and determine the correctness of
the judgment of the court of common pleas that the order of the agency is not supported by
any reliable, probative, and substantial evidence in the entire record."
       {¶ 14} "An appellate court's review of an administrative decision is more limited
[than that of a common pleas court]." Grimsley at ¶ 10, citing Pons v. Ohio State Med. Bd.,
No. 19AP-237                                                                             6

66 Ohio St. 3d 619, 621 (1993). In Pons, the Supreme Court of Ohio made the following
observations:
                While it is incumbent on the trial court to examine the
                evidence, this is not a function of the appellate court. The
                appellate court is to determine only if the trial court has
                abused its discretion, i.e., being not merely an error of
                judgment, but perversity of will, passion, prejudice, partiality,
                or moral delinquency. Absent an abuse of discretion on the
                part of the trial court, a court of appeals may not substitute its
                judgment for [that of an administrative agency] or a trial
                court. Instead, the appellate court must affirm the trial court's
                judgment.
Id. at 621.
       {¶ 15} "On review of purely legal questions, however, an appellate court has de novo
review." Grimsley at ¶ 10, citing Big Bob's, Inc. v. Ohio Liquor Control Comm., 151 Ohio
App.3d 498, 2003-Ohio-418, ¶ 15 (10th Dist.).
IV. LEGAL ANALYSIS
       {¶ 16} In the commission's sole assignment of error, the commission argues the trial
court erred in reversing the March 21, 2018 decision and remanding the matter to the
commission for a new hearing. More particularly, the commission argues the trial court
misconstrued the relevant statutes and rules in concluding Smith did not have the burden
of proving her suitability for a renewal casino gaming employee license by clear and
convincing evidence. Alternatively, the commission contends the hearing officer's findings
of fact and conclusions of law, as adopted by the commission, support denial of Smith's
renewal, regardless of her suitability. We agree with the commission that the trial court
misconstrued the relevant statutes and rules.
       {¶ 17} For purposes of R.C. Chapter 3722, " '[a]pplicant' means any person who
applies to the commission for a license under this chapter." R.C. 3772.01(A). R.C.
3772.10(B) sets forth the evidentiary standard for applicants as follows:
                All applicants for a license under this chapter shall establish
                their suitability for a license by clear and convincing
                evidence. If the commission determines that a person is
                eligible under this chapter to be issued a license as a casino
                operator, management company, holding company, key
                employee, casino gaming employee, or gaming-related
                vendor, the commission shall issue such license for not more
No. 19AP-237                                                                               7

               than three years, as determined by commission rule, if all
               other requirements of this chapter have been satisfied.
(Emphasis added.)
       {¶ 18} The commission's position is that Smith was an applicant for a renewal casino
gaming employee license and, therefore, she was required by R.C. 3722.10(B) to prove her
suitability for the license by clear and convincing evidence. Support for the commission's
position is found in the language of relevant statutes and commission rules. For example,
R.C. 3772.15(A), pertaining to casino gaming employee license renewal, provides in
relevant part as follows:
               Unless a license issued under this chapter is suspended,
               expires, or is revoked, the license shall be renewed for three
               years, as determined by commission rule, after a
               determination by the commission that the licensee is in
               compliance with this chapter and rules authorized by this
               chapter and after the licensee pays a fee. The commission may
               assess the license renewal applicant a reasonable fee in the
               amount necessary to cover the commission’s costs associated
               with the review of the license renewal application.
(Emphasis added.)
       {¶ 19} R.C. 3772.10(D)(3) provides:
               A license issued under this chapter is a revocable privilege.
               No licensee has a vested right in or under any license issued
               under this chapter. The initial determination of the
               commission to deny, or to limit, condition, or restrict, a
               license may be appealed under section 2505.03 of the Revised
               Code.
(Emphasis added.)
       {¶ 20} R.C. 3772.10(D)(3) unequivocally states that a casino gaming employee
license constitutes a revocable privilege, not a vested right. R.C. 3772.15(A) makes it clear
that a casino gaming employee license has a duration of three years and that renewal is
"determined by commission rule." Relevant commission rules include Ohio Adm.Code
3772-8-02(A), which provides in pertinent part as follows:
               An applicant for an initial, new, or renewal casino gaming
               employee license must complete and submit the appropriate
               form(s) required by the commission and pay an application
               fee and license fee as described in rule 3772-8-03 of the
               Administrative Code. The casino gaming employee must
               provide the commission with all information and documents
No. 19AP-237                                                                                 8

               that the commission requests. The application fee may be
               increased in accordance with paragraph (B) of rule 3772-8-03
               of the Administrative Code.
(Emphasis added.)
         {¶ 21} It is evident that Ohio Adm.Code 3772-8-02 identifies three types of casino
gaming employee licenses: initial, new, and renewal. As previously noted, for purposes of
R.C. Chapter 3722, " '[a]pplicant' means any person who applies to the commission for a
license under this chapter." (Emphasis added.) R.C. 3772.01(A). Because Smith is seeking
renewal of her expiring casino gaming employee license, she is an applicant for purposes of
R.C. Chapter 3722.
         {¶ 22} Smith argues the relevant statutes and commission rules create a distinction
between current licensees, applicants for an initial license, and applicants for a renewal
license. Smith further maintains only applicants for an initial casino gaming employee
license are required to prove their suitability for a license by clear and convincing evidence.
In other words, Smith believes that the statutes and commission rules support the
conclusion that an applicant for a renewal casino gaming employee license is not an
applicant at all. We disagree with Smith's strained construction of the relevant statutes and
rules.
         {¶ 23} If the General Assembly had intended that only applicants for an initial
casino gaming employee license were subject to the burden of proving suitability as set forth
in R.C. 3772.10(B), it would have been a simple matter for the General Assembly to add the
word "initial" to the first section of subsection (B). Of course, the General Assembly would
have also been required to add the same language to R.C. 3772.01(A) defining the term
"applicant." Because the General Assembly did not single out the "initial" casino gaming
employee license for special treatment under R.C. 3772.10(B), the only reasonable
conclusion to be drawn from the statutory language is that the burden of proof set forth in
R.C. 3772.10(B) applies to all applicants for a casino gaming employee license, including
renewal applicants such as Smith. Consistent with the intent manifested by the General
Assembly in drafting R.C. 3772.10(B), the commission adopted Ohio Adm.Code 3772-8-05
without adding the word "initial" to the relevant language. In accordance with R.C. 3772.10,
Ohio Adm.Code 3772-8-05(A) provides "[a]n applicant for a casino gaming employee
No. 19AP-237                                                                                9

license shall establish, by clear and convincing evidence, the applicant's suitability for
licensure."
       {¶ 24} Moreover, as noted previously, the hearing officer found that the commission
had proven all the allegations in the NOH "by a preponderance of the evidence." (Oct. 17,
2017 Report & Recommendation at 16.) Thus, the commission did not require Smith to
disprove any of the factual allegations in the NOH. Rather, in light of the proven factual
allegations and the legal conclusion arising from those proven facts, the commission placed
the burden on Smith to prove, by clear and convincing evidence, she was otherwise suitable
for a renewal casino gaming employee license. The relevant statutes and rules support the
commission's assessment of the applicable burden of proof in this matter.
       {¶ 25} Nevertheless, in reversing the commission, the trial court determined Smith
could not be considered an "applicant" for a casino gaming employee license because she
had been granted an initial casino gaming employee license in 2013. Rather, the trial court
determined Smith should be considered a licensee and, as a licensee, she was exempt from
the requirement that she prove her suitability for a license by clear and convincing evidence.
Based on this determination, the trial court reversed the commission's order and remanded
the matter to the commission for a new hearing without considering whether the
commission's order was supported by reliable, probative, and substantial evidence and was
in accordance with law.
       {¶ 26} In reversing the decision of the commission, the trial court relied on the
decision of the Eighth District Court of Appeals in Zingale. In Zingale, 2014-Ohio-4937, a
licensed casino gaming employee was discharged by the casino for consuming an energy
drink obtained from the casino bar without paying the $1.84 price.            Following the
employee's discharge, the commission initiated proceedings, pursuant to R.C. 3772.04,
seeking to revoke the employee's casino gaming employee license. The commission alleged
the employee (1) removed a Red Bull beverage from the cooler in the employee dining room
and voided the sale in violation of the casino's employee handbook; (2) was terminated
from employment on October 17, 2012; and (3) failed to notify the commission of his
termination in violation of Ohio Adm.Code 3772-8-04(A)(8) and/or (B). The commission
revoked the employee's license on finding the employee had failed to establish his
suitability by clear and convincing evidence.
No. 19AP-237                                                                                10

       {¶ 27} The employee appealed the commission's revocation order to the Cuyahoga
County Court of Common Pleas which upheld the agency decision on finding the order was
supported by reliable, probative, and substantial evidence. Id. at ¶ 20. In his appeal to the
Eighth District, the employee argued the commission improperly imposed the burden on
him to prove by clear and convincing evidence that he was suitable to retain his license.
The employee claimed the burden should have been on the commission to show he was
unsuitable. The Zingale court held the trial court erred in upholding the commission's
decision to revoke the employee's casino gaming employee license because the clear and
convincing evidence standard under R.C. 3772.10(B) did not apply to the current holders
of casino gaming employee licenses. Id. at ¶ 44. The court further concluded in order to
revoke a casino gaming employee license, the commission had the burden to prove the
licensee's unsuitability. Id.
       {¶ 28} Smith argues the rule of law in Zingale supports the trial court's decision in
this case to reverse the commission's order and remand the matter to the commission for a
new hearing.     The commission argues Zingale is inapplicable.          We agree with the
commission.
       {¶ 29} In Zingale, the commission initiated an administrative action seeking to
revoke an unexpired casino gaming employee license based on the employee's alleged
failure to notify the commission of his termination in violation of Ohio Adm.Code 3772-8-
04(A)(8) and/or (B). Zingale did not involve commission action on a pending application
for a casino gaming employee license. In this instance, however, Smith has filed an
application to renew her expiring casino gaming employee license. Thus, Zingale is
distinguishable from the instant case.
       {¶ 30} Furthermore, in this case, unlike Zingale, the hearing officer's findings of fact
and conclusions of law, as adopted by the commission, provide an independent justification
for denial of Smith's renewal application, regardless of suitability. (Oct. 17, 2017 Report &
Recommendation at 22, Conclusions of Law 10 & 11.) As the commission has noted, R.C.
3722.10(C) prohibits the commission from issuing a casino gaming employee license under
the following circumstances:
               The commission shall not issue a * * * casino gaming
               employee * * * license under this chapter to an applicant if:
No. 19AP-237                                                                               11

               (1) The applicant has been convicted of a disqualifying
               offense, as defined in section 3772.07 of the Revised Code.
               (2) The applicant has submitted an application for license
               under this chapter that contains false information.
               ***
               (5) The applicant violates specific rules adopted by the
               commission related to denial of licensure.
       {¶ 31} Due to the trial court's erroneous conclusion Smith was not an applicant, the
trial court did not consider the merits of the commission's findings and conclusions under
R.C. 3722.10(C). Because we have determined the trial court erred when it concluded Smith
was not an "applicant" for purposes of R.C. Chapter 3722, we must reverse the trial court
judgment and remand the matter to the trial court for a determination on the merits of
Smith's appeal. On remand, the trial court must review the administrative record to
determine whether any of the grounds for denial set forth in the hearing officer's report and
recommendation, as adopted by the commission, are supported by reliable, probative, and
substantial evidence and is in accordance with law. R.C. 119.12(M); Pons, 66 Ohio St. 3d at
621. This review will necessarily include a determination by the trial court whether reliable,
probative, and substantial evidence supports the commission's conclusion that Smith had
been convicted of a disqualifying offense, submitted false information on her renewal
application, and/or violated specific rules adopted by the commission related to denial of
licensure.   If the trial court finds any of these conclusions are supported by the
administrative record, R.C. 3722.10(C) required the commission to deny Smith's renewal
application whether Smith could otherwise be proven suitable or not.
       {¶ 32} For the foregoing reasons, we hold the trial court erred when it reversed the
commission's order in this case. Accordingly, the commission's assignment of error is
sustained. Because we have concluded the trial court misconstrued the applicable statutes
and rules in reversing the commission's order, we must reverse the trial court judgment
and remand the matter for the trial court to review the commission's order on the merits.
We will not address the merits of the commission's decision, for the first time, in this
appeal. R.C. 119.12(M); Pons at 621.
No. 19AP-237                                                                         12

V. CONCLUSION
       {¶ 33} Having sustained the commission's sole assignment of error, we reverse the
judgment of the Franklin County Court of Common Pleas and remand the matter for
further proceedings consistent with this decision.
                                                                   Judgment reversed;
                                                                     cause remanded.
                      DORRIAN and BEATTY BLUNT, JJ., concur.
                                   _____________