WEBVTT
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SJC-13196, FBT Everett Realty, LLC
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v. Massachusetts Gaming Commission.
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Okay. Attorney Weld?
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You're on mute.
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My apologies. Not a good start.
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May it please the Court.
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My name is Christopher Weld.
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I represent FBT Everett Realty, LLC,
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who is the plaintiff in the appellant.
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There are two primary issues,
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core issues I would call them,
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presented to the Court by this appeal.
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The first one relates to a regulatory taking
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and whether any one of the three Penn Central factors
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is an essential element of making out a takings claim
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or whether you must read all those three factors
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as well as other circumstances
(audio feedback playing)
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into the entire analysis.
(audio feedback playing)
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Okay, Attorney Weld.
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Hold on one second, let's see if we can-
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You're on mute.
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I'm not-
Hold on one second.
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There's a problem with the feedback.
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The issue is is that there is a Suffolk feed
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that's live in someone's office right now.
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So they need to mute the Suffolk feed.
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Mr. Weld, if you have that on right now,
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just turn that off.
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(audio feedback playing)
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Do you have the Suffolk feed on right now?
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I don't think so.
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Let me find out.
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(audio feedback playing)
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I apologize, apparently I did.
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Okay. No problem.
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Again, not a good start.
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I think I've lost a minute or so of time.
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Well?
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No, just joking, go ahead, just go ahead.
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Well why don't we just get into it
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and tell us why Justice O'Connor's confirms in Palozzolo
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and the very, very, very narrow exception
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in Hodel vs. Irving helps you as it relates to whether
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reasonable investment backed expectation is dispositive.
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Your Honor, I think the fundamental distinction here
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is whether reasonable investment backed expectations
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can be dispositive,
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can overweigh the other two items or elements,
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but what the court below held is that
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as a matter of law, not fact, as a matter of law,
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if you don't present evidence on one of the three elements,
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you do not have a regulatory takings claim.
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And I would submit to the Court
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that even beginning with Monsanto,
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that is not the holding of the Court.
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Monsanto Court repeatedly said,
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this is an ad hoc factual determination.
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It also said that the Penn Central , quote,
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"Should be taken into account.", close quote.
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But they also said that
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a reasonable investment backed expectation
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might be so overwhelming that it's dispositive of the issue.
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And quite honestly,
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this circumstance is not a situation
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where Native Americans are not able
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to leave their land to their heirs.
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I agree with you, Your Honor,
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that they can overweigh or outweigh the other factors.
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But what Hodel tells us is that
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even with no investment backed expectations,
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the nature of the governmental action
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and the economic impact
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can in fact outweigh the other factor.
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The court below did not even consider
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the nature of the governmental action
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and did not even consider the economic impact
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as factual elements to be weighed against
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the investment backed expectations,
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and in this case-
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Well why don't we them then.
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On the first one, on your client's economic impact,
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the profit margin from the initial purchase
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to the sale for $35 million
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was in the hundreds of percentile of profit.
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Your Honor, that goes to the element of economic impact,
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which there was no evidence of in the court below,
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other than what you've just said,
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but we did not have any opportunity to-
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Well, isn't that number precise?
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I mean, in your favor,
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we know exactly what the negative economic impact is
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because we know what your original deal was
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and what it was reduced.
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So we do know that number, right?
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Right.
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And this is summary judgment, right?
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So we don't really care about the judge's analysis,
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as long as we have disputed facts established
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or undisputed facts established, right?
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I disagree with that, Your Honor
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because the basis of the court's holding,
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the basis of the motion,
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was we don't have to address the other two factors at all.
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And the premise of the motion was-
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No, I understand that Mr. Weld,
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and I actually am sympathetic to your point,
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'cause I look at these cases
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and it does seem like you're supposed to,
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including our cases,
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the cases by Justice Cordy, the case by Justice Cowin,
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we sort of look at all three factors each time.
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And Palozzolo tells us
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that even when there's no reasonable expectation,
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it looks like investment expectation,
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certain types of extraordinary takings can still qualify.
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So I get it, but I'm just trying to get a sense of-
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We know the number of your loss.
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I mean, I don't think there's any dispute about it,
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whether the judge weighed it, I understand.
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You're saying we have to have the benefit
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of the judge's weighing of these things,
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we don't do that ourselves?
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I don't believe you do, Your Honor.
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And the reason is because we have not had a chance
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to develop a full record.
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If you look at virtually all these cases,
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when they hit the Appellate Court
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or they hit the Supreme Court,
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there has been a full trial on the merits,
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and therefore there's a full record.
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Here, the nature of the governmental action
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is the critical element from the plaintiff's point of view.
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But don't we have,
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when we're talking about disputed facts,
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putting aside that we know the $40 million issue,
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isn't it an issue of law
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as to whether we evaluate the economic impact
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based on the time of purchase,
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or as you would suggest, later on in the process
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as Wynn becomes a serious applicant.
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Isn't that an issue alone?
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Whatever your position is Mr. Weld, whatever it is,
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isn't that an issue of the law?
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The question of when the court
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is considering the factual elements
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of weighing the three Penn Central factors,
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that they have to include evidence
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about all of those factors.
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And I would agree with you that it's a question of law
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as to when one assesses the investments backed expectations
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on a given facts of the case.
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Virtually all the cases cited by the defendant
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involve preexisting regulations
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that were there when a landholder purchased the land.
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So it's an entirely different factual situation.
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Here, the chronology is important.
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FBT purchased the property in 2009.
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The Gaming Act passes in November, 2011.
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So in 2009, the preexisting regulation
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was no gaming in Massachusetts, right?
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That's correct.
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[Justice Wendlandt] Okay.
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And our argument isn't that
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we had investment backed expectations
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for a highest and best use sale as a casino use in 2009.
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And so are there any cases that you have found
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where there's free market value diminution
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is the investment backed expectation
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that you're suggesting your client might have?
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I don't think there are any cases
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anywhere close to the factual.
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The problem is with the temporal line here.
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So 2011 is gaming, early 2000-
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I know, but I wanna stick with my question,
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which is in 2009, the preexisting regulatory scheme
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did not allow gaming in Massachusetts.
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And so you're saying this case is different in kind,
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because in Monsanto, the preexisting regulations said,
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hey, if you disclose the data,
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we're gonna use it to measure competitive bids
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and disclose it.
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And I'm wondering why that's different
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than this case?
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Why we don't measure it at the time of the action?
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Here your purchase of property in Monsanto
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was the time which Monsanto decided to disclose its debt.
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For two reasons, Your Honor.
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First of all, the owner of property
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has a right to sell the property
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for the highest and best lawful use.
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The highest and best lawful use,
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the value of that was enhanced
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by the passage of the Gaming Act,
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but that landowner still has that same right.
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And the highest and best lawful use as in November, 2011,
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was for a casino.
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At that point-
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Doesn't that prove way too much?
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You're basically gonna wipe out regulatory taking law
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if you have the right
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to the highest and best use of your property
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and any subsequent regulation's gonna-
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It just seems like-
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I think Justice Wendlandt's point
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is there are no cases that ever do that
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because you basically,
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it's inconsistent with regulatory taking law.
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I disagree, Your Honor.
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I do agree with you that the government has a right
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to enact prospective regulatory actions
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without affecting a taking.
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And if that action is within constitutional boundaries,
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then the land owner is bound by it,
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and it falls into the cases that are land use cases,
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rent control cases, etc.
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But here, the critical element is
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that you have a regulatory action,
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a reduction in the purchase price,
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targeted to one citizen of the Commonwealth,
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one, FBT.
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The regulation is not regulatory
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because, in fact a casino was built on this property.
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It didn't say you couldn't-
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I get that point.
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And I understand you may have a strong argument
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on that third prong,
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that the character of this action is unique,
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and we're gonna need to probe Ms. Allison
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on what the justification of that is.
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But I still have some trouble with-
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Gambling, you're relying on the fact
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that you get a gambling premium,
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and you have a right to that,
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but gambling is heavily regulated,
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and when you bought the property,
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the gambling was illegal in Massachusetts.
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So you've got an uphill climb
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that you have a reasonable investment based expectation
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in this sort of gambling premium, don't you?
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That's a real-
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Let me give you a hypothetical.
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So I buy land and its zoned agricultural.
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The zoning changes, and it's now residential.
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I then invest millions of dollars into infrastructure,
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I put in a road, I put in utilities, etc.
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Whatever the regulatory body turns around and says,
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you know what, I am going to change the zoning
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just for your property,
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nobody else subject to that zoning area,
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but just for your property.
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And all of a sudden I'm telling you,
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it's now only used for agricultural,
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and all of your infrastructure that you built is gone,
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all of your plans to build 25 tracked houses is gone.
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And I would suggest that that type of taking
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would be a compensatory taking, illegal.
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Well why wouldn't that type of a taking
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satisfy the character of the government action prong
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rather than be dispositive?
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It would satisfy the character.
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I'm giving you that. I'm giving you that.
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Yes, so but here, I would suggest,
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and I really think this is an analysis
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that should be done at the trial court
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with a full record,
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but even on the record we have,
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that the governmental action is so overwhelming
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in this case as to carry the day.
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It's much closer to the Hodel situation,
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the Indian rights situation,
271
00:13:15.440 --> 00:13:17.960
than it is to any other of these takings cases,
272
00:13:17.960 --> 00:13:19.160
which are much different.
273
00:13:19.160 --> 00:13:21.320
They involve regulatory takings
274
00:13:21.320 --> 00:13:23.820
that involve large groups of people
275
00:13:23.820 --> 00:13:26.910
that are making a sacrifice for the benefit of the whole.
276
00:13:26.910 --> 00:13:28.750
And there's no question that that can be done,
277
00:13:28.750 --> 00:13:32.230
but here, the targeting and the punitive action,
278
00:13:32.230 --> 00:13:34.930
this was not a regulatory action, it was a punitive action.
279
00:13:34.930 --> 00:13:37.210
And if you look at Exhibit C to the complaint-
280
00:13:37.210 --> 00:13:39.370
Do we have enough factual-
281
00:13:39.370 --> 00:13:42.310
And there I have a question for you, Mr. Weld
282
00:13:42.310 --> 00:13:43.590
'cause I get it.
283
00:13:43.590 --> 00:13:47.030
This is very unusual that you would basically
284
00:13:47.030 --> 00:13:51.650
direct a lowering of price for a parcel like this
285
00:13:52.870 --> 00:13:53.703
by government,
286
00:13:53.703 --> 00:13:58.703
but are there any unclear facts here?
287
00:13:59.170 --> 00:14:01.400
I'm just trying to get a sense of,
288
00:14:01.400 --> 00:14:03.460
so from what I understand a commissioner
289
00:14:06.795 --> 00:14:10.800
directed Wynn not to pay more than the non-casino premium
290
00:14:13.190 --> 00:14:14.393
for this property.
291
00:14:16.400 --> 00:14:19.560
And he did so, or the commission did so
292
00:14:19.560 --> 00:14:24.320
because it was concerned that a felon of some sort
293
00:14:26.940 --> 00:14:30.030
had an investment interest in that property,
294
00:14:30.030 --> 00:14:31.530
an organized crime figure.
295
00:14:31.530 --> 00:14:33.760
I don't know exactly what the concern was.
296
00:14:33.760 --> 00:14:36.390
Are there disputed facts on this?
297
00:14:36.390 --> 00:14:39.360
'Cause again, we have a summary judgment decision here.
298
00:14:39.360 --> 00:14:43.153
Normally we do that kind of analysis.
299
00:14:45.110 --> 00:14:47.690
You will see in the record,
300
00:14:47.690 --> 00:14:49.190
the statement of undisputed facts,
301
00:14:49.190 --> 00:14:52.370
that the other two prongs are not subject
302
00:14:52.370 --> 00:14:54.560
of the facts put before the court,
303
00:14:54.560 --> 00:14:58.300
because the premise, the entire premise of the motion
304
00:14:58.300 --> 00:15:02.270
was that you don't have to look at those other two factors.
305
00:15:02.270 --> 00:15:05.630
We do know some facts, but for example,
306
00:15:05.630 --> 00:15:09.290
we believe that a deposition, the depositions of the-
307
00:15:09.290 --> 00:15:10.123
I'm sorry to interrupt you.
308
00:15:10.123 --> 00:15:13.740
Your point is that on summary judgment,
309
00:15:13.740 --> 00:15:18.240
the other side did not argue the other two prongs,
310
00:15:18.240 --> 00:15:20.370
and so as an appellate court,
311
00:15:20.370 --> 00:15:23.270
we're confined to the arguments made,
312
00:15:23.270 --> 00:15:26.470
that the issue de jure is only whether or not
313
00:15:26.470 --> 00:15:28.960
this one prong is dispositive.
314
00:15:28.960 --> 00:15:30.490
And if it's not dispositive,
315
00:15:30.490 --> 00:15:34.280
we don't get to de novo review the other two prongs
316
00:15:34.280 --> 00:15:35.640
because they didn't argue it.
317
00:15:35.640 --> 00:15:37.660
They waived it basically at this point.
318
00:15:37.660 --> 00:15:39.520
It's both that they didn't argue it,
319
00:15:39.520 --> 00:15:41.080
and that there's an insufficient record
320
00:15:41.080 --> 00:15:42.430
on the other two prongs.
321
00:15:42.430 --> 00:15:44.300
There is some evidence, but it's insufficient.
322
00:15:44.300 --> 00:15:45.640
So for example,
323
00:15:45.640 --> 00:15:47.900
we maintain that the sole basis
324
00:15:47.900 --> 00:15:49.950
of the actions by the commission
325
00:15:49.950 --> 00:15:54.860
was to punish, was to fine.
326
00:15:54.860 --> 00:15:57.520
And even in the Exhibit C of the amended complaint,
327
00:15:57.520 --> 00:16:00.917
you'll see that the IEB uses the term,
328
00:16:00.917 --> 00:16:04.273
"Should we reveal the fine?", the $40 million.
329
00:16:05.140 --> 00:16:07.500
And this is a shift of private wealth
330
00:16:07.500 --> 00:16:10.153
between two private parties by a public entity.
331
00:16:12.510 --> 00:16:14.140
Mr. Weld, I apologize,
332
00:16:14.140 --> 00:16:16.137
but you're only halfway through your argument
333
00:16:16.137 --> 00:16:17.770
and you're one minute over here.
334
00:16:17.770 --> 00:16:20.670
So I'm gonna throw a lot into one question,
335
00:16:20.670 --> 00:16:23.380
under the Mass. Tort Claims Act,
336
00:16:23.380 --> 00:16:25.230
you wanna overrule Kargman,
337
00:16:25.230 --> 00:16:28.170
we've got Lafayette saying,
338
00:16:28.170 --> 00:16:33.170
tie goes to the Mass. Tort Claims Act every time.
339
00:16:34.000 --> 00:16:39.000
We've got Mass Tort clearly distinguishable as an entity,
340
00:16:40.270 --> 00:16:43.980
you wanna overrule Kargman.
341
00:16:43.980 --> 00:16:45.430
There's a lot going on here
342
00:16:45.430 --> 00:16:50.170
for you to succeed on the intentional tort not being covered
343
00:16:51.558 --> 00:16:55.940
by the Mass. Tort Claims Act based on existing law.
344
00:16:55.940 --> 00:16:59.150
Why is it that you think we should pivot
345
00:16:59.150 --> 00:17:01.670
and change our law here?
346
00:17:01.670 --> 00:17:04.330
I think there are two primary reasons, Your Honor,
347
00:17:04.330 --> 00:17:07.850
First there is language in the statute,
348
00:17:07.850 --> 00:17:11.900
Chapter 258, Section 1 in the definition of public employer
349
00:17:11.900 --> 00:17:14.930
that says that an independent body politic incorporate
350
00:17:16.777 --> 00:17:20.450
and it is exempt, is not covered by Chapter 258.
351
00:17:20.450 --> 00:17:23.520
And effectively what Lafayette does
352
00:17:23.520 --> 00:17:26.150
is it writes those words out of the statute
353
00:17:26.150 --> 00:17:29.810
because virtually every public private entity
354
00:17:29.810 --> 00:17:34.810
with mixed elements is going to have factors
355
00:17:34.880 --> 00:17:37.180
on both sides of the Kargman test.
356
00:17:37.180 --> 00:17:42.180
And if the default is, if there's any unclarity at all,
357
00:17:42.900 --> 00:17:45.430
it defaults to, you're within the statute,
358
00:17:45.430 --> 00:17:48.850
you've effectively written that language out of the statute.
359
00:17:48.850 --> 00:17:50.740
Secondly, and I think more importantly,
360
00:17:50.740 --> 00:17:55.740
is the underlying reason for immunity in Chapter 258,
361
00:17:56.200 --> 00:17:59.760
and it goes back to the Morash decisions and Cormier
362
00:17:59.760 --> 00:18:04.627
when the Court was ready to abolish immunity
363
00:18:04.627 --> 00:18:06.330
and the legislature steps in.
364
00:18:06.330 --> 00:18:09.590
But the two underlying policies for the statute
365
00:18:09.590 --> 00:18:13.880
are one, to balance between the right of private citizens
366
00:18:13.880 --> 00:18:18.880
to get redress for harms caused by public entities.
367
00:18:20.160 --> 00:18:23.240
The second is to balance that
368
00:18:23.240 --> 00:18:25.000
with protecting public fisc
369
00:18:25.000 --> 00:18:29.160
against, quote, "catastrophic impacts", so-
370
00:18:29.160 --> 00:18:31.610
Well, but what do you do with the-
371
00:18:31.610 --> 00:18:36.610
So not only do we have to have a shift here in the law,
372
00:18:37.010 --> 00:18:40.030
but we also have some tough legislative history
373
00:18:40.030 --> 00:18:44.460
because there was a bill actually considering
374
00:18:44.460 --> 00:18:45.974
what you are asking for
375
00:18:45.974 --> 00:18:50.974
and having the commission be subject to suit,
376
00:18:51.130 --> 00:18:55.850
and that iteration didn't pass.
377
00:18:55.850 --> 00:18:56.950
So let me take,
378
00:18:56.950 --> 00:18:58.500
I think there's two parts to your question.
379
00:18:58.500 --> 00:19:01.360
The first one is the legislative history.
380
00:19:01.360 --> 00:19:03.540
And as everyone knows,
381
00:19:03.540 --> 00:19:06.040
there essentially is no legislative history
382
00:19:06.040 --> 00:19:07.220
in Massachusetts.
383
00:19:07.220 --> 00:19:08.730
It's a guesswork.
384
00:19:08.730 --> 00:19:13.140
The prior bill was months before the final bill was passed.
385
00:19:13.140 --> 00:19:16.170
There was no conference committee of the prior bill
386
00:19:16.170 --> 00:19:19.550
that had the language that you mentioned, Justice Lowy,
387
00:19:19.550 --> 00:19:21.570
and in the final bill,
388
00:19:21.570 --> 00:19:23.590
that bill contained certain things
389
00:19:23.590 --> 00:19:25.900
that came out of the final bill
390
00:19:25.900 --> 00:19:28.270
that would suggest independence.
391
00:19:28.270 --> 00:19:29.900
For example, the State Auditor
392
00:19:29.900 --> 00:19:31.450
would serve as a commissioner,
393
00:19:31.450 --> 00:19:33.193
the final bill, that was excluded.
394
00:19:34.550 --> 00:19:35.830
The Commissioner of Revenue
395
00:19:35.830 --> 00:19:38.900
would collect all of the licenses and fees,
396
00:19:38.900 --> 00:19:41.840
under the final bill that was excluded.
397
00:19:41.840 --> 00:19:45.253
The MGC, the commission itself, now collects the taxes.
398
00:19:49.238 --> 00:19:51.040
And there is no conference committee report
399
00:19:51.040 --> 00:19:52.670
to give us any guidance as to why
400
00:19:52.670 --> 00:19:55.650
some things were taken out and others were put in,
401
00:19:55.650 --> 00:19:58.070
basically weighing on the same factor
402
00:19:58.070 --> 00:19:59.500
in a conflicting manner.
403
00:19:59.500 --> 00:20:01.770
So I suggest that that legislative history
404
00:20:01.770 --> 00:20:04.210
is not as constructive,
405
00:20:04.210 --> 00:20:07.390
but what it is I think important here
406
00:20:07.390 --> 00:20:10.880
is that you have a situation
407
00:20:10.880 --> 00:20:14.970
where the legislature set up the Gaming Commission
408
00:20:14.970 --> 00:20:17.683
to act as a financially independent entity.
409
00:20:18.994 --> 00:20:22.230
Well, it's not a financially independent entity,
410
00:20:22.230 --> 00:20:23.560
the way Massport is,
411
00:20:23.560 --> 00:20:27.920
which generates hundreds of billions of dollars
412
00:20:27.920 --> 00:20:31.990
and operates and charges fees.
413
00:20:31.990 --> 00:20:34.050
It pays for itself, right?
414
00:20:34.050 --> 00:20:39.050
But it's not an independent sort of entity
415
00:20:41.340 --> 00:20:45.056
creating financial wealth out there.
416
00:20:45.056 --> 00:20:50.056
It's paying its operating costs through certain fees, right?
417
00:20:50.570 --> 00:20:53.070
It has two components.
418
00:20:53.070 --> 00:20:57.873
There's Sections 56 and 57 of Chapter 23K
419
00:21:01.170 --> 00:21:06.170
addresses how you fund the operations of the commission.
420
00:21:06.554 --> 00:21:09.190
And the way way you fund the operations of the commission is
421
00:21:09.190 --> 00:21:13.480
the commission has taxing authority as to the licensees,
422
00:21:13.480 --> 00:21:15.980
and whatever the necessary operating budget is
423
00:21:15.980 --> 00:21:18.190
for the commission,
424
00:21:18.190 --> 00:21:19.623
the licensees pay for it.
425
00:21:21.494 --> 00:21:22.370
What is that number?
426
00:21:22.370 --> 00:21:24.570
I'm just trying to get a rough sense of what that number is
427
00:21:24.570 --> 00:21:27.100
'cause I remember 20 years ago,
428
00:21:27.100 --> 00:21:29.940
Massport would have $500 million
429
00:21:29.940 --> 00:21:31.610
or something to that effect.
430
00:21:31.610 --> 00:21:34.500
My recollection- I'm sorry, I interrupted.
431
00:21:34.500 --> 00:21:37.170
What is the number for the commission here?
432
00:21:37.170 --> 00:21:38.333
What number are we talking about
433
00:21:38.333 --> 00:21:39.900
that they generate for themselves?
434
00:21:39.900 --> 00:21:41.180
My recollection,
435
00:21:41.180 --> 00:21:44.290
and I couldn't cite to the record appendix
436
00:21:44.290 --> 00:21:45.123
right this minute,
437
00:21:45.123 --> 00:21:48.243
but I believe it's in the vicinity of $20-25 million.
438
00:21:50.260 --> 00:21:52.380
And so they run their own operation,
439
00:21:52.380 --> 00:21:56.350
they also produce revenue that goes and funds public entity,
440
00:21:56.350 --> 00:21:58.150
public good, if you will.
441
00:21:58.150 --> 00:22:00.750
And the statute has a structure,
442
00:22:00.750 --> 00:22:03.200
where there are dedicated funds,
443
00:22:03.200 --> 00:22:05.710
generated from revenue from gaming,
444
00:22:05.710 --> 00:22:09.240
that go to social causes designated by the legislature.
445
00:22:09.240 --> 00:22:13.870
But the core of the operation of the commission itself,
446
00:22:13.870 --> 00:22:17.030
which is what's the commission is being sued here
447
00:22:17.030 --> 00:22:19.720
is funded by private parties,
448
00:22:19.720 --> 00:22:22.700
private money, casino operators.
449
00:22:22.700 --> 00:22:24.760
So that money goes into a fund.
450
00:22:24.760 --> 00:22:28.130
If there's too much money at the end of the year,
451
00:22:28.130 --> 00:22:30.500
the commission can either retain it
452
00:22:30.500 --> 00:22:32.620
or they can credit it back to the licensees.
453
00:22:32.620 --> 00:22:35.170
It does not go back to the general fund,
454
00:22:35.170 --> 00:22:37.180
does not go to the Commonwealth.
455
00:22:37.180 --> 00:22:40.030
So here, if there were a judgment against the commission,
456
00:22:41.681 --> 00:22:43.440
it would arise out of the operations
457
00:22:43.440 --> 00:22:45.300
of the Gaming Commission, 'cause after all,
458
00:22:45.300 --> 00:22:47.490
this is part of the Gaming Commission's purposes
459
00:22:47.490 --> 00:22:51.320
is to vet licensees.
460
00:22:51.320 --> 00:22:53.760
Therefore that judgment would be
461
00:22:53.760 --> 00:22:56.560
part of the operations of the Gaming Commission
462
00:22:56.560 --> 00:22:59.940
and they would tax the licensees
463
00:22:59.940 --> 00:23:04.170
for the value necessary to pay the judgment.
464
00:23:04.170 --> 00:23:07.040
It's a self-sufficient, it's designed to be self-sufficient
465
00:23:07.040 --> 00:23:10.150
with regards to the operations of the entity itself.
466
00:23:10.150 --> 00:23:11.890
And therefore in this case,
467
00:23:11.890 --> 00:23:14.660
there is no risk to the public fisc.
468
00:23:14.660 --> 00:23:16.830
So in our going back to our policy,
469
00:23:16.830 --> 00:23:19.880
balancing of citizens right
470
00:23:19.880 --> 00:23:21.750
to sue the government for harm
471
00:23:21.750 --> 00:23:24.520
against the protection of the public fisc,
472
00:23:24.520 --> 00:23:26.540
if you have no risk to the public fisc,
473
00:23:26.540 --> 00:23:30.540
where the balancing test weighs in favor
474
00:23:30.540 --> 00:23:35.230
of giving the right to have redress against the entity,
475
00:23:35.230 --> 00:23:38.500
and therefore Chapter 258 shouldn't apply.
476
00:23:38.500 --> 00:23:40.540
The rationale for the statute
477
00:23:40.540 --> 00:23:42.860
does not even come into question.
478
00:23:42.860 --> 00:23:45.040
Well, a $40 million judgment
479
00:23:45.040 --> 00:23:50.030
is going to ultimately impact how much state agencies
480
00:23:50.030 --> 00:23:54.570
and ultimately the general fund does receive.
481
00:23:58.987 --> 00:24:01.890
There's a cost to running this,
482
00:24:01.890 --> 00:24:04.300
and there's a point in time where
483
00:24:04.300 --> 00:24:06.210
it impacts the general fund
484
00:24:06.210 --> 00:24:08.450
and $40 million is a lot of money.
485
00:24:08.450 --> 00:24:10.580
No, I disagree with you, Your Honor,
486
00:24:10.580 --> 00:24:15.580
If you look at Chapter 23K, Sections 56 and 57,
487
00:24:15.920 --> 00:24:19.800
that if the funding of the operations of the commission
488
00:24:19.800 --> 00:24:22.400
are entirely private,
489
00:24:22.400 --> 00:24:24.280
they do not involve the general fund.
490
00:24:24.280 --> 00:24:27.050
If there were $150 million judgment,
491
00:24:27.050 --> 00:24:29.560
the assessment would go against the licensees.
492
00:24:29.560 --> 00:24:33.400
It's not an indemnity like the Regents case cited,
493
00:24:33.400 --> 00:24:38.400
it is a tax that the commission can assess on the licensees,
494
00:24:39.510 --> 00:24:42.750
and the licensees will foot the bill.
495
00:24:42.750 --> 00:24:45.990
And if you look at the Encore Casino,
496
00:24:45.990 --> 00:24:47.913
it's a $3 billion operation.
497
00:24:50.010 --> 00:24:52.800
They are well able to fund whatever that judgment is.
498
00:24:52.800 --> 00:24:54.490
And that's the way the statute is set up.
499
00:24:54.490 --> 00:24:57.520
There is no threat to the public fisc
500
00:24:57.520 --> 00:25:00.270
from a private judgment against the Gaming Commission,
501
00:25:00.270 --> 00:25:04.003
because it will be funded by the casino operators.
502
00:25:06.940 --> 00:25:09.890
Okay, any other questions?
503
00:25:09.890 --> 00:25:11.240
Okay, thank you.
504
00:25:11.240 --> 00:25:12.280
Attorney Allison?
505
00:25:14.813 --> 00:25:17.120
Ms. Allison, would you mind responding to that last point?
506
00:25:17.120 --> 00:25:19.370
I'm sorry to throw you off your outline.
507
00:25:19.370 --> 00:25:21.860
If there's a $40 million judgment,
508
00:25:21.860 --> 00:25:24.820
does that have no impact on other state agencies
509
00:25:24.820 --> 00:25:26.273
or the general fund?
510
00:25:27.770 --> 00:25:29.740
No, Your Honor, not necessarily.
511
00:25:29.740 --> 00:25:30.573
It might.
512
00:25:30.573 --> 00:25:34.870
So the provision which Mr. Weld refers to,
513
00:25:34.870 --> 00:25:39.190
which provides that costs of overseeing
514
00:25:39.190 --> 00:25:43.320
the Gaming Act and regulations
515
00:25:43.320 --> 00:25:48.320
and the cost associated with that
516
00:25:48.510 --> 00:25:51.803
can be assessed to licensees.
517
00:25:53.130 --> 00:25:56.340
If not assessed to the licensees,
518
00:25:56.340 --> 00:25:58.970
or if such costs are unable to be recovered,
519
00:25:58.970 --> 00:26:03.920
then such costs are appropriate under Section 57.
520
00:26:03.920 --> 00:26:06.370
So while, the commission has made the point
521
00:26:06.370 --> 00:26:09.210
that it's arguable and it would take the position
522
00:26:09.210 --> 00:26:11.820
that such a judgment could be assessed
523
00:26:11.820 --> 00:26:16.310
against the licensees as a cost
524
00:26:16.310 --> 00:26:18.810
under the Gaming Control Fund,
525
00:26:18.810 --> 00:26:21.970
the Gaming Control Fund explicitly provides
526
00:26:21.970 --> 00:26:26.970
that another source of funds to cover such costs
527
00:26:27.530 --> 00:26:29.350
is appropriation.
528
00:26:29.350 --> 00:26:32.610
So in that respect, it's entirely different
529
00:26:32.610 --> 00:26:36.140
from the Oberg case that FBT has cited to,
530
00:26:36.140 --> 00:26:38.430
and much more like the Regents case
531
00:26:38.430 --> 00:26:39.800
that the commission has cited to.
532
00:26:39.800 --> 00:26:43.740
It's really, the liability is with the commission.
533
00:26:43.740 --> 00:26:47.020
And at the end of the day, the taxpayers could hold the bag.
534
00:26:47.020 --> 00:26:48.700
On your licensing scheme,
535
00:26:48.700 --> 00:26:53.040
can you assess them for an intentional tort
536
00:26:53.040 --> 00:26:54.133
that you committed?
537
00:26:55.090 --> 00:26:58.730
Do you have the power to assess for intent?
538
00:26:58.730 --> 00:27:02.220
If there's a verdict against you for an intentional tort
539
00:27:02.220 --> 00:27:06.900
intentional contractual interference,
540
00:27:06.900 --> 00:27:09.033
can you assess that as a fee?
541
00:27:10.730 --> 00:27:13.720
The Gaming Control Fund refers to
542
00:27:13.720 --> 00:27:16.960
assessments for cost or expenses.
543
00:27:16.960 --> 00:27:21.960
If the commission were subject to a judgment in this case,
544
00:27:22.060 --> 00:27:26.650
it would take position that that could be assessed
545
00:27:26.650 --> 00:27:30.150
as a cost and expense to all of the licensees
546
00:27:30.150 --> 00:27:32.370
to be shared equally.
547
00:27:32.370 --> 00:27:36.060
The licensees, certainly the licensees other than Wynn
548
00:27:36.060 --> 00:27:37.350
might object to that.
549
00:27:37.350 --> 00:27:39.650
We would argue that they wouldn't have standing to
550
00:27:39.650 --> 00:27:41.333
under the Gaming Act.
551
00:27:43.200 --> 00:27:46.923
So that's certainly the position the commission would take,
552
00:27:49.970 --> 00:27:53.970
but if such a judgment could not be assessed as a cost,
553
00:27:53.970 --> 00:27:56.433
an operational cost of the commission,
554
00:27:57.510 --> 00:28:00.830
the Gaming Control Fund explicitly provides
555
00:28:00.830 --> 00:28:04.253
that such amounts can be appropriated.
556
00:28:06.420 --> 00:28:09.460
Has the commission ever paid out any verdicts?
557
00:28:09.460 --> 00:28:12.660
'Cause usually you need to pass legislation
558
00:28:12.660 --> 00:28:14.980
to pay for a Commonwealth verdict?
559
00:28:14.980 --> 00:28:16.973
Has that happened where-
560
00:28:18.530 --> 00:28:20.650
As far as I'm aware, Your Honor, no,
561
00:28:20.650 --> 00:28:22.780
the commission has not paid out a verdict
562
00:28:22.780 --> 00:28:27.080
or had to reach a determination
563
00:28:27.080 --> 00:28:29.580
as to this question under the Gaming Control Fund.
564
00:28:30.719 --> 00:28:33.054
Ms. Allison, can I ask you something?
565
00:28:33.054 --> 00:28:34.840
No, go ahead please, Justice Kafker.
566
00:28:34.840 --> 00:28:37.470
I wanted to switch to the sort of the main event
567
00:28:37.470 --> 00:28:38.303
if we could.
568
00:28:39.610 --> 00:28:43.567
So if we don't agree with the idea
569
00:28:46.810 --> 00:28:51.810
that the investment based expectation is dispositive,
570
00:28:54.650 --> 00:28:58.390
is this a reversal or do we have to,
571
00:28:58.390 --> 00:29:01.683
is there any way that's not a reversal?
572
00:29:05.350 --> 00:29:09.020
So the commission has argued,
573
00:29:09.020 --> 00:29:11.800
and I'd like to expand on that,
574
00:29:11.800 --> 00:29:13.350
that the failure of proof
575
00:29:13.350 --> 00:29:16.583
on reasonable investment backed expectations is dispositive,
576
00:29:16.583 --> 00:29:19.740
that that's the clear ruling under Monsanto
577
00:29:19.740 --> 00:29:22.380
and the federal cases that follow Monsanto.
578
00:29:22.380 --> 00:29:23.213
And in fact,
579
00:29:23.213 --> 00:29:26.560
given that the question under a regulatory taking is,
580
00:29:26.560 --> 00:29:29.480
has the regulation gone too far?
581
00:29:29.480 --> 00:29:34.020
The fact that a plaintiff fails, utterly fails,
582
00:29:34.020 --> 00:29:37.935
to show any interference with investment backed expectations
583
00:29:37.935 --> 00:29:39.986
necessarily establishes that.
584
00:29:39.986 --> 00:29:41.420
I have a little problem with that
585
00:29:41.420 --> 00:29:46.420
because, not just Hodel, but Palazzolo or whatever,
586
00:29:46.430 --> 00:29:48.430
I'm probably mispronouncing it,
587
00:29:48.430 --> 00:29:53.430
basically says, even if there's no reasonable expectation,
588
00:29:55.330 --> 00:30:00.330
meaning they bought after the regulation was in effect,
589
00:30:03.140 --> 00:30:07.937
they still said that if the regulation goes too far,
590
00:30:11.510 --> 00:30:15.560
there's certain things that are beyond the pale essentially.
591
00:30:15.560 --> 00:30:18.210
And then almost every SJC case
592
00:30:18.210 --> 00:30:21.140
always interconnects the factors
593
00:30:21.140 --> 00:30:25.670
when it's talking about them and uses this too far language,
594
00:30:25.670 --> 00:30:27.450
Justice Cowin uses it at one point
595
00:30:27.450 --> 00:30:31.060
and Justice Cordy talks about them as interlocking factors
596
00:30:31.060 --> 00:30:31.893
in the case.
597
00:30:31.893 --> 00:30:34.263
So I'm just a little concerned
598
00:30:34.263 --> 00:30:38.410
that we've always looked at all three,
599
00:30:38.410 --> 00:30:40.413
and so do the feds now.
600
00:30:41.919 --> 00:30:42.752
But go ahead.
601
00:30:42.752 --> 00:30:44.663
So let me start with Palazzolo.
602
00:30:45.910 --> 00:30:49.970
The Palazzolo concurrence does not overrule Monsanto.
603
00:30:49.970 --> 00:30:51.630
It doesn't even refer to Monsanto
604
00:30:51.630 --> 00:30:54.290
and it does not alter the effect of Monsanto.
605
00:30:54.290 --> 00:30:57.220
What the Palozzolo concurrence does is make the point
606
00:30:57.220 --> 00:31:00.360
that in the factual scenario that you just described,
607
00:31:00.360 --> 00:31:01.570
Justice Kafker,
608
00:31:01.570 --> 00:31:06.570
that these categorical rules that were proposed in that case
609
00:31:09.240 --> 00:31:12.360
cannot replace the Penn Central analysis.
610
00:31:12.360 --> 00:31:16.510
But Monsanto did not impose a categorical rule.
611
00:31:16.510 --> 00:31:17.343
When you're talking about the concurrence,
612
00:31:17.343 --> 00:31:20.770
are you talking about Justice Kennedy's decision,
613
00:31:20.770 --> 00:31:21.870
the opinion of the Court?
614
00:31:21.870 --> 00:31:26.233
'Cause I'm relying on Kennedy, not on Justice O'Connor.
615
00:31:27.830 --> 00:31:29.947
He wrote the majority decision, right?
616
00:31:29.947 --> 00:31:34.315
Right, and I'm referring to the FBT's argument
617
00:31:34.315 --> 00:31:39.170
that I think looking to Justice O'Connor's concurrence,
618
00:31:39.170 --> 00:31:40.600
which becomes.
619
00:31:40.600 --> 00:31:43.000
I don't even need Justice O'Connor's concurrence.
620
00:31:43.000 --> 00:31:46.560
I'm looking right at what Justice Kennedy writes
621
00:31:46.560 --> 00:31:48.360
for the majority.
622
00:31:48.360 --> 00:31:50.820
He has this sentence about Hobbesian sticks
623
00:31:50.820 --> 00:31:53.210
and Lockeian whatever, and then he goes,
624
00:31:53.210 --> 00:31:55.913
even if you bought after the regulation,
625
00:31:57.310 --> 00:31:59.800
that's not a get outta jail free.
626
00:31:59.800 --> 00:32:03.270
If the government sort of does something too much,
627
00:32:03.270 --> 00:32:04.650
you're still outta luck.
628
00:32:04.650 --> 00:32:06.690
Well, what he's saying there,
629
00:32:06.690 --> 00:32:10.620
is that you cannot impose a categorical rule
630
00:32:10.620 --> 00:32:14.670
to decide if investment backed expectations
631
00:32:14.670 --> 00:32:17.060
were met in the takings analysis.
632
00:32:17.060 --> 00:32:19.250
But that's not what Monsanto does.
633
00:32:19.250 --> 00:32:22.720
Monsanto does not impose a categorical rule.
634
00:32:22.720 --> 00:32:26.410
Monsanto speaks to an evidentiary failure.
635
00:32:26.410 --> 00:32:28.530
Monsanto says, looking,
636
00:32:28.530 --> 00:32:30.170
it's not imposing any categorical rule.
637
00:32:30.170 --> 00:32:31.510
It's looking at the evidence
638
00:32:31.510 --> 00:32:33.640
available on reasonable investment backed expectations.
639
00:32:33.640 --> 00:32:36.510
I get Monsanto's distinguishable on the facts.
640
00:32:36.510 --> 00:32:41.150
I get that, but can I ask you another question, which is,
641
00:32:41.150 --> 00:32:44.610
the U.S. Supreme Court has not adopted
642
00:32:44.610 --> 00:32:49.610
your timing point directly, right?
643
00:32:50.690 --> 00:32:53.640
I understand the Federal Circuit has said,
644
00:32:53.640 --> 00:32:56.200
we look at reasonable expectations
645
00:32:56.200 --> 00:32:58.470
at the moment of purchase,
646
00:32:58.470 --> 00:33:03.010
but the U.S. Supreme Court has not been that definitive,
647
00:33:03.010 --> 00:33:04.360
have they?
648
00:33:04.360 --> 00:33:07.247
And let me give you a hypothetical that concerns me,
649
00:33:07.247 --> 00:33:09.800
and it's something similar with Mr. Weld,
650
00:33:09.800 --> 00:33:13.143
so I buy this property,
651
00:33:15.950 --> 00:33:19.590
and then there's a change in regulation
652
00:33:19.590 --> 00:33:22.740
after I buy the property, just what he says,
653
00:33:22.740 --> 00:33:25.490
that allows me to build houses.
654
00:33:25.490 --> 00:33:29.150
I build a subdivision with roads and other things.
655
00:33:29.150 --> 00:33:33.610
So I've made a subsequent investment based expectation,
656
00:33:33.610 --> 00:33:35.440
investments,
657
00:33:35.440 --> 00:33:38.670
based on a change in regulation after the purchase.
658
00:33:38.670 --> 00:33:40.970
And then there's another change in regulation.
659
00:33:43.000 --> 00:33:46.210
Don't we consider the investments you made
660
00:33:46.210 --> 00:33:50.817
after the first change prior to the second one?
661
00:33:50.817 --> 00:33:51.950
No, Your Honor.
662
00:33:51.950 --> 00:33:53.690
And let me explain why.
663
00:33:53.690 --> 00:33:55.280
So first with respect to your question
664
00:33:55.280 --> 00:33:57.023
about Supreme Court precedent,
665
00:33:59.630 --> 00:34:02.760
the cases I across the board, you can see from the facts,
666
00:34:02.760 --> 00:34:07.300
they're looking to the regulatory regime,
667
00:34:07.300 --> 00:34:10.990
the regulatory status at the time of purchase
668
00:34:10.990 --> 00:34:12.423
in these cases.
669
00:34:13.429 --> 00:34:16.210
And I think, though this isn't a Supreme Court case,
670
00:34:16.210 --> 00:34:20.070
the 9th Circuit in the Bridge Aina Le'a case
671
00:34:20.070 --> 00:34:23.710
made that standard or that principle really clear
672
00:34:23.710 --> 00:34:26.460
when it said that what's relevant and important
673
00:34:26.460 --> 00:34:29.683
under all of these cases, citing to Supreme Court precedent,
674
00:34:31.194 --> 00:34:32.460
is the regulatory environment
675
00:34:32.460 --> 00:34:34.420
at the time of the acquisition,
676
00:34:34.420 --> 00:34:36.660
not when the regulation is challenged.
677
00:34:36.660 --> 00:34:38.400
And the reason that's important,
678
00:34:38.400 --> 00:34:40.080
and it makes perfect sense,
679
00:34:40.080 --> 00:34:43.320
as to reasonable investment backed expectations,
680
00:34:43.320 --> 00:34:45.670
is that a regulatory taking claim
681
00:34:45.670 --> 00:34:48.670
must be premised upon the interest taken
682
00:34:48.670 --> 00:34:50.270
in the property as a whole.
683
00:34:50.270 --> 00:34:52.800
This comes back to the fundamental problem
684
00:34:52.800 --> 00:34:54.960
with FBT's argument.
685
00:34:54.960 --> 00:34:57.963
As the commission argued below and the Supreme Court found,
686
00:34:58.810 --> 00:35:00.560
FBT can't base a taking claim
687
00:35:00.560 --> 00:35:04.350
on a loss of a particular development right of a parcel.
688
00:35:04.350 --> 00:35:06.180
And the scenario you just described,
689
00:35:06.180 --> 00:35:08.880
that's precisely what it allows it to do.
690
00:35:08.880 --> 00:35:10.280
This is why you have to measure
691
00:35:10.280 --> 00:35:12.690
reasonable investment backed expectations
692
00:35:12.690 --> 00:35:14.713
from the time of the acquisition.
693
00:35:15.750 --> 00:35:16.583
And in fact,
694
00:35:17.560 --> 00:35:20.440
and this is what FBT's sort of fair market value argument,
695
00:35:20.440 --> 00:35:22.650
this is why it's so fundamentally flawed too,
696
00:35:22.650 --> 00:35:24.290
they argue that fair market value
697
00:35:24.290 --> 00:35:27.606
essentially equates to investment backed expectation.
698
00:35:27.606 --> 00:35:28.767
I don't buy into that,
699
00:35:28.767 --> 00:35:32.860
but I still don't see why, if you've, again,
700
00:35:32.860 --> 00:35:35.370
you bought some property 50 years ago
701
00:35:35.370 --> 00:35:37.640
and there's a regulatory change.
702
00:35:37.640 --> 00:35:41.260
And then you make all these huge investments
703
00:35:41.260 --> 00:35:42.740
based on that regulatory change,
704
00:35:42.740 --> 00:35:44.660
and then there's a subsequent one.
705
00:35:44.660 --> 00:35:45.933
That's irrelevant?
706
00:35:47.410 --> 00:35:48.410
You're stuck
707
00:35:48.410 --> 00:35:51.280
even though the government's changed its mind twice?
708
00:35:51.280 --> 00:35:53.840
I mean, I'm just, I'm confused.
709
00:35:53.840 --> 00:35:58.350
I understand why you may have a diminished expectation,
710
00:35:58.350 --> 00:36:01.240
but you still got some expectation, don't you?
711
00:36:01.240 --> 00:36:03.070
You've invested money based on
712
00:36:03.070 --> 00:36:05.280
what the government was doing.
713
00:36:05.280 --> 00:36:08.900
I think it, you can look to the Penn Central test itself,
714
00:36:08.900 --> 00:36:10.430
the Penn Central case itself,
715
00:36:10.430 --> 00:36:14.110
to see how strongly it applies this principle.
716
00:36:14.110 --> 00:36:17.200
There it rejected a regulatory taking claim
717
00:36:17.200 --> 00:36:20.860
based on the alleged restriction
718
00:36:22.320 --> 00:36:26.520
on some particular use or some particular development right.
719
00:36:26.520 --> 00:36:31.310
And it said, no, you look to the property as a whole.
720
00:36:31.310 --> 00:36:36.310
You don't get to carve up your distinct development rights
721
00:36:36.340 --> 00:36:39.990
and say, ah, I've lost all of one development right,
722
00:36:39.990 --> 00:36:42.460
so it's a regulatory taking.
723
00:36:42.460 --> 00:36:44.560
That is fundamentally inconsistent
724
00:36:44.560 --> 00:36:46.860
with what a regulatory taking is.
725
00:36:46.860 --> 00:36:49.920
You look at the property as a whole.
726
00:36:49.920 --> 00:36:52.710
And so this is why the requirement
727
00:36:52.710 --> 00:36:56.140
that you look to the time of the acquisition makes sense.
728
00:36:56.140 --> 00:37:00.800
It's the only way to reconcile what Penn Central
729
00:37:00.800 --> 00:37:03.930
is trying to establish it as a regulatory taking.
730
00:37:03.930 --> 00:37:06.430
Can I ask one more question?
Ms. Allison, can I-
731
00:37:06.430 --> 00:37:07.550
Go ahead, Justice Kafker.
732
00:37:07.550 --> 00:37:10.400
So, can you talk to me about the conduct?
733
00:37:10.400 --> 00:37:13.230
Because my reading of the U.S. Supreme Court
734
00:37:13.230 --> 00:37:16.660
says that certain kinds of governmental behavior
735
00:37:16.660 --> 00:37:18.083
is beyond the pale.
736
00:37:19.900 --> 00:37:22.030
And this is very unusual.
737
00:37:22.030 --> 00:37:27.030
This is targeted at one entity.
738
00:37:29.240 --> 00:37:32.390
Tell me how do we justify this?
739
00:37:32.390 --> 00:37:36.170
Tell me what the logic is of this.
740
00:37:36.170 --> 00:37:38.310
'Cause I have real trouble following it.
741
00:37:38.310 --> 00:37:42.650
Well, so first you don't even need to look to
742
00:37:42.650 --> 00:37:44.380
the character of the action.
743
00:37:44.380 --> 00:37:47.700
Again, and we touched on Monsanto,
744
00:37:47.700 --> 00:37:52.200
but Monsanto remains good law, Palozzolo-
745
00:37:52.200 --> 00:37:53.250
Help me out though.
746
00:37:54.510 --> 00:37:57.630
Assume you do. Just assume you do for the purposes.
747
00:37:57.630 --> 00:38:00.530
Just assume you do for the purpose of the question
748
00:38:00.530 --> 00:38:03.510
and why this isn't Hodel vs. Irving.
749
00:38:03.510 --> 00:38:06.380
They're taking $40 million out of the pocket
750
00:38:06.380 --> 00:38:10.980
based on a jailhouse call of one individual
751
00:38:10.980 --> 00:38:13.160
who may or who may not
752
00:38:13.160 --> 00:38:15.450
have an ownership interest in the property.
753
00:38:15.450 --> 00:38:20.353
So assuming that it's not dispositive.
754
00:38:21.190 --> 00:38:24.223
So this case is entirely different from Hodel.
755
00:38:25.670 --> 00:38:30.670
Hodel was, courts and commentators across the board
756
00:38:31.070 --> 00:38:35.100
say that was a very unique case with respect to the taking,
757
00:38:35.100 --> 00:38:37.640
an extraordinarily unusual taking
758
00:38:37.640 --> 00:38:39.980
of the rights to pass on property to your heirs.
759
00:38:39.980 --> 00:38:42.880
And the Superior Court below noted the same thing.
760
00:38:42.880 --> 00:38:47.410
It's sort of equivalent to the line of cases,
761
00:38:47.410 --> 00:38:50.880
which say if there's a physical invasion of your property,
762
00:38:50.880 --> 00:38:55.430
it's necessarily a regulatory taking.
763
00:38:55.430 --> 00:38:58.053
It's sort of so unusual that it's on that level.
764
00:39:00.011 --> 00:39:01.610
This is not Hodel.
765
00:39:01.610 --> 00:39:04.240
This is not those special circumstances.
766
00:39:04.240 --> 00:39:06.550
Well, but what is this?
767
00:39:06.550 --> 00:39:09.310
'Cause again, I don't get this yet.
768
00:39:09.310 --> 00:39:11.370
I understand the Gambling Commission
769
00:39:11.370 --> 00:39:14.246
wants to keep organized crime outta gambling.
770
00:39:14.246 --> 00:39:16.080
I get it.
771
00:39:16.080 --> 00:39:19.650
But all this does is reduce the amount of money
772
00:39:19.650 --> 00:39:21.590
the owners of this get.
773
00:39:21.590 --> 00:39:23.490
I mean, if there actually is
774
00:39:23.490 --> 00:39:25.590
an organized crime figure in this,
775
00:39:25.590 --> 00:39:28.460
the person's still getting money.
776
00:39:28.460 --> 00:39:29.750
They're just getting less.
777
00:39:29.750 --> 00:39:33.400
I just don't understand exactly what is this reg.,
778
00:39:33.400 --> 00:39:37.569
what is going on here that we should give it some deference?
779
00:39:37.569 --> 00:39:38.788
So let me start with.
780
00:39:38.788 --> 00:39:43.190
Can I piggyback on Justice Kafker's question,
781
00:39:43.190 --> 00:39:48.020
in all of these cases, there is actually a regulation.
782
00:39:48.020 --> 00:39:50.910
Congress has passed something.
783
00:39:50.910 --> 00:39:53.980
What is the regulation here?
784
00:39:53.980 --> 00:39:58.140
It seems like there was an ask by the Gaming Commission
785
00:39:58.140 --> 00:40:02.350
to take out the casino premium,
786
00:40:02.350 --> 00:40:07.300
but there's, for this particular targeted consideration,
787
00:40:09.810 --> 00:40:12.140
not like a regulation
788
00:40:12.140 --> 00:40:16.250
in the ordinary context of a regulatory taking.
789
00:40:16.250 --> 00:40:21.250
Well, the way that FBT describes the regulatory action
790
00:40:21.670 --> 00:40:26.670
is the commission's acceptance or the decision
791
00:40:28.150 --> 00:40:30.360
to reduce the purchase price.
792
00:40:30.360 --> 00:40:33.030
Now, again, I don't think the Court
793
00:40:33.030 --> 00:40:36.780
needs to turn to any of these facts,
794
00:40:36.780 --> 00:40:41.780
but the facts are that FBT and Wynn
795
00:40:41.920 --> 00:40:45.730
agreed to reduce the purchase price
796
00:40:45.730 --> 00:40:48.310
by amending their auction agreement
797
00:40:48.310 --> 00:40:52.020
based on the fact that Wynn had expressed concerns
798
00:40:52.020 --> 00:40:56.570
about its suitability with FBT involved in the case,
799
00:40:56.570 --> 00:41:01.350
and the commission expressed that it had concerns
800
00:41:01.350 --> 00:41:04.390
about the transparency of the transaction,
801
00:41:04.390 --> 00:41:08.620
giving its paramount obligation
802
00:41:08.620 --> 00:41:12.710
to ensure the integrity and the transparency
803
00:41:13.550 --> 00:41:14.500
of the Gaming Act.
804
00:41:14.500 --> 00:41:19.500
So again, but the Court does not need to turn to
805
00:41:19.720 --> 00:41:22.210
the facts as to the action,
806
00:41:22.210 --> 00:41:27.210
or the facts as to the commission's acceptance
807
00:41:27.530 --> 00:41:29.720
of this amended auction agreement.
808
00:41:29.720 --> 00:41:32.610
What do we do with the fact that the commission was wrong
809
00:41:32.610 --> 00:41:37.210
or very well was wrong, given the federal criminal case?
810
00:41:37.210 --> 00:41:39.510
It's that this Lightbody Buffalino thing
811
00:41:39.510 --> 00:41:42.630
was jailhouse banter or whatever,
812
00:41:42.630 --> 00:41:44.160
they're acquitted of it,
813
00:41:44.160 --> 00:41:48.400
and now clearly the commission squeezed the parties,
814
00:41:48.400 --> 00:41:50.073
I think, to be polite,
815
00:41:51.720 --> 00:41:54.403
so no harm, no foul?
816
00:41:55.700 --> 00:41:59.750
Well, the fact that they were found,
817
00:41:59.750 --> 00:42:01.270
you're right, they were indicted
818
00:42:01.270 --> 00:42:02.600
and they were found to be not guilty.
819
00:42:02.600 --> 00:42:05.910
But the fact that there was reasonable doubt
820
00:42:05.910 --> 00:42:09.660
is not equivalent to the commission's reasonable doubt
821
00:42:09.660 --> 00:42:10.620
in the criminal matter,
822
00:42:10.620 --> 00:42:14.020
is not equivalent to the commission's concerns
823
00:42:14.020 --> 00:42:18.170
about ensuring the integrity of the Gaming Act.
824
00:42:18.170 --> 00:42:20.760
I mean, those two things can't be equated.
825
00:42:20.760 --> 00:42:24.610
So the commission's concerns, which were never resolved,
826
00:42:24.610 --> 00:42:26.410
had to do with-
827
00:42:26.410 --> 00:42:28.270
How does this regulatory action,
828
00:42:28.270 --> 00:42:30.023
if it is a regulatory action,
829
00:42:31.990 --> 00:42:35.980
protect the integrity of the commission of the act?
830
00:42:35.980 --> 00:42:38.143
Explain to me how it does that.
831
00:42:39.510 --> 00:42:42.240
So the commission's concerns
832
00:42:42.240 --> 00:42:46.470
about whether it was given the full facts
833
00:42:46.470 --> 00:42:50.000
with respect to ownership and FBT,
834
00:42:50.000 --> 00:42:54.410
whether it was provided false information
835
00:42:54.410 --> 00:42:56.533
when it began asking about that,
836
00:42:59.880 --> 00:43:02.090
raised concerns for the commission
837
00:43:02.090 --> 00:43:05.950
that there would not be transparency
838
00:43:05.950 --> 00:43:07.495
in the licensing process.
839
00:43:07.495 --> 00:43:12.480
How does reaching into the plaintiff's pocket
840
00:43:12.480 --> 00:43:17.480
for $40 million provide enhanced integrity?
841
00:43:21.260 --> 00:43:25.030
So, again, I mean, respectfully,
842
00:43:25.030 --> 00:43:27.170
this was not sort of squeezing anyone.
843
00:43:27.170 --> 00:43:32.170
This was the commission accepting a revised option agreement
844
00:43:32.210 --> 00:43:35.740
between Wynn and FBT because Wynn was aware-
845
00:43:35.740 --> 00:43:38.023
I thought the commission told Wynn,
846
00:43:39.130 --> 00:43:42.703
we may not accept your proposal if you include FBT
847
00:43:45.150 --> 00:43:48.720
who has a potential organized crime figure
848
00:43:48.720 --> 00:43:50.173
or something involved in it.
849
00:43:51.190 --> 00:43:52.980
But then it added this qualifier,
850
00:43:52.980 --> 00:43:57.980
unless you only pay FBT big box amounts,
851
00:43:58.510 --> 00:44:01.290
as opposed to big casino amounts.
852
00:44:01.290 --> 00:44:02.340
No, those are allegations,
853
00:44:02.340 --> 00:44:05.083
but those facts are not undisputed.
854
00:44:06.886 --> 00:44:09.950
But that leads us then back to my original question is,
855
00:44:09.950 --> 00:44:13.170
if we have to get into any of this,
856
00:44:13.170 --> 00:44:15.343
you lose summary judgment,
857
00:44:16.490 --> 00:44:20.110
because if we do, we've got this disputed facts
858
00:44:20.110 --> 00:44:25.110
on the nature of the regulatory behavior here.
859
00:44:25.500 --> 00:44:27.950
Those facts are not in the record.
860
00:44:27.950 --> 00:44:31.090
And that's why I would like to return to
861
00:44:31.090 --> 00:44:32.440
the argument we've made,
862
00:44:32.440 --> 00:44:36.440
which is the Court does not have to get into those facts
863
00:44:36.440 --> 00:44:38.870
to decide this motion for summary judgment.
864
00:44:38.870 --> 00:44:42.930
Monsanto does hold that a failure,
865
00:44:42.930 --> 00:44:44.290
a complete failure of proof
866
00:44:44.290 --> 00:44:46.400
on investment backed expectations is dispositive.
867
00:44:46.400 --> 00:44:49.340
And there are many cases after Monsanto that hold that.
868
00:44:49.340 --> 00:44:51.640
And to Mr. Welds argument,
869
00:44:51.640 --> 00:44:54.400
these cases do not consider,
870
00:44:54.400 --> 00:44:57.150
these cases do not consider the other factors.
871
00:44:57.150 --> 00:45:01.047
I would point you to Monsanto itself to begin.
872
00:45:01.047 --> 00:45:06.047
But in Monsanto, it's a disclosure of permit
873
00:45:07.400 --> 00:45:09.850
of environmental information, right?
874
00:45:09.850 --> 00:45:11.667
It's a disclosure of what-
875
00:45:11.667 --> 00:45:14.683
There's no suggestion of anything,
876
00:45:15.580 --> 00:45:18.100
in Justice Gaziano's words, squeezing
877
00:45:18.100 --> 00:45:23.030
or any sort of odd regulatory conduct
878
00:45:23.030 --> 00:45:25.580
that could go too far, right?
879
00:45:25.580 --> 00:45:28.723
The regulation there is a perfectly normal,
880
00:45:29.870 --> 00:45:32.000
standard type of regulation.
881
00:45:32.000 --> 00:45:35.243
Every one of these cases, except for Hodel,
882
00:45:39.320 --> 00:45:41.510
we're just dealing with a different animal here, aren't we?
883
00:45:41.510 --> 00:45:42.970
Well, the point is,
884
00:45:42.970 --> 00:45:46.700
as to Monsanto and all of the subsequent cases,
885
00:45:46.700 --> 00:45:51.180
is that it doesn't even look at any of those other factors.
886
00:45:51.180 --> 00:45:54.650
That's the very point that Monsanto holds you don't have to.
887
00:45:54.650 --> 00:45:55.580
It doesn't have to
888
00:45:55.580 --> 00:45:57.510
because we're not dealing with something
889
00:45:57.510 --> 00:46:02.510
that may be too far in the words of the Supreme Court,
890
00:46:02.600 --> 00:46:07.600
or like Palozzolo, what Justice Kennedy talks about.
891
00:46:07.820 --> 00:46:10.860
There could be some kind of governmental action
892
00:46:10.860 --> 00:46:14.740
that really, even when you don't have an expectation
893
00:46:16.100 --> 00:46:19.530
can be just too much and intolerable.
894
00:46:19.530 --> 00:46:22.080
Well, so that's not what any of these,
895
00:46:22.080 --> 00:46:25.040
none of the cases, Monsanto and post Monsanto,
896
00:46:25.040 --> 00:46:27.210
including Mehaffy and Cablevision and Good,
897
00:46:27.210 --> 00:46:29.220
and the ones we've cited,
898
00:46:29.220 --> 00:46:33.450
even suggest that they should be
899
00:46:33.450 --> 00:46:35.980
looking to these other factors if there's a failure,
900
00:46:35.980 --> 00:46:37.210
regardless of what they are,
901
00:46:37.210 --> 00:46:38.770
if there's a failure of proof
902
00:46:38.770 --> 00:46:41.010
on reasonable investment backed expectations.
903
00:46:41.010 --> 00:46:42.050
And I would also like-
904
00:46:42.050 --> 00:46:46.690
I see your point that this gambling premium
905
00:46:46.690 --> 00:46:48.810
was really a reach
906
00:46:48.810 --> 00:46:52.170
and these guys made a lot of money on this.
907
00:46:52.170 --> 00:46:55.530
So it just doesn't seem like a classic regulatory taking.
908
00:46:55.530 --> 00:46:58.640
The problem is the regulatory behavior
909
00:46:58.640 --> 00:47:01.320
is just extremely odd.
910
00:47:01.320 --> 00:47:04.290
And I just don't know if that can kick you over
911
00:47:05.410 --> 00:47:07.270
into problematic territory,
912
00:47:07.270 --> 00:47:11.680
even though Mr. Weld's client made a huge amount of money,
913
00:47:11.680 --> 00:47:15.090
and he was counting on this gambling premium,
914
00:47:15.090 --> 00:47:19.203
which, is something he shouldn't be counting on.
915
00:47:21.640 --> 00:47:23.890
Our position is it doesn't kick you over, Your Honor,
916
00:47:23.890 --> 00:47:25.360
not under Monsanto.
917
00:47:25.360 --> 00:47:26.780
And the fact that this case
918
00:47:26.780 --> 00:47:29.703
can be easily distinguished from Hodel.
919
00:47:32.620 --> 00:47:34.870
The additional thing that you have to take into account
920
00:47:34.870 --> 00:47:36.833
in this case, given the gaming,
921
00:47:37.950 --> 00:47:40.860
giving that we're talking about gaming,
922
00:47:40.860 --> 00:47:45.260
is that the law in the Caesars case and Abdow
923
00:47:45.260 --> 00:47:50.260
is clear that no one, the FBT, an applicant,
924
00:47:51.660 --> 00:47:53.940
can't have any reasonable expectation
925
00:47:53.940 --> 00:47:56.720
that depends on the award of a gaming license.
926
00:47:56.720 --> 00:47:59.150
The Caesars case said that there's no,
927
00:47:59.150 --> 00:48:01.487
to use the quote from Justice Souter,
928
00:48:01.487 --> 00:48:04.160
"expectation of value...",
929
00:48:04.160 --> 00:48:07.670
that could support any constitutional property right
930
00:48:07.670 --> 00:48:08.740
in a gaming license.
931
00:48:08.740 --> 00:48:11.320
That seeking a gaming license
932
00:48:11.320 --> 00:48:14.370
is nothing more than hope alone.
933
00:48:14.370 --> 00:48:15.790
And if that's the case,
934
00:48:15.790 --> 00:48:20.220
with respect to an applicant for a gaming license,
935
00:48:20.220 --> 00:48:21.870
then it necessarily follows
936
00:48:21.870 --> 00:48:25.240
that under the regulatory taking analysis,
937
00:48:25.240 --> 00:48:29.620
FBT can have no expectation of value
938
00:48:29.620 --> 00:48:31.463
in the award of the gaming license.
939
00:48:32.350 --> 00:48:34.920
Because we're talking about the gaming context,
940
00:48:34.920 --> 00:48:39.280
the commission's discretion here is virtually plenary.
941
00:48:39.280 --> 00:48:40.393
That's what-
942
00:48:40.393 --> 00:48:42.727
There are no rules in gaming?
943
00:48:42.727 --> 00:48:44.090
I mean, that can't.
944
00:48:44.090 --> 00:48:46.470
There's gotta be some standards of behavior
945
00:48:46.470 --> 00:48:50.770
that even in gambling is intolerable, right?
946
00:48:50.770 --> 00:48:52.330
Well, in the Caesars case,
947
00:48:52.330 --> 00:48:54.770
with a point that Justice Souter makes
948
00:48:54.770 --> 00:48:57.490
is that the gaming commission's discretion
949
00:48:57.490 --> 00:48:58.720
is virtually plenary.
950
00:48:58.720 --> 00:49:02.220
So to the extent that its exercising its discretion
951
00:49:02.220 --> 00:49:05.900
to determine how it needs to meet its obligations
952
00:49:05.900 --> 00:49:07.860
under the Gaming Act,
953
00:49:07.860 --> 00:49:11.640
what Caesars found is Wynn, an applicant,
954
00:49:11.640 --> 00:49:14.610
has no expectation of value whatsoever
955
00:49:14.610 --> 00:49:16.550
in light of that discretion,
956
00:49:16.550 --> 00:49:19.240
and the same analysis applies here.
957
00:49:19.240 --> 00:49:24.070
But the reality is there were two applicants in play.
958
00:49:24.070 --> 00:49:27.103
One municipality had already voted approval,
959
00:49:28.090 --> 00:49:31.940
Wynn was on a much greater scale of ability.
960
00:49:31.940 --> 00:49:33.130
I don't know about-
961
00:49:33.130 --> 00:49:37.501
I mean, no expectation in the facts of this case?
962
00:49:37.501 --> 00:49:38.920
That's right, Your Honor.
963
00:49:38.920 --> 00:49:42.910
I think that's precisely how you would have to apply
964
00:49:42.910 --> 00:49:45.540
Caesars to this case,
965
00:49:45.540 --> 00:49:48.150
which is that there can be no expectations.
966
00:49:48.150 --> 00:49:50.280
Caesars is a 9th Circuit case, is that right?
967
00:49:50.280 --> 00:49:51.113
I can't remember.
968
00:49:51.113 --> 00:49:52.868
Caesars is a 1st Circuit case, Your Honor.
969
00:49:52.868 --> 00:49:53.860
Caesars is a 1st Circuit case.
970
00:49:53.860 --> 00:49:55.150
Yes.
971
00:49:55.150 --> 00:49:57.890
And that's precisely what it says,
972
00:49:57.890 --> 00:50:02.310
that there can be no expectation of the value
973
00:50:02.310 --> 00:50:06.157
tied to the potential award of a gaming license.
974
00:50:06.157 --> 00:50:08.980
And this was with respect to an applicant, Wynn,
975
00:50:08.980 --> 00:50:10.960
and the same would hold here.
976
00:50:10.960 --> 00:50:13.820
There can be no expectation of value
977
00:50:13.820 --> 00:50:15.450
sufficient to support
978
00:50:15.450 --> 00:50:18.917
a reasonable investment backed expectation as to FBT.