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Lake County Riverboat, L.P. v. Illinois Gaming Board

June 28, 2002

LAKE COUNTY RIVERBOAT L.P., BY FRGP, L.P., ITS GENERAL PARTNER, PLAINTIFF-APPELLANT,
v.
ILLINOIS GAMING BOARD, DEFENDANT-APPELLEE, AND EMERALD CASINO, INC., FORMERLY KNOWN AS HP, INC., DES PLAINES DEVELOPMENT L.P. D/B/A HARRAH'S CASINO CRUISE-JOLIET, THE VILLAGE OF ROSEMONT, AN ILLINOIS MUNICIPAL CORPORATION, AND WEST CENTRAL MUNICIPAL CONFERENCE, AN ILLINOIS NOT-FOR-PROFIT CORPORATION, INTERVENING DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County. The Honorable Robert V. Boharic, Judge Presiding.

The opinion of the court was delivered by: Justice Wolfson

UNPUBLISHED

Mark Twain wrote about the Mississippi River: "It is good for steamboating, and good to drink; but it is worthless for all other purposes, except baptizing." *fn1 Not quite.

In February 1990, the Illinois General Assembly decided riverboat gambling would be an economic benefit to the people of this State. The legislation authorized the Illinois Gaming Board (the Board) to issue ten licenses for riverboats, the first four of them for gambling on the Mississippi River.

This case is about one of the first four licenses (the "tenth license"), and it is about the efforts of Lake County Riverboat, L.P. (Lake County) to obtain that license for a gambling boat on the Fox River. Standing in Lake County's way is a June 1999 statute that allows the Emerald Casino, Inc. (Emerald) to use its Mississippi River license anywhere it wishes, subject to local approval -- 230 ILCS 10/11.2(a) (West 2000).

Lake County filed suit against the Board, asking for a declaration that section 11.2 violates the State Constitution's special legislation provision, Ill. Const., 1970, art IV, sec. 13. Joining the Board in contending section 11.2 is valid were Emerald, Des Plaines Development, L.P. (Des Plaines), the Village of Rosemont (Rosemont), and the West Central Municipal Conference (West Central). The trial court never reached the issue of the statute's constitutionality. It found Lake County lacked standing to challenge the statute and dismissed the lawsuit. Lake County appeals the order of dismissal. We affirm.

FACTS

Section 10/7(e) of the 1990 Riverboat Gambling Act (the Act) authorized the Board to issue five licenses to become effective not earlier than January 1, 1991, four of them for gambling on the Mississippi River, the fifth on the Illinois River south of Marshall County. Another license was to be issued for gambling on the Des Plaines River in Will County "not earlier than March 1, 1992." That left "four additional licenses." The Board was given authority to issue them "effective not earlier than March 1, 1992," but no specific location was mandated. 230 ILCS 10/11-2(a) (West 2000).

In 1992, the Board issued one of the first four licenses authorized for the Mississippi River to H.P., Inc., which later became Emerald. (For purpose of clarity, we will refer to the licensee as Emerald.)

Emerald operated a riverboat on the Mississippi out of East Dubuque, Illinois. Like the other three, Emerald's license was for a duration of three years and could be renewed annually on a showing of adherence to statutory and regulatory requirements. 230 ILCS 10/7(f),(g) (West 1998).

Emerald's license was renewed for one year in July 1996, but the Board expressed concern about Emerald's financial outlook. In fact, competition from Iowa proved too great, and Emerald stopped operating its riverboat at its dock site on the Mississippi in July 1997.

In June 1997, Emerald applied for a license renewal. But not for use on the Mississippi. Emerald wanted to relocate to Rosemont. The Board refused to renew the license. Emerald began to pursue its administrative appeals, first asking for a hearing before the administrative law judge. The Board asked the ALJ to affirm its denial of Emerald's license renewal application.

On May 5, 1999, the ALJ concluded Emerald's renewal application "failed to meet the requirements of the Riverboat Gambling Act and the Board's decision to deny its renewal application was correct." In support of his decision, the ALJ observed Emerald did not have a riverboat to operate from, and even if it did the Act did not provide for relocation from the Mississippi. He said:

"A new application and an opportunity for other parties to participate in the application process for a riverboat casino other than where originally located is required."

Emerald filed two motions for reconsideration of the ALJ's order. Both were denied. The matter went back to the Board. But before the Board had a chance to act on the ALJ's order, the legislature intervened. Effective June 25, 1999, section 10/11.2 was amended to read:

"(a) A licensee that was not conducting riverboat gambling on January 1, 1998 may apply to the Board for renewal and approval of relocation to a new home dock location authorized under section 3(c) and the Board shall grant the application and approval upon receipt by the licensee of approval from the new municipality or county, as the case may be, in which the licensee wishes to relocate pursuant to section 7(j)." 230 ILCS 10/11.2(a) (West 2000).

Everyone agrees section 11.2 applies only to Emerald. This is the statute Lake County challenges as special legislation.

Lake County had not simply been sitting back and observing events. While the ALJ was reviewing the Board's order denying Emerald's application for renewal, Lake County filed its own application for an owner's license on December 30, 1997.

Lake County proceeded on the assumption that Emerald had no chance of keeping its license. Lake County was asking that the former Emerald license be reissued as a new license. But Lake County, like Emerald, was not interested in the Mississippi River as a location. It wanted to put its boat in the Fox River, in Lake County.

On February 17, 1998, the Board denied Lake County's application "without prejudicing the applicant," noting that no judgment was being made on the substantive merits of the application. The Board apparently was recognizing there was no "tenth license" available, since Emerald still held it. At the same time, the Board unanimously directed its staff to "revise the current owner's application form and develop a competitive process to be implemented in the future for the solicitation of applicants for an owner's license and the uniform submission and review of information by each applicant."

Lake County did not appeal the Board's denial, giving rise to defendants' claim in this lawsuit that Lake County failed to exhaust its administrative remedies.

Passage of section 11.2 changed everything. Board action on the ALJ recommendation that Emerald's license not be renewed came to a halt. The proceeding was pronounced "moot" on September 7, 1999. The Board had no choice. Emerald and only Emerald could file an application for renewal and relocation of the tenth license.

On October 8, 1999, Lake County filed its complaint in the Lake County Circuit Court, challenging the constitutionality of section 11.2. After legal wrangling not relevant to our decision the case was transferred to Cook County, where the trial judge granted the defendants' section 2-619 motions to dismiss (735 ILCS 5/2-619 (West 2000)), holding Lake County lacked standing to challenge the statute and that it failed to exhaust its administrative remedies. Lake County appeals.

DECISION

In this appeal the standing issue is paramount. That is where we focus our attention. We review the trial court's dismissal de novo. Prodromos v. Howard Savings Bank, 295 Ill. App. 3d 470, 474, 692 N.E.2d 707 (1998). We take Lake County's well-pleaded allegations as true when deciding whether there exists any set of facts that would entitle the plaintiff to recover. B&B Land Acquisition, Inc. v. Mandell, 305 Ill. App. 3d 1068, 1071, 714 N.E.2d 58 (1999).

STANDING

First, we review the standing doctrine, especially as it applies to parties who challenge the constitutionality of a statute.

In order to challenge section 10/11.2 Lake County must have sustained or be in immediate danger of sustaining a direct injury as a result of enforcement of the statute. Flynn v. Ryan, No. 90--263, slip op. at 6 (Ill. May 23, 2002). The alleged injury must be (1) distinct and palpable, (2) fairly traceable to defendant's actions, and (3) substantially likely to be prevented or redressed by the grant of the requested relief. Chicago Teachers Union v. Board of Education, 189 Ill. 2d 200, 207, 724 N.E.2d 914 (2000).

Because lack of standing is an affirmative defense, the defendants must plead and prove it. Chicago Teachers Union, 189 Ill. 2d at 206.

The defendants' contentions come down to two propositions, either of which, they say, defeats Lake County's standing to challenge the statute: first, Lake County has no right to the tenth license because Emerald holds it; second, the pre-amendment Act did not permit Emerald's license to operate anywhere but on the Mississippi.

If the defendants are correct about either of the propositions they raise, Lake County's challenge to the constitutionality of section 10/11.2 becomes an abstract question, interesting perhaps, but not the kind of issue our courts are designed to litigate since there would be no real controversy which Lake County has a direct interest in resolving. See Inland Real Estate Corp v. Tower Construction, 174 Ill. App. 3d 421, 425, 528 N.E.2d 421 (1988).

Lake County contends the only barrier to its standing to challenge section 10/11.2 is the statute itself. Without it, Emerald's license would have been available for competitive bidding by serious bidders. That is, once Emerald was denied renewal of its license, a new license would be issued to a new owner, who then could ask the Board to get away from the Mississippi River and dock in the Fox River.

The defendants say a conclusion that Emerald would have lost its license would be nothing more than impermissible speculation. They compare Lake County's position to the claims made by the physical education teachers in Chicago Teachers Union v. Board of Education. There, the teachers challenged a statute that allowed school districts to petition the State Board of Education for waiver of School Code mandates, used in that case to waive physical education requirements for eleventh and twelfth grade students. The teachers claimed the waiver reduced job security and career opportunities. The Court, noting that physical education ...


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