United States District Court, N.D. Illinois, Eastern Division
October 17, 2005.
EMERALD CASINO, INC., Plaintiff,
AARON JAFFE, CHARLES GARDNER, EUGENE WINKLER, and JEANNETTE TAMAYO, Defendants.
The opinion of the court was delivered by: MATTHEW KENNELLY, District Judge
MEMORANDUM OPINION AND ORDER
Emerald Casino, Inc. holds a license to operate a riverboat
casino in Illinois. It originally operated a casino in East
Dubuque, but ceased operations in 1997. In 1999, the Illinois
legislature enacted a statute which had the effect of allowing
Emerald to apply to the Illinois Gaming Board (which regulates
casino gambling) for relocation and renewal of its license upon
obtaining the okay from the municipality where it wished to
relocate. The statute also provided that licenses so renewed
would be for a maximum of four years.
Emerald obtained approval from the Village of Rosemont, and, in
September 1999, it applied to the Board for renewal of its
license and relocation to that municipality. In March 2001, the
Board denied Emerald's request and issued a disciplinary
complaint seeking to revoke Emerald's license on various grounds.
Emerald filed suit in state court, seeking a writ of mandamus
requiring the Board to approve the renewal and relocation
application. The Board prevailed at the trial level in July 2002,
but in December 2003, the decision was reversed on appeal, with the Illinois Appellate Court holding that the 1999
statute required the Board to grant Emerald's application. The
court noted in its decision that the statute did not prevent the
Board from seeking revocation of Emerald's license.
In the interim, involuntary bankruptcy proceedings were filed
against Emerald, and the case was eventually converted to a
Chapter 11 reorganization. During the pendency of the case,
Emerald entered into an agreement with the Board to stay the
administrative proceedings on the revocation complaint for a
limited period. That period ended in early 2003, and the Board
announced that the revocation proceedings would resume. Emerald
sought an injunction in the bankruptcy court on the grounds that
resumption would violate the automatic stay provision of the
Bankruptcy Code, but the bankruptcy judge denied the request, and
the ruling was affirmed on appeal by another judge of this Court.
Emerald's plan of reorganization contemplated an auction of its
license, and an entity called Isle of Capri was the successful
bidder. The Illinois Attorney General raised various concerns
about Rosemont and Isle of Capri. The Board entered into an
agreement to stay the revocation proceeding for another limited
period. In April 2005, however, the Board (which in the interim
had several new members appointed) announced that the proceeding
would resume, before a new ALJ, Abner Mikva.
In June 2005, the state court judge presiding over Emerald's
mandamus action entered an order directing the Board to grant
Emerald's application for relocation and renewal. The Board did
so, but it renewed the license for four years from September
1999, the date of Emerald's application, and thus effectively
granted an already-expired license. Emerald contended that this
did not comply with the Appellate Court's mandate, but the trial
judge disagreed. Emerald appealed; the appeal is currently pending before the Illinois
In the meantime, ALJ Mikva resumed the evidentiary hearing on
the revocation proceeding. At the time the present suit was
filed, the hearing was in progress but had not yet concluded. At
present, as the Court understands it, the evidence has closed,
and a ruling is likely to be forthcoming in the near future.
Emerald filed the present suit against the chairman, two
members, and the interim administrator of the Board, seeking to
enjoin the revocation proceeding. Emerald contends that the
Board's pursuit of those proceedings violates its rights under
the Equal Protection and Due Process Clauses of the Fourteenth
Amendment as well as the First Amendment. Specifically, Emerald
alleges that it has been treated differently than others
similarly situated based on what it characterizes as "wholly
illegitimate animus" toward Emerald based on its decision to
relocate to Rosemont; that the Board's actions have been
arbitrary and motivated by ill will and bias; and that the Board
has acted in retaliation for Emerald's decision to associate
itself with Rosemont.
Defendants have moved to dismiss Emerald's claims on a number
of grounds, but for present purposes the Court need only address
one of them: defendants' argument that the Court should abstain
from intervening in the ongoing Gaming Board proceedings pursuant
to Younger v. Harris, 401 U.S. 37 (1971). Under the Younger
abstention doctrine, which is based on the principles of
federalism and comity, federal courts must refrain from enjoining
ongoing state judicial and quasi-judicial proceedings when
important state interests are involved. Abstention is required
when there is an ongoing state proceeding that is judicial in
nature, implicates important state interests, and offers a fair
opportunity for review of federal constitutional claims, absent
extraordinary circumstances that make abstention appropriate.
See, e.g., Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423,
432 (1982); Green v. Benden, 281 F.3d 661, 666 (7th Cir. 2002).
It is undisputed that the Gaming Board's revocation proceeding
involving Emerald's license is judicial in nature and that it
implicates an important state interest. Emerald argues, however,
that the proceeding does not afford an adequate opportunity to
assert its federal claims. Specifically, Emerald contends it has
been stymied from offering before ALJ Mikva evidence to support
its claims that the Board has demonstrated a bias toward Emerald
and its planned association with the Village of Rosemont.
Emerald contends that ALJ Mikva has made it clear that he does
not intend to address Emerald's constitutional claims, and that
the Board cannot be expected to adjudicate fairly the claim it is
biased. Judicial review of the ALJ's and the Board's
determinations, however, may constitute an adequate opportunity
for a litigant to raise federal constitutional challenges. See
Ohio Civil Rights Comm'n v. Dayton Christian Schools, Inc.,
477 U.S. 619, 629 (1986); Green, 281 F.3d at 666; Majors v.
Engelbrecht, 149 F.3d 709, 713 (7th Cir. 1998). Illinois law
permits Emerald to bring its constitutional challenges along with
its claim for administrative review. See Stykel v. City of
Freeport, 318 Ill. App. 3d 839, 848-50, 742 N.E.2d 906, 914-15
(2001), cited in Green, 281 F.3d at 667; Bd. of Educ. of Rich
Twp. High School Dist. No. 227 v. Brown, 311 Ill. App. 3d 478,
488, 724 N.E.2d 956, 964-65 (2000).*fn1 Emerald points out
that what Illinois permits is assertion of a § 1983 claim as part of a suit in
conjunction with the claim for administrative review, see
Stykel, 318 Ill. App. 3d at 850, 742 N.E.2d at 915, and it
argues that it should be permitted to choose a federal rather
than a state forum to present its § 1983 claims. See Emerald
Resp. at 17. Green makes it clear, however, that the
opportunity to assert a § 1983 claim in state court as part of
an administrative review action constitutes an adequate
opportunity that requires abstention under Younger. Green,
281 F.3d at 667.
ALJ Mikva has sustained objections to the admission of some,
but not all, of the evidence offered by Emerald that is pertinent
to its constitutional claims. Emerald argues that this shows it
is not getting and will not get a fair opportunity to assert
those claims in a state forum. But the materials submitted to
this Court reflect that where the ALJ has excluded evidence, he
has permitted Emerald to make a record via offers of proof. In
addition, the record reflects that ALJ Mikva issued subpoenas to
all but one witness on Emerald's list that it said it wanted to
call. The one exception was defendant Jaffe, the Board's
chairman. Emerald indicated that it wanted to question Jaffe at
the hearing to determine the reasons for his decision to resume
the revocation proceeding. ALJ Mikva denied the request, finding
that Emerald had offered no evidence that would support a finding
of bias on Jaffe's part and that he was aware of no basis to
allow the head of an administrative agency to be questioned
regarding the reasons for his decision. Even so, the ALJ granted
Emerald's request to submit an offer of proof as to how Jaffe
would testify. Emerald says this is not an adequate alternative,
but on the present record the Court can make no such finding.
Under the circumstances, the Court concludes that Emerald will
have an adequate opportunity to raise its constitutional claims
as part of its claim for judicial review of the Board's determination assuming Emerald ends up losing at the
administrative level, which is by no means clear. It is certainly
possible that later developments will prove the Court wrong, but
if Emerald is foreclosed from presenting its constitutional
claims in state court, presumably it will then be able to refile
its federal suit.*fn2 The hypothetical possibility that this
might take place, however, is not a basis to decline abstention.
Cf. Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 15 (1987) (if
litigant has not attempted to present federal claims in related
state court proceedings, federal court should assume state
procedures afford adequate remedy absent unambiguous evidence to
the contrary); Green, 281 F.3d at 666 (same).
Emerald also contends that extraordinary circumstances make
abstention inappropriate. It argues that it has made a sufficient
showing of bad faith and bias on the part of the Board. An
exception to Younger exists when the state proceeding is
conducted in bad faith or is motivated by a desire to harass.
See Younger, 401 U.S. at 49, 54; see also, e.g., Crenshaw v.
Supreme Court of Ind., 170 F.3d 725, 729 (7th Cir. 1999).
Emerald argues that if a state administrative proceeding is
infected by bias, the litigant's right of state court judicial
review, even if it is on a de novo basis, does not take the
case outside this exception. But conclusory assertions of bias or
harassment are insufficient to bring the bad faith exception into
play. See, e.g., Crenshaw, 170 F.3d at 729; Pincham v.
Judicial Inquiry Bd., 872 F.2d 1341, 1349 (7th Cir. 1989).
Rather, a party claiming that extraordinary circumstances make
abstention inappropriate must demonstrate the existence of those
circumstances. Green, 281 F.3d at 667; see also, Ramsden v.
AgriBank, FCB, 214 F.3d 865, 871 (7th Cir. 2000).
Emerald's claim of bias and bad faith is not sufficiently
supported to undercut the case for Younger abstention. As
defendants argue, most of the matters cited by Emerald in support
of its bias/bad faith claim consist of actions by the Board
that purportedly exceeded its authority under state law. In
particular, Emerald contends that Illinois law did not authorize
the Board to investigate and institute a revocation proceeding
against Emerald after it submitted its application for renewal of
its license. But the Illinois Appellate Court, in its 2003 ruling
that Emerald was entitled to renewal, made it clear that the
statute upon which it relied did not "prevent the Board from
moving to revoke Emerald's license. In fact, the Board began
revocation proceedings on March 6, 2001. . . . [T]he legislature
did not intend to tinker with the Board's authority to revoke
Emerald's license. . . ." Emerald Casino, Inc. v. Ill. Gaming
Bd., 346 Ill. App. 3d 18, 34, 803 N.E.2d 914, 926 (2003).
Emerald also cites the Board's grant of its renewal application
retroactive to 1999, which as we previously noted effectively
made the renewed license expire upon its grant. But a state court
judge who Emerald does not hint was in any way biased ruled
that the Board's decision complied with the mandate of the
Appellate Court. Though that decision is on appeal, under the
circumstances the Board's decision cannot be cited as evidence of
bias or bad faith.
At oral argument on the present motion, Emerald's counsel also
cited the lack of an explanation for the Board's decision to
reopen the license revocation proceeding. We briefly review the
circumstances disclosed by the record submitted to the Court.
After the Board selected Isle of Capri following the
previously-described auction for the Emerald license, the
Illinois Attorney General raised objections. Following the lack
of a response by the Board, the Attorney General prepared to resume the revocation proceeding and
ultimately filed suit in state court seeking a determination of
whether the Board could drop the proceeding without the Attorney
General's consent. Around that same time, several members of the
Board resigned; they were replaced with new members in March
2005. Shortly thereafter, in April 2005, the new Board decided to
resume the revocation proceeding. These circumstances, at least
those disclosed in the present record, do not support a finding
of bad faith or bias on the part of the Board; rather, the
explanation may be as simple as the fact that the Board now has
In a status report submitted pursuant to the Court's directive
following oral argument on the motion to dismiss, Emerald appears
to suggest that the fact that the ALJ permitted certain lines of
questioning suggests a bias in the administrative proceeding that
cannot be cured by judicial review. Specifically, Emerald cites
the fact that the ALJ has permitted questioning about purported
association of Rosemont's mayor with various persons allegedly
involved in organized crime; contributors to the mayor's
campaign; and various other matters concerning Rosemont and the
mayor. Emerald also cites the ALJ's admission in evidence of a
short excerpt from an FBI surveillance tape in which alleged
organized crime members supposedly suggested involvement in a
The Court cannot conclude that the conduct of the proceedings
to date gives rise to an inference of bias against Emerald or, as
Emerald contends, an improper bias against its association with
the Village of Rosemont. It would be inappropriate for the Court
to make a determination regarding the veracity of the allegations
about Rosemont advanced during the administrative hearing or how,
if at all, those allegations bear on the matters to be decided by
the ALJ and the Board, and thus we do not do so. But we cannot say
that the decision to admit evidence claimed to show an
organized-crime connection to officials of the relatively small
town where a casino operated under Emerald's license would be
located is indicative of bias or bad faith on the part of the ALJ
or the Board. Moreover, as noted by Emerald in its status report,
the ALJ also admitted evidence offered by Emerald that it
contends refutes the allegation of an organized-crime connection
to Rosemont and its officials. Under the circumstances, the ALJ's
decisions to admit or exclude certain evidence do not support the
claim of bias or bad faith.
For these reasons, the Court concludes that Emerald has failed
to show extraordinary circumstances that would make abstention
For the reasons stated above, the Court grants defendants'
motion to dismiss plaintiff's claims on Younger abstention
grounds [docket # 14-1]. Plaintiff's motion for a preliminary
injunction is therefore denied [# 10-1]. The Clerk is directed to
enter judgment dismissing this action. The status and ruling date
of October 18, 2005 is vacated.
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