Filed: May 25, 2011
Latest Update: Feb. 21, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1511 THEODORE TSORAS, Plaintiff - Appellant, v. JOSEPH MANCHIN, III, Governor; JOHN C. MUSGRAVE, West Virginia Lottery Commission Director; MICHAEL A. ADAMS, West Virginia Lottery Commission Member; KENNETH L. GREEAR, West Virginia Lottery Commission Member; BILL CLAYTON, West Virginia Lottery Commission Member; DAVID MCCORMICK, West Virginia Lottery Commission Member; DON LUCCI, West Virginia Lottery Commission Member, Def
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1511 THEODORE TSORAS, Plaintiff - Appellant, v. JOSEPH MANCHIN, III, Governor; JOHN C. MUSGRAVE, West Virginia Lottery Commission Director; MICHAEL A. ADAMS, West Virginia Lottery Commission Member; KENNETH L. GREEAR, West Virginia Lottery Commission Member; BILL CLAYTON, West Virginia Lottery Commission Member; DAVID MCCORMICK, West Virginia Lottery Commission Member; DON LUCCI, West Virginia Lottery Commission Member, Defe..
More
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1511
THEODORE TSORAS,
Plaintiff - Appellant,
v.
JOSEPH MANCHIN, III, Governor; JOHN C. MUSGRAVE, West
Virginia Lottery Commission Director; MICHAEL A. ADAMS, West
Virginia Lottery Commission Member; KENNETH L. GREEAR, West
Virginia Lottery Commission Member; BILL CLAYTON, West
Virginia Lottery Commission Member; DAVID MCCORMICK, West
Virginia Lottery Commission Member; DON LUCCI, West Virginia
Lottery Commission Member,
Defendants - Appellees.
Appeal from the United States District Court for the Northern
District of West Virginia, at Wheeling. Frederick P. Stamp,
Jr., Senior District Judge. (5:08-cv-00121-FPS)
Argued: March 23, 2011 Decided: May 25, 2011
Before WILKINSON, SHEDD, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Theodore Levette Tsoras, ROBINSON LAW OFFICES, Wheeling,
West Virginia, for Appellant. David Lee Wyant, BAILEY & WYANT,
PLLC, Wheeling, West Virginia, for Appellees. ON BRIEF: April
J. Wheeler, BAILEY & WYANT, PLLC, Wheeling, West Virginia, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
The West Virginia Lottery Commission rejected Theodore
Tsoras’s gambling license application because he had been
convicted of gambling-related offenses. Tsoras then challenged
that denial in a § 1983 action. The district court dismissed
the suit. For the reasons that follow, we affirm.
I.
Theodore Tsoras applied for a West Virginia Lottery
Racetrack Table Games Act license. On November 13, 2007, the
West Virginia Lottery Director denied Tsoras’s application
because he was statutorily ineligible for a license. West
Virginia Code § 29-22C-15(a)(3) states that the “[t]he
commission may not grant any license” to someone who “[h]as been
convicted of a . . . gambling-related offense.” Tsoras had been
convicted of multiple gambling-related offenses, including
aiding and abetting an illegal gambling business, aiding and
abetting interstate transportation in gambling in racketeering
enterprises, and aiding and abetting in transmission of wagering
information.
Tsoras appealed the denial and received an administrative
hearing. At this hearing, Tsoras argued that the “may not”
language in West Virginia Code § 29-22C-15(a)(3) indicated
discretion and that he was fit to obtain a license despite his
3
prior convictions. He also advanced due process and equal
protection arguments. The hearing examiner recommended that the
West Virginia Lottery Commission affirm the denial. The
Commission held a hearing on the matter and affirmed the denial
on April 25, 2008.
At that point, Tsoras had the option of appealing the
Commission’s decision through the state court system. See W.
Va. Code § 29-22C-17. But he instead chose to file this § 1983
action in federal court. The district court granted the
defendants’ motion to dismiss, but it declined to reach the
merits of the state licensing dispute. Rather, the court
reasoned that the Commission’s decision had preclusive effect on
Tsoras’s claims and that Tsoras was improperly attempting to
appeal from the state court system to federal court. Tsoras
appealed to this court.
II.
The district court did not abuse its discretion in
declining to inject itself into the middle of a state licensing
proceeding. The district court rested its holding principally
on preclusion grounds, but we may affirm on any ground supported
by the record. See Pitt County v. Hotels.com, L.P., 553 F.3d
308, 311 (4th Cir. 2009).
4
A.
As an initial matter, West Virginia offers a fair
adjudicatory scheme for resolving gambling licensing disputes.
This system comports with the requirements of due process.
Tsoras benefited from these impartial procedures during his
licensing adjudication.
Tsoras’s administrative hearing before the hearing examiner
had many of the same procedural protections as judicial
proceedings. Those who appear before the hearing examiner may
have an attorney represent them. See W. Va. Code R. § 179-2-6.
They may submit briefing and present oral argument to the
hearing examiner. See W. Va. Code R. § 179-2-8. There is an
opportunity to engage in discovery before the hearing. See W.
Va. Code R. § 179-2-4. The hearing itself has evidentiary rules
that permit only reliable evidence. See W. Va. Code R. § 179-2-
8. And at the hearing, parties are permitted to call witnesses,
present evidence, and propose conclusions of law and findings of
fact. See id.
Tsoras made full use of these procedural protections. He
was represented by counsel. He fully presented both his state
law and constitutional claims through briefing and oral
argument. At the hearing, Tsoras testified on his own behalf
and entered eleven documents into evidence. And he later
submitted proposed findings of fact and conclusions of law.
5
Although Tsoras did not prevail, it cannot be said that his
hearing was anything less than fair.
Beyond the procedural protections at the administrative
hearing, the fact that there are multiple layers of review of
the initial licensing denial is in itself indicative of the
soundness of the administrative scheme. After the Director
denied Tsoras a gambling license, that decision went through two
layers of review, one before the hearing examiner and one before
the full Commission. Tsoras availed himself of these
opportunities to present the arguments and evidence supporting
his position.
When Tsoras did not prevail at either juncture in the
administrative process, he had yet an additional opportunity to
appeal, this time to the West Virginia court system. See W. Va.
Code §§ 29-22C-17; 29A-5-4. West Virginia Code § 29-22C-17
states: “Any person aggrieved by a final order or decision of
the commission in a contested case may file a petition for
appeal in the Circuit Court of Kanawha County within thirty days
after the person received notice of the final order or decision,
as provided in section four, article five, chapter twenty-nine-a
of this code.” This appeal to the state court system affords de
novo review of questions of law, which would certainly include
Tsoras’s constitutional arguments. See Carpenter v.
Cicchirillo, 662 S.E.2d 508, 511 (W. Va. 2008). This option for
6
state court review offered Tsoras a third opportunity to make
his case.
B.
Although the way was open for Tsoras to appeal through the
West Virginia court system, he did not avail himself of this
opportunity. Instead, he sought to bypass the state appeal and,
in effect, appeal the state agency’s decision to a federal
district court. Such a course fractured West Virginia’s
interests in maintaining the integrity of its gambling licensing
scheme and preventing the piecemeal litigation of denials of
licensing applications.
Gambling regulation is an area where states have much
expertise and competence, and it lies at the core of a state’s
police power. The Supreme Court has long recognized a state’s
special interests in regulating gambling: “The police power of
the state extends to . . . the prohibition of lotteries,
gambling, [and] horse-racing . . . .” Crutcher v. Commonwealth,
141 U.S. 47, 61 (1891); see also Ah Sin v. Wittman,
198 U.S.
500, 505-06 (1905) (“The suppression of gambling is concededly
within the police powers of a state . . . .”). Indeed, “the
police power embraces regulations . . . in the interest of the
public health, morals, or safety.” Chicago & Alton Railroad Co.
v. Tranbarger,
238 U.S. 67, 77 (1915). And the regulation of
gambling is aimed at these exact concerns. See United States v.
7
Edge Broadcasting Co., 509 U.S. 418, 426 (1993); Posadas de
Puerto Rico Associates v. Tourism Co. of Puerto Rico,
478 U.S.
328, 341 (1986).
This court has echoed these sentiments: “The regulation of
gambling enterprises lies at the heart of the state's police
power. Formulations of that power underscore the state's
paramount interest in the health, welfare, safety, and morals of
its citizens. The regulation of lotteries, betting, poker, and
other games of chance touch all of the above aspects of the
quality of life of state citizens.” Johnson v. Collins
Entertainment Co., Inc., 199 F.3d 710, 720 (4th Cir. 1999)
(internal citations omitted); see also Casino Ventures v.
Stewart,
183 F.3d 307, 310 (4th Cir. 1999) (“Because [gambling]
restrictions are aimed at promoting the welfare, safety, and
morals of South Carolinians, they represent a well-recognized
exercise of state police power.”).
Tsoras’s insistence on a federal forum here ignores the
fact that there are some cases in which federal courts “must
decline to interfere with the proceedings or orders of state
administrative agencies.” New Orleans Public Service, Inc. v.
Council of New Orleans, 491 U.S. 350, 361 (1989). Specifically,
federal courts must try to avoid the “[d]elay, misunderstanding
of local law, and needless federal conflict with the State
policy, [that] are the inevitable product of [a] double system
8
of review.” Burford v. Sun Oil Co., 319 U.S. 315, 327 (1943).
Tsoras seeks to fracture West Virginia’s gambling licensing
scheme, producing just such a double system of review, one that
would “disrupt[] . . . state efforts to establish a coherent
policy . . . and threaten[] the creation of a patchwork of
inconsistent enforcement efforts.”
Johnson, 199 F.3d at 723.
Not only would such a result create needless confusion, it would
also cast aside the principles of federalism and comity that the
Supreme Court has admonished us to consider in precisely this
context. See Quackenbush v. Allstate Ins. Co.,
517 U.S. 706,
728 (1996).
West Virginia provided Tsoras with a more than adequate
forum for his gambling license dispute, and he has given us no
reason to doubt the fairness or competence of the West Virginia
court system in this area. In these circumstances, we can
hardly fault the district court for declining to review the
merits of the case.
III.
As an alternate ground of affirmance, we hold that Tsoras’s
constitutional claims are without merit. See Wagner v. Wheeler,
13 F.3d 86, 91 (4th Cir. 1993). Tsoras first argues that West
Virginia Code § 29-22C-15(a) violates the Due Process Clause by
automatically denying him a license solely on the basis of his
9
previous gambling convictions even though he might otherwise be
qualified. He next argues that §§ 29-22C-15 and 29-22C-16
violate the Equal Protection Clause in two ways. The statutes
grant licenses to other similarly situated applicants who have
not been convicted of gambling-related crimes, and they give
discretion regarding the revocation of licenses already issued
to people who then commit a gambling-related offense.
These arguments are insubstantial. Those who have been
convicted of gambling-related offenses are not a suspect class,
and no fundamental right is at issue here. Accordingly, Tsoras
must prove that West Virginia had no rational basis for singling
out gambling offenders during the initial licensing process.
See In re Premier Automotive Services, Inc., 492 F.3d 274, 283
(4th Cir. 2007); Hawkins v. Freeman,
195 F.3d 732, 739 (4th Cir.
1999) (en banc). He cannot meet this burden.
It is entirely rational for West Virginia to deny gambling
licenses to gambling offenders. The state had every right to
exercise its police power to prohibit those who had demonstrated
a disregard for its gambling laws from receiving a privilege
under those laws and gaining access to more opportunities for
misconduct. It is also within the state’s power to make
revocation as a result of a gambling conviction discretionary
for those who had already received a license, even though it is
an absolute bar for those applying for a license. Licensees
10
have a track record that new applicants do not. And for
licensees with a long history of compliance, revocation may not
be the appropriate punishment. In sum, West Virginia’s policy
of denying gambling licenses to those who have run afoul of the
gambling laws comports with constitutional requirements and
affords an additional basis on which to affirm the district
court.
IV.
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.
11
