Keystone Redevelopment Partners, LLC v. Decker

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________

No. 10-1054

_______________

KEYSTONE REDEVELOPMENT PARTNERS, LLC

v.

THOMAS DECKER, MARY DIGIACOMO COLINS;

RAYMOND S. ANGELI, JEFFREY W. COY,

JOSEPH W. MARSHALL, III, KENNETH T. MCCABE,

and SANFORD RIVERS, all named in their individual

capacities as members of the Pennsylvania Gaming

Control Board in December, 2006; and GREGORY C. FAJT;

RAYMOND S. ANGELI; JEFFREY W. COY; JAMES B.

GINTY; KENNETH T. MCCABE; SANFORD RIVERS and

GARY A. SOJKA, all named in their official capacities as

current members of the Pennsylvania Gaming Control Board

v.

HSP GAMING, L.P.

(Intervenor in District Court)

Thomas Decker, Mary DiGiacomo Colins,

Raymond S. Angeli, Jeffrey W. Coy, Joseph W. Marshall III,

Kenneth T. McCabe and Sanford Rivers,

Appellants

_______________

On Appeal from the United States District Court

for the Middle District of Pennsylvania

(Civil Action No. 08-CV-2265)

District Judge: Honorable John E. Jones III

_______________

Argued

November 16, 2010

Before: AMBRO, FISHER, and GARTH, Circuit Judges

(Opinion filed : January 7, 2011)

David R. Overstreet, Esq. (Argued)

John P. Krill, Jr., Esq.

Abram D. Burnett, III, Esq.

Anthony R. Holtzman, Esq.

K&L Gates LLP

17 North Second Street, 18th Floor

Harrisburg, PA 17101

Counsel for Appellee

James J. Kutz, Esq.

Barbara A. Zemlock, Esq.

John W. Dornberger, Esq.

Post & Schell, P.C.

17 North 2th Street, 12th Floor

Harrisburg, PA 17101

R. Douglas Sherman, Esq.

Pennsylvania Gaming Control Board

303 Walnut Street/Strawberry Square

Verizon Tower, 5th Floor

Harrisburg, PA 17101

Ralph G. Wellington, Esq. (Argued)

Nancy Winkleman, Esq.

Joseph Anclien, Esq.

Joseph J. Langkamer, Esq.

Schnader Harrison Segal & Lewis, LLP

1600 Market Street, Suite 3600

Philadelphia, PA 19103

Counsel for Appellants

William H. Lamb, Esq.

Scot R. Withers, Esq.

Lamb McErlane, PC

24 East Market Street

P.O. Box 565

West Chester, PA 19381

Stephen A. Cozen, Esq.

F. Warren Jacoby, Esq.

Jennifer M. McHugh, Esq.

Cozen O’Connor

1900 Market Street

Philadelphia, PA 19103

Thomas E. Groshens, Esq. (Argued)

Richard A. Sprague, Esq.

Thomas A. Sprague, Esq.

Charles J. Hardy, Esq.

Sprague & Sprague

Wellington Building.

135 South 19th Street

Philadelphia, PA 19103

Counsel for Intervenor-Appellant HSP Gaming, L.P.

Barbara Adams, Esq.

Gregory Dunlap, Esq.

33 Market Street, 17th Floor

Harrisburg, PA 17120

Counsel for Amicus Edward G. Rendell, Governor of

Pennsylvania

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OPINION OF THE COURT

_______________

GARTH, Circuit Judge

In this appeal, we consider whether the former

members of the Pennsylvania Gaming Control Board are

immune from suits brought against them in their individual

capacities based on their decisions to grant gaming licenses to

certain applicants other tha n ap pellee K eystone

Redevelopment Partners, LLC (Keystone). We conclude that

they are entitled to absolute, quasi-judicial immunity.

Accordingly, we will reverse the decision of the District

Court.

I.

In 2004, the Pennsylvania General Assembly enacted

the Pennsylvania Race Horse and Gaming Act, 4 Pa. Cons.

Stat. §§ 1101-1906, which created the Pennsylvania Gaming

Control Board (“Gaming Board” or “Board”) to license a

limited number of gaming entities within the Commonwealth.

4 Pa. Cons. Stat. §§ 1201, 1202. The Gaming Board is

comprised of seven voting members,1 three of whom are

appointed by the Governor and four of whom are appointed

by four different members of the General Assembly. Id. §

1201(b). The voting members serve fixed terms of office --

three years for gubernatorial appointees, two years for

legislative appointees -- and may only be removed for

“misconduct in office, willful neglect of duty or conduct

1

Three ex officio members -- the Secretary of Revenue,

Secretary of Agriculture, and the State Treasurer -- also sit on

the Board, but are not permitted to vote. Id. § 1201(e).

evidencing unfitness for office or incompetence,” or a

conviction for certain criminal offenses. Id. § 1201(b.1), (d).

They are prohibited from political activity and from making

or soliciting political contributions. Id. § 1202.1(c)(5).

The Gaming Board’s procedure for considering license

applications is governed by express statutory and regulatory

guidelines, which include the following:

· Before conducting a licensing hearing, the Board must

hold at least one public input hearing at which

witnesses may testify and the opportunity for public

comment is afforded. Id. § 1205(b).

· A licensing hearing is held for each of the applicants.

The Board must give notice of the hearing to the

parties, 2 Pa. Cons. Stat. § 504, and make a schedule of

the hearings available to the public, 58 Pa. Code §

441a.7(a).

· The Bureau of Investigations and Enforcement (BIE),

an agency created by, but independent from, the Board,

4 Pa. Cons. Stat. § 1202(b)(25), performs background

checks on each applicant and delivers a report to the

Board “relating to the applicant’s suitability for

licensure,” id. § 1517(a.1)(2).

· A member of the Board must “[d]isclose and recuse

himself from any hearing or other proceeding in which

the member’s objectivity, impartiality, integrity or

independence of judgment may be reasonably

questioned due to the member’s relationship or

association with a party connected to any hearing or

proceeding or a person appearing before the board.” 4

Pa. Cons. Stat. § 1202.1(c)(3). In addition, no member

may engage in ex parte communication regarding a

pending matter. Id. § 1202.1(c.1). However, §

1202.1(e) defines “ex parte communication” to

exclude “off-the-record communications by or between

a member or hearing officer of the board . . . prior to

the beginning of the proceeding solely for the purpose

of seeking clarification or correction to evidentiary

materials intended for use in the proceedings,” as well

as “communications between the board or a member

and the office of chief counsel” of the BIE.

· At least thirty days before the initial license hearing,

each applicant must file with the Board, and serve on

all other applicants for the same license, “a

memorandum identifying all evidence it intends to use

in support of its presentation before the Board,” 58 Pa.

Code § 441a.7(i), including any materials about which

an expert witness will testify, id. § 441a.7(i)(4).

Evidence that has not been identified in that manner

may only be admitted later: 1) in response to a request

from the Board, id. § 441a.7(m)(1); 2) “if the issue

could not have been reasonably anticipated by the

applicant,” id. § 441a.7(m)(2); or 3) to “present

evidence which sets forth a comparison between the

applicant and other applicants within the same

category with respect to the standards and criteria” for

receiving a license, id. § 441a.7 (n).

· At the licensing hearing,

o the applicant has a right to counsel, 2 Pa. Cons.

Stat. § 502;

o the Board may subpoena documents and

witnesses, 4 Pa. Cons. Stat. § 1202(b)(7);

o the applicant may present documentary and

testimonial evidence, 58 Pa. Code § 441a.7(i);

o all witnesses must be sworn, id. at § 441a.7(q);

o the Board or Chief Enforcement Counsel, an

agent of the BIE, may examine or question the

applicant or applicant’s witnesses, id. §

441a.7(p); and

o the record must be transcribed, id. § 441a.7(v).

· Although there is no opportunity to cross-examine

competitors’ witnesses, an applicant may raise

objections to competitors’ hearings, id. § 441a.7(t),

and, after filing notice with the Board and on the

competitors, present evidence comparing its

application to those of competitors, id. § 441a.7(n). In

addition, after submitting their applications, applicants

are given the opportunity to make final oral remarks

before the Board, id. § 441a.7(w), and file a post-

hearing brief addressing competitors’ applications for

the license, id. § 441a.7(u).

· The Board must grant licenses to the applicants who

best demonstrate, by clear and convincing evidence,

their suitability for licensure based on certain

enumerated factors, id. § 441a.7(d), which relate

generally to: (a) the location and quality of the

proposed facility; (b) the potential for economic

development and new job creation, especially for

Pennsylvania residents; (c) a plan for diversity in

employment and contracting, (d) the history of the

applicant in developing tourism facilities, meeting

commitments to local agencies and community-based

organizations, dealing with its employees, and

complying with the law; and (e) the degree to which

potential adverse effects on the public resulting from

the project will be mitigated. 4 Pa. Cons. Stat. §

1325(c).

· The Board must issue a final order and written

decision, 58 Pa. Code § 441a.7(x), which contains

factual findings and the reasons for the Board’s

determination, 2 Pa. Cons. Stat. § 507. Unsuccessful

applicants have the right to appeal to the Pennsylvania

Supreme Court. 4 Pa. Cons. Stat. § 1204; 58 Pa. Code

§ 441a.7(y).

II.

In December 2005, appellee Keystone was one of five

entities to apply for one of two Category 2 slot-machine

licenses available for the City of Philadelphia. After holding

public and licensing hearings for each applicant, at a

December 20, 2006, public meeting, the Gaming Board

unanimously voted to grant licenses to Foxwoods and to

intervenor HSP Gaming, and to deny the other three entities’

applications, including Keystone’s. The Board detailed its

factual findings and offered the reasons for its votes in a 113-

page written decision.

In discussing one of the multiple factors weighing

against Keystone’s application, the Board explained as

follows:

The evidentiary record

establishes that Keystone’s parent

company, Trump Resorts, owns

three Atlantic City casinos . . . .

[Competitors] HSP/Sugarhouse,

R iv erw alk and Philadelphia

Entertainment/Foxwoods do not

own or control any Atlantic City

properties. The Board has

considered the fact of competing

Atlantic City properties as a

negative factor for licensure in

Philadelphia. While the Board

believes that each applicant

desires to make a profit in

Philadelphia if granted a license,

the Board also is cognizant of its

duty to license casinos in

Philadelphia which are in the best

interests of the Commonwealth

and Philadelphia. The Board

finds it credible that owners of

casinos in both locations may

attempt to use the Philadelphia

property as a gambling-incubator

to gain new customers who will

then be lured to its Atlantic City

properties where it can earn a

much higher profit on every dollar

gambled [due to the lower tax

rate]. Likewise, the Board finds

applicants without Atlantic City

connections are more strongly

motivated to compete directly

against the A tlantic C ity

competition because they have no

interest in diverting patrons to the

casino which has a better tax

structure for the casino.

Additionally, evidence has been

introd uced that the T rum p

E n tertain m ent pro perties in

Atlantic City have undergone

bankruptcy organizations in order

to rebuild and revitalize them.

The Board believes this further

supports its decision to choose

other applicants who do not have

other facilities so close to

Philadelphia which may lure

patrons to Atlantic City to assist in

the rebuilding and revitalization of

properties there. Therefore, the

Board finds that licensing casinos

in Philadelphia which do not have

common ownership with Atlantic

City facilities are more likely to

further the interests of the

Commonwealth and the public

which stands to benefit through

increased revenues obtained by

the Pennsylvania properties.

(App. 194-95.) Ultimately, while the Board found that each

of the applicants was “eligible and suitable for licensure under

the terms of the [Race Horse and Gaming] Act,” it concluded

that Foxwoods and HSP Gaming “were the applicants which

possessed the projects which the Board evaluated, in its

discretion, to be the best projects for licensure under the

criteria of the Act.” (App. 101.)

Only one of the unsuccessful applicants, Riverwalk

Casino, LP, exercised its statutory right to appeal to the

Pennsylvania Supreme Court. The Court affirmed the order

of the Gaming Board, holding, among other things, that the

Board “serves as a quasi-judicial body with fact-finding and

deliberative responsibilities.” Riverwalk Casino, LP v. Pa.

Gaming Control Bd., 926 A.2d 926, 935 (Pa. 2007).

On March 18, 2009, Keystone filed an amended

complaint in the District Court for the Middle District of

Pennsylvania against the members of the Gaming Board --

those currently serving, in their official capacities, in addition

to those serving on December 2006, in their individual

capacities -- seeking relief under 42 U.S.C. § 1983 for alleged

violations of its constitutional rights under the Commerce

Clause of Article I, Section 8, the First Amendment, and the

Equal Protection Clause of the Fourteenth Amendment.

Keystone asserted that the Gaming Board had reached its

licensing determination based on an illegally discriminatory

consideration, namely, that Keystone, due to its operation of

gaming facilities in Atlantic City, might divert commerce to

New Jersey rather than foster local economic interests.

Keystone demanded relief in the form of declaratory,

injunctive, and monetary relief and attorneys’ fees.

On March 27, 2009, the Gaming Board defendants and

intervenor HSP Gaming moved to dismiss the complaint

pursuant to Fed. R. Civ. P. 12(b)(6) on the basis that, inter

alia, the Board members were entitled to quasi-judicial

immunity (absolute immunity) or, in the alternative, qualified

immunity. In a December 16, 2009, Memorandum and Order,

the District Court dismissed Keystone’s claims against the

current Gaming Board members on ripeness grounds, but

denied the motions to dismiss with respect to Keystone’s

claims against the former Board members.2 Keystone Redev.

Partners, LLC v. Decker, 674 F. Supp. 2d 629, 668 (M.D. Pa.

2009).

In first addressing the Board Defendants’ invocation of

quasi-judicial immunity, the District Court declined to defer

to the Pennsylvania Supreme Court’s determination in

Riverwalk Casino that, based on state case law, the Gaming

Board is a quasi-judicial body. Id. at 657. Instead, the

District Court found that, based on the factual averments

contained in Keystone’s complaint, the Board’s hearings,

while akin to judicial proceedings in certain respects,

appeared to lack some indicia of adversarial contests -- in

particular, prohibitions on ex parte communications,

opportunities for cross-examination, and the ability to

challenge proffered evidence. Id. at 659. Therefore, the

Court held that without development of an evidentiary record,

2

Throughout this opinion, for ease of reference, we

collectively refer to the members of the former Board and

intervenor HSP Gaming as “Board Defendants.”

it could not resolve the question of quasi-judicial immunity.

Id.

Turning to the issue of qualified immunity, the Court

concluded that Keystone, by alleging that the Board

Defendants had deliberately favored local interests at the

expense of out-of-state competitors, had sufficiently pled

violations of “clearly established rights” protected under the

Constitution’s Commerce Clause and the Equal Protection

Clause for which relief could be granted. Id. at 660-67.

Accordingly, the Court held that the Board Defendants were

not entitled to qualified immunity, and denied their motions to

dismiss Keystone’s complaint on those grounds. Id. at 667-

68.

The Board Defendants appealed to this Court for

review of the District Court’s denial of their motion to dismiss

on the basis of quasi-judicial and/or qualified immunity.

III.

We have jurisdiction over the order denying official

immunity under the collateral order doctrine of 28 U.S.C. §

1291. Dotzel v. Ashbridge, 438 F.3d 320, 324 (3d Cir. 2006)

(citing Mitchell v. Forsyth, 472 U.S. 511, 526-27 (1985),

among others).

When considering an appeal from a denial of a motion

to dismiss, this Court exercises plenary review, accepting as

true “[t]he facts alleged in the complaint and the reasonable

inferences that can be drawn from those facts.” Farber v. City

of Paterson, 440 F.3d 131, 134 (3d Cir. 2006). In considering

the propriety of the District Court’s ruling, this Court “may

also consider matters of public record, orders, exhibits

attached to the complaint and items appearing the record of

the case.” Oshiver v. Levin, Fishbein, Sedran & Berman, 38

F.3d 1380, 1384 n.2 (3d Cir. 1994).

A.

Quasi-judicial immunity attaches to public officials

whose roles are “‘functionally comparable’ to that of a

judge.” Hamilton v. Leavy, 322 F.3d 776, 785 (3d Cir. 2003)

(quoting Butz v. Economou, 438 U.S. 478, 513 (1978)). Such

immunity “flows not from rank or title or location within the

Government, but from the nature of the responsibilities of the

individual official.” Cleavinger v. Saxner, 474 U.S. 193, 201

(1985) (citation and internal quotation marks omitted). Thus,

in evaluating whether quasi-judicial immunity grants

immunity to a particular official, a court inquires into “the

official’s job function, as opposed to the particular act of

which the plaintiff complains.” Dotzel, 438 F.3d at 325;

Gallas v. Supreme Court of Pa., 211 F.3d 760, 769 (3d Cir.

2000) (“[O]ur analysis must focus on the general nature of the

challenged action, without inquiry into such ‘specifics’ as the

[official’s] motive or the correctness of his or her decision.”

(citing Mireles v. Waco, 502 U.S. 9, 13 (1991))).

In Cleavinger, the Supreme Court offered a non-

exhaustive list of six factors “characteristic of the judicial

process” that it had identified in Butz as relevant to a

determination of whether an official enjoys quasi-judicial, and

thus absolute, immunity:

(a) the need to assure that the

individual can perform his

functions without harassment or

intimidation; (b) the presence of

safeguards that reduce the need

for private damages actions as a

means of controlling

unconstitutional conduct; (c)

insulation from political

influence; (d) the importance of

precedent; (e) the adversary nature

of the process; and (f) the

correctability of error on appeal.

474 U.S. at 202 (citing Butz, 438 U.S. at 512). This Court has

accordingly adopted the Butz factors outlined in Cleavinger as

the touchstones of its quasi-judicial immunity inquiry.

Dotzel, 438 F.3d at 325-37 (holding that members of a

municipal board of supervisors were immune from suit

brought against them in their official capacities).

Dotzel’s analysis, which is informed by the

instructions of Butz and Cleavinger, as we are, has the same

application to the Pennsylvania Gaming Control Board as it

did to the Dotzel zoning officials. There can be no distinction

among them when applying the Butz factors.3 We therefore

3

The distinction that Judge Fisher, our dissenting

colleague, draws between adjudicating rights and adjudicating

privileges is untenable for two reasons.

First, the zoning board in Dotzel was sued for its decision

to deny a conditional-use permit, which, if granted, confers on

the grantee a license, not a right, to use her land in a particular

fashion. The denial of that license in Dotzel, a determination

that we believed warranted quasi-judicial immunity, is no

different from the denial of a license to operate slot machines

that gives rise to this case.

Second, federal courts have uniformly concluded that

state licensing bodies charged with deciding whether to award

discretionary licenses are entitled to quasi-judicial immunity.

Burnett v. McNabb, 565 F.2d 398, 400 (8th Cir. 1977) (County

Beer Board granting conditional beer license); Kraft v. Jacka,

669 F. Supp. 333, 337 (D. Nev. 1987) (State Gaming

Commission denying gaming license); Hamm v. Yeatts, 479 F.

Supp. 267, 271-72 (W.D. Va. 1979) (State Alcoholic Beverage

Commission denying beer license); Brown v. DeBruhl, 468 F.

Supp. 513, 519 (D.S.C. 1979) (State Alcohol Beverage Control

Commission denying liquor license).

analyze the quasi-judicial immunity question in this case by

applying the Butz factors.

1. The need to assure that the function can be

performed without harassment or intimidation

In Butz, the Supreme Court recognized that

administrative law judges, like other judges, must be extended

quasi-judicial immunity so that they “can perform their

respective functions without harassment or intimidation” from

dissatisfied parties, such as “an individual targeted by an

administrative proceeding [who] will act angrily and may

seek vengeance in the courts,” or a “corportation [that] will

muster all of its financial and legal resources in an effort to

prevent administrative sanctions.” 438 U.S. at 512, 515. In

Dotzel, we concluded that members of a municipal board of

governors, as arbiters of local zoning disputes, would be

subject to those same risks of harassment and intimidation.

As we explained,

zoning disputes can be among the

most fractious issues faced by

municipalities, and the risk of

threats and harassment is great.

The monetary stakes are often

quite high, especially in

commercial cases like this one,

making the possibility of liability

an especially potent adversary of

objectivity. . . . “[T]he public

interest requires that persons

serving on planning boards

considering applications for

development act with

independence and without fear

th a t d e v e lo p e rs, w h o w ill

f re q u e n tly ha v e sig n if ic a n t

financial resources and the ability

to litigate, not bring them to court.

The possibility of facing

expensive litigation as a result of

m aking a dec ision on an

application for development may

in a subtle way impact on the

decision making process.”

438 F.3d at 325-26 (quoting Bass v. Attardi, 868 F.2d

45, 50 n.11 (3d Cir. 1989)).

Keystone argues that the Board Defendants are not

subject to a significant risk of harassment and intimidation

because they can only deprive applicants of financial

opportunities, not liberty or property interests, and they can

only award a limited number of licenses, which reduces the

number of potentially vindictive, disappointed applicants. The

Board Defendants, pointing to the four suits that have been

brought against the Gaming Board arising from its December

2006 licensing decision, assert that gaming license applicants’

extensive financial resources make them more likely to

initiate subsequent litigation to hold Board members liable for

an adverse licensing ruling.

We conclude that this factor weighs in favor of

immunity for the Board Defendants. The financial interests at

stake are extremely large: all applicants must be able to afford

a $50 million license fee, 4 Pa. Const. Ann. § 1209(a), and

each of the December 2006 applicants had annual revenues in

excess of $300 million. Keystone itself spent $10 million

alone on its application, and in its presentation to the Gaming

Board, it unveiled plans for a $444.8 million gaming project.

After Keystone lost out on the license, it initiated three

separate lawsuits, including this one. “‘When millions may

turn on regulatory decisions [as in this case], there is a strong

incentive to counter-attack.’” Butz, 438 U.S. at 515 (quoting

Expeditions Unlimited Aquatic Enters., Inc. v. Smithsonian

Inst., 566 F.2d 289, 293 (D.C. Cir. 1977)). It is plain that,

much as in Dotzel, “the monetary stakes are . . . high,” the

applicants “have significant financial resources and the ability

to litigate,” and thus “[t]he possibility of facing expensive

litigation as a result of making a decision on an application . .

. may in a subtle way impact on the decision making process.”

438 F.3d at 325-26.

Our conclusion regarding this factor is buttressed by

the reasoning of the District Court of Nevada, which, in

holding that absolute immunity extended to members of the

Nevada Gaming Control Board against claims arising from

their licensing decisions, aptly described the unique concerns

of retaliation facing members of a gaming licensing

commission:

In this important area of public

interest where the decisions made

by these individuals often involve

millions of dollars and the

reputation of a whole state, there

is a danger that a person who

receives an adverse decision will

retaliate and seek vengeance in

the courts. The discretion and

judgment of these officials in

initiating administrative

proceedings and in deciding

matters of great public importance

might be affected if their

immunity from damages arising

from those decisions was less than

complete.

Kraft v. Jacka, 669 F. Supp. 333, 337 (D. Nev. 1987) (quoting

Rosenthal v. State of Nevada, 514 F. Supp. 907, 914 (D. Nev.

1981)) (internal citations and quotation marks omitted).

Those concerns are equally applicable to the Pennsylvania

Gaming Control Board, and we are satisfied that the Board

Defendants cannot exercise their judgment without fear of

intimidation if their immunity from personal liability is not

assured.

2. The presence of institutional safeguards against

improper conduct

In fashioning the prevalence of the factors pronounced

by Butz, the more the activity looks judicial, the more weight

is to be given to officials’ freedom from personal liability.

In Butz, the Supreme Court opined that a finding of

immunity for administrative judges was supported by the fact

that “agency adjudication contain[s] many of the same

safeguards as are available in the judicial process,” noting in

particular that “[t]he proceedings are adversary in nature”;

“they are conducted by a trier of fact insulated from political

influence”; “[a] party is entitled to present his case by oral or

documentary evidence”; “the transcript of testimony and

exhibits together with the pleadings constitute the exclusive

record for decision”; “[t]he parties are entitled to know the

findings and conclusions on all of the issues of fact, law, or

discretion presented on the record”; and the administrative

judge “may issue subpoenas, rule on proffers of evidence,

regulate the course of the hearing, and make or recommend

decisions.” 438 U.S. at 513. These safeguards were found to

be present in Dotzel, just as they are relevant here. In

particular, in Dotzel there were requirements for (1) notice to

the parties and the public, (2) public hearings, (3) specific

procedures for conducting hearings, (4) the right to counsel,

(5) the use of subpoenas and oaths, (6) the issuance of written

decision, and (7) the preparation of transcripts. 438 F.3d at

326.

Here, consistent with Butz and Dotzel, the Gaming

Board must (1) give notice to the parties, 2 Pa. Cons. Stat. §

504, and the public, 58 Pa. Code § 441a.7(a); (2) hold public-

input hearings, 4 Pa. Cons. Stat. 1205(b); and (3) abide by

specific procedures for conducting hearings, 58 Pa. Code §

441a.7; (4) the applicants are entitled to counsel, 2 Pa. Cons.

Stat. § 502; (5) the Board may subpoena witnesses and

documents, 4 Pa. Cons. Stat. § 1202(b)(7), and accept only

sworn testimony, 58 Pa. Code § 447(q); (6) the Board must

issue a written decision, id. § 441a.7(x); and (7) the record

must be transcribed, id. § 447(v). This factor weighs in favor

of immunity for the Board Defendants, just as it did for the

public officials in Dotzel.

3. The degree of insulation from political influence

The Butz Court deemed probative to the question of

immunity whether the process of adjudication at issue “is

structured so as to assure that the hearing examiner exercises

his independent judgment on the evidence before him, free

from pressures by the parties or other officials within the

agency.” 438 U.S. at 513.

Voting members of the Gaming Board serve fixed

terms, 4 Pa. Cons. Stat. § 1201(d); may only be removed for

“misconduct in office, willful neglect of duty or conduct

evidencing unfitness for office or incompetence,” or a

criminal conviction, id. § 1201(b.1); are prohibited from

political involvement, id. § 1202.1(c)(5); and must recuse

themselves if their impartiality is called into question, id. §

1202.1(c)(3). Keystone points out that the ex officio members

of the Gaming Board (the Pennsylvania Secretary of Revenue,

Secretary of Agriculture, and Treasurer) are by definition not

barred from political activity. The statutory scheme,

however, mitigates any impropriety by denying those

members -- as distinct from the voting members -- the ability

to vote in licensing decisions. Id. § 1201(e). Accordingly, we

conclude that the Board is adequately insulated from political

pressures, thereby satisfying this element of quasi-judicial

immunity. 4

4

Judge Fisher, our dissenting colleague, suggests that even

4. The use of precedent in resolving controversies

Although the Butz Court did not expound on the

application of this factor, this Court in Dotzel inferred “the

relevant question . . . to be whether the Board's decisions are

purely discretionary, or are constrained by outside law.” 438

F.3d at 326-27. Since it was “not clear to what extent the

Board refers to its own prior determinations in reaching

decisions,” the Dotzel Court instead considered the fact that

“the Board is required by statute to consider in its

deliberations the land-use standards set out in the relevant

zoning ordinance, and to explain its reasoning in written

opinions,” as decisive of this factor. Id. at 327.

The Board Defendants’ brief recognizes that the Board

Defendants did not rely on past precedents because there was

no past precedent -- the December 2006 licensing decision

represented the Board’s first written opinion on a license

application. Because the licensing decision of the nascent

Gaming Board was the first of its kind, we instead view as

probative of this factor the existence of requirements that the

record be transcribed, that the Board issue a written decision

and final order, and that the Board employ “a cognizable

burden of proof.” Cleavinger, 474 U.S. at 206.

Here, the Gaming Board is required by law to reach its

decisions based on certain statutorily delineated criteria

relating to each applicant’s eligibility and suitability for

though the Board members serve for a set term of years, they are

still subject to political pressure to decide licensing applications

in a particular way if they wish to ensure their reappointment.

That line of reasoning would similarly deny elected state judges

absolute immunity, a proposition that we cannot, and do not,

endorse. See Tobin for Governor v. Ill. State Bd. of Elections,

268 F.3d 517, 526 (7th Cir. 2001); Brown v. Griesenauer, 970

F.2d 431, 439 (8th Cir. 1992).

licensing. 4 Pa. Cons. Stat. Ann. §§ 1302-1305, 1325(c); 58

Pa. Code § 441a.7(e)-(h). As we have noted, in determining

whether each applicant has satisfied those criteria, the Board

is required to employ a “clear and convincing evidence”

standard. 58 Pa. Code § 441a.7(d). As is evident in the

Board’s written decision in this case, fulfillment of those

criteria serves as a basis of comparison for deciding between

the applicants. The Board also is mandated to issue a written

decision accompanying its final order. We are satisfied that

this factor also supports quasi-judicial immunity.

5. The adversarial nature of the process

The Butz Court recognized that certain facets of the

adversarial process “enhance the reliability of information and

the impartiality of the decisionmaking process”: (1)

“[a]dvocates are restrained not only by their professional

obligations, but by the knowledge that their assertions will be

contested by their adversaries in open court,” (2) “jurors are

carefully screened to remove all possibility of bias,” and (3)

witnesses are . . . subject to the rigors of cross-examination

and the penalty of perjury.” 438 U.S. at 512. In Dotzel,

which we read as applying here, we found that the

proceedings at issue were “adversarial as a matter of law”

because (1) “all interested parties [must] be given notice and

an opportunity to attend,” (2) ex parte contacts were

prohibited, (3) witnesses could be cross-examined, and (4) the

parties could challenge proffered evidence. 438 F.3d at 327.

The District Court here denied immunity to the Board

Defendants because Keystone’s averments, which alleged that

ex parte communication was permitted at the licensing

hearings, among other averments, “cast substantial doubt as to

the adversarial nature of the proceedings.” Keystone, 674 F.

Supp. 2d at 629.

We observe that in applying for a license to the

Gaming Board, almost all of the adversarial elements this

Court identified in Dotzel are met at Gaming Board licensing

hearings. The applicants must be given “reasonable notice of

a hearing and an opportunity to be heard,” 2 Pa. Cons. Stat. §

504; are entitled to object to rulings made by the Board in

competitors’ hearings as well as their own, 58 Pa. Code §

441a7(t); and may challenge competitors’ evidence and

applications by presenting comparative evidence, briefs, and

oral argument, id. § 441a7(n), (u), (w). In addition, Gaming

Board members are largely proscribed from ex parte

communications, participation in which is usually grounds for

recusal, 4 Pa. Cons. Stat. § 1202.1(c), (c.1), (c.2), although

such communications are permitted 1) between the Board and

certain executive officers to the extent necessary to clarify or

correct evidentiary materials or 2) between the Board and the

office of chief counsel of the BIE. Id. § 1202.1(e).

Contrary to the District Court’s determination, those

limited exceptions to the blanket ban on ex parte contacts do

not affect the Board members’ eligibility for quasi-judicial

immunity. See, e.g., Brokaw v. Mercer Cnty., 235 F.3d 1000,

1015-16 (7th Cir. 2000); J.R. v. Wash. Cnty., 127 F.3d 919,

925-26 (10th Cir. 1997).

Keystone also identifies two hallmarks of the

adjudicatory process that are absent from licensing

proceedings before the Gaming Board. First, Keystone claims

that an applicant is not entitled to test the veracity of

background information relating to each applicant, which the

Board may consider in reaching its determination. 58 Pa.

Code § 441a7(r). That concern, however, is tempered by the

requirements that the Board must give notice of the contents

of any non-confidential information, 4 Pa. Const. Stat. §

1206(g); “[t]he Board may request that an applicant respond

to inquiries related to confidential information during a

licensing hearing to promote transparency in the regulation of

gaming in this Commonwealth,” 58 Pa. Code § 441a7(r); and

the applicant may object to any ruling by the Board, id. §

441a.7(t).

It is undisputed that applicants here have no right to

cross-examination. Some courts have concluded that while

the absence of a right to cross-examination may support a

finding that a given proceeding is non-adversarial, see

Cleavinger, 474 U.S. at 206, this does not determine the issue.

In considering the requirement for permitting cross-

examination in order to immunize officials under the quasi-

judicial status asserted here by the Board Defendants, our

sister circuits have held that the other factors of weighing

evidence, issuing written decisions, administering oaths, and

the like, are sufficient. See Beck v. Tex. State Bd. of Dental

Exam’rs, 204 F.3d 629, 636 (5th Cir. 2000) (holding that state

dental board disciplinary proceedings were adversarial, thus

supporting finding of quasi-judicial immunity for board

members, because dentist had rights to present evidence and

to counsel, and board administered oaths to witnesses and

made evidentiary rulings); Dunham v. Wadley, 195 F.3d

1007, 1011 (8th Cir. 1999) (concluding that members of

veterinary licensing board were entitled to immunity, without

mentioning whether right of cross-examination existed at

licensing hearings, because “board weighed evidence, made

factual determinations, determined sanctions, and issued

written decisions”); see also Franklin v. Shields, 569 F.2d

784, 796, 798 (4th Cir. 1977) (deciding pre-Butz that

members of parole board were entitled to quasi-judicial

immunity even though prisoners did not have rights to call or

cross-examine witnesses at parole hearings).

Moreover, not every Butz factor must be satisfied for

an official to be entitled to quasi-judicial, absolute immunity.

Miller v. Davis, 521 F.3d 1142, 1145 (9th Cir. 2008); Beck,

204 F.3d at 635 (noting that when analyzing Butz factors,

“[n]o one factor is controlling”). It follows that the District

Court erred by denying the Board members immunity on the

basis of considerations related to the adversariness factor

alone. See Keystone, 674 F. Supp. 2d at 659,

6. The availability of appellate review

In Dotzel, this Court recognized that “[a] formal

appellate procedure is probably the single most court-like

feature a government body can have,” explaining that many of

the procedural safeguards integral to the quasi-judicial

immunity analysis “exist largely to facilitate appellate

review,” and noting that “it is a hallmark of courts, unlike

legislature and executives, that (with one exception) they do

not consider themselves to be either final or infallible.” 438

F.3d at 327. We agree.

Under 4 Pa. Cons. Ann. § 1204, unsuccessful gaming

license applicants may appeal as of right to the Pennsylvania

Supreme Court; that Court, in turn, “shall affirm all final

orders, determinations or decisions of the board . . . unless it

shall find that the board committed an error of law or that the

order determination or decision of the board was arbitrary and

there was capricious disregard of the evidence.” To facilitate

any appeal, the Board must transcribe the hearings, 58 Pa.

Code § 441a.7(v), and issue a written decision, id. §

441a.7(x). It is clear that Keystone had a right to appeal the

Gaming Board’s decision to the Pennsylvania Supreme Court,

which it chose not to exercise. Therefore, as the District

Court similarly concluded, Keystone, 674 F. Supp. 2d at 659,

this factor also supports immunity for the Board Defendants. 5

In sum, we hold that the Butz factors, on balance,

clearly support quasi-judicial immunity for members of the

Pennsylvania Gaming Control Board.

B.

5

In Riverwalk Casino, LP v. Pa. Gaming Control Bd., 926

A.2d 926, 935 (Pa. 2007), the Supreme Court of Pennsylvania

held, as we have noted earlier, that the Pennsylvania Gaming

Control Board (the Board Defendants here) is a quasi-judicial

body. Therefore, under the authority of Butz, 438 U.S. 478, the

members of that body would be entitled to absolute immunity

from personal liability.

Finally, we disagree with the District Court’s

conclusion that additional factual development is necessary.

As we acknowledged in Dotzel, deciding whether to extend

quasi-judicial immunity to an official involves a “legal

determination” that focuses on “the legal and structural

components of the job function, as opposed to detailed facts

about specific acts and mental states.” 438 F.3d at 325. Here,

as in Dotzel, it is evident that, based on the relevant statutory

and regulatory provisions governing Gaming Board hearings,

the Board serves a quasi-judicial function, which entitles a

Board member to “immunity from suit rather than a mere

defense to liability.” Mitchell, 472 U.S. at 526.

We conclude that an overall consideration and

weighing of the factors required by Butz to establish quasi-

judicial, absolute immunity for the licensing decisions of the

Board Defendants have been more than met. In light of our

conclusion, we need not reach or address the parties’

arguments concerning qualified immunity.

IV.

We will reverse the decision of the District Court and

direct that the District Court on remand enter an order

dismissing all counts against the Board Defendants.

FISHER, Circuit Judge, concurring and dissenting.

Though I agree with the judgment to reverse and

remand the District Court’s decision, I disagree with my

colleagues’ broad interpretation of quasi-judicial immunity. I

therefore write separately.

The majority holds that the Pennsylvania Gaming

Control Board’s (“Board”) decision to grant two Category 2

gaming licenses was a judicial act subject to absolute

immunity. This expands the notion of “judicial.” The

Supreme Court has “been quite sparing in [its] recognition of

absolute immunity, . . . and h[as] refused to extend it any

further than its justification would warrant.” Burns v. Reed,

500 U.S. 478, 486-87 (1991) (quotation marks and citations

omitted). Today’s decision exceeds the traditional limitations

of absolute immunity, creating another barrier to the remedies

secured by Section 1983 for deprivations of constitutional

rights.

I would instead decide this case on the ground of

qualified immunity and hold that the Board members did not

deprive Keystone of a well-established constitutional right.

For this reason, I agree with our decision to reverse the

District Court. But we need not expand the narrow contours

of absolute immunity to reach this result. “Absolute

immunity . . . is strong medicine, justified only when the

danger of [officials’ being] deflect[ed from the effective

performance of their duties] is very great.” Forrester v.

White, 484 U.S. 219, 230 (1988) (quotation marks and

citation omitted) (modifications in original). There is little

reason to hold that the Board members, and similarly-situated

executive officials, “may with impunity discharge their duties

in a way that is known to them to violate the United States

Constitution or in a manner that they should know

transgresses a clearly established constitutional rule.” Butz v.

Economou, 438 U.S. 478, 507 (1978).

I.

Keystone brings this action under 42 U.S.C. § 1983,

which is written in broad terms. A decision to grant the

Board absolute immunity must comport with Section 1983. It

applies to “[e]very person” acting under color of state law

who deprives any other person in the United States of “rights,

privileges, or immunities secured by the Constitution and

laws.” 42 U.S.C. § 1983. Absolute immunity is nowhere

mentioned in the statute, but it was “solidly established at

common law” at the time of passage. Pierson v. Ray, 386

U.S. 547, 553-54 (1967). The “legislative record gives no

clear indication that Congress meant to abolish wholesale all

common-law immunities.” Id. at 554. Absolute immunity

therefore rests upon a finding that Congress did not intend to

abrogate the common-law traditions. In deciding whether

immunity applies, “our role is to interpret the intent of

Congress in enacting § 1983, not to make a freewheeling

policy choice.” Malley v. Briggs, 475 U.S. 335, 342 (1986);

see also Burns, 500 U.S. at 497 (Scalia, J., concurring and

dissenting) (stating that “we have . . . thought a common-law

tradition (as of 1871) to be a . . . necessary one” for absolute

judicial immunity under § 1983 (emphasis in original));

Tower v. Glover, 467 U.S. 914, 920 (1984) (“If an official

was accorded immunity from tort actions at common law

when the Civil Rights Act was enacted in 1871, the Court

next considers whether § 1983’s history or purposes

2

nonetheless counsel against recognizing the same immunity in

§ 1983 actions.”). At the time of passage, “the touchstone for

[absolute immunity’s] applicability was performance of the

function of resolving disputes between parties, or of

authoritatively adjudicating private rights.” Burns, 500 U.S.

at 500 (Scalia, J., concurring and dissenting) (citing Steele v.

Dunham, 26 Wis. 393, 396-97 (1870); Wall v. Trumbull, 16

Mich. 228, 235-37 (1867); Barhyte v. Shepherd, 35 N.Y. 238,

241-42 (1866)); see also Antoine v. Byers & Anderson, Inc.,

508 U.S. 429, 435-36 (1993).

Absolute judicial immunity was extended to

administrative bodies in Butz, 438 U.S. 478. But it was only

extended to administrative bodies that fulfill a judicial

function. The Court established an exception to the “general

rule [of qualified immunity] for executive officials charged

with constitutional violations” in holding “that there are some

officials whose special functions require a full exemption

from liability.” Butz, 438 U.S. at 508; Forrester, 484 U.S. at

227 (“[I]mmunity is justified and defined by the functions it

protects and serves, not by the person to whom it attaches.”

(emphasis in original)).

The Board’s decision to issue gambling licenses is

fundamentally different from a judicial decision. Though

steeped in formality, the discretionary act of issuing a

gambling license to some of several applicants is not the

fulfillment of a judicial function. The functional approach to

quasi-judicial immunity requires that “[w]hen judicial

immunity is extended to officials other than judges, it is

because their judgments are ‘functional[ly] comparab[le]’ to

3

those of judges.” Antoine, 508 U.S. at 436 (modifications in

original) (quoting Imbler v. Pachtman, 424 U.S. 409, 423

n.20 (1976)). To determine whether an act is “judicial,” we

must look to the “nature of the act itself, i.e., whether it is a

function normally performed by a judge, and to the

expectations of the parties, i.e., whether they dealt with the

[body] in [its] judicial capacity.” Stump v. Sparkman, 435

U.S. 349, 362 (1978). The Board is directed by statute to base

its decision upon “whether the issuance of a license will

enhance tourism, economic development or job creation [and]

is in the best interests of the Commonwealth.” 4 Pa. Cons.

Stat. Ann. § 1325(a). Exercising discretion to choose two of

five applicants for a license, based on these policy reasons, is

not a function “normally performed by a judge.” Judges do

not award licenses to competing applicants based on policy

preferences. They do not invite public comments and conduct

open meetings with members of the public. In holding

otherwise, my colleagues’ construction of absolute quasi-

judicial immunity fails to conform to the common law

traditions of absolute immunity.

Moreover, the decision fails to meet the “touchstone”

of serving “the function of resolving disputes between parties,

or of authoritatively adjudicating private rights.” Antoine,

508 U.S. at 435-36 (quoting Burns, 500 U.S. at 500 (Scalia,

J., concurring and dissenting)). The majority glosses over the

fact that the proceedings before the Board were not

adversarial. In previous cases finding quasi-judicial

immunity, administrative bodies served a judicial function:

they either resolved a dispute or authoritatively adjudicated

4

private rights.1 For example, in Butz, the Department of

Agriculture sought to revoke or suspend a business license by

alleging that it failed to meet minimum financial

requirements. 438 U.S. at 481. It was an adjudication

between an agency and a private company in which the right

to conduct business was in dispute. The closest case on point

1

The majority opinion refers to two district court cases from the

Ninth Circuit that involve a gaming commission but are not

entirely on point. In a case similar in name but not in substance,

the Nevada Gaming Commission initiated suspension

proceedings against a gaming employee and denied him a

license, revoking his work permit and frustrating “the right to be

employed by a licensed establishment.” Rosenthal v. Nevada,

514 F. Supp. 907, 911 (D. Nev. 1981); see also Romano v.

Bible, 169 F.3d 1182, 1187 (9th Cir. 1999) (holding that the

Nevada Gaming Commission was subject to absolute immunity

because it was sufficiently adversarial in nature and adjudicated

disciplinary proceedings against licensees). The Nevada

Gaming Commission proceeding is a clear case of a dispute

between parties and an authoritative adjudication of a right. The

only case which can be construed to support the majority’s

holding is Kraft v. Jacka, 669 F. Supp. 333 (D. Nev. 1987),

where the district court held that the Nevada Gaming

Commission’s decision to deny a gaming license was protected

by absolute immunity and qualified immunity. The court

applied both absolute and qualified immunity, thereby failing to

resolve whether denying a license to operate a gaming facility

is properly considered a judicial function.

5

from our Circuit is Dotzel v. Ashbridge, 438 F.3d 320 (3d Cir.

2006), where a board of supervisors denied an application for

a zoning permit by applying a discrete set of legal

requirements. We held that the board of supervisors was

sufficiently judicial and granted it absolute quasi-judicial

immunity. What, in part, distinguishes the board of

supervisors in Dotzel from the Board in this case is that the

board of supervisors adjudicated a private right, namely, the

right to use one’s land. Dotzel had a legal right to his land

and sought to exercise his right to use it for mining purposes.

The Board, by contrast, did not adjudicate any private

rights. Unlike the board of supervisors in Dotzel, the Board

did not authoritatively determine what Keystone or any of the

other four applicants could do with their property. Instead,

the five applicants sought a privilege. Multiple businesses

applied for two casino licenses, and the Board made a

discretionary decision, based on policy determinations, to

issue the privilege to some and not to others. It was akin to a

government agency awarding contracts after a formal bidding

process. The distinction between the board proceedings in

Dotzel and the Board proceedings in this case is fundamental.

In failing to take note of it, the majority risks an expansion of

absolute immunity to government functions that are not

properly regarded as judicial in nature.

I disagree with the majority’s application of two

additional Butz factors: the Board’s insulation from political

influence and its use of precedent in making decisions. An

administrative body shares the characteristics of the judiciary

if it is insulated from political influence. See, e.g., Butz, 438

6

U.S. at 512. The majority concludes that “the Board is

adequately insulated from political pressures.” Maj. Op. at

22. In Dotzel, we stated that “the key question for our inquiry

is . . . whether the Board members here can be removed from

office based on the substance of their official work.” 438

F.3d at 326. But in this case, the “for cause” provision is not

the key question because the short appointment terms fail to

insulate the Board members from political influence. The

appointing authorities may decide not to reappoint Board

members based on the substance of their work. The

gubernatorial appointees serve terms of three years, and the

legislative appointees serve terms of two years. 4 Pa. Cons.

Stat. Ann. § 1201(d). This means that Board members are

likely to mold the substance of their work to fit the political

views of the appointing authorities.

We must also look to how the Board’s decision-

making procedures are structured to determine if it is

insulated from political influence. Any action by the Board

involving the “approval, issuance, denial or conditioning of

any license . . . require[s] a qualified majority vote consisting

of at least one gubernatorial appointee and the four legislative

appointees.” Id. § 1201(f)(1). This means that the

“legislative appointees were granted what amounts to a veto

power on the Board.” Riverwalk Casinos, LP v. Pa. Gaming

Control Bd., 926 A.2d 926, 953 (Pa. 2007) (Castille, J.,

dissenting). The combination of the legislature’s veto power

on the Board and the two-year appointment term reveals that

the legislature exerts indirect control over the Board’s

decisions.

7

Finally, the Board acts in an entirely discretionary

manner and is not sufficiently bound by precedent or law to

be regarded as judicial in nature. In Dotzel, we understood

the question of whether precedent is used in resolving

controversies to “be whether the Board’s decisions are purely

discretionary, or are constrained by outside law.” 438 F.3d at

326-27. We paid notice that the board of supervisors was

“required by statute to consider in its deliberations the land-

use standards set out in the relevant zoning ordinance, and to

explain its reasoning in written opinions.” Id. at 327. The

Board is required to issue written opinions, 4 Pa. Cons. Stat.

Ann. § 441a.7(u), and to consider the basic eligibility of each

applicant. Id. § 1325(b). Beyond this, though, the Board’s

decision is entirely discretionary. The Act states that the

Board “may” base its decision on several factors:

(1) The location and quality of the proposed

facility, including, but not limited to, road and

transit access, parking and centrality to market

service area.

(2) The potential for new job creation and

economic development which will result from

granting a license to an applicant.

(3) The applicant's good faith plan to recruit,

train and upgrade diversity in all employment

classifications in the facility.

8

(4) The applicant's good faith plan for

enhancing the representation of diverse groups. .

..

(5) The applicant's good faith effort to assure

that all persons are accorded equality of

opportunity in employment and contracting. . . .

(6) The history and success of the applicant in

developing tourism facilities ancillary to

gaming development if applicable to the

applicant.

(7) The degree to which the applicant presents a

plan for the project which will likely lead to the

creation of quality, living-wage jobs and full-

time permanent jobs for residents of this

Commonwealth generally and for residents of

the host political subdivision in particular.

(8) The record of the applicant and its developer

in meeting commitments to local agencies,

community-based organizations and employees

in other locations.

(9) The degree to which potential adverse

effects which might result from the project,

including costs of meeting the increased

demand for public health care, child care, public

transportation, affordable housing and social

services, will be mitigated.

9

(10) The record of the applicant and its

developer regarding compliance with [Federal,

State, and local labor laws.]

(11) The applicant's record in dealing with its

employees and their representatives at other

locations.

Id. §1325(c). In its sole discretion, the Board can base its

decision on all, some, or none of the factors. In Dotzel, the

board of supervisors was “required by statute to consider in its

deliberations the land-use standards set out in the relevant

zoning ordinance.” 438 F.3d at 327. But the Gaming Act

states that “[t]he board shall in its sole discretion issue, renew,

condition or deny a slot machine license.” 4 Pa. Cons. Stat.

Ann. § 1325(a) (emphasis added). Furthermore, there is

nothing directing the Board to consider its previous decisions.

Though there were no prior decisions for the Board members

to cite in the Board’s Philadelphia licensing decision, there is

nothing to indicate that the Board operates by use of

precedent in making decisions. In fact, the highly

discretionary nature of the proceedings indicates that

decisions are to be made on a case-by-case basis. And this

makes sense, given that the Board is not fulfilling a judicial

function, but is applying policy preferences to determine the

best applicants for casino licenses.

The general rule is to limit the application of absolute

immunity to narrow circumstances and to apply qualified

immunity to executive officials. Harlow v. Fitzgerald, 457

U.S. 800, 807 (1982) (“For executive officials in general . . .

10

our cases make plain that qualified immunity represents the

norm.”). Butz represents an exception for executive officials

who fulfill a judicial function. The majority focuses on the

formalities surrounding the Board’s decision and fails to take

note of the nature of the decision itself. Deciding the

worthiest candidates for business licenses based on policy

preferences is categorically not a judicial function. Following

the majority’s logic, as long as an executive officer’s

decision, whether it be issuing business licenses or granting

contracts for paper supplies, is embedded in a sufficiently

formal procedure, we must grant that officer absolute

immunity. This is contrary to Supreme Court precedent,

which requires us to look to “the nature of the act itself.”

Stump, 435 U.S. at 362. The Board members’ position is that

they are absolutely immune from any liability, even if they

violate one’s constitutional rights and they do so knowingly

and deliberately. But in holding that the Board members are

immune, the majority risks upsetting the protections

embodied in Section 1983. “Under the criteria developed by

precedents of th[e Supreme] Court, § 1983 would be drained

of meaning were we to hold that the acts of a governor or

other high executive officer have ‘the quality of a supreme

and unchangeable edict.’” Scheuer v. Rhodes, 416 U.S. 232,

248 (1974) (quoting Sterling v. Constantin, 287 U.S. 378, 397

(1932)).

Our system of jurisprudence rests on the

assumption that all individuals, whatever their

position in government, are subject to federal

law: ‘No man in this country is so high that he

is above the law.’ . . . In light of this principle,

11

. . . officials who seek absolute exemption from

personal liability for unconstitutional conduct

must bear the burden of showing that public

policy requires an exemption of that scope.

Butz, 438 U.S. at 506 (quoting United States v. Lee, 106 U.S.

196, 220 (1882)). The Board members fail to meet the burden

of showing that “public policy requires an exemption” from

such a foundational principle of governance. Id. For these

reasons, I respectfully disagree with the majority’s decision.

The Board is not an exception to the rule of qualified

immunity.

II.

I believe that we should have decided this case on the

ground of qualified immunity and held that the Board

members did not deprive Keystone of a clearly-established

constitutional right. Whether the Board members should

receive qualified immunity is subject to a two-pronged test: a

court evaluating a claim of qualified immunity “must first

determine whether the plaintiff has alleged the deprivation of

an actual constitutional right at all, and if so, proceed to

determine whether that right was clearly established at the

time of the alleged violation.” Conn v. Gabbert, 526 U.S.

286, 290 (1999). The test reflects “the balance that [the

Court’s] cases strike between the interests in vindication of

citizens’ constitutional rights and in public officials’ effective

performance of their duties.” Davis v. Scherer, 468 U.S. 183,

195 (1984). Keystone claims that the Board members

violated its rights protected by the Commerce Clause and the

12

Equal Protection Clause. Neither claim of a constitutional

deprivation was clearly established.2

Government officials who perform discretionary duties

are “shielded from liability for civil damages insofar as their

conduct does not violate clearly established statutory or

constitutional rights of which a reasonable person would have

known.” Harlow, 457 U.S. at 818. This “generally turns on

the ‘objective legal reasonableness’ of the action . . . assessed

in light of the legal rules that were ‘clearly established’ at the

time [the action] was taken.” Anderson v. Creighton, 483

U.S. 635, 639 (1987) (quoting Harlow, 457 U.S. at 819).

A.

Under the Commerce Clause, Congress has the power

to “regulate Commerce . . . among the several States.” U.S.

Const. art. I, § 8, cl. 3. This clause has an implied

requirement—the Dormant Commerce Clause—that the states

not “mandate differential treatment of in-state and out-of-state

economic interests that benefits the former and burdens the

latter.” Granholm v. Heald, 544 U.S. 460, 472 (2005)

2

The two prongs of the qualified immunity test may be handled

in any order. “The judges of the district courts and the courts of

appeals should be permitted to exercise their sound discretion in

deciding which of the two prongs of the qualified immunity

analysis should be addressed first in light of the circumstances

in the particular case at hand.” Pearson v. Callahan, 129 S. Ct.

808, 818 (2009).

13

(quotation marks and citation omitted). In Dennis v. Higgins,

the Court held that “individuals injured by state action that

violates this [negative] aspect of the Commerce Clause may

sue and obtain injunctive and declaratory relief” and that this

“amounts to a ‘right, privilege, or immunity’ under [Section

1983].” 498 U.S. 439, 447 (1991).

Dormant Commerce Clause analysis consists of two

steps: “whether ‘heightened scrutiny’ applies, and, if not, then

. . . whether the law is invalid under the Pike [v. Bruce

Church, Inc., 397 U.S. 137, 142 (1970),] balancing test.”

Cloverland-Green Spring Dairies, Inc. v. Pa. Milk Mktg. Bd.,

462 F.3d 249, 261 (3d Cir. 2006). Heightened scrutiny

applies when a law “discriminates against interstate

commerce” in purpose or effect. C & A Carbone, Inc. v.

Town of Clarkstown, 511 U.S. 383, 390 (1994). If heightened

scrutiny does not apply, then we consider the Pike balancing

test: “whether the ordinance imposes a burden on interstate

commerce that is ‘clearly excessive in relation to the putative

local benefits.’” C & A Carbone, Inc., 511 U.S. at 390 (citing

Pike, 379 U.S. at 142).

The Board stated in its written decision that it

“considered the fact of competing Atlantic City properties as

a negative factor for licensure in Philadelphia.” (App. at

A194.)

The Board finds it credible that owners of

[Atlantic City] casinos . . . may attempt to use

the Philadelphia property as a gambling-

incubator to gain new customers who will then

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be lured to its Atlantic City properties where it

can earn a much larger profit on every dollar

gambled. Likewise, the Board finds applicants

without Atlantic City connections more strongly

motivated to compete directly against the

Atlantic City competition because they have no

interest in diverting patrons to the casino which

has a better tax structure for the casino.

(Id. at A194.) And it goes on to note why Keystone’s

ownership of a casino in Atlantic City serves as a negative

factor.

Additionally, evidence has been introduced that

the Trump Entertainment properties in Atlantic

City[, the parent company of Keystone,] have

undergone bankruptcy reorganizations in order

to rebuild and revitalize them. The Board

believes this further supports its decision to

choose other applicants who do not have other

facilities so close to Philadelphia which may

lure patrons to Atlantic City to assist in the

rebuilding and revitalization of properties there.

(Id. at A194.) The Board concludes by stating that it “finds

that licensing casinos in Philadelphia which do not have

common ownership with Atlantic City facilities are more

likely to further the interests of the Commonwealth and the

public which stands to benefit through increased revenues

obtained by the Pennsylvania properties.” (Id. at A194-95.)

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The Board’s decision meets both steps of Dormant

Commerce Clause analysis. First, the Board did not

discriminate against interstate commerce because it did not

impose an absolute barrier to entry of any out-of-state casinos.

Cf. Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 40 (1980).

In Dean Milk Co. v. City of Madison, the Court held that a

denial of a license to sell milk in conformity with a scheme to

exclude out-of-state milk “erect[ed] an economic barrier

protecting a major local industry against competition from

without the State” and “plainly discriminate[d] against

interstate commerce.” 340 U.S. 349, 354 (1951). Here, the

Board did not erect a barrier to out-of-state competition. It

merely considered Keystone’s ties to Atlantic City as a

negative factor—one of many factors it considered in the

course of its decision. In fact, the two companies that

received licenses had extensive out-of-state ties. HSP

Gaming is headquartered in Delaware, and Foxwoods is

affiliated with a company that owns a large gaming facility in

Connecticut. Therefore, the Board’s decision was unlike

previous findings of discriminatory intent, where states

established absolute barriers to interstate commerce.

Second, the Board’s decision furthers important state

interests that outweigh any incidental burdens on interstate

commerce. The decision advanced four state interests:

(1) the procurement of “a significant source of revenue to the

Commonwealth”; (2) “provid[ing] broad economic

opportunities to the citizens of th[e] Commonwealth”;

(3 ) “ p re v e n t[ing] possible m o nopolization ” ; a n d

(4) “enhanc[ing] the further development of the tourism

market.” 4 Pa. Cons. Stat. Ann. § 1102. States have a

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legitimate interest “in maximizing the financial return to an

industry within it.” Pike, 397 U.S. at 143. Considering

applicants’ ties to Atlantic City as a negative factor due to

concerns that it may draw customers away from the state does

not constitute a “clearly excessive” burden on interstate

commerce. C & A Carbone, Inc., 511 U.S. at 390. The

Board’s decision does not inhibit Keystone or any other

Atlantic City casino from attracting Pennsylvania customers.

And it does not impose a heavy burden on out-of-state

applicants for casino licenses, especially considering that the

two successful applicants had significant out-of-state ties.

Hence, the Board did not violate the Dormant Commerce

Clause and did not deprive Keystone of a constitutionally-

protected right.

The Board members should also be held immune

because there was not “sufficient precedent at the time of the

action, factually similar to the plaintiff’s allegations, to put

[the] defendant on notice that his or her conduct is

constitutionally prohibited.” McKee v. Hart, 436 F.3d 165,

171 (3d Cir. 2006) (quotation marks and citation omitted).

There is insufficient precedent that the mere consideration of

a company’s out-of-state ties as a negative factor—not a

barrier—by an administrative agency violates the Dormant

Commerce Clause, especially where the factors of site

location and previous experience carried dispositive weight in

determining the Board’s decision. Hence, even if the Board’s

action did constitute a deprivation of a constitutional right, the

lack of clarity in Dormant Commerce Clause jurisprudence

prohibited the Board members from being on notice that the

use of a negative factor in reaching a discretionary policy

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determination deprived Keystone of its rights under the

Commerce Clause.

B.

The Equal Protection Clause of the Fourteenth

Amendment, § 1, directs that no state shall “deny to any

person within its jurisdiction the equal protection of the laws.”

U.S. Const. amend. XIV, § 1. This “does not forbid all

classifica tio n s” but “ sim ply ke e ps gove rnm e nta l

decisionmakers from treating differently persons who are in

all relevant respects alike.” Nordlinger v. Hahn, 505 U.S. 1,

10 (1992). The District Court held that Keystone “sufficiently

alleged that the [Board] applied the Gaming Act in a way that

was designed to benefit in-state business to the detriment of

out-of-state competitors.” Keystone Redevelopment Partners,

LLC v. Decker, 674 F. Supp. 2d 629, 667 (M.D. Pa. 2009).

The class of casinos with out-of-state ties is not a suspect

class, and both parties agree that rational basis review should

be applied.

Rational basis review requires us to consider whether

“there is a plausible policy reason for the classification.”

Nordlinger, 505 U.S. at 11 (citation omitted). Two questions

must be addressed: “first, whether at least one of the purposes

of the classification involves a legitimate public interest and,

second, whether the classification is rationally related to the

achievement of that purpose.” Hancock Indus. v. Schaeffer,

811 F.2d 225, 237 (3d Cir. 1987). In making these

determinations, we exercise deference and grant discretion to

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the states. See Pers. Adm’r of Mass. v. Feeney, 442 U.S. 256,

272 (1979).

Keystone challenges the Board’s use of the Atlantic

City factor.3 As stated above, the Board advanced four

purposes for the classification: (1) “the procurement of a

significant source of revenue to the Commonwealth”;

(2) “providing broad economic opportunities to the citizens of

th [ e ] C o m m o n w e a lth ” ; (3 ) “ p re v e n tin g p o ss ib le

monopolization”; and (4) “enhancing the further development

of the tourism market.” Appellant’s Br. at 50-51. These

purposes derive from the Pennsylvania Race Horse

Development and Gaming Act. See 4 Pa. Cons. Stat. Ann.

§ 1102.

Purposes (1), (2), and (4) can be boiled down to the

purpose of promoting domestic industry and the state revenue

and tourism that will be derived therefrom. Though states

have an undoubtedly legitimate interest in raising revenue and

3

The classification between Atlantic City casinos and non-

Atlantic City casinos does not derive from legislation but is

created by the Board in reaching its decision. Rational basis

review is usually conducted on legislative categories. But it is

nevertheless proper here. In a slightly analogous case, a board

was alleged to have “utilized an implicit classification in

administering its zoning ordinance.” Sylvia Dev. Corp. v.

Calvert Cnty., 48 F.3d 810, 821 (4th Cir. 1995). There, the

court conducted rational basis review of the category, which was

created by the board.

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promoting domestic commerce, it is not a “general rule that

promotion of domestic industry is a legitimate state purpose

under equal protection analysis.” Metro. Life Ins. Co. v.

Ward, 470 U.S. 869, 876 (1985). The Board’s aim of

promoting domestic industry cannot be legitimate if it is

“purely and completely discriminatory, designed only to favor

domestic industry within the State.” Id. at 878.

But the Board’s aim was not solely to favor domestic

industry within the State. One of the Category 2 licenses

went to an out-of-state casino, and the other went to a casino

with extensive out-of-state ties. In Metropolitan Life, the

Court was concerned with a different form of discrimination:

a state tax that was categorically higher for all out-of-state

businesses. And since Metropolitan Life, the decision has

been “sharply limited to its facts.” Trojan Techs., Inc. v.

Pennsylvania, 916 F.2d 903, 915 (3d Cir. 1990). Here, the

Board was motivated by an interest in promoting local

commerce, revenue, and tourism. Moreover, the Board had

the legitimate purpose of reducing the possibility of local

monopolization. Unlike Metropolitan Life where the state

imposed a blanket impediment against interstate commerce,

the Board weighed a factor against casinos located nearby

based on concerns of local commerce. The Board’s use of the

Atlantic City factor is rationally related to the achievement of

legitimate public interests, and it passes rational basis review.

III.

I believe that the majority’s broad construction of

absolute quasi-judicial immunity is in conflict with Section

20

1983 and Supreme Court jurisprudence. The Board members

are executive officials, and we should apply qualified

immunity to their actions. For this reason, I respectfully

disagree with my colleagues. But I concur in the judgment to

reverse and remand the District Court’s decision, believing

that the Board members did not deprive Keystone of clearly-

established constitutional rights.

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