Appeals court upholds dismissal of MGM's claim against 2015 law favoring tribes

A federal appeals court has upheld the dismissal of MGM Resorts International's claim that the 2015 law that enabled the Mashantucket Pequot and Mohegan tribes to launch a bid for a third Connecticut casino put MGM at an unfair competitive disadvantage.

In June 2016, U.S. District Judge Alvin Thompson granted the state's motion to dismiss a lawsuit MGM had filed the previous August.

MGM, in its appeal of the dismissal, had claimed that Special Act 15-7, which granted the tribes the right to form a joint venture and to seek casino site proposals, violated the U.S. Constitution's equal protection clause of the 14th Amendment as well as the dormant commerce clause.

"Because MGM has failed to allege any specific plans to develop a casino in Connecticut, we conclude that any competitive harms imposed by the Act are too speculative to support Article III standing," which is the legal right to initiate a lawsuit, a three-judge panel of the 2nd U.S. Circuit Court of Appeals wrote in a 24-page decision filed Wednesday in Manhattan.

The judges — John Walker Jr., Robert Sack and Denny Chin — had heard oral arguments in the case in November.

"We have considered MGM's remaining arguments, and we find them unavailing," the judges wrote in their conclusion. "We therefore AFFIRM the judgment of the district court."

With MGM's appeal pending, the tribes settled months ago on a casino site off Interstate 91 in East Windsor, and legislation passed in recent weeks by the General Assembly authorizes them to proceed with development there, provided Gov. Dannel P. Malloy signs the bill into law.

In a statement, an MGM Resorts executive said Wednesday's ruling will not affect MGM's ability to challenge the new law, Senate Bill 957.

"As Connecticut Attorney General George Jepsen has acknowledged, both in a recent press interview and in his March 13 legal opinion, the state will not be able to use any of the arguments regarding Special Act 15-7 in any future lawsuit, giving MGM standing to challenge Senate Bill 957," said Uri Clinton, MGM Resorts senior vice president and legal counsel. "We view today's ruling as nothing more than a matter of timing and remain undeterred in our goal of having the opportunity to compete in Connecticut."

The East Windsor casino site is less than 15 miles from Springfield, Mass., where MGM is building a $950 million resort casino that poses a threat to the tribes’ respective southeastern Connecticut facilities, Foxwoods Resort Casino and Mohegan Sun. MGM has indicated it has investigated the Connecticut gaming market, identifying Bridgeport and other locations as potential casino locations that could tap the lucrative New York City market.

MGM’s Massachusetts casino license prohibits MGM from seeking another license within 50 miles of Springfield, an area that encompasses north-central Connecticut.

The judges, in their ruling, write that the alleged "harms" Special Act 15-7 inflicts on MGM "can only be conceived of as competitive harms that create an 'uneven playing field.' But for a competitive harm to confer standing, there must be some actual competition underway that the 'uneven playing field' distorts. A purely abstract competition, based only on MGM's expression of 'interest' and some preliminary studies, without any concrete steps toward a bid for a Connecticut casino, is insufficient."

Clinton noted that the judges did not rule out the possibility that MGM's alleged harm may at some point "become sufficiently imminent."

"If Governor Malloy signs into law the recently passed Senate Bill 957, the 'hypothetical' immediately becomes reality," Clinton said.

Rodney Butler, the Mashantucket Pequot chairman, and Kevin Brown, the Mohegan chairman, also released a statement regarding the appeals court decision:

"We're gratified that the Court of Appeals has upheld the dismissal of MGM's lawsuit," they said. "Our focus remains on saving the thousands of jobs and millions in state tax revenue that would have been lost had the legislature not passed SB 957. We look forward to developing an exciting new casino and continuing to build our state's economy in the weeks and months ahead."

A spokesman for the attorney general's office said the office was reviewing the decision and declined to comment further "at this time."

Editor's Note: This version corrects the date the decision was filed. It was Wednesday, June 21, 2017.


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