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Federal judge tosses racketeering lawsuit by former Suffolk Downs owners over Encore casino license

A federal judge ruled Friday that the former owners of the Suffolk Downs racetrack provided evidence of possible wrongdoing by the company that won the Boston area's casino license - but failed to prove that was evidence of racketeering.

US District Court Patti Saris dismissed racketeering complaints by Sterling Suffolk Racecourse against Wynn Resorts and some of its executives - including disgraced founder Steve Wynn. But Saris said Sterling Suffolk, which owned Suffolk Downs until 2017, could try its luck in state court to win damages of more than $1 billion. At the same time, Saris said Wynn Resorts could also try to block that suit under a state law that bars certain lawsuits against people or companies exercising their First Amendment right to petition the government, in this case, to seek a casino license from the state gaming commission.

Saris ruled that Sterling Suffolk had provided enough evidence to warrant a possible trial for only part of its case under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act - that Wynn had engaged in such activities as dealing with the owner of the Everett land it sought for its casino even though that company had owners with criminal pasts and provided "false and misleading statements" to the state gaming commission about the company and their interactions and that Wynn had similarly provided "false and misleading statements" to the commission about both Steve Wynn's sexual misconduct and the company's interactions with possibly shady characters in Macau, where it has two casinos.

She continued that the activities were clearly "related" to each other as required by the RICO law - all were part of Wynn's efforts to win the Boston area license.

But just when it looked like Sterling Suffolk was rolling a seven in its lawsuit, its legal dice came up snake eyes: Saris said the company's case fell apart when it comes to the final RICO requirement - that any of the possibly illegal activities be shown to have "continuity," that they be ongoing.

The company that sold the Everett land to Wynn Resorts no longer has any stake in the land, she wrote. Steve Wynn and an executive who pleaded his case before the gaming commission are no longer with Wynn Resorts.

And, in any case, Wynn MA has already secured the License and opened the Encore Boston Harbor casino at the Everett Site. Given these facts, the Court does not find that there is (or ever was) a realistic prospect that the association-in-fact enterprise will continue to operate into the future or that it is likely to conduct further racketeering activity.

But what of Wynn MA, the subsidiary that actually runs Encore complex? Sterling Suffolk argued the RICO conspiracy continued because some of the alleged activities - in particular surrounding Steve Wynn's sexual misconduct and the Macau issues - came out after Winn had won the Boston-area license, when Winn MA was already up and running.

Saris said Sterling Suffolk's argument failed there as well:

First, most of the other allegedly illicit activities are within the larger Wynn organization (i.e., Macau and Nevada), and do not establish that Wynn MA's regular way of conducting business carries a risk of an encore of future racketeering activity -- particularly now that Wynn and Sinatra are out the door. Second, and more importantly, the predicate acts themselves all relate to a single, discrete scheme to defraud the MGC, which is generally not enough to establish open-ended continuity.

She continued that all of Wynn's actions had a single aim - to win the license - and that that was obviously no longer ongoing:

Here, the adequately pleaded predicate acts all involve fraud on the MGC to secure the License. They comprised a single scheme, spanning somewhere between eighteen and twenty-four months, with the specific objective of securing the License for Wynn Resorts to build a destination casino at the Everett Site, and affecting a relatively narrow set of victims (the MGC and, arguably, MSM and SSR). Under controlling First Circuit precedent, this is insufficient to establish closed continuity. Therefore, the Court finds that SSR's RICO claims fail because the Amended Complaint does not adequately allege the continuity necessary to satisfy the RICO statute's pattern requirement.

But having disposed of Sterling Suffolk's RICO claims, Saris then dismissed other claims the company made without prejudice, so that it could bring them in a suit in state court. These include allegations that Wynn engaged in "unfair methods of competition and/or unfair and/or deceptive acts and practices," under state law - to the tune of more than $1 billion in damages claimed by Sterling Suffolk - and that Wynn intentionally interfered in a deal between the racetrack owners and Mohegan Sun to run the Suffolk Downs casino, which Sterling Suffolk says everybody knows would have been the better casino.

At the same time, she ruled that Wynn was also free to try to block any action in state court through a counterclaim under a state law intended to protect the First Amendment right to "petition" a government agency, which seeks to block "strategic lawsuits against public participation" - in this case, Wynn's "petitioning" the state gaming commission for a license.

Although such laws are better known as a way to protect individuals or neighborhood groups from potentially bankrupting lawsuits by large corporations, Massachusetts courts have held corporations can use the law as well. Earlier this month, the state Supreme Judicial Court applied the law to a dispute between the owner of a garage in the South End who tried to block a condo project from going in next door and said that the condo developer was protected under the law from "retaliatory" legal action by the garage owner once the developer "petititoned" the city Zoning Board of Appeal for the approvals it needed.

PDF icon Judge's ruling269.71 KB
PDF icon Sterling Suffolk's amended complaint388.59 KB


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And stop the craziness.

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