## Facts

- Massachusetts created a Gaming Commission to license and regulate casinos, granting broad discretion in licensing decisions and providing no right to review an adverse decision.
- SSR applied for a casino license and proposed Caesars as the casino operator.
- The Commission’s Investigations and Enforcement Bureau investigated Caesars and issued a report recommending a finding of unsuitability, citing concerns including Caesars’ associations, litigation history, and financial condition.
- SSR asked Caesars to withdraw from their contractual relationship to avoid jeopardizing SSR’s license application; Caesars withdrew.
- Caesars alleged the Commission officials treated it more harshly than another applicant and effectively excluded Caesars to favor a competing project.
- Caesars sued Commission officials under 42 U.S.C. § 1983, seeking injunctive relief and damages for alleged procedural and substantive due process violations and a class-of-one equal protection violation, plus a state-law tortious interference claim.

## Issues

1. Whether Caesars plausibly alleged a constitutionally protected property interest arising from its contract or its expected role in the licensing process, such that the unsuitability report and its alleged use deprived Caesars of property without due process.
2. Whether a class-of-one equal protection claim is available to challenge alleged differential treatment in a casino-licensing suitability process committed by statute to highly discretionary judgment.

## Decision

- The First Circuit affirmed dismissal under Rule 12(b)(6).
- Caesars failed to allege a cognizable property interest; therefore, its due process claims failed.
- Caesars’ class-of-one equal protection claim was not cognizable in this licensing context because the governing statute authorized highly discretionary, individualized decisionmaking.
- With the federal claims dismissed, dismissal without prejudice of the supplemental state-law claim was upheld.

## Legal Principles

- A due process property interest requires a “legitimate claim of entitlement,” not a unilateral expectation; broad statutory discretion over granting a benefit generally defeats an entitlement claim.
- Private contractual interests may be enforceable under state law, but they do not, without more, create a public-law entitlement to a particular regulatory outcome or process.
- Class-of-one equal protection does not apply where the challenged governmental action is taken under a regime that contemplates highly discretionary, individualized judgments and variable treatment among applicants.
- When federal claims are dismissed at the pleading stage, a federal court may decline supplemental jurisdiction over remaining state-law claims.

## Conclusion

The court held that Caesars lacked any constitutionally protected property interest in continuing as a proposed casino operator under a licensing scheme committed to broad agency discretion, and that class-of-one equal protection does not extend to discretionary casino-licensing suitability judgments; the § 1983 claims were properly dismissed and the state claim was left for state court.


Caesars Massachusetts Mgmt. Co., LLC v. Crosby, 778 F.3d 327 (1st Cir. 2015)