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Joint Petition of Boardwalk Regency Corporation v. New Jersey Casino Control Commission

June 21, 2002


On appeal from a final order of the New Jersey Casino Control Commission, 00-0656- MI.

Before Judges King, Cuff and Winkelstein.

The opinion of the court was delivered by: Winkelstein, J.A.D.

Argued March 20, 2002

Gary DiBartolomeo rose through the ranks of the Atlantic City casino industry to become the president of Caesars Casino on January 4, 2000. *fn1 He was also a compulsive gambler. By order of February 28, 2001, DiBartolomeo's casino key employee license was revoked by the New Jersey Casino Control Commission (Commission) which found him unqualified because he failed to establish his "good character, honesty[,] integrity and financial responsibility." *fn2 On the same date, the Commission entered an order invalidating the terms of a proposed severance agreement between Caesars and DiBartolomeo. In this appeal, DiBartolomeo argues that the Commission did not have the authority to review the severance agreement, and that even if it did, its actions improperly interfered with DiBartolomeo's contract rights. We disagree. We conclude that the Commission has the authority to review and invalidate agreements between casinos and their employees. We also find that the Commission's decision not to approve the proposed severance agreement between DiBartolomeo and Caesars was not arbitrary and was supported by substantial credible evidence in the record. Accordingly, we affirm.


DiBartolomeo had been employed in the Atlantic City gambling industry for almost his entire adult life. He was first licensed by the Commission in June 1979 and began his employment, at age twenty-three, as a craps dealer. From 1979 to 1989, he worked for both Caesars and the Golden Nugget Casino as a dealer and craps supervisor. In 1989 he became the executive host at the Showboat Casino. In 1990 he was employed by the Taj Mahal, first as an executive host, later as regional director of customer development, and from June 1993 to June 1994, as vice-president for customer development. In June 1994 he became assistant vice-president of national marketing for an enterprise known as Caesars World Market Corporation, a licensed junket enterprise. On July 14, 1995 DiBartolomeo was appointed Caesars' vice-president of customer development; he was promoted to president in January 2000.

DiBartolomeo was first granted a casino key employee license in March 1992. See N.J.S.A. 5:12-89a. He applied for renewal of his key license in September 1993, in connection with his position at the Taj Mahal. In a report dated August 23, 1994, the State of New Jersey, Division of Gaming Enforcement (Division), recommended that his key license not be renewed because he had outstanding gambling debts, had surreptitiously borrowed funds to pay off his losses, and had concealed or misrepresented certain information in his license application. Subsequently, DiBartolomeo reached an agreement with the Division for issuance of the license subject to conditions. In reliance upon this agreement, the Commission found DiBartolomeo qualified, and renewed his key license through March 31, 1997, subject to the following conditions: (1) for the duration of the license term, DiBartolomeo was prohibited from participating in any personal casino gaming activity in any jurisdiction and (2) he was to attend group counseling with a recognized organization, such as Gamblers Anonymous, or attend counseling with a licensed therapist on a weekly basis and provide documentary proof of his attendance on a quarterly basis to the Division and the Commission. In the agreement, DiBartolomeo represented that he had "not gambled and/or incurred any other gambling debts at least since the commencement of this action in March 1994."

On March 18, 1997 the Commission extended the expiration date of DiBartolomeo's license to March 31, 1998. *fn3 The gambling prohibition condition was extended but the counseling condition was not. He continued to gamble. However, during the renewal proceedings to extend his license beyond March 31, 1998, he concealed his gambling activities. As a result, on April 15, 1998 the Commission renewed DiBartolomeo's license without conditions through March 31, 2002.

When DiBartolomeo became president of Caesars, he entered into an employment agreement with BRC. He was to serve as president from January 4, 2000 to January 3, 2003. His annual base salary was $362,000. The agreement also provides that "[p]ursuant to the policies of Employer, a bonus payment may be made in addition to Base Salary on an annual basis in such amount as is determined by the Employer in its sole discretion." The agreement also includes additional benefits: "participation in the management incentive plan, medical and hospitalization, life insurance, long term disability, death and retirement plans, and the like . . . ." DiBartolomeo was subject, pursuant to paragraph eight of the agreement, to termination for, among other things, a failure to qualify "under any suitability or licensing requirement . . . ."

Because Caesars' casino license was to expire on June 30, 2000, a casino license renewal hearing was scheduled before the Commission for June 7, 2000. As part of Caesars' casino license renewal application, DiBartolomeo, as president of Caesars, was required to affirmatively establish his qualifications under the Casino Control Act (Act), N.J.S.A. 5:12-1 to -210. See N.J.S.A. 5:12-80a. In connection with the renewal of Caesars' license, in April 2000, the Division investigated whether DiBartolomeo violated the terms previously imposed upon his key employee license. As a result of the investigation, it became evident that the Division would not report favorably on DiBartolomeo's qualifications prior to the expiration of Caesars' casino license at the end of June. It therefore became necessary to remove DiBartolomeo from the list of people who had to affirmatively establish their qualifications under the Act in order for Caesars to have its license renewed.

To accomplish this, DiBartolomeo and BRC filed a joint petition with the Commission seeking a declaratory ruling that DiBartolomeo be granted a leave of absence. On May 24, 2000 the Commission approved a six-month leave of absence, from May 22 to November 22, 2000, with full pay and health benefits. The Commission also found that DiBartolomeo was no longer required to qualify in connection with the renewal of Caesars' license, provided he "be found qualified before he resumes or assumes the duties or exercises the powers of any position requiring his qualification or licensure . . . ." By effectively removing DiBartolomeo from qualifier status, Caesars' license could be, and was, renewed without resolving the issue of DiBartolomeo's qualifications.

The Division continued to investigate whether DiBartolomeo had violated the conditions of his license. On August 15, 2000 the Division issued a sixty-seven page report recommending that DiBartolomeo not be found qualified to resume the position of president of Caesars, and that his key employee license be revoked. The Division cited a litany of regulatory violations and inappropriate conduct. It found that DiBartolomeo's good character, honesty and integrity were adversely impacted as a result of his misrepresentation in the stipulated settlement agreement leading to the grant of a conditional license in 1995 that he had not gambled when, in fact, he had; at least 23 violations of the Commission's orders not to gamble; at least 29 violations of the 6 Commission's order to attend weekly counseling for gambling; misrepresentations to the Division regarding the six counseling visits with his private counselor; gambling in Atlantic City in violation of Section 100n of the Act; *fn4 the structured cash redemption of the $40,000 MGM marker; the use of the same airplane ticket to acquire a credit on a gambling debt and to obtain reimbursement from his employer; the failure to properly account to the I.R.S. for his gambling winnings; and, the failure to truthfully advise his new employer of significant information regarding his license at the time he was promoted to the presidency of BRC.

As a result of these findings, the Division took the position that DiBartolomeo lacked the requisite financial stability, responsibility, good character, honesty and integrity to be qualified as an officer of a casino licensee or to be licensed as a casino key employee. See N.J.S.A. 5:12-89 & 85c.

On October 2, 2000 DiBartolomeo's employment agreement was amended to allow him to assume a position other than president of Caesars. It also increased his period of paid medical leave from six months to eighteen months.

On November 3, 2000 DiBartolomeo and BRC filed a joint petition with the Commission requesting an extension of his paid leave pending a hearing before the Commission on his qualifications and suitability for continuing licensure. The Division did not oppose the relief sought. On November 14, 2000 DiBartolomeo resigned as president of Caesars. The next day he became Caesars' vice-president of customer development but remained on leave. His salary was unchanged.

Also on November 15, 2000, the Commission allowed the continuation of DiBartolomeo's medical benefits, so treatment of his "compulsive gambling condition" could continue, but denied the remainder of the relief requested in the petition. The following day, November 16, 2000, hearings began before Commission Chairman James R. Hurley, acting as a hearing officer, to determine if DiBartolomeo was qualified to retain his key employee casino license. See N.J.S.A. 5:12-107a. The hearings continued until November 30, 2000, when Hurley reserved decision.

On December 11, 2000, while awaiting Hurley's decision, DiBartolomeo and BRC filed another joint petition with the Commission. This petition sought approval of the proposed severance agreement. The petition was in the form of a letter signed by BRC's and DiBartolomeo's attorneys; it did not include a proposed written severance agreement. According to the petition, for the 2000 calendar year, DiBartolomeo would receive a $362,000 bonus, "salary continuation" payments equal to fifty percent of his base salary ($362,000) for 2001 and 2002, and continuation of his health benefits package (estimated at $30,000) through the expiration of his contract on January 3, 2003. The severance package, which totaled approximately $750,000, was to be paid in one lump sum.

According to the petition, the Commission's permission for BRC and DiBartolomeo to enter into the severance agreement was requested to allow DiBartolomeo to be "reasonably provided for in light of his past service and significant contributions to BRC. BRC has, in the past, arranged for severance payments and benefits to many executive employees who left the Company after a period of significant and diligent service."

In the petition DiBartolomeo also took the position that the Commission did not have the authority to disapprove the proposed severance agreement. Rather, he argued that N.J.S.A. 5:12-104b, upon which the Commission had in the past relied to review agreements to which a casino was a party, applied only to a casino licensee's contractual agreements with its vendors, not to agreements with its own employees. The Commission heard oral argument on this petition on January 3, 2001. The Division did not object to the relief requested. The Division maintained, however, that the Commission possessed the discretionary authority under Section 104b of the Act to disapprove all or a portion of the proposed agreement. The Commission reserved decision.

On January 22, 2001 Hurley issued his Initial Decision on the license issue; he recommended: 1) that DiBartolomeo's casino key employee license be revoked, 2) that DiBartolomeo be found unqualified to hold any position requiring qualification under the Act, and 3) that in the absence of a showing of good cause, DiBartolomeo be prohibited from employment by a casino licensee in any capacity. In rendering his decision, Hurley emphasized that DiBartolomeo's license was being revoked because he "failed to demonstrate the affirmative qualification for licensure of good character, honesty and integrity," and not because DiBartolomeo was a compulsive gambler. Among other things, Hurley found that DiBartolomeo had engaged in a pattern of deceit, and that he had even referred to himself as a "master of deception." Based on the testimony at the hearings, Hurley agreed with the Division that DiBartolomeo had gambled on many occasions after being ordered not to, and had lied to licensing authorities, his employer and his therapist. Hurley found portions of DiBartolomeo's testimony not credible. He also found that DiBartolomeo's pathological gambling problem did not excuse either his culpability for his conduct or his "pattern of deceit and dishonesty in trying to conceal the depths of his gambling problem from this state's gaming regulators." He concluded that DiBartolomeo needed to be held accountable for his actions because his gambling addiction did not prevent him from acting of his own volition in his pattern of deceit. Hurley also concluded that DiBartolomeo did not clearly and convincingly demonstrate his financial responsibility at the time of the hearing.

On February 28, 2001 the Commission adopted Hurley's decision. It revoked DiBartolomeo's license and prohibited him from employment with a casino licensee in any capacity. Also on February 28, the Commission decided the petition for approval of the proposed severance agreement. The Commission allowed payment of a bonus to DiBartolomeo for the period he actually worked as president of Caesars )) January 4, 2000 to May 22, 2000 )) and permitted continuation of his health benefits through the expiration of his employment contract on January 3, 2003. It denied any bonus beyond the commencement of his leave of absence on May 22, 2000, as well as the "salary continuation" payments.

On March 12, 2001 DiBartolomeo filed a motion for reconsideration and to supplement the record. See N.J.S.A. 5:12-107d(1). BRC did not join in the motion, which the Division opposed. On April 25, 2001 the Commission denied the motion for reconsideration; the motion to supplement the record was granted in part and denied in part. On ...

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