AS there was no finalized settlement agreement submitted to the federal court on July 18, the Commonwealth Casino Commission filed an opposition to the preliminary injunction request of Imperial Pacific International LLC and Best Sunshine International.
Chief Judge Ramona V. Manglona of the District Court earlier issued an order directing the casino commission to file its opposition to IPI’s motion for preliminary injunction by Friday, July 22, 2022.
IPI’s reply is due Friday, July 29, 2022, the judge added.
She also scheduled a motion hearing for Aug. 18, 2022, at 8:30 a.m.
Judge Manglona likewise granted the request that upon execution of the settlement agreement, the matter will be stayed until final approval is received by the casino commission.
She directed the parties to file a status report no later than Aug. 26, 2022, regarding the finalization of the settlement agreement.
On May 23, 2022, the federal court granted the motion of Best Sunshine and IPI and issued a temporary restraining order preventing the Commonwealth Casino Commission from holding a hearing on May 24-25, 2022, to revoke IPI’s exclusive casino license for its failure to pay the required fees among other alleged violations.
In a joint report regarding the status of their negotiations last week, the casino commission and IPI said they were in material agreement regarding the terms of the settlement agreement but were still negotiating a few final terms.
IPI previously told the court that at the end of May 2022, IPI “anticipates that it will begin receiving an infusion of $150 million of capital that will allow it to meet its obligations to its creditors, resume operations, and restart construction.”
IPI said it recently signed a Memorandum of Understanding with IH Group to provide that capital.
Kyunam Kim of IH Group, for his part, as a show of good faith to the court, appeared at a hearing recently and said the infusion of capital would happen.
In her opposition to IPI’s motion for preliminary injunction, Assistant Attorney General Keisha Blaise, who represents the casino commission, said the arbitration provision in the casino license agreement or CLA does not apply to the enforcement actions because those actions seek to enforce violations of Commonwealth law and regulations, not conditions that arise under the CLA.
She said, “The dispute resolution provisions in the CLA that provide for arbitration do not apply to revocation proceedings; to the contrary, the CLA explicitly states that the dispute resolution process does not apply to revocation proceedings.”
Moreover, “even if the arbitration clause applied to revocation proceedings, the arbitration anticipated by the CLA is not available.”
“In any event, IPI waived its right to arbitration when it answered the complaint, pleaded its affirmative defenses (but failed to raise arbitration as a defense at that time), and requested a hearing before the Commission,” Blaise said.
Another “glaring deficiency” of IPI’s motion is the plaintiffs’ failure to show irreparable harm, she added.
“Plaintiffs’ alleged harm arises from plaintiffs’ alleged inability to present its force majeure argument to the Commission and the court, its speculation that the Commission’s decision on such an argument is a foregone conclusion, and its suggestion that revocation of its license would be unwarranted if the purported capital infusion is made,” Blaise said.
But “IPI cannot prove that the balance of hardship tips decisively in their favor or that the public interest supports an injunction,” she added.
The injunction IPI seeks would cause significant harm to the casino commission as the resulting delay would hinder its funding, Blaise said, “thereby crippling its ability to regulate and grow the casino industry in the Commonwealth and would harm the Commonwealth for the same reasons.”
She also noted that the plaintiffs “filed their motion for preliminary injunction eight months after the Executive Director of the CCC filed five enforcement actions against IPI and over a year after the Commission ordered, after two evidentiary hearings, that IPI’s license was suspended indefinitely.”
Blaise said the basis of “plaintiffs’ motion is that Section 30 of the Casino License Agreement requires arbitration of IPI’s force majeure defense.”
But she said the “motion should be denied based on plaintiffs’ utter failure of proof as to each of the four factors necessary for such extraordinary relief: likelihood of success on the merits, irreparable harm, balance of hardship, and advancement of the public interest.”
Blaise also requested the court to issue an order awarding the casino commission attorney’s fees.
Best Sunshine and IPI are represented by attorneys Joey San Nicolas, Samuel Salyer, and Kevin Abikoff.
