IPI faces legal hurdles in dispute with CCC

Imperial Pacific International (CNMI) LLC, currently embroiled in a complex legal battle against the CNMI and several officials, has a significant hearing scheduled for July 25, 2024, with a motion to dismiss the whole case entirely.

The dispute centers around enforcement actions taken by the Commonwealth Casino Commission and the imposition of hefty penalties and license suspensions on IPI.

On June 11, 2024, the CCC, along with board chair Edward C. Deleon Guerrero, vice chair Rafael S. Demapan, and board member Mariano Taitano, filed a memorandum supporting their motion to dismiss IPI’s First Amended Complaint under Federal Rule of Civil Procedure 12(b)(1). The 20-page motion asserts that the court lacks subject-matter jurisdiction, as established by the precedent set in District of Columbia Court of Appeals v. Feldman (1983), and argues that IPI has failed to present a legitimate “case or controversy” under Article III of the U.S. Constitution.

IPI is facing a series of enforcement actions from the CCC since 2020, with accusations against the company of various breaches of the Casino License Agreement, including failing to pay the Community Benefit Fund contributions, the annual license fee, and maintaining requisite cash reserves. The CCC’s enforcement actions culminated in the suspension of IPI’s casino gaming license and imposition of penalties totaling $5 million on April 22, 2021.

IPI challenged this order in the CNMI Superior Court, claiming it was arbitrary and violated due process. The Superior Court upheld CCC’s decision, prompting IPI to appeal to the CNMI Supreme Court. While the Supreme Court partly affirmed and partly reversed the lower court’s decision, it remanded the case for further proceedings, leaving IPI’s license suspension and penalties in a state of flux.

On May 9, 2024, IPI filed its First Amended Complaint, alleging five causes of action:

Violation of the contracts clauses: IPI argues that the annual regulatory fee statute and Commission Order 2021-002 impose new liabilities and limitations that impair the CLA, particularly during the COVID-19 pandemic, without considering the force majeure clause.

Violation of the takings clause (42 U.S.C. § 1983): IPI contends that the fees constitute an unlawful taking of its property rights (casino license) without just compensation.

Violation of the due process clauses (42 U.S.C. § 1983): IPI asserts that the fee statute and Commission Order 2021-002 deprived it of due process, as the fees exceed actual regulatory costs and were imposed arbitrarily.

Breach of the CLA: IPI alleges that the enactment and implementation of the fee statute, along with demands for immediate payment, breach the CLA, especially considering the force majeure clause during COVID-19.

Prayer for relief: IPI seeks injunctive relief to halt enforcement of the fee statute, monetary restitution for fees paid, and declarations that the fee statute is unconstitutional as applied.

CCC further argued that the case should be dismissed for lack of subject-matter jurisdiction, as federal courts cannot review final state court decisions under Feldman. They also assert that IPI’s claims do not constitute a valid “case or controversy” because IPI has not demonstrated concrete, imminent harm traceable to the defendants’ actions.