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DeQuattro v. Rhode Island Personnel Appeal Board

Superior Court of Rhode Island, Providence

July 24, 2018


          For Plaintiff: Martin K. DeMagistris, Esq.

          For Defendant: Jennifer Sanborn Sternick, Esq.; Steven B. Merolla, Esq.


          TAFT-CARTER, J.

         Appellant Louis A. DeQuattro, Jr. (Appellant or DeQuattro) appeals the August 31, 2015 decision of the Rhode Island Personnel Appeal Board (the Board or PAB) upholding the discipline imposed by the Department of Business Regulation (DBR) on DeQuattro. Jurisdiction is pursuant to G.L. 1956 § 42-35-15. For the reasons set forth in this Decision, the Court affirms the decision of the PAB.


         Facts and Travel


         DeQuattro's Work History

         DeQuattro, an attorney and certified public accountant, began his career in state service in 1992 as an insurance examiner for the Department of Business Regulation (DBR), Insurance Division. (Decision 3; Hr'g Tr. 92:1-22, May 18, 2015.) Over the years, DeQuattro rose to the positions of Deputy Chief Legal Counsel for the Department of Administration and Associate Director and purchasing agent. (Decision 3.) At the time of the challenged disciplinary action, he served as Deputy Director of Legal Services at the DBR and "Executive Counsel." (Decision 3-4.) In these capacities, DeQuattro supervised the DBR's staff attorneys, managed legal work for the DBR, and addressed issues relating to gaming and banking (Decision 4; Hr'g Tr. 8-9, Apr. 16, 2015.) In addition to these duties, DeQuattro was a hearing officer in municipal liquor licensing disputes, the agency's public information officer, and the ethics officer for the DBR. (Decision 4; Hr'g Tr. 9:15-11:6, Apr. 16, 2015.) In addition to his work in state service, DeQuattro held the part-time position of North Providence Municipal Court Judge since July 2011. (Hr'g Tr. 179:14-22, May 18, 2015.)

         In 2010, while employed as Associate Director and purchasing agent in the Department of Administration, DeQuattro received a letter of reprimand from Rosemary Booth Gallogly, the Director of the Department of Administration. (Decision 4.) The letter of reprimand admonished DeQuattro for "us[ing] poor judgment and violat[ing] purchasing procedures" when he considered an untimely filed contracting bid from H.V. Collins while acting in his capacity as a purchasing agent on November 25, 2008. (State's Ex. 11.) The letter was not included in DeQuattro's personnel file, but was kept in Human Resources records. (Hr'g Tr. 236:4-11, May 18, 2015; Hr'g Tr. 41:1-42:10, May 20, 2015.)

         At all times relevant to this appeal, the DBR and the Division of Lotteries, Department of Revenue (Lottery) worked together to regulate the gaming industry in Rhode Island. (Hr'g Tr. 51:11-52:10, Feb. 26, 2015.) Together, they jointly held "full operational control" of the regulation of the Twin River Casino (Twin River)[1] in Lincoln, Rhode Island. (Decision 2, citing § 42-61.2-2.1(c); Hr'g Tr. 7:4-13, Apr. 16, 2015.)[2] In order to ensure the State's investment in the casino remained within Rhode Island, Twin River was subject to a compliance agreement with the Lottery and the DBR. (Hr'g Tr. 54:17-55:14, Feb. 26, 2015.) The agreement set forth specific procedures and required disclosures regarding the transfer of assets or debts of Twin River. Id.

         The Rhode Island State Police exercised oversight of Twin River through its Gaming Enforcement Unit. The unit is charged with "[c]onducting due diligence . . . and background investigations with respect to entities and individuals required to be licensed by the division and/or the department of business regulation." Sec. 42-61.3-1; Decision 2-3, citing State's Ex. 7 and Hr'g Tr., Apr. 7, 2015.

         As a result of the regulatory interplay among the three government entities, DeQuattro frequently collaborated with the Lottery and the State Police to regulate Twin River. (Decision 2-3; Hr'g Tr. 53:9-21, Feb. 26, 2015.) He was the DBR's contact person for Lottery Director Gerald Aubin and Craig Eaton, chief legal officer at Twin River. (Decision 4; Hr'g Tr. 53:9-21, Feb. 26, 2015; Hr'g Tr. 14:10-22, Apr. 7, 2015.)


         The 2013 Liquor Board Hearing

         This appeal concerns two instances of misconduct. The first instance of misconduct concerns a 2013 Liquor Board hearing. On August 1, 2013, DeQuattro served as a hearing officer for the DBR in the matter of RMP Investment Group v. City of Providence, DBR No. 13LQ063, regarding the appeal of a grant of a liquor license to RMP Investment Group, LLC (RMP). (State's Ex. 5; Decision 7.) During the hearing, DeQuattro admitted into the record a letter from Dino Autiello, Vice President of the North Providence Town Council, advocating for the approval of the liquor license. (State's Ex. 5.) The letter was addressed to "Judge DeQuattro" and endorsed "the character, business acumen, and professionalism" of the applicants for the license, based on the letter writer's experience as a former employee of the applicants. (July 30, 2013 Letter from Dino Autiello, State's Ex. 5.) DeQuattro stated on the record that he had received the letter by mail and accepted the letter into the record without disclosing to the parties his position as a North Providence Municipal Judge. (RMP Investment Group v. City of Providence Hr'g Tr. 6:11-23, Aug. 1, 2013, State's Ex. 5.) On October 4, 2013, DeQuattro issued a recommendation that the DBR uphold the grant of a liquor license to RMP. (In the Matter of Liquor License Application of RMP Investment Group, LLC, Decision and Order, Oct. 4, 2013, State's Ex. 5.) DBR adopted the recommendation as its decision, dated October 7, 2013. Id.

         The decision was appealed to the Superior Court. In the appeal, it was argued that DeQuattro had failed to disclose his employment as a Municipal Court Judge for North Providence. (State's Ex. 5.) On September 30, 2014, the DBR moved for remand of the RMP matter in part to address the issue of alleged bias resulting from DeQuattro's failure to disclose his professional relationship with Autiello. (State's Ex. 5; Findings of Fact, Decision ¶ 64.) The DBR personnel and legal team brought this issue to the attention of Paul McGreevy, the DBR Director, during the March 2015 investigation into the second instance of DeQuattro's misconduct. (Hr'g Tr. 17:18-18:5, Apr. 16, 2015.)


         Twin River and Fertitta

         The second instance of misconduct concerns an issue involving Twin River. On February 13, 2014, while conducting a background investigation pursuant to § 42-61.3-1, Corporal Timothy Allen of the State Police met with Tilman Fertitta, CEO of Fertitta Entertainment, in Houston, Texas to discuss the investor's interest in increasing his investment in Twin River. (Hr'g Tr. 117:1-8, Apr. 7, 2015.) During the interview, Fertitta mentioned a 2012 conversation he had with John Taylor, Board Chairman of Twin River Management Group. Id. at 117:19-118:1. Fertitta stated that he had set up the 2012 meeting with Taylor because he was interested in acquiring Twin River Management Group. Id. at 123:5-8. According to Fertitta, Taylor told him that "Rhode Island was unlike anywhere else," and that he would have an issue with the regulators. Id. at 123:17-18. According to Allen's testimony, Fertitta "repeatedly stated" that he thought Taylor was "hiding behind the regulators" and was "upset" about the way the meeting went. Id. at 123:19-20, 125:8-9; Excerpt, Fertitta Inc. Background Investigation, Appellant's Ex. B.

         Fifteen days later, on February 28, 2014, Lt. Flaherty told Aubin about his meeting with Fertitta and the comment Fertitta had made about his 2012 conversation with Taylor. (State's Ex. 3.) Lt. Flaherty advised Aubin he wished to contact the DBR to ask if they had knowledge of this potential purchase. Id.

         On March 3, 2014, Lt. Flaherty contacted DeQuattro to schedule a meeting. (Hr'g Tr. 128:18-129:2, May 18, 2015.) At the meeting, Flaherty asked DeQuattro a number of questions concerning companies interested in purchasing Twin River and whether DeQuattro was aware of a company offering to purchase Twin River in late 2012. Id. at 130:12-131:24. Flaherty informed DeQuattro about Fertitta's offer and the ensuing conversation between Fertitta and Taylor. Id. DeQuattro gave Flaherty his thoughts on what Taylor might have meant. Id. at 132-33. During the conversation, Flaherty questioned DeQuattro concerning the compliance agreement and whether it required Twin River to disclose this offer. Id. at 136:1-16. DeQuattro concluded it would not. Id. at 136:1-22. Later that day, DeQuattro had separate conversations with McGreevy and Maria D'Alessandro. Id. at 134:10-23.

         Lt. Flaherty met with Aubin and Marilyn McConaghy, legal counsel for the Lottery. At that meeting, he cemented his conclusion that Twin River was not obligated to report the offer. (State's Ex. 3; Hr'g Tr. 75:1-22, Feb. 26, 2015.) Flaherty spoke with Aubin about the details of his conversation with DeQuattro. (State's Ex. 3.) Aubin told Flaherty that he planned to call a meeting with Taylor and other members of Twin River leadership because he was "very, very concerned" about Fertitta's comment and wanted to "determine what was said at the . . . meeting." (State's Ex. 3; Hr'g Tr. 76:2-3, Feb. 26, 2015.) Aubin was particularly "concerned" that a "potential purchaser" of the casino had indicated to the State Police that he was not going forward with a purchase because he believed "the regulators were preventing him from doing so." (Hr'g Tr. 76:2-16, Feb. 26, 2015.) Aubin emailed Taylor to set up a meeting for March 14, 2014, but did not advise Taylor of the reason for the meeting. (State's Ex. 3; Hr'g Tr. 76:16-77:5; 78:19-23, Feb. 26, 2015.)

         Aubin testified that he spoke to DeQuattro by telephone the next day. (Hr'g Tr. 78:21-79:1, Feb. 26, 2015; Hr'g Tr. 138:19-24, May 18, 2015.) Aubin told DeQuattro he was "very concerned about the alleged allegations made by Mr. Taylor" to Fertitta. (Hr'g Tr. 81-1:11, Feb. 26, 2015.) Furthermore, he told DeQuattro that he was scheduling a meeting with Taylor at the Lottery but that he had not disclosed the topic of the meeting because he did not want Taylor to "have a prepared" answer. Id. DeQuattro disputes the conversation and maintains that Aubin told him he "might want to chat with" Twin River leadership about the deal. (Hr'g Tr. 144:12-16; 139:20-140:6, May 18, 2015.)

         On a routine business call on March 13, 2014, Craig Eaton, General Counsel for Twin River, told DeQuattro he and Taylor had a meeting the next day with Aubin and had not been given a reason for the meeting. (Hr'g Tr. 19:18-23, Apr. 7, 2015.) Eaton asked DeQuattro if he had any idea what the call might be about. Id. at 19:22-23. Eaton recalled that DeQuattro told him "between me and you, I think they're going to-they want to ask you about Fertitta; you might want to-you might . . . just . . . make yourself familiar [with] the Fertitta meeting." Id. at 20:1-7. According to Eaton, when he asked what the Fertitta meeting was, DeQuattro told him, "I'm not going to say anymore." Id. at 20:21-24. DeQuattro disputes this characterization of the conversation and testified that when Eaton asked him what the meeting might be about DeQuattro responded that Aubin "might have some questions on . . . the proposed deal and the offer that was made between Fertitta and Taylor." (Hr'g Tr. 154:18-22, May 18, 2015.) The next day, Aubin, Allen and Marilyn McConaghy met with Taylor, Eaton, and Craig Sculos, general manager of Twin River. DeQuattro spoke to Eaton after the meeting. (DeQuattro and Eaton Hr'g Tr. 161:5-8, May 18, 2015.) Eaton later informed Taylor of his conversation with DeQuattro, telling him, "I think they're going to ask us about Fertitta tomorrow; I don't really . . . know what that is." (Hr'g Tr. 21:5-8, Apr. 7, 2015.) According to Eaton, Taylor then "refreshed his memory" about the New York meeting with Fertitta. Id. at 22:3-4.

         The next day, Aubin, Allen, and Marilyn McConaghy met with Taylor, Eaton, and Craig Sculos, general manager of Twin River. (Hr'g Tr. 161:5-8, May 18, 2015.) Aubin spoke to Eaton after the meeting. Id. at 162:8-10.

         On March 18, 2014, Allen met with Eaton to ask him three questions concerning the March 14, 2014 meeting. Id. at 142:18-19. Allen sent an interdepartmental memorandum to Flaherty documenting the March 14, 2014 meeting, including his assessment that "[i]t was readily apparent" that the Twin River representatives knew the topic of the meeting prior to the meeting. (State's Ex. 4; Hr'g Tr. 91:16-92:9, Feb. 26, 2015.) It also documented Allen's March 18, 2014 conversation with Eaton, as follows:

"This detective asked Mr. Eaton the following questions:
"Did any member of the State Police contact you regarding the topic or scope of the questions for John Taylor prior to the meeting on Friday, March 14th: response: No
"Did any member of the RI lottery contact you regarding the topic or scope of the questions for John Taylor prior to the meeting on Friday, March 14th: response: No
"Did any member of the Department of Business Regulation (DBR) contact you regarding the topic or scope of the questions for John Taylor prior to the meeting on Friday, March 14th: response: Yes
"Who contacted you? Lou DeQuattro
"How did he contact you? Telephone conversation- Was not sure if he called Mr. DeQuattro or if Mr. DeQuattro called him.
"When was this phone conversation? Either the Wednesday or Thursday prior to the date of the scheduled meeting at RI Lottery.
"What was said? Mr. DeQuattro said 'between you and me' a 'heads up' regarding the meeting with John Taylor and the RI lottery. Familiarize yourself prior to the meeting with the offer from [Fertitta-] an issue may come up." (State's Ex. 4.)

         After receiving the memorandum, Lt. Flaherty delivered a copy to Aubin. (Hr'g Tr. 91:16- 92:9, Feb. 26, 2015.)


         Investigation and Discipline

         On March 24, 2014, Aubin drafted a memorandum documenting his March 18, 2014 conversation with Lt. Flaherty. (State's Ex. 3; Hr'g Tr. 66:9-20, Feb. 26, 2015.) He sent this memorandum, along with Allen's interoffice memorandum (State's Ex. 4), to McGreevy. (Hr'g Tr. 12:20-22, Apr. 16, 2015.) Upon receipt of the documents, McGreevy immediately called Tony Bucci, Personnel Director, and advised him of the personnel issue. Id. at 13:14-16.

         The following day, McGreevy held a meeting with the personnel and legal team concerning DeQuattro. (Hr'g Tr. 13:23-14:7, Apr. 16, 2015.) At the meeting, McGreevy asked the team to conduct an investigation and report back their findings. Id. The team concluded that DeQuattro should be placed on paid administrative leave. Id. at 14:12-23. The following day, McGreevy's secretary called DeQuattro to tell him that McGreevy wanted to meet with him. (Hr'g Tr. 165:1-7, May 18, 2015.) A meeting was scheduled for Friday, March 28, 2014. Id.

         On March 28, 2014, DeQuattro met with McGreevy and Kathleen Lanphear. (Hr'g Tr. 164:20-23, May 18, 2015). At the meeting, he was placed on paid administrative leave and was relieved of all his duties. Id.; Hr'g Tr. 13:23-15:1, Apr. 16, 2015.

         On June 5, 2014, DBR issued two disciplinary charges against DeQuattro (Appellant's Ex. H; See Hr'g Tr. 81:5-14, May 18, 2015.) The first charge read as follows:

"it has been reported that, during a telephone conversation a day or two before the [March 14] meeting . . . you told the General Counsel of the regulated gaming facility that, during the upcoming meeting, the Director of the Division of Lotteries might ask the [Twin River] Chairman about his earlier discussion with the prospective purchaser of the regulated facility . . .
"By alerting the representatives . . . to the topic of discussion ahead of time, you undermined the purpose of the meeting and the Director's strategy and failed to demonstrate proper judgment and an ability to maintain confidences entrusted to you." (Appellant's Ex. H.)

         The second charge alleged that DeQuattro failed to disclose a potential conflict of interest during the RMP liquor board hearing on August 1, 2013, and that the failure to disclose his relationship with the author of the letter, which, "whether a deliberate concealment or a lapse of judgment, created an appearance of impropriety which strikes at the integrity of the Department's administrative appeals process." Id.

         On June 10, 2014, the DBR conducted its pre-disciplinary/Loudermill hearing. See State's Ex. 8. On advice of counsel, [3] DeQuattro did not take an oath at the Loudermill hearing. (Hr'g Tr. 231:4-11, May 18, 2015.)

         On June 17, 2014, the DBR Human Resources (HR) department issued its recommendation for DeQuattro's discipline. (Appellant's Ex. F.) In the draft letter, HR recommended a ten-day suspension without pay. Id. Later that month, Jennifer Sternick[4] was assigned to McGreevy as legal counsel for this case. (Hr'g Tr. 66:18-24, Apr. 16, 2015.) McGreevy spoke with Sternick in determining the appropriate level of discipline for this case. (Hr'g Tr. 48:22-49:5, May 18, 2015.) McGreevy testified that in addition to the recommendation of HR, he used pages five through eight of the transcript from the RMP hearing (State's Ex. 5), Aubin's memorandum (State's Ex. 3), Allen's memorandum (State's Ex. 4), and the transcript from DeQuattro's June 10, 2014 Loudermill hearing (State's Ex. 8) to make his decision to demote DeQuattro. (Hr'g Tr. 31:20-32:4, Apr. 16, 2015.)

         The final disciplinary letter was issued to DeQuattro on July 3, 2014. (PAB R. 13, July 3, 2014 Letter; See Hr'g Tr. 87:1-13, May 18, 2015.) The letter asserted that DeQuattro created an "appearance of impropriety" with his ...

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