NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _______________

No. 25-1009 _______________

In re: TROPICANA ENTERTAINMENT, LLC, Debtor

LIGHTSWAY LITIGATION SERVICES, LLC, as Trustee of Tropicana Litigation Trust, Appellant

v.

WILLIAM J. YUNG, III; WIMAR TAHOE CORPORATION f/k/a Tropicana Casinos and Resorts, Inc.; COLUMBIA SUSSEX CORPORATION

_______________

On Appeal from the United States District Court for the District of Delaware (D.C. No. 1:23-cv-00959) District Judge: Honorable Colm F. Connolly _______________

Submitted under Third Circuit L.A.R. 34.1(a) December 8, 2025

Before: KRAUSE, PHIPPS, and CHUNG, Circuit Judges

(Filed: December 23, 2025) _______________

OPINION* _______________

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. KRAUSE, Circuit Judge.

Appellant Lightsway Litigation Services, LLC appeals the Bankruptcy Court’s

dismissal of its contract claims against Wimar Tahoe Corporation and the Columbia

Sussex Corporation (CSC). Discerning no error, we will affirm.

I. DISCUSSION1

On appeal, Lightsway argues that the Bankruptcy and District Courts erred in

(1) failing to give preclusive effect to the findings of the New Jersey Casino Control

Commission, and (2) concluding that Lightsway had failed to prove damages. We begin

and end with the first argument because we see no error in the Bankruptcy Court’s

decision to deny the Commission’s findings preclusive effect.

Under New Jersey law,2 issue preclusion applies when:

(1) the issue to be precluded is identical to the issue decided in the prior proceeding; (2) the issue was actually litigated in the prior proceeding; (3) the court in the prior proceeding issued a final judgment on the merits; (4) the determination of the issue was essential to the prior judgment; and (5) the party against whom the doctrine is asserted was a party to or in privity with a party to the earlier proceeding.

1 The Bankruptcy Court’s jurisdiction derived from

(b)(2)(B). The District Court had jurisdiction under

(a)(1), and we have jurisdiction under

(d)(1). We review the Bankruptcy Court’s factual findings for clear error and exercise plenary review over legal issues. In re Emoral, Inc.,

(3d Cir. 2014). Whether issue preclusion applies is a legal question subject to de novo review. Home Depot USA, Inc. v. Lafarge N. Am., Inc.,

(3d Cir. 2023). 2 We apply New Jersey preclusion law because Lightsway asks that we give the decision of a New Jersey administrative agency preclusive effect. See Greenleaf v. Garlock, Inc.,

(3d Cir. 1999). 2 Olivieri v. Y.M.F. Carpet, Inc.,

(N.J. 2006) (quoting In re Est. of

Dawson,

(N.J. 1994)).

But Lightsway stumbles on the first element because “issues are not identical if

the second action involves application of a different legal standard,” B & B Hardware,

Inc. v. Hargis Indus., Inc.,

, 154 (2015) (citation modified), including when

the proceedings employ different burdens of proof, see Kroy IP Holdings, LLC v.

Groupon, Inc.,

(Fed. Cir. 2025). Specifically, when “[t]he party

against whom preclusion is sought had a significantly heavier burden of persuasion with

respect to the issue in the initial action than in the subsequent action” or when “the

burden has shifted to his adversary,” issue preclusion is inappropriate. Restatement

(Second) of Judgments § 28(4) (A.L.I. 1982); see also In re Coruzzi,

(N.J. 1984).

That is the case here. In the proceeding before the Commission, Wimar Tahoe had

the burden to show that it was entitled to a casino license “by clear and convincing

evidence.”3 J.A. 3676 (quoting

-86a). But, in the contract action

before the Bankruptcy Court, Lightsway—not Wimar Tahoe—bore the burden, and it

needed to establish each element by a preponderance of the evidence. Thus, precluding

3 Lightsway contends that it was the Commission that had the burden of “establish[ing] by a preponderance of evidence” that an applicant is unqualified. Opening Br. 36. But Lightsway points to the standard for disqualifying a licensee or for suspending a license, not the standard for granting an application. Indeed, “[a]n applicant . . . shall have the affirmative obligation to establish by clear and convincing evidence satisfaction of the applicable affirmative standards.”

:42A-3.1 (emphasis added). In any event, the Commission itself stated that Tropicana bore the burden of proving “by clear and convincing evidence” that it was entitled to licensure. J.A. 3676. 3 Wimar Tahoe and CSC from relitigating issues found by the Commission would “be both

unfair and illogical” because it would wrongly assume “that the losing party in the first

action would also have lost” under the burden in the second. O’Shea v. Amoco Oil Co.,

(3d Cir. 1989) (citation modified).

Lightsway resists this conclusion, urging that the burden of proof is irrelevant

because “the [Commission] affirmatively found misconduct, as opposed to denying the

license . . . because of Appellees’ failure to” carry their burden. Opening Br. 36-37. But

Lightsway does not cite any authority for this argument, and it is foreclosed by New

Jersey law. See, e.g., L.T. v. F.M.,

(N.J. Super. Ct. App. Div.

2014); see also In re Coruzzi,

(“[A] judge, held liable in a civil or

administrative proceeding under facts found by a preponderance of the evidence, [should

not] be foreclosed from challenging those facts in a removal action where the same facts

have to be established beyond a reasonable doubt.”).

Notwithstanding the difference in evidentiary standards and which party bore the

burden, it is also not the case “that the same general legal rules govern both cases and that

the facts of both cases are indistinguishable as measured by those rules.” Suppan v.

Dadonna,

(3d Cir. 2000) (citation modified). On one hand, the

Commission considered whether Wimar Tahoe was entitled to a casino license under

state law and considered a range of factors, including Wimar Tahoe’s integrity and

financial stability, in doing so. The Bankruptcy Court, on the other hand, considered

4 whether Wimar Tahoe and CSC breached their service contracts. Those issues, too, are

plainly substantively different.4

Finally, Lightsway attempts to establish identity of issues by arguing that it seeks

only to preclude Wimar Tahoe and CSC from litigating the Commission’s findings of

fact, not the Commission’s legal conclusions. But, even granting this framing, Lightsway

fails to explain why the evidentiary facts it seeks to preclude were “essential” to the

Commission’s judgment. See State v. Leibowitz,

(N.J. 1956).

II. CONCLUSION

For the foregoing reasons, we will affirm.

4 Lightsway also argues that, during the Commission proceedings, “Wimar acknowledged that it had violated the requirement to timely establish an independent audit committee.” Reply Br. 13. Yet, in contrast to the Commission proceedings, the issue in the Bankruptcy Court was not whether Wimar Tahoe failed to timely set up an audit committee; only whether that failure was reasonable. 5