Bettor Racing, Inc. v. Nat'l Indian Gaming Comm'n, CIV. 13–4051–KES.

Citation47 F.Supp.3d 912
Decision Date19 September 2014
Docket NumberNo. CIV. 13–4051–KES.,CIV. 13–4051–KES.
PartiesBETTOR RACING, INC., and J. Randy Gallo, Plaintiffs, v. NATIONAL INDIAN GAMING COMMISSION, Defendant, and Flandreau Santee Sioux Tribe, Intervenor.
CourtU.S. District Court — District of South Dakota

47 F.Supp.3d 912

BETTOR RACING, INC., and J. Randy Gallo, Plaintiffs,
v.
NATIONAL INDIAN GAMING COMMISSION, Defendant,
and
Flandreau Santee Sioux Tribe, Intervenor.

No. CIV. 13–4051–KES.

United States District Court, D. South Dakota, Southern Division.

Signed Sept. 19, 2014


NIGC's and Tribe's motions granted, and business's motion denied.

[47 F.Supp.3d 916]

Meredith A. Moore, Cutler & Donahoe, LLP, Sioux Falls, SD, for Plaintiffs.

Ty Bair, U.S. Department of Justice, Washington, DC, for Defendant.


Gregory M. Narvaez, John M. Peebles, Patrick R. Bergin, Fredericks Peebles & Morgan, LLP, Sacramento, CA, Tracey Zephier, Fredericks, Peebles & Morgan, Rapid City, SD, for Intervenor.
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S AND INTERVENOR'S MOTIONS FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT
KAREN E. SCHREIER, District Judge.

Plaintiffs, Bettor Racing, Inc., and J. Randy Gallo, brought this suit under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701–06, and the United States Constitution, against defendant, National Indian Gaming Commission (NIGC). Plaintiffs ask this court to set aside the NIGC's final decision and order in its entirety or, alternatively, to set aside the portion of the final decision and order that assessed a civil fine against plaintiffs. The Flandreau Santee Sioux Tribe has intervened. Docket 35. The parties have filed cross motions for summary judgment.1 For the following reasons, the NIGC's and Tribe's motions for summary judgment are granted, and plaintiffs' motion for summary judgment is denied.


3. 25 U.S.C. §§ 2701–2721.

In 2003, Gallo and the Tribe met to discuss relocating Bettor Racing from its Sioux Falls, South Dakota, location to Royal River Casino, in part to avoid a state tax on parimutuel betting. In March 2004, Bettor Racing and the Tribe reached an agreement in the form of a management contract, which was submitted to the NIGC for approval. Following submission of the proposed agreement, the NIGC requested several changes, which the parties subsequently incorporated. The NIGC approved the management contract on March 17, 2005.

On September 20, 2004, during the pendency of the management contract's approval, Bettor Racing and the Tribe entered into what was styled a “consulting agreement” under which Bettor Racing

[47 F.Supp.3d 917]

would assist the Tribe in running a parimutuel betting operation at Royal River Casino. A.R. 2009–10. On September 24, 2004, Bettor Racing began operation of the parimutuel betting business at Royal River Casino (under the name Royal River Racing) until the management contract was approved on March 17, 2005. Following approval of the management contract, Bettor Racing and the Tribe operated under its terms.

In 2005, the state of South Dakota reduced its tax on parimutuel gaming revenue. SDCL 42–7–102. Bettor Racing and the Tribe discussed the effect of the changes in South Dakota's tax structure as well as a possible relocation of Bettor Racing's business away from Royal River Casino. Bettor Racing and the Tribe subsequently agreed to modify the terms of the management contract in 2006 (first modification). This agreement was executed by Bettor Racing and the Tribe on February 15, 2007. A.R. 1558–1561.

On January 25, 2007, the first modification was submitted for approval to the NIGC. On April 13, 2007, the Tribe requested the NIGC to hold its review of the first modification in abeyance pending litigation between the Tribe and state of South Dakota. Consequently, the first modification was never approved by the NIGC.

In 2008, following increases in fees charged by racetracks to off-track betting operations, Bettor Racing and the Tribe discussed further modifications of the management contract (second modification). The second modification was executed by the parties on August 1, 2008. The second modification was not submitted to the NIGC, however, and was never approved.

In August 2009, the NIGC conducted a management contract compliance review. On August 27, 2009, the NIGC issued a notice of noncompliance to Bettor Racing. The notice of noncompliance stated that Bettor Racing had failed to pay to the Tribe the required percentage of gaming revenue as required by the terms of the original management contract and federal law. A.R. 31–33. Additionally, from August 2009 until May 2011, the NIGC conducted an investigation. This investigation culminated in the issuance of a Notice of Violation (NOV) to both the Tribe and Bettor Racing on May 19, 2011. The NIGC determined that Bettor Racing committed three violations of the IGRA, and the Tribe had committed four violations of the IGRA.

As part of the NOV, the NIGC ordered Bettor Racing to pay the Tribe $4,544,755. This amount represented what the NIGC determined the Tribe should have received during the years 2005, 2006, 2007, and 2008. During the summer of 2011, the Tribe reached a settlement with the NIGC. A.R. 2611–16.

On June 20, 2011, Bettor Racing appealed the NOV. The Tribe intervened in the administrative appeal. On February 10, 2012, the NIGC issued a Notice of Proposed Civil Fine Assessment (CFA) against Bettor Racing. A.R. 2665–73. The total amount of the proposed fine was $5 million. This amount was independent of the assessment that Bettor Racing was ordered to pay the Tribe pursuant to the NOV. On March 9, 2012, Bettor Racing appealed the CFA. The Tribe also intervened in this administrative appeal. The original NOV and the CFA proceedings were consolidated into one appeal.

The chair for the NIGC and the Tribe each moved for summary judgment in the administrative appeal, which Bettor Racing opposed. On August 13, 2012, the presiding official issued her recommended decision granting the motions for summary judgment on the NOV and CFA in favor of

[47 F.Supp.3d 918]

the NIGC and Tribe. The Commission affirmed the presiding official's recommended decision in its final decision and order on September 12, 2012. The Commission determined, however, that the CFA of $5 million had “supplanted” the monetary remedy in the NOV. A.R. 3049.

In January 2013, the Tribe filed suit against plaintiffs in Flandreau Santee Sioux Tribal Court, alleging breach of contract and unjust enrichment. Docket 9–1, 9–2. Plaintiffs have counterclaimed in that action alleging fraud. On May 10, 2013, plaintiffs filed this suit against the NIGC seeking relief from the Commission's final decision and order. Docket 1. The Tribe moved to intervene on June 17, 2013. Docket 7. The Tribe's motion was granted on November 11, 2013. Docket 35.4 Pending before the court are cross motions for summary judgment from all parties regarding the Commission's final decision and order.

I. LEGAL STANDARD

Generally a motion for summary judgment may be granted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Clark v. Kellogg Co., 205 F.3d 1079, 1082 (8th Cir.2000). A factual dispute that does not rise to the level of materiality will not preclude summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Mosley v. City of Northwoods, Mo., 415 F.3d 908, 910–11 (8th Cir.2005). Rather, “ ‘the dispute must be outcome determinative under prevailing law.’ ” Mosley, 415 F.3d at 911 (quoting Get Away Club, Inc. v. Coleman, 969 F.2d 664, 666 (8th Cir.1992)).

The general standard set forth in Rule 56 does not apply where, as here, the parties are seeking this court's review of an administrative decision. Thus, this court is guided by the standards provided in the APA. Voyageurs Nat'l Park Ass'n v. Norton, 381 F.3d 759, 763 (8th Cir.2004); 5 U.S.C. § 706.

Specifically, a motion for summary judgment ... makes no procedural sense when a district court is asked to undertake judicial review of administrative action. Such a motion is designed to isolate factual issues on which there is no genuine dispute, so that the court can determine what part of the case must be tried to the court or a jury. Agency action, however, is reviewed, not tried. Factual issues have been presented, disputed, and resolved; and the issue is not whether the material facts are disputed, but whether the agency properly dealt with the facts.

Lodge Tower Condominium Ass'n v. Lodge Properties, Inc. 880 F.Supp. 1370, 1374 (D.Colo.1995) (internal citations omitted); see also North Carolina Fisheries Ass'n v. Gutierrez, 518 F.Supp.2d 62, 79 (D.D.C.2007). Consequently, a motion for summary judgment at this stage requires this court to determine “whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review” as a matter of law. Brodie v. U.S. Dep't of Health & Human Servs., 796 F.Supp.2d 145, 150 (D.D.C.2011).

Pursuant to the relevant standards set by the APA, this court will set aside an agency's action only if its decision was “arbitrary, capricious, an abuse of discretion,

[47 F.Supp.3d 919]

or otherwise not in accordance with law.” Sierra Club v. E.P.A., 252 F.3d 943, 947 (8th Cir.2001) (quoting 5 U.S.C. § 706(2)(A)). An agency decision fails the “arbitrary and capricious” standard if

[T]he agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). While this court's review of the facts before the agency is “searching and careful,” the “standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency.” Citizens to Preserve Overton Park, Inc. v. Volpe, ...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT