Cachil Dehe Band of Wintun Indians v. California

• Decision Date: 08 August 2008
• Docket Number: No. 06-16145.,06-16145.
• Citation: 547 F.3d 962
• Parties: CACHIL DEHE BAND OF WINTUN INDIANS OF THE COLUSA INDIAN COMMUNITY, a federally recognized Indian Tribe, Plaintiff-Appellant, v. State of CALIFORNIA; California Gambling Control Commission, an agency of the State of California; and Arnold Schwarzenegger, Governor of the State of California, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

547 F.3d 962

CACHIL DEHE BAND OF WINTUN INDIANS OF THE COLUSA INDIAN COMMUNITY, a federally recognized Indian Tribe, Plaintiff-Appellant, v. State of CALIFORNIA; California Gambling Control Commission, an agency of the State of California; and Arnold Schwarzenegger, Governor of the State of California, Defendants-Appellees.

No. 06-16145.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 9, 2008.

Filed August 8, 2008.

Amended October 24, 2008.

George Forman, Forman & Associates, San Rafael, CA, for the plaintiff-appellant.

Christine M. Murphy, Deputy Attorney General, Sacramento, CA (briefs); Peter H. Kaufman, Deputy Attorney General, San Diego, CA (oral argument); for the defendants-appellees.

Appeal from the United States District Court for the Eastern District of California; Frank C. Damrell, District Judge, Presiding. D.C. No. CV-04-02265-FCD.

Before: WILLIAM C. CANBY, JR., ANDREW J. KLEINFELD, and JAY S. BYBEE, Circuit Judges.

ORDER AMENDING OPINION AND DENYING THE PETITION FOR PANEL REHEARING AND PETITION FOR REHEARING EN BANC AND AMENDED OPINION

ORDER

The opinion filed in this case on August 8, 2008, slip op. at 10159, to appear at 536 F.3d 1034 (9th Cir.2008), is amended as follows:

At slip op. at 10166, 536 F.3d at 1038, first full paragraph, line 6: Insert "by the tribe on September 1, 1999," after "number of gaming devices operated."

At slip op. at 10169, 536 F.3d at 1040, lines 3-4: delete "for the issuance of up to 22,500 additional gaming device licenses" and substitute therefor: "for the operation of up to 22,500 additional gaming devices."

At slip op. 10174, 536 F.3d at 1043, lines 11-12: delete "for the issuance of up to 22,500 additional licenses" and substitute therefor: "for the operation of up to 22,500 additional gaming devices."

With these amendments, the panel has voted to deny the petition for panel rehearing. Judges Kleinfeld and Bybee have voted to deny the petition for rehearing en banc, and Judge Canby has so recommended.

The petition for en banc rehearing, together with these amendments, has been circulated to the full court, and no judge of the court has requested a vote on the petition for rehearing en banc. Fed. R.App. P. 35(b).

The petition for panel rehearing and the petition for rehearing en banc are DENIED. No further petitions for rehearing or rehearing en banc may be filed. No other petitions for panel or en banc rehearing remain pending.

OPINION

CANBY, Circuit Judge:

This appeal concerns the joinder requirements of Rule 19 of the Federal Rules of Civil Procedure and their effect on litigation brought by an Indian tribe engaged in casino gaming. The Cachil Dehe Band of Wintun Indians of the Colusa Indian Community ("Colusa"), a federally recognized Indian tribe, entered into a gaming compact with the State of California in 1999. Colusa brought this action for declaratory and injunctive relief against the State, its Governor and the California Gambling Control Commission (collectively, "the State"). Colusa challenges the Commission's interpretation of the compact and the Commission's assumption of authority to administer unilaterally the licensing of electronic gaming devices. The district court concluded that the many other Indian tribes that had entered into identical gaming compacts with the State in 1999, as well as California's non-gaming tribes, were required parties to this action. Because Indian tribes enjoy sovereign immunity and the action could not proceed in their absence, the district court granted the State's motion for judgment on the pleadings. Colusa appeals.

Because we conclude that the absent tribes are not required parties to this action, we reverse the district court's judgment (with one minor exception) and remand for further proceedings.

BACKGROUND

In 1988, Congress enacted the Indian Gaming Regulatory Act ("IGRA") "to provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments." 25 U.S.C. § 2702(1). IGRA recognizes three classes of gaming. 25 U.S.C. § 2703(6)-(8). Slot machines and equivalent gaming devices, which are the exclusive subject of this litigation, are Class III games. See 25 U.S.C. § 2703(7)(B)(ii), (8). Under the statute, a tribe may conduct Class III gaming activities only "in conformance with a Tribal-State compact entered into by the Indian tribe." 25 U.S.C. § 2710(d)(1)(C).

In September 1999, Colusa entered into a gaming compact (the "Compact") with the State of California, which sets forth various provisions relating to the operation of Class III gaming devices. See Tribal-State Gaming Compact Between the Colusa Indian Community and the State of California (Oct. 8, 1999). At the same time, sixty-two other tribes (the "Compact Tribes") executed virtually identical bilateral compacts with the State (the "1999 Compacts").¹ See Artichoke Joe's Cal. Grand Casino v. Norton, 353 F.3d 712, 717-18 (9th Cir.2003). The 1999 Compacts limit the number of gaming devices operated by each tribe to 2,000. See 1999 Compacts, § 4.3.2.2(a). They also establish a formula setting a statewide maximum number of gaming devices that all Compact Tribes may license in the aggregate under the 1999 Compacts. Id. § 4.3.2.2(a)(1).

A Compact Tribe, however, is not free to choose unilaterally how many gaming devices to operate, even if it wishes to operate fewer devices than the 2,000 limit. The Compacts establish a threshold number of devices that tribes may operate without a license. Id. § 4.3.1. In Colusa's case, that number was set at the number of gaming devices, 523, operated by the Tribe on September 1, 1999. For each additional gaming device, Colusa is required to obtain a license. Id. § 4.3.2.2(a). These licenses are distributed among the Compact Tribes who apply to obtain them pursuant to a detailed draw process. See id. § 4.3.2.2(a)(3). Under this process, a Compact Tribe's likelihood of being awarded a license hinges on its placement in one of five priority tiers. Id. Placement in a particular tier depends in part — though not exclusively — upon the number of gaming devices already operated by the tribe; the fewer gaming devices a tribe operates the higher its priority tier. Id. If, in any given round, more licenses are requested in aggregate by the Compact Tribes than the Commission is distributing, the license draw process is structured to award the bulk of those licenses to the Compact Tribes who have not yet developed large gaming operations. Id.

In 2001, then-Governor Gray Davis issued an executive order requiring the California Gambling Control Commission ("Commission") to take control of the licensing of gaming devices. Exec. Order No. D-29-01 (Mar. 8, 2001). Previously, a tribal administrator had conducted gaming device license draws. As soon as the Commission assumed control, it declared the licenses issued in previous draws invalid and replaced them with licenses issued by the Commission.

The 1999 Compacts also envision a revenue-sharing mechanism for the benefit of California's non-gaming tribes. See 1999 Compacts, § 4.3.2.1. In order to acquire licenses for gaming devices in excess of their initial allowance, Compact Tribes must pay "a non-refundable one-time pre-payment fee" of $1,250 for each gaming device being licensed. Id. § 4.3.2.2(e). In addition, in order to keep their licenses current, Compact Tribes must pay annual fees for each licensed device in accordance with a pre-determined fee schedule. Id. § 4.3.2.2(a)(2). The fees are to be deposited in the Revenue Sharing Trust Fund ("Revenue Fund"), a fund created by the California State Legislature and administered by the Commission as trustee. Id. Each Non-Compact Tribe² is entitled to receive a distribution of $1.1 million per year from the Revenue Fund, unless the funds therein are insufficient, in which case the available funds are distributed in equal shares among the Non-Compact Tribes. Id. § 4.3.2.1(a). The Commission has interpreted the 1999 Compacts as providing that the non-refundable, one-time pre-payment fee may be used as a credit toward annual license fees, and that no annual fees would be required for the first 350 licenses issued to a tribe.

Pursuant to the 1999 Compacts, the Legislature also created the Indian Gaming Special Distribution Fund ("Distribution Fund"). Cal. Gov't Code § 12012.85. The 1999 Compacts direct each gaming tribe to contribute to the Distribution Fund a portion of its revenues calculated according to the number of gaming devices operated by the tribe on September 1, 1999, and the "net wins" of those devices. 1999 Compacts § 5.1(a). The Legislature may then appropriate funds from the Distribution Fund to make up for "shortfalls that may occur in the ... Revenue ... Fund. This shall be the priority use of moneys in the ... Distribution Fund." Cal. Gov't Code § 12012.85(d).

In 2002, the Commission notified Colusa and other Compact Tribes that it would conduct a round of gaming device license draws that September. Prior to the draw, Colusa was operating its threshold number of 523 gaming devices for which it did not need licenses. Colusa notified the Commission of its intent to draw 250 licenses and tendered a $312,500 check as its non-refundable one-time pre-payment fee. Colusa was placed in the third priority tier and received 250 licenses. In November 2003, the Commission notified Colusa that it would conduct another round of draws in December 2003. Colusa requested 377 licenses and submitted a pre-payment of $471,250. Colusa was assigned to the fourth priority tier, a classification that Colusa challenges in this litigation. Colusa alleges that it was assigned to the fourth tier because it had previously drawn some licenses in the third tier, even though the number of gaming devices it operated after the earlier drawing should have continued to place it in the third tier. The December...