Cachil Dehe Band of Wintun Indians v. California

• Decision Date: 22 April 2009
• Docket Number: No. CIV. S-04-2265 FCD KJM.,CIV. S-04-2265 FCD KJM.
• Citation: 629 F.Supp.2d 1091
• Parties: CACHIL DEHE BAND OF WINTUN INDIANS OF the COLUSA INDIAN COMMUNITY, a federally recognized Indian Tribe, Plaintiff, Picayune Rancheria of the Chukchansi Indians, a federally recognized Indian Tribe, Plaintiff in Intervention, 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.
• Court: U.S. District Court — Eastern District of California

629 F.Supp.2d 1091

CACHIL DEHE BAND OF WINTUN INDIANS OF the COLUSA INDIAN COMMUNITY, a federally recognized Indian Tribe, Plaintiff, Picayune Rancheria of the Chukchansi Indians, a federally recognized Indian Tribe, Plaintiff in Intervention, 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.

No. CIV. S-04-2265 FCD KJM.

United States District Court, E.D. California.

April 22, 2009.

George Forman, Forman & Associates, San Rafael, CA, for Plaintiff.

John M. Peebles, Darcie L. Houck, Fredericks, Peebles & Morgan, LLP, Sacramento, CA, for Intervenor Plaintiffs.

Peter H. Kaufman, Attorney General of the State of California, San Diego, CA, Neil D. Houston, Office of the Attorney General, Sacramento, CA, for Defendants.

FRANK C. DAMRELL, JR., District Judge.

This matter is before the court on defendants State of California, California Gambling Control Commission (the "Commission" or "CGCC"), and Governor Arnold Schwarzenegger's (collectively, the "defendants") motion for judgment on the pleadings against plaintiff Cachil Dehe Band of Wintun Indians of the Colusa Indian Community ("Colusa"), defendants' motion for partial summary judgment against Colusa, Colusa's motion for summary judgment, defendants' motion to dismiss plaintiff-intervenor Picayune Rancheria of the Chukchansi Indians' ("Picayune") complaint, defendants' motion for summary judgment against Picayune, and Picayune's joinder in Colusa's motion for summary judgment. The court heard oral argument on the motions on February 20, 2009.¹ The court allowed the parties to submit supplemental briefing regarding the size of the statewide license pool under the 1999 Compact, the last of which was filed on April 8, 2009.

BACKGROUND²

Plaintiff Colusa is an American Indian Tribe with a governing body duly recognized by the Secretary of the Interior. (Pl.s' Compl. ("Compl."), filed Oct. 25, 2004, ¶ 2). Plaintiff-intervenor Picayune is also a federally recognized Indian tribe. (Compl. in Intervention, filed Jan. 29, 2009, ¶ 8). In April 1999, then-Governor Gray Davis ("Davis") invited Colusa and all other federally-recognized tribes in California to a meeting in Los Angeles, at which Davis announced his intention to negotiate a compact allowing Class III gaming with California's tribes. (Defs.' Resp. to Pl. Colusa's Stmt. of Undisp. Facts ("DUF") [Docket # 80-3], filed Feb. 6, 2009, ¶ 1). Colusa was part of a group of approximately 80 tribes that participated in negotiations with the team appointed by Davis. (Id. ¶ 2). Colusa attended and was represented by legal counsel at all of the negotiation meetings, the last of which took place in Sacramento on September 9, 1999. (Id.)

Colusa and Picayune entered into Class III Gaming Compacts (the "Compact") with the State of California (the "State") in 1999. (Id. ¶ 24; see Tribal-State Compact between Colusa Indian Community and State of California ("Compact"), attached to Stipulated Record of Documentary Evidence ("Stip. R.") [Docket # 62], filed Jan. 20, 2009). The Compact was ratified by the Legislature on September 10, 1999, and both Colusa and Picayune's Compact has been in effect since May 16, 2000. (See Pl. Colusa's Resp. to Defs.' Stmt. of Undisp. Facts ("PUF") [Docket # 79-3], filed Feb. 6, 2009, ¶ 4; DUF ¶ 7; 65 Fed. Reg. 31189-01 (May 16, 2000)). 55 other tribes (the "Compact Tribes") also executed virtually identical compacts with the State. (Compl. ¶ 24; Letter, Hill to Burton, Stip. R., at 63; see Artichoke Joe's California Grand Casino v. Norton, 353 F.3d 712, 717-18 (9th Cir.2003); Artichoke Joe's California Grand Casino, 216 F.Supp.2d 1084, 1094 (E.D.Cal.2002)). At their core, these compacts authorize Class III gaming pursuant to certain restrictions.

1. Limitations on Gaming Device Licenses

The Compact sets forth various provisions relating to the number of Class III Gaming Devices a Compact Tribe may operate. The Compact sets the limit of the amount of Gaming Devices operated by each individual tribe at 2,000. (Compact § 4.3.2.2(a)). A tribe must obtain a Gaming Device license for each device it seeks to operate in excess of the number of terminals already operated as of September 1, 1999. (DUF ¶ 8; Compact § 4.3.1).

The Compact also sets a statewide maximum on the number of Gaming Devices that all Compact Tribes may license in the aggregate. (Id.) This statewide maximum is determined by a formula set forth in the Compact. (Id.; PUF ¶ 3.) Specifically, the Compact provides:

The maximum number of machines that all Compact Tribes in the aggregate may license pursuant to this Section shall be a sum equal to 350 multiplied by the Number of Non-Compact tribes as of September 1, 1999, plus the difference between 350 and the lesser number authorized under Section 4.3.1.

(Compact § 4.3.2.2(a)(1)). Under defendants' calculation of the formula, the license pool consists of 32,151 licenses. (DUF ¶ 34). Plaintiffs assert that defendants' interpretation of the Compact is incorrect and that more licenses are available under the equation.

2. The License Draw Tier System

The Compact also provides that Gaming Device licenses are distributed among all the 1999 Compact Tribes pursuant to the license draw process. (Compact § 4.3.2.2). Tribes are awarded licenses based upon the tribe's placement in one of five priority tiers. (Id.) Specifically, the Compact provides:

Licenses to use Gaming Devices shall be awarded as follows:

(i) First, Compact Tribes with no Existing Devices (i.e., the number of Gaming Devices operated by a Compact Tribe as of September 1, 1999) may draw up to 150 licenses for a total of 500 Gaming Devices;

(ii) Next, Compact Tribes authorized under Section 4.3.1 to operate up to and including 500 Gaming Devices as of September 1, 1999 (including tribes, if any, that have acquired licenses through subparagraph (i)), may draw up to an additional 500 licences, to a total of 1000 Gaming Devices;

(iii) Next, Compact Tribes operating between 501 and 1000 Gaming Devices as of September 1, 1999 (including tribes, if any, that have acquired licenses through subparagraph (ii)), shall be entitled to draw up to an additional 750 Gaming Devices;

(iv) Next, Compact Tribes authorized to operate up to and including 1500 gaming devices (including tribes, if any, that have acquired licenses through subparagraph (iii)), shall be entitled to draw up to an additional 500 licenses, for a total authorization to operate up to 2000 gaming devices.

(v) Next, Compact Tribes authorized to operate more than 1500 gaming devices (including tribes, if any, that have acquired licenses through subparagraph (iv)), shall be entitled to draw additional licenses up to a total authorization to operate up to 2000 gaming devices.

(Compact § 4.3.2.2(a)(3)). Defendants placed Colusa in the third draw priority tier for its initial draw on September 5, 2002. (DUF ¶¶ 11-12). Subsequently, it was placed in the fourth draw priority tier and then the fifth draw priority tier. (DUF ¶¶ 17, 24). Colusa contends that it should have been placed in the third draw priority tier for all draws.

3. Deposit in the Revenue Sharing Trust Fund

In addition to authorizing Class III gaming, the Compact also provides for revenue sharing with non-gaming tribes. (Compact ¶ 4.3.2.1). The Revenue Sharing Trust Fund ("RSTF") is a fund created by the Legislature and administered by the Commission, as trustee, "for the receipt, deposit, and distribution of monies paid." (Compact § 4.3.2). The revenue sharing provisions of the Compact provide that Non-Compact Tribes shall receive $1.1 million per year, unless there are insufficient funds, in which case, the available monies in the RSTF shall be distributed in equal shares to the Non-Compact Tribes.³ (Compact § 4.3.2.1).

As a condition of acquiring licenses to operate Gaming Devices, the Compact requires that Colusa deposit in the RSTF "a non-refundable one-time pre-payment fee in the amount of $1,250 per Gaming Device being licensed." (Compact § 4.3.2.2(e)). The Commission applies this pre-payment to a tribe's annual license fees. However, a tribe does not owe annual license fees on any of the first 350 licenses it obtains through the license draw process. (DUF ¶ 51). Colusa has not been required to pay any license fees as is has drawn a total of 323 Gaming Device licenses through the draw process. (See DUF ¶ 52).

4. The Conduct of the Parties

Shortly after the conclusion of negotiations in September 1999, and in anticipation of the effectiveness of the 1999 Tribal-State Compacts, many tribes acted pursuant to § 4.3.2.2 of their respective compacts to create a system for issuing Gaming Device Licenses. (DUF ¶ 40). The Sides Accounting Firm ("Sides") administered this initial draw system (the "Sides process"). (Id.) By letter to Sides dated May 10, 2000, Special Counsel to the Governor and the Chief Deputy Attorney General acknowledged that the California Indian Tribes had reached an agreement on procedures for drawing machine licenses and clarified the requirements for the draw system provided in the compacts. (Letter to Sides, Stip. R., at 65-67). Specifically, the letter noted the State's expectation that no more than the available number of licenses would be issued through the Sides process. (Id. at 66-67).

The first Sides process draw occurred on or about May 15, 2000. (DUF ¶ 40). Through the Sides process, 29,398 putative gaming device licenses were issued to 38 tribes between May 15, 2000, and February 28, 2001. (Attachment A to Minutes of CGCC meeting, Stip. R., at 80). Sides also collected the one-time prepayment fees of $1,250 for each license issued in the process as well as some of the license fees that were due on a quarterly basis. (Decl. of Gary Qualset ("Qualset Decl.") [Docket # 75-3], filed Feb. 6, 2009, ¶ 3).

However, defendants assert that although...