Crosby Lodge, Inc. v. Nat'l Indian Gaming Comm'n

• Decision Date: 14 March 2011
• Docket Number: No. 3:06–CV–00657–LRH–RAM.,3:06–CV–00657–LRH–RAM.
• Citation: 803 F.Supp.2d 1198
• Parties: CROSBY LODGE, INC., a Nevada corporation, Plaintiff, v. NATIONAL INDIAN GAMING COMMISSION; Pyramid Lake Paiute Tribal Gaming Commission; Mervin Wright, Jr.; Does 1 through IV; and Pyramid Lake Paiute Tribe of Indians, Defendants.
• Court: U.S. District Court — District of Nevada

803 F.Supp.2d 1198

CROSBY LODGE, INC., a Nevada corporation, Plaintiff,

v.NATIONAL INDIAN GAMING COMMISSION; Pyramid Lake Paiute Tribal Gaming Commission; Mervin Wright, Jr.; Does 1 through IV; and Pyramid Lake Paiute Tribe of Indians, Defendants.

No. 3:06–CV–00657–LRH–RAM.

United States District Court, D. Nevada.

March 14, 2011.

Gordon H. De Paoli, Woodburn and Wedge, Reno, NV, for Plaintiff.

James M. Upton, Joseph N. Watson, United States Department of Justice, Environment and Natural, Washington, DC, for Defendants.

ORDER

LARRY R. HICKS, District Judge.

Before the court is Plaintiff Crosby Lodge, Inc.'s (“Crosby”) Motion for Summary Judgment (# 66 ¹). Defendant National Indian Gaming Commission (“NIGC”) has filed a cross-motion for summary judgment and an opposition to Crosby's motion (# 71).

I. Facts and Procedural History

This is a civil dispute challenging the adoption and enforcement of 25 C.F.R. § 522.10(c), a regulation promulgated by the NIGC pursuant to the Indian Gaming Regulatory Act (“IGRA”), 25 U.S.C. §§ 2701–2721. The regulation requires Indian tribes that license individually owned gaming operations to mandate by tribal ordinance “that not less than 60 percent of the net revenues be income to the Tribe.” 25 C.F.R. § 522.10(c).

Crosby operates a business on the Pyramid Lake Indian Reservation in Washoe County, Nevada. The business primarily consists of a convenience store, a bar, a motel, a gasoline station, and boat storage. The Pyramid Lake Paiute Tribe (the “Tribe”) has also licensed Crosby to conduct class III gaming on the property.² As such, Crosby operates fifteen slot machines on its premises. The owners of Crosby are private individuals who are not members of the Tribe.

In accordance with IGRA's requirements, on August 4, 1997, the Tribe and the State of Nevada entered into a gaming compact governing class III gaming within the Pyramid Lake Indian Reservation, and on January 6, 1998, the Secretary of the Interior approved the compact. The compact expressly authorizes the licensing of non-tribal class III gaming within the reservation, subject to the concurrent jurisdiction of the Tribe and the State of Nevada. The compact also requires the Tribe to adopt a taxation scheme at least as stringent as the State of Nevada's.

In 1999, the Tribe adopted a Tribal Gaming Ordinance (“ordinance”), and on July 19, 2000, the NIGC approved the ordinance. The ordinance prohibits class III gaming unless a person or entity complies with the terms of the gaming compact and receives a license from the Tribal Gaming Commission. Neither the Tribe's ordinance nor the Tribal–State compact include a specific provision requiring sixty percent of the net revenue of non-tribal class III gaming be income to the Tribe as required by 25 C.F.R. § 522.10(c).

On May 20, 2004, the NIGC's General Counsel sent a letter to the Tribe stating, pursuant to 25 C.F.R. § 522.10(c), sixty percent of the proceeds from individually owned operations on the reservation must go to the Tribe. On September 27, 2005, the NIGC's General Counsel sent another letter to the Tribe specifically discussing Crosby and stating that Crosby must meet certain requirements, including giving sixty percent of its revenue to the Tribe. On August 16, 2006, the Pyramid Lake Tribal Gaming Commission informed Crosby that, pursuant to 25 C.F.R. § 522.10(c), Crosby owed the Tribe sixty percent of its “net revenue.” Crosby paid the amount due under protest.

On December 1, 2006, Crosby filed a complaint alleging that the NIGC exceeded its statutory jurisdiction in enacting 25 C.F.R. § 522.10(c) and that the regulation is unlawful pursuant to the Administrative Procedure Act, 5 U.S.C. § 706. On February 22, 2010, Crosby filed its motion for summary judgment. The NIGC subsequently filed its own cross-motion for summary judgment.

II. Legal Standard

Summary judgment is appropriate only when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir.2001).

The moving party bears the burden of informing the court of the basis for its motion, along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On those issues for which it bears the burden of proof, the moving party must make a showing that is “sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party.” Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986); see also Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1141 (C.D.Cal.2001). For those issues where the moving party will not bear the burden of proof at trial, the moving party must point out to the court “that there is an absence of evidence to support the nonmoving party's case.” Catrett, 477 U.S. at 325, 106 S.Ct. 2548.

To successfully rebut a motion for summary judgment, the non-moving party must point to facts supported by the record which demonstrate a genuine issue of material fact. Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736 (9th Cir.2000). A “material fact” is a fact “that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir.1983). A dispute regarding a material fact is considered genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Liberty Lobby, 477 U.S. at 248, 106 S.Ct. 2505. The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient to establish a genuine dispute; there must be evidence on which the jury could reasonably find for the plaintiff. See id. at 252, 106 S.Ct. 2505.

When, as here, parties file cross-motions for summary judgment on the same claims before the court, the court must consider each party's motion separately and on its own merits. Fair Hous. Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir.2001) (citations omitted). “[T]he court must consider the appropriate evidentiary material identified and submitted in support of both motions, and opposition to both motions, before ruling on each of them.” Id. at 1134.

III. Crosby's Motion for Summary Judgment

An administrative agency may not exercise its authority “in a manner that is inconsistent with the administrative structure that Congress enacted into law.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 125, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000). Thus, the legality of 25 C.F.R. § 522.10(c) turns upon the court's interpretation of IGRA. A two step analysis is used to review an agency's construction of a statute it administers. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); Natural Res. Def. Council v. United States EPA, 526 F.3d 591, 603 (9th Cir.2008). First, the court must determine “whether Congress has directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842, 104 S.Ct. 2778. If the intent of Congress is clear, the court must “give effect to the unambiguously expressed intent of Congress.” Id. at 842–43, 104 S.Ct. 2778. If, however, the statute is silent or ambiguous with respect to the specific issue, the court must then consider “whether the agency's answer is based on a permissible construction of the statute.” Id. at 843, 104 S.Ct. 2778.

A. Congressional Intent

Pursuant to Chevron, the court must first determine whether Congress, when it passed IGRA, unambiguously expressed its intent regarding the precise question at issue. See 467 U.S. at 842, 104 S.Ct. 2778. Crosby contends that the issue before the court is whether provisions in subsection (b) of IGRA, namely the sixty percent net revenue requirement, are statutory requirements for non-tribal class III gaming. The NIGC argues that Congress intended the whole of 25 U.S.C. § 2710(b) to apply to non-tribal class III gaming and interprets Section 2710(b) as mandatory restrictions.

At this stage of analysis, the court employs the “traditional tools of statutory construction, including examination of the statute's text, structure, purpose, and legislative history” to determine the intent of Congress. Shays v. FEC, 414 F.3d 76, 105 (D.C.Cir.2005) (citation omitted).

1. Plain Text

“The starting point for our interpretation of a statute is always with its language.” Tahara v. Matson Terminals, Inc., 511 F.3d 950, 953 (9th Cir.2007) (citation omitted). “Where the words of the statute are unambiguous, ... judicial inquiry is complete.” Artichoke Joe's Cal. Grand Casino v. Norton, 353 F.3d 712, 720 (9th Cir.2003) (citation omitted). “Where the language is not dispositive, we look to congressional intent revealed in the history and purposes of the statutory scheme.” Id. (citation omitted).

Here, the language of IGRA does not unambiguously support Crosby. IGRA's text states that, if an Indian tribe plans to authorize “any person or entity to engage in ... a class III gaming activity on Indian lands of the Indian tribe,” the governing body of the tribe must adopt and submit to the Chairman of the NIGC “an ordinance or resolution that meets the requirements of subsection (b).” 25 U.S.C. § 2710(d)(2)(A). Included in subsection (b), entitled ...