FORT INDEPENDENCE INDIAN COMMUNITY v. California
| Decision Date | 24 December 2009 |
| Docket Number | No. Civ. S-08-432 LKK/KJM.,Civ. S-08-432 LKK/KJM. |
| Citation | 679 F. Supp.2d 1159 |
| Court | U.S. District Court — Eastern District of California |
| Parties | FORT INDEPENDENCE INDIAN COMMUNITY, a federally-recognized tribe, Plaintiffs, v. State of CALIFORNIA; Arnold Schwarzenegger, Governor of the State of California; Jerry Brown, Attorney General of the State of California, Defendants. |
Jack Duran, Robert Allen Rosette, Rosette & Associates, PC, Folsom, CA, for Plaintiffs.
Jennifer T. Henderson, Department of Justice, Sacramento, CA, for Defendants.
Plaintiff Fort Independence Indian Community, a federally recognized tribe, brings suit against the State of California and associated officials (collectively, the "State"). The Tribe's sole remaining claim alleges that the State has violated its obligation to negotiate in good faith regarding a Tribal-State gaming compact. In particular, the Tribe argues that the State has improperly insisted upon a revenue sharing agreement. Although the Indian Gaming Regulatory Act is apparently hostile to such agreements, they have become common. These agreements have also been upheld by the Department of the Interior, the agency that administers this aspect of the IGRA.
The parties have filed cross motions for summary judgment. The court resolves the matters on the papers, including supplemental briefing, and after oral argument. Questions of material fact remain, but the court grants summary adjudication/partial summary judgment as to several issues.
The Indian Gaming Regulatory Act, 25 U.S.C. ? 2701 et seq., divides gaming into three classes.1 Class III gaming, which includes slot machines and similar devices, is at issue in this case. Under IGRA, a tribe may conduct Class III gaming only in "conformance with a Tribal-State compact entered into by the Indian Tribe and the State and approved by the Secretary of the Interior." Coyote Valley Band of Pomo Indians v. California (In re Indian Gaming Related Cases Chemehuevi Indian Tribe), 331 F.3d 1094, 1097 (9th Cir.2003) (hereinafter Coyote Valley II). Such gaming must also comply with certain other conditions not relevant here. Id.
A tribe seeking to conduct Class III gaming may request that the state "enter into negotiations for the purpose of entering into a Tribal-State compact." ? 2710(d)(3)(A). If the state permits other Class III gaming of the types sought, the state must honor the request and negotiate in "good faith." Id., Rumsey Indian Rancheria of Wintun Indians v. Wilson, 64 F.3d 1250, 1258 (9th Cir.1994), amended by 99 F.3d 321 (9th Cir.1996). The State may negotiate "regarding aspects of class III tribal gaming that might affect legitimate State interests." Coyote Valley II, 331 F.3d at 1097; see also ? 2710(d)(3)(C) (enumerating topics that "may" be addressed by compacts).
The present dispute principally concerns the extent to which a state may seek money from a tribe. IGRA does not provide authority to "impose any tax, fee, charge, or other assessment" other than assessments necessary to defray the costs of regulating gaming. ? 2710(d)(4). However, a state does not "impose" a fee when the state "offers meaningful concessions in return for its demands." Coyote Valley II, 331 F.3d at 1111. IGRA separately provides that "any demand by the State for direct taxation of the Indian tribe" shall be considered as non-conclusive evidence of bad faith. ? 2710(d)(7)(B)(iii)(II).
IGRA provides a cause of action whereby tribes can enforce the obligation to negotiate in good faith. ? 2710(d)(7)(A); see also S. Rep. 100-446, *14-15 (Aug. 3, 1988), U.S.Code Cong. & Admin.News 1988, pp. 3071, 3084-85. Although IGRA does not waive sovereign immunity, California has by statute consented to suit. Cal. Gov.Code ? 98005, Seminole Tribe v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996); see also Coyote Valley II, 331 F.3d at 1101 n. 9.2
Once a compact has been negotiated, it does not take effect until the Secretary of the Interior affirms that it complies with IGRA. ? 2710(d)(8)(B)(i).
In the gaming context, California's present relationship with tribes is largely the product of 60 compacts negotiated in 1999. The Ninth Circuit provided the history of these negotiations in Coyote Valley II, 331 F.3d at 1100-07, the relevant portions of which are summarized here. Prior to 1999, California prohibited slot machines and other forms of class III gaming sought by the tribes. Accordingly, California was not obliged to negotiate compacts authorizing such gaming, and refused to do so. Rumsey, 64 F.3d at 1258, ? 2710(d)(3)(A). In 1998, a coalition of tribes introduced a ballot initiative that would compel the State to change this policy. This measure passed, and although it was later invalidated by the California Supreme Court, it set in motion a process culminating in extensive negotiations, further legislation, and an amendment to the California Constitution. The amendment to the Constitution included the following:
the Governor is authorized to negotiate and conclude compacts, subject to ratification by the Legislature, for the operation of slot machines and for the conduct of lottery and banking and percentage card games by federally recognized Indian tribes on Indian lands in California in accordance with federal law. Accordingly, slot machines, lottery games, and banking and percentage card games are hereby permitted to be conducted and operated on tribal lands subject to those compacts.
Calif. Const. Art. IV, ? 19(f).3 Concurrent with the effort to pass this amendment the State negotiated with a group of tribes to produce a template compact. Sixty tribes adopted the template (the "1999 Compact") shortly after the amendment was ratified. Coyote Valley II, 331 F.3d at 1104.
The sixty tribes' adoption of this compact, and the contemporarily passed legislation, established the major features of California's present treatment of gaming. Most significantly, tribes are the exclusive operators of slot machines and certain other forms of class III gaming. Prior to 1999, the California constitution had prohibited all slot machines and certain other forms of gaming desired by the tribes. As part of the changes surrounding the 1999 compacts, the constitution was amended to allow tribal gaming, although other gaming remains prohibited.
A second major feature is the Revenue Sharing Trust Fund ("RSTF"), which redistributes wealth among the tribes. Tribes adopting the 1999 compacts pay into the fund by purchasing "`licenses' to acquire and maintain gaming devices in excess of" certain quantities. Coyote Valley II, 331 F.3d at 1105. The RSTF pays out to "non-compact tribes," defined as "federally recognized tribes that are operating fewer than 350 gaming devices." Non-compact tribes each receive up to $1.1 million annually from the RSTF. The 1999 Compacts explicitly provide that non-compact tribes are third party beneficiaries of the compacts, but also that non-compact tribes have no right to enforce the compacts.
Two other features of the 1999 Compacts are pertinent here. The 1999 Compacts called for payments of a percentage of revenue into a "Special Distribution Fund." This fund may be used only to pay expenses related to gaming, including shortfalls in the RSTF. Id. at 1113-14. The 1999 Compacts also oblige tribes to provide a procedure "addressing organizational and representational rights of Class III Gaming Employees and other employees associated with the Tribe's Class III gaming enterprise." Id. at 1116 (). The Ninth Circuit has held that both of these provisions are consistent with IGRA. Id. at 1114, 1116.
California compacts negotiated since 1999 and compacts negotiated by other states contain several additional features pertinent here.
The post-1999 California compacts are notable in two ways. First, the State has entered twenty one compacts with "noncompact tribes," allowing them to operate fewer than 350 gaming devices and still receive payments from the RSTF. Conversely, there are no federally recognized California tribes operating fewer than 350 class III gaming devices pursuant to a compact that do not receive RSTF payments. Second, many California compacts subsequent to the 1999 compacts provide for "revenue sharing" with the state. See, e.g., Tribal-State Compact Between the State of California and the Pinoleville Pomo Nation, executed March 10, 2009, Pl.'s RFJN Ex. 6. These provisions, unlike the "special distribution fund" approved in Coyote Valley II, provide for payment into the State's general fund, such that the funds received may be used for any purpose. Ordinary English would appear to require that a program in which a percentage of revenues must be paid to a state is a tax. However, the arrangements between sovereigns, the State and the Tribes, use the term "revenue sharing" to refer to programs of this type.4 This term is used ubiquitously in compacts with California and with other states, and by the Department of the Interior. Accordingly, the court adopts this practice here. In California, compacts use the term "revenue sharing" to refer to sharing of revenue between the tribe and the state, and the acronym "RSTF" to refer to the sharing of revenue between tribes. For the remainder of this order, this court uses the term "unrestricted revenue sharing" to refer to programs wherein a portion of gaming revenues is paid into the state's general fund and the state's use of those payments is unrestricted.
Post-1999 California compacts with unrestricted revenue sharing provisions specify that revenue sharing is offered in exchange for the "meaningful concession" of continued tribal exclusivity. See, e.g., Tribal-State Gaming Compact between The Coyote Valley Band of Pomo Indians and The State of...
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