McCracken and Amick, Inc. v. Perdue
| Decision Date | 22 December 2009 |
| Docket Number | No. COA09-431.,COA09-431. |
| Citation | 687 S.E.2d 690 |
| Parties | McCRACKEN AND AMICK, INCORPORATED d/b/a The New Vemco Music Co. and Ralph Amick, Plaintiffs, v. Beverly Eaves PERDUE, in her official capacity as Governor of North Carolina, Defendant. |
| Court | North Carolina Court of Appeals |
Everett Gaskins Hancock & Stevens, LLP, by Hugh Stevens, Michael J. Tadych, Raleigh, and James M. Hash, for plaintiffs-appellees.
Attorney General Roy Cooper, by Special Deputy Attorney General Mark A. Davis, for defendant-appellant.
Eastern Band of Cherokee Indians, by Attorney General Annette Tarnawsky; Ben Oshel Bridgers, PLLC, by Ben Oshel Bridgers; and Holland & Knight LLP, by Frank Lawrence, Los Angeles, California, pro hac vice, for amici curiae Eastern Band of Cherokee Indians, National Congress of American Indians, National Indian Gaming Association, United South and Eastern Tribes, Arizona Indian Gaming Association, and Poarch Band of Creek Indians of Alabama.
The State appeals from the trial court's order entering judgment in favor of plaintiffs McCracken and Amick, Incorporated, doing business as The New Vemco Music Co., and its principal owner, Ralph Amick, on their claim that the State is not permitted under federal Indian gaming law to grant the Eastern Band of Cherokee Indians of North Carolina ("the Tribe") exclusive rights to conduct certain gaming on tribal land while prohibiting it throughout the rest of the State. We conclude, however, that state law providing the Tribe with exclusive gaming rights does not violate federal Indian gaming law. Consequently, we reverse the trial court's order.
In 1988, Congress enacted the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701 through 2721 ("IGRA"), in order "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[.]"1 25 U.S.C. § 2702(1). IGRA creates three classes of gaming: Class I gaming is defined as "social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as a part of, or in connection with, tribal ceremonies or celebrations." 25 U.S.C. § 2703(6). Class II gaming includes bingo and card games (other than banking card games) operated in accordance with state law regarding the amount of wagers and hours of operation. 25 U.S.C. § 2703(7). Class III gaming encompasses "all forms of gaming that are not class I gaming or class II gaming," including slot machines, casino-style games, banking card games, video games, and lotteries. 25 U.S.C. § 2703(8). With respect to Class III gaming, IGRA requires a compact between the federally recognized Indian tribe and the State prior to the tribe being permitted to conduct Class III gaming on its land.
In August 1994, the Tribe entered into a compact with the State of North Carolina that permits the Tribe to conduct "raffles," "video games," and "other Class III gaming which may be authorized" in writing by the Governor. Under the compact, the Tribe operates Harrah's Cherokee Casino in Cherokee, North Carolina, which attracts more than 3.5 million visitors a year and generates annual revenues over $250,000,000. In 2000, the terms of the compact were extended until 2030.
Prior to 1 July 2007, video poker was legal in North Carolina but heavily regulated. In 2006, the General Assembly enacted Senate Bill 912, which became Chapter 6 of the 2006 Session Laws ("S.L. 2006-6").2 S.L. 2006-6 phased out the number of video poker machines permitted in the State and banned them completely as of 1 July 2007. S.L. 2006-6 repealed N.C. Gen.Stat. § 14-306.1 (2005), which legalized and regulated video poker, and enacted N.C. Gen.Stat. § 14-306.1A (2007), which, effective 1 July 2007, made it "unlawful for any person to operate, allow to be operated, place into operation, or keep in that person's possession for the purpose of operation any video gaming machine," including video poker machines.N.C. Gen.Stat. § 14-306.1A(a). Although N.C. Gen.Stat. § 14-306.1A criminalizes video poker in general in North Carolina, the legislature carved out an exception from the ban for "a federally recognized Indian tribe," making it lawful for a tribe to possess and operate video poker machines on tribal land "if conducted in accordance with an approved Class III Tribal-State Compact applicable to that tribe. ..." N.C. Gen.Stat. §14-306.1A(a). S.L. 2006-6 also contains a voiding clause, providing that "[i]f a final Order by a court of competent jurisdiction prohibits possession or operation of video gaming machines by a federally recognized Indian tribe because that activity is not allowed elsewhere in this State, this act is void."
Plaintiffs own and operate video games, vending machines, and amusement devices, such as juke boxes, pinball machines, and pool tables. Prior to 1 July 2007, plaintiffs' business also included selling, leasing, distributing, operating, and maintaining video poker machines. On 10 November 2008, plaintiffs filed a declaratory judgment action against the State, alleging that the State is not permitted under IGRA to grant the Tribe a gaming "monopoly" within the State. Plaintiffs also asserted a "separation of powers" violation in that "the authority to negotiate, approve and execute tribal-state compacts or amendments to the existing Compact is reserved to the General Assembly" — not the Governor.
On 21 November 2008, the State moved to dismiss plaintiffs' complaint on multiple grounds, including: (1) lack of standing; (2) failure to state a claim for relief; and (3) failure to join a necessary party — the Tribe — to the action. On 18 February 2009, plaintiffs took a voluntary dismissal of their separation of powers claim. With the consent of the parties, the trial court converted the State's motion to dismiss into a motion for judgment on the pleadings with respect to plaintiff's IGRA claim.
The trial court entered an order on 19 February 2009, concluding that "IGRA does not permit a state to ban the possession and operation of video gaming machines elsewhere in the state while allowing their possession and operation on tribal lands." Thus, the trial court "declare[d] that the State acted unlawfully in authorizing the Eastern Band of the Cherokee Indians to possess and operate video gaming machines on tribal lands within North Carolina because that activity is not allowed elsewhere in this State; pursuant to Section 12 of SL 2006-6, this declaration renders G.S. § 14-306.1A null, void and of no effect." Consequently, the trial court entered judgment on the pleadings in favor of plaintiffs. The State noticed appeal from the trial court's order and the trial court stayed "the operation and effect of [its] rulings ... pending the resolution of the State's appeal."
The State contends that the trial court erred in entering judgment on the pleadings in favor of plaintiffs.3 On appeal the trial court's grant of a motion for judgment on the pleadings pursuant to N.C.R. Civ. P. 12(c) is reviewed de novo. Toomer v. Branch Banking & Tr. Co., 171 N.C.App. 58, 66, 614 S.E.2d 328, 335, disc. review denied, 360 N.C. 78, 623 S.E.2d 263 (2005). Judgment on the pleadings is proper "when all the material allegations of fact are admitted in the pleadings and only questions of law remain." Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974).
As the trial court correctly points out, this case "arises out of the interplay" between IGRA, the tribal-state compact between the Tribe and the State of North Carolina, and the State's criminalization of video gaming machines pursuant to S.L. 2006-6. IGRA "divides gaming on Indian lands into three classes — I, II, and III — and provides a different regulatory scheme for each class." Seminole Tribe v. Florida, 517 U.S. 44, 48, 116 S.Ct. 1114, 134 L.Ed.2d 252, 262 (1996). IGRA dictates that Class III gaming, the category at issue here, is "lawful on Indian lands only if such activities are": (1) authorized by an approved tribal ordinance or resolution; (2) "located in a State that permits such gaming for any purpose by any person, organization, or entity"; and (3) conducted in conformance with a tribal-state compact in effect. 25 U.S.C. § 2710(d)(1)(A)-(C); Seminole Tribe, 517 U.S. at 48-49, 116 S.Ct. at 1120, 134 L.Ed.2d at 261-62.
Through Chapter 71A of the General Statutes, the chapter dealing with "Indians," the General Assembly permits gaming by federally recognized tribes on tribal lands provided that the gaming is authorized by a tribal-state compact:
In recognition of the governmental relationship between the State, federally recognized Indian tribes and the United States, a federally recognized Indian tribe may conduct games consistent with the Indian Gaming Regulatory Act, Public Law 100-497, that are in accordance with a valid Tribal-State compact executed by the Governor pursuant to G.S. 147-12(14) and approved by the U.S. Department of Interior under the Indian Gaming Regulatory Act, and such games shall not be unlawful or against the public policy of the State if the State permits such gaming for any purpose by any person, organization, or entity.
N.C. Gen.Stat. § 71A-8 (2007). The Fourth Circuit has recognized that "North Carolina, citing the IGRA and acknowledging that the Eastern Band of Cherokee Indians is a federally recognized Indian tribe, ... authorized, subject to various regulations, Class III gaming, the operation of video gaming devices, and the administering of raffles." United States v. Garrett, 122 Fed.Appx. 628, 630 (4th Cir.2005).
In 2006, the General Assembly enacted S.L. 2006-6, codified as N.C. Gen.Stat. § 14-306.1A, which provides...
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