Pauma Band of Luiseno Mission Indians of the Pauma & Yuima Reservation v. California

• Decision Date: 26 October 2015
• Docket Number: 14–56105.,Nos. 14–56104,s. 14–56104
• Citation: 813 F.3d 1155
• Parties: PAUMA BAND OF LUISENO MISSION INDIANS OF the PAUMA & YUIMA RESERVATION, aka Pauma Band of Mission Indians, aka Pauma Luiseno Band of Mission Indians, Plaintiff–Appellee/Cross–Appellant, v. State of CALIFORNIA; California Gambling Control Commission, an agency of the State of California; Edmund G. Brown, Jr., as Governor of the State of California, Defendants–Appellants/Cross–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

813 F.3d 1155

PAUMA BAND OF LUISENO MISSION INDIANS OF the PAUMA & YUIMA RESERVATION, aka Pauma Band of Mission Indians, aka Pauma Luiseno Band of Mission Indians, Plaintiff–Appellee/Cross–Appellant,

v.State of CALIFORNIA; California Gambling Control Commission, an agency of the State of California; Edmund G. Brown, Jr., as Governor of the State of California, Defendants–Appellants/Cross–Appellees.

Nos. 14–56104

14–56105.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 10, 2015.

Filed Oct. 26, 2015.

Amended Dec. 18, 2015.

Teresa Michelle Laird (argued), Deputy Attorney General; Kamala D. Harris, Attorney General of California; Sara J. Drake, Senior Assistant Attorney General; Neil D. Houston, Deputy Attorney General, San Diego, CA, for Defendants–Appellants/Cross–Appellees.

Cheryl A. Williams (argued) and Kevin M. Cochrane, Williams & Cochrane, LLP, San Diego, CA, for Plaintiff–Appellee/Cross–Appellant.

Before: MARY M. SCHROEDER and RICHARD C. TALLMAN, Circuit Judges, and JOHN A. JARVEY,^* Chief District Judge.

Opinion by Judge TALLMAN

; Dissent by Chief District Judge JARVEY.

TALLMAN

, Circuit Judge:

ORDER

The panel has voted to amend its previous opinion and issues the following opinion to replace it. With this amendment, the panel has voted to deny the petitions for panel rehearing and to deny the petitions for rehearing en banc.

The full court has been advised of the petitions for rehearing en banc and no judge has requested a vote on whether to rehear the matter en banc. Fed. R.App. P. 35

.

The petitions for panel rehearing and petitions for rehearing en banc are DENIED. No future petitions for rehearing or petitions for rehearing en banc will be entertained.

OPINION

Sixteen years ago more than sixty Native American tribes entered into Tribal–State Gaming Compacts with the State of California. Sadly, the long and tortured history leading to the culmination of these Compacts did not cease there. Rather, litigation based on ambiguous provisions as to the number of authorized gaming devices has ensued for most of the duration of these Compacts. See In re Indian Gaming Related Cases, 331 F.3d 1094, 1095–1107 (9th Cir.2003)

(detailing the entire history before and after the Compacts were enacted). Before us is yet another installment in this ongoing saga, this time between the Pauma Band of Luiseno Mission Indians ("Pauma" or "the Tribe") and the State of California, the California Gambling Control Commission, and Governor Edmund G. Brown, Jr. (collectively "the State").

Pauma sued the State based on our prior decision in Cachil Dehe Band of Wintun Indians of the Colusa Indian Community v. California ("Colusa II "), 618 F.3d 1066 (9th Cir.2010)

. We have been asked to determine (1) whether Colusa II's interpretation of the Compacts' license pool provision applies retroactively, such that the State would be deemed to have misrepresented a material fact as to how many gaming licenses were available when negotiating with Pauma to amend its Compact; (2) whether the district court awarded the proper remedy to Pauma by refunding $36.2 million in overpayments; and (3) whether the State has waived its sovereign immunity under the Eleventh Amendment. We answer each question in the affirmative, although on alternative grounds supporting the relief awarded by the district court with respect to the remedy. On cross-appeal, Pauma also asks us to determine whether the State acted in bad faith under the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. § 2710

. We agree with the district court's finding that IGRA is inapplicable here, and thus Pauma's argument that the State acted in bad faith is irrelevant.

We have jurisdiction under 28 U.S.C. § 1291

, and we affirm.

I

We begin our journey with a quick overview of the weathered past between Native American tribes and the State of California, and then discuss the complicated procedural history that leads us here.

A

In 1988, Congress attempted to strike a delicate balance between the sovereignty of states and federally recognized Native American tribes by passing IGRA. The purpose of IGRA is well established:

IGRA was Congress' compromise solution to the difficult questions involving Indian gaming. The Act was passed 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" and "to shield [tribal gaming] from organized crime and other corrupting influences to ensure that the Indian tribe is the primary beneficiary of the gaming operation." 25 U.S.C. § 2702(1)

, (2). IGRA is an example of "cooperative federalism" in that it seeks to balance the competing sovereign interests of the federal government, state governments, and Indian tribes, by giving each a role in the regulatory scheme.

Artichoke Joe's Cal. Grand Casino v. Norton, 216 F.Supp.2d 1084, 1092 (E.D.Cal.2002)

, aff'd, 353 F.3d 712 (9th Cir.2003). IGRA creates three classes of gaming, with Class III gaming consisting of "the types of high-stakes games usually associated with Nevada-style gambling." In re Indian Gaming, 331 F.3d at 1097. As a result, Class III gaming is subjected to the greatest degree of control under IGRA's regulations. Class III gaming is lawful on Native American lands only if such activities are conducted pursuant to a Tribal–State Compact entered into by the tribe and a state that permits such gaming, and the Compact is approved by the Secretary of the Interior. Id. (citing 25 U.S.C. § 2710(d)(1), (d)(3)(B) ).

California did not immediately allow Indian gaming within its boundaries after the passage of IGRA. Some gubernatorial administrations were hostile to tribes conducting Class III gaming because it was then prohibited by California's Constitution, and so the State refused to negotiate with the tribes to permit it. See id. at 1098–99

. In 1998, the people of California spoke by passing the tribes' ballot initiative—Proposition 5 (codified at Cal. Gov't Code §§ 98000 –98012 ). See Hotel Emps. & Rest. Emps. Int'l Union v. Davis, 21 Cal.4th 585, 589, 88 Cal.Rptr.2d 56, 981 P.2d 990 (1999). Proposition 5 contained a model compact purporting to effectuate IGRA's provisions within California. Id. at 589–90, 88 Cal.Rptr.2d 56, 981 P.2d 990. But the victory was short-lived. The California Supreme Court found all but one sentence of Proposition 5 unconstitutional.¹ Id. at 589, 615, 88 Cal.Rptr.2d 56, 981 P.2d 990

. Undeterred, the voters of California responded by amending the California Constitution on March 7, 2000, to create an exception for certain types of Class III Indian gaming notwithstanding the general prohibition on gambling in the State. In re Indian Gaming, 331 F.3d at 1103 & n. 11.

In September 1999, several tribes began negotiating with the State to enter nearly identical Compacts to operate Class III, or casino-style, gambling (the "1999 Compact"). In April 2000, Pauma joined more than sixty other tribes who ultimately signed the 1999 Compact. The 1999 Compact contains a provision limiting the number of licenses² available statewide for tribes based on a formula.³ As we have previously observed, "[t]he License Pool Provisions that California and [the tribes] included in their Compact as a foundation for establishing Class III gaming in California are murky at best." Colusa II, 618 F.3d at 1084

. Due to the limited time the tribes had to negotiate with the State, the parties agreed to the 1999 Compact without ever discussing their radically different interpretations of how many licenses the statewide license pool formula actually produced. See id. at 1070–72 ; In re Indian Gaming, 331 F.3d at 1104. It required protracted litigation before we settled the number in Colusa II, 618 F.3d at 1082.

By December 2003, the State informed the tribes that the collective license pool had been exhausted—without stating the total number of licenses actually authorized—and Pauma received only 200 licenses in that draw instead of its requested 750. Thus several tribes, including Pauma, began negotiating with the State to amend their Compacts in order to abolish the license pool provision and gain access to an unlimited number of licenses. The State demanded substantially more money per operable license during negotiations, Rincon Band of Luiseno Mission Indians v. Schwarzenegger, 602 F.3d 1019, 1025 (9th Cir.2010)

, and only five tribes—including Pauma—ultimately concluded such amendments ("2004 Amendment"). Colusa II, 618 F.3d at 1072. At the time, Pauma was set to enter into a contract with Caesars to build a Las Vegas-style casino in place of Pauma's tent facility near San Diego, but needed more gaming licenses to do so.⁴

Several lawsuits ensued. By 2009–2010, these suits had percolated in the district courts for several years, and culminated in dispositive opinions rendered by our court. See Colusa II, 618 F.3d at 1084

; Rincon, 602 F.3d at 1026 (holding that the State negotiated in bad faith by refusing to remove a provision from the proposed 2004 Amendment for 15% of Rincon's net wins, which we declared an impermissible tax under IGRA). In Colusa II, we held that the State miscalculated the number of licenses in the common pool under the 1999 Compact. 618 F.3d at 1080. We found that the formula in the 1999 Compact allows for a statewide total of 40,201 licenses, not the 32,151 that the State had originally calculated. Id. at 1082.

B

Shortly after the district court in Colusa rendered its decision holding that more licenses existed than the State had allowed, Pauma filed a complaint asserting eighteen claims attacking the formation of the 2004 Amendment under various theories, including mistake and misrepresentation. Pauma notes that it has remained at roughly 1,050 licenses since December 2003 when the State first asserted that the license pool had been depleted, while two neighboring tribes operate at least 2,000 gaming devices apiece. Pauma executed the 2004 Amendment because it...