Sault Ste. Marie Tribe Chippewa Ind. v. Granholm
| Decision Date | 30 January 2007 |
| Docket Number | No. 05-2603.,No. 05-2146.,05-2146.,05-2603. |
| Citation | 475 F.3d 805 |
| Parties | SAULT STE. MARIE TRIBE OF CHIPPEWA INDIANS, The Grand Traverse Band of Ottawa and Chippewa Indians, The Keweena Bay Indian Community, The Bay Mills Indian Community, The Lac Vieux Desert Band of Lake Superior Chippewa Indians, and The Saginaw Chippewa Tribe of Indians, Plaintiffs, Hannahville Indian Community, Plaintiff-Appellant, v. Jennifer GRANHOLM, Governor, Public Officer, Successor in Interest Party, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Anthony Mancilla III, Hannahville Indian Community, Wilson, Michigan, for Appellant. Todd B. Adams, Office of the Attorney General, Lansing, Michigan, for Appellee.
ON BRIEF:
Anthony Mancilla III, Hannahville Indian Community, Wilson, Michigan, Paul W. Shagen, Raymond & Prokop, Sault Saint Marie, Michigan, for Appellant. Todd B. Adams, Office of the Attorney General, Lansing, Michigan, for Appellee.
Before CLAY and ROGERS, Circuit Judges; KATZ, District Judge.*
CLAY, J., delivered the opinion of the court, in which ROGERS, J., joined. KATZ, D.J. (p. 816), delivered a separate concurring opinion.
Plaintiff Hannahville Indian Community ("Plaintiff Hannahville") appeals the district court's grant of a Motion to Enforce Stipulation and Consent Judgment in favor of the Governor of the State of Michigan ("Defendant") pursuant to Fed.R.Civ.P. 7 and 54. For the reasons set forth below, we REVERSE the district court's decision and REMAND to the district court to resolve ambiguous terms in the Stipulation and Consent Judgment with the aid of extrinsic evidence.
On October 17, 1988, the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. § 2701 et seq., was signed into law. The purpose of the IGRA was 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." 25 U.S.C. § 2702(1). Almost immediately after the passage of the Act, Plaintiffs Hannahville, Sault Ste. Marie Tribe of Chippewa Indians, the Grand Traverse Band of Ottawa and Chippewa Indians, the Keweena Bay Indian Community, the Bay Mills Indian Community, the Lac Vieux Desert Band of Lake Superior Chippewa Indians, and the Saginaw Chippewa Tribe of Indians (collectively "the Tribes") began engaging in negotiations with Defendant to enter into an agreement that would govern the operation of class III games ("slot machines") on the Tribes' native lands. Disagreements about the scope of the IGRA led to a breakdown in these negotiations and subsequently to a suit filed in the district court by the Tribes alleging that Defendant refused to negotiate gaming compacts as was required by the IGRA. On August 20, 1993, the parties reached an agreement with respect to that claim, which was memorialized in a Stipulation and incorporated into a Consent Judgment.
The Stipulation and Consent Judgment set forth guidelines as to how the Tribes would operate their Michigan casinos. The district court retained jurisdiction to enforce the Consent Judgment. One of the terms of the Consent Judgment was that the Tribes agreed to "make semiannual payments to any local unit of state government in the immediate vicinity of each tribal casino in the aggregate amount equal to two percent (2%) of the net win at each casino derived from all class III electronic games of chance." (J.A. at 76-77). The term "net win" was defined in the Stipulation. Specifically it stated: "`[n]et win' is defined as the total amount wagered on each electronic game of chance, minus the total amount paid to players for winning wagers at said machines." (J.A. at 69).
Plaintiff Hannahville owns and operates the Island Resort and Casino ("the Island Casino") in Harris, Michigan. Around 1998, the Island Casino began producing and distributing promotional tokens to customers, which were good for a free play on the promotional slot machines. The tokens, called QuickSilver tokens, were given out to customers completely free of charge. Such "comps" are standard at casinos and are often used for marketing and promotional purposes. The QuickSilver tokens could only be used while playing the QuickSilver slot machines. The QuickSilver machines accepted only those tokens, and the tokens themselves could not be redeemed for real money. The QuickSilver machines did, however, pay out in real money: One "credit" on a QuickSilver machine was denoted as a quarter, and the machines paid quarters to patrons when they won.
While the tokens were not redeemable for cash, there was some discrepancy with respect to how they were valued. In its Daily Revenue Report, which was an internal record kept to keep track of the casinos profits and losses, Plaintiff Hannahville valued QuickSilver tokens at twenty-five cents. Further, the Island Casino advertised their distribution of comps, and afforded them a dollar value in those ads, though there is some discrepancy as to whether those ads were referring to QuickSilver tokens or some other promotional wager program at the casino.
At the time Plaintiffs and Defendant entered into the Consent Judgment, the Island Casino had no promotional wagering programs in place, and accordingly, the Consent Judgment made no mention of how the casino should calculate net win with respect to promotional wagers. According to the Stipulation and Consent Judgment, the Island Casino is required to pay 2% of its net win to Defendant. A dispute arose over how to value the promotional tokens when calculating net win. Defendant argued that they should be valued at twenty-five cents, but Plaintiff Hannahville decided that the tokens should be valued as a zero cent wager. However, because the QuickSilver machines paid out in quarters, the money won by patrons on these machines was reflected in the net win calculus. The effect was that the QuickSilver machines consistently showed no money being wagered, but money being paid out. Thus, Plaintiff Hannahville's practice of assigning the tokens a zero cent value resulted in these machines necessarily producing a net loss. Because net wins are calculated across the entire floor of a casino and not on a machine by machine basis, this method of calculation lowered the Island Casino's overall profits and, accordingly, it lowered the amount Plaintiff Hannahville was required to pay Defendant.
Defendant filed a Motion to Enforce the Stipulation and Consent Judgment on January 25, 2005. There were originally three issues Defendant raised in the motion: "1) the calculation of `net win' from promotional wagers (which is the issue currently before this Court); 2) the inclusion of expenses from wide area progressive slot machines in the net win calculation; and 3) the process by which Plaintiff Hannahville distributes 2% of the net win to local units of state government." (J.A. at 78). The parties subsequently reached an agreement on the issue of the wide area progressive machines, and the district court dismissed the distribution issue without prejudice because Plaintiff Hannahville did not contest it. Therefore, the first issue concerning calculation of net win was the only one before the district court, and accordingly, is the only issue before this Court.
Importantly, in the briefs submitted to this Court and to the district court, both Plaintiff Hannahville and Defendant attribute the alleged ambiguity to the entire phrase "total amount wagered." However, the arguments put forward in those briefs focus specifically on the ambiguity of the term "wager." Additionally, during oral argument, the question of ambiguity was discussed only with respect to the term "wager." We therefore conclude that the issue before this Court is whether the term "wager" is ambiguous.
The district court noted that it was undisputed that the QuickSilver tokens were considered wagers. Because a wager, definitionally, must incorporate some type of value, the court reasoned that the dispute was over what value to assign the tokens. Plaintiff Hannahville argued that the tokens need not correspond to a monetary amount to have value. According to Plaintiff Hannahville, the value of the QuickSilver tokens was that they were worth one chance to win a quarter. In support for its position, Plaintiff Hannahville attempted to introduce extrinsic evidence which showed that within the gaming industry, there is a way of understanding wagers which have no monetary value. Therefore, Plaintiff Hannahville argued, the concept of "wager" is latently ambiguous when applied within the context of this industry. Defendant countered that "wager" is unambiguous, and that the common sense definition of a wager contemplates a monetary value. Thus, Defendant urged the court to assign a monetary value of twenty-five cents to the tokens. Defendant based this figure on evidence it submitted that Plaintiff Hannahville assigned a twenty-five cent value to the tokens in advertisements and internal records.
The district court held that the term wager was unambiguous and refused to consider Plaintiff Hannahville's extrinsic evidence. Instead, the court concluded that the tokens must be assigned a monetary value. The district court determined that, based on the advertisements and internal records introduced by Defendant, it was clear that Plaintiff Hannahville valued the tokens at twenty-five cents each. Accordingly, the court granted Defendant's motion and ordered Plaintiff Hannahville to pay Defendant $1,027,378.00 (plus interest), which is what Defendant would have received if Plaintiff Hannahville had valued the tokens at twenty-five cents each. The future value of the QuickSilver tokens was not in dispute, as Plaintiff Hannahville no longer uses Quicksilver tokens, but now gives away promotional free games on the regular slot machines using a card...
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