Taxpayers of Michigan Against Casinos v. State

• Decision Date: 20 February 2003
• Docket Number: Docket No. 225066.,Docket No. 225017
• Citation: 657 N.W.2d 503,254 Mich. App. 23
• Parties: TAXPAYERS OF MICHIGAN AGAINST CASINOS and Laura Baird, Plaintiffs-Appellees/Cross-Appellants, v. The STATE of Michigan, Defendant-Appellant, and North American Sports Management Company, Inc, IV, and Gaming Entertainment, LLC, Intervening-Defendants-Appellants/Cross-Appellees.
• Court: Court of Appeal of Michigan — District of US

657 N.W.2d 503

254 Mich. App. 23

TAXPAYERS OF MICHIGAN AGAINST CASINOS and Laura Baird, Plaintiffs-Appellees/Cross-Appellants, v. The STATE of Michigan, Defendant-Appellant, and North American Sports Management Company, Inc, IV, and Gaming Entertainment, LLC, Intervening-Defendants-Appellants/Cross-Appellees.

Docket Nos. 225017, 225066.

Court of Appeals of Michigan.

Submitted August 13, 2002, at Lansing.

Decided November 12, 2002, at 9:00 a.m.

Released for Publication February 20, 2003.

Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, and Barris, Sott, Denn & Driker, P.L.L.C. (by Eugene Driker, Leon S. Cohan, Morley Witus, and Thomas F. Cavalier), Special Assistant Attorneys General, Detroit, for the state of Michigan.

Warner Norcross & Judd LLP (by Robert J. Jonker, William C. Fulkerson, and Daniel K. DeWitt), Grand Rapids, for Taxpayers of Michigan Against Casinos and State Representative Laura Baird.

Dickinson Wright PLLC (by Peter H. Ellsworth and Jeffery V. Stuckey) and Dykema Gossett PLLC (by Richard D. McLellan, Bruce G. Davis, and Robert M. Horwitzi) for Gaming Entertainment, LLC.

Kimbal R. Smith, III for Senators George A. McManus, Jr., and Harry Gast, Jr., and House Speaker Charles Perricone, for Amici Curiae.

Before: HOOD, P.J., and HOLBROOK, Jr., and OWENS, JJ.

HOOD, P.J.

Defendant, state of Michigan, appeals as of right from the trial court's determination that legislative approval, by resolution, of compacts allowing operation of casinos by Indian tribes violated provisions of the Michigan Constitution.¹ We affirm in part and reverse in part.

In 1997 and 1998, Governor John Engler negotiated compacts with four Indian tribes ² to permit class III gaming by the tribes on eligible Indian lands in Michigan. The terms of the compacts contained various regulatory provisions. The tribes agreed to hiring criteria for their employees and management and agreed to provide benefits and disability compensation in conformance with Michigan law. The tribes also agreed to a minimum age requirement of eighteen years for participation in any class III game. The tribes adopted Michigan law regarding the sale and regulation of alcoholic beverages. Compact provisions addressed revenue payments to the state and to local governments and the creation of an oversight body to address the manner of distribution of revenues. However, the compacts did not provide the state with any authority to enforce the provisions of the compacts. Rather, they provided that representatives of the tribes and the state would meet to resolve any dispute regarding alleged noncompliance. If resolution could not be reached, the matter would be submitted to arbitration. The compacts provided that the Governor would endorse the compacts and concurrence in that endorsement by the Michigan Legislature would occur by "resolution." The governor had the ability to receive and agree to any amendments of the compacts.

A bill becomes law when it has the concurrence of a majority of members elected to and serving in each house. Const. 1963, art. 4, § 26. However, the approval of the compacts was submitted to the Legislature through the joint resolution process that required only a majority of voting members. The Legislature approved the compacts by a majority of voting members. House Concurrent Resolution No. 115 (December 10, 1998). The manner of approval of the compacts is challenged in this appeal.

I. The Origins of Federal Authorization for Operation of Casinos

In California v. Cabazon Band of Mission Indians, 480 U.S. 202, 204-207, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987), two federally recognized Indian tribes conducted bingo games on their reservations pursuant to an ordinance approved by the Secretary of the Interior. Other card games, including draw poker, were also played at the facility. The games were open to the general public and were played predominantly by non-Indians who came onto the Indian reservation. The games were the primary source of employment for tribal members, and the profits were the sole source of tribal income. The state of California sought to apply provisions of its penal code to preclude the gambling activity. California law permitted bingo games, as long as the games were staffed and operated by members of a designated charitable organization who were not paid for their services. Profits could only be utilized for charitable purposes, and prizes were limited to a nominal amount. The state sought to enforce these restrictions on the Indian reservations. The tribes sued in federal court for a declaration that state ordinances could not be applied against the reservation and for an injunction against any enforcement. Id.

The Supreme Court held that state jurisdiction over the tribes could only occur under limited circumstances:

The Court has consistently recognized that Indian tribes retain "attributes of sovereignty over both their members and their territory," and that "tribal sovereignty is dependent on, and subordinate to, only the Federal Government, not the States,".... It is clear, however, that state laws may be applied to tribal Indians on their reservations if Congress has expressly so provided. [Id. at 207, 107 S.Ct. 1083 (citations omitted).]

The state alleged that congressional authority was granted by 18 USC 1162, a statute granting broad criminal jurisdiction and limited civil jurisdiction to six states, including California, over specified areas of Indian country, and by the Organized Crime Control Act (OCCA), 18 USC 1955. However, the United States Supreme Court concluded that congressional law neither permitted regulation nor precluded operation of the gaming activities conducted by the Indian tribes. Specifically, the Court noted that California law did not ban all forms of gambling. The state itself operated a state lottery and encouraged its citizens to participate in this state-run gambling. Additionally, the state allowed pari-mutuel horse-race betting, and more than four hundred card rooms similar to the card rooms operated by the tribes were active in the state. When state law permitted conduct, subject to regulation, it was civil regulatory law and federal statutes did not authorize enforcement on an Indian reservation. Thus, in light of the substantial amount of gambling activity permitted and the state's active operation of a state lottery, the Supreme Court concluded that California regulated rather than prohibited gambling in general and bingo in particular. Therefore, the state could not interfere with this permitted conduct that occurred on an Indian reservation. Cabazon, supra at 207-214, 107 S.Ct. 1083.

The United States Supreme Court then analyzed the burden on Indian tribes when the state sought to regulate the dealings of non-Indians participating in bingo games on Indian reservations. The United States Supreme Court held that state jurisdiction was preempted if it interfered or was incompatible with federal and tribal interests reflected in tribal law. Throughout history the congressional goal was to allow Indian self-government, including self-sufficiency and economic development. After examining the congressional laws and policies designed to achieve this goal by allowing tribal bingo enterprises, the United States Supreme Court stated:

These policies and actions, which demonstrate the Government's approval and active promotion of tribal bingo enterprises, are of particular relevance in this case. The Cabazon and Morongo Reservations contain no natural resources which can be exploited. The tribal games at present provide the sole source of revenues for the operation of the tribal governments and the provision of tribal services. They are also the major sources of employment on the reservations. Self-determination and economic development are not within reach if the Tribes cannot raise revenues and provide employment for their members. The Tribes' interests obviously parallel the federal interests.

* * *

We conclude that the State's interest in preventing the infiltration of the tribal bingo enterprises by organized crime does not justify state regulation of the tribal bingo enterprises in light of the compelling federal and tribal interests supporting them. State regulation would impermissibly infringe on tribal government, and this conclusion applies equally to the county's attempted regulation of the Cabazon card club. We therefore affirm the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion. [Cabazon, supra at 218-222, 107 S.Ct. 1083.]

In response to the Cabazon decision, Congress enacted the Indian Gaming Regulatory Act (IGRA), 25 USC 2701 et seq. This act explicitly authorizes licensed gaming activities on Indian lands by Indian tribes to generate tribal revenue, 25 USC 2701(1), and promote the goals of tribal economic development and self-sufficiency, 25 USC 2701(4). The regulation of gaming activity on Indian lands is exclusively the province of the Indian tribes. 25 USC 2701(5). The operation of gaming activity by Indian tribes is permitted within a state that does not as a matter of law and public policy prohibit such gaming activity. Id. Class III gaming activities³ are lawful on Indian lands only if the activities are authorized by ordinance or resolution and conducted in conformance with a tribal-state compact entered into between a tribe and a state. 25 USC 2710(d)(l)(A),(C). Upon receiving a request to enter into negotiations to complete a compact, the state "shall negotiate" in good faith to enter into such a compact. 25 USC 2701(d)(3)(A). While the compact "may" include provisions addressing application of criminal and civil law, allocation of criminal and civil jurisdiction, cost allocation, taxation, remedies for breach of contract, and operation standards, there is no provision for enforcement of these provisions. 25 USC 2701(d)(3)(C). The state must...