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San Pasqual Band of Mission Indians v. State

March 20, 2007

SAN PASQUAL BAND OF MISSION INDIANS, A FEDERALLY RECOGNIZED INDIAN TRIBE, PLAINTIFF,
v.
STATE OF CALIFORNIA, CALIFORNIA GAMBLING CONTROL COMMISSION, AN AGENCY OF THE STATE FOR CALIFORNIA, AND ARNOLD SCHWARZENEGGER, AS GOVERNOR OF THE STATE OF CALIFORNIA, DEFENDANTS.



The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge

ORDER GRANTING MOTION TO DISMISS SECOND AMENDED COMPLAINT

[Dkt No. 13]

Plaintiff the San Pasqual Band of Mission Indians ("San Pasqual"), a federally recognized Indian Tribe, seeks declaratory relief in this action against the State of California, the California Gaming Control Commission ("Commission"), and Governor Arnold Schwarzenegger (collectively "Defendants" or "State") related to its 1999 Tribal-State Compact, under the Indian Gaming Regulatory Act of 1988 ("IGRA"), 25 U.S.C. §§ 2701, et seq. This matter is before the court on the State's Motion To Dismiss Second Amended Complaint ("Motion") pursuant to FED.R.CIV.P. ("Rules") 12(b)(7), (19). San Pasqual filed Opposition, and Defendants filed a Reply. In addition, the court accepted briefs from two amicus curiae: the California Nations Indian Gaming Association ("CNIGA") opposing Defendants' Motion; and the California Tribal Business Alliance and the Rumsey Band of Wintun Indians (collectively "Rumsey") in support of the Motion.

On February 26, 2007, the court convened the Motion hearing. Stephen Solomon, Esq. appeared for San Pasqual. Randall A. Pinal, Esq. appeared for Defendants. Frank Lawrence, Esq. appeared for amicus curiae CNIGA. Fred J. Hiestand, Esq. appeared for amicus curiae Rumsey. Attorneys R. Bruce Evans, Esq., Peter Kaufman, Esq., and Ryan Kroll, Esq. also appeared. For the reasons recited on the record and as discussed below, the Motion is GRANTED.

I. BACKGROUND

The State entered individual Compacts with approximately 60 Indian tribes in September 1999. The Compacts authorize the participating tribes to own and operate Indian Gaming facilities on their Reservations. As pertinent here, the Compacts regulate Class III Gaming Devices (slot machines) and incorporate a formula for calculating the aggregate maximum number of licenses available to all Class III gaming tribes statewide, with an individual tribal limit of 2,000 each. San Pasqual alleges the State denied its application for additional licenses within its individual limit on grounds no more were available. In this action, San Pasqual alleges the State's calculation of the total aggregate number of licenses under the Compact formula is too low. The tribe seeks a judicial determination of the question: what is the correct number of Class III Gaming Device licenses authorized in the aggregate by the State Aggregate Limit formula contained in San Pasqual's Tribal-State Gaming Compact?

Defendants contend the Second Amended Complaint ("SA C") must be dismissed on grounds San Pasqual failed to join all 61 other tribes who executed 1999 Compacts materially identical to San Pasqual's. They assert those absent parties are necessary and indispensable to this action because San Pasqual challenges the State's interpretation and application of a formula common to all those Gaming Tribes who obtain Class III device licences under the 1999 Compacts. They argue each individual Compact tribe has a beneficial interest in any judicial construction of the aggregate limit provision and a legally protected stake in this litigation that would be impaired by a favorable judgment for San Pasqual. They also argue disposition of this action in the absence of the other Compact tribes would subject the State to inconsistent obligations. However, the absent tribes cannot be joined because they enjoy tribal sovereign immunity from suit, and Defendants argue neither the State nor San Pasqual can adequately represent all tribal interests. The narrow issue presented here is whether Rule 19, addressing the joinder of parties indispensable for just adjudication, requires dismissal of this action.

II. DISCUSSION

A. Indian Gaming Regulatory Act ("IGRA")

Congress enacted IGRA, 25 U.S.C. § 2701, et seq., in 1988 to provide a statutory basis for the operation of gaming by Indian tribes as a means "to promote tribal economic development, tribal self-sufficiency, and strong tribal government." 25 U.S.C. § 2701(4). The statute grants states a role in the regulation of Indian gaming. Artichoke Joe's v. Norton, 353 F.3d 712, 715 (9th Cir. 2003). IGRA makes Class III gaming activities lawful on Indian lands if (among other things), the activities are "located in a State that permits such gaming for any purpose by any person, organization, or entity" and are "conducted in conformance with a Tribal-State compact entered into by the Indian tribe and the State under paragraph (3) that is in effect." 25 U.S.C. §§ 2710(d)(1)(B),(C). After a tribe and the Governor negotiate a compact in California, the Legislature must ratify it.*fn1 Cal. Const. art. IV, § 19(f); 25 U.S.C. § 2710(d)(8). The Secretary of the Interior then "is authorized to approve any Tribal-State compact entered into between an Indian tribe and a State governing gaming on Indian lands of such Indian tribe," and may disapprove a Tribal-State compact "only if such compact violates -- (i) any provision of this chapter, (ii) any other provision of Federal law that does not relate to jurisdiction over gaming on Indian lands, or (iii) the trust obligations of the United States to Indians." 25 U.S.C. § 2710(d)(8)(A),(B). The tribal-State compact becomes effective when the Secretary approves it.

B. The 1999 Compacts

As traced in Defendants' Motion, the State and 57 federally-recognized California Indian tribes (including San Pasqual) executed nearly identical Compacts on September 10, 1999, to enable each of those tribes to conduct Class III gaming on Indian lands as defined by IGRA. Ultimately 62 tribes separately signed the 1999 Compact. The Legislature ratified the 1999 Compacts, and the Secretary approved them by publication in the Federal Register on May 16, 2000.

The 1999 Compacts "are identical in most respects." Artichoke Joe's v. Norton, 216 F.Supp.2d 1084, 1094 (E.D.Cal. 2002), aff'd 353 F.3d 712 (9th Cir. 2003). The Compacts specify that each tribe may operate up to 2,000 Gaming Devices and establish a statewide maximum number of Gaming Devices that all 1999 Compact Tribes may license in the aggregate. Compact § 4.3.2.2(a) (San Pasqual Compact, Exh. A to Defendants' Request For Judicial Notice ("Compact")). Gaming Device licenses are distributed among all Compact Tribes pursuant to a license draw process described in the Compact, with licenses awarded based on a tribe's placement in a series of priority tiers established by, among other criteria, the number of Gaming Devices operated by the tribe. Compact § 4.3.2.2(a)(3); see SAC ¶ 18.

C. The Dispute

The provisions relating to the allocation of Class III Gaming Device licenses, including the formula for calculating the statewide aggregate cap, is common to all the 1999 Compacts. The Compact also provides that each individual tribe may operate no more than 2,000 slot machines. San Pasqual currently operates fewer than 2,000 slot machines and, prior to filing its lawsuit, it "requested Gaming Device licenses from the State through the draw process, but was informed by the State that there are no more Gaming Device licenses available," so "was denied its requested Gaming Device licenses." SAC § 24.

San Pasqual alleges the State's June 2002 interpretation of Compact § 4.3.2.2(a)(1) constituted a breach of the Compact in that its calculation of the aggregate limit is too low. The tribe alleges the State unilaterally and erroneously determined only 32,151 Gaming Device licences are available statewide, whereas previously the State had stated the aggregate limit was considerably higher. SAC ¶ 23. It is San Pasqual's position "that under § 4.3.2.2(a)(1) of the Compact, the State Aggregate Limit authorizes at least 42,700 Gaming Device licenses, and the Defendants, through their erroneous interpretation, have breached the Compact by refusing to make all Gaming Device licenses authorized by the Compact available through the Gaming Device license draw process." SAC ¶ 25 (emphasis added); see SAC ¶ 26 (San Pasqual argues "the Compact authorizes the issuance of at least 42,700 additional Gaming Device licences through the Gaming Device license draw process") (emphasis added). San Pasqual seeks "a judicial determination as to the correct number of Gaming Device licenses authorized in the aggregate by the State Aggregate Limit formula contained in its Tribal-State Gaming Compact between San Pasqual and the State." SAC 8:4-6.

a. Section 2.6 of the Compact defines the term "Gaming Device" to mean a slot machine.

b. Section 4.3.1 of the Compact authorizes the San Pasqual to operate either: a) the number of Gaming Devices operated by San Pasqual on September 1, 1999; or b) 350 Gaming Devices, whichever is larger. Under § 4.3.1.(b), San Pasqual is authorized to operate and does operated 350 Gaming Devices as a matter of right.

c. Section 4.3.2.2 of the Compact provides that San Pasqual may acquire Gaming Device licenses to operate Gaming Devices in excess of 350. For each Gaming Device license obtained, San Pasqual must pay the applicable fees to be deposited in the Revenue Sharing Trust Fund.*fn2

d. The number of Gaming Device licenses San Pasqual may obtain is limited by the State Aggregate Limit, contained in § 4.3.2.2(a)(1) of the Compact, on the number of Gaming Devices that all tribes in the aggregate may license and the 2,000 per-tribe Gaming Device limit contained in § 4.3.2.2.(a).

e. Section 4.3.2.2(a)(1) of the Compact caps the State Aggregate Limit of licenses as follows:

"The maximum number of machines that all Compact Tribes in the aggregate may license pursuant to this Section shall be a sum equal to 350 multiplied by the number of Non-Compact tribes as of September 1, 1999, plus the difference between 350 and the lesser number authorized under Section 4.3.1." *fn3 ]

f. Currently, San Pasqual is authorized to operate 1,572 Gaming Devices.

SAC ¶ 16 (emphasis added); see Compl. Exh. A.

San Pasqual alleges the State has "issued several different and wildly conflicting conclusions that the 1999 Model Compacts, including San Pasqual's Compact, authorize as many as 60,000 Gaming Device licenses to be dispersed through the Gaming Device license draw process," whereas in or around June 2002, Defendants allegedly "breached" the Compact by "unilaterally and erroneously determin[ing] that the State Aggregate Limit stated in § 4.3.2.2(a)(1) of the Compact authorizes a Statewide Aggregate Limit of only 32,151 Gaming Device licenses," a figure it continues to enforce. SAC ¶¶ 22-23. San Pasqual does not allege a breach of contract cause of action.*fn4 Rather, the tribe uses its breach allegations as a "backdrop" to illustrate "the State's wildly inconsistent determinations and ultimate refusal to make available all Gaming Device licenses authorized by the Compact," purportedly warranting judicial "determination of the number of Gaming Device licenses authorized in the aggregate by the Compact between the State and San Pasqual." SAC ¶ 24.

San Pasqual relies on its own calculation of a higher aggregate number of licences, applying the 1999 Compact formula. San Pasqual wants the court to declare "the State Aggregate Limit authorizes at least 42,700 Gaming Device licenses" (SAC ΒΆ 25) are available through the draw process, rather than the State's lower calculation in order to force the State to revisit its decision to deny San Pasqual's request for additional Gaming Device licenses on the stated ground "there are no more Gaming Device licenses ...


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