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Rumsey Indian Rancheria of Wintun Indians of California v. Dickstein

March 5, 2008

RUMSEY INDIAN RANCHERIA OF WINTUN INDIANS OF CALIFORNIA; RUMSEY GOVERNMENT PROPERTY FUND I, LLC; RUMSEY DEVELOPMENT CORPORATION; RUMSEY TRIBAL DEVELOPMENT CORPORATION; RUMSEY MANAGEMENT GROUP; AND RUMSEY AUTOMOTIVE GROUP, PLAINTIFFS,
v.
HOWARD DICKSTEIN; JANE G. ZERBI; DICKSTEIN & ZERBI; DICKSTEIN & MERIN; ARLEN OPPER; OPPER DEVELOPMENT, LLC; METRO V PROPERTY MANAGEMENT COMPANY; CAPITAL CASINO PARTNERS I; MARK FRIEDMAN; FULCRUM MANAGEMENT GROUP, LLC; FULCRUM FRIEDMAN MANAGEMENT GROUP, LLC, DBA FULCRUM MANAGEMENT GROUP, LLC; ILLINOIS PROPERTY FUND I CORPORATION; ILLINOIS PROPERTY FUND II CORPORATION; ILLINIOS PROPERTY FUND III CORPORATION; 4330 WATT AVENUE, LLC; AND DOES 1-100, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER

Plaintiffs move to remand this action to state court. Defendants Howard Dickstein, Jane G. Zerbi, Distein & Zerbi and Dickstein & Merin ("Defendants") oppose the motion. Oral arguments on the motion were heard February 11, 2008. For the reasons stated, Plaintiffs' motion is granted and the case is remanded to state court.

BACKGROUND

Plaintiffs filed this action in Superior Court of the State of California in the County of Yolo on October 9, 2007. Plaintiff Rumsey Band of Wintun Indians ("the Tribe") is a sovereign Indian tribe who owns the Cache Creek Casino Resort. (Compl. ¶¶ 1, 3(b).) Defendant Howard Dickstein ("Dickstein") is the Tribe's former attorney and Defendant Arlen Opper ("Opper") is the Tribe's former financial advisor. (Id. ¶ 2.) Plaintiffs allege that Opper and Dickstein "repeatedly involved the Tribe in complicated investments or transactions in which the business terms were more favorable to others than they were to the Tribe. Many such deals were fraught with self-dealing and conflicts of interest they failed to disclose." (Id. ¶ 2.) Plaintiffs further allege that Opper collected fees for purportedly managing Tribal assets, without actually managing them[, and] Opper's entire method and structure of compensation was an artifice created [by Opper and Dickstein] to avoid regulatory oversight of Opper's management of an Indian-owned gaming facility, which was illegal without the prior approval of the National Indian Gaming Commission.

(Id. ¶ 7.) Plaintiffs' Complaint comprises fourteen state law claims including breach of contract, breach of fiduciary duty, unjust enrichment and violation of the California Business and Professions Code Section 17200. (Id. at 34:21, 36:11, 40:13, 50:14, 52:2.)

On November 8, 2007, Defendants removed the action to this Court under 28 U.S.C. §§ 1441 and 1446, arguing that federal question jurisdiction exists because the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701-2721, completely preempts Plaintiffs' state law claims and because Plaintiffs' claims raise substantial questions of federal law. (Notice of Removal ¶¶ 1, 2, 10.)

Congress passed the Indian Gaming Regulatory Act ("IGRA") "to provide a statutory basis for the operation and regulation of gaming by Indian tribes." Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 48 (1996). IGRA established the National Indian Gaming Commission ("NIGC") to oversee gaming activities on tribal lands. 25 U.S.C. §§ 2704, 2706. IGRA permits tribes to enter into management contracts for the operation and management of their gaming facilities subject to the NIGC's approval, which includes ensuring that the contracts provide minimum protection for the tribes. Id. § 2711. The NIGC also has the authority to hold a hearing and void any management contract that violates IGRA. Id. § 2711(f). NIGC regulations further establish that any management contract that is not approved by the NIGC is void. 25 C.F.R. § 533. Decisions by the NIGC are final agency actions for purposes of the Administrative Procedures Act and are appealable to a federal district court. 25 U.S.C. § 2714.

REMOVAL STANDARDS

"[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by [] the defendants, to the district court [] for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). The removal statute is strictly construed against removal jurisdiction, see Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992), and the party seeking removal "has the burden of establishing that removal [is] proper." Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). There is a "'strong presumption' against removal" with "any doubt" resolved in favor of remand. Gaus, 980 F.2d at 566.

Defendants' removal is premised on allegations that federal question jurisdiction exists. To sustain removal on this basis, "a defendant [must establish] Plaintiff's case 'arises under' federal law." Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 10 (1983). "The presence or absence of federal-question jurisdiction is governed by the 'well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint . . . ." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). "As the master of the complaint, a plaintiff may defeat removal by choosing not to plead independent federal claims." ARCO Envtl. Remediation, L.L.C., v. Dep't of Health & Envtl. Quality, 213 F.3d 1108, 1114 (9th Cir. 2000) (citing Caterpillar Inc., 482 U.S. at 399). However, "the artful pleading doctrine is a useful procedural sieve to detect traces of federal subject matter jurisdiction in a particular case," through a determination of whether Plaintiffs have "artfully phrased a federal claim by dressing it in state law attire." Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d 1033, 1042 (9th Cir. 2003). Even where the complaint does not indicate on its face that a case "arises under" federal law, jurisdiction may lie if "Congress . . . so completely pre-empt[s] a particular area that any civil complaint raising [Plaintiffs'] select group of claims is necessarily federal in character," Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987), or when the claims "turn on substantial questions of federal law." Grable & Sons Metal Prods. Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312 (2005).

ANALYSIS

I. Complete Preemption

Defendants argue that "IGRA provides a textbook example of an exclusive federal regulatory regime, sufficient to convert state claims, such as those advanced by the Tribe, into federal claims." (Opp'n at 4:26-5:7 (citing Great W. Casinos, Inc. v. Morango Band of Mission Indians, 74 Cal. App. 4th 1407, 1428 (1999); Gaming Corp. of Am. v. Dorsey & Whitney, 88 F.3d 536, 543 (8th Cir. 1996)).) Defendants argue evidence of this exclusive federal regime is IGRA's creation of the NIGC to monitor and investigate tribal gaming activity . . . . The NIGC Chairman is responsible for approving all Indian gaming management contracts pursuant to federal guidelines . . . . If the Chairman fails to act in a timely manner or a tribe wishes to appeal the Chairman's decision, IGRA specifies the United States District Courts as the exclusive jurisdiction for relief.

(Opp'n at 5:17-22 (citing 25 U.S.C. ยงยง 2706, 2711, 2711(d), 2714).) Defendants argue Plaintiffs' claims fall within ...


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