This matter is before the court on defendants State of California, California Gambling Control Commission (the "Commission" or "CGCC"), and Governor Arnold Schwarzenegger's (collectively, the "defendants") motion for judgment on the pleadings against plaintiff Cachil Dehe Band of Wintun Indians of the Colusa Indian Community ("Colusa"), defendants' motion for partial summary judgment against Colusa, Colusa's motion for summary judgment, defendants' motion to dismiss plaintiff-intervenor Picayune Rancheria of the Chukchansi Indians' ("Picayune") complaint, defendants' motion for summary judgment against Picayune, and Picayune's joinder in Colusa's motion for summary judgment. The court heard oral argument on the motions on February 20, 2009.*fn1 The court allowed the parties to submit supplemental briefing regarding the size of the statewide license pool under the 1999 Compact, the last of which was filed on April 8, 2009.
Plaintiff Colusa is an American Indian Tribe with a governing body duly recognized by the Secretary of the Interior. (Pl.s' Compl. ("Compl."), filed Oct. 25, 2004, ¶ 2). Plaintiff- intervenor Picayune is also a federally recognized Indian tribe. (Compl. in Intervention, filed Jan. 29, 2009, ¶ 8). In April 1999, then-Governor Gray Davis ("Davis") invited Colusa and all other federally-recognized tribes in California to a meeting in Los Angeles, at which Davis announced his intention to negotiate a compact allowing Class III gaming with California's tribes. (Defs.' Resp. to Pl. Colusa's Stmt. of Undisp. Facts ("DUF") [Docket #80-3], filed Feb. 6, 2009, ¶ 1). Colusa was part of a group of approximately 80 tribes that participated in negotiations with the team appointed by Davis. (Id. ¶ 2). Colusa attended and was represented by legal counsel at all of the negotiation meetings, the last of which took place in Sacramento on September 9, 1999. (Id.)
Colusa and Picayune entered into Class III Gaming Compacts (the "Compact") with the State of California (the "State") in 1999. (Id. ¶ 24; see Tribal-State Compact between Colusa Indian Community and State of California ("Compact"), attached to Stipulated Record of Documentary Evidence ("Stip. R.") [Docket #62], filed Jan. 20, 2009). The Compact was ratified by the Legislature on September 10, 1999, and both Colusa and Picayune's Compact has been in effect since May 16, 2000. (See Pl. Colusa's Resp. to Defs.' Stmt. of Undisp. Facts ("PUF") [Docket #79-3], filed Feb. 6, 2009, ¶ 4; DUF ¶ 7; 65 Fed. Reg. 31189-01 (May 16, 2000)). 55 other tribes (the "Compact Tribes") also executed virtually identical compacts with the State. (Compl. ¶ 24; Letter, Hill to Burton, Stip. R., at 63; see Artichoke Joe's California Grand Casino v. Norton, 353 F.3d 712, 717-18 (9th Cir. 2003); Artichoke Joe's California Grand Casino, 216 F. Supp. 2d 1084, 1094 (E.D. Cal. 2002)). At their core, these compacts authorize Class III gaming pursuant to certain restrictions.
1. Limitations on Gaming Device Licenses
The Compact sets forth various provisions relating to the number of Class III Gaming Devices a Compact Tribe may operate. The Compact sets the limit of the amount of Gaming Devices operated by each individual tribe at 2,000. (Compact § 188.8.131.52(a)). A tribe must obtain a Gaming Device license for each device it seeks to operate in excess of the number of terminals already operated as of September 1, 1999. (DUF ¶ 8; Compact § 4.3.1).
The Compact also sets a statewide maximum on the number of Gaming Devices that all Compact Tribes may license in the aggregate. (Id.) This statewide maximum is determined by a formula set forth in the Compact. (Id.; PUF ¶ 3.) Specifically, the Compact provides:
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.
(Compact § 184.108.40.206(a)(1)). Under defendants' calculation of the formula, the license pool consists of 32,151 licenses. (DUF ¶ 34). Plaintiffs assert that defendants' interpretation of the Compact is incorrect and that more licenses are available under the equation.
2. The License Draw Tier System
The Compact also provides that Gaming Device licenses are distributed among all the 1999 Compact Tribes pursuant to the license draw process. (Compact § 220.127.116.11). Tribes are awarded licenses based upon the tribe's placement in one of five priority tiers. (Id.) Specifically, the Compact provides:
Licenses to use Gaming Devices shall be awarded as follows:
(i) First, Compact Tribes with no Existing Devices (i.e., the number of Gaming Devices operated by a Compact Tribe as of September 1, 1999) may draw up to 150 licenses for a total of 500 Gaming Devices;
(ii) Next, Compact Tribes authorized under Section 4.3.1 to operate up to and including 500 Gaming Devices as of September 1, 1999 (including tribes, if any, that have acquired licenses through subparagraph (i)), may draw up to an additional 500 licences, to a total of 1000 Gaming Devices;
(iii) Next, Compact Tribes operating between 501 and 1000 Gaming Devices as of September 1, 1999 (including tribes, if any, that have acquired licenses through subparagraph (ii)), shall be entitled to draw up to an additional 750 Gaming Devices;
(iv) Next, Compact Tribes authorized to operate up to and including 1500 gaming devices (including tribes, if any, that have acquired licenses through subparagraph (iii)), shall be entitled to draw up to an additional 500 licenses, for a total authorization to operate up to 2000 gaming devices.
(v) Next, Compact Tribes authorized to operate more than 1500 gaming devices (including tribes, if any, that have acquired licenses through subparagraph (iv)), shall be entitled to draw additional licenses up to a total authorization to operate up to 2000 gaming devices.
(Compact § 18.104.22.168(a)(3)). Defendants placed Colusa in the third draw priority tier for its initial draw on September 5, 2002. (DUF ¶¶ 11-12). Subsequently, it was placed in the fourth draw priority tier and then the fifth draw priority tier. (DUF ¶¶ 17, 24). Colusa contends that it should have been placed in the third draw priority tier for all draws.
3. Deposit in the Revenue Sharing Trust Fund
In addition to authorizing Class III gaming, the Compact also provides for revenue sharing with non-gaming tribes. (Compact ¶ 22.214.171.124). The Revenue Sharing Trust Fund ("RSTF") is a fund created by the Legislature and administered by the Commission, as trustee, "for the receipt, deposit, and distribution of monies paid." (Compact § 4.3.2). The revenue sharing provisions of the Compact provide that Non-Compact Tribes shall receive $1.1 million per year, unless there are insufficient funds, in which case, the available monies in the RSTF shall be distributed in equal shares to the Non-Compact Tribes.*fn3 (Compact § 126.96.36.199).
As a condition of acquiring licenses to operate Gaming Devices, the Compact requires that Colusa deposit in the RSTF "a non-refundable one-time pre-payment fee in the amount of $1,250 per Gaming Device being licensed." (Compact § 188.8.131.52(e)). The Commission applies this pre-payment to a tribe's annual license fees. However, a tribe does not owe annual license fees on any of the first 350 licenses it obtains through the license draw process. (DUF ¶ 51). Colusa has not been required to pay any license fees as is has drawn a total of 323 Gaming Device licenses through the draw process. (See DUF ¶ 52).
4. The Conduct of the Parties
Shortly after the conclusion of negotiations in September 1999, and in anticipation of the effectiveness of the 1999 Tribal-State Compacts, many tribes acted pursuant to § 184.108.40.206 of their respective compacts to create a system for issuing Gaming Device Licenses. (DUF ¶ 40). The Sides Accounting Firm ("Sides") administered this initial draw system (the "Sides process"). (Id.) By letter to Sides dated May 10, 2000, Special Counsel to the Governor and the Chief Deputy Attorney General acknowledged that the California Indian Tribes had reached an agreement on procedures for drawing machine licenses and clarified the requirements for the draw system provided in the compacts. (Letter to Sides, Stip. R., at 65-67). Specifically, the letter noted the State's expectation that no more than the available number of licenses would be issued through the Sides process. (Id. at 66-67).
The first Sides process draw occurred on or about May 15, 2000. (DUF ¶ 40). Through the Sides process, 29,398 putative gaming device licenses were issued to 38 tribes between May 15, 2000, and February 28, 2001. (Attachment A to Minutes of CGCC meeting, Stip. R., at 80). Sides also collected the one-time prepayment fees of $1,250 for each license issued in the process as well as some of the license fees that were due on a quarterly basis. (Decl. of Gary Qualset ("Qualset Decl.") [Docket #75-3], filed Feb. 6, 2009, ¶ 3).
However, defendants assert that although repeatedly asked, Sides consistently refused to disclose the Compact Tribes that had engaged it to conduct the draws. (Id. ¶ 4). Sides also consistently refused to disclose the number of Gaming Device licenses issued as well as the nature and source of the payments he presented to go into the RSTF. (Id.)
On or about March 13, 2001, Gray Davis issued Executive Order D-31-01, in which he declared that the Commission had exclusive control over the issue of Gaming Device licensing under the Compact. (DUF ¶ 42). By letter dated March 16, 2002, the Chief Deputy Legal Affairs Secretary to the Governor and the Chief Deputy Attorney General directed Sides to cease any further Gaming Device license draws. (Qualset Decl. ¶ 6). The letter noted that Sides' disclosure of the information relating to the number of licenses issued was necessary for the Commission to carry out its Compact duties as trustee of the RSTF. (Id.; Ex. B to Qualset Decl.). Over the next months, defendants contend that the Commission had difficulties administering the RSTF based upon the lack of accurate and complete information from Sides or the Compact Tribes relating to the licenses drawn and the fees received. (Qualset Decl. ¶¶ 9-10). In August 2001, the Department of Justice, Division of Gambling Control issued an investigative subpoena for production of records relating to the Sides process. (Id. ¶ 10).
However, in December 2001, Sides sent out an announcement that a draw would be conducted on December 31, 2001. (Id. ¶ 13). Sides refused to voluntarily halt the scheduled draw. (Id. ¶ 15). Thus, the Commission sought a temporary restraining order in Sacramento County Superior Court, which was granted on December 28, 2001. (Id. ¶ 12; Ex. G to Qualset Decl.). Pursuant to a settlement agreement effective January 7, 2007, Sides agreed not to conduct further license draws, and the Commission dismissed its action. (Id. ¶ 16; Ex. H to Qualset Decl.).
In June 2002, the Commission declared that the licenses issued through the Sides process were invalid and that they would be replaced by licenses issued by the Commission. (Attachment A to Minutes of CGCC meeting, Stip. R., at 88). Subsequently, the Commission assumed sole responsibility for the administration of the license draw system. (DUF ¶ 10).
Colusa was operating 523 Gaming Devices as of September 1, 1999. (DUF ¶ 9). As such, it was placed in the third priority tier for the first round of draws it participated in on September 5, 2002. (DUF ¶¶ 11-12). Colusa drew 250 licenses from the third tier in the September 2002 draw. (DUF ¶ 14). Colusa tendered a check in the amount of $312,500 as the non-refundable one-time pre-payment fee. (DUF ¶ 48). The Commission conducted another round of license draws on December 19, 2003, and placed Colusa in the fourth priority tier. (DUF ¶¶ 16-17). Colusa requested 377 licenses, but received none because the Commission determined that all available licenses had been issued to the tribes drawing from the first three priority tiers. (DUF ¶¶ 19). On October 21, 2004, the Commission conducted another round of license draws and again placed Colusa in the fourth priority tier. (DUF ¶¶ 20-21). Colusa requested 341 licenses and deposited a pre-payment of $471,200, but received only 73 licenses because too few licenses were available to satisfy Colusa's full request. (DUF ¶¶ 22, 49). The Commission refunded $380,000, but retained $91,250 in pre-payments for the licenses actually received. In every draw subsequently administered, the Commission has assigned Colusa to the fifth (and last) priority tier, and Colusa has not been awarded any more licenses. (DUF ¶ 24). Since the October 21, 2004 draw, Colusa has been authorized to operate 846 Gaming Devices. (DUF ¶ 23). Colusa has made pre-payments in the amount of $403,750. (DUF ¶ 52). However, because it has only drawn a total of 323 Gaming Device licenses through the draw process, it has not owed annual license fees. (See DUF ¶ 51).
By letter dated October 11, 2006, Colusa notified the Commission of its desire to acquire additional licences and asked for confirmation that the Commission would conduct a draw within 30 days of receiving the letter. (DUF ¶ 64). In August 2007, Colusa repeated its request for a draw. (DUF ¶ 66). However, in both instances the Commission declined to conduct a draw because, under its calculations, no licences existed in the statewide license pool at the time of the requests. (DUF ¶ 67; see DUF ¶ 65). As such, conducting a draw "would be an empty and futile act." (DUF ¶ 67). As of January 20, 2009, the statewide license pool contained no available licenses under defendants' interpretation of the maximum number of gaming devices authorized under § 220.127.116.11(a)(1) of the Compact. (Defs.' Stmt. of Undisp. Facts in Supp. of Mot. for Summ. J. on Picayune's Compl. ("DPUF") [Docket #67-4], filed Jan. 28, 2009, ¶ 2).
On October 25, 2004, plaintiff filed a complaint in this court, alleging violations of the Compact. Plaintiff asserts that defendants violated the Compact by: (1) excluding the Tribe from participating in the third priority tier in the December 19, 2003 round of draws; (2) unilaterally determining the number of Gaming Device licenses authorized by § 18.104.22.168(a)(1) of the Compact; (3) failing to refund money paid pursuant to the nonrefundable one-time pre-payment fee set forth in § 22.214.171.124(e) of the Compact; (4) CGCC conducting rounds of draws of Gaming Device licenses without authority; and (5) failing to negotiate in good faith.*fn4 On March 28, 2006, defendants filed a motion for judgment on the pleadings, seeking to dismiss plaintiff's first, second, third, and fourth claims for relief for failure to join necessary and indispensable parties and plaintiff's fifth claim for relief for failure to exhaust non-judicial remedies. By order dated May 16, 2006 (the "May 16 order"), the court granted defendants' motion.
Colusa appealed the court's May 16 order.*fn5 The Ninth Circuit reversed the court's ruling that Colusa's first four claims required joinder pursuant to Rule 19 and remanded for further proceedings consistent with its opinion. Cachil Dehe Band of Wintun Indians of the Colusa Indian Cmty. ("Colusa") v. California, 547 F.3d 962 (9th Cir. 2008). The Ninth Circuit's mandate was filed in this court on November 14, 2008.
In the interim, on June 5, 2007, Colusa filed a second action in this court, alleging that defendants violated the Compact by (1) refusing to schedule and conduct a round of draws; and (2) counting multi-station games as equal to the number of terminals. (First Am. Compl. in Case No. 2:07-cv-1065 [Docket #22], filed Feb. 8, 2008). Colusa also alleged that defendants failed to negotiate in good faith in violation of both the Compact and the Indian Gaming Regulatory Act, 25 U.S.C. § 2710.
On December 10, 2008, the court consolidated the two actions and set a revised schedule for dispositive motions. On January 2, plaintiff-intervenor Picayune filed a motion to intervene in the action, alleging that the Commission breached its Gaming Compact with the State of California by miscalculating the total number of licenses in the gaming device license pool. (Compl. in Intervention). Defendants opposed the motion to intervene on the sole ground that Picayune's claim was subject to dismissal under Federal Rule of Civil Procedure 19 for failure to join indispensable parties, the very argument rejected by the Ninth Circuit's decision. The court granted Picayune's motion, but maintained the existing schedule for the parties' dispositive motions. (Order [Docket #63], filed Jan. 22, 2009).
On a motion to dismiss, the allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). The court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). Thus, the plaintiff need not necessarily plead a particular fact if that fact is a reasonable inference from facts properly alleged. See id.
Nevertheless, it is inappropriate to assume that the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). Moreover, the court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986).
Ultimately, the court may not dismiss a complaint in which the plaintiff alleged "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1973 (2007). Only where a plaintiff has not "nudged [his or her] claims across the line from conceivable to plausible," is the complaint properly dismissed. Id. "[A] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002) (quoting Hudson v. King & Spalding, 467 U.S. 69, 73 (1984)).
In ruling upon a motion to dismiss, the court may consider only the complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. Of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp. 2d 1035, 1042 (C.D. Cal. 1998).
B. Motion for Judgment on the Pleadings
Rule 12(c) of the Federal Rules of Civil Procedure provides, "After the pleadings are closed -- but early enough not to delay trial -- a party may move for judgment on the pleadings." In considering a motion for judgment on the pleadings, the standard applied by the court is virtually identical to the standard for dismissal for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). Fajardo v. City of Los Angeles, 179 F.3d 698, 699 (9th Cir. 1999).
C. Motion for Summary Judgment
The Federal Rules of Civil Procedure provide for summary judgment where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see California v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998). The evidence must be viewed in the light most favorable to the nonmoving party. See Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc).
The moving party bears the initial burden of demonstrating the absence of a genuine issue of fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party fails to meet this burden, "the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir. 2000). However, if the nonmoving party has the burden of proof at trial, the moving party only needs to show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp., 477 U.S. at 325.
Once the moving party has met its burden of proof, the nonmoving party must produce evidence on which a reasonable trier of fact could find in its favor viewing the record as a whole in light of the evidentiary burden the law places on that party. See Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995). The nonmoving party cannot simply rest on its allegations without any significant probative evidence tending to support the complaint. See Nissan Fire & Marine, 210 F.3d at 1107. Instead, through ...