Big Lagoon Rancheria v. State of California, No. 4:2009cv01471 - Document 101 (N.D. Cal. 2010)
Court Description: ORDER GRANTING PLAINTIFFS 80 MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS 93 CROSS-MOTION FOR SUMMARY JUDGMENT (Docket Nos. 80 and 93) Further Case Management Conference set for 3/8/2011 02:00 PM. Signed by Judge Claudia Wilken on 11/22/2010. (ndr, COURT STAFF) (Filed on 11/22/2010)
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Big Lagoon Rancheria v. State of California Doc. 101 1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 United States District Court For the Northern District of California 10 BIG LAGOON RANCHERIA, a Federally Recognized Indian Tribe, 11 12 No. 09-01471 CW Plaintiff, v. 13 STATE OF CALIFORNIA, 14 Defendant. / 15 ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT’S CROSS-MOTION FOR SUMMARY JUDGMENT (Docket Nos. 80 and 93) 16 17 Over the past several years, Plaintiff Big Lagoon Rancheria 18 (Big Lagoon or the Tribe) has sought to enter into a tribal-state 19 compact with Defendant State of California that permits it to 20 conduct class III gaming. 21 negotiated in bad faith. 22 an order directing the State to negotiate in good faith, under the 23 Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701, et seq. 24 The State opposes the motion and cross-moves for summary judgment. 25 The motions were heard on August 12, 2010. 26 argument and the papers submitted by the parties, the Court GRANTS 27 Big Lagoon’s motion and DENIES the State’s cross-motion. The Tribe alleges that the State has Big Lagoon moves for summary judgment and Having considered oral 28 Dockets.Justia.com 1 2 3 BACKGROUND I. Legal Background In enacting IGRA in 1988, Congress created a statutory 4 framework for the operation and regulation of gaming by Indian 5 tribes. 6 may conduct certain gaming activities only if authorized pursuant 7 to a valid compact between the tribe and the state in which the 8 gaming activities are located. 9 Indian tribe requests that a state negotiate over gaming activities See 25 U.S.C. § 2702. IGRA provides that Indian tribes See id. § 2710(d)(1)(C). If an United States District Court For the Northern District of California 10 that are permitted within that state, the state is required to 11 negotiate in good faith toward the formation of a compact that 12 governs the proposed gaming activities. 13 Rumsey Indian Rancheria of Wintun Indians v. Wilson, 64 F.3d 1250, 14 1256-58 (9th Cir. 1994), amended on denial of reh’g by 99 F.3d 321 15 (9th Cir. 1996). 16 state that fails to negotiate in good faith, in order to compel 17 performance of that duty, see 25 U.S.C. § 2710(d)(7), but only if 18 the state consents to such suit. 19 517 U.S. 44 (1996). 20 suits. 21 Employees Int’l Union v. Davis, 21 Cal. 4th 585, 615 (1999). 22 See id. § 2710(d)(3)(A); Tribes may bring suit in federal court against a See Seminole Tribe v. Florida, The State of California has consented to such See Cal. Gov’t Code § 98005; Hotel Employees & Rest. IGRA defines three classes of gaming on Indian lands, with a 23 different regulatory scheme for each class. 24 defined as “all forms of gaming that are not class I gaming or 25 class II gaming.” 26 among other things, slot machines, casino games, banking card 27 games, dog racing and lotteries. 28 25 U.S.C. § 2703(8). Class III gaming is Class III gaming includes, Class III gaming is lawful only 2 1 where it is (1) authorized by an appropriate tribal ordinance or 2 resolution; (2) located in a state that permits such gaming for any 3 purpose by any person, organization or entity; and (3) conducted 4 pursuant to an appropriate tribal-state compact. 5 § 2710(d)(1). 6 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 See id. IGRA prescribes the process by which a state and an Indian tribe are to negotiate a gaming compact: Any Indian tribe having jurisdiction over the Indian lands upon which a class III gaming activity is being conducted, or is to be conducted, shall request the State in which such lands are located to enter into negotiations for the purpose of entering into a Tribal-State compact governing the conduct of gaming activities. Upon receiving such a request, the State shall negotiate with the Indian tribe in good faith to enter into such a compact. Id. § 2710(d)(3)(A). IGRA provides that a gaming compact may include provisions relating to (i) the application of the criminal and civil laws and regulations of the Indian tribe or the State that are directly related to, and necessary for, the licensing and regulation of such activity; 18 19 (ii) the allocation of criminal and civil jurisdiction between the State and the Indian tribe necessary for the enforcement of such laws and regulations; 20 21 (iii) the assessment by the State of such activities in such amounts as are necessary to defray the costs of regulating such activity; 22 23 (iv) taxation by the Indian tribe of such activity in amounts comparable to amounts assessed by the State for comparable activities; 24 (v) remedies for breach of contract; 25 26 (vi) standards for the operation of such activity and maintenance of the gaming facility, including licensing; and 27 28 3 1 (vii) any other subjects that are directly related to the operation of gaming activities. 2 Id. § 2710(d)(3)(C). 3 If a state fails to negotiate in good faith, the Indian tribe 4 may, after the close of the 180-day period beginning on the date on 5 which the Indian tribe asked the state to enter into negotiations, 6 initiate a cause of action in a federal district court. See id. 7 § 2710(d)(7)(A)(i). In such an action, the tribe must first show 8 that no tribal-state compact has been entered into and that the 9 state failed to respond in good faith to the tribe’s request to United States District Court For the Northern District of California 10 negotiate. See id. § 2710(d)(7)(B)(ii). Assuming the tribe makes 11 this prima facie showing, the burden then shifts to the state to 12 prove that it did in fact negotiate in good faith. See id.1 If 13 the district court concludes that the state failed to negotiate in 14 good faith, it “shall order the State and Indian Tribe to conclude 15 such a compact within a 60-day period.” Id. § 2710(d)(7)(B)(iii). 16 17 18 19 20 21 22 23 24 25 26 27 28 1 Specifically, IGRA provides: (i) An Indian tribe may initiate a cause of action [to compel the State to negotiate in good faith] only after the close of the 180-day period beginning on the date on which the Indian tribe requested the State to enter into negotiations under paragraph (3)(A). (ii) In any action [by an Indian tribe to compel the State to negotiate in good faith], upon the introduction of evidence by an Indian tribe that– (I) a Tribal-State compact has not been entered into under paragraph (3), and (II) the State did not respond to the request of the Indian tribe to negotiate such a compact or did not respond to such request in good faith, the burden of proof shall be upon the State to prove that the State has negotiated with the Indian tribe in good faith to conclude a Tribal-State compact governing the conduct of gaming activities. 25 U.S.C. § 2710(d)(7)(B). 4 1 If no compact is entered into within the next sixty days, the 2 Indian tribe and the state must then each submit to a court- 3 appointed mediator a proposed compact that represents their last 4 best offer. 5 proposed compact that “best comports with the terms of [IGRA] and 6 any other applicable Federal law and with the findings and order of 7 the court.” 8 does not consent to the compact selected by the mediator, the 9 mediator notifies the Secretary of the Interior, who then See id. § 2710(d)(7)(B)(iv). See id. The mediator chooses the If, within the next sixty days, the state United States District Court For the Northern District of California 10 prescribes the procedures under which class III gaming may be 11 conducted. 12 II. 13 See id. § 2710(d)(7)(B)(vii). Prior Proceedings This is the second action concerning Big Lagoon’s efforts to 14 secure a tribal-state compact for class III gaming. 15 lawsuit, Big Lagoon Rancheria v. California (Big Lagoon I), Case 16 No. 99-4995 CW (N.D. Cal.), related to the parties’ earlier 17 negotiations, which commenced after the Tribe’s March, 1998 request 18 to enter into a compact. 19 alleged that the State did not negotiate in good faith. The first In Big Lagoon I, as here, the Tribe 20 Because the background of that case is explained in detail in 21 the Court’s March 18, 2002 Order on Big Lagoon’s second motion for 22 summary judgment, it will not be repeated here in its entirety. 23 The Court recounts, however, facts relevant to the Tribe’s current 24 action. 25 On October 5, 2001, Big Lagoon filed a motion for summary 26 judgment and sought an order compelling the State to negotiate in 27 good faith. 28 The Tribe opposed the State’s insistence that it enter 5 1 into a “side letter agreement,” under which the Tribe would not 2 have commenced construction of a casino or conducted class III 3 gaming until it had “completed all environmental reviews, 4 assessments, or reports, and received approval for its construction 5 by the State through its agencies.” 6 Big Lagoon I. 7 impose its environmental and land use regulations on the Tribe 8 absent authority from Congress.” 9 could negotiate for compliance with such regulations “to the degree Order of Mar. 18, 2002, at 8, The Court held that, under IGRA, the State “may not Id. at 12-13. However, the State United States District Court For the Northern District of California 10 to which they are ‘directly related’ to the Tribe’s gaming 11 activities or can be considered ‘standards’ for the operation of 12 and maintenance of the Tribe’s gaming facility under [25 U.S.C.] 13 § 2710(d)(3)(C)(vi) and (vii).” 14 letter agreement, the Court stated, 15 16 17 18 19 20 21 22 23 Id. at 15. Concerning the side [T]he State’s continued insistence that the Tribe agree to this broad side letter agreement would constitute bad faith. The State may in good faith ask the Tribe to make particular concessions that it did not require of other tribes, due to Big Lagoon’s proximity to the coastline or other environmental concerns unique to Big Lagoon. The State could demonstrate the good faith of its bargaining position by offering the Tribe concessions in return for the Tribe’s compliance with requests with which the other tribes were not asked to comply. However, the State may not in good faith insist upon a blanket provision in a tribal-State compact with Big Lagoon which requires future compliance with all State environmental and land use laws, or provides the State with unilateral authority to grant or withhold its approval of the gaming facility after the Compact is signed, as it proposed in the side letter agreement. 24 Id. at 19. 25 for summary judgment, concluding that a determination of bad faith 26 was premature “due to the novelty of the questions at issue 27 regarding good faith bargaining under IGRA” and because the 28 The Court denied without prejudice the Tribe’s motion 6 1 “Court’s March 22, 2000 Order gave the State reason to believe that 2 it could negotiate on environmental and land use issues.” 3 parties were ordered to resume negotiations consistent with the 4 guidance provided in the Court’s Order. 5 Id. The On April 2, 2003, frustrated by the pace of the negotiations, 6 Big Lagoon filed another motion for summary judgment. 7 had offered an alternative proposal, under which it would enter 8 into a compact with the Tribe in exchange for, among other things, 9 a requirement that the Tribe site its gaming facility on a twenty- The State United States District Court For the Northern District of California 10 five-acre parcel that it would purchase from the State. 11 was inclined to grant Big Lagoon’s motion. 12 June 11, 2003, the Court stayed its ruling and, instead, set a 13 deadline by which the parties were to finalize a draft compact 14 based on the State’s new proposal. 15 deadline. 16 The Court However, in an order of The parties failed to meet the On August 4, 2003, the Court lifted the stay on its decision 17 and denied Big Lagoon’s motion without prejudice. 18 delay was attributable to demands made by the Tribe, not the 19 State’s intransigence, the Court directed the parties to continue 20 negotiations. 21 Because the Negotiations continued through 2005 and, in the intervening 22 period, the governorship changed hands. 23 Tribe and the Schwarzenegger administration entered into a 24 settlement agreement, under which Big Lagoon would have been 25 granted a tribal-State compact permitting the Tribe to operate, 26 along with the Los Coyotes Band of Cahuilla and Cupeño Indians, a 27 joint gaming operation in Barstow, California. 28 7 On August 17, 2005, the Under this so- 1 called “Barstow Compact,” Big Lagoon agreed not to establish gaming 2 facilities on its own lands. 3 agreement and the Barstow Compact, however, was contingent upon 4 several conditions, one of which was ratification of the Barstow 5 Compact by the California Legislature. 6 The execution of the settlement The Legislature did not ratify the Barstow Compact in either 7 its 2006 or 2007 legislative sessions. 8 the Barstow Compact became null and void in September, 2007. 9 III. Current Round of Negotiations United States District Court For the Northern District of California 10 Accordingly, by its terms, As contemplated by the settlement agreement, Big Lagoon and 11 the State began a new round of negotiations. 12 2007, the Tribe sent a letter to the State, indicating its desire 13 to conduct class III gaming “on the trust lands that constitute the 14 Big Lagoon Rancheria contiguous to Big Lagoon along the coastline 15 in Humboldt County.” 16 On September 18, Engstrom Decl., Ex. 2. On November 19, 2007, the State sent a draft compact to the 17 Tribe. 18 in siting the Tribe’s gaming facilities on off-reservation lands. 19 The draft compact contained a section on “Revenue Contribution,” 20 requiring the Tribe to pay the State a portion of its annual net 21 win. 22 included a provision for “Exclusivity,” which provided that, if the 23 State were to “authorize any person or entity other than an Indian 24 tribe with a federally approved Class III Gaming compact to operate 25 Gaming Devices within” the Tribe’s “core geographic market,” and 26 such person or entity were to so operate, the Tribe could, subject 27 to restrictions, cease to make the payments required by the revenue 28 8 In an accompanying letter, the State expressed an interest Engstrom Decl., Ex. 3 at BL000684. The draft compact also 1 contribution provision discussed above. 2 subsequent compact proposals contained a requirement for revenue 3 contribution and a provision for exclusivity. 4 Id. at BL000688. All On January 31, 2008, the State sent Big Lagoon another 5 proposal, offering the Tribe a compact in exchange for, among other 6 things, siting its gaming operations based on the State’s 7 preferences. 8 construct its facilities at the “Highway Site,” which was “located 9 adjacent to the highway within five miles of the Big Lagoon The State’s preferred option was for the Tribe to United States District Court For the Northern District of California 10 Rancheria.” 11 proposal, the Tribe would have been required to develop at the 12 Highway Site, unless precluded from doing so. 13 Tribe would have been able to develop on its lands only if, for 14 some reason, it could not develop the Highway Site. 15 preferred on-reservation alternative was the so-called “Five- 16 Acre/Rancheria Site.” 17 on a nine-acre parcel comprising the Tribe’s “original rancheria,” 18 “a 50-room casino-related hotel . . . on the Tribe’s post-1988 19 trust lands” and various support facilities located on an adjacent 20 five-acre parcel that the Tribe owned in fee. 21 the event that the Tribe could not gain regulatory approval for use 22 of the five-acre parcel, it could build on what the State called 23 the “Rancheria Site.” 24 casino on the 9 Acre Parcel and a 50-room hotel on the 11 Acre 25 Parcel along with any other related facilities . . . .” 26 BL000794. 27 Acre/Rancheria or Rancheria sites, which were adjacent to 28 Engstrom Decl., Ex. 4 at BL000792. Under the In other words, the The State’s This plan would allow “a 250-device casino” Id. at BL000793. This alternative would allow a “175-device Id. at If the casino had been sited on either the Five- 9 In 1 environmentally-sensitive lands, the Tribe would have been required 2 to comply with additional “Development Conditions.” 3 A. 4 See id., App. The January, 2008 proposal also provided that the Tribe would 5 pay the State a share of its net win, ranging from twelve to 6 twenty-five percent. 7 annual net win and the location of the casino. 8 Tribe’s payments, the State would provide “geographic exclusivity 9 of 50 miles.” The actual rate would depend on the Tribe’s In exchange for the Engstrom Decl., Ex. 4 at BL000794. United States District Court For the Northern District of California 10 On March 21, 2008, through its counsel, Big Lagoon sent a 11 letter to the State, which rejected any siting of its proposed 12 gaming operations on locations “other than the Tribe’s existing 13 trust lands.” 14 proposed that any compact should include a 350-device casino, a 15 120-room hotel and “all amenities (restaurants, spa, meeting rooms, 16 etc.) associated with a modestly-sized, upscale facility.” 17 The Tribe also suggested that any compact “should provide for . . . 18 future expansion.” 19 Engstrom Decl., Ex. 6 at BL000904. The Tribe Id. Id. On May 2, 2008, the State sent the Tribe a letter, which 20 reiterated its desire to site any gaming operation on a location 21 other than the Tribe’s lands. 22 “preserving and protecting, for present and future generations, 23 environmentally significant State resources located adjacent to the 24 rancheria.” 25 proposed a compact that would have permitted the Tribe to operate a 26 99-device casino on the nine-acre parcel within its original 27 rancheria, and a 50-room hotel on the eleven-acre parcel on its 28 The State emphasized its interest in Engstrom Decl., Ex 7 at BL000907. 10 The State then 1 post-1988 trust lands. 2 geographic exclusivity of fifty miles and payments to the State, 3 ranging from ten to twenty-five percent, depending on the Tribe’s 4 annual net win. The proposed compact also provided for 5 On October 6, 2008, Big Lagoon, through its counsel, sent a 6 letter to the State, expressing its belief that the geographical 7 exclusivity offered by the State was “meaningless” because its 8 lands were “in an area in which non-Tribal gaming is unlikely to 9 proliferate . . . .” Engstrom Decl., Ex. 8 at BL000912. And, United States District Court For the Northern District of California 10 although it had considered making payments to the State in earlier 11 proposals, it stated that it was “no longer willing to pay the 12 State what simply amounts to a tax . . . .” 13 Lagoon stated that any final compact would have to include the 14 right to operate up to 350 gaming devices and a hotel with up to 15 100 rooms. 16 have to be deposited solely into the Revenue Sharing Trust Fund 17 (RSTF). 18 license fees that are paid . . . pursuant to the terms of 19 tribal-state gaming compacts for the purpose of making 20 distributions to noncompact tribes.” 21 see also In re Gaming Related Cases (Coyote Valley II), 331 F.3d 22 1094, 1110 (9th Cir. 2003). 23 did not execute a final agreement by November 7, 2008, it would 24 resume its litigation in this Court. 25 Id. at BL000913. The Tribe also proposed that any payments it made would The RSTF contains “moneys derived from gaming device Cal. Gov’t Code § 12012.75; Big Lagoon stated that, if the parties On October 31, 2008, the State sent a letter to the Tribe, 26 which contained its final proposal. 27 was open to siting a 349-device casino on the Tribe’s lands. 28 Big 11 The State indicated that it 1 However, because of such a facility’s proximity to “a State 2 ecological reserve, a State recreation area, and . . . [a] lagoon,” 3 the State proposed that the compact contain environmental 4 mitigation measures. 5 Engstrom Decl., Ex. 9 at BL000918. The State also proposed that the Tribe make quarterly payments 6 of fifteen percent of its net win; unlike the State’s earlier 7 offers, the Tribe’s payments would have been based on a flat rate. 8 The State explained that the fifteen-percent rate was consistent 9 with what it received from other tribes. The State also responded United States District Court For the Northern District of California 10 that its request for “general fund revenue sharing” was in exchange 11 for providing the Tribe with “the exclusive right to conduct gaming 12 in the most populous state in the union.” 13 According to the State, the Tribe would “receive significant value 14 from a compact that provides it with a class III gaming monopoly” 15 and that it was only fair for the State to receive “something of 16 value in return.” 17 permit the Tribe to continue receiving distributions from the RSTF, 18 so long as Big Lagoon operated less than 349 devices and did not 19 use RSTF funds to defray costs “arising out of, connected with, or 20 relating to any gaming activities.” 21 Id. at BL000916. Id. at BL000916-17. The State also offered to Id. The parties failed to execute a compact. On April 3, 2009, 22 the Tribe filed its complaint, alleging that the State failed to 23 negotiate in good faith, in violation of IGRA. 24 25 LEGAL STANDARD Summary judgment is properly granted when no genuine and 26 disputed issues of material fact remain, and when, viewing the 27 evidence most favorably to the non-moving party, the movant is 28 12 1 clearly entitled to prevail as a matter of law. 2 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); 3 Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir. 4 1987). 5 6 Fed. R. Civ. P. DISCUSSION I. State’s Requests for General Fund Revenue Sharing 7 Big Lagoon asserts that the State’s failure to negotiate in 8 good faith is evidenced by the State’s requests for general fund 9 revenue sharing,2 insistence that the Tribe comply with various United States District Court For the Northern District of California 10 environmental and land use regulations and recommendations that the 11 Tribe site its gaming facility off of its tribal lands. 12 As noted above, in its last offer, the State proposed a 13 tribal-State compact that required the Tribe to pay, on a quarterly 14 basis, fifteen percent of its net win into the State’s general 15 fund. 16 the Tribe share its revenue. 17 facie evidence of bad faith. 18 Throughout the negotiation process, the State insisted that The Tribe claims this is prima Under IGRA, “a state may, without acting in bad faith, request 19 revenue sharing if the revenue sharing provision is (a) for uses 20 ‘directly related to the operation of gaming activities’ in 21 § 2710(d)(3)(C)(vii), (b) consistent with the purposes of IGRA, and 22 (c) not ‘imposed’ because it is bargained for in exchange for a 23 ‘meaningful concession.’” Rincon Band of Luiseño Mission Indians 24 25 2 27 The proposed tribe-State compact does not identify the State’s general fund to be the beneficiary of the Tribe’s payments. However, throughout its papers, the State acknowledges that such revenue contributions would be paid into the State’s general fund. See, e.g., State’s Am. Opp’n 6. 28 13 26 1 v. Schwarzenegger, 602 F.3d 1019, 1033 (9th Cir. 2010) (citing 2 Coyote Valley II, 331 F.3d at 1111-15) (emphasis in original). 3 Here, the State’s demands for general fund revenue sharing 4 constitute evidence of bad faith. The State does not dispute that 5 its requests were non-negotiable. Indeed, throughout its 6 communications to the Tribe and briefs on this motion, the State 7 asserted its entitlement to seek revenue sharing as consideration 8 for a gaming compact. 9 BL000916. See, e.g., Engstrom Decl., Ex. 9 at Because the State’s insistence on general fund revenue United States District Court For the Northern District of California 10 sharing amounts to a demand for direct taxation of Big Lagoon, the 11 burden shifts to the State to prove that it nonetheless negotiated 12 in good faith. 13 § 2710(d)(7)(B)(ii). 14 See Rincon, 602 F.3d at 1030; 25 U.S.C. The State makes no effort to do so. It does not argue that 15 the revenue sharing provision is directly related to the operation 16 of gaming activities. 17 revenue sharing is consistent with the purposes of IGRA. 18 the State argues that Rincon was wrongly decided and that, even if 19 the decision stands,3 it is not applicable to this case. Nor does it contend that general fund Instead, 20 As the State acknowledges, the Court is bound to follow 21 Rincon, see Wedbush, Noble, Cooke, Inc. v. SEC, 714 F.2d 923, 924 22 (9th Cir. 1983), and the State fails to demonstrate that Rincon’s 23 24 25 26 27 28 3 In Rincon, the State petitioned the Ninth Circuit for a rehearing en banc, which was denied. However, the Ninth Circuit stayed the issuance of its mandate pending the filing of the State’s petition for a writ of certiorari with the United States Supreme Court. The Supreme Court has not yet ruled on the State’s petition and, accordingly, the Ninth Circuit’s stay remains in effect. Fed. R. App. P. 42(d)(2)(B). 14 1 teachings are not applicable here. 2 desired to expand its gaming operations, which required it to 3 renegotiate provisions of its 1999 compact with the State. 4 F.3d at 1024. 5 here, the State offered to allow the tribe to expand its gaming 6 operations, “but only if Rincon would agree to pay the State 15% of 7 the net win on the new devices, along with an additional 15% fee 8 based on Rincon’s total 2004 net revenue.” 9 offered the tribe an “‘exclusivity provision.’” United States District Court For the Northern District of California 10 In that case, the Rincon tribe 602 Similar to its negotiating position with Big Lagoon As here, the State Id. Id. Applying the IGRA burden-shifting framework described above, 11 the Ninth Circuit held that the State did not rebut the tribe’s 12 prima facie showing that the demand for general fund revenue 13 sharing evidenced a failure to negotiate in good faith. 14 particular, the court concluded that contributions to the State’s 15 general fund were not, as required by IGRA, “directly related to 16 the operation of gaming activities.” 17 § 2710(d)(3)(C)(vii)). 18 was not consistent with the purposes of IGRA. 19 1035-36. 20 offer a “meaningful concession” in exchange for its demand of 21 revenue. 22 which amended the State’s constitution to “authorize tribal gaming 23 in California” and “effectively gave tribes a state constitutional 24 monopoly over casino gaming in California,” id. at 1023, rendered 25 the State’s offer of exclusivity meaningless. 26 explained that 27 28 In Id. at 1033 (citing 25 U.S.C. The court also held that the State’s demand Rincon, 602 F.3d at Finally, the Ninth Circuit held that the State did not Id. at 1036. The court explained that Proposition 1A, The Ninth Circuit in the current legal landscape, “exclusivity” is not a 15 1 2 3 4 5 6 7 8 9 United States District Court For the Northern District of California 10 11 new consideration the State can offer in negotiations because the tribe already fully enjoys that right as a matter of state constitutional law. Moreover, the benefits conferred by Proposition 1A have already been used as consideration for the establishment of the RSTF and SDF [Special Distribution Fund4] in the 1999 compact. . . . The State asserts that it would be unfair to permit Rincon to keep the benefit of exclusivity conferred by Proposition 1A without holding the tribe to an ongoing obligation to periodically acquiesce in some new revenue sharing demand. While we do not hold that no future revenue sharing is permissible, it is clear that the State cannot use exclusivity as new consideration for new types of revenue sharing since it and the collective tribes already struck a bargain in 1999, wherein the tribes were exempted from the prohibition on gaming in exchange for their contributions to the RSTF and SDF. Id. at 1037 (citations omitted). The State attempts to distinguish Rincon by arguing that, 12 unlike the tribe in that case, the Tribe here has not offered 13 anything for the rights granted under Proposition 1A. 14 appears to assert that Proposition 1A exclusivity remains a The State 15 4 16 17 18 19 20 21 22 23 24 The tribes’ payments to the SDF may used by the State for the following purposes: (a) grants for programs designed to address gambling addiction; (b) grants for the support of state and local government agencies impacted by tribal gaming; (c) compensation for regulatory costs incurred by the State Gaming Agency and the state Department of Justice in connection with the implementation and administration of the compact; (d) payment of shortfalls that may occur in the RSTF; and (e) “any other purposes specified by the legislature.” 27 Coyote Valley II, 331 F.3d at 1106; see generally Cal. Gov’t Code § 12012.85. The Coyote Valley II court countenanced the State’s request for payments to the SDF because the State is restricted on what it “can do with the money it receives from the tribes pursuant to the SDF provision, and all of the purposes to which such money can be put are directly related to tribal gaming.” Id. at 1114. 28 16 25 26 1 meaningful concession as to Big Lagoon because the Tribe has not 2 previously offered consideration for it. 3 persuasive. 4 California Constitution or indicator of legislative intent that 5 suggests Big Lagoon is required to offer some form of consideration 6 before exercising rights to which it is already entitled. 7 this argument addresses neither the relationship between general 8 fund revenue sharing and gaming operations nor whether such revenue 9 sharing is consistent with the purposes of IGRA; as explained This argument is not The State does not point to any provision of the Further, United States District Court For the Northern District of California 10 above, both must be established to rebut a prima facie showing of a 11 failure to negotiate in good faith. 12 The State correctly asserts that, under Rincon and Coyote 13 Valley II, it may, in good faith, bargain for some form of revenue 14 sharing. 15 actually did so here. 16 that it negotiated in good faith, notwithstanding revenue sharing 17 demands, if it satisfies the requirements set forth in Rincon. 18 State has not done so. 19 approved of revenue sharing payments by tribes, addressed payments 20 into the RSTF and SDF, not into the general fund. 21 general fund contributions, which are at issue here. 22 However, that it could have done so does not mean it As explained above, the State can establish The Further, the Coyote Valley II court, which Rincon rejected The State offers two additional arguments to justify the 23 propriety of its negotiating position, neither of which are 24 persuasive. 25 because its revenue sharing requests were consistent with the terms 26 to which the Tribe agreed in the Barstow Compact. 27 the post-Barstow negotiations, the Tribe rejected general fund 28 First, it maintains that it negotiated in good faith 17 However, during 1 revenue sharing. 2 relied on the Tribe’s prior position during the most recent round 3 of negotiations. 4 its subjective beliefs are not relevant as to whether it negotiated 5 in good faith. 6 The State does not argue -- nor can it -- that it In addition, as the State emphasizes elsewhere, See Rincon, 602 F.3d at 1041. The State also argues it negotiated in good faith based on the 7 United States Supreme Court’s February, 2009 decision in Carcieri 8 v. Salazar, 129 S. Ct. 1058 (2009). 9 concluded that the Indian Relocation Act (IRA) authorizes the There, the Supreme Court United States District Court For the Northern District of California 10 Secretary of the Interior to acquire land in trust for a tribe only 11 if the tribe was “under the federal jurisdiction of the United 12 States when the IRA was enacted in 1934.” 13 State maintains that Big Lagoon is not such a tribe and that, under 14 Carcieri, the Tribe’s eleven-acre parcel was unlawfully acquired by 15 the Secretary of the Interior. 16 negotiated in good faith because the public interest would be 17 disserved by siting a gaming facility on land that was “unlawfully 18 acquired in trust for Big Lagoon . . . .” 19 129 S. Ct. at 1068. The Thus, the State reasons, it State’s Am. Opp’n 13. At the hearing on the motions, the State acknowledged the 20 flaws in this argument. 21 evidence that the State bargained based on an argument that some of 22 the Tribe’s lands were unlawfully acquired. 23 its last proposal to the Tribe in October, 2008, almost four months 24 before the Supreme Court issued its decision in Carcieri. 25 State cannot establish that it negotiated in good faith through a 26 post hoc rationalization of its actions. 27 516 F.3d 1106, 1113 (9th Cir. 2008) (rejecting counsel’s post hoc 28 The record of negotiations contains no 18 Indeed, the State sent The Cf. Arrington v. Daniels, 1 explanations of agency action as a “substitute for the agency’s own 2 articulation of the basis for its decision”). 3 the State’s after-the-fact challenge to the status of some of the 4 Tribe’s lands runs afoul of Rincon’s teaching that “good faith 5 should be evaluated objectively based on the record of 6 negotiations.” At the very least, 602 F.3d at 1041. 7 Furthermore, the State does not dispute that the Tribe is 8 currently recognized by the federal government or that it has lands 9 on which gaming activity could be conducted. On these facts, the United States District Court For the Northern District of California 10 Tribe is entitled to good faith negotiations with the State toward 11 a gaming compact. 12 the eleven-acre parcel may be in question does not change this 13 result. 25 U.S.C. § 2710(d)(3)(A). That the status of 14 Finally, related to its public interest argument, the State 15 maintains that the Court should deny the Tribe relief because it 16 would be inequitable to require the State to negotiate for a 17 compact involving lands that may have been unlawfully acquired in 18 trust. 19 in equity in disregard of congressional intent. 20 that, once a court finds that a state has failed to negotiate for a 21 compact in good faith, “the court shall order the State and the 22 Indian Tribe to conclude such a compact within a 60-day period.” 23 25 U.S.C. § 2710(d)(7)(b)(iii) (emphasis added). However, the State offers no authority for the Court to act IGRA makes clear 24 The State’s newfound concerns need not go unaddressed. 25 provides a procedure by which the Secretary of the Interior can 26 disapprove of tribal-state compacts. 27 § 2710(d)(8)(B). 28 IGRA See 25 U.S.C. The Secretary could reject a compact between Big 19 1 Lagoon and the State if he were to determine that it violated any 2 provision of IGRA, “any other provision of Federal law that does 3 not relate to jurisdiction over gaming on Indian lands” or “the 4 trust obligations of the United States to Indians.” 5 Id. Because the status of the Tribe and its eleven-acre parcel has 6 no bearing on whether the State negotiated in good faith, the 7 State’s request for a continuance pursuant to Federal Rule of Civil 8 Procedure 56(f) is denied. 9 State’s request to stay the proceedings in this case pending the In addition, the Court denies the United States District Court For the Northern District of California 10 United States Supreme Court’s decision on its petition for a writ 11 of certiorari in Rincon. 12 discretionary stay is warranted. 13 F.3d 1098, 1110 (9th Cir. 2005) (providing factors to be considered 14 in determining the propriety of a discretionary stay under Landis 15 v. N. Am. Co., 299 U.S. 248 (1936)). 16 The State does not establish that a See Lockyer v. Mirant Corp., 398 Accordingly, the Tribe is entitled to summary judgment. 17 State’s cross-motion for summary judgment is denied. 18 II. The 19 State’s Requests for Environmental Mitigation Measures Big Lagoon maintains that, under IGRA, environmental 20 mitigation is not a permissible subject for the compacting process 21 and that the State’s negotiating position amounted to an imposition 22 of such measures, evincing the State’s lack of good faith. 23 The State’s requests for compliance with environmental 24 mitigation measures are not new. 25 in Big Lagoon I, the State made similar requests, to which the 26 Tribe objected. 27 members of Congress indicating there was no congressional intent 28 During the negotiations at issue As it does here, the Tribe proffered statements by 20 1 that compacts include environmental and land use regulation. 2 Order of Mar. 18, 2002 at 15, Big Lagoon I (quoting statement of 3 Representative Tony Coelho, 134 Cong. Rec. H8155 (Sept. 26, 1988)). 4 The Court rejected the Tribe’s argument that environmental and land 5 use issues were outside the scope of permissible topics under IGRA. 6 With regard to the legislators’ comments, the Court stated that 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 See a better reading of the legislative history is that it warns against allowing States to regulate tribal activity broadly under the guise of negotiating provisions on subjects that directly relate to gaming activity and may be included in a tribal-State compact under § 2710(d)(3)(C). In other words, the legislative history does not state that issues such as environmental protection and land use may never be included in a tribal-State compact, but only that the State may not use the compacting process as an excuse to regulate these areas more generally. Id. at 16 n.5. Big Lagoon now argues that Rincon requires reconsideration of 15 the Court’s earlier conclusion. 16 a footnote in Rincon, in which the Ninth Circuit cites Senator 17 Daniel Inouye’s statement that Congress did not intend “that the 18 compacting methodology be used in such areas such as taxation, 19 water rights, environmental regulation, and land use . . . .” 20 Rincon, 602 F.3d at 1029 n.10 (quoting 134 Cong Rec. S12643-01, at 21 S12651 (Sept. 15, 1988)). 22 extrapolates that “Rincon specifically holds” that Congress did not 23 intend that environmental regulation and land use be within the 24 scope of compact negotiations. 25 Specifically, the Tribe points to From this citation, the Tribe Big Lagoon’s Reply 5. The Ninth Circuit did not, by quoting a senator’s statement in 26 a footnote, categorically forbid negotiations over environmental 27 mitigation measures. 28 It is true that the footnote to which the 21 1 Tribe refers pertained to the Rincon court’s discussion of 2 permissible topics of negotiation under IGRA. 3 above, comments like Senator Inouye’s merely demonstrate that 4 Congress did not intend states to use the compacting process as a 5 tool for regulating tribes generally. 6 previously, the State’s request for mitigation measures is 7 permissible so long as such measures directly relate to gaming 8 operations or can be considered standards for the operation and 9 maintenance of the Tribe’s gaming facility. However, as stated Thus, as the Court stated See 25 U.S.C. United States District Court For the Northern District of California 10 § 2710(d)(3)(C)(vi)-(vii). 11 exchange for its request. 12 gaming activities would take place in an environmentally-sensitive 13 area. 14 would be carried on without any negative environmental impact, 15 thereby obviating the need for environmental mitigation measures. 16 The State must offer concessions in The Tribe does not dispute that its Nor does it contend that its proposed gaming operations Coyote Valley II supports the Court’s conclusion. There, the 17 court held that a labor relations provision was a permissible topic 18 of negotiation and could be included in a gaming compact because it 19 directly related to gaming operations. 20 court noted that the State did not insist on “general employment 21 practices on tribal lands,” but sought a labor relations provision 22 that pertained to “employees at tribal casinos and related 23 facilities.” 331 F.3d at 1116. The Id. (emphasis in original). 24 In the alternative, the Tribe appears to argue that no 25 environmental mitigation measure directly relates to gaming 26 activities. 27 circular “the State’s argument that general fund revenue sharing is 28 22 It again cites Rincon, where the court rejected as 1 ‘directly related to the operation of gaming activities’ because 2 the money is paid out of the income from gaming activities . . . .” 3 602 F.3d at 1033. 4 § 2710(d)(4), which limits the type of assessments for which a 5 state may negotiate under IGRA. 6 Lagoon’s reliance on these statements is misplaced. 7 court focused primarily on the direct taxation of tribes, which is 8 specifically identified and proscribed under IGRA. 9 § 2710(d)(4) and (7)(B)(iii)(II). United States District Court For the Northern District of California 10 The Ninth Circuit also cited 25 U.S.C. Rincon, 602 F.3d at 1033. Big The Rincon See IGRA does not treat environmental mitigation measures similarly. 11 Still relying on Rincon, the Tribe also contends that 12 environmental protections are not consistent with the purposes of 13 IGRA. 14 regulation. 15 statutory analysis” to determine the metes and bounds of IGRA’s 16 purposes because the State clearly misinterpreted Coyote Valley II 17 and the congressional intent underlying IGRA. 18 The court stated that the “only state interests mentioned in § 2702 19 are protecting against organized crime and ensuring that gaming is 20 conducted fairly and honestly.” 21 did not, however, declare that environmental mitigation measures, 22 based on the location of a tribe’s gaming facility, do not promote 23 IGRA’s purposes. 24 counter to tribal interests. 25 reprinted in 1988 U.S.C.C.A.N. 3071, 3085 (stating that, in 26 considering good faith, the committee “trusts that courts will 27 interpret any ambiguities on these issues in a manner that will be 28 However, the Rincon court did not address environmental Nor did it engage in a “potentially complicated 602 F.3d at 1034. Id. (emphasis in original). It Compliance with such measures does not run Cf. S. Rep. 100-446, at 15 (1988), 23 1 most favorable to tribal interests”). 2 establish that the State’s proposed environmental mitigation 3 measures are so discordant with IGRA’s purposes that they amount to 4 prohibited topics of negotiation. 5 Thus, Big Lagoon does not This conclusion does not end the inquiry. As the Court has 6 held, to negotiate for environmental mitigation measures in good 7 faith, the State must offer a meaningful concession in exchange. 8 See also Coyote Valley II, 331 F.3d at 1116-17 (explaining that the 9 State’s “numerous concessions” in exchange for a labor relations United States District Court For the Northern District of California 10 provision demonstrated that it did not act in bad faith). 11 briefing, the State points to two: (1) the right to operate up to 12 349 gaming devices and (2) continued receipt of RSTF payments, even 13 though Big Lagoon would no longer be a non-gaming tribe. 14 the record of negotiations does not show that either of these 15 offers was related to the proposed environmental mitigation 16 measures; instead, they appear to have been offered in exchange for 17 general fund revenue sharing. 18 BL000915-17. 19 the request for environmental mitigation measures, the State does 20 not satisfy its burden to show that they were meaningful. 21 any context or comparison, the State simply declares that they were 22 valuable. 23 In its However, See Engstrom Decl., Ex. 9 at Even if these purported concessions were connected to Without This is not sufficient. Because the Court concludes that environmental mitigation 24 measures are a permissible subject for negotiation under IGRA so 25 long as they meet the definitions of § 2710(d)(3)(C)(vi) or (vii), 26 the State could offer as a meaningful concession gaming rights that 27 are more expansive than allowed to otherwise similarly situated 28 24 1 tribes. 2 time and gaming devices, Rincon may have to submit, for instance, 3 to greater State regulation of its facilities or greater payments 4 to defray the costs the State will incur in regulating a larger 5 facility.” 6 iii)). 7 The Rincon court noted, “In order to obtain additional 602 F.3d at 1039 (citing 25 U.S.C. § 2710(d)(3)(C)(i, In sum, the State may request environmental mitigation 8 measures so long as they (1) directly relate to gaming operations 9 or can be considered standards for the operation and maintenance of United States District Court For the Northern District of California 10 the Tribe’s gaming facility, (2) are consistent with the purposes 11 of IGRA and (3) are bargained for in exchange for a meaningful 12 concession. 13 meaningful concession in connection with its requests for 14 environmental mitigation measures, it thus far has failed to 15 negotiate in good faith. 16 favor of Big Lagoon. Because it does not appear that the State offered a 17 18 This further supports summary judgment in CONCLUSION For the foregoing reasons, the Court GRANTS the Tribe’s motion 19 for summary judgment. 20 for summary judgment is DENIED. (Docket No. 80.) The State’s cross-motion (Docket No. 93.) 21 Pursuant to 25 U.S.C. § 2710(d)(7)(B)(iii), the Court directs 22 the Tribe and the State to conclude a compact within sixty days of 23 the date of this Order. 24 the expiration of the sixty-day period, Big Lagoon and the State 25 shall each submit a proposed compact to the Court, along with a 26 joint proposal for a mediator under 25 U.S.C. § 2710(d)(7)(B)(iv). 27 If the parties cannot agree on a mediator, they shall file separate 28 25 If they fail to do so, thirty days after 1 2 3 4 proposals. A further case management conference is set for March 8, 2011 at 2:00 p.m. IT IS SO ORDERED. 5 6 Dated: 11/22/2010 CLAUDIA WILKEN United States District Judge 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26
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