Burdett v. Harrah's Kansas Casino Corp.

260 F.Supp.2d 1109

Sheila BURDETT, Plaintiff, v. HARRAH'S KANSAS CASINO CORP., et al., Defendants.

No. CIV.A. 02-2166-KHV.

United States District Court, D. Kansas.

May 5, 2003.

Stephen B. Small, Kansas City, MO, for Plaintiff.

Glenn B. Brown, Kenneth E. Holm, Baty, Holm & Numrich, PC, Kansas City, MO, for Harrah's Kansas Casino Corp., Harrah's Operating Co., Inc., Harrah's Entertainment, Inc., and Prairie Band Potawatomi Nation.

John G. Schultz, Franke, Schultz & Mullen, PC, Kansas City, MO, Michael A. Klutho, Bassford, Lockhart, Truesdell & Briggs, PA, Minneapolis, MN, for Edward T. Burke & Associates, PC, Edward T. Burke and Creditors Interexchange, Inc.

David Israel, Session, Fishman & Nathan, LLP, New Orleans, LA, Richmond M. Enochs, Wallace, Saunders, Austin, Brown & Enochs, Chartered, Overland Park, KS, for NCO Financial Systems, Inc.

Adam J. Prochaska, Darren K. Sharp, Laurence R. Tucker, Armstrong Teasdale, LLP, Kansas City, MO, for Telecheck Systems, Inc.

MEMORANDUM AND ORDER

VRATIL, District Judge.

This matter is before the Court on the Motion To Dismiss (Doc. #21) filed by Harrah's Kansas Casino Corporation, Harrah's Operating Company, Incorporated, Harrah's Entertainment, Incorporated and Prairie Band Potawatomi Nation on October 21, 2002; the Motion To Dismiss (Doc. #41) filed December 6, 2002 by Edward T. Burke & Associates, P.C., Edward T. Burke, Esq. and Creditors Interchange, Incorporated; and Defendant Telecheck Services, Inc's Motion To Dismiss (Doc. # 46) filed December 19, 2002. For reasons stated below, the Court sustains the motion filed by Harrah's Kansas Casino Corporation, Harrah's Operating Company, Incorporated, Harrah's Entertainment, Incorporated and Prairie Band Potawatomi Nation and sustains in part the other two motions.

Procedural History

On April 12, 2002, plaintiff filed suit against nine defendants: Harrah's Kansas Casino Corporation, Harrah's Operating Company, Incorporated and Harrah's Entertainment, Incorporated (collectively "Harrah's"); Edward T. Burke & Associates, PC and Edward T. Burke, Esq. (collectively "Burke"); Creditors Interchange, Incorporated ("CT"); NCO Financial Systems, Incorporated ("NCO"); Telecheck Systems, Incorporated ("Telecheck"); and Prairie Band Potawatomi Nation (the "Tribe"). Plaintiff alleges that defendants violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq.; the Racketeer Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq.; the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. § 2701 et seq. and the Kansas Consumer Protection-Unconscionable Practice Act, K.S.A § 50-626 et seq. Plaintiff also alleges that defendants committed intentional and negligent infliction of emotional distress, causing her husband, Clarence Burdett, to commit suicide.¹ In addition, plaintiff seeks to enjoin collection and set aside the gambling debts of Mr. Burdett, and recover his gambling losses.

Harrah's and the Tribe seek dismissal under Fed.R.Civ.P. 12(b)(1), alleging lack of subject matter jurisdiction. Burke, CI and Telecheck seek dismissal under Fed. R.Civ.P. 12(b)(1) and 12(b)(6), alleging lack of jurisdiction and failure to state a RICO claim. Plaintiff asserts that federal question jurisdiction is appropriate under 28 U.S.C. § 1331 because she raises federal claims under RICO, the FDCPA and the IGRA. She also claims that the Court has diversity jurisdiction under 28 U.S.C. § 1332.

Legal Standards

1. Rule 12(b)(1)—Subject Matter Jurisdiction

The Court may exercise jurisdiction only when specifically authorized to do so, Castaneda v. INS, 23 F.3d 1576, 1580 (10th Cir.1994), and must "dismiss the cause at any stage of the proceeding in which it becomes apparent that jurisdiction is lacking." Scheideman v. Shawnee County Bd. of County Comm'rs, 895 F.Supp. 279, 281 (D.Kan.1995) (quoting Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974)); see also Fed.R.Civ.P. 12(h)(3). Because federal courts are courts of limited jurisdiction, the law imposes a presumption against their jurisdiction. Marcus v. Kan. Dep't of Revenue, 170 F.3d 1305,1309 (10th Cir.1999) (quoting Penteco Corp. v. Union Gas Sys., Inc., 929 F.2d 1519, 1521 (10th Cir.1991)); Basso, 495 F.2d at 909. If federal jurisdiction is challenged, plaintiff bears the burden of showing why the case should not be dismissed, see Jensen v. Johnson County Youth Baseball League, 838 F.Supp. 1437, 1439-40 (D.Kan.1993), and must demonstrate by a preponderance of the evidence that retention of the case is appropriate. United States v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 1160 (10th Cir.1999). "Mere conclusory allegations of jurisdiction are not enough." Id.

Federal courts have original jurisdiction over civil actions "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. A plaintiff creates federal question jurisdiction by means of a well-pleaded complaint which establishes either that federal law creates the cause of action or that plaintiffs right to relief depends on resolution of a substantial question of federal law. Sac & Fox Nation of Okla. v. Cuomo, 193 F.3d 1162, 1165-66 (10th Cir.1999) (citing Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). Federal courts also have original jurisdiction over civil actions "between ... citizens of different States" when the amount in controversy exceeds the sum or value of $75,000. 28 U.S.C. § 1332.

The standards that apply to a motion to dismiss for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) are well settled. Such motions generally take the form of facial attacks on the complaint or factual attacks on the accuracy of its allegations. Holt v. United States, 46 F.3d 1000, 1002-03 (10th Cir.1995) (citing Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir.1990)). Harrah's and the Tribe have filed a motion to dismiss for lack of subject matter jurisdiction, alleging that the Tribe has exclusive jurisdiction to hear plaintiffs claims. Through evidence outside the complaint, defendants' motion attacks the factual accuracy of plaintiffs jurisdictional allegations.² In such cases, the Tenth Circuit has set forth the following standard:

[A] party may go beyond allegations contained in the complaint and challenge the facts upon which subject matter jurisdiction depends. When reviewing a factual attack on subject matter jurisdiction, a district court may not presume the truthfulness of the complaint's factual allegations. A court has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1). In such instances, a court's reference to evidence outside the pleadings does not convert the motion to a Rule 56 motion.

Holt, 46 F.3d at 1003 (citations omitted). Because defendants' motion to dismiss raises a factual challenge to plaintiffs jurisdictional allegations, as opposed to a facial one, plaintiffs' allegations of material fact are not presumed to be true. Stewart v. Mitchell Transp., Inc., 197 F.Supp.2d 1310,1313 (D.Kan.2002).

Defendants also argue that the Tribe retains sovereign immunity. Arguments of sovereign immunity and subject matter jurisdiction are inextricably intertwined and sovereign immunity is therefore a matter of subject matter jurisdiction. Hartman v. Golden Eagle Casino, Inc., 243 F.Supp.2d 1200 (D.Kan.2003) (citing E.F.W. v. St. Stephen's Indian High Sch., 264 F.3d 1297, 1302 (10th Cir.2001)). "Indian tribes are domestic dependent nations that exercise inherent sovereign authority over their members and territories. As an aspect of this sovereign immunity, suits against tribes are barred in the absence of an unequivocally expressed waiver by the tribe or abrogation by Congress." E.F.W., 264 F.3d at 1304 (quoting Fletcher v. United States, 116 F.3d 1315, 1324 (10th Cir. 1997)).

II. Rule 12(b)(6) Standard—Failure To State A Claim

In ruling on a motion to dismiss for failure to state a claim, the Court accepts the veracity of all well-pleaded facts in plaintiffs complaint and views the facts and all reasonable inferences in the light most favorable to plaintiff. Rule 12(b)(6), Fed.R.Civ.P.; see Hons. Auth. of Kaw Tribe v. City ofPonca City, 952 F.2d 1183, 1187 (10th Cir.1991); Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984). In reviewing the sufficiency of plaintiffs complaint, the issue is not whether plaintiff will prevail but whether plaintiff is entitled to offer evidence to support her claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). The pleadings must be liberally construed. Gas-A-Car, Inc. v. Am. Petrofina, Inc., 484 F.2d 1102, 1107 (10th Cir.1973). Although plaintiff need not precisely state each element of her claims, she must plead minimal factual allegations on those material elements that must be proved. See Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.1991). A Rule 12(b)(6) motion should not be granted unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle [her] to relief." GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir.1997) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

Factual Background

Plaintiff's complaint alleges the following facts:

Harrah's operates a gaming establishment for the benefit of the Prairie Band Potawatomi Nation, which is a federally recognized tribe of native American Indians. The gaming establishment, Harrah's Prairie Band Casino (the "casino"), is located on land which the United States Trust holds for the benefit of the Tribe.

Mr. Burdett visited the casino many times and cashed numerous personal checks which were dishonored on account of insufficient funds. Plaintiff alleges that Mr. Burdett exchanged his checks...