Pauma Band of Luiseno Mission Indians of the Pauma & Yuima Reservation v. California

343 F.Supp.3d 952

PAUMA BAND OF LUISENO MISSION INDIANS OF THE PAUMA & YUIMA RESERVATION, Plaintiff,

v.State of CALIFORNIA, et al., Defendants.

Case No. 16-cv-01713-BAS-JMA

United States District Court, S.D. California.

Signed September 28, 2018

Cheryl A. Williams, Kevin Michael Cochrane, Williams & Cochrane LLP, San Diego, CA, for Plaintiff.

Paras Hrishikesh Modha, Timothy Michael Muscat, California Office of Attorney General, Sacramento, CA, for Defendants.

ORDER:

(1) DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (ECF No. 37);

(2) GRANTING DEFENDANTS' CROSS-MOTION FOR SUMMARY JUDGMENT (ECF No. 36); AND

(3) DIRECTING ENTRY OF JUDGMENT UNDER RULE 54(b)

Hon. Cynthia Bashant, United States District Judge

OVERVIEW

This action stems from an effort to negotiate a new tribal-state gaming compact under the Indian Gaming Regulatory Act. The Pauma Band of Luiseno Mission Indians of the Pauma & Yuima Reservation ("Pauma" or "Tribe") seeks to offer new forms of gambling at its casino in Northern San Diego County. To make this possible, the Tribe entered into compact negotiations with the State of California and Governor Edmund G. Brown, Jr. (collectively, "State") to expand its gaming rights. However, Pauma now claims the State has failed to negotiate with the Tribe in good faith. Pauma brings suit to trigger a remedial scheme that is designed to result in a new gaming compact.

Presently before the Court are Pauma's and the State's cross-motions for summary judgment on the Tribe's bad faith negotiation claims. (ECF Nos. 36, 37.) The parties have also submitted a joint record of their negotiations. (Joint Record of Negotiations ("JR"), ECF Nos. 32-1 to 32-4.) The Court held oral argument on the motions. (ECF No. 48.)

There is no shortage of animosity between the parties. When they commenced negotiations to reach a new gaming compact, Pauma and the State were embroiled in litigation concerning an amendment to the parties' operative compact. Unsurprisingly, the parties' negotiations became contentious and unproductive at times. But the joint record does not demonstrate the State has failed to negotiate in good faith. The State met with Pauma several times and expressed a willingness to agree that the Tribe could offer additional forms of gambling at its casino. The State also reached out to other parties for information and obtained sample agreements to help Pauma and the State negotiate a new compact. In addition, to guide the parties' future discussions, the State transmitted a first draft of a new compact. Although Pauma now takes issue with the terms proposed in this initial draft, the Tribe never objected to these terms or otherwise responded to the State's proposal. Finally, at the time Pauma stopped participating in the negotiations and filed this lawsuit, nothing indicated the State was unwilling to continue to negotiate with the Tribe to reach a compromise.

The Court cannot conclude on this record that the State has failed to negotiate in good faith. Consequently, for the following reasons, the Court denies Pauma's motion for summary judgment, grants the State's cross-motion for summary judgment, and directs entry of judgment on the claims at issue under Federal Rule of Civil Procedure 54(b).

BACKGROUND

I. Indian Gaming Regulatory Act

There is a "weathered past between Native American tribes and the State of California" when it comes to tribal gaming, and the story starts well before the turn of the century. See Pauma Band of Luiseno Mission Indians of Pauma & Yuima Reservation v. California , 813 F.3d 1155, 1159 (9th Cir. 2015) ; see also In re Indian Gaming Related Cases , 331 F.3d 1094, 1095–1107 (9th Cir. 2003) (" Coyote Valley II ").

"In the 1970s, some California tribes began to operate bingo halls on their lands as a way to generate revenue." Coyote Valley II , 331 F.3d at 1095. These operations "were controversial because the tribes generally refused to comply with state gambling laws, a situation that developed into a serious point of contention with [the] state government[ ]." Id. (alterations in original) (quoting Flynt v. Cal. Gambling Control Comm'n , 104 Cal. App. 4th 1125, 1132, 129 Cal.Rptr.2d 167 (2002) ).

California responded by attempting to enforce its "bingo statute" against the tribes. See California v. Cabazon Band of Mission Indians , 480 U.S. 202, 206, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987) ; see also Cal. Penal Code § 326.5. A dispute erupted between the State and two tribes, culminating in the Supreme Court's decision in California v. Cabazon Band of Mission Indians , 480 U.S. 202, 206, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987). The tribes prevailed—the Supreme Court held California lacked the authority to enforce its bingo statute on tribal lands. Id. at 221–22, 107 S.Ct. 1083.

"After the Court's decision in Cabazon , States sought recourse on Capitol Hill." Coyote Valley II , 331 F.3d at 1096. Within a year, "Congress attempted to strike a delicate balance between the sovereignty of states and federally recognized Native American tribes by passing" the Indian Gaming Regulatory Act ("IGRA" or "Act"), 25 U.S.C. §§ 2701 – 21. Pauma , 813 F.3d at 1160. To summarize the Act:

IGRA was Congress' compromise solution to the difficult questions involving Indian gaming. The Act was passed in order to provide "a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments" and "to shield [tribal gaming] from organized crime and other corrupting influences to ensure that the Indian tribe is the primary beneficiary of the gaming operation." 25 U.S.C. § 2702(1), (2). IGRA is an example of "cooperative federalism" in that it seeks to balance the competing sovereign interests of the federal government, state governments, and Indian tribes, by giving each a role in the regulatory scheme.

Artichoke Joe's v. Norton , 216 F.Supp.2d 1084, 1092 (E.D. Cal. 2002) (alteration in original), aff'd , 353 F.3d 712 (9th Cir. 2003).

To accomplish its purpose, IGRA "creates a framework for regulating gaming activity on Indian lands." Michigan v. Bay Mills Indian Cmty. , 572 U.S. 782, 134 S.Ct. 2024, 2028, 188 L.Ed.2d 1071 (2014) (citing 25 U.S.C. § 2702(3) ). "The Act divides gaming on Indian lands into three classes—I, II, and III."

Seminole Tribe of Fla. v. Florida , 517 U.S. 44, 48, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). IGRA then "assigns authority to regulate gaming to tribal and state governments depending on the class of gaming involved." Big Lagoon Rancheria v. California , 789 F.3d 947, 949 (9th Cir. 2015) (en banc).

The final category—Class III gaming—"includes the types of high-stakes games usually associated with Nevada-style gambling." Coyote Valley II , 331 F.3d at 1097. "As a result, Class III gaming is subjected to the greatest degree of control under IGRA's regulations." Pauma , 813 F.3d at 1160. A tribe may conduct Class III gaming "only if such activities are conducted pursuant to a Tribal-State Compact entered into by the tribe and a state that permits such gaming, and the Compact is approved by the Secretary of the Interior." Id. (citing Coyote Valley II , 331 F.3d at 1097 ); see also 25 U.S.C. § 2710(d)(1), (3)(B). Thus, IGRA contemplates that a tribe and the relevant state shall negotiate to enter into a compact that (i) permits Class III gaming and (ii) may address various regulatory issues related to this type of gaming. 25 U.S.C. § 2710(d)(3)(A), (C).

II. 1999 Gaming Compact

"Despite IGRA's negotiation and compact framework, several unresolved conflicts ... developed between the State of California and Indian tribes surrounding class III gaming and, especially, gaming devices in casinos. See Hotel Emps. & Rest. Emps. Int'l Union v. Davis , 21 Cal. 4th 585, 596, 88 Cal.Rptr.2d 56, 981 P.2d 990 (1999). In particular, "[s]ome gubernatorial administrations were hostile to tribes conducting Class III gaming because it was then prohibited by California's Constitution, and so the State refused to negotiate with the tribes to permit it." Pauma , 813 F.3d at 1160.

As a result, a coalition of tribes "went directly to the people of California" and "drafted and put on the November 1998 State ballot Proposition 5." Coyote Valley II , 331 F.3d at 1100. Proposition 5 required the State to enter into a model compact with tribes to allow certain Class III gaming activities. Id. ; see also Flynt , 104 Cal. App. 4th at 1136, 129 Cal.Rptr.2d 167. Proposition 5 passed, but the tribes' victory was short-lived. The California Supreme Court held that the gaming rights the proposition conferred on the tribes violated the California Constitution's "anticasino provision." Hotel Emps. , 21 Cal. 4th at 615, 88 Cal.Rptr.2d 56, 981 P.2d 990. "Undeterred, the voters of California responded by amending the California Constitution on March 7, 2000, to create an exception for certain types of Class III Indian gaming notwithstanding the general prohibition on gambling in the State." Pauma , 813 F.3d at 1161 (citing Coyote Valley II , 331 F.3d at 1103 & n.11 ).

Meanwhile, in 1999, a group of tribes had started negotiating with the State to enter into nearly identical compacts under IGRA. See Coyote Valley II , 331 F.3d at 1101–07 (detailing the course of negotiations). "In April 2000, Pauma joined more than sixty other tribes who ultimately signed" a copy of this compact—the "1999 Compact." Pauma , 813 F.3d at 1161.

Central to the 1999 Compact "is a formula to calculate the number of gaming devices California tribes are permitted to license." Cachil Dehe Band of Wintun Indians of Colusa Indian Cmty. v. California , 618 F.3d 1066, 1069 (9th Cir. 2010). "The total number of slot machines allowed was restricted by contract language that authorized the continued operation of existing machines, permitted tribes who were not yet operating machines to operate up to 350 machines, and provided a formula for a limited license pool for the remaining machines." Id....