Pauma Band of Luiseno Mission Indians of the Pauma & Yuima Reservation v. California
813 F.3d 1155
9th Cir.2015Background
- In 1999 over sixty California tribes, including the Pauma Band, signed Compacts with California containing a license-pool formula limiting statewide slot-machine licenses; the formula’s ambiguity spawned long-running litigation.
- The State calculated the pool as 32,151 licenses; this deprived some tribes (including Pauma) of additional licenses they sought. Pauma later signed a 2004 Amendment paying much higher per‑license fees to obtain more slots.
- This court in Colusa II later interpreted the 1999 Compact’s formula to authorize 40,201 licenses, meaning 8,050 licenses remained when the State told Pauma the pool was exhausted in December 2003.
- Pauma sued, asserting (inter alia) misrepresentation, sought rescission/restitution of overpayments (district court: rescission + refund of $36.235M), and argued IGRA bad‑faith claims; the district court awarded rescission/restitution and found a contractual waiver of sovereign immunity permitted suit.
- On appeal the Ninth Circuit affirmed: (1) Colusa II’s contract interpretation establishes the correct historical fact for the compact’s formation; (2) Pauma proved innocent/material misrepresentation; (3) proper remedy is rescission and restitution (not specific performance); and (4) the Compact’s limited waiver encompassed the restitution remedy, so Eleventh Amendment immunity did not bar relief. IGRA bad‑faith relief was unavailable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Colusa II’s interpretation create an existing fact such that the State misrepresented license availability in 2003? | Pauma: Colusa II fixed the correct number from the Compact’s inception; State misrepresented existing fact (pool exhausted). | State: Colusa II was a later judicial change; retroactive application is improper, so no existing fact was misrepresented in 2003. | Held: Contract interpretation is not subject to retroactivity doctrines; Colusa II reflects the Compact’s original meaning, so the State misrepresented an existing material fact. |
| Was Pauma entitled to relief and what remedy? | Pauma: rescission/restitution or reformation to retain term at 1999 rates. | State: district court mislabeled remedy as specific performance; State sought setoff for Pauma’s profits; opposed reformation. | Held: Remedy is rescission and equitable restitution (not specific performance); $36,235,147.01 affirmed; no setoff for alleged profits; reformation unavailable (innocent misrepresentation only). |
| Did California waive Eleventh Amendment immunity for this relief? | Pauma: 1999 Compact’s limited waiver allows injunctive, specific performance and other equitable relief, which includes restitution. | State: waiver excludes monetary claims; “that is” clause limits waiver to listed remedies only (no restitution). | Held: Reading the Compact as a whole shows waiver encompassed restitution as equitable relief; sovereign immunity waived to permit Pauma’s claim. |
| Are Pauma’s IGRA bad‑faith claims viable? | Pauma: State negotiated in bad faith under IGRA and relief (reformation/renegotiation) is appropriate. | State: IGRA’s remedial scheme applies only when no compact was entered; Pauma actually entered the 2004 Amendment. | Held: IGRA’s plain text governs only failures/refusals to negotiate; where the parties entered a Compact, IGRA’s renegotiation remedy does not apply—IGRA claims fail. |
Key Cases Cited
- Cachil Dehe Band of Wintun Indians v. California, 618 F.3d 1066 (9th Cir. 2010) (interpreting the 1999 Compact’s license‑pool formula to authorize 40,201 licenses)
- Rincon Band of Luiseno Mission Indians v. Schwarzenegger, 602 F.3d 1019 (9th Cir. 2010) (bad‑faith negotiation under IGRA analysis)
- In re Indian Gaming Related Cases, 331 F.3d 1094 (9th Cir. 2003) (background on California tribal gaming and the Compacts)
- Big Lagoon Rancheria v. California, 789 F.3d 947 (9th Cir. 2015) (procedural/remedy principles in similar Compact litigation)
- Edelman v. Jordan, 415 U.S. 651 (1974) (Eleventh Amendment limits on suits seeking retrospective monetary relief from state treasuries)
- Bowen v. Massachusetts, 487 U.S. 879 (1988) (distinction between equitable monetary relief and damages for Eleventh Amendment purposes)
- Blatchford v. Native Village of Noatak, 501 U.S. 775 (1991) (Eleventh Amendment applies to suits by tribes against states)
- Republic Sav. Bank, F.S.B. v. United States, 584 F.3d 1369 (Fed. Cir. 2009) (restitution awards must be offset by benefits conferred; courts calculate net loss)