In Re Indian Gaming Related Cases. Chemehuevi Indian Tribe Elk Valley Rancheria Hoopa Valley Indian Tribe Hopland Band of Pomo Indians Redding Rancheria Smith River Rancheria, and Coyote Valley Band of Pomo Indians v. The State of CaliforniaIn Re Indian Gaming Related Cases. Chemehuevi Indian Tribe Elk Valley Rancheria Hoopa Valley Indian Tribe Hopland Band of Pomo Indians Redding Rancheria Smith River Rancheria, and Coyote Valley Band of Pomo Indians v. The State of California
Sara J. Drake, Marc A. Le Forestier, and Christine Murphy, Office of the Attorney General, Sacramento, California, for the appellee.
Appeal from the United States District Court for the Northern District of California; Claudia Wilken, District Judge, Presiding. D.C. No. CV-98-01806-CW.
OPINION
WILLIAM A. FLETCHER, Circuit Judge.
The Coyote Valley Band of Pomo Indians (Coyote Valley) contends that the State of California (the State) has refused to negotiate in good faith with the tribe to conclude a Tribal-State compact, as required by the Indian Gaming Regulatory Act (IGRA),
The historical background against which Coyote Valley and the State negotiated is important to an understanding of this case. We begin with the events leading up to the Supreme Court‘s landmark decision in California v. Cabazon Band of Mission Indians, 480 U.S. 202, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987). In the 1970s, some California tribes began to operate bingo halls on their lands as a way to generate revenue. Such activities 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[]. Flynt v. California Gambling Control Comm‘n, 104 Cal.App.4th 1125, 1132, 129 Cal.Rptr.2d 167 (2002). The State responded by attempting to enforce
In response, the State contended that Congress had expressly consented to its exercise of jurisdiction over tribal bingo by passing Public Law 280,
In 1987 in Cabazon, the Supreme Court ruled in favor of the tribes, adopting a distinction originally drawn by this court between criminal/prohibitory and civil/regulatory state laws:
[I]f the intent of a state law is generally to prohibit certain conduct, it falls within Pub.L. 280‘s grant of criminal jurisdiction, but if the state law generally permits the conduct at issue, subject to regulation, it must be classified as civil/regulatory and Pub.L. 280 does not authorize its enforcement on an Indian reservation.
Id. Because California permitted a substantial amount of gambling activities, including bingo, and actually promote[d] gambling through its state lottery, the Court concluded that the State regulate[d] rather than prohibit[ed] gambling in general and bingo in particular. Id. at 211, 107 S.Ct. 1083. Because there were no exceptional circumstances that warranted the assertion of State jurisdiction over tribal bingo operations, the Court held that the State lacked authority under Public Law 280 to enforce the bingo statute on Indian lands. Id. at 221-22, 107 S.Ct. 1083.
After the Court‘s decision in Cabazon, States sought recourse on Capitol Hill. Congress passed IGRA the next year, in 1988. As Judge Levi has recently written:
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. § 2701(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 (2002) (alteration in original).
IGRA creates three classes of gaming, each subject to a different level of regulation. Class I gaming includes social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as part of, or in connection with, tribal ceremonies or celebrations,
IGRA‘s compact requirement grants States the right to negotiate with tribes located within their borders regarding aspects of class III tribal gaming that might affect legitimate State interests. See
IGRA provides that if no compact has been entered 180 days after an Indian tribe has requested that the State enter into compact negotiations, the tribe may bring suit in federal court.
The passage of IGRA did not end the fight over Indian gaming in California. After the statute‘s enactment, certain California tribes (including Coyote Valley) sought to negotiate compacts with the State permitting the operation of class III games on their respective reservations.4 Flynt, 104 Cal.App.4th at 1136, 129 Cal.Rptr.2d 167. Among the class III games over which these tribes sought to negotiate were live banked or percentage card games and stand-alone electronic gaming machines (similar to slot machines). Rumsey Indian Rancheria of Wintun Indians v. Wilson, 64 F.3d 1250, 1255 (9th Cir. 1994), amended by 99 F.3d 321 (9th Cir. 1996). These particular games were not permitted under California law, see
The tribes argued that the phrase such gaming in
We rejected the tribes’ construction of
IGRA does not require a state to negotiate over one form of Class III gaming simply because it has legalized another, albeit similar form of gaming. Instead, the statute says only that, if a state allows a gaming activity for any purpose by any person, organization, or entity, then it also must allow Indian tribes to engage in that same activity.
25 U.S.C. § 2710(d)(1)(B) . In other words, a state need only allow Indian tribes to operate games that others can operate, but need not give tribes what others cannot have.
Id. at 1258. Accord Cheyenne River Sioux Tribe v. South Dakota, 3 F.3d 273, 279 (8th Cir.1993) (The such gaming language of
Our decision in Rumsey meant that the State had no obligation to negotiate with tribes over the most lucrative forms of class III gaming. The Wilson Administration also refused to negotiate compacts covering class III games that the State did permit, unless and until the tribe requesting such negotiations ceased engaging in unlawful class III gaming \xe2\x80\x94 i.e., class III gaming conducted in the absence of a valid Tribal-State compact as required by
The proposition, which amended state law but not the State constitution, required the state to enter into a model Tribal-State Gaming Compact with Indian tribes to allow certain class III gambling activities, such as banked card games and slot machines. Proposition 5 obligated the governor to execute compacts as a ministerial act within 30 days after any federally recognized Indian tribe requested such an arrangement. Under the plan, the compacts were deemed approved if the governor took no action within 30 days.
Flynt, 104 Cal.App.4th at 1136, 129 Cal.Rptr.2d 167 (internal citations omitted). See generally
Relevant to this appeal, Proposition 5‘s model compact created three funds to which compacting tribes would contribute a set percentage of their net wins from tribal gaming terminals: (1) a Nongaming Tribal Assistance Fund, from which distributions were to be made to non-gaming tribes to fund social services; (2) a Statewide Trust Fund, from which distributions were to be made to counties in California to supplement emergency medical care and to establish or supplement programs addressing compulsive and addictive gambling; and (3) a Local Benefits Grant Fund, from which distributions were to be made to address the needs of the cities or counties within the boundaries of which tribal gaming facilities were located. See
The parties acknowledge that the operation of Tribal gaming terminals authorized under this Gaming Compact is expected to occupy a unique place in gaming within the State that is material to the ability of the Tribe and other tribal governments operating under similar compacts to achieve the economic development and other goals intended by IGRA. The Tribe therefore agrees to make the contributions to the trust funds described in Sections 5.2, 5.3, and 5.4, only for as long as it and other tribes that have entered into Gaming Compacts are not deprived of that unique opportunity.
Id. at Sec. 5.1. In other words, the tribes’ obligation to contribute to these funds lasted only so long as they maintained their monopoly in the State over the operation of slot machines. Proposition 5 also included an explicit waiver of the State‘s sovereign immunity to suits brought against it pursuant to IGRA. See
Proposition 5 passed by a wide margin. Shortly after its passage, however, the Hotel Employees and Restaurant Employees International Union (the Union) and others filed a petition for a writ of mandate in the California Supreme Court seeking to prevent the Governor from implementing Proposition 5 because, they argued, it violated
On August 23, 1999, the California Supreme Court held, in agreement with the Union, that the gaming rights conferred on tribes by Proposition 5 violated the California Constitution. Id. at 589, 88 Cal.Rptr.2d 56, 981 P.2d 990. Because Proposition 5, a purely statutory measure, did not amend section 19(e) or any other part of the Constitution, and because in a conflict between statutory and constitutional law the Constitution must prevail, the court invalidated the proposition in its entirety, save the final sentence of
Before the California Supreme Court ruled in Hotel Employees, the new Davis Administration had sought to engage tribes in compact negotiations, despite its limited obligations under our decision in Rumsey. Among other things, Governor Davis was concerned about the effect an adverse decision in Hotel Employees could have on tribes then engaged in (and dependent on revenue from) unlawful class III gaming operations. Depending on the scope of the opinion, the decision could completely prohibit the State from entering compacts to legitimize that gaming, thus leaving these tribes vulnerable to federal prosecution.
In March 1999, Governor Davis appointed a Special Counsel for Tribal Affairs to lead the State‘s negotiating team, and on April 9th he met personally with tribal leaders to introduce his appointee. At that meeting, which was attended by a representative of Coyote Valley, the State‘s lead negotiator asked that the tribes organize themselves into one or more negotiating teams to provide structure to the compact discussions. The tribes agreed, and subsequently formed three groups: (1) the United Tribe Compact Steering Committee (UTCSC); (2) the Desert Six group; and (3) the Pala Tribe group. Coyote Valley joined the UTCSC negotiating group, but reserved its right to withdraw at any time.10
From April 9 until May 4, the State‘s Office of Tribal Affairs received formal requests from the tribes to enter compact negotiations. The State met for an initial round of negotiations with the Desert Six group on May 6, with the Pala Tribe group on May 7, and with the UTCSC on May 13. At the May 13 meeting, the UTCSC announced that the model compact contained in Proposition 5 would be its opening offer. The State explained that it, too, wished to stay as close to the text of Proposition 5 as possible, but identified what it believed to be a few key deficiencies in the Proposition 5 model compact. While the State expressed no interest in cutting back on either the types of games permitted under Proposition 5 or the number of gaming machines currently in operation on tribal lands, it wanted to prevent the expansion of tribal gaming beyond what it considered to be reasonable levels, something Proposition 5 itself did not do. The State also took the position that the negotiated compact should allow the State to spend any revenue-sharing dollars it received from the tribes as it saw fit, rather than earmark those dollars for specified uses as in Proposition 5‘s model compact.
At the conclusion of the May 13 meeting, the parties agreed that the State would promptly prepare and circulate a working draft model compact in the form of a redlined version of Proposition 5 and that the parties would then meet for a second round of negotiations to discuss the draft. The State circulated its draft on May 21, and a second round of negotiations was held with the Desert Six and Pala Tribe groups on May 25, and with the UTCSC on May 26. Over the course of the next month, the State received and reviewed written responses and counter-proposals submitted by the three tribal negotiating groups.
On June 17, the UTCSC sent the State a discussion draft of its own, also as a redlined version of Proposition 5. The State did not respond immediately, and on July 22 the UTCSC sent the State a letter expressing frustration with the pace of discussions and voicing its concern that a compact might not be concluded before the announcement of the Hotel Employees decision. In that letter, the UTCSC again expressed its belief that labor relations, a subject included in the State‘s discussion draft of May 21, was not a proper topic of compact negotiations pursuant to IGRA. The letter also stated that the UTCSC had learned that the State was exploring the concept of an enormous revenue sharing requirement, and noted that [u]nder IGRA, this clearly would be an impermissible tax on Tribal gaming operations. According to Coyote Valley, the State intentionally stalled talks during this period so as to force the tribes to meet with union representatives.
Negotiations commenced again at the end of August. Two significant events occurred at about this time. First, the California Supreme Court announced its decision in Hotel Employees. The State already had no obligation to conclude compacts with tribes permitting slot machines and banked card games, see Rumsey, 64 F.3d at 1258; the decision meant it now also lacked the authority to do so. To address this problem, the Davis Administration proposed an amendment to
The State responded by circulating a revised draft on September 7 and a final offer on September 9. The final draft included several changes from the August 27 draft, the most significant of which was an expansion of the types of games that tribes were permitted to conduct. Each of the previous drafts (indeed, even Proposition 5‘s model compact), had permitted only gaming devices and banked card games that paid prizes in accordance with a players’ pool prize system. By contrast, the final State proposal, in a major concession, permitted the tribes to operate real Las Vegas-style slot machines and house-banked blackjack. See K. Alexa Koenig, Gambling on Proposition 1A: The California Indian Self Reliance Amendment, 36 U.S.F. L. REV. 1033, 1043-44 (2002) (In exchange for a percent of tribal gaming revenue, the governor offered tribes even more than what they had sought with Proposition 5: ... full Las Vegas-style slot machines, as well as an exclusive right to conduct class III gaming in the state.).12
According to Coyote Valley, the State delivered this final offer at approximately 8:00 p.m. and required that the tribes respond by 10:00 p.m. that same night if they wished to accept. A representative from Coyote Valley went to the Governor‘s office during this two hour interval to discuss the tribe‘s concerns with the proposed compact, but the State‘s negotiating team was inaccessible. Several tribal leaders and attorneys sought to meet with the Governor‘s negotiating team at this same time. The Governor‘s negotiating team met with one tribal employee and one tribal attorney, neither of whom represented Coyote Valley. The remaining people were escorted from the Governor‘s reception room.
That night, 57 tribes (including Coyote Valley) signed letters of intent to enter the compact. Only one tribe initially refused, and it signed the letter a few days later with slight modifications to the compact. That tribe was the Agua Caliente Band of Cahuilla Indians of Palm Springs (Agua Caliente). Frustrated with the lull in negotiations in June, July, and early August, Agua Caliente had begun a campaign to place Proposition 5 (and its model compact) back on the ballot, this time as a constitutional amendment. Agua Caliente had gathered enough signatures to qualify the initiative for the April 2000 ballot when Governor Davis made the unexpected concession offering tribes the right to operate real Las Vegas style slot machines as well as house-banked blackjack. In response, Agua Caliente withdrew its initiative petition. Agua Caliente signed a letter of intent to enter the Davis Compact on September 14, 1999.
The core of the negotiated compact (the Davis Compact) is that the State granted the tribes the exclusive right to conduct lucrative Las Vegas-style class III gaming, free from non-tribal competition in the State. In return, the tribes agreed to a number of restrictions and obligations concerning their gaming enterprises.13 Specifically, the tribes agreed to three provisions that Coyote Valley contends in this suit are impermissible and whose inclusion in the ultimate compact demonstrates the bad faith of the State. These challenged provisions are: (1) the Revenue Sharing Trust Fund provision; (2) the Special Distribution Fund provision; and (3) the Labor Relations provision.14
The Special Distribution Fund: The preamble to the compact also recites that the
exclusive rights that Indian tribes in California[] will enjoy under this Compact create a unique opportunity for the Tribe to operate its Gaming Facility in an economic environment free of competition from the Class III gaming referred to in Section 4.0 of this Compact on non-Indian lands in California. The parties are mindful that this unique environment is of great economic value to the Tribe and the fact that income from Gaming Devices represents a substantial portion of the tribes’ gaming revenues. In consideration for the exclusive rights enjoyed by the tribes, and in further consideration for the State‘s willingness to enter into this Compact, the tribes have agreed to provide the State, on a sovereign-to-sovereign basis, a portion of its revenue from Gaming Devices.
Pursuant to this part of the preamble, the compact provides in Section 5 for the creation of a Special Distribution Fund (SDF), to be financed out of the tribes’ net win from the operation of their gaming devices. As provided in Section 5.1, the amount that goes to the fund is to be calculated as 0% of the net win for the first 200 terminals, 7% of the net win for the next 300 terminals, 10% of the net win for the next 500 terminals, and 13% of the net win for any additional terminals above 1000. Section 5.2 provides that the revenue deposited in the SDF is available for appropriation by the Legislature for the following specified 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. The compact states that it is the intent of the parties that Compact Tribes will be consulted in the process of identifying purposes for grants made to local governments.
shall be null and void if, on or before October 13, 1999, the Tribe has not provided an agreement or other procedure acceptable to the State for addressing organizational and representational rights of Class III Gaming Employees and other employees associated with the Tribe‘s Class III gaming enterprise, such as food and beverage, housekeeping, cleaning, bell and door services, and laundry employees at the Gaming Facility or any related facility, the only significant purpose of which is to facilitate patronage at the Gaming Facility.
Between late July and September 1999, California tribes conducted independent negotiations with labor representatives and agreed on a model Tribal Labor Relations Ordinance (the TLRO) that meets the requirements of Section 10.7. The TLRO provides limited organizational rights to workers at tribal gaming establishments and related facilities that employ 250 or more employees.15 These rights include union access to eligible employees in break rooms and locker rooms during non-work time, as well as the right to engage in collective bargaining if the union becomes the exclusive collective bargaining representative by winning an election. The TLRO also contains several provisions that protect tribal interests. For example, it guarantees tribal gaming establishments the right to grant employment preferences to Native Americans, places strict limits upon a union‘s right to strike, and completely prohibits picketing on Indian lands.
Coyote Valley initially signed a letter of intent stating that it accepted the Davis Compact, including the three just described provisions it now challenges. However, when the time came actually to execute the compact, Coyote Valley refused. In a letter dated October 13, 1999, Coyote Valley informed the State that before it would agree to sign, it needed to meet with State representatives to discuss various issues and concerns regarding certain provisions in the Davis Compact. The State replied in a letter dated October 18, 1999. The State did not respond to the tribe‘s request for a meeting, but instead emphasized the numerous negotiating opportunities the tribe had had, and highlighted the fact that the tribe had already signed a letter of intent to enter the Davis Compact. The tribe responded by letter on October 20, again requesting a meeting with the State on an individual tribal basis to discuss its concerns. The State replied on October 25, asking that Coyote Valley submit in writing any proposed changes or modifications to the Davis Compact for consideration.
Coyote Valley submitted its proposed changes to the State on November 12. In addition to several other modifications, the tribe sought: (1) the complete elimination of the RSTF provision; (2) a limitation of its obligation to contribute to the SDF to only those amounts necessary to reimburse the costs to the State of regulating activities at Coyote Valley‘s gaming facility; and (3) the complete elimination of the Labor Relations provision. In an accompanying cover letter, Coyote Valley indicated that it was only proposing changes to the provisions of the Compact that it views as irreconcilable with [] IGRA. The tribe also indicated that it was putting into place its own Tribal Employees Rights Ordinance (rather than the TLRO) to address the rights of its class III gaming employees, and that it would forward the document to the State shortly.
The State replied on December 8, rejecting all of Coyote Valley‘s proposed modifications. The State specifically indicated that the tribe must adopt a labor ordinance identical to the TLRO in order for that ordinance to be acceptable to the State under Section 10.7 of the Davis Compact. The State indicated that it would be willing to meet with the tribe‘s representative to discuss the State‘s position and to allow the tribe an opportunity to discuss its position. No such meeting ever occurred.
Coyote Valley had earlier filed a complaint in the District Court for the Northern District of California alleging a lack of good faith negotiation by the Wilson Administration. In December 1999, after the State rejected the tribe‘s proposed modifications to the Davis Compact, Coyote Valley amended its complaint to allege a lack of good faith negotiation by both the Wilson and Davis Administrations. The tribe moved for an order requiring the State to negotiate in good faith pursuant to
We review mixed questions of law and fact de novo. Diamond v. City of Taft, 215 F.3d 1052, 1055 (9th Cir.2000). A mixed question of law and fact exists where the relevant facts are undisputed and the question is whether those facts satisfy the applicable legal rule. Id. Very few of the relevant facts in this case, as set forth in the preceding narrative, are in dispute. To the extent that there is a difference in the competing versions of the facts, we accept, for purposes of this appeal, Coyote Valley‘s version. The issue before us is whether, on these facts, the State has satisfied IGRA‘s good faith requirement. On this legal issue, we review the district court‘s decision de novo.
II. Discussion
IGRA provides that, in determining whether a State has negotiated in good faith, a court:
(I) may take into account the public interest, public safety, criminality, financial integrity, and adverse economic impacts on existing gaming activities, and
(II) shall consider any demand by the State for direct taxation of the Indian tribe or of any Indian lands as evidence that the State has not negotiated in good faith.
(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 [gaming] activity;
(ii) the allocation of criminal and civil jurisdiction between the State and the Indian tribe necessary for the enforcement of such laws and regulations;
(iii) the assessment by the State of such activities in such amounts as are necessary to defray the costs of regulating such activity;
(iv) taxation by the Indian tribe of such activity in such amounts comparable to amounts assessed by the State for comparable activities;
(v) remedies for breach of contract;
(vi) standards for the operation of such activity and maintenance of the gaming facility, including licensing; and
(vii) any other subjects that are directly related to the operation of gaming activities.
IGRA‘s legislative history gives guidance to courts deciding whether a party has negotiated in good faith. Because of the scant authority interpreting or applying IGRA‘s good faith requirement, we set forth a somewhat lengthy excerpt from the Senate Committee Report:
In the Committee‘s view, both State and tribal governments have significant governmental interests in the conduct of class III gaming. States and tribes are encouraged to conduct negotiations within the context of the mutual benefits that can flow to and from tribe and States [sic]. This is a strong and serious presumption that must provide the framework for negotiations. A tribe‘s governmental interests include raising revenues to provide governmental services for the benefit of the tribal community and reservation residents, promoting public safety as well as law and order on tribal lands, realizing the objectives of economic self-sufficiency and Indian self-determination, and regulating activities of persons within its jurisdictional borders. A State‘s governmental interests with respect to class III gaming on Indian lands include the interplay of such gaming with the State‘s public policy, safety, law and other interests, as well as impacts on the State‘s regulatory system, including its economic interest in raising revenue for its citizens. It is the Committee‘s intent that the compact requirement for class III gaming not be used as a justification by a State for excluding Indian tribes from such gaming or for the protection of other State-licensed gaming enterprises from free market competition with Indian tribes.
....
The terms of each compact may vary extensively depending on the type of gaming, the location, the previous relationship of the tribe and State, etc. Section [](d)(3)(C) describes the issues that may be the subject of negotiations between a tribe and a State in reaching a compact. The Committee recognizes that subparts of each of the broad areas may be more inclusive. For example, licensing issues under clause vi may include agreements on days and hours of operation, wage and pot limits, types of wagers, and size and capacity of the proposed facility. A compact may allocate most or all of the jurisdictional responsibility to the tribe, to the State or to any variation in between. The Committee does not intend that compacts be used as a subterfuge for imposing State jurisdiction on tribal lands.
....
Finally, the bill allows States to consider negative impacts on existing gaming activities. That is not to say that the bill would allow States to reject Indian gaming on the mere showing that Indian gaming will compete with non-Indian games. Rather, the States must show that economic consequences will be severe and that they will clearly outweigh positive economic consequences.
S. REP. 100-446, at 13-14 (1988), reprinted in 1988 U.S.C.C.A.N. 3071, 3083-84.
Coyote Valley makes two kinds of arguments. The first is procedural. The tribe contends that the State‘s conduct during negotiations \xe2\x80\x94 specifically its dilatory tactics over the course of a seven-year period \xe2\x80\x94 constitutes bad faith. The second is substantive. The tribe contends that the RSTF, SDF, and Labor Relations provisions of the Davis Compact fall outside the list of appropriate topics for Tribal-State compacts set forth in
1. Procedural Objections
We cannot conclude from the history of negotiations recounted above that, as a procedural matter, the State has refused to negotiate in good faith. It is clear that the Wilson Administration was not sympathetic to tribal gaming and was exceedingly reluctant to reach any agreement that the tribes considered acceptable. But the gravamen of Coyote Valley‘s amended complaint is that the Davis Administration, rather than the Wilson Administration, has refused to negotiate in good faith; and it is against the Davis Administration that Coyote Valley seeks injunctive relief.
On the record before us, it appears that the Davis Administration has actively negotiated with Indians tribes, including Coyote Valley, concerning class III gaming, and that it has negotiated despite the absence of any legal obligation to do so. Until Proposition 1A was ratified in March of 2000, the State had no obligation to negotiate with Coyote Valley over the types of class III games covered in the Davis Compact. See Rumsey, 64 F.3d at 1250;
2. Substantive Objections
We do not believe that the three challenged provisions are categorically forbidden by the terms of
a. The Revenue Sharing Trust Fund
Coyote Valley first argues that the Revenue Sharing Trust Fund, which requires that gaming tribes share gaming revenues with non-gaming tribes, is impermissible under
As explained more fully below, we hold that
Coyote Valley asks us to read
We also reject Coyote Valley‘s argument that, regardless of whether the RSTF provision would otherwise fall within
Except for any assessments that may be agreed to under paragraph (3)(C)(iii) of this subsection, nothing in this section shall be interpreted as conferring upon a State or any of its political subdivisions authority to impose any tax, fee, charge, or other assessment upon an Indian tribe or upon any other person or entity authorized by an Indian tribe to engage in a class III activity. No State may refuse to enter into the negotiations described in paragraph (3)(A) based upon the lack of authority in such State, or its political subdivisions, to impose such a tax, fee, charge, or other assessment.
We do not hold that the State could have, without offering anything in return, taken the position that it would conclude a Tribal-State compact with Coyote Valley only if the tribe agreed to pay into the RSTF. Where, as here, however, a State offers meaningful concessions in return for fee demands, it does not exercise “authority to impose” anything. Instead, it exercises its authority to negotiate, which
In this case, Coyote Valley cannot seriously contend that the State offered no real concessions in return for its insistence on the RSTF provision. Under our holding in Rumsey, the State had no obligation to enter any negotiations at all with Coyote Valley concerning most forms of class III gaming. Nor did the State have any obligation to amend its constitution to grant a monopoly to tribal gaming establishments or to offer tribes the right to operate Las Vegas-style slot machines and house-banked blackjack. As part of its negotiations with the tribes, the State offered to do both things. We therefore reject the tribe‘s challenge to the RSTF premised on
Finally, Coyote Valley relies on
On the facts of this case, we do not find that the State‘s demands regarding the RSTF provision amount to bad faith. That provision does not put tribal money into the pocket of the State. Rather, it redistributes gaming profits to other Indian tribes. The idea of gaming tribes sharing revenue with non-gaming tribes traces its origins not to a State-initiated proposal, but rather to tribe-drafted and tribe-sponsored Proposition 5. Moreover, the UTCSC, of which Coyote Valley was a member, suggested in its discussion draft of June 17 that just such a provision be included in the Davis Compact. Every other compacting tribe in California has agreed to the provision.
Given that the State offered significant concessions to tribes during the course of negotiations in return for the RSTF provision, that the provision originated in proposals by the tribes and now has strong support among the tribes, and that Coyote Valley was not excluded from the negotiations that shaped the RSTF provision, we hold that the State did not act in bad faith by refusing to enter a compact with Coyote Valley that did not include this provision.
b. The Special Distribution Fund
Unlike contributions to the RSTF, money that goes into the Special Distribution Fund does go into the pocket of the State. But it does not go into just any pocket. Although at the outset of compact negotiations with the UTCSC the State sought unrestricted access to a percentage of the tribes’ net win from gaming devices, the SDF provision ultimately incorporated into the Davis Compact is much more restrictive. It provides that money from the SDF may be appropriated by the Legislature for only 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.
The district court interpreted subsection (e) under the ejusdem generis principle to be “limited to purposes that, like the first four enumerated purposes, are directly related to gaming.” (Emphasis added.) See United States v. Lacy, 119 F.3d 742, 748 (9th Cir.1997) (“[A] general term following more specific terms means that the things embraced in the general term are of the same kind as those denoted by the specific terms.” (internal quotation marks omitted)). The State does not contest that construction on appeal, and we adopt it here.
Coyote Valley raises objections to the SDF provision similar to those it raised against the RSTF provision. Specifically, it argues that the SDF provision both falls outside the proper scope for compact negotiations set forth in
We next determine whether the State acted in bad faith by insisting on the inclusion of the SDF provision in the Davis Compact. Even if the State‘s insistence on this provision was indeed a “demand” for a “direct tax” (which we do not decide), we hold that circumstances exist in this case to justify the State‘s conduct. As explained above, a State‘s demand for direct taxation of an Indian tribe constitutes only “evidence” of bad faith that courts “shall consider.”
Congress did not intend to allow States to invoke their economic interests “as a justification ... for excluding Indian tribes from” class III gaming; nor did Congress intend to permit States to use the compact requirement “as a justification ... for the protection of other State-licensed gaming enterprises from free market competition with Indian tribes.”
Here the State did not use compact negotiations to protect “other State-licensed gaming enterprises from free market competition with Indian tribes.”
c. The Labor Relations Provision
Finally, Coyote Valley contends that the Labor Relations provision is improper, arguing that labor relations are too far afield from tribal gaming to be an appropriate topic for Tribal-State compact negotiations. The State counters that because thousands of its citizens are employed at tribal casinos, it is proper for the State to insist on some minimal level of protection for those workers as a precondition to entering a Tribal-State compact.18 We hold that the provision falls within the scope of
During the negotiation of the Davis Compact, the State did not demand that tribes adopt a specific set of legal rules governing general employment practices on tribal lands. Instead, it demanded that tribes meet with labor unions to negotiate independently a labor ordinance addressing only organizational and representational rights and applicable only to employees at tribal casinos and related facilities. This demand became Section 10.7 of the Davis Compact:
Notwithstanding any other provision of this Compact, this Compact shall be null and void if, on or before October 13, 1999, the Tribe has not provided an agreement or other procedure acceptable to the State for addressing organizational and representational rights of Class III Gaming Employees and other employees associated with the Tribe‘s Class III gaming enterprise, such as food and beverage, housekeeping, cleaning, bell and door services, and laundry employees at the Gaming Facility or any related facility, the only significant purpose of which is to facilitate patronage at the Gaming Facility.
We hold that this provision is “directly related to the operation of gaming activities” and thus permissible pursuant to
We also reject Coyote Valley‘s argument that the State acted in bad faith when it demanded that the Labor Relations provision be included in the compact. We may consider the public interest of the State when deciding whether it has negotiated in good faith, and a State‘s concern for the rights of its citizens employed at tribal gaming establishments is clearly a matter within the scope of that interest.
Finally, Coyote Valley argues that even if the Labor Relations provision itself does not violate
III. Conclusion
For the foregoing reasons, the district court‘s order denying Coyote Valley‘s motion is AFFIRMED.
Notes
The people of the state [] find that casinos of the type currently operating in Nevada and New Jersey are materially different from the tribal gaming facilities authorized under this chapter, including those in which the gaming activities under the Gaming Compact are conducted, in that the casinos in those states: (1) commonly offer their patrons a broad spectrum of house-banked games, including but not limited to house-banked card games, roulette, dice games, and slot machines that dispense coins or currency, none of which games are authorized under this chapter; and (2) are owned by private companies, individuals, or others that are not restricted on how their profits may be expended, whereas tribal governments must be the primary beneficiaries of the gaming facilities under this chapter and the Gaming Compact, and are limited to using their gaming revenues for various tribal purposes, including tribal government services and programs such as those that address reservation housing, elderly care, education, economic development, health care, and other tribal programs and needs, in conformity with federal law.
Notwithstanding subdivisions (a) and (e), and any other provision of state law, the Governor is authorized to negotiate and conclude compacts, subject to ratification by the Legislature, for the operation of slot machines and for the conduct of lottery and banking and percentage card games by federally recognized Indian tribes on Indian lands in California in accordance with federal law. Accordingly, slot machines, lottery games, and banking and percentage card games are hereby permitted to be conducted and operated on tribal lands subject to those compacts.