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More News Coverage of Rincon Band Decision

April 21, 2010Matthew L.M. Fletcher

California can’t force Indian tribes to share gambling profits to repair the state’s budget problems, the 9th U.S. Circuit Court of Appeals said Tuesday.

In a stunning blow to Gov. Arnold Schwarzenegger’s tactics when dealing with tribes wanting casinos, a divided, three-judge panel of the appeals court said the governor can’t ask for money for the state’s general fund without offering something of value in return because that amounts to an illegal tax.

The court upheld a 2008 ruling by a federal judge in San Diego that the governor was playing dirty in his negotiations with North County’s Rincon Indian band.

“This is a great, big message to the state,” Rincon Chairman Bo Mazzetti said. “Your days of trying to bully tribes around … those days are over.”

In the decision, Pasadena-based Judge Milan Smith Jr. compared the state’s efforts to those of the federal government when it took land from the Sioux after Lt. Col. George Custer reported finding gold in the Black Hills of South Dakota.

“Today, many tribes have struck figurative gold with casino gaming, and again, some state governments, just like their predecessors, are maneuvering to take, or at least share in, some of that figurative gold,” Smith wrote for a two-judge majority.

In his dissent, Judge Jay Bybee said tribes with casinos here and around the country have agreed for years to share revenue with state governments, just as Schwarzenegger was seeking.

“The holding … does not just upset the apple cart — it derails the whole train,” Bybee wrote. “If the majority is correct, then there is nothing for California to do but to authorize whatever (slot machines) the band wants. The band wins. Everything.”

The state will seek to have Tuesday’s decision reviewed by a larger panel of 9th Circuit judges, said Jeff Macedo, a spokesman for Schwarzenegger.

Legal experts disagreed on whether the case would be reviewed by a larger panel, or by the U.S. Supreme Court, should it be asked.

Macedo said the governor sees this as federal meddling.

“We still believe we were negotiating in good faith,” Macedo said. “This amounts to the federal courts again telling the state what it can and can’t do, and it’s not allowing the state the ability to negotiate these compacts.”

The ruling has big implications for Schwarzenegger, who campaigned on a promise to make tribes “pay their fair share” for casino expansions.

“It’s about millions and millions of dollars to the state of California,” said Matthew L.M. Fletcher, a law professor at Michigan State University who follows Indian legal issues nationally.

The ruling could affect other casino negotiations, he said.

The issue comes down to the kind of bargain that tribes and states can strike. The federal 1988 Indian Gaming Regulatory Act, known as IGRA, laid out how tribes can set up Las Vegas-style casinos. It said such gambling requires state approval, but that states can’t tax the profits.

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A Note on Judge Bybee’s Dissent in Rincon Band

April 20, 2010Matthew L.M. Fletcher2 Comments

Judge Bybee dissent in Rincon Band is not a very good example of legal scholarship (not that it has to be, since he’s a judge, not a law professor), but one potential problem is that he resorts to the “parade of horribles” argument at the very end:

The majority’s legal errors carry grave–and widespread–practical repercussions. The majority’s decision will call into question Tribal-State gaming compacts not just in cash-strapped California, * * * but throughout the country. The Second Circuit has never addressed a legal challenge to the Connecticut compacts governing the behemoth Foxwoods and Mohegan Sun Casinos, but the majority decision here will inevitably spur such challenges in Connecticut and in New York. The Sixth, Tenth, and Eleventh Circuits have yet to consider the validity of general revenue sharing under IGRA, but it can be reasonably be expected that district court clerks in Michigan, New Mexico, Oklahoma, and Florida will be docketing challenges sometime soon. These lawsuits * * * will eat up State, tribal, and federal resources and will unsettle dozens of mutually beneficial revenue-sharing provisions that have fed both tribal coffers and revenue-hungry state treasuries.

So many points, but here are a few. (1) At least in regards to the 1993 compacts in Michigan, it won’t happen. Those compacts came about as a result of a negotiated settlement and consent decree. (2) This is a pretty crass effort to get an issue on the Supreme Court’s radar, where there are no other splits in authority because states simply have not waived their 11th Amendment immunity. (3) How many times in one paragraph can one assert that states are desperate for tribal gaming revenues (implying, I think, that the judge thinks states are entitled to them)?

If, and it’s a huge if, another circuit decides a revenue sharing case, and that decision rejects the Rincon Band majority’s reasoning, then it will be a matter for the Supreme Court. Not before.

What’s Going on with the Lumbees?

April 18, 2010April 18, 2010Matthew L.M. Fletcher

From the Fayetteville Observer via Pechanga:

Bad bet: Tribe gambles its assets on recognition bid.

It appears that Lumbee leaders have decided it’s acceptable to bet a big piece of the tribe’s net worth on one game of chance.

It’s not surprising, though, that many of the people they represent are outraged. They should be.

On March 12, the Lumbee Tribal Council, meeting at a conference in Raleigh, abruptly dumped longtime Lumbee lawyer Arlinda Locklear, who had worked – for free – for more than two decades to achieve full federal recognition for the tribe. Recognition would bring hundreds of millions of federal dollars to the tribe, to improve housing, education and health care, and to create new and better jobs.

The recognition effort has made good progress in the current Congress, winning approval in the House and clearing the Senate’s Indian Affairs Committee. The measure has President Obama’s support and both this state’s senators believe it has a good chance of Senate approval.

That may be out the window now, because the Tribal Council hired a Nevada gaming consultant to take Arlinda Locklear’s place. That means (although the council won’t say as much) that the tribe’s pledge to forsake casino operations, as a condition of recognition, is also out the window. The tribe wouldn’t hire a specialist in casino development if it wasn’t planning to get into the gambling business. That sudden change of course may be enough to kill any chance of Senate approval this year – or any other year.

And then it gets worse.

The Tribal Council’s contract with Lewin International includes penalties of $35 million if the council can’t get the tribe to agree to gambling once federal recognition is in place. If the penalty is assessed, most of the tribe’s assets – including housing and public buildings – could be at risk.

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California Court of Appeals Holds that California Valley Miwok Has Standing to Sue Cal. Gaming Commission

April 18, 2010Matthew L.M. Fletcher2 Comments

Here is the opinion in California Valley Miwok Tribe v. California Gambling Control Commission (Cal. App. 4th Dist.).

An excerpt:

The California Valley Miwok Tribe (the Miwok Tribe) appeals from a judgment of dismissal following an order sustaining the demurrer filed by the California Gambling Control Commission (the Commission) on the basis that the Miwok Tribe lacked capacity or standing to pursue its action against the Commission. As we will explain, we conclude that the trial court improperly concluded that the Miwok Tribe lacked capacity or standing, and further that none of the other grounds for demurrer asserted by the Commission have merit. Accordingly, we reverse the judgment.

Gaming Finances Mismanagement Investigation at LTBB

April 13, 2010Matthew L.M. Fletcher1 Comment

From the Petoskey News-Review via Pechanga:

The Little Traverse Bay Bands of Odawa Indians’ Gaming Board of Directors is under investigation by tribal police for alleged financial mismanagement.

In the April 2010 issue of “Odawa Trails,” the tribe’s monthly newsletter, tribal chairman Ken Harrington informs tribal citizens that, as a result of a recent ethics complaint filed by a tribal citizen, who was not named, the gaming board of directors is currently under investigation.

Harrington’s letter states: “Tribal police investigated, a warrant was issued and the tribal police acted on the warrant and seized the (gaming board’s) phones and computers.”

Harrington also reported in this letter, that after recently issuing an executive order to have the gaming board’s finances moved to the tribal government building, financial issues were discovered.

“It became apparent the (gaming board’s) budget was $20,000 over and overpayment of stipends became evident.”

Matthew Lesky, tribal prosecutor, confirmed to the New-Review Monday, during a phone interview, that the gaming board, in fact, is under investigation by tribal police for what he described as “financial management” issues.

As of press time today, Tuesday, no charges had yet been filed against the gaming board of directors in tribal court.

According to confidential tribal documents recently provided to the News-Review, it is alleged that on Jan. 25, the three remaining members of the gaming board of directors — Carol McFall, chairperson; Judith Pierzynowski, vice chairperson; and Sheran Patton, treasurer/secretary — acted outside its authority by terminating Denise White, director of human resources for the tribe, and approving a $53,000 severance check to her the following day (Jan. 26), which was stopped shortly after its issuance.

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