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

One of the statutory elements for establishing a prima facie case of bad faith negotiation against a state under the Indian Gaming Regulatory Act, 25 U.S.C. § 2701 et seq., is that “a Tribal-State compact has not been entered into.” 25 U.S.C. § 2710(d)(7)(B)(ii)(I). In this case, the United States Court of Appeals for the Ninth Circuit interpreted this language according to the status quo ante, holding that an Indian tribe who sought and obtained a declaration rescinding a compact could not pursue a claim for latent bad faith negotiation against a state that induced the compact through material misrepresentations in order to increase its tax receipts (i.e., “revenue sharing”) by 2,460%. With this holding seeming to violate deep-rooted principles of retroactivity and interpretive norms for the Indian Gaming Regulatory Act set forth within this Court’s precedent, the question presented is:

Whether an Indian tribe can pursue a bad faith negotiation claim against a state under Section 2710(d)(7)(A)(i) of the Indian Gaming Regulatory Act after rescinding a compact induced by misrepresentation or other latent bad faith conduct, and thus bringing its circumstances into compliance with the statutory requirement that “a Tribal-State compact has not been entered into.”

California’s petition is here.

Lower court materials here (panel, en banc).

Ninth Circuit Rules in Favor of Tribe in $36.2M Compact Dispute

October 26, 2015Matthew L.M. Fletcher4 Comments

Here is the opinion in Pauma Band of Luiseño Indians v. State of California.

From the court’s syllabus:

Affirming the district court’s summary judgment, the panel held that the Pauma Band of Luiseno Mission Indians was entitled to rescission of the 2004 Amendment to the 1999 Tribal-State Compact governing operation of Class III, or casino-style, gaming on Pauma’s land.

The panel held that the interpretation of a Compact license pool provision in Cachil Dehe Band of Wintun Indians of the Colusa Indian Cmty. v. Cal., 618 F.3d 1066 (9th Cir. 2010), applied, such that the State of California would be deemed to have misrepresented a material fact as to how many gaming licenses were available when negotiating with Pauma to amend its Compact. The panel held that, unlike a change in judicial interpretation of a statute or law, the doctrine of retroactivity does not apply to contracts. Once there has been a final judicial interpretation of an ambiguous contract provision, that is and has always been the correct interpretation from the document’s inception.

The panel held that the district court properly granted summary judgment on Pauma’s misrepresentation claim. The panel held that the district court awarded the proper remedy to Pauma by refunding $36.2 million in overpayments, even though the district court mislabeled the remedy as specific performance, rather than rescission and restitution for a voidable contract. The panel held that this equitable remedy fell within the State’s limited waiver of its sovereign immunity in the Compacts, and thus was not barred by the Eleventh Amendment.

On cross-appeal, the panel held that Pauma was not entitled to seek redress under the Indian Gaming Regulatory Act because the State and Pauma actually reached a gaming Compact.

Dissenting, Chief District Judge Jarvey wrote that the State did not commit the tort of misrepresentation by interpreting the Compact differently than a later court decision. He also wrote that, under the language of the Compact, the State did not waive its sovereign immunity with respect to this claim.

Briefs here.