As a result of the Rincon decision….
Original protective order here.
For two decades American Indians have complained that states have been extorting unreasonable if not illegal revenue sharing agreements from tribal governments in exchange for the right to operate casinos.
Tribal leaders claim revenue sharing called for in the agreements, referred to as “compacts” under the Indian Gaming Regulatory Act of 1988, violate the intent if not the letter of the act, which prohibits taxation of tribal governments.
Indigenous Americans got a measure of satisfaction in an April 20 decision by a three-judge panel of the 9th Circuit Court of Appeals in San Francisco which ruled California Gov. Arnold Schwarzenegger negotiated in bad faith by demanding an illegal taxin tribal-state compact negotiations with the Rincon Band of Luiseño Indians, a small but prosperous tribe near San Diego.
“We applaud this decision because it confirms one of the basic foundations of the relationship between American Indian tribes and states, that Indian tribes are sovereign governments, which, like other governments, cannot be taxed,” Rincon Chairman Bo Mazzetti said.
The ruling also was a respite from what tribes believe is a backlash against Indian gambling and a growing public perception of tribes not as sovereign governments and culturally rich first Americans, but wealthy purveyors of casinos.
Legal experts believe the 2-1 ruling, should it be upheld on appeal to a full panel of 9th Circuit judges and the US Supreme Court, will not influence compacts in the other 27 states with tribal casinos. They contend it will only impact California compactswith some 61 tribes.
But tribal leaders found comfort in the harsh language of the court’s ruling, not to mention newspaper headlines which claimed Schwarzenegger “broke the law” and “strong-armed” tribes into paying onerous revenue sharing payments in exchange for the right to increase their volume of slot machines.
“We are mindful that many states, and especially California, are currently writhing in the financial maw created by the clash of certain mandatory state expenditures at a time when state revenues have plummeted from historic levels,” wrote 9th Circuit Judge Milan Smith Jr.
From the San Diego Union-Tribune:
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.
From the San Diego Union-Tribune:
A federal appeals court Tuesday backed a North County tribe that says Gov. Arnold Schwarzenegger negotiated in bad faith by demanding payments for the state general fund.
The ruling in a lawsuit by the Rincon Indian band against the governor has big implications for the governor, who campaigned on a promise to make tribes “pay their fair share” for casino expansions, and for future negotiations for casino compacts.
“It’s a huge deal,” said law professor Matthew L.M. Fletcher, who follows Indian legal issues nationally. “It’s about millions and millions of dollars to the state of California.”
And it could affect negotiations between the state and other tribes, said Fletcher, who teaches at Michigan State University’s law school.
The issue comes down to what kind of bargain tribes and states can strike. The Indian Gaming Regulatory Act, which oversees how tribes can set up Las Vegas-style casinos, says that states must approve such gambling but can’t tax the profits. So states and tribes have entered into revenue-sharing contracts in which tribes have paid part of their profits in exchange for getting exclusive rights to gamble.
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.
Here is the Ninth Circuit’s opinion in Rincon Band v. Schwarzeneggar (over a dissent).
Only some of the materials are available (since this case is so old, and CA9 only recently joined the 21st century):
[Picayune Amicus Brief unavailable]
Here are the lower court briefs and materials.
The Supreme Court denied cert earlier this week in two of the cases that are part of a trilogy of California gaming cases (here is the Court’s order list). Those cases were docket nos. 08-931 (CACHIL DEHE BAND OF WINTUN) and 08-1030 (RINCON BAND OF LUISENO MISSION). A third petition is still pending, but one expects that one to be denied as well (no. 08-1208 — San Pasqual).
All of the petitions are available here.