DEFINING THE SCOPE OF THE STATE'S GOOD FAITH DUTY: PERMISSIBLE TOPICS IN TRIBAL-STATE GAMING COMPACT NEGOTIATIONS (COMMENTARY RE CHICKEN RANCH RANCHERIA OF ME-WUK INDIANS V. NEWSOM )
2021; Mary Ann Liebert, Inc.; Volume: 25; Issue: 6 Linguagem: Inglês
10.1089/glr2.2021.0008
ISSN2572-5327
AutoresKathryn R.L. Rand, Steven Andrew Light,
Tópico(s)European and International Contract Law
ResumoGaming Law ReviewVol. 25, No. 6 ArticleFree AccessDEFINING THE SCOPE OF THE STATE'S GOOD FAITH DUTY: PERMISSIBLE TOPICS IN TRIBAL-STATE GAMING COMPACT NEGOTIATIONS (COMMENTARY RE CHICKEN RANCH RANCHERIA OF ME-WUK INDIANS V. NEWSOM)Kathryn R.L. Rand and Steven Andrew LightKathryn R.L. RandThey co-founded and co-direct the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota. Rand and Light also currently serve as Distinguished Senior Fellows in Tribal Gaming at the International Center for Gaming Regulation at the University of Nevada, Las Vegas. Rand may be reached at E-mail Address: rand@law.und.edu and Light at E-mail Address: steven.light@und.edu.Kathryn R.L. Rand, JD, is the Floyd B. Sperry Professor at the University of North Dakota School of Law in Grand Forks, North Dakota, USA.Search for more papers by this author and Steven Andrew LightThey co-founded and co-direct the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota. Rand and Light also currently serve as Distinguished Senior Fellows in Tribal Gaming at the International Center for Gaming Regulation at the University of Nevada, Las Vegas. Rand may be reached at E-mail Address: rand@law.und.edu and Light at E-mail Address: steven.light@und.edu.Steven Andrew Light, PhD, is a professor of political science and public administration at the University of North Dakota College of Business and Public Administration in Grand Forks, North Dakota, USA.Search for more papers by this authorPublished Online:10 Aug 2021https://doi.org/10.1089/glr2.2021.0008AboutSectionsPDF/EPUB ToolsAdd to favoritesDownload CitationsTrack CitationsPermissions Back To Publication ShareShare onFacebookTwitterLinked InRedditEmail I. INTRODUCTIONCalifornia is notable for a number of reasons related to tribal gaming: the state is home to both the largest number of tribes operating gaming facilities and the most lucrative tribal gaming industry in the nation, with gaming revenue topping $8.4 billion in 2016.1 California also receives the highest amount of state revenue-sharing payments from tribal gaming—some $375 million in 2016.2 Such revenue-sharing payments test the limits of permissible compact terms under the federal Indian Gaming Regulatory Act of 1988 (IGRA).3 California stands out here as well, as the only state to waive its sovereign immunity from federal suit and willingly submit to litigation concerning tribal-state compact negotiations.For Class III, or casino-style gaming, IGRA requires that the tribe enter into a compact with the state in which the tribe's casino is located.4 To bring states to the negotiation table, IGRA imposes on states a duty to negotiate in good faith.5 And to enforce the state's good-faith duty, IGRA authorizes tribes to sue states in federal court for failure to negotiate in good faith.6 In Seminole Tribe v. Florida,7 however, the U.S. Supreme Court held that a state must consent to such suit.8Perhaps not surprisingly, in Seminole Tribe's aftermath, states generally have not consented to have a federal court review their proffered compact terms to determine whether the state has met its good-faith duty. Instead, states appear to have leveraged the Court's decision legally, politically, and fiscally in compact negotiations. As one court put it, after Seminole Tribe, “[N]othing now protects the Tribe if the State refuses to bargain in good faith or at all; the State holds all the cards (so to speak).”9Additionally, the Court's decision had the effect of quashing development of the law—what, exactly, would constitute good faith (or lack thereof)? Without court decisions to interpret, apply, and explain the statutory provisions, both tribes and states were left without much guidance.10 Good faith, it seemed, might be satisfied by whatever state demands the tribe was willing to agree to.11California, though, waived its sovereign immunity.12 As a result, California's various rounds of compact negotiations have provided the federal courts with the opportunity to determine what satisfies, or fails to satisfy, the state's good-faith duty. All the best cases, if you will, are coming out of California.13 This case, Chicken Ranch Rancheria of Me-Wuk Indians v. Newsom,14 is another good one.II. BACKGROUNDFive tribes in California commenced this litigation against the state and Governor Gavin Newsom in 2019, challenging the state's proffered terms for new Class III gaming compacts.15 Specifically, the tribes argued that over the course of several years of hard-line negotiations resulting in a virtual take-it-or-leave-it mandate,16 the state had demanded provisions related to topics outside of those expressly authorized by IGRA.IGRA provides that compacts “may contain provisions relating to” a list of specified topics, including “any other subjects that are directly related to the operation of gaming activities.”17 Thus, the key question is whether the state's negotiations include topics directly related to the tribe's gaming operations. If a state raises issues outside of the topics authorized by IGRA that are “so attenuated” from the tribe's gaming operations,18 the court should consider it as “strong, if not determinative, evidence of bad faith.”19 In some circumstances, such evidence may be rebutted by the state's offer of “meaningful concessions” to the tribe as an element of compact negotiations.20Here, the state's proffered terms included provisions requiring the tribes to (1) adopt employment standards for its gaming operations (including minimum wage, labor relations, and anti-discrimination and anti-harassment laws); (2) enact tort laws to govern personal injury and property damage claims connected to the tribal casino, including a waiver of tribal sovereign immunity to permit tort claims against the tribe in tribal court; (3) recognize and enforce state spousal and child support orders against any tribal casino employees; (4) adopt a specified system of environmental impact review for any construction of or modification to the tribal casino (including an obligation on the tribe to negotiate environmental mitigation agreements with local governments); and (5) make payments of gaming revenue to a new state-managed fund, the Tribal Nation Grant Fund, to provide grants to non-gaming tribes in the state.III. SUMMARY: THE FEDERAL COURT'S ANALYSIS AND CONCLUSIONSThe district court's analysis of each area offers guidance as to which fall within the compact provision topics authorized by IGRA, as well as which may require the state to offer a meaningful concession in return. Though the full analysis (which follows this commentary) is instructive, the court's conclusions may be summarized as follows:(1) Employment standards, including labor relations, that apply only to employees at the tribe's casino and related facilities, fall within “any other subjects that are directly related to the operation of gaming activities,” as authorized under IGRA.21 A state's attempt to negotiate employment standards is “not per se evidence of bad faith,” but the state should be willing to offer something in return: [B]ecause these topics are not at the heart of the gaming activity and only somewhat connected (they are not directly related to the class III gaming itself but related to the overall operation of the facilities in which the gaming take[s] place), the state should also provide “meaningful concessions” in exchange for making demands on these topics.22(2) Tort law, including waiver of tribal sovereign immunity to permit tort claims, may be a permitted topic of negotiation if such claims are resolved in tribal, rather than state, court23 and the claims are limited to people “who travel to the casino for the purpose of taking part in gaming activities and without whom the gaming activities would not prosper.” The court cautioned, however, that “this is at the very edge of relevance” in terms of the connection to tribal gaming, and requires a meaningful concession from the state in return for the tribe's agreement.24(3) Comity for state spousal and child support orders against tribal casino employees falls outside the topics permitted by IGRA, as this issue involves “legal rights that exist independently of any gaming operations”: Spousal and child support obligations are affected by employment and income but would still exist even in the absence of the gaming related job. … [The state was] arguably trying to regulate the relationship between the [tribal casino] employees and third[-]party family members who have no connection with the gaming activity; the nexus of those relationships was not the gaming activity. This is a topic which pulled the negotiations into a field wholly collateral to the operation of gaming facilities.25Further, the requirement that tribal courts would “automatically” enforce state spousal and child support orders was akin to shifting jurisdiction from the tribe to the state.26 The state's proffered terms in this regard amounted to “per se evidence of bad faith.”27(4) The scope of the state's proffered terms involving environmental impact review processes and an obligation on the tribe to negotiate environmental mitigation agreements with local governments was limited to tribal gaming facilities and thus was within IGRA's authorized topics. This, too, though, “is a subject for which the [state] need[s] to provide meaningful concessions.”28(5) The new Tribal Nation Grant Fund is similar to California's (then-novel) Revenue Sharing Trust Fund in the current compacts enacted in 1999. The legality of the Revenue Sharing Trust Fund was upheld by the Ninth Circuit in a prior case; accordingly, the court reached the same conclusion with regard to the Tribal Nation Grant Fund.29Finally, the district court cautioned, “It is the burden of [the state] to link specific concessions as being offered in return for specific topics. … The [state] also [has] to explain in detail how much a benefit the concessions actually would provide to the [tribe].”30IV. IMPLICATIONSAs it stands, California has failed to negotiate in good faith. This finding by the district court triggers the remedial process detailed in IGRA, with the required next step that the state and tribes return to the negotiating table in light of the court's findings.31Stakeholders in California and the five tribal plaintiffs, as well as many other policymakers and industry observers with interests in defining, interpreting, or simply gaining greater clarity on the scope of permissible Class III compact negotiations and provisions, will be eager onlookers, as well.With a total of 64 compacts including those at hand here due to expire in California over the next 18 months and the clock ticking on renegotiation, the expectation of “meaningful concessions” could mean that the state's proffered provisions are scaled back. Or, it could mean that the state must offer more—including the possibility of an expansion of “off-reservation” gaming on newly acquired trust lands outside the tribes' reservations, or perhaps some degree of tribal exclusivity over new games, such as sports betting. Either way, there are sure to be impacts on the future of compact negotiations and tribal gaming in California. Stay tuned.1 Alan Meister, Casino City's Indian Gaming Industry Report 27, 30 (2018 ed.). Annual tribal gaming data generally lags that of commercial facilities that are subject to state reporting requirements. In 2016, 64 tribes operated gaming in California at 74 facilities. In the same year, 31 tribes in Oklahoma operated 131 gaming facilities in the state, many of them relatively modest and co-located in travel centers and convenience stores. Id. at 27–28. Tribes in Oklahoma earn the second highest gaming revenue in the nation, with $4.36 billion in 2016. Id. at 30. Tribal gaming in these two states accounts for about 40% of tribal gaming revenue nationally. Id. at 37. It is important to note, if perhaps obvious, that all figures cited here pre-date the global pandemic that disrupted the entire gaming and hospitality industry across all sectors. The extent of the bounce-back for tribal gaming in California, Oklahoma, and other states remains to be seen.2 Id. at 90. This amount does not include direct payments to local governments nor state regulatory costs charged to the tribes. In 2016, the two states closest to California in terms of direct revenue-sharing payments to the state were Connecticut and Florida, each with far fewer tribal casinos (and far fewer tribes, for that matter). Id.3 25 U.S.C. §§ 2701–2721.4 Id. § 2710(d)(1)(C).5 Id. § 2710(d)(3)(A) (providing that “the State shall negotiate with the Indian tribe in good faith to enter into such a compact”). For a discussion of the congressional intent of the state's good-faith duty, See Steven Andrew Light & Kathryn R.L. Rand, Indian Gaming and Tribal Sovereignty: The Casino Compromise 56–57 (2005).6 Id. § 2710(d)(7)(A)(i).7 517 U.S. 44 (1996).8 The Court held that Congress did not have power to abrogate state sovereign immunity. Id. at 71–72. Thus, the federal action authorized by the Indian Gaming Regulatory Act (IGRA) may proceed only if the state waives its sovereign immunity and consents to suit. Without state consent, such suits are “barred by the Eleventh Amendment and must be dismissed for a lack of jurisdiction.” Id. at 76.9 United States v. Spokane Tribe of Indians, 139 F.3d 1297, 1301 (9th Cir. 1998).10 Duly negotiated compacts are subject to federal review by the U.S. Secretary of the Interior, who may disapprove a compact if it violates IGRA, other federal law, or the federal government's trust obligations. 25 U.S.C. § 2710(d)(8). Thus, when the Secretary issues a written decision on a submitted compact, the Secretary may provide some guidance as to why the compact was approved (or disapproved). The Secretary's approval process, however, is distinct from the federal cause of action authorized by IGRA: rather than coming before a federal court as an allegation that the state has failed to negotiate in good faith, a duly negotiated compact comes before the Secretary as an agreement that the tribe willingly has entered into with the state. As Kevin Washburn has noted, the Secretary “is loath to disapprove compacts,” given the time and effort already expended by the tribe and the state. Kevin K. Washburn, Recurring Issues in Indian Gaming Compact Approval, 20 Gaming L. Rev. 388, 391 (2016).11 See Steven Andrew Light, Kathryn R.L. Rand & Alan P. Meister, Spreading the Wealth: Indian Gaming and Revenue-Sharing Agreements, 80 N.D. L. Rev. 657 (2004).12 SeeCal. Gov't Code § 98005 (“[T]he State of California also submits to the jurisdiction of the courts of the United States in any action brought against the state by any federally recognized California Indian tribe asserting any cause of action arising from the state's refusal to enter into negotiations with that tribe for the purpose of entering into a different Tribal-State compact pursuant to IGRA or to conduct those negotiations in good faith . … ”).13 See, e.g., Rincon Band of Luiseno Mission Indians v. Schwarzenegger, 602 F.3d 1019 (9th Cir. 2010); In re Indian Gaming Related Cases (Coyote Valley II), 331 F.3d 1094 (9th Cir. 2003). In its consideration of duly negotiated compacts, the Interior Secretary has cited to the Ninth Circuit's decisions. See, e.g., Letter from Kevin K. Washburn, Assistant Secretary for Indian Affairs, to Gary Besaw, Chair, Menominee Indian Tribe of Wisconsin (Mar. 12, 2015) (relaying the Interior Secretary's analysis of the duly negotiated compact submitted by the tribe for approval, and stating that “aspects of the [Ninth Circuit's decision in Rincon] may provide useful guidance in our inquiry here”).14 Chicken Ranch Rancheria of Me-Wuk Indians v. Newsom, No. 19-CV-00024, 2021 WL 1212712 (E.D. Cal. Mar. 21, 2021).15 The tribal plaintiffs included the Chicken Ranch Rancheria of Me-Wuk Indians, the Blue Lake Rancheria, the Chemehuevi Indian Tribe, the Hopland Band of Pomo Indians, and the Robinson Rancheria. Id. In prior litigation, the Chemehuevi Indian Tribe was listed as the first plaintiff, so that the case often was referred to as Chemehuevi. See Chemehuevi Indian Tribe v. Newsom, 919 F.3d 1148 (9th Cir. 2019).16 “The Tribe had a compact with the state that had worked since 1999, so the Tribe was hopeful that a new compact would be negotiated fairly quickly,” said Lloyd Mathiesen, tribal chair of the Chicken Ranch Rancheria of Me-Wuk Indians. “We tried, but after five years of negotiations it was painfully clear that the state wanted more from the Tribe than it had a right to ask for. The state's actions threatened our sovereignty. We had no choice but to resist, and litigation became our only option.” Court Rules Governor Negotiated with Tribes in Bad Faith, Del Norte Triplicate (Crescent City, CA) (Apr. 12, 2021), at https://www.triplicate.com/news/court-rules-governor-negotiated-in-bad-faith-with-indian-tribes/article_1bfe0996-9979-11eb-a6d8-bb570a27900f.html.17 IGRA provides that compacts “may contain provisions relating to” a list of specified topics, including “any other subjects that are directly related to the operation of gaming activities.” 25 U.S.C. § 2710(d)(3)(C). The Ninth Circuit has held that the statutory list operates to limit compact negotiations to the same topics. See Rincon, 602 F.3d at 1028–29. For a broader discussion of the issue of what IGRA authorizes to be “on the table” in compact negotiations, see Kathryn R.L. Rand & Steven A. Light, Do “Fish and Chips” Mix? The Politics of Indian Gaming in Wisconsin, 2 Gaming L. Rev. 129 (1998).18 Chicken Ranch Rancheria of Me-Wuk Indians v. Newsom, No. 19-CV-00024, 2021 WL 1212712 (E.D. Cal. Mar. 21, 2021) (quoting Chemehuevi, 919 F.3d at 1153).19 Id. (quoting Fort Independence Indian Community v. California, 679 F. Supp. 2d 1159, 1172 (E.D. Cal. 2009)).20 Id. (citing Rincon, 602 F.3d at 1036). The concept of “meaningful concessions” is central to a court's—and the Interior Secretary's—review of revenue-sharing demands or provisions. See, e.g., In re Indian Gaming Related Cases (Coyote Valley II), 331 F.3d at 1112 (“Where, as here, … a State offers meaningful concessions in return for fee demands,” the state “exercises its authority to negotiate [a fee, rather than to impose a fee], which IGRA clearly permits.”); Washburn Letter, supra note 13 (“We review revenue sharing requirements in gaming compacts with great scrutiny. Our analysis first looks to whether the state has offered meaningful concessions to the tribe.”).21 25 U.S.C. § 2710(d)(3)(C)(vii).22 Chicken Ranch Rancheria of Me-Wuk Indians v. Newsom, No. 19-CV-00024, 2021 WL 1212712 (E.D. Cal. Mar. 21, 2021) (citing In re Indian Gaming Related Cases (Coyote Valley II)).23 The court acknowledged that the state's proffered terms required the tribe to adopt state legal standards regarding tort claims, but did not impermissibly “shift jurisdiction” over such claims from the tribe to the state. “[T]he ability to resolve disputes within the tribal court system is the legal default position.” Id. (citing Navajo Nation v. Dalley, 896 F.3d 1196 (10th Cir. 2018); Pueblo of Santa Ana v. Nash, 972 F. Supp. 2d 1254 (D.N.M. 2013)).24 Id. (citing Big Lagoon Rancheria v. California, 759 F. Supp. 2d 1149, 1162 (N.D. Cal. 2010)).25 Id. (citing In re Indian Gaming Related Cases (Coyote Valley II)).26 Id. (citing Navajo Nation; Pueblo of Santa Ana).27 Id.28 Id.29 Id. (citing In re Indian Gaming Related Cases (Coyote Valley II)).30 Id. (citing Big Lagoon Rancheria).31 See 25 U.S.C. § 2710(d)(7)(B).FiguresReferencesRelatedDetails Volume 25Issue 6Aug 2021 InformationCopyright 2021, Mary Ann Liebert, Inc., publishersTo cite this article:Kathryn R.L. Rand and Steven Andrew Light.Gaming Law Review.Aug 2021.234-237.http://doi.org/10.1089/glr2.2021.0008Published in Volume: 25 Issue 6: August 10, 2021KeywordsChicken Ranch Rancheria of Me-Wuk IndiansBlue Lake RancheriaChemehuevi Indian TribeHopland Band of Pomo IndiansRobinson Rancheriatribal casinosIndian Gaming Regulatory Acttribal-state compactsCaliforniaPDF download
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