Alturas Indian Reservation v. California Gambling Control Commission

Filing 22

ORDER signed by Judge Lawrence K. Karlton on 9/1/2011 ORDERING 20 Defendant's motion, made in open court, for interpleader of the funds subject to the IRS levies issued on 6/27/2011 and 7/8/2011, is GRANTED; dft is hereby GRANTED leave to depo sit the funds with the Clerk of Court, pursuant to the procedures set forth in LR 150. Upon making such deposit, CGCC, pursuant to 28:2361, shall be and is hereby DISCHARGED from any further liability to the US with regard to the IRS levies; Dismissal of dft CGCC from the case is STAYED until further order of this court; pltfs 9 Motion for a Preliminary Injunction, is DENIED as MOOT. (Reader, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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ALTURAS INDIAN RANCHERIA,
a federally recognized
Indian tribe,
NO. CIV. S-11-2070 LKK/EFB

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Plaintiff,
v.

O R D E R

CALIFORNIA GAMBLING
CONTROL COMMISSION, an
agency of the State of
California,

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Defendant.
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/

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Plaintiff in this case is the Del Rosa faction of the Alturas

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Indian Rancheria, a federally recognized Indian Tribe. Plaintiff

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sought a preliminary injunction to prohibit defendant California

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Gambling Control Commission from releasing funds held in trust for

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the Tribe to the Internal Revenue Service. The IRS is attempting

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to collect the funds pursuant to two Notices of Levy it issued to

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the defendant on June 27, 2011 and July 8, 2011 respectively.

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On August 1, 2011, Plaintiff, the Del Rosa Faction of the
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Alturas Indian Rancheria filed suit against the California Gambling

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Control Commission (“CGCC”) in Sacramento County Superior Court.

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See Notice of Removal, ECF No. 1. The complaint, which seeks

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declaratory and injunctive

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entitled

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Sharing Trust Fund (“RSTF”). Pursuant to state law, those funds are

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distributed quarterly to participating tribes through the CGCC, as

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trustee. According to plaintiff, “at the beginning of 2010, the

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CGCC determined that a leadership dispute within the Tribe required

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the Commission to withhold RSTF distributions pending resolution

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of the dispute.1

to

monetary

relief, alleges that plaintiff is

distributions

from

California’s

Revenue

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On or about July 20, 2011, plaintiff became aware that the IRS

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had contacted the CGCC seeking levies against the Tribe’s RSTF

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funds.2 At a meeting held on July 28, 2011, the CGCC voted to

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recognize the levies and to allow the IRS to execute the levies.

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Plaintiff claims that the Tribe has no knowledge of what the levies

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correspond to, and requested time from the CGCC for the Tribe

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investigate the matter directly with the IRS. Plaintiff alleges

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that the CGCC’s conduct constitutes breach of a tribal-state

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compact, and breach of the covenant of good faith and fair dealing.

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Plaintiff filed a motion for a temporary restraining order (“TRO”)

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That leadership dispute is also at the center of a related
action filed in this court, Alturas v. Salazar, 10-1997.

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In a letter from the CGCC to the IRS, CGCC indicated that
it believed that the levies were related to unpaid employment
taxes. See July 19, 2011 Letter from Tina Littleton to Fara Mills,
ECF No. 9-2 at 99.
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and preliminary injunction. The court granted the TRO without

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hearing or briefing by the defendants. The court held a hearing on

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plaintiff’s preliminary injunction motion on August 29, 2011.

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Defendants have indicated that payment on the levies has not been

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made to the IRS.

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Shortly before the hearing, the other faction of the Alturas

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Indian Rancheria (the “Rose faction”) filed a Motion to Intervene

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as plaintiffs in this case. The motion is accompanied by a proposed

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motion for voluntary dismissal of the case. The motion to intervene

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is set for hearing on September 26, 2011.

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At the hearing, defendant moved in open court to interplead

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the funds to the Clerk of Court, and the court granted the motion.

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Upon granting of defendant’s motion to interplead the funds,

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the motion for a preliminary injunction is DENIED as MOOT. It also

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appears, upon granting the motion, that for all purposes, the CGCC

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should be dismissed as a defendant in this case. However, the court

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hereby STAYS dismissal of CGCC from the case until the court rules

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on the pending motion to intervene by the Rose Faction.

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Accordingly, the court ORDERS as follows:

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[1]

Defendant’s

motion,

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interpleader of the funds subject to the IRS levies

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issued on June 27, 2011 and July 8, 2011, is GRANTED.

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Defendant is hereby granted leave to deposit the funds

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with the Clerk of Court, pursuant to the procedures set

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forth in Local Rules 150. Upon making such deposit,

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CGCC, pursuant to 28 U.S.C. § 2361, shall be and is
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made

in

open

court,

for

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hereby discharged from any further liability to the

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United States with regard to the IRS levies.

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[2] Dismissal of defendant CGCC from the case is STAYED

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until further order of this court.

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[3] Plaintiff’s Motion for a Preliminary Injunction, ECF

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No. 9, is DENIED as MOOT.

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IT IS SO ORDERED.

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DATED: September 1, 2011.

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