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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 ALTURAS INDIAN RANCHERIA, a federally recognized Indian tribe, NO. CIV. S-11-2070 LKK/EFB 13 14 15 16 Plaintiff, v. O R D E R CALIFORNIA GAMBLING CONTROL COMMISSION, an agency of the State of California, 17 Defendant. 18 / 19 Plaintiff in this case is the Del Rosa faction of the Alturas 20 Indian Rancheria, a federally recognized Indian Tribe. Plaintiff 21 sought a preliminary injunction to prohibit defendant California 22 Gambling Control Commission from releasing funds held in trust for 23 the Tribe to the Internal Revenue Service. The IRS is attempting 24 to collect the funds pursuant to two Notices of Levy it issued to 25 the defendant on June 27, 2011 and July 8, 2011 respectively. 26 On August 1, 2011, Plaintiff, the Del Rosa Faction of the 1 1 Alturas Indian Rancheria filed suit against the California Gambling 2 Control Commission (“CGCC”) in Sacramento County Superior Court. 3 See Notice of Removal, ECF No. 1. The complaint, which seeks 4 declaratory and injunctive 5 entitled 6 Sharing Trust Fund (“RSTF”). Pursuant to state law, those funds are 7 distributed quarterly to participating tribes through the CGCC, as 8 trustee. According to plaintiff, “at the beginning of 2010, the 9 CGCC determined that a leadership dispute within the Tribe required 10 the Commission to withhold RSTF distributions pending resolution 11 of the dispute.1 to monetary relief, alleges that plaintiff is distributions from California’s Revenue 12 On or about July 20, 2011, plaintiff became aware that the IRS 13 had contacted the CGCC seeking levies against the Tribe’s RSTF 14 funds.2 At a meeting held on July 28, 2011, the CGCC voted to 15 recognize the levies and to allow the IRS to execute the levies. 16 Plaintiff claims that the Tribe has no knowledge of what the levies 17 correspond to, and requested time from the CGCC for the Tribe 18 investigate the matter directly with the IRS. Plaintiff alleges 19 that the CGCC’s conduct constitutes breach of a tribal-state 20 compact, and breach of the covenant of good faith and fair dealing. 21 Plaintiff filed a motion for a temporary restraining order (“TRO”) 22 23 1 That leadership dispute is also at the center of a related action filed in this court, Alturas v. Salazar, 10-1997. 24 2 25 26 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. 2 1 and preliminary injunction. The court granted the TRO without 2 hearing or briefing by the defendants. The court held a hearing on 3 plaintiff’s preliminary injunction motion on August 29, 2011. 4 Defendants have indicated that payment on the levies has not been 5 made to the IRS. 6 Shortly before the hearing, the other faction of the Alturas 7 Indian Rancheria (the “Rose faction”) filed a Motion to Intervene 8 as plaintiffs in this case. The motion is accompanied by a proposed 9 motion for voluntary dismissal of the case. The motion to intervene 10 is set for hearing on September 26, 2011. 11 At the hearing, defendant moved in open court to interplead 12 the funds to the Clerk of Court, and the court granted the motion. 13 Upon granting of defendant’s motion to interplead the funds, 14 the motion for a preliminary injunction is DENIED as MOOT. It also 15 appears, upon granting the motion, that for all purposes, the CGCC 16 should be dismissed as a defendant in this case. However, the court 17 hereby STAYS dismissal of CGCC from the case until the court rules 18 on the pending motion to intervene by the Rose Faction. 19 Accordingly, the court ORDERS as follows: 20 [1] Defendant’s motion, 21 interpleader of the funds subject to the IRS levies 22 issued on June 27, 2011 and July 8, 2011, is GRANTED. 23 Defendant is hereby granted leave to deposit the funds 24 with the Clerk of Court, pursuant to the procedures set 25 forth in Local Rules 150. Upon making such deposit, 26 CGCC, pursuant to 28 U.S.C. § 2361, shall be and is 3 made in open court, for 1 hereby discharged from any further liability to the 2 United States with regard to the IRS levies. 3 [2] Dismissal of defendant CGCC from the case is STAYED 4 until further order of this court. 5 [3] Plaintiff’s Motion for a Preliminary Injunction, ECF 6 No. 9, is DENIED as MOOT. 7 IT IS SO ORDERED. 8 DATED: September 1, 2011. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 4

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