Alturas Indian Reservation v. California Gambling Control Commission

Filing 43

ORDER granting 29 Motion to Intervene signed by Judge Lawrence K. Karlton on 10/26/11: The California Gambling and Control Commission is ORDERED to interplead the funds subject to the IRS levies issued on June 27, 2011 and July 8, 2011 within one (1) day of the issuance of this order, pursuant to this court's September 2, 2011 order 22 . (Kaminski, H)

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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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/
This case is another arising from the dispute between members

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of the Alturas tribe.

It is one more demonstration of why that

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case should settle, and why the ongoing dispute is not in the best

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interest of the tribe.

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the California Gambling and Control Commission for the Alturas

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Valley Indian Rancheria, a federally-recognized Indian Tribe.

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Pending before the court is a Motion to Intervene by the United

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States. For the reasons stated herein, the motion to intervene is

This case involves funds held in trust by

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GRANTED.
I. Background

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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 relief, alleges that plaintiff is

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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.” Mot. for a Temporary Restraining Order 3, ECF No.

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9.

to

monetary

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.1 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 additional time for the Tribe to

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investigate the matter. Plaintiff alleges that the CGCC’s conduct

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constitutes breach of a tribal-state compact, and breach of the

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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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covenant of good faith and fair dealing.

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This court granted a Temporary Restraining Order (“TRO”) to

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plaintiffs on August 10, 2011. The TRO, which enjoined the CGCC

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from distributing funds from plaintiff’s RSTF account, expired on

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August 29, 2011. See ECF No. 14. After a hearing on whether to

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issue a preliminary injunction, this court granted a motion by CGCC

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to interplead the funds subject to the IRS levies, and dismissed

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the preliminary injunction motion as moot. ECF No. 22. The court

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also granted a motion to intervene by the Rose Faction. See ECF No.

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28.

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Now before the court is a motion to intervene by the United

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States. The United States has also filed a proposed Motion to

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Dismiss, which it plans to pursue if intervention is granted.

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Plaintiff

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Defendant CGCC and intervenor Rose Faction have filed statements

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of non-opposition.

Del

Rosa

Faction

opposes

the

intervention

motion.

II. Standard for a Motion to Intervene

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Intervention is governed by Fed. R. Civ. P. 24, which is

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broadly construed in favor of intervention in order to prevent or

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simplify future litigation on related matters. United States v.

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City of Los Angeles, 288 F.3d 391, 397 (9th Cir. 2002). In

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determining whether the moving party is entitled to intervention,

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courts

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considerations,” and Rule 24(a). Id.

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are

“guided

primarily

by

practical

and

equitable

III. Analysis
The United States seeks intervention as of right under Fed.
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R. Civ. P. 24(a)(2), or in the alternative, permissive intervention

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under Rule 24(b)(1).

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A. Intervention of Right under Fed. R. Civ. P. 24(a)

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A party is entitled to intervention of right if a federal

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statute grants the party an unconditional right to intervene, or

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if the party “claims an interest relating to the property or

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transaction that is the subject of the action, and is so situated

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that disposing of the action may as a practical matter impair or

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impede the movant’s ability to protect its interest, unless the

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existing parties adequately represent that interest.” Fed. R. Civ.

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P. 24(a). In such cases, the court must permit intervention so long

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as the party seeking intervention meets four elements: “(1) the

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application

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‘significant protectable’ interest relating to the transaction that

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is the subject of the litigation; (3) the applicant must be so

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situated that the disposition of the action may, as a practical

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matter, impair or impede the applicant's ability to protect its

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interest; and (4) the applicant's interest must be inadequately

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represented by the parties before the court.” League of United

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Latin Am. Citizens v. Wilson, 131 F.3d 1297, 1302 (9th Cir. 1997).

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See also United States v. City of Los Angeles, 288 F.3d 391, 396

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(9th Cir. 2002).

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i. Timeliness

must

be

timely;

(2)

the

applicant

must

have

a

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Timeliness is a threshold issue for intervention as of right;

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if a motion is determined to be untimely, there is no need to reach

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the remaining three elements. League of Latin American Citizens 131
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F.3d at 1302. A motion to intervene is evaluated for timeliness

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based on: “(1) the state of the proceeding at which an applicant

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seeks to intervene; (2) the prejudice to other parties; and (3) the

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reason for an length of the delay.” Id. A “substantial lapse of

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time

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intervention.” Id.

[before

a

motion

is

filed]

weighs

heavily

against

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This case was removed to federal court on August 3, 2011. The

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United State’s motion was filed less than two months later, on

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September 21, 2011. This case is in the early stages. The Del Rosa

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faction does not argue that the motion to intervene is not timely.

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The court finds that there will be no undue prejudice to the

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parties if the motion is granted and that the motion was timely

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filed.

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ii. Significant Protectable Interest

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“An applicant has a significant protectable interest in an

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action if (1) it asserts an interest that is protected under some

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law,

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protected

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Glickman, 159 F.3d 405, 409 (9th Cir. 1998). The ‘relationship’

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prong is met “only if the resolution of the plaintiff’s claims

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actually will affect the applicant.” Id.

and

(2)

there

interest

is
and

a

‘relationship’

the

plaintiff’s

between
claims.”

its

legally

Donnelly

v.

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The Unites States asserts that it has a protectable interest

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in “protecting the orderly system Congress has established for

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challenging the assessment or collection of federal taxes.” The

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United States contends that this action was filed by plaintiff in

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order to thwart the IRS levies. Mot. to Intervene 4. Plaintiff does
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not dispute that the U.S. has an interest protected under law in

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the

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relationship between that interest, and plaintiff’s claims because

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the U.S. has not identified the source of the tax liability. Pl.’s

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Opp’n 2. This argument by plaintiff, however, is not on point. The

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protectable interest the United States is asserting is an interest

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in preserving the system that Congress has set up for collecting

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taxes, not in the collection of the particular taxes allegedly due

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in this case. As defendants point out, that system, articulated in

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the Anti-Injunction Act, requires taxpayers to pay first and

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litigate later: “the Court has interpreted the principal purpose

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of this language [of the Anti-Injunction Act” to be the protection

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of

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expeditiously

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judicial interference, and to require that the legal right to the

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disputed sums be determined in a suit for refund." Bob Jones Univ.

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v. Simon, 416 U.S. 725, 736 (U.S. 1974).

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right

the

to

collect

Government's
as

taxes,

need

possible

but

to

disputes

assess

with

a

and

minimum

that

there

collect
of

is

taxes

a

as

pre-enforcement

Without holding that the Anti-Injunction Act bars this suit,

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the

court

concludes

that

there

is

a

relationship

between

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plaintiff’s claims and a significant protectable interest of the

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United States.

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Additionally, the court notes that the United States has

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produced evidence showing the source of the tax liability at issue

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in order to directly refute plaintiff’s only argument that a

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relationship between plaintiff’s claim and proposed intervenor’s

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interest has not been shown. See e.g., Decl. Hankla in Supp. of
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[Proposed] Mot. to Dismiss, ECF No. 29-4.

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iii. The movant’s ability to protect its interest

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Even where an applicant shows a significant protectable

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interest, “the applicant must be so situated that the disposition

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of the action may, as a practical matter, impair or impede the

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applicant's ability to protect its interest.” League of United

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Latin Am. Citizens, 131 at 1302. This element is closely related

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to the previous one discussed. Here, the United States asserts that

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it “needs to intervene in order to be able to directly oppose the

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Del

Rosa

Faction’s

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litigate later’ rule applicable to all tax-payers.” The court

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agrees.

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injunctive or declaratory relief, the United States would be unable

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to pursue the tax levies.

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iv. Whether the United State’s interests are adequately represented

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by the parties before the court

If

the

attempt

court

were

to

short-circuit

to

grant

the

plaintiff’s

‘pay

first,

request

for

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“[T]he burden of showing inadequacy is ‘minimal,’ and the

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applicant need only show that representation of its interests by

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existing

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Biological

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2001)(citing Trbovich v. United Mine Workers, 404 U.S. 528, 538 n.

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10 (1972). Plaintiff does not argue that any party currently before

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the court will adequately represent the United State’s interest.

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The United States asserts that no party will ensure that all issues

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are properly addressed. The court finds that the United States has

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met its minimal burden.

parties

‘may

Diversity

v.

be’

inadequate.”

Berg,

268

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F.3d

Southwest
810,

823

Ctr.
(9th

for
Cir.

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B. Permissive Intervention under Fed. R. Civ. P. 24(b)

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Because the court has found that the United States is entitled

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to intervention as of right under Rule 24(a), the court declines

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to consider whether permissive intervention is appropriate.
IV. Conclusion

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For the reasons stated herein, the court ORDERS as follows:

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[1] The United State’s Motion to Intervene, ECF No.

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29, is GRANTED.

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[2] The California Gambling and Control Commission is

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ORDERED to interplead the funds subject to the IRS

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levies issued on June 27, 2011 and July 8, 2011 within

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one (1) day of the issuance of this order, pursuant to

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this court’s September 2, 2011 order, ECF No. 22.

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IT IS SO ORDERED.

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DATED: October 26, 2011.

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