State of Idaho v. Coeur d' Alene Tribe

Filing 35

MEMORANDUM DECISION AND ORDER denying as moot 3 Plaintiff's MOTION for Temporary Restraining Order; denying as moot 4 Plaintiff's MOTION for Preliminary Injunction; denying in part and granting in part 15 Defendant's MOTION to D ismiss for Lack of Jurisdiction and MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM. Defendants request to compel arbitration is GRANTED to the extent that the Court will STAY this litigation until the parties have complied with Article 21 of the Gaming Compact. The motion is DENIED in all other respects, as explained above. The parties are ordered to file a joint report no later than 7/7/2014 regarding the status of proceedings under Article 21 of the Gaming Compact. (Status Report due by 7/7/2014.) Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

STATE OF IDAHO, a sovereign State of
the United States
Plaintiff,

Case No. 2:14-cv-000170-BLW
MEMORANDUM DECISION AND
ORDER

v.
COEUR D’ALENE TRIBE, a federally
recognized Indian tribe,
Defendant.

INTRODUCTION
The Court has before it defendant Coeur d’Alene Tribe’s Motion to Dismiss (Dkt.
15) as well as plaintiff’s Motion for a Temporary Restraining Order and for a Preliminary
Injunction (Dkts. 3, 4). For the reasons explained below, the Court will stay this lawsuit
based on the Tribe’s argument that the parties’ Class III Gaming Compact requires
arbitration.
BACKGROUND
In early May 2014, the Coeur d’Alene Tribe began conducting Texas Hold ’em
tournaments at the Coeur d’Alene Casino Resort Hotel. Texas Hold ’em is a poker game.
The State of Idaho immediately sought an injunction prohibiting the Tribe from
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conducting the tournaments. The State argues that the Tribe is violating the parties’
Class III Gaming Compact.
The Tribe responded with a motion to dismiss. Among other things, the Tribe
says the parties should not be before this Court because Article 21 of the Gaming
Compact requires arbitration.
The relevant parts of Article 21 provide as follows:
Article 21. Dispute Resolution.
...
21.2

Except as provided in Article 6[ 1], if either party believes that the
other party has failed to comply with any requirement of this
Compact, it shall invoke the following procedure:
.1

.2

21.3

1

The party asserting the non-compliance shall serve written
notice on the other party. The notice shall identify the
specific statutory, regulatory or Compact provision alleged
to have been violated and shall specify the factual basis for
the alleged noncompliance. The State and the Tribe shall
thereafter meet within ten (10) working days in an effort to
resolve the dispute.
If the dispute is not resolved to the satisfaction of the
parties within sixty (60) days after service of the notice set
forth in Article 21.2.1, either party may pursue binding
arbitration to enforce or resolve disputes concerning the
provisions of this Compact.

Except as provided in Article 6, both parties consent to binding
arbitration as provided herein. Once a party has given notice of
intent to pursue binding arbitration and the notice has been sent to
the non-complaining party, the matter in controversy may not be
litigated in court proceedings. A panel of three (3) arbitrators shall
be selected by the American Arbitration Association. . . . .

Neither party has argued that Article 6 applies here.

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21.4

Nothing in this Article 21 shall be construed to preclude, limit or
restrict the ability of the parties to pursue, by mutual agreement,
alternative methods of dispute resolution, whether binding or nonbinding, including, but not limited to, arbitration, mediation, minitrials or judicial resolution firms; provided, however, that neither
party is under any obligation to agree to such alternative methods of
dispute resolution.

1992 Class III Gaming Compact (“Compact” hereafter), Dkt. 3-3, at 27-28 (emphasis
added). As discussed below, the State violated Article 21 by filing this lawsuit.
DISCUSSION
At the outset of this dispute, both parties acknowledged that Article 21 governs
dispute-resolution procedures. 2 The Court concurs, and is not persuaded by any
suggestion that Article 21 may not apply. Rather, as the Court sees it, the key point of
contention is the parties’ disagreement over what Article 21 says. In a nutshell, the Tribe
says Article 21 requires arbitration unless the parties mutually agree to some other form
of dispute resolution. The State says arbitration is optional under Article 21.
Preliminarily, the Court has jurisdiction to enforce promises made in Article 21 of
the Compact. In Cabazon Bank of Mission Indians v. Wilson, 124 F.3d 1050, 1056 (9th
Cir. 1997), the Ninth Circuit held that the Indian Gaming Regulatory Act of 1988
“necessarily confers jurisdiction onto federal courts to enforce Tribal-State compacts and
the agreements contained therein.”
As for the legal standards governing enforcement of an arbitration agreement, the

2

See May 1 Letter from Jeffrey R. Anderson to Hon Chief Allan, Dkt. 3-9, at 2 (“The State hereby
gives written notice under Article 21.2 of the Tribe’s non-compliance with the Compact.”); May 2, 2014
Letter from Allan to Anderson, Dkt. 15-3, at 2 (The Tribe “believes that Article 21 of the Compact is the
required mechanism to resolve this type of dispute, . . . .”).
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Tribe has pointed out that any doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration. See Reply, Dkt. 33, at 9 (citing Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). But the presumption in favor
of arbitrability does not always apply. Rather, a court “must first decide whether the
parties are contesting the existence or the scope of an arbitration agreement. Goldman,
Sachs & Co. v. City of Reno, 747 F.3d 733, 741 (9th Cir. 2014). “If the parties contest
the existence of an arbitration agreement, the presumption in favor of arbitrability does
not apply. . . . The presumption in favor of arbitrability applies only where the scope of
the agreement is ambiguous as to the dispute at hand, . . . .” Id.
As noted above, both parties have stated that Article 21 governs this dispute, but
they disagree as to whether it requires arbitration. Thus, the dispute is not about the
scope of Article 21; it is about whether Article 21 is, in fact, an arbitration agreement, as
opposed to an agreement requiring or allowing other forms of dispute resolution. Thus,
the Court will not apply the presumption in favor of arbitrability in first determining
whether Article 21 requires arbitration. Instead, the Court will apply general principles
of federal contract law in interpreting Article 21. See Cachil Dehe Band of Wintun
Indians v. California, 618 F.3d 1066, 1073 (9th Cir. 2010) (“General principles of federal
contract law govern the Compacts, which were entered pursuant to IGRA.”). Practically,
speaking, however, the Court will look to Idaho contract law, as it has not discerned any
difference between Idaho contract law and federal contract law. See id.; Idaho v.
Shoshone-Bannock Tribes, 465 F.3d 1095, 1098 (9th Cir. 2006) (employing Idaho
contract law to interpret a tribal-state compact that was to be “construed in accordance
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with the laws of the United States”).
Under Idaho law, the determination of a contract’s meaning and legal effect are
questions of law to be decided by the court where the contract is clear and unambiguous.
Galaxy Outdoor Advertising Inc. v. Idaho Transp. Dep’t, 710 P.2d 602 (Idaho 1985). If a
contract is ambiguous, however, the interpretation of the document presents a question of
fact which focuses upon the intent of the parties. Ramco v. H-K Contractors, Inc., 794
P.2d 1381, 1383 (Idaho 1990). “A contract term is ambiguous when there are two
different reasonable interpretations or the language is nonsensical.” Potlatch Educ. Ass’n
v. Potlatch Sch. Dist., 226 P.3d 1277, 1280 (Idaho 2010).
In this case, the Court concludes, as a matter of law, that the Gaming Compact
unambiguously prohibits the State from suing the Tribe within the first 60 days after an
Article 21 notice has been sent. That 60-day window effectively functions as a holding
period. At the conclusion of the 60-day period, either side may force a binding
arbitration – to the exclusion of a lawsuit.
The language of Article 21 – quoted at length above – lays out this procedure as
follows: First, Article 21.2.1 says that if either party believes the other has violated the
Compact, then the party asserting non-compliance must provide a written notice to the
other side. The State provided this notice on May 1, 2014. See May 1, 2014 Letter from
Jeffrey R. Anderson to Hon. Chief Allan, Dkt. 3-9. (“The State hereby gives written
notice under Article 21.2 of the Tribe’s noncompliance with the Compact.”).
The May 1 notice triggered two different time periods: (1) a ten-day period in
which the parties were required to meet in an effort to resolve the dispute; and (2) a 60MEMORANDUM DECISION AND ORDER - 5

day period. The purpose of the 60-day period is not expressly stated in the Compact, but
Article 21.2.2 says that if the parties are unable to resolve their disputes within that 60day period, then either side may force the other into binding arbitration. Impliedly, then,
the 60-day period serves as a limited window of time in which the parties can attempt to
resolve their differences before one side has the opportunity to force the other into
binding arbitration.
Both sides have acknowledged that this is how the 60-day period is meant to
function. For example, the States’ May 1, 2014 notice to the Tribe acknowledges that
neither side can force an arbitration until the conclusion of the 60-day period. The notice
does not say that in so many words, but it plainly implies it by saying that the State would
be willing to waive that 60-day period so that the parties could proceed directly to
arbitration. See May 1, 2014 Letter from Anderson to Allan, Dkt. 3-9 (“The State is
willing to waive the . . . 60-day period specified in Article 21.2.2, and proceed
immediately to binding arbitration . . . if the Tribe confirms immediately upon receipt of
this letter that it will not initiate the proposed poker gambling until the completion of the
arbitration process.”) (emphasis added); see also May 2, 2014 Letter from Allan to
Anderson, Dkt. 15-3 (also expressing a willingness to waive the 60-day period and
proceed directly to arbitration).
In any event, after laying out this 60-day holding period, the next part of Article
21 goes on to provide as follows:
Except as provided in Article 6, both parties consent to binding arbitration
as provided herein. Once a party has given notice of intent to pursue

MEMORANDUM DECISION AND ORDER - 6

binding arbitration and the notice has been sent to the non-complaining
party, the matter in controversy may not be litigated in court proceedings.”
Compact, Dkt. 3-3, Art. 21.3, at 27-28 (emphasis added). That second sentence – the one
referring to court proceedings – suggests that if neither side compels arbitration, then the
parties may litigate their disputes. But given the 60-day holding period, the parties
logically cannot sue each other during those 60 days.
The State, however, insists that after it sent the written notice of non-compliance,
it had every right to immediately sue the Tribe – without regard to the 60-day period.
And that is exactly what the State did. It notified the Tribe of non-compliance on May 1,
2014 and filed this lawsuit the very next day. Further, the State says that because it raced
into Court so quickly, the Tribe has forever lost any ability to force a binding arbitration.
As the State puts it, “Article 21.3 did not foreclose Idaho from electing that remedial
course [a lawsuit] and, having chosen, to pursue it to conclusion. This matter, in other
words, may “be litigated in court proceedings” because it commenced before either party
gave and sent ‘notice of intent to pursue binding arbitration.’” Combined Reply, Dkt. 25,
at 10.
This is not a reasonable interpretation of Article 21. If accepted, it would
thoroughly eviscerate the procedure the parties put in place to make binding arbitration
the agreed-upon method of dispute resolution. Under the State’s view, if the parties are
within the 60-day, post-notice period, one party could always unilaterally decide against
arbitrating and in favor of litigating simply by racing to court.
The Court finds that Article 21 of the Compact unambiguously prohibits the State

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from filing a lawsuit within the 60-day period. The State’s position to the contrary is
unreasonable, and thus fails to create any ambiguity that would prevent the Court from
interpreting the Compact as a matter of law. See Potlatch, 226 P.3d at 1280 (“A contract
term is ambiguous when there are two different reasonable interpretations or the language
is nonsensical.”).
At this point, we are within the 60-day period. By the Court’s calculation, which
assumes the Tribe was served with the notice on May 1, the 60-day period does not
conclude until June 30. So the Tribe has every right under the Compact to wait until June
30 and then force a binding arbitration. The Court is not persuaded by the Tribe’s
argument that both sides have already waived the 60-day period and commenced
arbitration procedures. Rather, the State said it was willing to waive the 60-day period
and proceed to arbitration if – and only if – the Tribe agreed not to conduct poker
tournaments. The Tribe expressed a willingness to waive the 60-day period, but did not
agree to refrain from holding the poker tournaments. The upshot is that the 60-day period
has not been waived and neither side has pursued binding arbitration. The Court will
therefore enter an order staying this lawsuit to give the Tribe an opportunity to compel
arbitration.
Finally, the Court notes that it will refrain from rendering an opinion as to what
happens at the conclusion of the 60-day period if the Tribe does not force a binding
arbitration. Based on its position thus far, the State would surely argue that it could
proceed with its lawsuit. The Tribe, on the other hand, says a lawsuit absolutely cannot
be filed unless the parties mutually agree to resolve their dispute in Court. The Tribe
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relies on Article 21.4, which says the parties may agree to “alternative methods of dispute
resolution, whether binding or non-binding, . . . .” Compact, Dkt. 3-3, Art. 21.4, at 28.
That dispute, however, is for another day. For now, the Court will stay the lawsuit
because the parties are within the 60-day period in which the Compact unambiguously
prohibits the State from filing this lawsuit.
ORDER
1. Plaintiff’s motions for injunctive relief (Dkts. 3, 4) are DENIED AS
MOOT.
2. Defendant’s Motion to Dismiss (Dkt. 15) is DENIED in part and
GRANTED in part. Defendant’s request to compel arbitration is
GRANTED to the extent that the Court will STAY this litigation until the
parties have complied with Article 21 of the Gaming Compact. The motion
is DENIED in all other respects, as explained above.

3. The parties are ordered to file a joint report no later than July 7, 2014
regarding the status of proceedings under Article 21 of the Gaming
Compact.

DATED: June 23, 2014

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

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