State of Idaho v. Coeur d' Alene Tribe
Filing
57
MEMORANDUM DECISION AND ORDER. IT IS ORDERED that Defendant's Motion to Stay 42 is DENIED. 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 (st)
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 for Stay of
Preliminary Injunction Pending Appeal (Dkt. 42). For the reasons explained below, the
Court will deny the motion.
BACKGROUND
In early May 2014, the Coeur d’Alene Tribe began conducting Texas Hold ’em
tournaments at the Coeur d’Alene Casino. Texas Hold ’em is a poker game. Idaho has
expressly prohibited all forms of gambling other than: (1) a state lottery; (2) pari-mutuel
betting on horse, dog, and mule races; and (3) certain bingo and raffle games. Shortly
after the Tribe began conducting the tournaments, the State sued the Tribe in this Court,
MEMORANDUM DECISION AND ORDER - 1
seeking to enjoin the tournaments. The State contends that poker is a prohibited form of
gambling in Idaho and, further, that the Tribe is violating the parties’ Class III Gaming
Compact by conducting the poker tournaments. The Tribe, however, says that (1) Texas
Hold ’em does not fit Idaho’s definition of “gambling,” (2) the parties’ Compact does not
address Texas Hold ’em; and (3) this Court lacks subject-matter jurisdiction over this
dispute.
On September 5, 2014, this Court determined it had jurisdiction and issued an
injunction preventing the Tribe from conducting the Texas Hold ’em tournaments. The
Tribe now moves to stay this injunction pending appeal to the Ninth Circuit.
THE LEGAL STANDARD
Federal Rule of Civil Procedure 62(c) 1 authorizes district courts to stay equitable
or injunctive relief during the pendency of an appeal. Rule 62(c), however, “grants the
district court no broader power than it has always inherently possessed to preserve the
status quo during the pendency of an appeal; it ‘does not restore jurisdiction to the district
court to adjudicate anew the merits of the case.’ Thus, any action taken pursuant to Rule
62(c) ‘may not materially alter the status of the case on appeal.’” Natural Resources
Defense Council, Inc. v. S.W. Marine Inc., 242 F.3d 1163 (9th Cir. 2001) (all internal
citation omitted).
1
Federal Rule of Civil Procedure 62(c) provides, in relevant part, as follows:
Injunction Pending an Appeal. While an appeal is pending from an interlocutory order
or final judgment that grants, dissolves, or denies an injunction, the court may suspend,
modify, restore, or grant an injunction on terms for bond or other terms that secure the
opposing party's rights.
MEMORANDUM DECISION AND ORDER - 2
In determining whether to grant a stay under Rule 62(c), courts consider the
following factors: “(1) whether the stay applicant has made a strong showing that he is
likely to succeed on the merits; (2) whether the applicant will be irreparably injured
absent a stay; (3) whether issuance of the stay will substantially injure the other parties
interested in the proceeding; and (4) where the public interest lies.” Hilton v. Braunskill,
481 U.S. 770, 776 (1987). See also Lair v. Bullock, 697 F.3d 1200, 1203 (9th Cir. 2012).
This standard presents a continuum. Golden Gate Rest. Ass'n v. City & County of San
Francisco, 512 F.3d 1112, 1119 (9th Cir. 2008). At one end of the continuum, if there is
a “probability” or “strong likelihood” of success on the merits of the appeal, a relatively
low standard of hardship is sufficient. Id. At the other end, if the balance of hardships
tips sharply in favor of the party seeking the stay, a relatively low standard of likelihood
of success on the merits is sufficient. Id.
1.
Strong Likelihood of Success on the Merits
The Tribe outlines three reasons why it will be able to make a strong showing that
it will likely succeed on the merits of this action. First, the Tribe says it will succeed on
the merits because the only way to resolve this dispute is through arbitration – not
litigation. Second, the Tribe says the Court lacks subject matter jurisdiction over this
dispute. Third, and finally, the Tribe says it is entitled to offer Texas Hold ’em as a Class
II game under the Indian Gaming Regulatory Act. The Court will address each argument
in turn.
MEMORANDUM DECISION AND ORDER - 3
A.
The Tribe Waived Its Right to Arbitrate
The Court is not persuaded by the Tribe’s argument that, at this point in the
proceedings, arbitration is the exclusive method of dispute resolution. The Tribe
contends that it has always intended for this dispute to be arbitrated, but that the Court
misinterpreted its intentions. The Tribe’s conduct within this lawsuit seriously
undermines this contention.
The State sued the Tribe on May 2, 2014. The Tribe responded with a motion to
dismiss, arguing that the dispute should be arbitrated. In addition to invoking an
arbitration clause in the parties’ Class III Gaming Compact, however, the Tribe also
tackled the substantive issues. The Tribe’s central argument was that under relevant state
and federal law, the Tribe was entitled to offer Texas Hold ’em tournaments at the Couer
d’Alene Casino. See Dkt. 15-1.
On June 23, 2014, the Court issued a narrow ruling, restricted to the Tribe’s
invocation of the arbitration clause. See Dkt. 35. The Court concluded that the State had
violated the arbitration clause by suing the Tribe before the conclusion of a 60-day
window then in effect. 2 The Court relied on the following arbitration provisions within
the Compact:
2
This sixty-day window is explained further in the Court’s June 23, 2014 ruling. See
Dkt. 35.
MEMORANDUM DECISION AND ORDER - 4
Article 21. Dispute Resolution.
...
21.2
Except as provided in Article 6[ 3], 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
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.
.2
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.
21.3
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. . . . .
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).
3
Neither party has argued that Article 6 applies here.
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Given the Tribe’s insistence that this matter must be arbitrated, the Court expected
that at the conclusion of the 60-day period the Tribe would compel the State to arbitrate.
The Tribe acknowledged it had such a right. In briefing the motion to dismiss, the Tribe
said:
If either party is dissatisfied at the close of the 60-day period, it “may
pursue binding arbitration” without obtaining any further consent of the
other party, as such consent was bargained for and explicitly provided
for in the Compact. In fact, the Tribe, itself, could invoke arbitration at
the end of the 60-day period.
Reply in Support of Motion to Dismiss, Dkt. 33, at 8 (emphasis added).
The Court agreed with the Tribe on this point, and stayed the ligation to give the
Tribe a chance to compel arbitration. 4 The Court further ordered the parties to file a joint
report as to the status of the proceedings under the Compact’s arbitration provisions by
no later than July 7, 2014. By that date, the 60-day period would have expired. The
Court believed its June 23, 2014 ruling would end the litigation, given the Tribe’s
professed desire to arbitrate.
On July 7, 2014, however, the parties jointly informed the Court that “neither
Plaintiff nor Defendant has requested arbitration pursuant to Article 21.2.2 of the 1992
Class III Gaming Compact concerning the dispute over poker gaming (Texas Hold ’em)
at the Coeur d’Alene Casino Resort Hotel and therefore believe that disposition of the
pending motion to dismiss . . . is appropriate.” Joint Notice re Status of Dispute
Resolution Process, Dkt. 37, at 1-2 (emphasis added).
4
When the Court issued this ruling, the 60-day period was still in effect.
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Significantly, at that point in the proceedings, the remaining issues to be decided
in the motion to dismiss were substantive. As the parties were well aware, if the Court
was called upon to decide these issues, it would likely be deciding the merits of the case.
In fact, at a hearing that took place well before the parties filed the joint report, the Court
explained to the parties that in this particular case, deciding jurisdiction would basically
require a decision on the merits.
Against this factual backdrop, when the parties filed their joint report, the Court
concluded that both parties had decided they would prefer to litigate rather than arbitrate.
After all, if the Tribe wanted an arbitrator to decide these substantive issues, it very easily
could have compelled an arbitration. So, upon receiving the joint report, the Court
proceeded to expend a significant amount of time and effort deciding the relatively
complex issues raised in the motion to dismiss. Then, having determined jurisdiction, the
Court decided the pending motions for injunctive relief. The Court issued a decision on
these motions on September 5, 2014. See Dkt. 40.
Immediately after the Court issued this decision – which was unfavorable to the
Tribe – the Tribe began insisting that it had never had any intention of litigating this
dispute. Rather, the Tribe says the only way to resolve this dispute is through arbitration.
The Tribe suggests that the onus is on the State to compel arbitration, as the State is the
one alleging non-compliance with the Compact. The Tribe also accuses the State of
“seeking to confuse the record” by suggesting that the Tribe was given a choice between
arbitration and litigation. See Reply, Dkt. 50, at 3.
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Tellingly, in advancing these arguments, the Tribe says nothing about the July 7,
2014 joint status report, where the State and the Tribe jointly said it would be appropriate
for the Court to decide the pending motion to dismiss. And, as noted above, the motion
to dismiss did not simply argue that the case should be dismissed due to an arbitration
clause. That issue had been resolved. So the only issues remaining were heavy, issueladen ones that went right to the heart of this case. In that context, if the Tribe believed
the only way to resolve this dispute was through arbitration – and if the Tribe truly
wanted to arbitrate – why did it push a court into issuing a ruling on the merits?
Under these circumstances, the Court concludes that the Tribe consented to litigate
this matter and, as the State argues, the Tribe is now bound by this Court’s September 5,
2014 ruling. The Tribe, on the other hand, insists it has not waived its right to arbitrate.
The Court recognizes that federal policy generally favors enforcing arbitration
agreements. Nonetheless, courts may refuse to enforce an arbitration agreement on the
ground that the party seeking enforcement has waived any such right. Van Ness
Townhouses v. Mar Indus. Corp., 862 F.2d 754, 758–59 (9th Cir. 1988). “A party
seeking to prove waiver of a right to arbitrate must demonstrate (1) knowledge of an
existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3)
prejudice to the party opposing arbitration resulting from such inconsistent acts.” Britton
v. Co-op Banking Group, 916 F.2d 1405, 1412 (9th Cir. 1990).
All three factors weigh in favor of finding a waiver. First, the Tribe plainly knew
it had the right to compel arbitration at the conclusion of the 60-day period. This Court
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issued a ruling stating that this was the case. Further, the Tribe explicitly acknowledged
it had such a right.
Second, the Tribe acted inconsistently with this right by electing not to compel
arbitration and, at the same time, convincing a court to decide the key, substantive issues
raised by the State’s lawsuit.
Third, and finally, the State will be prejudiced if it is compelled to arbitrate at this
point in the game. Prejudice, in this context, “refers to the inherent unfairness in terms of
delay, expense, or damage to a party’s legal position that occurs when the party’s
opponent forces it to litigate an issue and later seeks to arbitrate that same issue.” 1
Martin B. Domke, Gabriel Wilner & Larry E. Edmonson, Domke on Commercial
Arbitration, § 23:10 (footnote citations to cases omitted). The Tribe seeks to characterize
this lawsuit as being in the very early stages, given that it has not yet filed an answer.
But this is an unusual case, because the Court has been pushed deep into the merits of this
litigation for the reasons discussed above. See generally id. (“the more involved a party
becomes in litigation, the greater chance that prejudice to the other party will be found”).
B.
The Tribe Violated the Parties’ Class III Gaming Compact
The Tribe next argues it is likely to succeed on the merits because it has not
violated the parties’ Class III Gaming Compact. The Court already rejected this
argument in a previous decision. See Sept. 5, 2014 Order, Dkt. 40, at 11-15.
MEMORANDUM DECISION AND ORDER - 9
C.
Texas Hold ’em is Prohibited by Idaho Law
Finally, the Tribe argues that it will succeed on the merits because Texas Hold ’em
is authorized under Idaho law. Again, the Court rejected this argument in its previous
decision. See id. at Sept. 5, 2014 Order, at 3-11.
2.
The Public’s Interest
The Court finds that the public’s interest is furthered by keeping the injunction in
place. The Tribe argues that the public’s interest “[u]ndoubtedly . . . lies with respecting
and implementing bargained-for contractual agreements, particularly when the contract at
issue, the Tribal-State Gaming Compact, lies at the center of Congress’ effort to balance
the interest of tribes, states, and the federal government with respect to gaming on Indian
lands.” Reply, Dkt. 50, at 9. The Court agrees that upholding the Tribal-State Compact
serves the public’s interest. And, as explained further in its September 5, 2014 decision,
the Court has concluded that the Tribe has violated that compact.
The Court also finds that the public’s interest is furthered by upholding Idaho state
law. The Tribe argues that state law is not at issue because “[o]nly federal and tribal law
applies” on the Tribe’s reservations. Id. at 9. But with respect to Class III gaming, the
relevant provisions of the Indian Gaming Regulatory Act “confirm that Congress
understood that it would be the Tribes and the States, not the federal government, who
would be responsible for the regulation of Class III Indian gaming.” Colorado River
Indian Tribes v. Nat’l Indian Gaming Comm’n, 383 F. Supp. 2d 123, 136 (D.D.C. 2005);
see also United States v. Santa Ynez Band of Chumash Mission Indians, 983 F. Supp.
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1317, 1326 (C.D. Cal. 1997) (observing that there is a substantial public interest in
subjecting tribal Class III gaming to outside regulation).
The Tribe also argues that Texas Hold ’em is widely played throughout the state
and, as such, the public’s interest is not served by preventing the game from being
played. But the fact that a law is allegedly routinely violated does not mean that an
injunction upholding that law does not serve the public’s interest. As the State has
pointed out, if the public becomes dissatisfied with a particular law, the remedy lies with
the legislature, not with the courts.
3.
Balance of the Equities
For the reasons explained in its earlier injunction order, the Court concludes that
the State would be substantially injured if the injunction is stayed pending appeal. See
Sept. 5, 2014 Order, Dkt. 40, at 22.
As for the Tribe’s alleged irreparable injury, the Court cannot conclude that the
balance of hardships tips in the Tribe’s favor. The Tribe contends that if the injunction is
left in place, “there will be immediate and irreparable injury to the Tribe’s economy, selfsufficiency, and government.” Reply, Dkt. 50, at 6. Regarding self-governance
principles, the State points out that there are countervailing sovereignty issues that IGRA
preserves. See Response, Dkt. 50, at 10.
Otherwise, the Tribe’s effort to establish irreparable injury mainly involves
economic harms. The Tribe says that if the injunction remains in place, the casino will
lose revenues associated with the Texas Hold ’em tournaments, which, in turn, would
negatively impact the Tribe’s ability to fund various Tribal government programs.
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Relatedly, the Tribe says that some casino employees might lose their jobs and apply for
unemployment benefits. See Reply, Dkt. 50, at 7. The Court cannot find that these
alleged harms outweigh the harm to the State if the injunction is stayed.
Finally, the Court will observe that preliminary injunction order in this case serves
a key function of any injunction – which is to preserve the status quo pending a
determination on the merits. Dep’t of Parks & Rec. v. Bazaar del Mundo Inc., 448 F.3d
1118, 1124 (9th Cir. 2006). The Tribe did not begin offering Texas Hold ’em
tournaments until after the parties began disputing the legality of the tournaments. The
State sued on May 2, 2014. It appears that Tribe began offering the tournaments a day
earlier. Well before that time, however – and before the tournaments were being offered
– the parties had been disputing the legality of Texas Hold ’em in a series of letters, and
the State had indicated it would seek to enjoin the Tribe from offering the tournaments.
See, e.g., Dkt. 3-5 through 3-10.
The Ninth Circuit has defined “the status quo” as “not simply any situation before
the filing of the lawsuit, but rather the last uncontested status that preceded the parties’
controversy.” Id. In this case, the last uncontested status that preceded the parties’
controversy was that the Tribe was not offering Texas Hold ’em tournaments. The
preliminary injunction preserves that state of affairs. Cf. United States v. Santa Ynez
Band of Chumash Mission Indians, 983 F. Supp. 1317, 1326 n.16 (C.D. Cal. 1997) (“The
court does not sympathize with the tribes’ plight to the extent that they have increased
their investment in Class III gaming after being put on notice that the United States
planned to take action against them.”).
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ORDER
IT IS ORDERED that Defendant’s Motion to Stay (Dkt. 42) is DENIED.
DATED: September 18, 2014
_________________________
B. Lynn Winmill
Chief Judge
United States District Court
MEMORANDUM DECISION AND ORDER - 13
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