Flandreau Santee Sioux Tribe v. South Dakota, State of et al

Filing 235

MEMORANDUM OPINION AND ORDER denying 207 Motion for Summary Judgment; denying 210 Motion for Judgment on the Pleadings. Signed by U. S. District Judge Lawrence L. Piersol on 6/27/11. (SLW)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION

FILED
JUN 2 720U

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CIV.07-4040
FLANDREAU SANTEE SIOUX TRIBE, *
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a federally-recognized Indian tribe,
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Plaintiff,
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MEMORANDUM OPINION
-vs­
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AND ORDER
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STATE OF SOUTH DAKOTA;
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MICHAEL ROUNDS, Governor ofthe
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State of South Dakota; SOUTH
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DAKOTA COMMISSION ON
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GAMING; LARRY LONG,
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South Dakota Attorney General,
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Defendants.
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This suit by the Flandreau Santee Sioux Tribe ("Tribe") against the State of South Dakota
("State") was brought pursuant to the Indian Gaming Regulatory Act ("IGRA"). Pending before the
Court are the Tribe's Motion for Judgment on the Pleadings under Federal Rule of Civil Procedure
12(c), doc. 210, and the State's Motion for Summary Judgment pursuant to Federal Rule of Civil
Procedure 56(a), doc. 207. For the following reasons, the motions will be denied.

BACKGROUND
The Tribe began operating the Royal River Casino in Flandreau, South Dakota, pursuant to
a Tribal State Gaming Compact negotiated with the State in 1990 which permitted 250 slot machines
at the Tribe's casino. Under the last Tribal State Gaming Compact executed on December 27, 1999,
the Tribe still could not operate more than 250 slot machines on the reservation. The Tribe seeks
to eliminate the limit on the number of slot machines and wants to extend the term of the compact
for 20 years. The parties began negotiating a new compact in May of2005, with negotiation sessions
held on six occasions between December 30, 2005, and January 11, 2007. The Tribe brought this

action for declaratory and injunctive relief, alleging that the State has violated various provisions of
the IGRA by failing to negotiate in good faith with the Tribe for purposes of entering into a Tribal­
State compact for conducting class III gaming on the Tribe's reservation: The Tribe's state and
federal equal protection claims were dismissed by the Court.

The Tribe moves the Court for entry ofjudgment in its favor and requests an order directing
the parties to conclude a Tribal-State Compact within a sixty (60) day period pursuant to 25 U.S.C.
§ 271 O(d)(7)(b)(iii) and (iv). In the alternative, the Tribe requests an order finding that it has made
a prima facie showing that the State did not respond to the Tribe's request to negotiate a Tribal-State
Compact in good faith and, thus, the Tribe asks that the Court order that the burden of proof is on
the State to prove that it has negotiated in good faith in accordance with 25 U.S.C.

§ 271 O(d)(7)(B)(ii).

The State moves for summary judgment, asserting the Tribe will not be able to make a prima
facie case that the State failed to conduct negotiations for a gaming compact with the Tribe in good
faith. The State asserts that even if a prima facie case was made, the undisputed facts prove that it
negotiated in good faith as a matter of law.

DISCUSSION
A motion for judgment on the pleadings under Rule 12(c) is governed by the same standards
as a motion to dismiss for failure to state a claim under Rule 12(b)(6). See Westcott v. City of

Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). All facts pleaded by the non-moving party are taken
as true. McCormack v. CUibank, NA., 979 F.2d 643, 646 (8th Cir. 1992). "Judgment on the
pleadings is appropriate where no material issue of fact remains to be resolved and the movant is
entitled to judgment as a matter of law." Faibisch v. University ofMinnesota, 304 F.3d. 797, 803
(8th Cir. 2002).

IThe IGRA grants jurisdiction to the district courts over "any cause of action initiated by an
Indian Tribe arising from the failure ofa State to enter into" compact negotiations or to negotiate in
good faith. See 25 U.S.C. § 2710(d)(6)(B)(I).
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As a result of the State's motion for summary judgment, both parties were given an
opportunity to present all material pertinent to the motions at issue here, and both parties refer to
exhibits outside the pleadings. When a court considers matters outside the pleadings, a motion for
judgment on the pleadings "must be treated as one for summary judgment." Fed.R.Civ.P. 12(d).
Because this Court is considering matters outside the pleadings, it will treat the Tribe's motion for
judgment on the pleadings as a motion for summary judgment.

Rule 56(a) ofthe Federal Rules of Civil Procedure provides that summary judgment shall be
entered "ifthe movant shows that there is no genuine dispute as to any material fact and the movant
is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(a). In ruling on a motion for
summary judgment, the Court is required to view the facts in the light most favorable to the non­
moving party and must give that party the benefit of all reasonable inferences to be drawn from the
underlying facts. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir. 1987). The moving party
bears the burden of showing both the absence ofa genuine issue of material fact and its entitlement
to judgment as a matter oflaw. Fed. R. Civ. P. 56(c)(1); Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 257 (1986). Once the moving party has met its burden, the non-moving party may not rest on
the allegations of its pleadings but must set forth specific facts, by affidavit or other evidence,
showing that a genuine issue of material fact exists. Fed. R. Civ. P. 56(c)(I); Anderson, 477 U.S.
at 257; City ofMt. Pleasant v. Associated Elec. Coop., Inc., 838 F.2d 268, 273-74 (8th Cir. 1988).

According to the Tribe, the number of authorized gaming devices for its casino is the single
most important issue subject to negotiation in its Compact with the State, yet the State refused to
negotiate any increase from the 250 slot machines approved decades ago. During negotiations, the
State continually asserted that increasing the number of machines would violate South Dakota's
public policy of"limited" gaming. Pointing to the dramatic increase in the number ofslot machines
in Deadwood and video lottery terminals throughout South Dakota, the Tribe argues that the State's
"limited gaming" stance is a subterfuge to protect non-Indian State-licensed gaming enterprises from
competition with the Tribe. The Tribe contends the State's refusal to present any counter-proposal
and its rejection of every one of the Tribe's proposals concerning the number of slot machines is

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evidence that the State did not negotiate in good faith. The State says that it was waiting for
concessions from the Tribe on civil and criminal jurisdiction over gaming matters in exchange for
additional machines for the Tribe.

With the "good faith standard as the legal barometer," Congress stated, the tribe "must show
a prima facie case, [and] after doing so the burden will shift to the State to prove that it did act in
good faith." Indian Gaming Regulatory Act, S. Rep. No.1 00-446 at 26 (1988) as reprinted in 1988
U.S.C.C.A.N. 3071, 1998 WL 169811, at *14. The Court must first determine what it means for the
State to negotiate in good faith. Good faith is not defined in the lORA. The lORA's legislative
history provides courts with the following guidance:
The Committee notes that it is States not tribes that have crucial information in
their possession that will prove or disprove tribal allegations of failure to act in
good faith. Furthermore, the bill provides that the court, in making its
determination, may include issues of a very general nature and, and [sic] [of]
course, trusts that courts will interpret any ambiguities on these issues in a manner
that will be most favorable to tribal interests consistent with the legal standard
used by courts for over 150 years in deciding cases involving Indian tribes.
Id.; see In re Indian Gaming and Related Cases, 331 F.3d 1094, 1108 (9th Cir. 2003).

Relying on the Ninth Circuit's decision in Rincon Band ofLuiseno Mission Indians ofRincon
Reservation v. Schwarzenegger, 602 F.3d 1019 (9th Cir. 2010), the State argues that good faith is
to be evaluated objectively. Although the Ninth Circuit in Rincon held that good faith should be
evaluated objectively based on the record ofnegotiations, its holding was made under very different
circumstances from those in the present case. In Rincon, the State of California demanded that the
Tribe pay a tax. See id. at 1042. The Ninth Circuit interpreted the plain language of the IGRA as
prohibiting states from imposing taxes on Indian tribes. Under the lORA, a court must consider a
demand for a tax to be evidence of bad faith. See 25 U.S.C. § 2701 (d)(7)(B)(iii)(II). The State
argued that it believed its demand was legal, and that this subjective belief rebutted the inference of
bad faith which its improper demand created. The Ninth Circuit held that the State's subjective
belief did not rebut the inference ofbad faith created by its objectively improper demand, noting that
the lORA expressly condemns a demand for a tax. Rincon's objective test for good faith as applied

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in that case was in line with Congress' decision to expressly prohibit taxation of the tribes by the
states.

In the present case, the State did not violate an express provision of the IGRA, but its
behavior (refusal to negotiate for additional gaming devices) still may violate its duty to negotiate
in good faith. Under these circumstances, the Court believes that a more subjective test is necessary
for a good faith determination. 2

The National Labor Relations Act ("NLRA") mandates employers and employees to
negotiate labor agreements in good faith. The meaning ofgood faith negotiations in the area oflabor
law has been well-developed over the course ofmany years, and it is a helpful model for developing
the meaning of good faith negotiations under the IGRA. As Justice Frankfurter recognized when
considering the NLRA good faith bargaining requirements: Good faith "means more than merely
going through the motions ofnegotiating; it is inconsistent with a predetermined resolve not to budge
from an initial position." NLRB v. Truitt MIg. Co., 351 U.S. 149,155 (1956) (Frankfurter, J.,
concurring in part and dissenting in part). Courts have recognized that what is known as "surface
bargaining" -- going through the motions of negotiating, without any real intent to reach an
agreement -- does not constitute good faith bargaining. K-Mart Corp. v. NLRB, 626 F.2d 704, 706
(9th Cir. 1980). Good faith "presupposes a desire to reach ultimate agreement" and not simply "an
attitude oftake it or leave it." NLRB v. Ins. Agents,'International Union, 361 U.S. 477, 485 (1960),
This more subjective test for good faith allows courts to examine a wide range of behavior, which
the Court finds is necessary to determine good faith in the present case.

The Court must decide if, on this record, there is a disputed fact regarding whether the State
negotiated in good faith. The State has offered some explanations for its failure to offer additional
gaming devices for the Tribe during negotiations. The State asserts that the State of South Dakota

2ln a case decided prior to Rincon, the Ninth Circuit said that "IGRA's legislative history also
makes clear that the good faith inquiry is nuanced and fact-specific, and is not amenable to bright­
line rules", In re Indian Gaming Related Cases, 331 F.3d at 1113.

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has a policy of limited gaming. The State also contends that it wanted concessions from the Tribe
on civil and criminal jurisdiction before offering additional machines. 3 While the State may
convince a trier of fact that this is true and that the State was willing to negotiate an increase in
gaming devices, viewing the facts in the light most favorable to the Tribe, a trier of fact could find
the State had no intention of negotiating on this important subject. See, e.g., NLRB v. Montgomery

Ward & Co., 133 F.2d 676, 687 (9th Cir. 1943) (refusal to submit counter-proposals is some
evidence of the employer's lack of good faith negotiations with the union); NLRB v. George P.

Pilling & Son Co., 119 F.2d 32, 37 (3d Cir. 1941) ("Agreement by way of compromise cannot be
expected unless the one rejecting a claim or demand is willing to make counter-suggestion or
proposal. And, where that is expressly invited but is refused, in such circumstances the refusal may
go to support a want of good faith, and, hence, a refusal to bargain."). Although the record before
the Court suggests an unwillingness to negotiate in good faith on the part of the State, it is not
appropriate to attribute bad motives to the State at the summary judgment stage. The Court believes
that the appropriate course is to resolve these issues at trial. For all of these reasons,
IT IS ORDERED:
1.

That Defendants' Motion for Summary Judgment, doc. 207, is denied; and

2.

That Plaintiffs Motion for Judgment on the Pleadings, doc. 210, is denied.

Dated this

~ay of June, 2011.

BY THE COURT:

A-a.uu~l~

ATTEST:

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JO~E~C~

~wrence L. Piersol

United States District Judge

BY.~,~~~~=q~~
---~F=~--~(SEAL)
EPUTY

3IGRA's legislative history states that in enacting IGRA, Congress did not intend "that
compacts be used as a subterfuge for imposing State jurisdiction on tribal lands," Indian Gaming
Regulatory Act, S. Rep. No. I 00-446 at 26 (1988) as reprinted in 1988 U.S.C.C.A.N. 3071,1998 WL
169811, at *14, and that the compact requirement "not be used as a justification by a State for
excluding Indian tribes from such gaming or for the protection of other State-licensed gaming
enterprises from free market competition with Indian tribes." Id. at *13.

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