State of Texas, et al v. Alabama-Coushatta, et al
Filing
193
MEMORANDUM OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW ON THE STATE'S MOTION FOR CONTEMPT. The Court therefore DENIES the State's request for the Tribe to show cause and to hold the Tribe in contempt 160 . The Court further DENIES the State's request to enjoin the bingo gaming currently offered on the Tribe's reservation. Signed by Magistrate Judge Keith F. Giblin on 8/31/21. (ljw, )
Case 9:01-cv-00299-KFG Document 193 Filed 08/31/21 Page 1 of 26 PageID #: 5627
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
LUFKIN DIVISION
STATE OF TEXAS,
Plaintiff,
v.
ALABAMA COUSHATTA TRIBE
OF TEXAS,
Defendant.
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CIVIL ACTION NO. 9:01-CV-299
MEMORANDUM OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW
ON THE STATE’S MOTION FOR CONTEMPT
Pursuant to 28 U.S.C. § 636(c), the Local Rules for the United States District Court for the
Eastern District of Texas, and order of the District Court, this proceeding is before the undersigned
United States Magistrate for all matters, including trial and entry of judgment. Pending before the
Court is the State of Texas’ Second Amended Motion for Contempt and Motion for Order to Show
Cause (doc. #160). On May 17-18, 2021, the undersigned conducted a bench trial and evidentiary
hearing on the issues presented in the State’s motion. See Transcript, Vol. 1 and Vol. 2 (doc. #184,
doc. #185). The Court now enters these findings of fact and conclusions of law after considering
the evidence presented and the parties’ competing arguments and briefs.
Case 9:01-cv-00299-KFG Document 193 Filed 08/31/21 Page 2 of 26 PageID #: 5628
I.
Background
A.
The Original Complaint and Injunction
On November 21, 2001, the Alabama-Coushatta Tribe of Texas (“The Tribe”) filed a
complaint for declaratory and injunctive relief (doc. #1) against the State of Texas (“The State”)
and a handful of its officials seeking injunctive and declaratory relief under the provisions of the
Ysleta del Sur Pueblo and Alabama-Coushatta Indian Tribes of Texas Restoration Act (“The
Restoration Act”), the Indian Gaming Regulatory Act of 1988 (“IGRA”), and case law.
Specifically, the Tribe sought injunctive relief allowing the Tribe to govern gaming activities on
its Indian lands, free from interference. In the original complaint, the Tribe cited the imminent
threat presented by Texas potentially interfering in the Tribe’s exercise of its sovereign and
statutory rights to offer certain gaming activities on Tribal lands. The Tribe also cited background
information about its circumstances at the time, including a 46% unemployment rate, poor health
conditions, and a median household income for the Tribe of $10,809. See Complaint (doc. #1), at
p. 6. The Tribe stated that it is responsible for stewardship of its 4,593 acre reservation, the external
boundaries of which fall within Polk County, Texas. The land lies in the Big Thicket area and is
generally unsuitable for raising crops or cattle.
The Tribe claims that it was wrongfully
dispossessed of over two million acres of its original reservation but acknowledges that it was
seeking a declaration of its rights only regarding the current acreage held by the United States in
trust for the benefit of the Tribe. The complaint goes on to explain the background regarding the
Restoration Act of 1987 and the resulting sovereign authority of federally recognized tribes to
govern gaming activities.
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By means of the Restoration Act of 1987, Indian tribes were restored to federally
recognized status. Through the Restoration Act, all rights or privileges lost to the tribes under the
Termination Act of 1954, codified in Title 25, United States Code, were restored to the tribes,
including the tribes’ authority to manage their own affairs, govern themselves, regulate internal
matters and substantive law, and have territorial boundaries. See Complaint (doc. #1), at ¶17. In
this case, the Tribe argued that certain members of Congress threatened to block passage of the
Restoration Act unless the Tribe agreed to language which would forever prevent it from engaging
in gaming activities on its lands. Id. at ¶18. The Tribe claims that under duress, it was coerced
into passing a tribal resolution (T.C.-86-07) supporting such language, which if passed into law,
would have precluded gaming. Id. Congress passed the governing Restoration Act in 1987, and
the Tribe’s resolution was incorporated into the Act. See 25 U.S.C.S. § 737(a) 1 (LexisNexis), 100
P.L. 89, 101 Stat. 666 (Aug. 18, 1987). The Court will address the pertinent provisions of the
Restoration Act in further detail below.
The complaint also discussed the United States Supreme Court’s decision in California v.
Cabazon Band of Mission Indians, 480 U.S. 202 (1987), which the Tribe contends should be
applied to Texas public policy to allow for the Tribe to have sovereign and inherent authority over
its gaming activities. See Complaint, at ¶19-21. In 1999, the General Council for the Tribe voted
for the Tribe to offer gaming activities as a source to generate badly-needed tribal government
revenues. Id. at ¶23. The Tribe constructed and opened an “Entertainment Facility” for members
of the Tribe’s private gaming club. Id. at ¶24. The Entertainment Facility maintained a number
In the course of researching the Restoration Act, the Court discovered that the publishers of the
United States Code Service (LexisNexis) and United States Code Annotated (West) opted to omit the
statutory language of the relevant Restoration Act provisions found in Title 25 from their respective
publications. The Restoration Act is, however, still in effect and the full authoritative source can be found
at Pub. L. No. 100-89, 101 Stat. 666 (August 18, 1987).
1
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of gaming devices, including random number generators, electronic ticket dispensers, electronic
pull tabs, spinning reel slots, and video lottery devices. Id. The Tribe cited gaming activities that
were protected in Texas at that time, including the State Lottery, a horse racing industry, an
extensive “slot parlor” market, charitable carnival or casino nights, high-stakes bingo, raffles,
casino cruises. Id. at ¶26. The Tribe also claimed that the State had embraced a policy of “willful
blindness” when it came to non-enforcement as thousands of “eight-liner” games were being used
in hundreds of establishments throughout Texas, despite the State’s official policy against allowing
such private, non-governmental “lottery” games. Id. at ¶27. The complaint notes that the Texas
State Lottery and Texas State Horse Racing Commission have the regulatory/discretionary
authority over gambling/gaming devices. Id. at ¶28. In conclusion, the Tribe filed their initial
complaint seeking a declaration and injunctive relief from the court permitting it to possess
authority to regulate gaming activities on its own Indian lands and to authorize and regulate forms
of gaming on its own lands. See id. at ¶¶35-41.
After the Tribe filed the original complaint in November 2001, the following course of
events ensued. The State filed an answer with a competing motion for injunctive relief. The
presiding judge at the time, The Honorable John Hannah, Jr., stayed the case pending a ruling by
the United States Court of Appeals for the Fifth Circuit in a related case 2, Texas v. Yselta del Sur
The Yselta del Sur Pueblo litigation is relevant for consideration because the Yselta del Sur Pueblo
Tribe is the only other Texas tribe subject to the same Restoration Act, enacted on August 18, 1987. See
25 U.S.C.S. § 1300g et seq. and 25 U.S.C.S. § 731 et seq., Pub. L. No. 100-89, 101 Stat. 666-672 (August
18, 1987) (“An Act to provide for the restoration of the Federal trust relationship and Federal services and
assistance to the Yselta del Sur Pueblo and Alabama and Coushatta Indian Tribes of Texas[.]”).
2
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Pueblo. 3 After the Fifth Circuit handed down its January 17, 2002, order affirming the district
court in the Yselta case, the Court lifted the stay in this case. Judge Hannah then conducted a four
(4) day hearing on the requested relief and issued his findings of fact and memorandum opinion
after receiving the parties’ post-hearing proposed findings of fact and briefs.
Judge Hannah issued his ruling on June 25, 2002, in a 22-page memorandum opinion and
order in which he granted relief to the State of Texas in the form of a permanent injunction (doc.
#36), Alabama-Coushatta Tribes of Texas v. Texas, 208 F. Supp. 2d 670, 674 (E.D. Tex. 2002).
In sum, he held that “the Tribe should be permanently enjoined from operating its casino because
(1) under the plain language of the Restoration Act, as codified in Title 25 of the United States
Code, Section 737(a), and Texas law the Tribe is prohibited from conducting casino gaming and
(2) the Tribe’s resolution not to engage in gaming in exchange for restoration of its federal trust
status was “incorporated into the Restoration Act.” Id. at 672. Judge Hannah carefully analyzed
governing precedent, including the Restoration Act and its history, the Fifth Circuit’s decision in
Yselta del Sur Pueblo v. State of Tex., 36 F.3d 1325, cert. denied 514 U.S. 1016 (5th Cir. 1994)
(Yselta I), and the Supreme Court’s decision in Cabazon. See id. at 672-678. He concluded that
the Tribe’s activities in operating the Entertainment Center (to include gaming activities) violated
provisions of the Texas Penal Code which prohibit certain manners of gambling and that the
Entertainment Center was a public nuisance under law. See id. at 678-79 (citing the applicable
versions of TEX. PENAL CODE §§ 47.02-47.04 and TEX. CIV. PRAC. & REM. CODE §§ 125.001 and
See State v. Yselta del Sur Pueblo, No. 01-51129, 31 F. App’x 835, 2002 WL 243274 (5th Cir.
2002) (“We affirm the judgment of the district court essentially for the reasons stated in its careful, thorough
September 27, 2001, Memorandum Opinion.”) (as cited in Judge Hannah’s order, Alabama-Coushatta
Tribes of Texas v. Texas, 208 F. Supp. 2d 670, 674 (E.D. Tex. 2002)).
3
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125.041(1)) 4 (governing common and public nuisances as defined by Texas Penal Code)). Based
on this conclusion, and after weighing the appropriate factors to consider before issuing injunctive
relief, Judge Hannah ordered the Tribe to cease and desist in operating its gaming and gambling
activities on the Tribe’s reservation which violate state law. Id. at 682.
On July 17, 2002, Judge Hannah entered final judgment and denied the Tribe’s request to
stay his ruling pending appeal (doc. #47, doc. #48). On September 11, 2002, while the appeal was
pending, he also granted the State’s request for an award of attorney’s fees and awarded
$62,828.50 in attorneys’ fees and $3,816.00 in non-taxable litigation expenses to the State as the
prevailing party pursuant to the Texas Civil Practice and Remedies Code. See Order (doc. #52).
On April 16, 2003, the Fifth Circuit issued a per curiam opinion in which a three-judge
panel upheld Judge Hannah’s decision. See Fifth Circuit Order (doc. #53), 66 F. App’x 525 (5th
Cir. 2003). The Fifth Circuit concluded that it was bound by Yselta I and further noted that
“[h]owever sympathetic we may be to the Tribe’s argument, we may not reconsider Yselta, even
if we believed that the case was wrongly decided.” Id. at p. 4. The Court went on to conclude
that “[j]ust as the district court concluded, we are bound by the determination that the Restoration
Act precludes the Yselta del Sur Pueblo and the Alabama Coushatta tribes from conducting all
gaming activities prohibited by Texas Law on tribal lands.” Id.
The United States Supreme Court denied the Tribe’s petition for writ of certiorari on October
The Texas Legislature repealed Section 125.041 of the Texas Civil Practice & Remedies Code in
2003. See Acts of 2003, 78th Leg., ch. 1202, § 14. The current provision defining a common nuisance
predicated on gambling is found in Section 125.0015. See TEX. CIV. PRAC. & REM. CODE. ANN.
§ 125.0015(a)(5).
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6, 2003. See Letter (doc. #55), 540 U.S. 882 (2003).
The Clerk then shipped the case to the
Federal Records Center in 2004, and Judge Hannah’s injunction and judgment remained in place
for over thirteen years, with no activity in the case until filings in 2016, as discussed below.
B. Recent Developments After Judge Hannah’s Injunction
In 2015, the Tribe sought guidance from the National Indian Gaming Commission (NIGC) 5
regarding the Tribe’s Resolution No. 2015-038, adopted by the Tribe as a Class II gaming
ordinance. See October 8, 2015, letter from NIGC to Tribe (“NIGC letter”), Exhibit A to Tribe’s
Motion for Relief from Judgment (doc. #76-1). The NIGC issued its responsive letter on October
8, 2015, in which the NIGC considered whether the Tribe’s lands are eligible for gaming. Id. The
NIGC considered the Restoration Act and IGRA. Id. The NIGC noted that a similar question
regarding the Yselta del Sur Pueblo’s gaming ordinance arose and that the same jurisdictional
analysis applies to the Alabama Coushatta because they are governed by nearly identical language
under the Restoration Act.
The NIGC found that IGRA 6 applied to the Tribe, thus bringing the Tribe within the
NIGC’s jurisdiction. Id. Accordingly, the NIGC further determined that the Tribe’s lands were
eligible for gaming under IGRA. Id. Relatedly, the NIGC concluded that the Restoration Act did
not bar the Tribe from conducting gaming on its lands pursuant to IGRA. Id.
According to the Tribe, it began development of its Naskila Entertainment Center
(“Naskila”) to establish a Class II gaming center for operating electronic bingo gaming on its lands.
See Motion for Relief (doc. #76), at p. 6. The Tribe notified the State about Naskila, and, after
In IGRA, Congress established the NIGC within the Department of the Interior as a three member
commission to monitor gaming conducted on Indian lands and approve related tribal resolutions and
ordinances. See 25 U.S.C.S. §§ 2704-2707 (LexisNexis).
5
6
25 U.S.C.S. §§ 2701–2721 (LexisNexis)
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negotiations with the Tribe, the State in turn agreed to permit the Tribe to operate Naskila pending
the Court’s ultimate determination of the impact of the NIGC’s agency decision as it relates to the
injunction in this case and, if necessary, whether the gaming at Naskila qualifies as Class II gaming
under IGRA. Id.
On June 27, 2016, June 28, 2016, and July 14, 2016, counsel for the parties filed various
motions to substitute new attorneys and to realign the parties for purposes of the case style, which
the Court granted. See Orders (doc. #69, doc. #71). The docket activity prompted the Clerk to
reassign the case to the docket of United States District Judge Michael H. Schneider, as Judge
Hannah passed away in 2003. On August 3, 2016, Judge Schneider in turn referred the proceeding
to the undersigned United States Magistrate Judge for recommended disposition. See Order (doc.
#67). On September 13, 2016, the case was reassigned to United States District Judge Ron Clark
upon Judge Schneider’s retirement. Finally, the parties consented to the undersigned magistrate
judge for all matters, including trial and entry of judgment pursuant to 28 U.S.C. § 636(c), and
Judge Clark entered his corresponding Order of Reference (doc. #82) on November 7, 2016.
The parties then jointly requested the entry of a scheduling order setting out certain
deadlines. The Court issued scheduling orders (doc. #73, doc. #91) culminating in a motion
hearing before the undersigned on May 11, 2017. See Minute Entry (doc. #113), Transcript (doc.
#115). The hearing focused on the legal issues regarding the NIGC’s 2015 interpretation of
IGRA’s application and related case law.
On February 6, 2018, the undersigned issued a memorandum opinion and order on the
competing dispositive motions and pending legal issues relevant to the NIGC opinion, Naskila,
and the Restoration Act. See Order (doc. #129). In summary, the Court partially granted the
State’s motion for declaratory judgment/injunctive relief regarding legal issues governing the
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permissibility of the gambling activities (“Those motions are granted with respect to the State’s
request for a declaration from the Court that the Restoration Act and, consequently, Texas law,
applies to the Tribe’s gaming activities.”) Id. at p. 26. The undersigned deferred ruling on the
State’s request for relief regarding contempt findings and damages, pending appeal. Id. In support,
the Court explained
Having concluded that the Restoration Act applies, the Court finds it unnecessary to reach
the question of whether the activities conducted at Naskila constitute Class II or Class III
gaming under IGRA at this juncture. To the extent that the parties’ motions seek relief on
this issue, that relief is denied as moot, without prejudice to reassert. As indicated above,
the Court further defers any finding on the State’s contempt allegations and corresponding
request for damages and fees until after conducting a hearing and making proper
evidentiary findings.
Id.
The Tribe appealed the Court’s opinion. On March 19, 2019, the Fifth Circuit affirmed the
undersigned’s holding. See Texas v. Alabama Coushatta Tribe of Tex., 918 F.3d 440 (5th Cir.
2019), cert. denied 140 S. Ct. 855 (2020). In sum, the Fifth Circuit held that under Brand X, “a
court should not defer to an agency's interpretation of a statute if a “judicial precedent hold[s] that
the statute unambiguously forecloses the agency's interpretation.” Id. at 449 (quoting Nat’l Cable
& Telecomms. Ass’n v. Brand X Internet Services, 545 U.S. 967, 982–83 (2005)). Consequently,
the Fifth Circuit held that the NIGC's decision that IGRA applies to the Tribe does not
displace Ysleta I. Id. Citing Yselta Del Sur Pueblo v. Tex., 36 F.3d 1325 (5th Cir. 1994), cert.
denied 514 U.S. 1016 (1995). “We thus reaffirm that the Restoration Act and the Texas law it
invokes—and not IGRA—govern the permissibility of gaming operations on the Tribe's lands.”
Id. IGRA does not apply to the Tribe, and the NIGC does not have jurisdiction over the Tribe.
The district court did not abuse its discretion in denying relief from the permanent injunction. The
order denying the motion for relief from judgment is AFFIRMED.” Id.
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The Supreme Court denied certiorari on January 13, 2020 (doc. #148). On March 30, 2020,
the parties jointly moved for a briefing schedule and a scheduling order regarding the remaining
issues. The entered several scheduling orders and continuances, resulting mostly from the ongoing
COVID-19 pandemic and corresponding lockdowns on the Tribe’s land. Ultimately, the parties
filed competing briefs regarding the contempt motions in accordance with the schedule and the
case proceeded to a bench trial.
C.
Current Issues and Pending Contempt Motion
The parties previously agreed to an evidentiary show cause hearing regarding the factual
issues on contempt. Now that the issues regarding application of the Restoration Act issues have
been decided, the legal framework centers on whether the Tribe should be held in contempt for
participating in the type of gaming available at Naskila.
Pursuant to a post-appeal briefing order, the State filed its Second Amended Motion for
Contempt and Motion to Show Cause (doc. #160). The motion presents the issue of whether the
Tribe is in violation of this Court’s 2002 injunction prohibiting the Tribe from engaging in gaming
activities that are impermissible in Texas. “The State therefore requests that the Court order that
the Tribe show cause why it should not be held in contempt of the Court’s injunction. The State
further requests that the Court enjoin the Tribe’s impermissible gaming operations following the
bench trial.” See Second Amended Motion for Contempt, at p. 1. More specifically, the State
argues that the Tribe’s activities violate provisions of the Texas Penal Code prohibiting gambling,
the Texas Bingo Enabling Act, and the Texas Civil Practice and Remedies Code. See id. at pp. 610. In sum, the State seeks relief in the form of an order directing the Tribe to show cause why
the Tribe should not be held in contempt for failing to comply with the 2002 Injunction. The State
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further requests that the Court issue an order finding the Tribe in contempt of the 2002 Injunction
and ordering the Tribe to:
“A. Cease all electronic bingo operations at Naskila Entertainment Center; and
B. Remove all computers, software, hardware, and any other equipment the Tribe currently
uses as a gambling device from the Naskila Entertainment Center that relate to any game with cash
prizes or cash equivalent prizes.”
The State further requests that:
“C. Upon the entry of the contempt order, the Court assess a penalty for any day of
operation beyond the date of the order; and,
D. The Tribe only should pay costs to the State of the June 15th investigation conducted in
this case, as well as any Court costs and attorneys’ fees incurred after June 15, 2016.”
See id. at p. 10.
The Tribe responds by arguing that the Court should deny the Contempt Motion. The Tribe
maintains that the evidence will show that the Tribe is engaged in the gaming activity of bingo
and, thus, cannot be held in contempt of a 2002 Injunction directed at different gaming activities.
The Tribe further avers that the bingo conducted on the Tribe’s lands complies with the terms of
the Restoration Act, as the Texas laws and regulations do not prohibit that gaming activity. See
Tribe’s Response to State’s Second Amended Motion for Contempt (doc. #161).
The parties also filed a reply and sur-reply (doc. #162, doc. #163). The Court notes that
the parties’ briefs in total are much more detailed than summarized here, but the undersigned will
refrain from restating the parties’ arguments at length.
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II.
Discussion
A. Findings of Fact
1. On October 8, 2015, the NIGC concluded that the Tribe could offer Class II gaming—
specifically, bingo—on the Tribe’s reservation under IGRA, and concurrently approved the
Tribe’s proposed Class II gaming ordinance. See Letter from NIGC Chairman Chaudhuri (Oct.
8, 2015), Tribe’s Exhibit No. 25 (doc. #186-27); see also Stipulation of Fact No. 2, Joint PreTrial Order (doc. #177), at p. 4.
2. The State and the Tribe subsequently entered into a Pre-Litigation Agreement, in which the
Tribe advised the State that it intended to open a gaming facility, and the State agreed not to
seek prior injunctive relief to stop the initial opening of the Tribe’s gaming facility in exchange
for the right to inspect the facility once it opened. See Pre-Litigation Agreement, Tribe Exhibit
No. 31–2 (doc. #186-33); see also Testimony of Keith Sherer, Trial Tr. Vol. 1, at pp. 93–94
(doc. #184).
3. The Tribe opened Naskila Gaming, an entertainment center located on the Tribe’s reservation,
on May 16, 2016. See Stipulation of Fact Nos. 4–5, Joint Pre-Trial Order (doc. #177), at p. 4.
4. Naskila Gaming is owned by the Tribe and managed by the Tribal Economic Development
Authority. See Testimony of Doug Searle, Trial Tr. Vol. 2, at p. 225 (doc. #185). The
operations of Naskila Gaming are overseen by a General Manager/Chief Operating Officer,
who in turn manages a number of department directors, including: a Director of Surveillance,
Director of Gaming Operations, Director of Community Development, Director of
Compliance, Director of Internal Audit, among others. See id. Trial Tr. Vol 2, at pp. 225–
229; see also Naskila Gaming Administration Organization Chart, Tribe’s Exhibit No. 117
(doc. #186-118).
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5. Naskila Gaming offers a specific game of chance that is commonly known as bingo, where
prizes are awarded on the basis of designated numbers or symbols conforming to randomly
selected numbers or symbols. See Testimony of Nick Farley, Trial Tr. Vol. 1, at pp. 172–173,
184–185, 200–201; see also Farley Expert Report, Tribe’s Exhibit 40 (doc. #186-42); Tex.
Occ. Code § 2001.002(4) (West 2021) 7 ; see generally Farley Expert Report, at pp. 8-9,
(concluding that the Naskila Gaming facility owned by the tribe “offers the game commonly
known as Bingo to its customers” with “an alternative entertaining display of spinning reels in
addition to the Bingo card and Bingo ball draw from which the alternative entertaining display
of spinning reels is derived”).
6. Naskila Gaming has not offered blackjack, poker, slots, or any other game of chance—other
than bingo—since the facility opened. See Sherer Testimony, Trial Tr. Vol. 1, at pp. 95–96;
Testimony of Brian Callaghan, Trial Tr. Vol. 1, at pp. 143, 145–147; Searle Testimony, Trial
Tr. Vol. 2, at p. 232.
7. On June 15, 2016, the State conducted an inspection of the gaming activities offered at Naskila
Gaming. See Sherer Testimony, Trial Tr. Vol. 1, at p. 94. Chief Deputy Daniel Guajardo
conducted the inspection as an investigator for the State. See Testimony of Daniel Guajardo,
Trial Tr. Vol. 1, at p. 49. During that inspection, Naskila Gaming’s Executive Director of
Operations, Keith Sherer, explained to the State how the player terminals at Naskila Gaming
allowed players to play bingo. See Sherer, Trial Tr. Vol. 1, at pp. 124–125.
a. Each player terminal displays an electronic pre-numbered bingo card; the player terminals
are connected to a server that conducts a virtual ball call or drop; and players win prizes if
The Texas Bingo Enabling Act defines “bingo” as a “specific game of chance, commonly known as bingo or lotto,
in which prizes are awarded on the basis of designated numbers or symbols conforming to randomly selected numbers
or symbols.”
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numbers from the virtual ball call achieve a game-winning pattern on the player’s bingo
card. See Sherer, Trial Tr. Vol. 1, at pp. 99, 109–121, 124 (testifying to functionality of
gaming machines depicted in Tribe’s Exhibits 129 and 130 (videos of gaming machines,
which are “fairly representative of other machines at Naskila”); see also Farley Testimony,
Trial Tr. Vol. 1, at pp. 185–186, 189–190; Expert Report of Nick Farley, at p. 8 (concluding
that gaming systems at Naskila Gaming facilitate the play of bingo with each player
terminal displaying a bingo card, a bingo ball draw, and the bingo card is highlighted with
matching balls drawn and winning bingo patterns).
b. The bingo software offered on some player terminals may allow the player to change the
bingo card for a different pre-numbered bingo card, but only one bingo card may be played
at a time on a player terminal. See Sherer Testimony, Trial Tr. Vol. 1, at pp. 101–102, 111,
113.
c. The game-winning bingo patterns are available for players to view on the player terminal,
typically by accessing an on-screen “help” menu. See Sherer Testimony, Trial Tr. Vol. 1,
at pp. 107, 119.
d. The player terminals feature an entertainment display where the results of the bingo game
may be displayed to the player in various entertaining ways. That entertainment feature
often takes the form of spinning reels with symbols, which play no role in determining
whether a player wins or what prize may be awarded for the game played on the player
terminal; the results of a bingo game also may be displayed through other “bonus” features
intended to create suspense or excitement for the player. See Sherer Testimony, Trial Tr.
Vol. 1, at pp. 102–103, 106, 121–124; see also Farley Expert Report, at pp. 8-9 (concluding
that the player terminals feature “an alternative entertaining display of spinning reels in
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addition to the Bingo card and Bingo ball draw from which the alternative entertaining
display of spinning reels is derived”).
e. The player terminals contain various notices informing players that:
•
“Game determination is based on the bingo pattern only. Any other displays and
reels are for entertainment purposes only.”
•
“Reel patterns are for entertainment purposes only and indicate prizes for bingo
patterns matched.”
•
“Pseudo pay table. Game determination is based on the bingo pattern only.”
See Sherer Testimony, Trial Tr. Vol. 1, at pp. 100–101, 109, 115–116.
8. The bingo conducted by the Tribe reflects how bingo has evolved over the centuries: the player
terminals feature an electronic bingo card; the ball call or drop is conducted by a server that
randomly generates the ball call or ball drop numbers—a feature that makes the game more
secure and less susceptible to fraud or mistake; the bingo software automatically daubs the
player’s bingo card and identifies any game-winning patterns for the player; and the results of
the bingo game may be displayed in various entertaining ways. See Farley Testimony, Trial
Tr. Vol. 1, at pp. 173–178.
9. The bingo software played on Naskila’s player terminals is distinguishable from a slot
machine, because a slot machine is a stand-alone device that uses a random number generator
to select a stop position on the reels and award prizes. See Farley Testimony, Trial Tr. Vol. 1,
at p. 183. For example, in a three-reel slot machine, the random number generator will pick
three numbers from a pool of numbers as the stop positions, the reels will spin and stop based
on the stop-position determined by the random number generator, and the symbols displayed
on the reels determine whether a player wins a prize and the value of the prize. See id. Bingo,
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by contrast, is based on drawing numbers or symbols from a pool of numbers or symbols that
are then matched against a pre-numbered bingo card and, depending on the numbers that
match, there could be a bingo pattern that awards a prize. See id. at pp. 183–184. The spinning
reels on a player terminal that runs bingo software are merely an alternative entertaining
display of the results of the bingo game, where the pattern achieved on the bingo card (if any)
is translated into a winning reel pattern. See id. at p. 190.
10. Prior to the State’s inspection of Naskila, Doug Sherer also met with the Attorney General’s
Office in Austin where he described the mechanics of the electronic bingo offered at Naskila
Gaming. See Sherer Testimony, Trial Tr. Vol. 1, at p. 125. The bingo software played on the
player terminals at Naskila Gaming is distinct from a slot machine in that the game is not
played against the machine; the bingo software must be able to identify two players to link
together to play a bingo game. See Sherer Testimony, Trial Tr. Vol. 1, at pp. 98–99, 125–126.
If a player sits down at a player terminal at Naskila Gaming and tries to initiate a game and the
server is unable to identify a second player, then the game cannot be played and the bet will be
refunded. See id. at p. 99. For that reason, Mr. Sherer was unable to bring a representative
machine to the meeting with the Attorney General’s Office to demonstrate how the machine
played bingo; however, the State was able to view how the player terminals operated during
its June 2016 inspection of Naskila Gaming. See id. at pp. 125–126; see also Guajardo
Testimony, Trial Tr. Vol. 1, at pp. 50, 52-57.
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B.
Conclusions of Law
(1). Applicability of the 2002 Permanent Injunction; Standard of Review for Contempt
A party seeking to enforce an injunction through contempt must establish by clear and
convincing evidence that (1) “the order required specified conduct by the respondent,” with which
“the respondent failed to comply,” United States v. City of Jackson, 359 F.3d 727, 731 (5th Cir.
2004), and (2) the respondent had “actual notice” of the specific conduct subject to the injunction,
see FED. R. CIV. P. 65(d)(2); Travelhost, Inc. v. Blandford, 68 F.3d 958, 961 (5th Cir. 1995); see
also Hornbeck Offshore Servs., L.L.C. v. Salazar, 713 F.3d 787, 792 (5th Cir. 2013). A party
commits contempt when it violations a “definite and specific order” of the court requiring it to
perform or refrain from performing a particular act or acts with knowledge of the court’s order.
See Salazar, at 792 (quoting Travelhost, at 961). The clear and convincing standard is higher than
the preponderance standard, but not as high as beyond a reasonable doubt. Travelhost, at 961.
Clear and convincing evidence is that weight of proof which produces in the mind of the trier of
fact a firm belief or conviction ... so clear, direct and weighty and convincing as to enable the fact
finder to come to a clear conviction, without hesitancy, of the truth of precise facts of the case.
Salazar, at 792 (quoting Shafer v. Army & Air Force Exch. Serv., 376 F.3d 386, 396 (5th Cir.
2004)).
Judge Hanna’s 2002 Injunction enjoins the Tribe from offering the particular gaming
activities that the Court concluded violated the Restoration Act. The language of the 2002
Injunction specifically ordered the Tribe to “cease and desist operating, conducting, engaging in,
or allowing others to operate, conduct, or engage in gaming and gambling activities on the Tribe’s
Reservation which violate State law.” See Injunction (doc. #36), at p. 22 (emphasis added). This
is consistent with the Court’s contemporaneous descriptions of the 2002 Injunction as barring
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“continuation” of the gaming activities adjudicated by Judge Hannah. This is bolstered by the
“cease and desist” language of the injunction. The Court finds that because the Tribe was not thenoffering bingo, the 2002 Injunction cannot be construed in a manner that would subject the Tribe
to contempt for purportedly violating the Restoration Act by engaging in a different gaming
activity (bingo) that the Court has never adjudicated under that Act. While a district court need
not spell out in detail the means in which its order must be effectuated, the injunction’s provisions
must be clear in what conduct has been mandated and prohibited. See Salazar, at 793 (quoting
Am. Airlines Inc. v. Allied Pilots Ass’n, 228 F.3d 574, 578-79 (5th Cir. 2000)).
The activities
currently offered at Naskila do not fall directly within an “express or clearly inferable obligation”
placed upon the Tribe by Judge Hannah’s Injunction. See id. This is especially the case given that
Texas law permits bingo under certain regulated circumstances, as explained below, whereas the
2002 Injunction speaks specifically to gaming activities which violate Texas law. The Court is
unpersuaded that the Tribe’s activities at Naskila fall within the “definite and specific” language
of Judge Hannah’s 2002 Injunction. For these reasons alone, the Court finds the State’s request
for contempt to be procedurally problematic. The undersigned further finds, however, that the
motion may be denied on other grounds in construing the plain language of the Restoration Act
and Texas law.
(2). Relevant Framework Under Texas Gaming Law
In Texas, gambling is generally prohibited. See Dep’t of Tex., Veterans of Foreign Wars
v. Tex. Lottery Comm’n, 760 F.3d 427, 431 (5th Cir. 2014). However, in 1990, the Texas
Constitution was amended to establish an exception to this prohibition for charitable bingo. See
TEX. CONST. ART. III, § 47(a)-(b); Veterans of Foreign Wars, at 431. The State excepted bingo by
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by allowing the Texas legislature to “authorize and regulate bingo games” conducted by various
nonprofit organizations. See TEX. CONST. ART. III, § 47(b).
Pursuant to that authority, the Texas legislature enacted the Texas Bingo Enabling Act,
which defines “bingo” as “a specific game of chance, commonly known as bingo or lotto, in which
prizes are awarded on the basis of designated numbers or symbols conforming to randomly
selected numbers or symbols.” TEX. OCC. CODE § 2001.002(4) (West 2021). The Texas Bingo
Enabling Act sets forth a licensing regime for bingo that is overseen by the Texas Lottery
Commission. See id. at §§ 2001.003-2001.161. Only “an authorized organization” that applies
for and receives a license issued by the Texas Lottery Commission may conduct bingo. Id. at
§ 2001.101; see also id.; at § 2001.411. The license issued by the Texas Lottery Commission
includes, among other things, “the address of the premises where and the time when bingo is to be
conducted.” Id. § 2001.106. The Bingo Enabling Act taxes bingo through licensing fees and bingo
prize fees collected by the Texas Lottery Commission. See id.; at §§ 2001.003, 2001.158;
2001.502; 2001.504.
Bingo operators are required to collect a five percent “bingo prize fee” that is paid to the
Texas Lottery Commission and, under certain circumstances, the county or municipality in which
bingo is conducted. Id. at § 2001.502. The revenue collected from the fee on prizes is credited to
the general revenue fund and considered miscellaneous revenue for purposes of appropriations.
See id. at § 2001.507. Each license-holder is required to furnish some form of security to the
Texas Lottery Commission to secure payment of the bingo prize fees. See id. § 2001.514. In
addition, bingo operators are required to submit quarterly reports under oath to the Texas Lottery
Commission itemizing the amount of gross receipts derived from bingo, expenses incurred or paid,
net proceeds derived from bingo, the use to which the proceeds were applied, and a list of prizes
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given. See id. § 2001.505. The Texas Tax Code 8 also applies to the administration, collection and
enforcement of the bingo prize fees imposed by the Bingo Enabling Act, such that “the fees on
prizes is treated as if it were a tax.” Id. § 2001.512. The Bingo Enabling Act therefore regulates
the manner and means by which bingo may be conducted in the State of Texas. See Veterans of
Foreign Wars, at 437 (citing TEX. OCC. CODE ANN. §§ 2001.055, 2001.419, 2001.313 and finding
the Bingo Enabling Act implements a “regulatory scheme” through which the Texas Lottery
Commission “regulates all bingo-related activities, including the types of games played, game
frequency and times, and bingo-employee qualifications”).
In addition, the Texas Lottery Commission has enacted certain administrative rules for
the conduct of bingo under the Bingo Enabling Act. See, e.g. 16 TEX. ADMIN. CODE §§ 402.100–
402.709. Through this statutory framework, the State of Texas controls where bingo may be
conducted. See, e.g., TEX. OCC. CODE §§ 2001.402; 2001.404. The State also controls how often
bingo may be conducted; how much a bingo operator may charge and pay in prizes for a bingo
game, how a bingo operator may accept payment and deliver a prize, and how bingo proceeds are
maintained and used.
See id.
at §§ 2001.419; 2001.413; 2001.420; 2001.409(a)(2)–(3);
2001.410(a)(3); 2001.451; 2001.452; 2001.453; 2001.454; and 2001.458, respectively.
The Bingo Enabling Act ensures compliance by, among other things, (1) granting the
Texas Lottery Commission the power to revoke an operator’s license for non-compliance with its
provisions (including the operating, taxing, and reporting requirements described above), see id.
at §§ 2001.353, 2001.355, 2001.554; and (2) making it a third-degree felony to conduct bingo
without a license, see id. at § 2001.551(b)&(c).
8
See TEX. TAX CODE § 111.001 et seq.
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(3.) The Interplay Between Texas Law and the Restoration Act
The key provision of the Restoration Act at issue is Section 207, which governs gaming
activities:
(a) IN GENERAL.—All gaming activities which are prohibited by the laws of the State
of Texas are hereby prohibited on the reservation and on lands of the tribe. Any violation
of the prohibition contained in this subsection shall be subject to the same civil and criminal
penalties that are provided by the laws of the State of Texas. The provisions of this
subsection are enacted in accordance with the tribe’s request in Tribal Resolution No. T.C.–
86–07 which was approved and certified on March 10, 1986.
(b) NO STATE REGULATORY JURISDICTION.—Nothing in this section shall be
construed as a grant of civil or criminal regulatory jurisdiction to the State of Texas.
(c) JURISDICTION OVER ENFORCEMENT AGAINST MEMBERS.—
Notwithstanding section 206(f), the courts of the United States shall have exclusive
jurisdiction over any offense in violation of subsection (a) that is committed by the tribe,
or by any member of the tribe, on the reservation or on lands of the tribe. However, nothing
in this section shall be construed as precluding the State of Texas from bringing an action
in the courts of the United States to enjoin violations of the provisions of this section.
See 25 U.S.C. § 737; Pub. L. No. 100-89, § 207.
The Fifth Circuit’s interpretation of the Restoration Act in this litigation as well as the
Yselta del Sur Pueblo cases indicates that the tribes are prohibited from engaging in any gaming
activity prohibited by Texas law. See Al. Coushatta Tribe of Tex. v. Tex., 66 F. App’x 525, at *1
(5th Cir. 2003) (per curiam); Yselta I, 36 F.3d at 1335. It has explained that the Restoration Act
governs the determination of whether gaming activities proposed by the tribes are allowed under
Texas law, which functions as surrogate federal law. See Yselta I, at 1335 (emphasis added).
Within the constructs of the Court’s previous ruling regarding the applicability of the
Restoration Act and corresponding precedent, the Court finds that the issue before the undersigned
may be narrowed to whether the gaming activity conducted at Naskila is “allowed” under Texas
law.
Put another way, the Court considers whether the Tribe’s gaming operation is
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“impermissible” under Texas law. See State v. Yselta Del Sur Pueblo, 955 F.3d 408, 416 (5th Cir.
2020) (“Yselta II”).
Texas does not prohibit or disallow “bingo” itself in its entirety, per se. Rather, as
described above, Texas regulates bingo by, among other thing, restricting the obtainment of a
license to conduct bingo and prohibits the operation of bingo without a license. See, e.g., TEX.
OCC. CODE § 2001.101(a). Furthermore, Texas prohibits the operation of bingo when it does not
comply with its restrictions concerning when, where, and how bingo may be conducted in
accordance with Texas law. The Texas Penal Code specifically criminalizes bingo activities which
do not confirm with the Bingo Enabling Act. See TEX. PENAL CODE § 47.02.
In contrast, Section 207(b) of the Restoration Act explicitly states that “nothing in this
section shall be construed as a grant of civil or criminal regulatory jurisdiction” to the State. 25
U.S.C. § 737(b); Pub. L. 100-89, § 207(b). The plain language therefore bars the State from
enforcing its regulatory jurisdiction over bingo through criminal means on the Tribe’s lands. The
same language likewise precludes the State from asserting regulatory jurisdiction over bingo
gaming on the Tribe’s lands through the “civil” regulatory means of a common nuisance suit
predicated on gambling under Chapter 125 of the Texas Civil Practice and Remedies Code. Stated
another way, the Court finds that the language of the Restoration Act does not permit the State to
exercise its regulatory authority over the Tribe by way of the Bingo Enabling Act or through a
nuisance suit. A simplistic rule depending on whether the statute includes penal sanctions could
result in conversion of every regulatory statute (e.g., the Bingo Enabling Act) into a prohibitory
one. See Seminole Tribe of Fla. v. Butterworth, 658 F.2d 310, 314 (5th Cir. 1981); see also Yselta
I, at 1330 (discussing the criminal-prohibitory/civil-regulatory dichotomy). The Court finds that
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this was not the intent of the drafters of the Restoration Act and any such imposition of regulatory
authority over the Tribe the State would be an overreach under the Act.
The Court acknowledges that the Fifth Circuit’s latest decision in the Yselta del Sur
Pueblo litigation concerned some of the same issues. See Yselta II, 955 F.3d 408 (5th Cir. 2020).
Yselta II is not wholly on point, however, under the procedural posture and circumstances of the
current case. Although the Fifth Circuit considered state bingo law and regulations in Yselta II, it
only reached one issue of Restoration Act interpretation. It deferred to Yselta I, which held that
the Restoration Act did not incorporate the criminal-prohibitory/civil-regulatory test used in Public
Law 280 9 cases to determine whether a law falls within a state’s civil or criminal jurisdiction. See
Yselta II, at 414. In addressing the position advanced by the Pueblo relative to bingo activities,
the Fifth Circuit touched on arguments which are not at issue here - (1) whether “prohibit” has a
special meaning in federal Indian law as used by the Supreme Court in Cabazon Band, (2)
whether courts should apply the Cabazon Band criminal-prohibitory/civil-regulatory distinction
as the Supreme Court did when applying IGRA. Yselta II, at 414. The language in Yselta II
referencing “regulations” does not alter the undersigned’s findings. See id. at 414-415. Section
207 specifically delineates gaming activities that are prohibited by Texas law. Texas does not
prohibit bingo by law or regulation. To prohibit and to regulate are distinguishable not only by
definition 10, but also in the context of the laws at issue here. The latter is not included in the
language of the Restoration Act, other than a specific statement that nothing in the Act should be
Public Law 280 was at issue in Cabazon Band, 480 U.S. 202 (1987) and Bryant v. Itasca County, 426
U.S. 373 (1976). In Pub. L. 280, Congress expressly granted six states jurisdiction over specified areas of
Indian country within those states and provided for the assumption of jurisdiction by other states. Cabazon
Band, 480 U.S. 208. Public Law 280 is distinguishable from the Tribe’s Restoration Act.
10
Prohibit is “1. To forbid by law. 2. To prevent, preclude, or severely hinder.” Regulate is “1. To control
(an activity or process) esp. through the implementation of rules. 2. To make (a machine or one's body)
work at a regular speed, temperature, etc.” Black’s Law Dictionary (11th ed. 2019);
9
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construed as granting regulatory jurisdiction. The Fifth Circuit’s decision in Yselta II does not
resolve the issues currently present in this case.
The Court already determined that the Restoration Act applies to the Tribe’s gaming
operations. In considering the plain language of the Restoration Act, Sections 207(a) and (b) are
naturally reconciled to allow the State to enforce laws prohibiting gaming outright. Specific to
this case, however, if the State permits a gaming activity pursuant to certain regulations – here,
bingo – under the language of the Restoration Act, the Tribe may engage in that gaming activity
independent from the State’s regulatory jurisdiction. See Yselta I, at 1330 (discussing Cabazon
Band’s holding, 480 U.S. at 209 (California’s bingo statute at issue in Cabazon Band was not
criminal in nature on the basis that it was “not a general prohibition on certain conduct.” Instead,
“the state law generally permits the conduct at issue, subject to regulation.”)
This interpretation is supported by the legislative history of the Restoration Act. The
record shows that Congress did not adopt language specifically requested by the Tribe’s Tribal
Resolution No. T.C.-86-07, which originally sought an absolute prohibition on all “gaming,
gambling, lottery, or bingo, as defined by the laws and administrative regulations of the State of
Texas.” See Tribal Resolution No. T.C.-86-07, Tribe’s Ex. No. 71 (doc. #186-72). Congress did
not include this language banning all gaming as defined by Texas law when it enacted the
Restoration Act. See Section 207(a) of the Restoration Act; Alabama-Coushatta Tribe of Tex.,
918 F.3d at 443 n. 3 (“The significance of the Restoration Act’s reference to the Tribe’s resolution
is disputed. The state contends that the resolution represents a quid pro quo in which the Tribe
agreed to foreswear gaming for all time in exchange for passage of the Restoration Act. The Tribe
examines the evolution of drafts of the Restoration Act and emphasizes that strong prohibitory
language was ultimately deleted. In any event, the stringent prohibition proposed by the resolution
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was not included.”) If Congress had intended to provide for direct application of Texas laws that
regulate gaming on the Tribe’s lands, it would have expressly stated as much. See Bryan v. Itasca
Co., Minn., 426 U.S. 373, 390 (1976) (“. . .if Congress in enacting Pub. L. 280 had intended to
confer upon the States general civil regulatory powers. . .over reservation Indians, it would have
expressly said so.”)
In sum, the Court finds that the result must flow from the plain language of the governing
Restoration Act and the State’s authority over the Tribe’s activities on its lands under the Act. As
discussed herein, bingo is not per se prohibited by Texas law. The Court finds that the evidence
presented at the bench trial shows that the Tribe is in fact conducting bingo on its land. The dispute
therefore turns on whether the State can bar the Tribe’s bingo activities under the Texas regulatory
framework governing bingo. The Court finds that because the State regulates bingo gaming, that
gaming activity is not “prohibited by the laws of the State of Texas” within the meaning of Section
207(a) of the Restoration Act. Section 207(b) of the Restoration Act further emphasizes that
nothing in the Restoration Act should be construed as a grant of regulatory jurisdiction to the State
over the Tribe’s present bingo activities through civil or criminal means. See Pub. Law 100-89,
§ 207. The Court therefore concludes, based on the evidence presented, that the Tribe’s bingo
gaming activities conducted at Naskila are not subject to the State’s restrictions governing bingo
unless and until the State of Texas prohibits that gaming activity by law outright, as it has done
with other gaming activities. The Restoration Act only prohibits on the Tribe’s lands those gaming
activities that are “prohibited”—not regulated—by the laws of the State of Texas. Moreover,
Section 207(b) of the Restoration Act bars the State from exercising regulatory jurisdiction,
through civil or criminal means, over gaming activities conducted on the Tribe’s lands.
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Accordingly, the Tribe’s bingo gaming is not subject to the laws of the State of Texas unless and
until the State of Texas prohibits that gaming activity outright.
For these reasons, the Court also concludes that the State failed to establish by clear and
convincing evidence that the Tribe should be held in contempt. There is not clear and convincing
evidence supporting a finding that the Tribe engaged in specific gaming conduct violative of the
.
direct prohibitions stated in Judge Hannah’s 2002 Injunction.
III.
Concluding Statements and Order of the Court
The Court therefore DENIES the State’s request for the Tribe to show cause and to hold
the Tribe in contempt (doc. #160). The Court further DENIES the State’s request to enjoin the
bingo gaming currently offered on the Tribe’s reservation.
It is so ordered.
SIGNED this the 31st day of August, 2021.
____________________________________
KEITH F. GIBLIN
UNITED STATES MAGISTRATE JUDGE
26
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