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Tohono O'Odham Nation v. Ducey

United States District Court, D. Arizona

September 16, 2015

Tohono O'odham Nation, Plaintiff,
Douglas A. Ducey, et al., Defendants.


DAVID G. CAMPBELL, District Judge.

Plaintiff Tohono O'odham Nation (the "Nation") is currently constructing a major casino on land purchased in 2003 near Glendale, Arizona. In May 2013, this Court ruled that the 2002 Gaming Compact between the State of Arizona and the Nation did not prohibit construction of another casino in the Phoenix metropolitan area, and the Nation elected to begin construction of the casino even though that ruling is on appeal. As construction has progressed, the State and its officials have refused to certify vendors and employees to work at the casino. In response, the Nation brings this action for declaratory and injunctive relief to prohibit the State from continuing to bar the casino's progress. Before the Court is the Nation's motion for preliminary injunction (Doc. 3), Defendants Douglas Ducey and Mark Brnovich's joint motion to dismiss (Doc. 49), and Defendant Daniel Bergin's motion to dismiss (Doc. 50). The Court heard oral argument on September 10, 2015. For the reasons set forth below, the Court will deny the Nation's motion for preliminary injunction, grant Ducey and Brnovich's motion to dismiss, and grant Bergin's motion to dismiss in part.

I. Background.

A. The Indian Gaming Regulatory Act.

In California v. Cabazon Band of Mission Indians, 480 U.S. 202 (1987), the Supreme Court held that states could not regulate gaming on Indian lands. In response, Congress passed the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. §§ 2701-2721, which granted "states some role in the regulation of Indian gaming." Artichoke Joe's California Grand Casino v. Norton, 353 F.3d 712, 715 (9th Cir. 2003). "IGRA is an example of "cooperative federalism" in that it seeks to balance the competing sovereign interests of the federal government, state governments, and Indian tribes, by giving each a role in the regulatory scheme.'" Id. (quoting Artichoke Joe's v. Norton, 216 F.Supp.2d 1084, 1092 (E.D. Cal. 2002)).

IGRA divides gaming into three classes: Class I, which includes social games with prizes of minimum value and traditional forms of Indian gaming; Class II, which includes bingo and certain card games; and Class III, which includes all gaming that falls outside of Classes I and II, typically referred to as "casino-style" gaming. 25 U.S.C. §§ 2703(7)(A), (7)(B), (8). Under IGRA, "Class I gaming on Indian lands is within the exclusive jurisdiction of the Indian tribes[.]" Id. § 2710(a)(1). Class II gaming is also "within the jurisdiction of the Indian tribes, " but subject to some federal regulation. Id. § 2710(a)(2). Class III gaming is permitted if it is authorized by a tribal ordinance, conducted in a state that permits such gaming, and "conducted in conformance with a Tribal-State compact entered into by the Indian tribe and the State[.]" Id. § 2710(d)(1).

B. Arizona Department of Gaming.

To carry out the state regulation allowed by IGRA, Arizona created the Arizona Department of Gaming ("ADG"). See A.R.S. § 5-604(A). ADG is managed by a governor-appointed director, Defendant Daniel Bergin. ADG is tasked with "certify[ing], as provided in tribal-state compacts, prospective gaming employees, facility support employees, tribal gaming office employees, financiers, management contractors, providers of gaming services and manufacturers and distributors of gaming devices to ensure that unsuitable individuals or companies are not involved in [gaming]." Id. § 5-602(A). ADG is also charged with promoting "the public welfare and public safety" and seeking "to prevent corrupt influences from infiltrating Indian gaming." Id.

C. The Compact.

On January 24, 2003, the Secretary of the Interior approved a tribal-state compact between the Nation and Arizona (the "Compact"). Doc. 1, ¶ 49. The Compact permits the Nation to operate four gaming facilities and provides that it does not apply to Class I or Class II gaming. Id., ¶¶ 41, 51. The Compact requires prospective gaming employees, contractors, and vendors to obtain certification from ADG. Specifically, it provides that ADG "shall conduct the necessary background investigation to ensure the Applicant is qualified for State Certification." Doc. 1-3 at 4.[1] Once a background check is completed, ADG must either issue the certification or deny the application and provide the grounds for denial. Id. ADG may deny certifications on several grounds, including prior felony convictions, providing false statements, or previous violations of gaming laws. Id. at 5.

After the Compact was executed, the Nation purchased unincorporated land in Glendale, Arizona, located just west of Phoenix. Several years later, in 2009, the Nation announced plans to use the land for a Class III gaming facility to be known as the West Valley Resort. Doc. 1, ¶ 64. The State of Arizona filed suit in this Court, arguing that gaming on the Glendale land was not authorized by IGRA and violated the Compact's ban on additional casinos in the Phoenix area. The State also asserted that the Nation committed fraud by agreeing with the State and the voters that there would be no more casinos in the Phoenix area, while secretly planning to acquire land and open the West Valley Resort. See Arizona v. Tohono O'odham Nation, 944 F.Supp.2d 748 (D. Ariz. 2013). The Court held that the Nation's construction of a casino on the Glendale land would not violate any provision of the Compact and was permitted by IGRA. Id. at 754. The Court also found the State's claims of fraud and promissory estoppel barred by the Nation's sovereign immunity. Id. at 769. The decision was appealed to the Ninth Circuit and remains pending.

D. The Present Dispute.

The Nation began construction of the West Valley Resort in December 2014. The building currently under construction will serve as an interim facility until construction of the entire resort takes place in the future. Doc. 62-2 at 240. On February 2, 2015, Defendant Bergin expressed concern to the Nation that the casino was "not authorized, and, as a consequence, ... ADG would not have the authority to participate in any certification or approval processes relating to the opening or operation of the casino." Doc. 1, ¶ 75. On April 10, 2015, Bergin informed the Nation that "ADG lacks statutory authority to approve [the Nation's] Glendale casino notwithstanding [the Court's earlier decision]." Doc. 1-5 at 2. Bergin expressed a belief that the Nation committed fraud during the formation of the Compact and that the fraud "nullif[ied] any right that [the Nation] would otherwise have under the compact to build the Glendale casino." Id. He referenced A.R.S. § 5-602(C), which "requires ADG to execute the State's duties under tribal-state compacts in a manner that is consistent with this state's desire to have extensive, thorough and fair regulation of Indian gaming permitted under the tribal-state compacts.'" Id. at 3 (quoting § 5-602(C) (emphasis in Bergin letter)). Bergin stated that "the record created in [the prior litigation] includes credible and largely unrefuted evidence that [the Nation] engaged in deceptive behavior and made significant misrepresentations during the compact negotiations[.]" Id. at 3-4. He concluded that ADG would "exceed its authority if it were to proceed with any certification or approval processes relating to the opening or operation" of the casino, and noted that the casino does not qualify as "Indian gaming permitted under the Tribal-State compact." Id.

In May 2015, ADG issued a new notice for its certification applications, which stated the following:

Please be advised this application for certification is valid only for authorized Arizona gaming facilities. Providing goods or services to any location considered by the State to be unauthorized, or in pending litigation with the State concerning whether it is authorized, would be outside the approval granted through State Certification. Vendors providing goods or services to unauthorized facilities may be subject to legal and/or regulatory risks.

Doc. 1, ¶ 86. The notice also stated that "based upon the fraud and misrepresentation committed" by the Nation, "[ADG] has determined that the proposed West Valley casino is not authorized." Id., ¶ 88. The notice does not distinguish between Class II and Class III gaming. Id., ¶ 89. ADG requires the Nation to use these forms for prospective vendors and employees of the casino. Id., ¶ 90-91.

On June 22, 2015, the Nation filed this action against Arizona Governor Douglas Ducey, Arizona Attorney General Mark Brnovich, and ADG Director Daniel Bergin. It alleges that Ducey and Brnovich directed Bergin to deny certifications for the West Valley Resort and that Defendants have violated the Supremacy Clause because IGRA preempts state regulation of gaming on Indian lands. It further alleges that Defendants are violating IGRA by illegally regulating Class II gaming, specifically because the notice appears to apply to any gaming that may take place at the West Valley Resort. The Nation asks the Court to enjoin Defendants from refusing to grant the Class III certifications and from regulating Class II gaming. The Court will address the merits of Defendants' motions to dismiss before turning to the Nation's motion for preliminary injunction.

II. Motions to Dismiss.

Defendants Ducey and Brnovich argue that the Nation's claims should be dismissed for several reasons: (1) sovereign immunity bars suit against them in their official capacities, (2) the Nation's claims are a disguised and improper mandamus action, (3) the Nation's claims are non-justiciable, and (4) the Nation fails to state a claim for relief. Defendant Bergin argues that the claims should be dismissed for similar reasons: (1) sovereign immunity bars the Nation's claims against him because IGRA provides an alternative enforcement mechanism, (2) the Nation's claim regarding Class II gaming is not ripe, (3) the Nation's complaint fails to state a claim for relief, and (4) the Nation's requested relief would violate the Tenth Amendment. Because courts generally treat sovereign immunity as a threshold issue, the Court will address it first. See Confederated Tribes & Bands of the Yakama Indian Nation v. Locke, 176 F.3d 467, 469 (9th Cir. 1999).

A. Sovereign Immunity.

The Eleventh Amendment bars federal court lawsuits against a state "by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XI. This bar applies to suits against states by federally-recognized Indian tribes. See Seminole Tribe of Florida v. Florida, 517 U.S. 44, 55 (1996); see also Blatchford v. Native Village of Noatak, 501 U.S. 775, 782 (1991). State agencies such as ADG fall within the protection of the Eleventh Amendment. See Regents of the Univ. of Cal. v. Doe, 519 U.S. 425, 429 (1997).

There are several exceptions to the protection of sovereign immunity, one of which is at issue in this case. The Supreme Court held in Ex parte Young, 209 U.S. 123 (1908), that state officials can, in some circumstances, be sued to enjoin violations of federal law. This exception to sovereign immunity applies when lawsuits are brought against state officers in their official capacities for an injunction prohibiting future violations of federal law. Such "official-capacity actions for prospective relief are not treated as actions against the State" for purposes of the Eleventh Amendment. Will v. Michigan Dept. of State Police, 491 U.S. 58, 71 n.10 (1989) (internal quotations omitted). This is because "state officers have no authority to violate the Constitution and laws of the United States, " and an injunction against such violations therefore does not infringe any legitimate state power. Erwin Chemerinsky, Federal Jurisdiction, § 7.5 (6th ed. 2012).

The Ex parte Young exception has two limitations that are relevant here. First, it does not apply to all state officers. The officer named in the suit "must have some connection with the enforcement of the act" to be enjoined. 209 U.S. at 157. The connection between the officer and the act "must be fairly direct; a generalized duty to enforce state law or general supervisory power over the persons responsible for enforcing the challenged provision will not subject an official to suit." Coal. to Defend Affirmative Action v. Brown, 674 F.3d 1128, 1134 (9th Cir. 2012) (quoting L.A. Cty. Bar Ass'n v. Eu, 979 F.2d 697, 704 (9th Cir. 1992)); Sweat v. Hull, 200 F.Supp.2d 1162, 1167 (D. Ariz. 2001). Second, "where Congress has prescribed a detailed remedial scheme for the enforcement against a State of a statutorily created right, a court should hesitate before casting aside those limitations and permitting an action against a state officer based upon Ex parte Young. " Seminole Tribe, 517 U.S. at 74. Permitting suit under Ex parte Young in such a circumstance might render the congressionally-created remedial scheme superfluous. Id. at 75.

Defendants' invoke both of these limitations. The Nation seeks to enjoin Defendants from denying certifications in violation of IGRA and the Supremacy Clause. Defendants Ducey and Brnovich argue that they lack the necessary connection to the granting of such certifications. Defendant Bergin argues that he cannot be sued because IGRA includes a comprehensive enforcement mechanism. The Court will address these arguments separately.

1. Connection to Enforcement of the Act.

Ex parte Young 's required connection between the defendant and a challenged law can be established when the law specifically grants the defendant enforcement authority. See, e.g., Ass'n des Eleveurs de Canards et d'Oies du Quebec v. Harris, 729 F.3d 937, 943 (9th Cir. 2013). Here, the statute cited by ADG for denying certifications - A.R.S. § 5-602 - charges ADG with issuing certifications in connection with gaming on Indian lands. Specifically, the director of ADG is granted authority to determine whether prospective vendors and employees meet the requirements for certification. See A.R.S. §§ 5-602(A), (G), (J). The Nation does not argue that § 5-602 grants the governor or the attorney general authority to issue or deny certificates.[2]

The Nation instead asserts that "Ducey and Brnovich intervened in the normal course of ADG's business, directed ADG to take steps to block the [casino], and caused ADG to adopt" the position of refusing certifications for potential employees and vendors. Doc. 60 at 11. Specifically, the Nation notes that Ducey and Brnovich wrote letters to Bergin ...

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