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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 7, 2000 Decided November 3, 2000

No. 98-5516

Diamond Game Enterprises, Incorporated and

The Cheyenne and Arapaho Tribes of

Oklahoma Gaming Commission, on behalf of the

Cheyenne and Arapaho Tribes of Oklahoma,

Appellants

v.

Janet Reno, Attorney General, et al.,

Appellees

Consolidated with

99-5345

Appeals from the United States District Court

for the District of Columbia

(No. 97cv00452)

---------

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James E. Townsend argued the cause for appellants. With

him on the briefs were David W. McElroy, Munford Page

Hall, II, Virginia W. Boylan and Stephen A. Lenske. Philip

Baker-Shenk entered an appearance.

Leander Bergen, Geoffrey M. Standing Bear and Andrew

W. Baldwin were on the brief for amici Pueblo of San Juan,

et al.

John T. Stahr, Attorney, U.S. Department of Justice, argued the cause for the Federal appellees and Jonathan A.

Glogau, Special Counsel, State of Florida, argued the cause

for the State appellees. With them on the joint brief were

Lois J. Schiffer, Assistant Attorney General, U.S. Department of Justice, David C. Shilton and Edward J. Passarelli,

Attorneys, and Sara J. Drake, Supervising Deputy Attorney

General, State of California. Jared A. Goldstein, Attorney,

U.S. Department of Justice, entered an appearance.

Before: Ginsburg, Randolph and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: This case requires us to determine

whether a gambling machine known as the Lucky Tab II, an

electromechanical device that dispenses paper pull-tabs and

then displays their contents on a video monitor, should be

classified under the Indian Gaming Regulatory Act as a Class

II "aid" or a Class III "facsimile." The Act prohibits Indian

tribes from operating Class III facsimiles without first negotiating a compact with the state. Applying the statute's plain

language, guided by our only relevant precedent, Cabazon

Band of Mission Indians v. NIGC, 14 F.3d 633 (D.C. Cir.

1994), and proceeding without any views from the agency

charged with the Act's implementation, we conclude that the

Lucky Tab II is a Class II aid.

I

The Indian Gaming Regulatory Act of 1988 ("IGRA"), 25

U.S.C. s 2701-19, regulates gambling operations run by Indian tribes. The Act's purpose is to "provide a statutory basis

for the operation of gaming by Indian tribes as a means of

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promoting tribal economic development, self-sufficiency, and

strong tribal governments." 25 U.S.C. s 2702(1).

The Act divides Indian gaming into three classes, each

requiring a different level of authorization. Class I gaming

consists of social games played solely for prizes of minimal

value as well as traditional forms of Indian gaming. See 25

U.S.C. s 2703(6). Indian tribes may operate Class I games

as they wish. See 25 U.S.C. s 2710(a)(1).

Class II gaming includes bingo, and if conducted in the

same hall as bingo, it also includes lotto, punch boards, and

tip jars, as well as pull-tabs, the game at issue here. See 25

U.S.C. s 2703(7)(A). In language central to the dispute in

this case, the Act allows the use of "electronic, computer, or

other technologic aids" in connection with Class II games, 25

U.S.C. s 2703 (7)(A)(i), but prohibits the use of "[e]lectronic

or electromechanical facsimiles of any game of chance." 25

U.S.C. s 2703 (7)(B)(ii). Tribes may conduct Class II gaming

if the state in which they are located permits such forms of

gambling and if the governing body of the tribe adopts a

gaming ordinance that is then approved by the Chairman of

the National Indian Gaming Commission, the agency created

by Congress to implement IGRA. See 25 U.S.C. ss 2710(b),

2704.

Class III gaming includes all gambling not covered by

either Class I or Class II, including "facsimiles" of Class II

devices. See 25 U.S.C. s 2703(8). In order to conduct Class

III operations, tribes must obtain state approval through

negotiation of a tribal-state compact. See 25 U.S.C.

s 2710(d)(1).

Commission regulations define Class II aids and Class III

facsimiles. An aid is "a device ... that when used ... [i]s

not a game of chance but merely assists a player or the

playing of a game [and] is readily distinguishable from the

playing of a game of chance on an electronic or electromechanical facsimile." 25 C.F.R. s 502.7. A facsimile is "any

gambling device as defined in [the Johnson Act]." 25 C.F.R.

s 502.8. Predating IGRA by more than 30 years, the Johnson Act prohibits the use of gambling devices on federal land,

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in interstate commerce, and in "Indian country." See 15

U.S.C. ss 1171-78 (1953). Both the Commission's regulations and this Court have interpreted IGRA as limiting the

Johnson Act prohibition to devices that are neither Class II

games approved by the Commission nor Class III games

covered by tribal-state compacts. See Cabazon, 14 F.3d at

635, n.3 (noting that IGRA repealed the Johnson Act with

regard to Class III devices subject to a tribal-state compact

but that there is no other repeal of the Johnson Act in IGRA,

implying that Class II aids, permitted under IGRA, do not

run afoul of the Johnson Act).

This case concerns a game known as pull-tabs. A small,

two-ply paper card, a pull-tab bears symbols and patterns

similar to tic-tac-toe that appear when players peel off the

pull-tab's top layer. The pattern of the symbols determines

whether the player wins a prize. In the traditional pull-tabs

game, bingo hall clerks sell pull-tabs from counters or mobile

carts, and winners present the tabs to either clerks or cashiers to collect prizes. Pull-tabs are sold from large pools

known as "deals." Containing anywhere from 1200 to 100,000

pull-tabs, deals have a fixed number of winners and losers.

At issue in this case is the proper classification of a

gambling device known as the Lucky Tab II, an electromechanical dispenser of paper pull-tabs. The machine dispenses

pull-tabs from a roll containing approximately 7500 tabs.

About 100 rolls comprise a deal, within which winning pulltabs are randomly distributed. The machine cuts the pull-tab

from the roll and drops it into a tray. A bar code scanner

inside the machine automatically reads the tab and then

displays its contents on a video screen. A placard on the

machine informs players that "[v]ideo images may vary from

actual images on pull tabs. Each tab must be opened to

verify." To collect prizes, players must present the actual

winning tab to a clerk. In many bingo halls, players purchase pull-tabs either from a Lucky Tab II or from clerks; in

such cases, machines and clerks cut pull-tabs from rolls that

are part of the same deal.

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In 1994, the Kickapoo Traditional Tribe of Texas and

Diamond Game Enterprises, the manufacturer of the Lucky

Tab II, asked the Commission to classify the machine as a

Class II aid. Two years passed without Commission action.

In August 1996, the Kickapoo Tribe began operating approximately 100 Lucky Tab II machines. At this point, the record

becomes complicated and, to say the least, confusing. As far

as we can tell, the following events of significance to this case

transpired: The Commission's Director of Enforcement advised the Tribe that the machines were Class III gambling

devices that could only be operated pursuant to a tribal-state

compact. See Diamond Game Enterprises, Inc. v. Reno, 9 F.

Supp. 2d 13, 15 (D.D.C. 1998). Notwithstanding the Director's action, the members of the Commission were apparently divided over the proper classification of the Lucky Tab

II, some thinking it an aid and others a facsimile. Because of

this disagreement, the Commission sought advice from the

Department of Justice, but DOJ lawyers were themselves

divided over the proper classification of the machine. See

Memorandum from Deputy Assistant Attorney General Richard Shiffrin to Associate Deputy Attorney General Seth P.

Waxman, at 1 (June 13, 1996) (noting that the Office of Tribal

Justice and the Criminal Division had reached opposite conclusions on the appropriate classification of the Lucky Tab

II--the former concluding that it falls under Class II and the

latter concluding that it belongs in Class III). The Commission never formally responded to the request to classify the

Lucky Tab II.

According to the Tribe and Diamond Game, certain members of the Commission recommended that the Tribe and the

company file a declaratory judgment action in federal court to

resolve the issue. Acting on that advice, they filed this action

in the U.S. District Court for the District of Columbia seeking, among other things, a declaratory judgment that the

machine qualifies as a Class II aid. The Cheyenne and

Arapaho Tribes of Oklahoma intervened as plaintiffs. Alabama, California, and Florida intervened as defendants.

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The parties filed cross motions for summary judgment.

Finding that the Lucky Tab II "performs all the functions

that a player of the traditional pull-tab game would have

performed," the district court found the machine to be a Class

III facsimile and granted summary judgment to the government. See Diamond Game, 9 F. Supp. 2d at 20. Subsequently, Diamond Game and the Tribes filed a Rule 60(b)

motion, claiming that the company had made technical

changes to the Lucky Tab II. Finding that the modifications

were not new evidence, the district court denied the motion.

II

Unlike the legal issues presented in this case, the policy

questions are both interesting and challenging. In determining the proper classification of the Lucky Tab II, how do we

further Congress' objective of allowing Indian tribes to use

gaming as a means of "promoting tribal economic development, self-sufficiency, and strong tribal governments," 25

U.S.C. s 2702(1), while at the same time "shield[ing] [Indian

tribes] from organized crime and other corrupting influences," 25 U.S.C. s 2702(2)? Will the Lucky Tab II enable

tribes to "take advantage of modern methods of conducting

class II games"? S. Rep. No. 100-446, at 9 (1988). Or does

the machine increase the risk of corruption or excessive

gambling losses, concerns that government counsel told us at

oral argument require its classification as a Class III device?

To resolve such issues, Congress created the National Indian

Gaming Commission, headed by a Chair appointed by the

President and confirmed by the Senate presumably for his or

her expertise on Indian gaming. Yet whether because of

bureaucratic gridlock or, as the tribes allege, because of

congressional interference, we have no idea what the Commission thinks about the policy questions presented by the

Lucky Tab II. Not only does this leave us with no agency

position to which we might defer, see Chevron U.S.A. v.

Natural Resources Defense Council, Inc., 467 U.S. 837, 844

(1984) ("[A] court may not substitute its own construction of a

statutory provision for a reasonable interpretation made by

the administrator of an agency"), but the Commission's IGRA

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regulations provide no assistance in interpreting the statute.

Boiled down to their essence, the regulations tell us little

more than that a Class II aid is something that is not a Class

III facsimile. We mention this not to escape our duty to

decide this case--to the contrary, because we have jurisdiction, we must determine how the Lucky Tab II should be

classified--but to highlight the fact that we have no choice

but to proceed without the benefit of a Commission position, a

situation we expect Congress neither anticipated nor would

appreciate. That said, we turn to the parties' arguments

about the classification of the Lucky Tab II. See Everett v.

United States, 158 F.3d 1364, 1367 (D.C. Cir. 1998) ("We

review a grant of summary judgment de novo.").

Diamond Game and the Tribes contend that the Lucky Tab

II acts as a permitted "electronic aid" to the Class II game of

pull-tabs. They emphasize that the machine's operation depends entirely on pre-printed paper pull-tabs that can be (and

in fact are) played without the mechanical dispenser. The

Lucky Tab II, in other words, cannot function without rolls of

paper pull-tabs. The Tribes also emphasize that despite the

fact that the Lucky Tab II presents a video image of the

contents of the pull-tabs it dispenses, the machine does not

give the player the final word on the game; players must still

peel off the top layer to verify its contents and present it to a

clerk to receive their winnings. For all of these reasons, they

argue, the Lucky Tab II cannot be considered a facsimile of

the paper game of pull-tabs.

According to the government, because the machine mirrors

the traditional game played by purchasing cards from clerks,

it is a Class III facsimile, not a Class II aid. The government

embraces the district court's description of the Lucky Tab II:

"When the participant plays the Lucky Tab II, she is not

playing the pull-tabs inside the machine; she is engaging the

machine that replicates the functions of the traditional pulltab game." Diamond Game, 9 F. Supp. 2d at 13, 20. As to

the possibility that the information on the video screen might

be inaccurate, the government says mistakes are rare and for

all practical purposes, the Lucky Tab II is a duplicate of the

paper version.

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Both sides claim support from Cabazon Band of Mission

Indians v. NIGC, 14 F.3d 633 (D.C. Cir. 1994). There, we

held that a video pull-tabs game was a "computerized version" of pull-tabs and therefore a Class III facsimile. The

machine "randomly selects a card for the gambler, pulls the

tab at the gambler's direction, and displays the result on the

screen. The computer version, like the paper version, has a

fixed number of winning cards in each deal." Cabazon, 14

F.3d at 635. Finding that video pull-tabs "exactly replicate[s]" the game of pull-tabs in computer form, Cabazon

concluded that it amounted to a facsimile of the game. See

id.; see also Sycuan Band of Mission Indians v. Roache, 54

F.3d 535, 541-42 (9th Cir. 1994) (holding that a self-contained

unit containing a computer linked to a video monitor and a

printer constitutes an electronic facsimile of pull-tabs).

We think the Lucky Tab II is quite different from the

machine at issue in Cabazon. To begin with, the Lucky Tab

II is not a "computerized version" of pull-tabs. Although the

Lucky Tab II has a video screen, the screen merely displays

the contents of a paper pull-tab. Instead of using a computer

to select patterns, the Lucky Tab II actually cuts tabs from

paper rolls and dispenses them to players. In other words,

the game is in the paper rolls, not, as in the case of the

Cabazon machine, in a computer. Indeed, players using the

Lucky Tab II often play a deal simultaneously with other

players in the same hall who have chosen to purchase pulltabs from clerks. For players using the Lucky Tab II, the

machine functions as an aid--it "helps or supports," or "assists" the paper game of pull-tabs. Webster's Third New

International Dictionary 44 (1993). Without the paper rolls,

the machine has no gaming function at all. It is, in essence,

little more than a high-tech dealer. Viewed this way, the

game played with the Lucky Tab II is not a facsimile of paper

pull-tabs, it is paper pull-tabs.

Another difference between the Lucky Tab II and the video

machine at issue in Cabazon reinforces our belief that the

Lucky Tab II should be classified as a Class II aid. The

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Cabazon machine plays the game of pull-tabs in its entirety,

dispensing receipts for players to redeem winnings. By

contrast, the Lucky Tab II dispenses actual paper pull-tabs

that players must peel and display to a clerk before they can

obtain prizes. Although the machine's scanner apparently

commits few errors when reading paper pull-tabs, the fact

remains that unlike the Cabazon machine, the Lucky Tab II

is technically not final. It is, in other words, an aid to the

game of pull-tabs.

Notwithstanding the differences between the Lucky Tab II

and the machine at issue in Cabazon, the government insists

that the Lucky Tab II is a Class III device. At oral

argument, the government even asserted that removing the

video screen would not convert the Lucky Tab II into a Class

II aid. Asked what in the government's view would be an

aid, counsel pointed us to an electronic scanner called the

"Tab Force Validation System." As we understand this

device, after a clerk dispenses a paper pull-tab, instead of

peeling off the top layer, the player inserts the pull-tab into

the machine, which scans the bar code and displays the

results on a video screen. The Commission has issued advisory opinions classifying the Tab Force and other similar

machines as Class II aids, concluding that the systems "simply read the pull-tabs and display whether or not they are

winners.... [They] cannot change the outcome of the

game." See NIGC Advisory Opinion, at 2 (June 8, 1998).

We see no principled difference between the Tab Force and

the Lucky Tab II. Both devices electronically "read" paper

pull-tabs and display their contents on a screen, and neither

can "change the outcome of the game." Unlike the machine

involved in Cabazon, neither contains an internal computer

that generates the game. Rather, both machines facilitate

the playing of paper pull-tabs. They are thus Class II aids.

The government makes two additional arguments in support of its position that the Lucky Tab II is a Class III

facsimile. First, like the district court, it relies on language

from a Senate Indian Affairs Committee report describing a

Class II aid as a device that enables tribes to "take advantage

of modern methods of conducting class II games" by, for

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example, "join[ing] with other tribes to coordinate their class

II operations and thereby enhance the potential of increasing

revenues." S. Rep. No. 100-446, at 9 (1988). Class II aids

are thus limited to devices that "merely broaden the potential

participation levels and [are] readily distinguishable from ...

electronic facsimiles in which a single participant plays a

game with or against a machine rather than with or against

other players." Id. Unlike computers, cables, or telephone

lines that connect bingo games on different reservations--

examples the Senate Report gives of aids that expand participation--the Lucky Tab II, the government argues, neither

increases participation levels nor enhances competition among

players. Second, the government claims that the Lucky Tab

II makes it easier for players to play pull-tabs, thus increasing the potential for players to "lose the rent money."

These statutory interpretations, resting as they do on the

policy underlying IGRA, are interesting and might even be

worthy of Chevron two deference had they been offered by

the Commission. But they come only from appellate counsel--indeed the "lose-the-rent" argument surfaced for the

first time at oral argument. Moreover, nothing in the Senate

Report suggests that an electronic device must link players

on different reservations to qualify as a Class II aid. Accordingly, because of the similarities between the Lucky Tab II

and the Tab Force Validation System, which the Commission

has found to be a Class II aid, and because of the differences

between the Lucky Tab II and the Class III device at issue in

Cabazon, we reverse the district court and remand with

instructions to enter summary judgment for appellants. In

view of this disposition, we have no need to address the

district court's denial of the Rule 60(b) motion.

So ordered.

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