Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-56105/USCOURTS-ca9-14-56105-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PAUMA BAND OF LUISENO MISSION

INDIANS OF THE PAUMA & YUIMA

RESERVATION, AKA Pauma Band of

Mission Indians, AKA Pauma

Luiseno Band of Mission Indians,

Plaintiff-Appellee/

Cross-Appellant,

v.

STATE OF CALIFORNIA; CALIFORNIA

GAMBLING CONTROL COMMISSION,

an agency of the State of California;

EDMUND G. BROWN, JR., as

Governor of the State of California,

Defendants-Appellants/

Cross-Appellees.

Nos. 14-56104

14-56105

D.C. Nos.

3:09-cv-01955-

CAB-MDD

3:09-cv-01955-

CAB-MDD

ORDER AND

AMENDED

OPINION

Appeal from the United States District Court

for the Southern District of California

Cathy Ann Bencivengo, District Judge, Presiding

Argued and Submitted

July 10, 2015—San Francisco, California

Filed October 26, 2015

Amended December 18, 2015

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2 PAUMA V. STATE OF CALIFORNIA

Before: Mary M. Schroeder and Richard C. Tallman,

Circuit Judges, and John A. Jarvey,

*

 Chief District Judge.

Opinion by Judge Tallman;

Dissent by Chief District Judge Jarvey

SUMMARY**

Indian Law

The panel filed (1) an order amending its opinion and

dissent and denying petitions for panel rehearing and

rehearing en banc, and (2) an amended opinion and dissent in

an action concerning a Tribal-State Gaming Compact.

In its amended opinion, the panel affirmed the district

court’s summary judgment and held that the Pauma Band of

Luiseno Mission Indians was entitled to rescission of the

2004 Amendment to the 1999 Tribal-State Compact

governing operation of Class III, or casino-style, gaming on

Pauma’s land.

The panel held that the interpretation of a Compact

license pool provision in Cachil Dehe Band of Wintun

Indians of the Colusa Indian Cmty. v. Cal., 618 F.3d 1066

(9th Cir. 2010), applied, such that the State of California

* The Honorable John A. Jarvey, Chief United States District Judge for

the Southern District of Iowa, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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PAUMA V. STATE OF CALIFORNIA 3

would be deemed to have misrepresented a material fact as to

how many gaming licenses were available when negotiating

with Pauma to amend its Compact. The panel held that,

unlike a change in judicial interpretation of a statute or law,

the doctrine of retroactivity does not apply to contracts. Once

there has been a final judicial interpretation of an ambiguous

contract provision, that is and has always been the correct

interpretation from the document’s inception. The panel held

that the district court properly granted summary judgment on

Pauma’s misrepresentation claim.

The panel held that the district court awarded the proper

remedy to Pauma by refunding $36.2 million in

overpayments, even though the district court mislabeled the

remedy as specific performance, rather than rescission and

restitution for a voidable contract. The panel held that this

equitable remedy fell within the State’s limited waiver of its

sovereign immunity in the Compacts, and thus was not barred

by the Eleventh Amendment.

On cross-appeal, the panel held that Pauma was not

entitled to seek redress under the Indian Gaming Regulatory

Act because the State and Pauma actually reached a gaming

Compact.

Dissenting, Chief District Judge Jarvey wrote that the

State did not commit the tort of misrepresentation by

interpreting the Compact differently than a later court

decision. He also wrote that, under the language of the

Compact, the State did not waive its sovereign immunity with

respect to this claim.

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4 PAUMA V. STATE OF CALIFORNIA

COUNSEL

Teresa Michelle Laird (argued), Deputy Attorney General;

Kamala D. Harris, Attorney General of California; Sara J.

Drake, Senior Assistant Attorney General; Neil D. Houston,

Deputy Attorney General, San Diego, California, for

Defendants-Appellants/Cross-Appellees.

Cheryl A. Williams (argued) and Kevin M. Cochrane,

Williams & Cochrane, LLP, San Diego, California, for

Plaintiff-Appellee/Cross-Appellant.

ORDER

The panel has voted to amend its previous opinion and

issues the following opinion to replace it. With this

amendment, the panel has voted to deny the petitions for

panel rehearing and to deny the petitions for rehearing en

banc.

The full court has been advised of the petitions for

rehearing en banc and no judge has requested a vote on

whether to rehear the matter en banc. Fed. R. App. P. 35.

The petitions for panel rehearing and petitions for

rehearing en banc are DENIED. No future petitions for

rehearing or petitions for rehearing en banc will be

entertained.

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PAUMA V. STATE OF CALIFORNIA 5

OPINION

TALLMAN, Circuit Judge:

Sixteen years ago more than sixtyNative American tribes

entered into Tribal-State Gaming Compacts with the State of

California. Sadly, the long and tortured history leading to the

culmination of these Compacts did not cease there. Rather,

litigation based on ambiguous provisions as to the number of

authorized gaming devices has ensued for most of the

duration of these Compacts. See In re Indian Gaming

Related Cases, 331 F.3d 1094, 1095–1107 (9th Cir. 2003)

(detailing the entire history before and after the Compacts

were enacted). Before us is yet another installment in this

ongoing saga, this time between the Pauma Band of Luiseno

Mission Indians (“Pauma” or “the Tribe”) and the State of

California,theCalifornia GamblingControl Commission, and

Governor Edmund G. Brown, Jr. (collectively “the State”).

Pauma sued the State based on our prior decision in

Cachil Dehe Band of Wintun Indians of the Colusa Indian

Community v. California (“Colusa II”), 618 F.3d 1066 (9th

Cir. 2010). We have been asked to determine (1) whether

Colusa II’s interpretation of the Compacts’ license pool

provision applies retroactively, such that the State would be

deemed to have misrepresented a material fact as to how

many gaming licenses were available when negotiating with

Pauma to amend its Compact; (2) whether the district court

awarded the proper remedy to Pauma by refunding $36.2

million in overpayments; and (3) whether the State has

waived its sovereign immunity under the Eleventh

Amendment. We answer each question in the affirmative,

although on alternative grounds supporting the relief awarded

by the district court with respect to the remedy. On cross-

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6 PAUMA V. STATE OF CALIFORNIA

appeal, Pauma also asks us to determine whether the State

acted in bad faith under the Indian Gaming Regulatory Act

(“IGRA”), 25 U.S.C. § 2710. We agree with the district

court’s finding that IGRA is inapplicable here, and thus

Pauma’s argument that the State acted in bad faith is

irrelevant.

We have jurisdiction under 28 U.S.C. § 1291, and we

affirm.

I

We begin our journey with a quick overview of the

weathered past between Native American tribes and the State

of California, and then discuss the complicated procedural

history that leads us here.

A

In 1988, Congress attempted to strike a delicate balance

between the sovereignty of states and federally recognized

Native American tribes by passing IGRA. The purpose of

IGRA is well established:

IGRA was Congress’ compromise solution to

the difficult questions involving Indian

gaming. The Act was passed in order to

provide “a statutory basis for the operation of

gaming by Indian tribes as a means of

promoting tribal economic development,

self-sufficiency, and strong tribal

governments” and “to shield [tribal gaming]

from organized crime and other corrupting

influences to ensure that the Indian tribe is the

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PAUMA V. STATE OF CALIFORNIA 7

primary beneficiary of the gaming operation.” 

25 U.S.C. § 2702(1), (2). 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.

Artichoke Joe’s Cal. Grand Casino v. Norton, 216 F. Supp.

2d 1084, 1092 (E.D. Cal. 2002), aff’d, 353 F.3d 712 (9th Cir.

2003). IGRA creates three classes of gaming, with Class III

gaming consisting of “the types of high-stakes games usually

associated with Nevada-style gambling.” In re Indian

Gaming, 331 F.3d at 1097. As a result, Class III gaming is

subjected to the greatest degree of control under IGRA’s

regulations. Class III gaming is lawful on Native American

lands only if such activities are conducted pursuant to a

Tribal-State Compact entered into by the tribe and a state that

permits such gaming, and the Compact is approved by the

Secretary of the Interior. Id. (citing 25 U.S.C. § 2710(d)(1),

(3)(B)).

California did not immediately allow Indian gaming

within its boundaries after the passage of IGRA. Some

gubernatorial administrations were hostile to tribes

conducting Class III gaming because it was then prohibited

by California’s Constitution, and so the State refused to

negotiate with the tribes to permit it. See id. at 1098–99. In

1998, the people of California spoke by passing the tribes’

ballot initiative—Proposition 5 (codified at Cal. Gov’t Code

§§ 98000–98012). See Hotel Emps. & Rest. Emps. Int’l

Union v. Davis, 21 Cal. 4th 585, 589 (1999). Proposition 5

contained a model compact purporting to effectuate IGRA’s

provisions within California. Id. at 589–90. But the victory

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8 PAUMA V. STATE OF CALIFORNIA

was short-lived. The California Supreme Court found all but

one sentence of Proposition 5 unconstitutional.1Id. at 589,

615. Undeterred, the voters of California responded by

amending the California Constitution on March 7, 2000, to

create an exception for certain types of Class III Indian

gaming notwithstanding the general prohibition on gambling

in the State. In re Indian Gaming, 331 F.3d at 1103 & n.11.

In September 1999, several tribes began negotiating with

the State to enter nearly identical Compacts to operate Class

III, or casino-style, gambling (the “1999 Compact”). In April

2000, Pauma joined more than sixty other tribes who

ultimately signed the 1999 Compact. The 1999 Compact

contains a provision limiting the number of licenses2

available statewide for tribes based on a formula.3 As we

1 The sole surviving provision of Proposition 5 is the statutory waiver of

sovereign immunity by the State for claims arising out of violations of

IGRA. Cal. Gov’t Code § 98005. The California Supreme Court found

this provision severable and recognized that the language was meant to

effectuate IGRA since the U.S. Supreme Court had recently stripped the

Act of its teeth in Seminole Tribe of Florida v. Florida, 517 U.S. 44

(1996). Hotel Emps., 21 Cal. 4th at 614–15; see also Rincon Band of

Luiseno Mission Indians v. Schwarzenegger, 602 F.3d 1019, 1026 n.8 (9th

Cir. 2010) (“California has waived its Eleventh Amendment immunity

from such suits [brought by tribes under IGRA].”).

 

2 Each license is the equivalent of one slot machine or electronic video

gaming device, and each tribe was limited to a maximum of 2,000

licenses.

3 The formula, which has been the subject of much litigation, is found

in section 4.3.2.2(a)(1) and reads:

The maximum number of machines that all Compact

Tribes in the aggregate may license pursuant to this

Section shall be a sum equal to 350 multiplied by the

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PAUMA V. STATE OF CALIFORNIA 9

have previously observed, “[t]he License Pool Provisions that

California and [the tribes] included in their Compact as a

foundation for establishing Class III gaming in California are

murky at best.” Colusa II, 618 F.3d at 1084. Due to the

limited time the tribes had to negotiate with the State, the

parties agreed to the 1999 Compact without ever discussing

their radically different interpretations of how many licenses

the statewide license pool formula actually produced. See id.

at 1070–72; In re Indian Gaming, 331 F.3d at 1104. It

required protracted litigation before we settled the number in

Colusa II, 618 F.3d at 1082.

By December 2003, the State informed the tribes that the

collective license pool had been exhausted—without stating

the total number of licenses actually authorized—and Pauma

received only 200 licenses in that draw instead of its

requested 750. Thus several tribes, including Pauma, began

negotiating with the State to amend their Compacts in order

to abolish the license pool provision and gain access to an

unlimited number of licenses. The State demanded

substantially more money per operable license during

negotiations, Rincon Band of Luiseno Mission Indians v.

Schwarzenegger, 602 F.3d 1019, 1025 (9th Cir. 2010), and

only five tribes—including Pauma—ultimately concluded

such amendments (“2004 Amendment”). Colusa II, 618 F.3d

at 1072. At the time, Pauma was set to enter into a contract

number of Non-Compact tribes as of September 1,

1999, plus the difference between 350 and the lesser

number authorized under Section 4.3.1.

Section 4.3.1 states tribes may not operate more gaming devices than “the

larger of” “(a) A number of terminals equal to the number of Gaming

Devices operated by the Tribe on September 1, 1999; or (b) Three hundred

fifty (350) Gaming Devices.”

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10 PAUMA V. STATE OF CALIFORNIA

with Caesars to build a Las Vegas-style casino in place of

Pauma’s tent facility near San Diego, but needed more

gaming licenses to do so.4

Several lawsuits ensued. By 2009–2010, these suits had

percolated in the district courts for several years, and

culminated in dispositive opinions rendered by our court. See

Colusa II, 618 F.3d at 1084; Rincon, 602 F.3d at 1026

(holding that the State negotiated in bad faith by refusing to

remove a provision from the proposed 2004 Amendment for

15% of Rincon’s net wins, which we declared an

impermissible tax under IGRA). In Colusa II, we held that

the State miscalculated the number of licenses in the common

pool under the 1999 Compact. 618 F.3d at 1080. We found

that the formula in the 1999 Compact allows for a statewide

total of 40,201 licenses, not the 32,151 that the State had

originally calculated. Id. at 1082.

4 For more detail on the unsuccessful deal with Caesars, see Pauma

Band of Luiseno Mission Indians v. Harrah’s Operating Co., No.

D050667, 2009 WL3069578 (Cal. Ct. App. Sept. 28, 2009). In summary,

the Pauma and Rincon tribes are competitors whose casinos are only six

miles apart in San Diego County. Id. at *2. The Rincon tribe had already

paired with Harrah’s in building a Nevada-style casino, and was operating

1600 licenses when their negotiations with the State broke down over the

proposed 2004 amendments. Pauma intended to enter its contract with

Caesars to compete with Rincon, but then Caesars and Harrah’s merged

in 2004. Id. Pauma knew the Rincon’s exclusivity agreement with

Harrah’s would preclude it from building a competing casino and so

Pauma backed out of the Caesars deal. Id. at *3–4. Pauma continued by

negotiating with several other large gaming companies (Hardrock,

Foxwood, etc.), but the economic recession of 2008 struck and no deal

was ever completed. Id. Pauma has never been able to build a larger

casino, and still operates its 1,050 licenses out of a tent facility.

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PAUMA V. STATE OF CALIFORNIA 11

B

Shortly after the district court in Colusa rendered its

decision holding that more licenses existed than the State had

allowed, Pauma filed a complaint asserting eighteen claims

attacking the formation of the 2004 Amendment under

various theories, including mistake and misrepresentation. 

Pauma notes that it has remained at roughly 1,050 licenses

since December 2003 when the State first asserted that the

license pool had been depleted, while two neighboring tribes

operate at least 2,000 gaming devices apiece. Pauma

executed the 2004 Amendment because it needed to have at

least 2,000 licenses in order to secure a viable deal with a Las

Vegas-style operator. But after the putative deals fell

through, Pauma continued paying California the exorbitantly

expensive 2004 Amendment prices for the same machines it

acquired under the 1999 Compact provisions. Under the

original 1999 Compact, Pauma paid $315,000 annually for

the 1,050 machines. Under the 2004 Amendment, Pauma

paid $7.75 million annually. Pauma sought reformation,

injunctive relief, rescission, and restitution.

In April 2010, the United States District Court for the

Southern District of California granted Pauma’s request for

injunctive relief from the annual $7.75 million payments,

permitting Pauma to revert to the 1999 Compact rate. The

State appealed. On the prior appeal, No. 10-55713, we left

the injunction in place but remanded to the district court for

reconsideration of the preliminary injunction factors in light

of recent cases, including Colusa II. On remand, the case was

reassigned to three different district judges before the court

finally ruled on the summary judgment motions, leaving the

injunction in place.

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12 PAUMA V. STATE OF CALIFORNIA

Presently before us is the district court’s summary

judgment ruling in favor of Pauma on its misrepresentation

claim. In light of our ruling in Colusa II, the district court

found the State had misrepresented the number of licenses

available in December 2003 when it told Pauma the pool was

exhausted; in fact, there were 8,050 remaining. As a result,

the district court rescinded the 2004 Amendment, allowed

Pauma to return to the 1999 Compact’s lower rate, and

ordered as specific performance a refund of the difference in

payment that Pauma had made as between the higher and

lower rates for the 1,050 machines (totaling $36,235,147.01). 

The district court also held that the State had waived its

Eleventh Amendment sovereign immunity in a provision in

the 1999 Compact, which the parties had left undisturbed in

the 2004 Amendment. The court further held that the State

was not entitled to a setoff for the profits Pauma made

between 2004 and 2009 because Pauma should have been

able to obtain the 1,050 machines under the correctly

calculated license formula in the 1999 Compact.

The district court entered final judgment in December

2013, but was immediately asked by Pauma to vacate the

order so it could request further relief. Pauma sought a ruling

on two additional claims labeled “bad faith/violation of

IGRA” so that the Tribe would be entitled to reformation

rather than rescission. The district court denied the request as

moot since it would not result in a remedy different from the

one already provided to Pauma, and held it would fail on the

merits in any event. This ruling triggered Pauma’s

mandamus petition, which we denied as premature earlier this

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PAUMA V. STATE OF CALIFORNIA 13

year.5 The State’s appeal and Pauma’s cross-appeal are now

ripe for review.

II

We review a district court’s grant of summary judgment

de novo. Big Lagoon Rancheria v. California, 789 F.3d 947,

952 n.4 (9th Cir. 2015) (en banc). “Summary judgment is

appropriate if there is no genuine issue of material fact and,

even making all reasonable inferences in favor of the

nonmoving party, the moving party is entitled to judgment as

a matter of law.” Rincon, 602 F.3d at 1026. We also review

the following legal determinations de novo: interpretation of

contracts based on the plain meaning, Colusa II, 618 F.3d at

1070; whether negotiations were conducted in good faith

under IGRA, Rincon, 602 F.3d at 1026; and the applicability

of Eleventh Amendment sovereign immunity, Idaho v. Coeur

d’Alene Tribe, 794 F.3d 1039, 1042 (9th Cir. 2015). “General

principles of federal contract law govern the Compacts,

which were entered pursuant to IGRA.” Colusa II, 618 F.3d

at 1073 (citation omitted). We “often look to the . . .

Restatement when deciding questions of federal common

law.” Curtin v. United Airlines, Inc., 275 F.3d 88, 93 n.6

(D.C. Cir. 2001). We may also rely on California contract

law since there is no practical difference between state and

federal law in this area. Colusa II, 618 F.3d at 1073.

5 Pauma’s mandamus petition essentially challenged the district court’s

decision to rule solely on its misrepresentation claim, and refusal to reach

any of the other claims—such as the Tribe’s bad faith claims under IGRA. 

We allowed Pauma to assert such claims in its cross-appeal, and Pauma

has chosen to do so. We address them below.

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14 PAUMA V. STATE OF CALIFORNIA

“We review the district court’s choice of remedy for

abuse of discretion.” Id. at 1082. A misapplication of the

correct legal rule constitutes an abuse of discretion. United

States v. Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009)

(en banc). Otherwise, we must “determine whether the trial

court’s application of the correct legal standard was

(1) illogical, (2) implausible, or (3) without support in

inferences that may be drawn from the facts in the record.” 

Id. at 1262 (internal quotations omitted).

III

The heart of the State’s argument before us focuses on

whether there was a “fact in existence” that it misrepresented

to Pauma during the 2004 negotiations. Thus, we review

whether Colusa II’s holding that 40,201 licenses were

available—meaning 8,050 remained in December 2003 when

the State told Pauma that the license pool had been

depleted—constitutes a “fact in existence” giving rise to

liability under Pauma’s misrepresentation claim. We hold

that, unlike a change in judicial interpretation of a statute or

law, the doctrine of retroactivity does not apply to contracts. 

Once there has been a final judicial interpretation of an

ambiguous contract provision, that is and has always been the

correct interpretation from the document’s inception.

In order to establish its misrepresentation claim, Pauma

must demonstrate: (1) the State made a misrepresentation

about a fact in existence, (2) that was either fraudulent or

material, (3) which induced Pauma to enter into the 2004

Amendment, and (4) Pauma was justified in relying on the

State’s misrepresentation. See Restatement (Second) of

Contracts § 164(1) (1981); see also Addisu v. Fred Meyer,

Inc., 198 F.3d 1130, 1137 (9th Cir. 2000) (adopting the

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PAUMA V. STATE OF CALIFORNIA 15

Restatement definition for misrepresentation). The outcome

of this case hinges on the first prong. “A misrepresentation

is an assertion that is not in accord with the facts” as they

exist at the time the assertion is made. Restatement (Second)

of Contracts § 159 & cmt. c. “Such facts include past events

as well as present circumstances but do not include future

events. An assertion limited to future events . . . may be a

basis of liability for breach of contract, but not of relief for

misrepresentation.” Id. § 159 cmt. c.

Furthermore, “an assertion need not be fraudulent to be a

misrepresentation” so long as “it is material.” Id. § 159

cmt. a; cf. Reliance Fin. Corp. v. Miller, 557 F.2d 674, 680

(9th Cir. 1977) (referring to this version as “innocent

misrepresentation”).6 A misstated fact is “material if it would

be likely to induce a reasonable person to manifest his [or

her] assent” to enter a contract. Restatement (Second) of

Contracts § 162(2). “A misrepresentation induces a party’s

manifestation of assent if it substantially contributes to his [or

her] decision to” enter the contract. Id. § 167. Although a

partymust have justifiably relied upon the misrepresentation,

“the requirement of justification is usually met unless, for

example, the fact to which the misrepresentation relates is of

6 We note that the district court had before it Pauma’s claims for

either innocent/material misrepresentation or fraudulent/negligent

misrepresentation—and the court ruled for Pauma solely on the former. 

Thus, we refuse to consider any of Pauma’s assertions that the State

knowingly acted in bad faith or with any kind of evil intent. The formula

was confusing. We definitively resolved the issue in 2010. Nothing in

our decision in Colusa IIsuggests the State should have known the correct

number of licenses when negotiating with Pauma in 2003–2004, and we

refuse to so hold now. We review only whether innocent

misrepresentation was properly applicable.

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16 PAUMA V. STATE OF CALIFORNIA

only peripheral importance to the transaction . . . .” Id. § 164

cmt. d.

While both parties dispute whether the doctrine of

retroactivity applies, that doctrine is a red herring because we

are dealing with a contract provision. The State argues that

our holding in Colusa II does not apply “retroactively.” In

essence, the State asserts that the district court erred in

granting summary judgment for Pauma because the license

pool did not expand until mid-2009 when a district court first

handed down its ruling in Cachil Dehe Band of Wintun

Indians of the Colusa Indian Community v. California

(“Colusa I”), 629 F. Supp. 2d 1091 (E.D. Cal. 2009). In the

State’s view, the number of available licenses changed when

we handed down Colusa II in 2010. Thus, the State contends

it could not have misrepresented an existing fact when it

denied licenses to tribes beyond a total of 32,151. We reject

this argument.

We find that the term “retroactive” is a misnomer in the

realm of contract interpretation. Once a court has interpreted

an ambiguous contract provision that is and has always been

the correct interpretation from its formation. Although the

cases discussing the retroactivity of judicial decisions

interpreting statutes may be instructive, a contract is

fundamentally different from a statute or a body of law. A

contract is a private agreement formed between two parties to

represent their mutual intent. See Restatement (Second) of

Contracts § 3. Thus, a contract provision has only one true

meaning—what it meant when written—even though the

parties may later dispute the correct interpretation. By

contrast, a statute is enacted by Congress and the

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PAUMA V. STATE OF CALIFORNIA 17

understanding of its provisions may evolve over time, often

through judicial interpretations or legislative amendments.7

“[T]he fundamental goal of contract interpretation is to

give effect to the mutual intent of the parties as it existed at

the time of contracting.” U.S. Cellular Inv. Co. v. GTE

Mobilnet, Inc., 281 F.3d 929, 934 (9th Cir. 2002) (emphasis

added). This fundamental axiom is widely accepted and

uncontested. See, e.g., Colusa II, 618 F.3d at 1073 (holding

the “court gives effect to the mutual intention of the parties as

it existed at the time the contract was executed” (emphasis

added) (internal quotations omitted)); Liberty Nat’l Bank &

Trust Co. v. Bank of Am. Nat’l Trust & Sav. Ass’n, 218 F.2d

831, 840 (10th Cir. 1955) (“[T]he basic rule of universal

acceptation for the ascertainment of [the parties] intention is

for the court, so far as possible, to put itself in the place of the

parties when their minds met upon the terms of the agreement

. . . .”); 11 Williston on Contracts § 31:9 (4th ed. 2015).

When dealing with interpretation of a contract there is no

such thing as a “change in the law”—once a final judicial

decision determines what the contested language supports,

that is it. The State’s argument that Colusa II “changed” the

number of licenses available under the license pool provision

defies logic. As is typical in contract interpretation cases, the

dispute was between the parties’ competing calculations. 

Once we decreed that 40,201 licenses were available under

the formula provision based on a reasonable interpretation of

7 Therefore, the dissent’s reliance on Curtin v. United Airlines, Inc. is

misplaced as it involves the judicial interpretation of a provision of the

WarsawConvention; a legislatively enacted document, similar to a statute,

rather than a contract. See 275 F.3d 88, 96–97 & nn. 16–20 (D.C. Cir.

2001).

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18 PAUMA V. STATE OF CALIFORNIA

the contract language and the intention of the parties at the

time it was formed, we resolved the dispute. Colusa II,

618 F.3d at 1081–82. Thus, the number of licenses never

“changed” as the State asserts.

In Colusa II, we found that the State did not adequately

explain why it had chosen 32,151 for the total available

licenses since “the foundation for this . . . number is at odds

with the plain language of the contract and with an

interpretation of part of the formula that is now agreed upon

by both parties.” Id. at 1076; see also id. at 1078 nn. 9 & 12. 

We calculated the correct number of licenses that “were

authorized for distribution statewide through the license draw

process,” to be 40,201, id. at 1082, and then we turned to the

opinion’s prospective effect on other tribes. We recognized

that “the remedy deprived the state of its right to litigate the

size of the license pool under different facts in other pending

and future cases” because we purposefully “anticipated that

California would be liable for a single number of licenses in

the statewide pool, not separate numbers for separate

litigants based on their respective situations.” Id. at 1084

(emphasis added) (internal quotation marks omitted). In sum,

our interpretation in Colusa II of the 1999 Compact’s license

pool provision is the final word for all tribes, at all times.

The formula for calculating the license pool never

changed—it just took over a decade to reach a final judicial

interpretation which settled a longstanding dispute over the

number of licenses it authorized. Innocent misrepresentation

of a different number does not require a fraudulent or

misleading intent. See Restatement (Second) of Contracts

§ 159 cmt. a. It simply requires a fact, which is material, to

be false. Id. § 159 cmts. a, c. The formula stated in the 1999

Compact is a fact. The number of tribes with and without

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PAUMA V. STATE OF CALIFORNIA 19

Compacts as of the listed date (September 1, 1999) was an

ascertainable, existing fact. See Colusa II, 618 F.3d at 1073. 

The number of licenses each tribe with a Compact had as of

that date was also an existing fact. Id. at 1074. The State had

all of the information it needed to calculate its own formula.8

The State simply miscalculated.

Understandably, the State “expresses a sense of unfairness

engendered by the retrospective application of a new judicial

interpretation of an [existing contract provision]. But the

essence of judicial decisionmaking necessarilyinvolves some

peril to individual expectations.” Morales-Izquierdo v. Dep’t

of Homeland Sec., 600 F.3d 1076, 1090 (9th Cir. 2010)

(internal quotation and alterations omitted). The State could

have sought a declaratory judgment much earlier, but it did

not. The State also could have simply used fixed numerals in

the formula, but it did not. The fact that there was ambiguity

in the formula’s language or that the State interpreted the

total number of licenses in good faith is irrelevant to the

analysis. We interpreted the total number of licenses in the

license pool to be 40,201 based on a reasonable interpretation

of the contract language. Therefore, in December 2003, the

State misrepresented an existing fact to the tribes—including

Pauma—that no further licenses were available when, in fact,

there were 8,050 more licenses under the correct

interpretation of the formula.

8

“[I]t is undisputed that the State’s negotiation team actually drafted

[this provision] in the Compact.” Colusa I, 629 F. Supp. 2d at 1115. As

such, general contract principles also indicate that any ambiguity in “‘the

language of the contract should be interpreted strongly against the party

who caused the uncertainty to exist’ [(i.e., the State drafters)].” Id. at

1113 (quotingBuckley v. Terhune, 441 F.3d 688, 695–96 (9thCir. 2006)).

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20 PAUMA V. STATE OF CALIFORNIA

The State’s remaining arguments regarding the

misrepresentation claim warrant only brief discussion. First,

the State’s argument that the license pool provision was not

material to the 1999 Compacts borders on the incredible. See

Colusa II, 618 F.3d at 1069 (“Central to the Compacts is a

formula to calculate the number of gaming devices California

tribes are permitted to license.”). Second, the State’s

argument that the limited number of licenses did not induce

Pauma to enter the 2004 Amendment is equally absurd,

considering procurement of more licenses (at least 2,000) was

essential to its putative contract with Caesars, dependent on

at least that many devices. Finally, Pauma justifiably relied

on a fact that was entirely within the State’s control (the total

number of available licenses). Pauma has, therefore,

established that no genuine issue of material fact remains as

to its misrepresentation claim, and the district court properly

granted summary judgment.9

IV

After granting summary judgment in favor of Pauma on

its innocent misrepresentation claim, the district court turned

to the appropriate remedy. Since the Compacts include a

limited waiver of sovereign immunity that allows for suit

seeking an equitable remedy, but not one seeking monetary

damages, we must first decide what the correct remedy is. 

Then we determine whether that remedy is barred by the

9 We note that most tribes have already received their licenses under

Colusa II, which approved the district court’s remedy of re-opening the

draw process for the remainder of the licenses. By contrast, Pauma is one

of only five tribes who chose to amend its Compact and thus paid higher

prices for licenses which it should have been able to obtain under the

original 1999 Compact.

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PAUMA V. STATE OF CALIFORNIA 21

Eleventh Amendment or if it falls within the State’s limited

waiver.

A

The district court erred in awarding Pauma $36.2 million

under the guise of “specific performance.” Specific

performance is a remedy associated with breach of contract. 

Restatement (Second) of Contracts § 357; 81A C.J.S. Specific

Performance § 4 (2015) (“[A] cause for specific performance

ordinarily cannot lie until there has been a breach of the

contract.”). “A party who has avoided a contract on the

ground of . . . misrepresentation . . . is entitled to restitution

for any benefit that he has conferred on the other party by

way of part performance or reliance.” Restatement (Second)

of Contracts § 376; 1 Witkin, Summary of California Law,

Contracts § 1022 (10th ed. 2005) (“A person who pays money

under the mistaken belief that he or she is under a duty to do

so may recover it.”). Furthermore, “[s]pecific performance

. . . will not be granted unless the terms of the contract are

sufficiently certain to provide a basis for an appropriate

order.” Restatement (Second) of Contracts § 362.

Where, as here, no breach of a contract has been alleged,

but rather a challenge to its formation—i.e., Pauma would not

have entered into the 2004 Amendment had it known

additional licenses were available at the cheaper 1999

Compact rates—the contract is voidable and the appropriate

remedy is rescission and restitution. See 1 Witkin, Summary

of California Law, Contracts § 307 (10th ed. 2005) (noting

innocentmisrepresentation is grounds for rescission); see also

Reliance Fin. Corp., 557 F.2d at 680 (same); Restatement

(Third) of Restitution §§ 52, 54 (2011); Dan B. Dobbs, Law

of Remedies § 4.1(1) (2d ed. 1993) (“When the contract itself

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22 PAUMA V. STATE OF CALIFORNIA

is unenforceable, restitution is usually the only remedy

available for benefits the plaintiff has conferred upon a

defendant in part performance.” (emphasis in original)); id.

§ 9.2(2) (“A representation by the defendant, if believed by

the plaintiff, would be the equivalent of a mutual mistake for

which rescission would be granted.”); id. § 9.3(1).

Moreover, one cannot specificallyperform something that

is not a term in the contract. Cf. Restatement (Second) of

Contracts § 362. The Compact did not contain a clause for

dealing with overpayments. The sole option for returning

Pauma to the status quo ante was equitable restitution. Id.

§ 376; see Ambassador Hotel Co. v. Wei-Chuan Inv.,

189 F.3d 1017, 1031 (9th Cir. 1999). Thus, the district court

misapplied the law in labeling the remedy specific

performance.

However, in this case, the district court’s error in

mislabeling the remedy does not require reversal. Neither

side disputes the calculation of $36,235,147.01 as the

difference between the higher 2004 Amendment payments

and the lower 1999 Compact’s rates. Rather, the State

challenges only whether it is entitled to a setoff for the profits

Pauma gained from operatingmachines it would not have had

absent the 2004 Amendment, and Pauma now alleges it is

entitled to essentially reform the entire contract under the

procedures outlined in IGRA. Since we reject both

arguments, we affirm the district court’s calculation of the

remedy on the alternative grounds of equitable rescission and

restitution.

Under general contract principles, “[w]hen calculating

restitution, we must offset the Plaintiffs’ award by the value

of any benefits that Plaintiffs received from the [D]efendant

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PAUMA V. STATE OF CALIFORNIA 23

under the contract, so that only the actual, or net, loss is

compensated.” Republic Sav. Bank, F.S.B. v. United States,

584 F.3d 1369, 1377–78 (Fed. Cir. 2009) (internal quotation

omitted); see, e.g., Cal. Fed. Bank v. Matreyek, 8 Cal. App.

4th 125, 134 (1992) (holding restitutionary recovery

inequitable where the bank would be able to retain both a

benefit and a profit); Restatement (Second) of Contracts

§ 384; Dan B. Dobbs, Law of Remedies § 9.3(3) (2d ed.

1993). The State is not entitled to a setoff here because

Pauma would have made the same profits by acquiring the

same number of machines under the 1999 Compact that it

now operates under the 2004 Amendment if the State had not

miscalculated the number of available licenses.

The State argues that, although this would return Pauma

to the status quo ante in theory, in reality it would unjustly

enrich Pauma vis-à-vis the other tribes who were parties to

the 1999 Compact because the other tribes were unable to

obtain “unlimited” machines as Pauma could under the 2004

Amendment and thus did not earn additional profits. 

Essentially, the State argues that Pauma will receive a

windfall of roughly $16 million by sitting on the sidelines

during the Colusa litigation.

However, the State’s argument depends on viewing the

situation holistically, in contravention to general litigation

principles. The district court correctly stated it must deal

solely with the parties before it. See, e.g., Boating Indus.

Ass’ns v. Marshall, 601 F.2d 1376, 1382 n.7 (9th Cir. 1979)

(“Remedy for this injury would depend upon actions of third

parties not before the court in this action.”). Under this view,

as between Pauma and the State, Pauma is not obtaining a

“windfall” because it should never have had to pay the State

the $36.2 million in the first place, and it should have been

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24 PAUMA V. STATE OF CALIFORNIA

able to obtain the same number of licenses (a total of 1,050)

for less money. Thus, the State’s argument— to consider

Pauma’s position in comparison to the other tribes who were

unable to obtain further licenses and the attendant

profits—must fail. The district court correctly held that the

State is not entitled to a setoff.

Pauma’s argument for reformation meets a similar fate. 

On cross-appeal, Pauma requests reformation of the 2004

Amendment—rather than rescission—so that Pauma may

keep the amended contract’s extended term limit (expiring in

2030 instead of 2020) at the more favorable 1999 Compact

price rates. “[H]owever, reformation is proper only in cases

of fraud and [mutual] mistake.” Skinner v. Northop

Grumman Ret. Plan B, 673 F.3d 1162, 1166 (9th Cir. 2012);

see Restatement (Second) of Contracts § 166 (referencing

only fraudulent misrepresentation as giving rise to

reformation as a remedy); Dan B. Dobbs, Law of Remedies

§ 9.5 (2d ed. 1993) (“Reformation is the appropriate remedy

. . . for fraud or mistake in the written expression of the

agreement.”). This case involves innocent misrepresentation,

not fraudulent misrepresentation. Reformation is thus

inappropriate here.

In sum, the district court erred in applying the law of

contractual remedies by awarding Pauma specific

performance rather than ordering rescission and restitution. 

But because neither side challenges the calculation of the

remedy, only whether a setoff should be applied or

reformation ordered as a superior remedy— both of which we

reject—we affirm the district court’s award to Pauma of

$36,235,147.01 under the equitable remedies of rescission

and restitution.

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PAUMA V. STATE OF CALIFORNIA 25

B

Because the State must refund the $36.2 million in

overpayments, we next consider whether the district court

correctly held that the State had waived its Eleventh

Amendment sovereign immunity in this case to permit such

relief.

“[T]he rule has evolved that a suit by private parties

seeking to impose a liability which must be paid from public

funds in the state treasury is barred by the Eleventh

Amendment.” Edelman v. Jordan, 415 U.S. 651, 663 (1974). 

The Supreme Court has extended this bar to suits brought by

Native American tribes even though they are sovereigns in

their own right. See Blatchford v. Native Vill. of Noatak,

501 U.S. 775, 779–82 (1991). In Edelman, the Court made

clear that a state’s sovereign immunity extends even to

equitable judgments, particularly if “the award resembles far

more closely the monetary award against the State itself . . .

than it does the prospective injunctive relief . . . .” 415 U.S.

at 665. The Court specifically rejected an individual’s claims

for “equitable restitution” based on the state’s wrongful

withholding of benefits under a public aid program. Id. at

656, 665. Thus, the Court held only prospective, nonmonetary relief against state officials is exempt from the

Eleventh Amendment bar. Id. at 677.

“However, there are exceptions to this general bar.” N.E.

Med. Servs., Inc. v. Cal. Dep’t Health Care Servs., 712 F.3d

461, 466 (9th Cir. 2013). The Supreme Court discussed one

such exception at length in Edelman—waiver. 415 U.S. at

671–74. Edelman recognized that Congress may abrogate a

states’ sovereign immunity via a clear, express legislative

statement, or a state may enter a “compact” by which the state

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26 PAUMA V. STATE OF CALIFORNIA

expressly and unequivocally waives its own immunity. Id. at

672. “In deciding whether a State has waived its

constitutional protection under the Eleventh Amendment, we

will find waiver only where stated by the most express

language or by such overwhelming implications from the text

as will leave no room for any other reasonable construction.” 

Id. at 673 (internal quotation and alteration omitted).

Here,the State waived its Eleventh Amendment sovereign

immunity through an explicit contractual waiver. The 1999

Compact contains a limited waiver of sovereign immunity on

behalf of both the State and the Tribe, which the 2004

Amendment left undisturbed. It reads in relevant part:

Sec. 9.4. Limited Waiver of Sovereign

Immunity.

(a) In the event that a dispute is to be resolved

in federal court . . . , the State and the Tribe

expressly consent to be sued therein and

waive any immunity therefrom that they may

have provided that:

(1) The dispute is limited solely to issues

arising under this Gaming Compact;

(2) Neither side makes any claim for

monetary damages (that is, only injunctive,

specific performance, including enforcement

of a provision of this Compact requiring

payment of money to one or another of the

parties, or declaratory relief is sought); . . . .

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PAUMA V. STATE OF CALIFORNIA 27

This is an express waiver that falls within the exception to the

Eleventh Amendment delineated in Edelman—but the parties

dispute the scope of the waiver. We must determine whether

the exclusion for monetary damages in Section 9.4(a)(2)

includes authorization to seek the remedy of rescission and

restitution.

We hold that the proper remedy here does not trigger the

exclusion provision, and thus the State waived its sovereign

immunity for Pauma’s misrepresentation claim. We begin by

analyzing the language of the contract itself. See Colusa II,

618 F.3d at 1073. The contractual language establishes a

clear dichotomy between claims for monetary damages—

which are excluded and thus barred by sovereign

immunity—and equitable relief. Although restitution may be

considered a legal or equitable remedy, see Restatement

(Third) of Restitution § 4(1); Dan B. Dobbs, Law of Remedies

§ 4.1(1) (2d ed. 1993), interpreting the contract as a whole

demonstrates that restitution was contemplated by the parties

as a potential remedy for which sovereign immunity was

waived. Thus, we hold that restitution is included in the

waiver “by such overwhelming implications from the text as

will leave no room for any other reasonable construction.” 

Edelman, 415 U.S. at 673 (internal quotation and alteration

omitted).10

10 The district court relied, as Pauma does on appeal, on Bowen v.

Massachusetts, 487 U.S. 879 (1988), for the distinction drawn between

monetary damages awards (meant to compensate for an injury) and

specific monetary relief (meant to reinstate one to his or her original

position). Id. at 893. But Bowen simply reaffirms two steadfast

principles: (1) equitable relief, which may take the form of money, is

different than monetary damages; and (2) when Congress has specifically

provided a waiver of sovereign immunity in a statute that allows for

equitable relief (there, the Administrative Procedure Act (“APA”)), that

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28 PAUMA V. STATE OF CALIFORNIA

“A written contract must be read as a whole and every

part interpreted with reference to the whole, with preference

given to reasonable interpretations.” Wapato Heritage,

L.L.C. v. United States, 637 F.3d 1033, 1039 (9th Cir. 2011)

(internal quotation omitted); see Restatement (Second) of

Contracts § 202(2). Here, reading the contract as a whole, the

present restitutionary order falls well within the waiver.

The waiver applies “provided that . . . [n]either side

makes any claim for monetary damages (that is, only

injunctive, specific performance, including enforcement of a

provision of this Compact requiring payment of money to one

or another of the parties [which must mean either Pauma or

the State], or declaratory relief is sought).” This clause

envisions payment of money to either party, and yet the

Compact does not contain any provisions requiring payment

of money from the State to the Tribe.11If this clause did not

may occasionally involve specific relief in the form of money. However,

those propositions do not answer the contractual interpretation question

presented here.

We have already stated that Bowen does “not implicate Eleventh

Amendment concerns” since it only analyzed the statutory language of the

APA. Native Vill. of Noatak v. Blatchford, 38 F.3d 1505, 1513 (9th Cir.

1994). Furthermore, although Bowen cited approvingly contract cases

awarding specific performance, those cases all dealt with a breach of

contract issue and enforcement of a contract provision to pay

money—neither of which exist in the present case. Consequently, Bowen

sheds light on the current case only to the extent it reinforces our

conclusion that restitution of the money wrongfully paid by Pauma may

still be awarded as an equitable remedy and is not a claim for monetary

damages against the State.

11 The State itself asserts that no provision in the contract required it to

pay Pauma money when arguing that specific performance was the wrong

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PAUMA V. STATE OF CALIFORNIA 29

contemplate the restitutionary remedy ordered by the district

court and affirmed herein, then the provision would be

operative only as to one party, not both. Excluding restitution

as a remedy that the Tribe could seek under this waiver would

render this clause null and void. Cf. 11 Williston on

Contracts § 32:5 (4th ed. 2015) (“An interpretation which

gives effect to all provisions of the contract is preferred to

one which renders part of the writing superfluous, useless or

inexplicable.”). When “that is” is construed to limit waiver

only as to the remedies listed, as urged by the dissent, the

restitution remedy ordered by the district court still falls

within that restrictive interpretation. Thus, the district court

properly held that restitution by the State of overpayments by

the Tribe was included in the waiver.

In sum, the contractual waiver clearly envisions

restitution as falling within its purview, and only actions for

monetary damages or actions not arising from the Compact

itself to be excluded. The proper remedy for Pauma due to

the State’s misrepresentation of the number of licenses

available under the 1999 Compact’s formula is rescission of

the 2004 Amendment and restitution for the overpayments

made. Therefore, the State contractuallywaived to this extent

its Eleventh Amendment sovereign immunity and Pauma was

not barred from bringing its misrepresentation claim seeking

rescission and restitution.12

remedy. That argument cuts against the State here given the language of

the agreement.

12 In any event, California—unlike many states—has chosen to

legislatively enact a broad statutory waiver of sovereign immunity for

claims arising out of violations of IGRA. See Cal. Gov’t Code § 98005;

Hotel Emps., 21 Cal. 4th at 615. Because we find the contractual waiver

to include the restitutionary remedy sought and recovered here, we need

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30 PAUMA V. STATE OF CALIFORNIA

V

On cross-appeal, Pauma asserts the district court erred by

denying summary judgment on the Tribe’s fifth and sixth

claims for relief—styled as bad faith/IGRA violation claims. 

Pauma provides a lengthy and fact-intensive explanation why

it thinks the State acted in bad faith with respect to the

entirety of their course of dealings over the last fifteen years. 

The Tribe relies heavily upon our recent decision in Rincon,

involving a different California tribe, that upheld a finding of

bad faith under IGRA. However, in the process, Pauma

ignores the explicit statutory language of IGRA under which

it seeks relief. The district court held Pauma’s IGRA claims

were moot because rescission of the 2004 Amendment had

already been granted,13judicially estopped as inconsistent

not reach whether the statutory waiver would also apply. We do note,

however, that our ruling is supported by the California Supreme Court,

which upheld the constitutionality ofthe waiver provision contained in the

referendum by the people. Hotel Emps., 21 Cal. 4th at 615.

13 Neither of the parties briefed this issue so we need not reach it, but we

also note the district court’s analysis is supported by our recent en banc

decision in Big Lagoon Rancheria, 789 F.3d at 955 (holding the tribe’s

cross-appeal was moot regarding bad faith claim since the district court

had ruled in the tribe’s favor on other grounds).

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PAUMA V. STATE OF CALIFORNIA 31

with Pauma’s earlier position,14and barred by the plain

language of the IGRA statute. We affirm on the last ground.

The plain language of IGRA does not support Pauma’s

argument. IGRA states that a Native American tribe “shall

request” a state to enter into negotiations for the purposes of

entering a Tribal-State Gaming Compact, and “[u]pon

receiving such a request, the State shall negotiate with the

Indian Tribe in good faith to enter into such a compact.” 

25 U.S.C. § 2710(d)(3)(A) (emphasis added). In order to give

effect to this language, the statute vests federal district courts

with jurisdiction over “any cause of action initiated by an

Indian tribe arising from the failure of a State to enter into

negotiations with the Indian tribe for the purpose of entering

into a Tribal-State compact under paragraph (3) orto conduct

14 Pauma’s claims are not inconsistent, as the district court found. 

Although Pauma did not use the words “bad faith” in the body of its

complaint with respect to these IGRA claims, it relied heavily on Rincon’s

holding that the State’s request for 15% of the tribe’s net wins in its

proposed 2004 Amendment was an impermissible tax under IGRA and

that the State thus negotiated in bad faith when it refused to remove that

provision. Rincon, 602 F.3d at 1024–25, 1036, 1042. We did not express

an opinion as to the validity of the provision for the five tribes, including

Pauma, who successfully negotiated and obtained a 2004 Amendment

because their Compacts “were satisfactory to them” and the tribes freely

entered into the amendments. Id. at 1037 n.17. Since Pauma had the

same provision in its 2004 Amendment that was at issue in Rincon, Pauma

argues that the same result should be applied in its case.

The district court also found that Pauma was requesting different

relief, but in fact Pauma had been requesting “reformation” based on

IGRA claims five and six in the complaint from the beginning. Pauma

merely requested “rescission” and “restitution” in addition, with claim ten

(misrepresentation) providing a basis for such relief. Thus, Pauma’s

claims in its complaint and summary judgment motion are not

inconsistent.

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32 PAUMA V. STATE OF CALIFORNIA

such negotiations in good faith[.]” Id. § 2710(d)(7)(A)(i)

(emphasis added).

The next subsection describes, in detail, the procedure a

tribe must follow if a state does not adhere to these mandates. 

Id. § 2710(d)(7)(B). Specifically, the Native American tribe

must first introduce evidence that “a Tribal-State compact has

not been entered into under paragraph (3),” and “the State did

not respond to the request of the Indian tribe to negotiate such

a compact or did not respond to such request in good faith[.]” 

Id. § 2710(d)(7)(B)(ii)(I), (II) (emphasis added). Then, IGRA

provides a remedy if such an event should occur: “If . . . the

court finds that the State has failed to negotiate in good faith

with the Indian tribe to conclude a Tribal-State compact

governing the conduct of gaming activities, the court shall

order the State and the Indian Tribe to conclude such a

compact within a 60-day period.” Id. § 2710(d)(7)(B)(iii)

(emphasis added). This same section also lists factors a court

may consider when determining whether a State has

negotiated in good faith. Id.

The detailed procedures set forth in IGRA allow for

redress by Native American tribes when a State refuses to

negotiate or negotiates in bad faith for a gaming Compact. 

These procedures, by their own language, simply do not

apply when the State and the Tribe have actually reached a

Compact. See id. § 2710(d)(7)(B)(ii)(I). Rincon does not

hold otherwise. Cf. 602 F.3d at 1026. The Rincon tribe

(Pauma’s nearby competitor in San Diego) also entered into

negotiations with the State in 2003 and 2004—but Rincon

refused to sign an actual amended Compact with the State and

filed suit instead. Id. at 1023, 1026; see also Big Lagoon

Rancheria, 789 F.3d at 951–52; In re Indian Gaming,

331 F.3d at 1110 (holding the State did not negotiate in bad

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PAUMA V. STATE OF CALIFORNIA 33

faith with respect to the 1999 Compact’s revenue provisions,

which the tribe refused to sign). Pauma is thus in a very

different position than the Rincon tribe because it actually

agreed to the 2004 Amendment and did not challenge the

negotiation process under IGRA.

Therefore, the district court correctly concluded: 

“Although [ ] IGRA may allow a court to reform or rescind

an unlawful agreement (which is what Pauma wanted until

now), it does not allow the Court to turn back the clock and

compel re-negotiation of an agreement actually reached ten

years ago, let alone one that has been rescinded and never

would have been negotiated in the first place in light of the

relief the Court has already granted in this case.” The relief

Pauma seeks in its cross-appeal is not available under the

plain statutory language of IGRA, and we affirm the district

court’s denial of Pauma’s summary judgment motion on this

ground.

VI

In conclusion, we hold that once a court’s judgment

interpreting an ambiguous contract provision becomes final,

that is and has always been the correct interpretation from its

inception. As such, the State innocently misrepresented a

material fact when it erroneously informed Pauma the 1999

Compact’s license pool had been depleted based on its

miscalculation of the formula. Since this misrepresentation

induced Pauma to enter into the much more expensive 2004

Amendment, the Tribe is entitled to rescission of the

amendment and restitution for the $36.2 million in

overpayments made to the State. The Eleventh Amendment

does not bar this suit because the State contractually waived

its sovereign immunity for claims arising out of the Compacts

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34 PAUMA V. STATE OF CALIFORNIA

seeking such relief. Finally, Pauma is not entitled on crossappeal to seek redress under IGRA because the plain

language of the statute precludes relief when the Tribe and

the State actually enter into a Compact.15

AFFIRMED. Each party shall bear its own costs.

JARVEY, Chief District Judge, dissenting:

I agree with the majority’s conclusion that courts

determine contracting parties’ intent as of the time the

contract is executed. I disagree, however, that California

committed the tort of misrepresentation by interpreting the

Compact differently than a later court decision. The

provision regarding the number of available licenses in the

Compact was hopelessly ambiguous. California, the

compacting tribes, the district court and this court all

interpreted it differently. That this court’s opinion differed

from that offered by California does not establish that

California made “an assertion that [was] not in accord with

the facts” as they existed at the time the assertion was made.

RESTATEMENT (SECOND) OF CONTRACTS § 159 & cmt. c.

The decision in Colusa II was not the result of any

judicial fact finding. In fact, this court rejected the parties’

15 Pauma makes conclusory references to the claims it advanced in its

mandamus petition, asking the court to vacate the magistrate judge’s order

denying Pauma’s motion to compel discovery and to reassign the case to

a different district court judge based on her handling of the IGRA claims. 

We deny both of these requests as moot in light of our holding foreclosing

further pursuit of Pauma’s claims under IGRA.

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PAUMA V. STATE OF CALIFORNIA 35

extrinsic evidence for contract interpretation purposes and

determined the number of available licenses as a matter of

law. Because extrinsic evidence was rejected and the number

determined as a matter of law, all parties to the Compact were

on equal footing with respect to their ability to interpret this

ambiguous provision. The majority is correct when it notes

that any party could have sued to get more clarity. The tribes

in Colusa II did, but the plaintiff here chose instead to

negotiate for the possibility of receiving more licenses than

have ever been available under the 1999 Compact.1

On the misrepresentation issue, Curtin v. United Airlines,

Inc., 275 F.3d 88 (D.C. Cir. 2001) is analogous and

persuasive. Curtin involved a provision of the Warsaw

Convention (a treaty) that established the compensation to be

paid by a carrier when passengers’ luggage was lost during

international travel. The Warsaw Convention provided for a

payment of $9.07 per pound up to the maximum of a seventy

pound bag, or $635. United Airlines had a practice of paying

the maximum amount ($635) for lost international luggage

rather than weighing the bags and paying the $9.07 price per

pound for the lost luggage. That practice had been

interpreted by some courts as permissible, and by others as

impermissible. Ultimately, the District of Columbia Circuit

Court of Appeals rejected the practice, holding that the

Warsaw Convention did not cap liability at $635 where the

carrier had failed to weigh the bags as required.

In Curtin, passengers who had settled their lost luggage

claims for $635 sued claiming, among other things, that the

 

1

I find it more than ironic that Pauma has received monetary damages

as a result of Colusa II that were denied to the tribes that won that

decision. I find it inequitable.

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36 PAUMA V. STATE OF CALIFORNIA

settlement agreements were procured by United’s

misrepresentation of its obligation under the Warsaw

Convention, as later determined by the Court of Appeals. 

However, the District of Columbia Circuit held that United

did not make a misrepresentation by reasonably interpreting

the Warsaw Convention differently than the later District of

Columbia Court of Appeals decision. This decision is

sensible, intuitive and analogous to what happened in the

matter now before the court. Because I believe that the

State’s interpretation of this ambiguous contractual provision

does not qualify under the common law definition of a

material misrepresentation, I respectfully dissent.

I also do not believe that the State of California waived

sovereign immunity with respect to this claim. The 1999

Compact waives immunity as follows:

Sec. 9.4. Limited Waiver of Sovereign

Immunity.

(a) In the event that a dispute is to be resolved

in federal court . . . , the State and the Tribe

expressly consent to be sued therein and

waive any immunity therefrom that they may

have provided that:

(1) The dispute is limited solely to issues

arising under this Gaming Compact;

(2) Neither side makes any claim for

monetary damages (that is, only injunctive,

specific performance, including enforcement

of a provision of this Compact requiring

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PAUMA V. STATE OF CALIFORNIA 37

payment of money to one or another of the

parties, or declaratory relief is sought); . . . .

I agree with the majority that the remedy of specific

performance is not available in this case. The majority

upholds the award as restitution, concluding that the Compact

waives immunity against claims for restitution because the

Compact waives immunity against claims for “specific

performance, including payment of money to one or another

of the parties.” I disagree with the majority’s reading of the

waiver.

The limited waiver of sovereign immunity is well drafted

and clear. It states that neither side can make a claim for

monetary damages. It then defines the waiver, beginning

with the words “that is.” The phrase “that is” is commonly

thought of as a shorthand version of the phrase “that is to

say.” It is used to preface a more specific delineation of the

preceding contractual language. Here, to further clarify the

limitation of the waiver, the parties stated, “that is, only

injunctive, specific performance, including enforcement of a

provision of this Compact requiring payment of money to one

or another of the parties, or declaratory relief is sought . . . .” 

(emphasis added). The use of the word “only” is routinely

defined to mean alone, solely or exclusively. The waiver’s

applicability is therefore explicitly confined to the

circumstances listed.

The majority infers a waiver of sovereign immunity for

restitution from a canon of contract interpretation that prefers

interpretations that do not render other terms “superfluous,

useless or inexplicable.” It finds that reading the language

“including payment of money to one or another of the

parties” as allowing monetary payment only in the context of

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38 PAUMA V. STATE OF CALIFORNIA

specific performance would render the clause superfluous

because the Compact’s payment provisions run only from

Pauma to the State. But this reading disregards the explicit

text of the clause. The clause makes clear that the parties

intended “specific performance” to include monetary

payments only when the Compact requires them. This

language is the parties’ clear recognition of Bowen v.

Massachusetts, 487 U.S. 879 (1988), which held that a

monetary payment can constitute specific performance when

a contractual clause requires such payment. The fact that the

waiver includes specific performance of payment provisions

does not render it superfluous, useless or inexplicable simply

because those particular obligations run only from Pauma to

the State. It would be helpful in the event of that kind of

breach by Pauma.

The monetary damages awarded here do not qualify as

injunctive, specific performance or declaratory relief. 

Because the law demands that waivers of sovereign immunity

ordinarily derive only from “the most express language” or

“such overwhelming implications from the text as [will]leave

no room for any other reasonable construction,” there can be

no waiver found here. Edelman v. Jordan, 415 U.S. 651, 673

(1974) (citation and internal quotation marks omitted)

(alteration in original). The express language of the

sovereign immunity does not include suits for restitution, and

in fact, explicitly excludes suits for monetary damages

outside the context of specific performance. I find no other

implications from the text, and certainly not overwhelming

implications, of sovereign immunity waiver.

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