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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ELEM INDIAN COLONY OF POMO

INDIANS,

Plaintiff,

 v.

PACIFIC DEVELOPMENT PARTNERS X,

LLC, et al.,

Defendants. /

No. C 09-1044 CRB

ORDER DENYING LEAVE TO FILE

MOTION FOR RECONSIDERATION

Defendants ask this Court to grant them leave to file a motion for reconsideration. 

Defendants rely on the grounds outlined in Local Rule 7-9(b)(2), which provides that such a

motion for leave may be granted upon a showing of “[t]he emergence of new material facts

or a change of law . . . .” Defendants argue that the Supreme Court’s opinion of April 27,

2010, in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010), dictates that

the arbitrator’s decision be reversed. 

Stolt-Nielsen dealt primarily with the issue of class arbitration where not all parties

have agreed to participate in class arbitration. The Court noted that the parties agreed that

the relevant contract was “silent on whether [it] permit[ted] or preclude[d] class arbitration.” 

Id. at 1770 (alteration in original). The Court went on to conclude that “[t]his stipulation left

no room for an inquiry regarding the parties’ intent, and any inquiry into that settled question

would have been outside the panel’s assigned task.” Id. Defendants rely on this language to

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resurrect their argument regarding the stipulation entered into in this case. Defendants

remind this Court that the parties agreed that the memorandum of understanding (“MOA”)

approved by the Tribe’s executive committee on September 3, 2007, was essentially the same

as the MOA that was executed on the following day. This stipulation, according to

Defendants, forbade the arbitrator from concluding that there were, in fact material

differences between the September 3 and September 4 versions of the MOA. 

However, as noted in this Court’s prior order, this issue need not be reached because

the arbitrator’s decision also rested upon an independent rationale: that the MOA was void

for lack of regulatory approval. Defendants now argue that this independent rationale was

not in fact independent, and that the arbitrator’s factual error equally pollutes both holdings. 

For the reasons that follow, this argument is not persuasive.

Analysis

Defendants argue that the arbitrator’s failure to accept the parties’ stipulation was an

essential component of his conclusion that the MOA was void for regulatory approval, and

that his error therefore could not be harmless. Defendants direct our attention to the Supreme

Court’s admonition in O’Neal v. McAninch, 513 U.S. 432, 438 (1995): “The inquiry cannot

be merely whether there was enough to support the result, apart from the phase affected by

the error. It is rather, even so, whether the error had substantial influence. If so, or if one is

left in grave doubt, the [decision under review] cannot stand.”

First, O’Neal was a habeas case and had nothing whatsoever to do with arbitration. 

Second, even accepting the standard proposed by Defendants, the arbitrator’s decision must

stand, for the alleged error did not have “substantial influence” on the independent holding,

and this court is not left “in grave doubt.”

Given the deferential standard afforded to the decisions of arbitrators, this Court

cannot conclude that the disregarded factual stipulation had any substantive impact

whatsoever on the arbitrator’s decision regarding the lack of regulatory approval. The sole

error identified by Defendants concerns the arbitrator’s understanding of when various drafts

of the MOA were provided to certain members of the Tribe. Defendants do not dispute that a

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variety of drafts of the MOA were in fact produced, and that the final draft was substantially

different from the earlier drafts. In particular, Defendants do not appear to dispute that

“Version 3” of the MOA, which was discussed extensively in the arbitrator’s opinion and is

in this Court’s record at Docket No. 42-2, does in fact differ substantially from the final draft. 

The arbitrator was apparently under the impression that only an early version of the MOA

had been presented to the Tribe on September 2, but the parties had stipulated that this was

not the case. 

The issue of when Version 3 of the MOA, as opposed to the final version, was

presented to the tribe, is irrelevant to the issue of whether the final version needed regulatory

approval. The arbitrator explained in his order that to rely on a contract with an Indian Tribe

with regard to gaming requires, in addition to compliance with the Tribe’s Constitution,

“approval by the [National Indian Gaming Council] if the contract falls within their

guidelines.” Dkt. 42-1, at 6. The arbitrator went on a few pages later to discuss a list of

changes made between Version 3 and the final version, and concluded that “[t]he signed draft

. . . of September 4, 2007 and the document entitled Version 3 (unsigned) are not the same. 

They are dramatically different, not just in verbage [sic], but in obligations imposed and

remedies or benefits received.” Id. at 9. The arbitrator then explained that these substantive

changes, and the question of when and if they are disclosed to the Tribe, reveal “the reasons

for the creation of the National Indian Gaming Commission and IGRA. Whether one agrees

with the philosophy or positions of these entities or not, they represent the controlling law

dealing with recognized Indian Tribes on Indian lands when dealing with gaming issues.” Id.

These prefatory references to the National Indian Gaming Council, and the fact that

some contracts require its approval, lead to the arbitrator’s discussion at the end of his order:

In the Arbitrator’s opinion, the MOA of September 4, 2007, because of the extensive

changes and substantial alterations to the Version 3 MOA it should have received

NIGC approval before it became operative . . . . The signed MOA of September 4,

2009, is invalid and unenforceable according to the Constitution of the Respondents

and to the rules and regulations of the National Indian Gaming Commission.

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Id. at 10 (emphasis added). As reflected here, the arbitrator relied on the series of changes

implemented between Version 3 and the final version to conclude that the final version

“should have received NIGC approval before it became operative.” While Defendants

dispute the issue of when Version 3 was edited, and when it was presented to the Tribe, they

do not dispute that the document entitled “Version 3” and submitted as an exhibit to this

Court is, in fact, different from the final version. 

Defendants’ primary textual argument relies on the following passage: “If the contrary

is true, i.e. Exhibits 10 and 15 were in front of the [Executive Committee] on September 3,

2007 then the Claimants would be correct in asserting the import of Stipulation No. 44 and

Respondent/Tribe’s argument would/should be dismissed.” Id. at 8. Defendants suggest that

this amounts to the arbitrator admitting that, if in fact the final version of the MOA was in

front of the Executive Committee on September 3—which the parties stipulated to—the

Tribe’s case must be dismissed. However, this is not a reasonable interpretation of the

passage. First, the arbitrator wrote only that, the “argument” should be dismissed, not the

entire case. Given that prior pages focused on a different argument—“[w]hether or not the

General Council or its authorized agents approved the ‘final Draft’ . . . according to the

mandates of the Tribe’s Constitution and By Laws”—it is unreasonable to conclude that the

arbitrator believed that the stipulated fact would have undermined his conclusion on the issue

of regulatory approval. Indeed, it is hard to see how the timing of the various versions could

possibly impact whether the final version required regulatory approval. The issue of

regulatory approval concerns the nature of the contract and whether it is the type of contract

that falls withing NIGC’s purview. This analysis is in no way affected by the issue of

whether and when the contract was disclosed to the Tribe. 

Defendants also note that the arbitrator’s preliminary conclusions indicated that he

rejected the regulatory approval argument, and suggest this undermines his later conclusion

to the contrary. But of course this is the virtue of a preliminary conclusion: it can be

changed. The language in the arbitrator’s final order is unambiguous: “[T]he MOA of

September 4, 2007, because of the extensive changes and substantial alterations to the

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Version 3 MOA it should have received NIGC approval before it became operative . . . .” Id.

at 10. It is unavailing to now argue that, before he accepted the argument in a final order, the

arbitrator had preliminarily rejected it.

Next, Defendants once again dispute the award of attorney’s fees. Defendants suggest

that this Court’s order “overlooks controlling law,” and relies instead on a now-overruled

Eleventh Circuit case, Lifecare Int’l, Inc. v. CD Medical, Inc., 68 F.3d 429, 436 (11th Cir.

1995). Defendants in fact refer to Lifecare as the “linchpin” of this Court’s prior order,

despite the fact that the case is cited once, and only in a footnote. Moreover, Lifecare was

cited as authority for a proposition that has been by no means overruled. As the Ninth

Circuit recently stated, an arbitral award may be vacated only if it is “‘completely irrational’

or ‘constitutes manifest disregard of the law.’” Comedy Club, Inc. v. Improv West Assoc.,

553 F.3d 1277, 1288 (9th Cir. 2009). Despite the fact that the arbitrator did not cite the

proper legal authority for his award of attorney’s fees, his award was neither “completely

irrational” or in “manifest disregard of the law.”

As for this Court’s failure to rely on controlling law, Defendants once again fail to cite

any persuasive authority. Defendants first argue that state law cannot support an award of

fees here because “‘the litigated issues involved not basic contractual enforcement

question[s] but issues peculiar to . . . federal law.’” Mot. at 12 (quoting Resolution Trust

Corp. v. Midwest Federal Savings, 36 F.3d 785, 800 (9th Cir. 1993)). However, this is at

heart a contract claim. Defendants initiated this suit for breach of contract, and in fact they

dispute that federal law intervenes to preclude their claim. The contract at issue adopts

California law, which in turn supports an award of fees here. See Lafarge Conseils Et

Etudes, S.A. v. Kaiser Cement & Gypsum Corp, 791 F.2d 1334 (9th Cir. 1986). In fact, the

exception cited in Resolution Trust has been overruled by the Supreme Court. Resolution

Trust cited In re: Fabian as authority for the exception, and Fabian had confined the

exception to issues of federal bankruptcy law. This case was specifically overruled by the

Supreme Court. See Travelers Cas. and Sur. Co. of America v. Pac. Gas & Elec. Co., 549

U.S. 443, 451-52 (2007). There is no authority for proposition that, despite the contract’s

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adoption California law, the presence of a federal issue precludes an award of attorney’s fees

under state law.

Defendants also contend that “the Ninth Circuit has held that Cal. Civ. Code § 1717 is

preempted by federal law governing labor arbitration agreements.” Mot. at 12. While this is

true, this case does not concern a labor arbitration agreement. Defendants suggest that such a

holding “is logically extended to preemption of § 1717 under the FAA as well.” Id.

Defendants neglect to note this Court’s prior citation to Lafarge, an FAA case that awarded

fees under § 1717. If indeed the FAA preempted § 1717, Lafarge could not have been

decided as it was.

Finally, Defendants contend that because Plaintiff failed to ask for fees at the outset of

arbitration, it waived its opportunity to obtain them. Defendants cite a series of cases, but

none supports their position. For example, U.S. ex rel. Leno v. Summit Const. Co, 892 F.2d

788 (9th Cir. 1989), did not concern a pure failure to request attorney’s fees. On the

contrary, the party in that case failed to establish in the trial court an appropriate basis for

jurisdiction. Because the party had only argued for jurisdiction under the Miller Act, which

does not permit an award of fees, the Circuit Court affirmed the district court’s decision not

to award fees. Also, as for Port of Stockton v. Western Bulk Carrier KS, 371 F.3d 1119,

1121-22 (9th Cir. 2004), that case concerned a failure to ask for fees before judgment was

entered. 

While Defendant is correct that Plaintiff did not ask for an award for attorney’s fees in

its pleadings, it certainly did request fees once it prevailed. At that point, the arbitrator

awarded them. See Dkt. 42-5 at 16. Defendants have not cited any law to support the

conclusion that a party to arbitration must submit a request for fees in pleadings or other

preliminary paperwork. The contract in conjunction with California law entitled the Tribe to

an award of fees, and through its “Request For Modification of Arbitration Award to Include

Specific Award of Attorneys’ Fees,” Plaintiff submitted the issue to the arbitrator. While

Defendants are quite right that the arbitrator awarded fees on a flawed theory, and that he

specifically rejected the theory this Court relies upon, it remains the fact that the award of

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fees was not contrary to law. His decision was neither “completely irrational” nor did it

constitute “manifest disregard of the law.” See Comedy Club, 553 F.3d at 1290. On the

contrary, the arbitrator accidentally provided for a lawful result. Defendants once again butt

their heads against the standard of review: it is simply not enough to point out mistakes made

by the arbitrator. 

Because Defendants’ arguments were sufficiently addressed in the prior order, and

they raise no substantial new arguments, their motion is DENIED.

IT IS SO ORDERED.

Dated: June 29, 2010 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

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