NO. 95-452

IN THE SUPREME COURT OF THE STATE OF MONTANA

1996

RICHARD S. LARSON, ENOCH E. RICHWINE, TODD

C. DUPUIS, ROBERT L SHORES, JOHN HERAK,

RODNEY L. SMART, ROLAND B. MCKINLEY,

WILLIAM DOUGLAS BAROCH, MR. and MRS. MARK

GILROY, MARY DELANEY SCHOEPF, VERLIN A. SNOWBERG,

SR., L.L.S. BROWNELL, JENNIFER L. MCGINNIS,

MR. and MRS. GEORGE R. MAHONEY, KATHY J. KORF,

MR. and MRS. ROBERT A. PIERCE, PATRICIA ANNE

EARLEY, CALVIN BROWN, BERTON N. SHULTZ, HAROLD

F. ALEXANDER, MR. and MRS. JAMES W. JONES and

THOMAS M. JONES, SONNY BENSON, WILLIAM N. FREER,

FRED L. GILLEARD, C. DOUGLAS MORIGEAU, MR. and

MRS. RICHARD J. WHEELER, CHARLES S. JENNISON,

Petitioners/Applicants and Appellants,

v.

STATE OF MONTANA, DEPARTMENT OF JUSTICE, GAMBLING

CONTROL DIVISION and its ADMINISTRATOR, JANET JESSUP,

Respondents and Respondents.

APPEAL FROM: District Court of the Twentieth Judicial District,

In and for the County of Lake,

The Honorable Ted 0. Lympus, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Dexter L. Delaney, Brian L. Delaney, Attorneys at

Law, Missoula, Montana

For Respondents:

Hon. Joseph P. Mazurek, Attorney General,

Clay R. Smith, Ass't Attorney General,

Helena, Montana

Filed:

Submitted on Briefs: January 4, 1996

Decided: February 27, 1996
Justice Karla M. Gray delivered the Opinion of the Court.

The appellants in this case (Business Owners) appeal from an

order of the Twentieth Judicial District Court, Lake County,

denying their petition for a writ of mandamus directing the State

of Montana, Department of Justice, Gambling Control Division

(State) to issue gambling licenses and permits to them. We affirm.

The issue on appeal is whether the District Court erred in

denying the Business Owners' petition for a writ of mandamus.

The relevant facts in this case are undisputed. The Business

Owners operate various businesses located within the exterior

boundaries of the Flathead Indian Reservation, which is "Indian

country" as defined in 18 U.S.C. § 1151. In the past, the Business

Owners have been licensed by the State to operate video gambling

machines, which are gambling devices under the Johnson Act, 15

U.S.C. § 1171, and Class III gaming under the Indian Gaming

Regulatory Act (IGRA), 25 U.S.C. § 2703.

In 1993, the United States Attorney for the District of

Montana issued a press release stating that Class III gaming would

no longer be lawful on Indian lands absent a Tribal-State compact

properly executed pursuant to 25 U.S.C. § 2710(d). In May of 1994,

on the basis of the United States Attorney's determination

regarding Class III gaming, the State notified the Business Owners

by letter that it would not process gambling license and permit

applications. In the State's view, the operation of video gambling

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machines on the reservation would be unlawful under the Johnson Act

and IGRA. The Confederated Salish and Kootenai Tribes of the

Flathead Indian Reservation and the State still have not executed

a compact for Class III gaming.

In September of 1994, the Business Owners filed a petition for

a writ of mandamus directing the State to issue the gambling

licenses and permits to them as required by §§ 23-5-176(2) and 23-

5-612(1), MCA. The District Court issued an alternate writ

ordering the State to issue the licenses and permits or to show

cause why it had not done so. Thereafter, the parties agreed to

vacate the show cause hearing; they subsequently submitted the case

for resolution under stipulated facts. The District Court denied

the Business Owners' petition for a writ of mandamus and the

Business Owners appeal.

Did the District Court err in denying the Business

Owners' petition for a writ of mandamus?

Section 27-26-102, MCA, sets forth the two requirements which

must be met by a party seeking a writ of mandamus. The party must

demonstrate both an entitlement to the performance of a clear legal

duty and the absence of a speedy and adequate remedy in the

ordinary course of law. Section 27-26-102, MCA; Franchi v. County

of Jefferson (Mont. 1995), 908 P.2d 210, 212, 52 St.Rep. 1229,

1230. "A negative answer to the first question bars the issuance

of the writ, and, irrespective of the answer to that question, an

affirmative answer to the second, divests the court of authority to

issue it." State ex rel. Chisholm v. District Court (1986), 224

Mont. 441, 443, 731 P.2d 324, 325 (quoting State ex rel. County of

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Musselshell v. District Court (1931), 89 Mont. 531, 534, 300 P.2d

235, 236).

The District Court denied the Business Owners' petition for a

writ of mandamus based on its conclusion that the State did not

have a clear legal duty to issue the gambling licenses and permits.

A district court's denial of a writ of mandamus calls for a

conclusion of law which we review to determine if it is correct.

Franchi, 908 P.2d at 212 (citing Phillips v. City of Livingston

(1994), 268 Mont. 156, 161, 885 P.2d 528, 531).

The Business Owners argue that they qualified for gambling

licenses and permits under the applicable Montana statutes and

administrative rules and, therefore, the State was required by the

mandatory language of §§ 23-5-176 and 23-5-612, MCA, to issue the

licenses and permits. They point out that the State's refusal to

process their applications was based on its interpretation of IGRA,

but that nothing in the Montana statutes allows the State to refuse

to issue licenses and permits on that basis. They contend that the

District Court erred in concluding that the State did not have a

clear legal duty to issue the licenses and permits and, on the

basis of that conclusion, in denying their petition. The Business

Owners also contend that IGRA does apply to them because they are

non-Indians.

The State argues that it does not have a clear legal duty to

issue gambling licenses and permits to the Business Owners because,

absent a Tribal-State compact, Class III gaming on the Flathead

Indian Reservation is unlawful under IGRA. The State argues that

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the Business Owners cannot compel it to issue licenses and permits

for an activity unlawful under federal law.

The resolution of this case requires consideration of the

interplay between state and federal law regarding gambling.

Montana gambling statutes are contained in Title 23, Chapter 5 of

the Montana Code Annotated. Section 23-5-176, MCA, provides in

relevant part:

(1) A person who the department determines is

qualified to receive a license under the provisions of

this chapter may, based on information available to,

required by, or supplied to the department under

department rules, be issued a state gambling license.

(2) Except as provided in subsection (4), the

department shall issue a license unless the department

can demonstrate that the applicant:

(a) is a person whose prior financial or other

activities or criminal record:

iiiii . creates a danger of illegal practices,

methods, or activities in the conduct of gambling or in

the carrying on of the business and financial

arrangements incidental to gambling;

. .

(Emphasis added.) Section 23-5-612(l), MCA, provides that 'I Et1 he

department, upon payment of the fee provided in subsection (2) and

in conformance with rules adopted in this part, shall issue to the

operator an annual permit for an approved video gambling machine."

(Emphasis added.)

On a stand-alone basis, these Montana statutes mandate the

issuance of licenses and permits so long as the applicant is

qualified and pays the appropriate fee, and the State does not

establish one of the statutorily-enumerated bases for denial. The

State argues that it demonstrated a specific, statutorilyauthorized basis for denial of the Business Owners' applications.

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Based on its interpretation that IGRA prohibits the operation of

video gambling machines on the Flathead Indian Reservation, the

State maintains that licensing the Business Owners "creates a

danger of illegal . . . activities in the conduct of gambling .

.'I under § 23-5-176(2) (a) (iii), MCA.

The State misreads the statute. As specifically provided in

5 23-E-176(2) (a), MCA, an application can be denied under (iii)

only where the State demonstrates that the aoolicant's "prior

financial or other activities or criminal record" creates the

danger of the illegal gambling activity. Here, the State's

argument is entirely unrelated to these Business Owners and the

State made no showing that anything in any of the Business Owners'

backgrounds created the danger of illegal gambling. Thus, we

reject the State's contention that § 23-5-176(2)(a) (iii), MCA,

specifically authorized it to refuse to process the Business

Owners' applications.

Notwithstanding our rejection of the State's contention,

however, it is clear that federal legislation specifically

addresses and regulates gambling on Indian reservations. Because

the Business Owners seek to conduct gambling operations on the

Flathead Indian Reservation, these federal statutes must be

considered in conjunction with 55 23-5-176 and 23-5-612, MCA.

In 1951, Congress enacted the Johnson Act, 15 U.S.C. 55 1171-

1178. In pertinent part, the Johnson Act provides that "[iIt shall

be unlawful to manufacture, recondition, repair, sell, transport,

possess, or use any gambling device . . in any possession of the

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United States, within Indian country as defined in section 1151 of

title 18 . .'I 15 U.S.C. § 1175(a). "Indian country" is

defined, insofar as it is relevant here, as "all land within the

limits of any Indian reservation under the jurisdiction of the

United States Government . . . .'I 18 U.S.C. § 1151(a).

In 1988, Congress enacted IGEA, 18 U.S.C. §§ 1166-1168 and 25

U.S.C. §§ 2701-2721. IGRA provides specific exceptions to the

Johnson Act regarding gaming on Indian reservations. IGEA

separates gaming into three classes. See 25 U.S.C. § 2703. Here,

the parties stipulated that only Class III gaming is at issue. See

25 U.S.C. § 2703(g). Class III gaming is unlawful on Indian lands,

which, under IGRA, 25 U.S.C. § 2703(4) (A), is land within the

limits of any Indian reservation, unless three requirements are

met, one of which is the existence of a Tribal-State compact. 25

U.S.C. § 2710(d) (1). No Tribal-State compact exists between the

State and the Confederated Salish and Kootenai Tribes.

State law which conflicts with the purpose and operation of a

federal statute, regulation or policy is preempted by the federal

law. & Cabazon Band of Mission Indians v. Wilson (9th Cir.

1994)) 37 F.3d 430, 433 (citing Crow Tribe of Indians v. Montana

(9th Cir. 1987), 819 F.2d 895, 898, aff'd 484 U.S. 997, 108 S.Ct.

685, 98 L.Ed.2d 683 (1988)). Congress has explicitly stated its

policies and purposes in enacting IGRA. & 25 U.S.C. § 2702. One

such purpose is

to declare that the establishment of independent Federal

regulatory authority for gaming on Indian lands, [and1

the establishment of Federal standards for gaming on

Indian lands . . . are necessary to meet congressional

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concerns regarding gaming and to protect such gaming as

a means of generating tribal revenue.

25 U.S.C. § 2702(3). IGKA establishes a comprehensive regulatory

scheme for gaming on Indian lands. See United Keetoowah Band of

Cherokee Indians v. State of Oklahoma, ex rel. Moss (10th Cir.

1991), 927 F.2d 1170, 1176 (citations omitted). If IGRA does apply

to the Business Owners, then State licensure of Class III gaming

under these facts would frustrate the federal policy underlying

IGPA by licensing the Business Owners pursuant to Montana statutes

to conduct activities prohibited by federal law absent a TribalState compact.

The Business Owners concede that an appropriate federal court

with jurisdiction has yet to rule on the applicability of IGPA to

non-Indians such as themselves and that the issue is outside the

scope of this mandamus case. A ruling by such a court in favor of

the Business Owners could result in the State having a clear legal

duty to issue gambling licenses and permits to the Business Owners.

Absent such a ruling, however, and given the apparent conflict

between Montana licensing statutes and federal statutes regulating

gambling on Indian lands, we conclude that no clear legal duty

exists requiring the State to issue gambling licenses and permits

to the Business Owners.

Issuance of a writ of mandamus is precluded in this case by

the Business Owners' failure to demonstrate entitlement to the

performance of a clear legal duty. See State ex rel. Chisholm, 731

P.2d at 325. We hold, therefore, that the District Court did not

err in denying the Business Owners' petition for a writ of

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mandamus.

Affirmed.

We concur:

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