If you have any questions, please contact NIGC Senior Attorney John Hay at
(202) 632-7003.

Sincerely,
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Sric Shepard
Acting General Counsel

ce: Matthew Heinhold (mheinhold@fertitta.com)


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March 5S, 2013

John Maier

Maier Pfeffer Kim & Geary, LLP
1440 Broadway, Suite 812
Oakland, CA 94612

Re: — Review of transaction documents for North Fork Rancheria of Mono Indians

Dear Mr. Maier:

This letter responds to your request for the National Indian Gaming Commission
Office of General Counsel (*OGC”) to review the First Amended and Restated
Development Agreement dated Fehruary |, 2013, and the First Amended and Restated
Promissory Note dated February 1, 2012 (collectively “the Transaction Documents”),
between the North Fork Rancheria of Meno Indians of California (Tribe} and SC Madera
Development, LLC (Developer). Specifically, you have asked for our opinion regarding
whether the Transaction Documents are a management contract requiring the NIGC
Chairwoman’s review and approval under the Indian Gaming Regulatory Act. You also
requested an opinion regarding whether the Transaction Documents violates IGRA’s
requirement that the Tribe have the sole proprietary interest in its gaming operations.
Afler careful review, it is my opinion that the Transaction Documents are not a
management contract requiring the review and approval of the Chairwoman.
Addilionally, it is my opinion that the Transaction Documents do not grant the Developer
an improper proprietary interest in the gaming activity. However, because the
Transaction Documents are collateral to a management contract, they are subject to
further review by the NIGC. Therefore, as part of that review, you may be required to
revise the terns of the Transaction Documents.

Management Contracts

IGRA provides the NIGC with authority to review and approve gaming-related
contracts and collateral agreements to management! contracts to the extent that they
implicate management. Catskill Development LLC v. Park Place Entertainment Corp.,
No. 06-5860, 2608 U.S. App. LEXIS 21839 at *38 (2TM Cir. October 21, 2008) (“a
collateral agreement is subject to agency approval under 25 C.F.R. § 533.7 only if it
‘provides for management of al! or part of a gaming operation’), Machal dnc, v. Jena
Band of Choctaw indians, 387 F, Supp. 2d 659, 666 (W.D. La. 2005) (“collateral
agreements are subject to approval by the NIGC, but only if that agreement ‘relatefs] to
the gaming activity’’). Aecord. Jena Bund of Choctaw Indians v. Tri-Millennium Corp..

MANION: HEADQUARTERS Mt DW See PIU We nronytton oo 2UUOS lar Tee a4) FOU ae AYES! hen wasine sew

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387 |. Supp. 2d 671. 678 (W.D. La. 2005); United States ex rel. St. Regis Mohawk Tribe
v. President R.C.-St. Regis Management Co., No. 7:02-CV-845, 2005 U.S. Dist. LEXIS
12456, at *3-*4, *9-*10 (N.D.N.Y. June 13, 2005), aff"d on other grounds, 451 F.3d 44
(29 Cir. 2006).

The NIGC has defined the term managemea! contract to mean “any contract,
subcuntract, or collateral agreement between an [ndian tnbe and a contractor or between
a contractor and a subcontractor if such contract or agreement provides for the
management of all or part of a gaming operation.” 25 C.F.R. § 502.15. Collateral
agrecment is defined as “any contract, whether or not in writing, that is related cither
dirce'ly or indirectly, to a management contract, or any rights, duties or obligations
created between a tribe (or any of its members, entities, organizations) and a management
contractor or subcontractor (or any person or entity related to a management contractor or
subcentractor}.” 25 C.F.R. § 502.5.

Although NIGC regulations do not define management, the agency has explained
that the term encompasses activities such as planning, organizing, directing, coordinating,
and controlling. See attached N/GC Bulletin No. 94-5: “Approved Management Contracts
v. Consulting Agreements (Unapproved Management Contracts are Void).” The
definition of primary management official is “any person who has the authority to set up
working policy for the gaming operation.” 25 C.F.R. § 502.19(b)(2). Further,
management employees are “those who formulate and effectuate management policies by
expressing and making operative the decision of their employer.” N.L.R.B. v. Bell
Aerospace Co., 416 U.S. 267, 288 (1974). Whether particular employees are
“managerial” is not controlled by an employee’s job title. Waldo v. M.S.P.B., 19 F. 3d
1395 (Fed. Cir. 1994). Rather, the question must be answered in terms of the employee’s
actua: job responsibilities, authority and relationship to management. /d. At 1399. In
essence, an employee can qualify as management if the employee actually has authority
to take discretionary actions ~ a de jure manager — or recommends discretionary actions
that are implemented by others possessing actual authority to control employer policy a
de facto manager. Id. at 1399 citing N.L.R.B. v. Yeshiva, 444 U.S. 672, 683 (1980).

Ifa contract requires the performance of any management activity with respect to
all or part of the gaming operation, the contract is a management contract within the
meaning of 25 U.S.C. § 2711 and requires the NIGC Chairwoman’s approval.
Management contracts not approved by the Chairman are void. 25 C.F.R. § 533.7; Wells
Farge Bank, N.A. v. Lake of the Torches Economic Dev. Corp,, No. 09-CV-768, 2010
US. idist. LEXIS 1714 at *8-*9 (W.D. Wisc. January 1t, 2010).

Sole Proprietary Interest

Among IGRA’s requirements is thal “the Indian tribe will have the sole
proprietary interest and responsibility for the conduct of any gaming activity.” 25 U.S.C
§ 271 0(b)(2)(A); see also 25 C.F.R. §§ 522.4(h)}(1) and 522.6(c). Proprietary interest
not defined in the IGRA or the NIGC’s implementing regulations. As discussed in Notice
of Violation # 11-02, OGC legal opinions concerning the sole proprietary interest



mandate have focused primarily on three criteria in its analysis of the requirement. The
legal opinions examine: 1) the term of the relationship; 2) the amount of revenue paid to
the third party; and 3) a third party’s right to exercise control over all or any part of the
gaming activity. See also City of Duluth v. Fond du Lac Band of Lake Superior
Chippewa, 830 F. Supp. 2d 712, 723 (D. Minn. 2011), aff'd in pertinent part, 2013 WL.
141725 (8" Cir. Jan. 14, 201 3\(discussing NIGC adjudication of proprietary interest
prov'sion). Accordingly, final agency actions by NIGC and OGC legal opinions have
found an improper proprietary interest in agreements under which a party, other than a
tribe. receives a high Icvel of compensation, for a long period of time, and possesses
some aspect of control. fd. 723-724.

Analysis

On April 22, 2004, the OGC issued a legal advisory opinion that opined that the
original development agreement and promissory note, both dated December 8, 2003,
were not management agreements requiring the approval of the Chairwoman. This
opinion was confirmed by NIGC Attomey John R. Hay by letter dated October 5, 2004.

In addition to ministerial changes, the Amended and Restated Development
Agreement

The Amended and Restated Promissory Note sets the interest rate on any
advauces made prior to the contemplated loan to and any advances made
after the facility loan equal to

The changes instituted by the Transaction Documents do not include any actions
that would constitute management. Additionally, the changes to the financial terms of the
agreements do not individually result in the Developer receiving a proprietary interest in
the gaming activity.

Conclusion

The Transaction Documents do not provide the Devcloper with any management
tights. Therefore, 1t is my opinion that the Transaction Documents are not a management
contract requiring the approval of the Chairwoman. It is also my opinion thal the
Transaction Documents do not violate |GRA’s sole proprietary interest requirement

] anticipate that this letter will be the subject of Freedom of Information Act
(FOL \) requests. Since we believe that some of the information contained herein may fall
within FOIA Exemption 4, which applies to confidential or privileged financial or
commercial information, the release of which could cailse substantial harm, | ask that you
provide me with your vicws regarding release within ten days.