Source: http://openjurist.org/327/f3d/1019/seneca-cayuga-tribe-of-oklahoma
Timestamp: 2015-07-30 04:22:25
Document Index: 637194447

Matched Legal Cases: ['§ 1171', '§ 2701', '§ 1175', '§ 1171', '§ 2704', '§ 2705', '§ 2703', '§ 2703', '§ 2710', '§ 2703', '§ 2703', '§ 2703', '§ 2710', '§ 2710', '§ 2703', '§ 2703', '§ 2710', '§ 1175', '§ 3282']

327 F3d 1019 Seneca-Cayuga Tribe of Oklahoma | OpenJurist
327 F. 3d 1019 - Seneca-Cayuga Tribe of Oklahoma Home
327 F3d 1019 Seneca-Cayuga Tribe of Oklahoma 327 F.3d 1019
SENECA-CAYUGA TRIBE OF OKLAHOMA; Fort Sill Apache Tribe of Oklahoma; Northern Arapaho Tribe of Wyoming; Diamond Game Enterprises, Inc., Plaintiffs-Appellees,v.NATIONAL INDIAN GAMING COMMISSION; John Ashcroft, Attorney General of the United States; United States Department of Justice; Thomas Scott Woodward, United States Attorney for the Northern District of Oklahoma, Defendants-Appellants.
No. 01-5066.
Edward P. Lazarus (Sandra M. Lee and L. Rachel Helyar with him on the briefs), Akin, Gump, Strauss, Hauer & Feld LLP, Los Angeles, California for Plaintiff-Appellee, Diamond Game Enterprises, Inc.
Jess Green, Ada, Oklahoma, for Plaintiffs-Appellees Northern Arapaho Tribe of Wyoming and Seneca-Cayuga Tribe of Oklahoma; (Andrew W. Baldwin, Lander, Wyoming for Plaintiff-Appellee Northern Arapaho Tribe of Wyoming; Robert E. Prince, Lawton, Oklahoma, for Plaintiff-Appellee Fort Sill Apache Tribe of Oklahoma, with him on the briefs).
Vincent J. Falvo, Jr., United States Department of Justice, Washington, D.C. (Frank J. Marine, Senior Litigation Counsel, Washington, D.C., David E. O'Meila, United States Attorney, Northern District of Oklahoma, and Catherine Depew, Assistant United States Attorney, Northern District of Oklahoma, with him on the briefs), for Defendants-Appellants.
Stephen P. Collette, Long Beach, California, for Amici Curiae National Coalition Against Gambling Expansion, Stand Up For Kansas, and New Mexico Coalition Against Gambling.
Stephen B. Otto, Newport Beach, California, and Richard J. Wilson, Houston, Texas, for Amicus Curiae Cheyenne-Arapaho Gaming Commission.
This case requires us to interpret the Johnson Act, 15 U.S.C. §§ 1171-1178, and the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. §§ 2701-2719. Appellants are the federal agencies and officials who threatened to prosecute three Native American tribes for use of a device called the Magical Irish Instant Bingo Dispenser System, which we will call "the Machine." Appellees are the three tribes, as well as the corporation that manufactured and supplied the Machine.
In response to the threat of prosecution, the appellees filed a complaint in federal district court. Subsequently, the district court granted the appellees' motion for a declaratory judgment stating that the Machine (1) is not an illegal "gambling device" under the Johnson Act; and (2) is a permissible technologic aid to Class II gaming under IGRA. This appeal followed.
Our opinion proceeds in four steps. Part I summarizes the applicable statutory framework. Part II summarizes the background of this dispute. Part III assesses, and rejects, the two threshold arguments raised by appellees: mootness and collateral estoppel. Part IV evaluates the district court's judgment on the merits in two sections. The first section analyzes the relationship between IGRA and the Johnson Act and concludes that if the Machine is properly classified as an IGRA Class II technologic aid, then the Machine is necessarily both authorized by IGRA and protected from Johnson Act scrutiny. The second section, following the D.C. Circuit, concludes that the Machine is indeed an IGRA Class II technologic aid. Accordingly, although our reasoning differs somewhat from the district court, we affirm the district court's decision.
We begin by summarizing the applicable statutory framework. We discuss the Johnson Act and then IGRA.
The Johnson Act, as amended in 1962, makes criminal, both outside and inside "Indian country,"1 the possession, use, sale, or transportation of any "gambling device." 15 U.S.C. § 1175(a). The Johnson Act defines a "gambling device" as any
slot machine ... and other machine or mechanical device (including but not limited to, roulette wheels and similar devices) designed and manufactured primarily for use in connection with gambling, and (A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property.
Id. § 1171(a)(1), (2). Courts have construed the Johnson Act broadly, concluding that the statute's "gambling device" language was enacted to "anticipate the ingeniousness of gambling machine designers" in "separating the public from its money on a large scale," Lion Mfg. Corp. v. Kennedy, 330 F.2d 833, 836-37 (D.C.Cir. 1964), and therefore to cover a wide variety of machines. See James L. Rigelhaupt, Jr., What Constitutes Gambling Device Within Meaning of 15 U.S.C.A. Sec. 1171(a) So as to be Subject to Forfeiture Under Gambling Devices Act of 1962 (15 U.S.C.A. secs. 1171-1178), 83 A.L.R. Fed. 177, 1987 WL 419639 (1987 & Supp.2000) (collecting cases).
Following the Supreme Court's decision in California v. Cabazon Band of Mission Indians, 480 U.S. 202, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987), which "authorized gaming on federally recognized Indian country, Congress enacted the Indian Gaming Regulatory Act ... also known as IGRA." United States v. 162 MegaMania Gambling Devices, 231 F.3d 713, 717 (10th Cir.2000) (internal citations omitted). IGRA "provides a comprehensive regulatory framework for gaming activities on Indian country which seeks to balance the interests of tribal governments, the states, and the federal government." Pueblo of Santa Ana v. Kelly, 104 F.3d 1546, 1548 (10th Cir.1997) (internal quotation marks omitted). Towards that end, IGRA authorized the creation within the United States Interior Department of a three member National Indian Gaming Commission. See 25 U.S.C. § 2704. The NIGC's broad powers include inspecting tribes' books and records, approving tribal-state pacts, levying and collecting civil fines, monitoring and shutting down unauthorized tribal games, and promulgating regulations and guidelines to implement IGRA. See 25 U.S.C. §§ 2705-06, 2713. IGRA divides Native American gaming into three mutually exclusive categories: Classes I, II, and III. 25 U.S.C. § 2703. The three classes differ as to the extent of federal, tribal, and state oversight. See United Keetoowah Band of Cherokee Indians v. Oklahoma, 927 F.2d 1170, 1177 (10th Cir.1991).
Class I gaming includes traditional Native American "social games played in connection with `tribal ceremonies or celebrations.'" Id. (quoting 25 U.S.C. § 2703(6)). These traditional games include "`stick or bone' games, rodeos, and horse races played in conjunction with tribal celebrations, ceremonies, pow wows, or feasts."2 Tribes possess "exclusive jurisdiction" to regulate Class I gaming. Keetoowah, 927 F.2d at 1177 (quoting 25 U.S.C. § 2710(a)(1)) (emphasis supplied).
Class II gaming includes "the game of chance commonly known as bingo (whether or not electronic, computer or other technologic aids are used in connection therewith) ... including (if played in the same location) pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo...." 25 U.S.C. § 2703(7)(A). IGRA excludes from the definition of Class II gaming "electronic or electromechanical facsimiles of any game of chance or slot machines of any kind." Id. at § 2703(7)(B)(ii). Class II gaming may be conducted in Indian country without a tribal-state compact. See id. §§ 2703(7) & 2710(b)(1). Tribes may engage in, or license and regulate, Class II gaming on land within a given tribe's territorial boundaries if three conditions are met: (1) "such Indian gaming is located within a State that permits such gaming for any purpose by any person, organization or entity," (2) "such gaming is not otherwise specifically prohibited on Indian country by Federal law," and (3) "the governing body of the Indian tribe adopts an ordinance or resolution which is approved by the [Chairman of the NIGC]." Id. § 2710(b)(1)(A)-(B). Class II games are "regulated by the [NIGC]." MegaMania, 231 F.3d at 718 (citing 25 U.S.C. § 2710(b)) (emphasis supplied). Congress made no reference in IGRA to the relationship between the Johnson Act's strictures and IGRA's authorization of the use of technologic aids to Class II gaming. Nor has Congress amended the Johnson Act to clarify this relationship.
Class III is a residual category: under IGRA, all gaming activity other than Class I and II gaming is Class III gaming. Id. § 2703(8). Examples of Class III gaming include "any banking card games, including baccarat, chemin de fer, or blackjack (21)," and "electronic or electromechanical facsimiles of any game of chance or slot machines of any kind." Id. § 2703(7)(B)(i)-(ii). IGRA provides that the Johnson Act's prohibitions "shall not apply to any gaming conducted under a [t]ribal-[s]tate compact that" is entered into between "[a]ny Indian tribe having jurisdiction over the Indian lands upon which a Class III gaming activity is being conducted" in "a state in which gambling devices are legal." Id. § 2710(d)(3), (6). Class III gaming authorized by a tribal-state compact is regulated by the given compact. However, Class III gaming not duly authorized may be subject to federal criminal prosecution under the Johnson Act. Thus, regulation of Class III gaming is shared by the tribes, the states, the NIGC, and the Department of Justice.
At the heart of this dispute is whether the game played with the Machine qualifies as the IGRA Class II game of pull-tabs. Therefore, we first describe the game of pull-tabs as played in its traditional, manual form. We then describe the game that is played with the Machine.3
1. Pull-tabs
In the game of pull-tabs as it is typically played, players compete against one another to obtain winning cards from a set of cards, known as a "deal." A typical deal contains up to 100,000 cards and a predetermined number of winning cards. Each individual pull-tab within a deal is a small, two-ply paper card. When the top layer of an individual card is removed, the bottom layer reveals a pattern of symbols indicating whether the player has won a prize. Winning cards are randomly spaced within preprinted, prearranged deals which are stored in boxes or divided into rolls. One deal consists of all of the pull-tabs in a given game that could possibly be purchased. A single game of pull-tabs is complete only when all pull-tabs within a given deal have been sold.
To participate in the game of pull-tabs, a player must purchase an individual tab from a clerk or dispenser. The clerk or dispenser gives the next tab in the preprinted roll to the player. The player must then open the tab to see if it contains a winning combination and present any winning tabs to a gaming hall clerk to obtain the corresponding prize.
2. The Magical Irish Instant Bingo Dispenser System (The Machine)
The Machine is an electro-magnetic dispenser manufactured by plaintiff-appellee Diamond Game Enterprises. Three physically separate components constitute the Machine — the dispenser, the base, and the verifier. The Machine dispenses paper pull-tabs from a roll of a maximum of 7,500 tabs that are part of a larger pull-tab deal. Other rolls within the same deal may be dispensed by another dispenser or a gaming hall clerk.
The Machine is mounted in front of fluorescent lights that illuminate the Machine. When a player inserts money into the Machine and presses the button marked "DISPENSE," the Machine cuts the next pull-tab card from the pre-printed roll within its dispenser compartment and drops the tab into a tray for the player to receive.
The Machine has a "verify" feature that allows players to see the results for a given pull-tab posted on a video display. When this feature is enabled, the Machine's display screen scans a bar code that has been previously printed on the back of a paper tab. After the tab is dispensed, the screen displays the contents of the paper tab on a video screen approximately six seconds later. The video screen depicts a grid that is similar in appearance to that of a slot machine.
Whether or not the "verify" function is enabled, any winning tabs dispensed by the Machine must be presented for in-person inspection by a gaming hall clerk before the player receives payment. The clerk must confirm that the paper pull-tab contains a winning prize, and only then may the clerk award the appropriate (pecuniary) prize.
The game played with the Machine can be a high-stakes, high-speed affair. A winning ticket pays up to $1,199.00 per one-dollar play. When working properly, the Machine completes one play every seven seconds.
3. The Tribes' Use of the Machine
Each of the three appellee tribes — the Seneca-Cayuga Tribe of Oklahoma, the Fort Sill Apache Tribe of Oklahoma, and the Northern Arapaho Tribe of Wyoming — is authorized by the NIGC to conduct gaming operations on its reservation. Each tribe entered into leasing agreements with Diamond Game for use of the Machine, and at least one of the tribes, the Seneca-Cayuga Tribe, used the Machine as part of its gaming operations.
1. The NIGC Advisory Opinion Letter and the Decision of the District Court for the District of Columbia in the Diamond Game case
In January 2000, the three tribes requested an administrative opinion from the NIGC regarding the classification of the Machine under IGRA. The resulting advisory opinion concluded that the game played with the Machine constitutes unauthorized Class III gaming.
In the advisory opinion, the NIGC relied heavily on a decision by the United States District Court for the District of Columbia involving another dispenser made by Diamond Game, the "Lucky Tab II." Like the Machine, the Lucky Tab II dispenses paper pull-tabs from a preprinted roll and displays the contents of the pull-tab on a video screen. However, unlike the Machine, the Lucky Tab II does not permit the user to disable the "verify" feature and is one integrated physical unit. On June 23, 1998, the United States District Court for the District of Columbia held that the Lucky Tab II is an IGRA Class III game not authorized for use by tribes in their gaming operations without specific compacts between the tribes and the states in which their operations are located.4 The NIGC's advisory opinion reasoned that the Lucky Tab II "closely parallels [the Machine]," and that the district court's opinion regarding the Lucky Tab II "provides clear guidance to determine the classification for the [Machine]."5
Following the issuance of the NIGC's opinion, the United States Attorney for the Northern District of Oklahoma threatened to bring an enforcement action against the three tribes for conducting unauthorized use of gambling devices in violation of the Johnson Act. In response to this threat of prosecution and the NIGC's advisory opinion, the tribes, joined by Diamond Game, filed the federal district court complaint in this case. The complaint sought two forms of relief: a declaratory judgment stating that the pull-tabs game as played with the Machine constitutes Class II gaming under IGRA and is not a "gambling device" proscribed by the Johnson Act; and an injunction preventing the federal authorities from taking the threatened enforcement action against the three tribes.
3. The District Court Hearing
On August 30, 2000, the district court conducted an evidentiary hearing, during which each side presented testimony from expert witnesses. During the hearing, the Machine and the Lucky Tab II were displayed. The government argued that the Machine is virtually identical to the Lucky Tab II and that both devices should be classified as Class III devices. In so arguing, the government asserted that "there is no[] ... legal distinction or difference to be drawn" between the Machine and the Lucky Tab II, and that "fundamentally, the Machine and Lucky Tab II games are the same."6
4. The District Courts Rulings
The district court issued three rulings relevant to this appeal: an oral ruling on August 30, 2000, and two rulings on February 20, 2001, one oral, and one in writing.
a. August 30, 2000 Oral Ruling
At the close of the evidentiary hearing, the district court made the following oral findings regarding the classification of the Machine under IGRA:
The [Machine] is simply a dispenser of Pull-Tabs. It's not a Class II gaming device, nor a Johnson Act device. The [Machine] simply takes a deal, which is a roll of Pull-Tabs, which may be put in several rolls, and dispenses them at various locations. This deal could be played without the dispenser. In other words, somebody could sit at a ticket window and sell the Pull-Tabs individually. It wouldn't change the outcome of the game, whether they were sold over-the-counter or put out by the dispenser.
The Pull-Tab tickets are predetermined at the time they are printed, outside the player's presence. When the Pull Tab is purchased, the person purchasing the Pull-Tab is competing with all other persons in the deal. The Pull-Tab is printed before the game is ever played.
The dispenser does not select the order of dispensing the Pull-Tab tickets, that is determined by where they are on the roll. The dispenser does not determine what is printed on the tickets. The dispenser does not accumulate any winnings, it does not make change of any kind, it doesn't contain a random number generator; in other words, there is nothing inside the machine that determines who wins. It's just a technologic aid to dispensing Pull-Tabs. The winner is determined by the ticket being taken to a person, the person looking at the ticket, and then paying if the ticket is a winner.
There is no application of an element of chance in the machine, the dispenser doesn't do that at all. The dispenser doesn't determine who the winner is. That is predetermined when the Pull-Tabs are printed at some other location before the game is ever played.7
b. February 20, 2001 Oral Ruling
On February 20, 2001, the district court made the following oral finding regarding the Johnson Act's applicability to the Machine:
[T]he Court finds that the [Machine] is not a Johnson Act [gambling] device. While the game of pull-tabs itself, by its nature contains an element of chance, no additional element of chance is applied by the [Machine]. The [Machine] merely dispenses preprinted prearranged pull-tabs and contains an additional optional monitor to help make the play of the game more enjoyable. The device cannot change the outcome of the game and a participant cannot win anything without first taking it to a cashier.8
However, in its oral ruling, the district court refused to issue a permanent injunction.9
c. February 20, 2001 Judgment Order
On the same day, the district court entered its declaratory judgment that "[t]he [Machine] is a permissible Class II aid under [IGRA] and that it is not a gam[bl]ing device under the Johnson Act."10 The instant appeal by the government ensued. In the meantime, however, events relevant to this appeal had continued to unfold.
5. The D.C. Circuit Decision in the Diamond Game case and the Switch to Lucky Tab II
On November 3, 2000, the D.C. Circuit Court of Appeals held that the Lucky Tab II is an authorized IGRA Class II technologic aid, reversing the ruling by the United States District Court for the District of Columbia.11 In the wake of the D.C. Circuit's holding and the legal uncertainty surrounding this appeal, appellees stopped using the Machine and transitioned towards exclusive reliance on the Lucky Tab II. By February 2002, none of the tribes were either using, or even still in possession of, a single Machine. The tribes state that they have no present intention to use the Machine in the future, and that they have turned their attention from the Machine to the Lucky Tab II and other pull-tab devices. Diamond Game states that it has ceased both manufacturing and providing the Machine to any tribes, and that, save one Machine it has retained for historical purposes, it no longer possesses any Machines. The government does not dispute these statements.
Before turning to our evaluation of the merits of district court's rulings, we must first resolve two threshold issues raised by the appellees.
Having secured a victory in the D.C. Circuit, the appellees have moved to dismiss this appeal as moot and vacate the district court's declaratory judgment. The appellees argue that the case is moot because they "cannot be prosecuted" by the government.12 The appellees' advocacy on this point may be somewhat half-hearted; at oral argument, counsel for two of the three appellee tribes urged us to reach the merits of this appeal. Nonetheless, because questions of mootness go to our jurisdiction, we are required to address this issue at the outset. City of Erie v. Pap's A.M., 529 U.S. 277, 287, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000).
We review mootness questions de novo. Faustin v. City & County of Denver, 268 F.3d 942, 947 (10th Cir.2001). "Constitutional mootness doctrine is grounded in the Article III requirement that federal courts [may] only decide actual, ongoing cases or controversies." Building and Constr. Dep't v. Rockwell Int'l. Corp., 7 F.3d 1487, 1491 (10th Cir. 1993) (internal citations and quotation marks omitted). However, "the conditions under which a suit will be found constitutionally moot are stringent." Id.
The current status of this appeal does not meet those stringent conditions. Because appellees retain a "legally cognizable interest in the outcome," id., the case is not moot. The appellees assert that their cessation of use of the Machine necessarily means that they can no longer be prosecuted under the Johnson Act. This assertion is incorrect. Affidavits submitted by the appellees establish that the Machines were being supplied by Diamond Game to Native American tribes through at least November 2000, and were being used on certain of the appellee tribes' properties as recently as December 2001. The Johnson Act prohibits the possession, sale, transportation, or use of any gambling device in Indian country. 15 U.S.C. §§ 1175-76. The statute of limitations for Johnson Act prosecutions is five years. See 18 U.S.C. § 3282. Therefore, but for the legal impediment presented by the district court's February 20, 2001 declaratory judgment, the government would appear to have until at least 2006 to initiate a prosecution against the tribes, and until at least 2005 to prosecute Diamond Game.
Two additional factors counsel against dismissing the appeal as moot. First, it is not "absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur." S. Utah Wilderness Alliance v. Norton, 301 F.3d 1217, 1236 n. 17 (10th Cir.2002) (quoting Adarand Constructors, Inc. v. Slater, 528 U.S. 216, 222, 120 S.Ct. 722, 145 L.Ed.2d 650 (2000) (emphasis in original, internal quotation marks omitted)). Here, the plaintiffs/appellees shoulder the "heavy burden of persuading the court that the challenged conduct cannot reasonably be expected to start up again." Adarand, 528 U.S. at 222, 120 S.Ct. 722; see also City of Erie, 529 U.S at 287-88, 120 S.Ct. 1382 (imposing this burden on the party that was the plaintiff below). As appellees concede, it is "technically possible" for the tribes to resume usage of the Machines. Aples' Mot. to Dismiss at 15. Indeed, Diamond Game nowhere represents that it wo