Court Opinion

ID: 185291
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:30:14+00
Date Added: 2024-06-11T17:26:14.631063
License: Public Domain

230 F.3d 365 (D.C. Cir. 2000)
Diamond Game Enterprises, Incorporated and The Cheyenne and Arapaho Tribes of Oklahoma Gaming Commission, on behalf of the Cheyenne and Arapaho Tribes of Oklahoma, Appellantsv.Janet Reno, Attorney General, et al.,Appellees
Nos. 98-5516 & 99-5345
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 7, 2000Decided November 3, 2000

Appeals from the United States District Court for the District of Columbia(No.  97cv00452)
James E. Townsend argued the cause for appellants.  With  him on the briefs were David W. McElroy, Munford Page  Hall, II, Virginia W. Boylan and Stephen A. Lenske.  Philip  Baker-Shenk entered an appearance.
Leander Bergen, Geoffrey M. Standing Bear and Andrew  W. Baldwin were on the brief for amici Pueblo of San Juan,  et al.
John T. Stahr, Attorney, U.S. Department of Justice, argued the cause for the Federal appellees and Jonathan A.  Glogau, Special Counsel, State of Florida, argued the cause  for the State appellees.  With them on the joint brief were  Lois J. Schiffer, Assistant Attorney General, U.S. Department of Justice, David C. Shilton and Edward J. Passarelli,  Attorneys, and Sara J. Drake, Supervising Deputy Attorney  General, State of California.  Jared A. Goldstein, Attorney,  U.S. Department of Justice, entered an appearance.
Before:  Ginsburg, Randolph and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Tatel.
Tatel, Circuit Judge:

1
This case requires us to determine  whether a gambling machine known as the Lucky Tab II, an  electromechanical device that dispenses paper pull-tabs and  then displays their contents on a video monitor, should be  classified under the Indian Gaming Regulatory Act as a Class  II "aid" or a Class III "facsimile."  The Act prohibits Indian  tribes from operating Class III facsimiles without first negotiating a compact with the state.  Applying the statute's plain  language, guided by our only relevant precedent, Cabazon  Band of Mission Indians v. NIGC, 14 F.3d 633 (D.C. Cir.  1994), and proceeding without any views from the agency  charged with the Act's implementation, we conclude that the  Lucky Tab II is a Class II aid.

2
* The Indian Gaming Regulatory Act of 1988 ("IGRA"), 25  U.S.C. § 2701-19, regulates gambling operations run by Indian tribes.  The Act's purpose is 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."  25 U.S.C. § 2702(1).

3
The Act divides Indian gaming into three classes, each  requiring a different level of authorization.  Class I gaming  consists of social games played solely for prizes of minimal  value as well as traditional forms of Indian gaming.  See 25  U.S.C. § 2703(6).  Indian tribes may operate Class I games  as they wish.  See 25 U.S.C. § 2710(a)(1).

4
Class II gaming includes bingo, and if conducted in the  same hall as bingo, it also includes lotto, punch boards, and  tip jars, as well as pull-tabs, the game at issue here.  See 25  U.S.C. § 2703(7)(A).  In language central to the dispute in  this case, the Act allows the use of "electronic, computer, or  other technologic aids" in connection with Class II games, 25  U.S.C. § 2703 (7)(A)(i), but prohibits the use of "[e]lectronic  or electromechanical facsimiles of any game of chance." 25  U.S.C. § 2703 (7)(B)(ii).  Tribes may conduct Class II gaming  if the state in which they are located permits such forms of  gambling and if the governing body of the tribe adopts a  gaming ordinance that is then approved by the Chairman of  the National Indian Gaming Commission, the agency created  by Congress to implement IGRA.  See 25 U.S.C. §§ 2710(b),  2704.

5
Class III gaming includes all gambling not covered by  either Class I or Class II, including "facsimiles" of Class II  devices.  See 25 U.S.C. § 2703(8).  In order to conduct Class  III operations, tribes must obtain state approval through  negotiation of a tribal-state compact.  See 25 U.S.C.  § 2710(d)(1).

6
Commission regulations define Class II aids and Class III  facsimiles.  An aid is "a device ... that when used ... [i]s  not a game of chance but merely assists a player or the  playing of a game [and] is readily distinguishable from the  playing of a game of chance on an electronic or electromechanical facsimile."  25 C.F.R. § 502.7.  A facsimile is "any  gambling device as defined in [the Johnson Act]."  25 C.F.R.  § 502.8.  Predating IGRA by more than 30 years, the Johnson Act prohibits the use of gambling devices on federal land, in interstate commerce, and in "Indian country." See 15  U.S.C. §§ 1171-78 (1953).  Both the Commission's regulations and this Court have interpreted IGRA as limiting the  Johnson Act prohibition to devices that are neither Class II  games approved by the Commission nor Class III games  covered by tribal-state compacts.  See Cabazon, 14 F.3d at  635, n.3 (noting that IGRA repealed the Johnson Act with  regard to Class III devices subject to a tribal-state compact  but that there is no other repeal of the Johnson Act in IGRA,  implying that Class II aids, permitted under IGRA, do not  run afoul of the Johnson Act).

7
This case concerns a game known as pull-tabs.  A small,  two-ply paper card, a pull-tab bears symbols and patterns  similar to tic-tac-toe that appear when players peel off the  pull-tab's top layer.  The pattern of the symbols determines  whether the player wins a prize.  In the traditional pull-tabs  game, bingo hall clerks sell pull-tabs from counters or mobile  carts, and winners present the tabs to either clerks or cashiers to collect prizes.  Pull-tabs are sold from large pools  known as "deals."  Containing anywhere from 1200 to 100,000  pull-tabs, deals have a fixed number of winners and losers.

8
At issue in this case is the proper classification of a  gambling device known as the Lucky Tab II, an electromechanical dispenser of paper pull-tabs.  The machine dispenses  pull-tabs from a roll containing approximately 7500 tabs.About 100 rolls comprise a deal, within which winning pulltabs are randomly distributed.  The machine cuts the pull-tab  from the roll and drops it into a tray.  A bar code scanner  inside the machine automatically reads the tab and then  displays its contents on a video screen.  A placard on the  machine informs players that "[v]ideo images may vary from  actual images on pull tabs.  Each tab must be opened to  verify."  To collect prizes, players must present the actual  winning tab to a clerk.  In many bingo halls, players purchase pull-tabs either from a Lucky Tab II or from clerks;  in  such cases, machines and clerks cut pull-tabs from rolls that  are part of the same deal.

9
In 1994, the Kickapoo Traditional Tribe of Texas and  Diamond Game Enterprises, the manufacturer of the Lucky  Tab II, asked the Commission to classify the machine as a  Class II aid.  Two years passed without Commission action.In August 1996, the Kickapoo Tribe began operating approximately 100 Lucky Tab II machines.  At this point, the record  becomes complicated and, to say the least, confusing.  As far  as we can tell, the following events of significance to this case  transpired:  The Commission's Director of Enforcement advised the Tribe that the machines were Class III gambling  devices that could only be operated pursuant to a tribal-state  compact.  See Diamond Game Enterprises, Inc. v. Reno, 9 F.  Supp. 2d 13, 15 (D.D.C. 1998).  Notwithstanding the Director's action, the members of the Commission were apparently divided over the proper classification of the Lucky Tab  II, some thinking it an aid and others a facsimile.  Because of  this disagreement, the Commission sought advice from the  Department of Justice, but DOJ lawyers were themselves  divided over the proper classification of the machine.  See  Memorandum from Deputy Assistant Attorney General Richard Shiffrin to Associate Deputy Attorney General Seth P.  Waxman, at 1 (June 13, 1996) (noting that the Office of Tribal  Justice and the Criminal Division had reached opposite conclusions on the appropriate classification of the Lucky Tab  II--the former concluding that it falls under Class II and the  latter concluding that it belongs in Class III).  The Commission never formally responded to the request to classify the  Lucky Tab II.

10
According to the Tribe and Diamond Game, certain members of the Commission recommended that the Tribe and the  company file a declaratory judgment action in federal court to  resolve the issue.  Acting on that advice, they filed this action  in the U.S. District Court for the District of Columbia seeking, among other things, a declaratory judgment that the  machine qualifies as a Class II aid.  The Cheyenne and  Arapaho Tribes of Oklahoma intervened as plaintiffs.  Alabama, California, and Florida intervened as defendants.

11
The parties filed cross motions for summary judgment.Finding that the Lucky Tab II "performs all the functions  that a player of the traditional pull-tab game would have  performed," the district court found the machine to be a Class  III facsimile and granted summary judgment to the government.  See Diamond Game, 9 F. Supp. 2d at 20.  Subsequently, Diamond Game and the Tribes filed a Rule 60(b)  motion, claiming that the company had made technical  changes to the Lucky Tab II.  Finding that the modifications  were not new evidence, the district court denied the motion.

II

12
Unlike the legal issues presented in this case, the policy  questions are both interesting and challenging.  In determining the proper classification of the Lucky Tab II, how do we  further Congress' objective of allowing Indian tribes to use  gaming as a means of "promoting tribal economic development, self-sufficiency, and strong tribal governments," 25  U.S.C. § 2702(1), while at the same time "shield[ing] [Indian  tribes] from organized crime and other corrupting influences," 25 U.S.C. § 2702(2)?  Will the Lucky Tab II enable  tribes to "take advantage of modern methods of conducting  class II games"?  S. Rep. No. 100-446, at 9 (1988).  Or does  the machine increase the risk of corruption or excessive  gambling losses, concerns that government counsel told us at  oral argument require its classification as a Class III device? To resolve such issues, Congress created the National Indian  Gaming Commission, headed by a Chair appointed by the  President and confirmed by the Senate presumably for his or  her expertise on Indian gaming.  Yet whether because of  bureaucratic gridlock or, as the tribes allege, because of  congressional interference, we have no idea what the Commission thinks about the policy questions presented by the  Lucky Tab II.  Not only does this leave us with no agency  position to which we might defer, see Chevron U.S.A. v.  Natural Resources Defense Council, Inc., 467 U.S. 837, 844  (1984) ("[A] court may not substitute its own construction of a  statutory provision for a reasonable interpretation made by  the administrator of an agency"), but the Commission's IGRA regulations provide no assistance in interpreting the statute. Boiled down to their essence, the regulations tell us little  more than that a Class II aid is something that is not a Class  III facsimile.  We mention this not to escape our duty to  decide this case--to the contrary, because we have jurisdiction, we must determine how the Lucky Tab II should be  classified--but to highlight the fact that we have no choice  but to proceed without the benefit of a Commission position, a  situation we expect Congress neither anticipated nor would  appreciate.  That said, we turn to the parties' arguments  about the classification of the Lucky Tab II.  See Everett v.  United States, 158 F.3d 1364, 1367 (D.C. Cir. 1998) ("We  review a grant of summary judgment de novo.").

13
Diamond Game and the Tribes contend that the Lucky Tab  II acts as a permitted "electronic aid" to the Class II game of  pull-tabs.  They emphasize that the machine's operation depends entirely on pre-printed paper pull-tabs that can be (and  in fact are) played without the mechanical dispenser.  The  Lucky Tab II, in other words, cannot function without rolls of  paper pull-tabs.  The Tribes also emphasize that despite the  fact that the Lucky Tab II presents a video image of the  contents of the pull-tabs it dispenses, the machine does not  give the player the final word on the game;  players must still  peel off the top layer to verify its contents and present it to a  clerk to receive their winnings.  For all of these reasons, they  argue, the Lucky Tab II cannot be considered a facsimile of  the paper game of pull-tabs.

14
According to the government, because the machine mirrors  the traditional game played by purchasing cards from clerks,  it is a Class III facsimile, not a Class II aid.  The government  embraces the district court's description of the Lucky Tab II:"When the participant plays the Lucky Tab II, she is not  playing the pull-tabs inside the machine;  she is engaging the  machine that replicates the functions of the traditional pulltab game." Diamond Game, 9 F. Supp. 2d at 13, 20.  As to  the possibility that the information on the video screen might  be inaccurate, the government says mistakes are rare and for  all practical purposes, the Lucky Tab II is a duplicate of the  paper version.

15
Both sides claim support from Cabazon Band of Mission  Indians v. NIGC, 14 F.3d 633 (D.C. Cir. 1994).  There, we  held that a video pull-tabs game was a "computerized version" of pull-tabs and therefore a Class III facsimile.  The  machine "randomly selects a card for the gambler, pulls the  tab at the gambler's direction, and displays the result on the  screen.  The computer version, like the paper version, has a  fixed number of winning cards in each deal." Cabazon, 14 F.3d at 635.  Finding that video pull-tabs "exactly replicate[s]" the game of pull-tabs in computer form, Cabazon  concluded that it amounted to a facsimile of the game.  See  id.;  see also Sycuan Band of Mission Indians v. Roache, 54 F.3d 535, 541-42 (9th Cir. 1994) (holding that a self-contained  unit containing a computer linked to a video monitor and a  printer constitutes an electronic facsimile of pull-tabs).

16
We think the Lucky Tab II is quite different from the  machine at issue in Cabazon. To begin with, the Lucky Tab  II is not a "computerized version" of pull-tabs.  Although the  Lucky Tab II has a video screen, the screen merely displays  the contents of a paper pull-tab.  Instead of using a computer  to select patterns, the Lucky Tab II actually cuts tabs from  paper rolls and dispenses them to players.  In other words,  the game is in the paper rolls, not, as in the case of the  Cabazon machine, in a computer.  Indeed, players using the  Lucky Tab II often play a deal simultaneously with other  players in the same hall who have chosen to purchase pull tabs from clerks.  For players using the Lucky Tab II, the  machine functions as an aid--it "helps or supports," or "assists" the paper game of pull-tabs.  Webster's Third New  International Dictionary 44 (1993).  Without the paper rolls,  the machine has no gaming function at all.  It is, in essence,  little more than a high-tech dealer.  Viewed this way, the  game played with the Lucky Tab II is not a facsimile of paper  pull-tabs, it is paper pull-tabs.

17
Another difference between the Lucky Tab II and the video  machine at issue in Cabazon reinforces our belief that the  Lucky Tab II should be classified as a Class II aid.  The Cabazon machine plays the game of pull-tabs in its entirety,  dispensing receipts for players to redeem winnings.  By  contrast, the Lucky Tab II dispenses actual paper pull-tabs  that players must peel and display to a clerk before they can  obtain prizes.  Although the machine's scanner apparently  commits few errors when reading paper pull-tabs, the fact  remains that unlike the Cabazon machine, the Lucky Tab II  is technically not final.  It is, in other words, an aid to the  game of pull-tabs.

18
Notwithstanding the differences between the Lucky Tab II  and the machine at issue in Cabazon, the government insists  that the Lucky Tab II is a Class III device.  At oral  argument, the government even asserted that removing the  video screen would not convert the Lucky Tab II into a Class  II aid.  Asked what in the government's view would be an  aid, counsel pointed us to an electronic scanner called the  "Tab Force Validation System."  As we understand this  device, after a clerk dispenses a paper pull-tab, instead of  peeling off the top layer, the player inserts the pull-tab into  the machine, which scans the bar code and displays the  results on a video screen.  The Commission has issued advisory opinions classifying the Tab Force and other similar  machines as Class II aids, concluding that the systems "simply read the pull-tabs and display whether or not they are  winners....  [They] cannot change the outcome of the  game."  See NIGC Advisory Opinion, at 2 (June 8, 1998).

19
We see no principled difference between the Tab Force and  the Lucky Tab II.  Both devices electronically "read" paper  pull-tabs and display their contents on a screen, and neither  can "change the outcome of the game."  Unlike the machine  involved in Cabazon, neither contains an internal computer  that generates the game.  Rather, both machines facilitate  the playing of paper pull-tabs. They are thus Class II aids.

20
The government makes two additional arguments in support of its position that the Lucky Tab II is a Class III  facsimile.  First, like the district court, it relies on language  from a Senate Indian Affairs Committee report describing a  Class II aid as a device that enables tribes to "take advantage  of modern methods of conducting class II games" by, for example, "join[ing] with other tribes to coordinate their class  II operations and thereby enhance the potential of increasing  revenues."  S. Rep. No. 100-446, at 9 (1988).  Class II aids  are thus limited to devices that "merely broaden the potential  participation levels and [are] readily distinguishable from ...  electronic facsimiles in which a single participant plays a  game with or against a machine rather than with or against  other players." Id.  Unlike computers, cables, or telephone  lines that connect bingo games on different reservations-examples the Senate Report gives of aids that expand participation--the Lucky Tab II, the government argues, neither  increases participation levels nor enhances competition among  players.  Second, the government claims that the Lucky Tab  II makes it easier for players to play pull-tabs, thus increasing the potential for players to "lose the rent money."

21
These statutory interpretations, resting as they do on the  policy underlying IGRA, are interesting and might even be  worthy of Chevron two deference had they been offered by  the Commission.  But they come only from appellate counsel--indeed the "lose-the-rent" argument surfaced for the  first time at oral argument. Moreover, nothing in the Senate  Report suggests that an electronic device must link players  on different reservations to qualify as a Class II aid.  Accordingly, because of the similarities between the Lucky Tab II  and the Tab Force Validation System, which the Commission  has found to be a Class II aid, and because of the differences  between the Lucky Tab II and the Class III device at issue in  Cabazon, we reverse the district court and remand with  instructions to enter summary judgment for appellants.  In  view of this disposition, we have no need to address the  district court's denial of the Rule 60(b) motion.

So ordered