Court Opinion

ID: 1015509
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:34:03.702314+00
Date Added: 2024-06-11T15:12:16.851805
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                               No. 03-4569

UNITED STATES OF AMERICA,

                                                Plaintiff - Appellee,

          versus

GARLAND BENNETT GARRETT, JR.,

                                               Defendant - Appellant.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Wilmington. Terrence W. Boyle,
Chief District Judge. (CR-01-140-BO)

Submitted:   August 25, 2004              Decided:   February 15, 2005

Before WILKINS, Chief Judge, TRAXLER, Circuit Judge, and Roger W.
TITUS, United States District Judge for the District of Maryland,
sitting by designation.

Affirmed by unpublished opinion. Judge Titus wrote the opinion, in
which Chief Judge Wilkins and Judge Traxler joined.

R. Daniel Boyce, BOYCE & ISLEY, P.L.L.C., Raleigh, North Carolina;
William Woodward Webb, Sr., William Woodward Webb, Jr., EDMISTEN &
WEBB LAW FIRM, Raleigh, North Carolina; Anthony Brannon, BRANNON
STRICKLAND, P.L.L.C., Raleigh, North Carolina, for Appellant.
Frank D. Whitney, United States Attorney, Anne M. Hayes, Christine
Witcover Dean, Assistant United States Attorneys, OFFICE OF THE
UNITED STATES ATTORNEY, Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

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TITUS, District Judge:

     Cape Fear Music Company, Inc. (Cape Fear) and the Appellant,

Garland Bennett Garrett, Jr. (Garrett) were indicted by a grand

jury in the United States District Court for the Eastern District

of North Carolina for conducting a gambling business in violation

of 18 U.S.C. §§ 1955 & 2, as well as conspiracy, wire fraud, mail

fraud and money laundering.   Garrett filed two motions to dismiss

the second superseding indictment, which contained 276 counts.

Following denial of his motions, Garrett entered a conditional plea

of guilty to Count Two pursuant to Rule 11(a)(2) of the Federal

Rules of Criminal Procedure, reserving the right to appeal the

denial of his motions to dismiss.      The remaining counts were

dismissed without prejudice pursuant to a written plea agreement,

and Garrett was sentenced to five months of imprisonment, two years

of supervised release, and a $5,000 fine.    Garrett and Cape Fear

were jointly ordered to forfeit $750,000.   Garrett then appealed,

challenging the denial of his motions to dismiss.       Finding no

error, we affirm.

                                I.

     Garrett’s motions to dismiss the second superseding indictment

were based on the grounds that: 1) North Carolina was violating his

equal protection rights enumerated in the Fourteenth Amendment and

the Declaration of Rights of the North Carolina Constitution by

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prosecuting him for the same activities in which Native American

tribes are permitted to engage; and 2) North Carolina’s gaming laws

violate the dormant commerce clause. For the reasons stated on the

record at a hearing held before the district court on September 12,

2002, the district court denied the motions.           J.A. 232.

     Garrett’s arguments below and in this Court stem from various

state and federal laws and regulations which permit gambling to

occur on Native American lands by Native American tribes, see J.A.

102 (Tribal - State Compact Between the Eastern Band of Cherokee

Indians and the State of North Carolina), but deny the same

privilege to non-Native American citizens, such as Garrett.            Thus,

when he provided video gambling games for numerous establishments,

including the Elks Lodge of Wilmington, North Carolina, he was

charged with violations of various gambling laws. Garrett asserts,

and the Government does not deny, that if the same activities

occurred on Native American tribal land and were administered by

Native American tribes or assignees thereof, then those individuals

would not have been charged with a crime.           Gaming is permitted on

Native American lands pursuant to the legal framework set forth in

the Indian Gaming Regulatory Act (IGRA).

     The IGRA permits Class III gaming activities,          see 25 U.S.C.

§   2703(6)-(8)   (2004),     on   Indian   lands    provided   that   five

requirements are met.       25 U.S.C. § 2710(d)(1).      To be lawful the

gaming activities must be

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     (A) authorized by an ordinance or resolution that (i) is
     adopted by the governing body of the Indian tribe having
     jurisdiction over such lands, (ii) meets the requirements
     of subsection (b) of this section, and (iii) is approved
     by the Chairman, (B) located in a State that permits such
     gaming for any purpose by any person, organization, or
     entity, and (C) conducted in conformance with a Tribal-
     State compact entered into by the Indian tribe and the
     State[.]

25   U.S.C.    §   2710(d)(1)(A),       (B),      &   (C).     The    IRGA,   known

colloquially as a “cooperative federalism” statute, contemplates

joint federal and state regulation. See Artichoke Joe’s California

Grand    Casino    v.   Norton,   353      F.3d   712,   715   (9th    Cir.   2003)

(hereinafter “Artichoke Joe’s”).               In this case, the laws of North

Carolina are implicated.

        North Carolina, in accordance with the IGRA, permits gaming by

federally recognized Indian tribes on tribal lands provided that

such gaming is authorized         by   a   Tribal-State      Compact.    N.C. Gen.

§ 71A-8 (2004).         North Carolina facilitates gaming by Native

Americans on tribal lands by specifically granting the Governor the

power and duty “[t]o negotiate and enter into Class III gaming

compacts, and amendments thereto, on behalf of the State consistent

with State law and the [IGRA], as necessary to allow a federally

recognized Indian tribe to operate gaming activities in this State

as permitted under federal law.”               N.C. Gen. § 147-12 (2004).

        In August, 1994, then North Carolina Governor James B. Hunt,

Jr. entered into the Tribal - State Compact between the Eastern

Band of Cherokee Indians and the State of North Carolina.                     J.A.

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100-21. North Carolina, citing the IGRA and acknowledging that the

Eastern Band of Cherokee Indians is a federally recognized Indian

tribe, id. at 101, authorized, subject to various regulations,

Class III gaming, the operation of video gaming devices, and the

administering of raffles.   Id. at 104-15.   The Compact therefore

explicitly permits the Eastern Band of Cherokee Indians to be

purveyors of video poker, while other laws of North Carolina

criminalize these same activities.   See N.C. Gen. Stat. §§ 14-292,

14-295, 14-296, 14-301, 14-302, 14-303, 14-304, 14-305, 14-306.

                               II.

     Garrett argues that North Carolina’s laws permitting Native

American-run gambling on tribal lands, but denying the same to all

other citizens, violates his equal protection rights as guaranteed

by the Fourteenth Amendment, his due process rights as guaranteed

by the Fifth Amendment, the equal protection guarantee in the

Declaration of Rights of the North Carolina Constitution, and the

“dormant” Commerce Clause. Specifically, Garrett argues that it is

unconstitutional that Harrah’s, in business with the Eastern Band

of Cherokee Indians, is immune from North Carolina and federal

laws, while he, in business with, inter alia, the Elks Club, should

be prosecuted under the same laws.   Appellant’s brief at 7.

     Garrett’s assertions are clearly contrary to previous holdings

of the Supreme Court, which have carved-out a legitimate special

                                6
class for Native American gaming preferences due to the unique

historical    relationship      between    the   United    States   and    Native

American nations, as well as constitutional authorization emanating

from the “Indian commerce clause.”               U.S. CONST. ART. I sect. 8.

Thus, following the Supreme Court’s guidance in this area of

jurisprudence, we affirm the district court’s denial of Garrett’s

Motions to Dismiss.

                                      A.

     Garrett argues that North Carolina laws authorizing Native

American gaming violate the Fourteenth Amendment’s guarantee of

equal protection of the laws.        He contends that because the Native

American gaming preferences favor Native Americans based solely on

their race, such laws should be subjected to strict scrutiny.

Garrett acknowledges the Supreme Court’s decision in Morton v.

Mancari,     417   U.S.   535    (1974),    where    the    Court   held     that

“legislation that singles out Indians for particular and special

treatment[]” shall be upheld “where the preference is reasonable

and rationally designed to further Indian self-government,” id. at

554-55, but contends that the Supreme Court’s more recent decision

in Adarand Constructors v. Peña, 515 U.S. 200 (1995) requires a

departure from the application of the rational basis review for

Native American preferences.        In Adarand, the Supreme Court stated

that “all governmental action based on race . . . should be

subjected to detailed judicial inquiry to ensure that the personal

                                      7
right to equal protection of the laws has not been infringed.”             Id.

at 227.   Thus, Garrett argues that the Court’s broad statement in

Adarand means that “Mancari’s days are numbered.”                 Williams v.

Babbitt, 115 F.3d 657, 665 (9th Cir. 1997) (citing Stuart Minor

Benjamin, Equal Protection and the Special Relationship; The Case

of Native Hawaiians, 106 YALE L.J. 537, 567 (1996)).

       The argument that Adarand has changed the level of scrutiny

for Native American preferences has been rejected by other courts.

See Am. Fed’n of Gov. Employees, AFL-CIO v. United States, 330 F.3d

513,   517,   519-21    (D.C.   Cir.   2003)    (hereinafter    “Am   Fed’n”).

Garrett does not attempt distinguish Am. Fed’n, but instead relies

on Williams v. Babbitt, 115 F.3d 657 (9th Cir. 1997) for the

proposition that if the government’s preference does not “relate[]

to native land, tribal or communal status, or culture[]” then the

preference should be subjected to strict scrutiny.                Id. at 664.

Garrett further contends that, unlike Mancari (where the preference

clearly related to self-government, i.e., a statute permitting

hiring    preferences    for    the    Bureau   of   Indian    Affairs),   the

preference in this case is not clearly related to uniquely Indian

issues and should not receive rational basis review.

       Garrett’s reliance on Williams is misplaced.            The same court

that decided Williams subsequently upheld a California gaming

preference for Native Americans, similar to the one at issue in

this case.      Artichoke Joe’s, 353 F.3d 712.                Artichoke Joe’s

                                        8
succinctly   explained   the   differences   between   Williams   and

situations in which gaming preferences are given to Indian tribes.

Because Garrett has relied so heavily upon a decision from our

sister circuit, and the analysis in Artichoke Joe’s is consistent

with Mancari and its progeny, we find it appropriate to quote this

decision at length:

     Plaintiffs’ suggestion that Williams controls the outcome
     of the present case ignores the obvious distinctions
     between an unqualified preference for individual native
     Alaskans [at issue in Williams] and the limited
     preference for tribes reflected in the text of IGRA [at
     issue in this case].      The operative terms of IGRA
     expressly relate only to tribes, not to individual
     Indians. . . .      Further, through IGRA’s compacting
     process, and through its reliance on tribal governments
     and tribal ordinances to regulate class III gaming, the
     statute relates to tribal status and tribal self-
     government. The very nature of a Tribal-State compact is
     political; it is an agreement between an Indian tribe, as
     one sovereign, and a state, as another. . . .
     Additionally, unlike the legislation construed in
     Williams, IGRA pertains only to Indian lands. Like the
     vast majority of statues by which Congress fulfills its
     obligations to the Indian tribes, IGRA regulates
     activities only on Indian lands. . . . Accordingly, IGRA
     falls squarely within the rule of Mancari.       Williams
     continued to recognize that a statue relating to tribal
     self-government, to tribal status, or to Indian lands is
     subject to rational-basis review. IGRA is just such a
     statute, notwithstanding the dictum in Williams that
     doubted whether Congress could give “Indians a complete
     monopoly on the casino industry.”        As our lengthy
     discussion of the statue has made clear, IGRA does not
     give “Indians” a monopoly; it neither relates to
     “Indians” (as distinct from federally recognized tribes)
     nor, itself, creates a monopoly.

Artichoke Joe’s, 353 F.3d 734-35 (internal citations omitted).     We

concur with the Ninth Circuit’s interpretation of Mancari in

relation to Tribal-State Compacts under the IRGA.

                                  9
       Considering this application of Mancari, Garrett’s argument

that the Court’s decision in Adarand requires Native American

gaming preferences to be subjected to strict scrutiny must be

rejected for two reasons.       First, Adarand held that “all racial

classifications . . . must be analyzed by a reviewing court under

strict scrutiny.”      Adarand, 515 U.S. at 227 (emphasis added).

Preferences   given   to   Indian   tribes,   however,    are   not   racial

preferences; they are “political rather than racial in nature.”

Mancari, 417 U.S. at 554 n. 24; see also Rice v. Cayetano, 528 U.S.

495, 519-20 (2000); Artichoke Joe’s, 353 F.3d at 734.           Therefore,

Adarand’s broad statement does not require that the IGRA or the

laws   authorizing    North   Carolina’s   Tribal   -   State   Compact    be

subjected to strict scrutiny. Second, even if we did not recognize

the distinction between racial and political preferences, we find

it difficult to conclude, as Garrett suggests, that Mancari, a case

dealing with Native American preferences, is not more on point than

Adarand.    Therefore, we find the Supreme Court’s discussion in

Agostini v. Felton, 521 U.S. 203 (1997) to be instructive.

       In Agostini, the Supreme Court offered guidance to the lower

federal courts, explaining that the Court “do[es] not hold[] that

other courts should conclude [that the Supreme Court’s] more recent

cases have, by implication, overruled an earlier precedent.”              Id.

at 238.     The Court “reaffirmed that ‘[i]f a precedent of [the

Supreme Court] has direct application in a case, yet appears to

                                    10
rest on reasons rejected in some other line of decision, the Court

of Appeals should follow the case which directly controls, leaving

to [the Supreme Court] the prerogative of overruling its own

decisions.’” Id. (quoting Rodriguez de Quijas v. Shearson/American

Express, Inc., 490 U.S. 477, 484 (1989)).         We find this principle

to be directly implicated in this case and refuse to reject the

reasoning of Mancari by relying on Adarand. See American Greyhound

Racing, Inc. v. Hull, 146 F. Supp. 2d 1012, 1077 (D. Ariz. 2001)

vacated on other grounds 305 F.3d 1015 (9th Cir. 2002).

     Applying   the   rational    basis    standard   for   Indian    tribal

preferences   set   forth   in   Mancari,    we   hold   that   the   gaming

preferences given to the Eastern Band of the Cherokee Indians are

rationally related to a legitimate governmental interest. The laws

creating this preference “promot[e] the economic development of

federally recognized Indian tribes (and thus their members)[.]” Am.

Fed’n, 330 F.3d at 522-23.       The Supreme Court has explicitly held

that this goal constitutes not just a legitimate, but an important

government interest.    See California v. Cabazon Band of Mission

Indians, 480 U.S. 202, 216-17 (1987) (explaining that the goals of

tribal   self-sufficiency   and    overall    economic   development    are

“important federal interests.”).         It also appears undisputed that

gaming operators derive significant profits from their business.

Therefore, gaming preferences for Indian tribes conducted on tribal

land are a rational means of ensuring the economic development of

                                    11
the Eastern Band of Cherokee Indians.          For these reasons, North

Carolina’s State-Tribal Compact and the scheme set forth by the

IGRA easily pass muster under the rational basis standard of

review.

                                   B.

                     Dormant Commerce Clause Claim

      Garrett’s second major attack on his prosecution is premised

on an alleged violation of the commerce clause.             Although the

commerce clause is an enumerated power of Congress to “regulate

Commerce with foreign Nations, and among the several States and

with the Indian Tribes,” U.S. CONST. ART. I, sect. 8, from very

early in this country’s history the Supreme Court has recognized

that this grant of power to Congress necessarily restricts state

action.   See e.g., Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824).

This concept, as alive today as it was in the early 19th century,

see Harper v. Public Service Commission of West Virginia, No. 04-

1444, slip op. at 12 (4th Cir. Jan. 24, 2005) (“[E]ven when

Congress has not acted, the Supreme Court has long recognized that

the Commerce Clause nonetheless divests states of any interest

which unduly burdens interstate commerce.”), has become known as

the   “dormant”   commerce   clause.     The   dormant   commerce   clause

prohibits   states   from    burdening   interstate   commerce   or   from

discriminating against out-of-state business.         See e.g., West Lynn

Creamery, Inc. v. Healy, 512 U.S. 186, 192-94 (1994).

                                   12
     Garrett argues that “there is clearly discrimination on the

face of the laws and treaties of North Carolina” because “Mr.

Garrett, who provided video poker machines to the Elks Club, was

prosecuted [while] Harrah’s, which operates in and through North

Carolina provid[ing] video poker games in interstate commerce and

advertises in interstate commerce, is immune from prosecution by

state and federal law enforcement authorities[.]”        Appellant’s

brief at 36.     We cannot agree that this statement asserts a viable

claim for a violation of the dormant commerce clause.*

     The dormant commerce clause is violated when the laws of a

state    treat    in-state   entities   and   out-of-state   entities

differently.     The Supreme Court has also found a violation of the

dormant commerce clause when state laws were ostensibly applied

     *
       To the extent that Garrett argues that the dormant commerce
clause is violated because Harrah’s operates in numerous states
while he only operates in North Carolina, he misreads prior case
law. The fact that Harrah’s operates and advertises in numerous
states, and has been granted the ability to engage in gaming
activities in North Carolina, does not suggest a violation of the
dormant commerce clause. If Harrah’s were permitted to engage in
gaming only because it operated in numerous states, while those
businesses that operate only in North Carolina were not permitted
to engage in gaming, then perhaps there might be a violation.
First, that is not the situation in this case. Harrah’s is able to
engage in gaming because of North Carolina’s Tribal-State Compact
with the Eastern Band of Cherokee Indians and the agreement between
Harrah’s and the Eastern Band, not because of Harrah’s “interstate”
character.      Second, this would be an unusual type of
discrimination: North Carolina would be discriminating against its
own citizens and in favor of out-of-state businesses. If Garrett’s
dormant commerce clause contention is that North Carolina has
favored an interstate business over his own, simply because it is
an out-of-state, rather than in-state, business, then his argument
must fail.

                                   13
equally, yet the burden on interstate commerce outweighed the

benefits of such a law. For example, the Supreme Court invalidated

a state law requiring a particular type of mud flap on trucks

because it was too burdensome to require truckers transporting

goods in interstate commerce to stop at the state line and change

an accessory on their vehicles.               Bibb v. Navajo Freight Lines,

Inc., 359 U.S. 520 (1959).

       Garrett’s claims are not at all similar to the typical dormant

commerce clause cases.          Cf. Beskind v. Easley, 325 F.3d 506 (4th

Cir. 2003) (North Carolina ABC laws treated in-state manufacturers

of   wine     differently     than   out-of-state   manufacturers     and   thus

violated the dormant commerce clause). In this case, regardless of

whether a citizen or entity lives in North Carolina or in another

state, that person or entity will be prosecuted for a violation of

gambling laws if gambling mechanisms are provided to non-Native

American establishments, but not be prosecuted when the end users

are Native American-run establishments operating on tribal lands.

Thus, there is no unequal treatment vis-à-vis North Carolinians and

residents of other states.           Nor are the North Carolina laws unduly

burdensome on interstate commerce.

       The cases cited by Garrett are inapposite.              Cases such as

Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984) and Beskind, 325

F.3d    506    dealt   with    laws    that    explicitly   treated   in-state

manufacturers differently than their out-of-state counterparts.

                                         14
Such discrimination is not occurring in this case, as both in-state

and out-of-state gambling purveyors are either subjected to, or

exempted from, the laws of North Carolina, depending on their

status or that of their business partners.    They are not subjected

to different laws because of their residence inside or outside of

North   Carolina.   Thus,   Garrett’s   argument   fails   to   state   a

violation of the dormant commerce clause.

     For the aforementioned reasons, we affirm the ruling of the

district court.

                                                                AFFIRMED

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