Court Opinion

ID: 3039140
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:00:09.045765+00
Date Added: 2024-06-11T10:53:06.036218
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

STATE OF IDAHO; IDAHO STATE             
LOTTERY,
                  Defendants-cross-
               plaintiffs-Appellants,
                                              No. 04-35636
                 v.
                                                D.C. Nos.
SHOSHONE-BANNOCK TRIBES, a                 CV-01-00052-BLW
federally recognized Indian Tribe;          CV-01-00171-BLW
FORT HALL BUSINESS COUNCIL;
                                                OPINION
SHOSHONE-BANNOCK TRIBAL
GAMING COMMISSION,
                     Plaintiff-cross-
              defendants-Appellees.
                                        
        Appeal from the United States District Court
                  for the District of Idaho
         B. Lynn Winmill, District Judge, Presiding

                    Argued and Submitted
             April 5, 2006—Seattle, Washington

                   Filed October 11, 2006

    Before: William C. Canby, Jr., Ronald M. Gould, and
               Carlos T. Bea, Circuit Judges.

                  Opinion by Judge Canby

                            17545
         STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES   17547

                       COUNSEL

Michael S. Gilmore, Deputy Attorney General, Boise, Idaho,
for the defendants-cross-plaintiffs-appellants.
17548     STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES
Scott D. Crowell, Kirkland, Washington, for the plaintiff-
cross-defendants-appellees.

                            OPINION

CANBY, Circuit Judge:

   Idaho appeals the district court’s grant of summary judg-
ment to the Shoshone-Bannock Tribes (“Tribes”)1 in their
declaratory judgment action regarding the types of games they
may offer pursuant to their tribal-state gaming Compact
(“Compact”) with Idaho. The court ruled that the Tribes could
operate tribal video gaming machines without renegotiating
their Compact to limit the numbers of games and to require
payments by the Tribes to local educational programs and
schools. We affirm the district court’s grant of summary judg-
ment to the Tribes.

                        BACKGROUND

  A. The IGRA and the Tribes’ Gaming Compact With
  Idaho

   The Indian Gaming Regulatory Act (“IGRA”) provides a
comprehensive framework for regulating gaming on Indian
land. See 25 U.S.C. §§ 2701-2721. The IGRA divides tribal
gaming into three classes: I, II and III. The parties agree that
operation of the tribal video gaming machines at issue in this
case constitutes class III gaming. Class III gaming may be
conducted on Indian lands if it is: (1) authorized by the tribe
seeking to conduct the gaming; (2) located in a State which
does not bar such gaming; and (3) “conducted in conformance
with a Tribal-State compact entered into by the Indian tribe
and the State . . . .” 25 U.S.C. § 2710(d)(1).
  1
   We refer to the Shoshone-Bannock Tribes by their plural name, but
they constitute a single federally recognized Indian tribe.
          STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES       17549
   In 2000, the Tribes and Idaho entered into a gaming Com-
pact. See 65 Fed. Reg. 54541-03 (Sept. 8, 2000) (approval of
the Compact by the Assistant Secretary of the Interior for
Indian Affairs). The parties intended the Compact to “govern
the licensing, regulation and operation of Class III gaming
conducted by the Tribes on Indian Lands located within
[Idaho].” Compact § 3(k). The Compact authorizes the Tribes
to conduct any class III gaming activity “that the State of
Idaho ‘permits for any purpose by any person, organization,
or entity,’ as the phrase is interpreted in the [IGRA].” Com-
pact § 4(a). Remarkably, the Compact did not specify a limit
on the numbers of gaming machines, nor did it specify a term
of the Compact’s duration.

   When the Compact was negotiated, the Tribes and State
could not agree on what types of class III games Idaho
allowed others to conduct. Idaho’s position was that “the elec-
tronic gaming currently conducted by the Tribes in Idaho is
an imitation of casino games and prohibited under Idaho and
federal law.” The Tribes’ position was that Idaho allowed all
class III gaming except sports betting.

  Unable to compromise on the scope of permissible class III
gaming, the parties agreed to seek a declaratory judgment to
determine which class III games the Compact authorized. The
Tribes and State each filed suit in the district court seeking
declaratory relief. The court consolidated the cases into the
present action.

  B.   Proposition One

   While this case was pending in the district court, the voters
of Idaho adopted an initiative called Proposition One that
authorized Indian tribes to conduct gaming using “tribal video
gaming machines.” Section Two of Proposition One stated
that the Indian tribes suffer from disproportionate unemploy-
ment and poverty and that recently tribes have “proceeded in
good faith to make major investments in Indian gaming facili-
17550        STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES
ties, and [that] those facilities have finally enabled the tribes
to reduce unemployment and welfare and improve living con-
ditions on their reservations.” Proposition One informed vot-
ers about the disagreement between the tribes and Idaho
regarding video gaming machines.2 The voters approved
Proposition One on November 5, 2002.

   Proposition One added two sections to the Idaho Code, 67
429B and 67-429C. Section 429B allows “Indian tribes . . . to
conduct gaming using tribal video gaming machines pursuant
to state-tribal gaming compacts which specifically permit
their use.” Idaho Code § 67-429B(1). Section 429C authorizes
tribes to amend their gaming compacts to permit the use of
tribal video gaming machines. It also provides that the gaming
machines authorized by such an amendment are limited to the
number currently operated by the affected tribe plus 25%, and
that no annual increase in numbers may exceed 5% of the
number of gaming machines possessed on January 1, 2002.
Idaho Code § 67-429C(1)(b). In addition, the statute provided
that tribes adopting the prescribed amendments agreed to con-
tribute 5% of the annual net gaming income to local educa-
tional programs and schools. Idaho Code § 67-429C(1)(c).
  2
   Section Two of Proposition One presented the dispute as follows:
        Due to differences in opinion over the interpretation of Idaho
      law, . . . tribes face legal uncertainties about the types of gaming
      machines they can operate on Indian lands.
      ...
         Attempts by the tribes and the governor to resolve these legal
      uncertainties have failed, jeopardizing the future of tribally-
      funded education, health care, and social service programs.
      Therefore, the citizens of Idaho desire to secure the future of
      tribal gaming on Indian lands in Idaho themselves through this
      ballot measure.
         This ballot measure clarifies that it is the public policy of . . .
      Idaho that Indian tribes can continue to operate the types of
      lottery-style gaming machines currently used at Indian gaming
      facilities on Idaho reservations under the terms of this act.
          STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES       17551
Shortly after Proposition One became law, the Coeur d’Alene,
Kootenai, and Nez Perce Tribes employed the amendment
procedure in Idaho Code section 67-429C(2) to amend their
compacts with Idaho by incorporating the terms of 67-
429C(1). The amendments granted them the right to operate
tribal video gaming machines, subject to the statute’s limita-
tions of numbers and requirements of school payments.

  C.   District Court Ruling

   The voters’ approval of Proposition One narrowed the dis-
pute before the district court by clarifying Idaho’s public pol-
icy regarding tribal video gaming machines. The remaining
issue before the district court was whether the existing Com-
pact between the Tribes and Idaho must be renegotiated
before the Tribes could operate tribal video gaming machines.
The court held that “the Compact does not require the Tribe[s]
and the State of Idaho to enter into renegotiations before the
Tribe[s are] authorized to conduct gaming using tribal video
gaming machines.” Further, the court ordered the parties to
“adopt a brief written amendment clarifying that the Tribe is
authorized to operate ‘tribal video gaming machines’ as that
term is defined in [Idaho Code] § 67-429B.” The court found
“[t]hat the machines used by the Shoshone-Bannock Tribes in
their gaming operation in May 2004 are tribal video gaming
machines . . . .”

                        DISCUSSION

   We review de novo a district court’s grant of summary
judgment. Sierra Club v. Babbitt, 65 F.3d 1502, 1507 (9th
Cir. 1995). The Compact states that it is to be “construed in
accordance with the laws of the United States.” Compact
§ 27. We apply general principles of contract interpretation to
construe a contract governed by federal law. See Kennewick
Irrigation Dist. v. United States, 880 F.2d 1018, 1032 (9th
Cir. 1989). The parties here rely on Idaho contract law, how-
ever, and we accept that practice because we discern, and the
17552           STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES
parties note, no difference between Idaho and federal contract
law.

I.       Authorization of Tribal Video Gaming Machines

  The Compact has two, somewhat differing provisions
addressing the permissible scope of the Tribes’ class III gam-
ing.

     Section 4, “Authorized Class III Gaming,” provides:

          [T]he Tribes may operate in its gaming facilities
          located on Indian Lands, any gaming activity that the
          State of Idaho ‘permits for any purposes by any per-
          son, organization, or entity,’ as the phrase is inter-
          preted in [the IGRA]. The Tribes may not operate
          any other form of Class III gaming activity.

     Section 24.d, “Games Conducted by Other Tribes,” states:

          In the event any other Indian tribe is permitted by
          compact or final court decision to conduct any Class
          III games in Idaho in addition to those games permit-
          ted by this Compact, this Compact shall be amended
          to permit the Tribes to conduct those same additional
          games . . . .

   [1] The plain language of section 4 authorizes the Tribes to
operate video gaming machines because Idaho permits three
other tribes to operate tribal video gaming machines in the
state. An Indian tribe is an “entity” under the IGRA. Arti-
choke Joe’s Cal. Grand Casino v. Norton, 353 F.3d 712, 731
(9th Cir. 2003) (interpreting 25 U.S.C. § 2710(d)(1)(B)). The
Coeur d’Alene, Kootenai, and the Nez Perce Tribes all legally
operate tribal video gaming machines3 in Idaho pursuant to
     3
         A tribal video gaming machine . . . is not activated by a handle
         or lever, does not dispense coins, currency, tokens, or chips, and
         performs only the following functions:
            STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES                17553
Idaho Code section 67-429B. If section 4 of the Compact
stood alone, authorization of the Tribes to conduct video gam-
ing would appear to be automatic, because section 4 does not
mention any requirement of an amendment of the Compact.

   [2] The State relies, however, on section 24.d, which does
contemplate an amendment to the Compact to permit gaming
conducted by other tribes. We agree in part with the State:
section 24.d is applicable here. Section 24.d is more specific
in its application to gaming by other tribes than is section 4.4
Specific terms of a contract govern inconsistent, more general
terms. S. Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885,

         (a) Accepts currency or other representative of value to
         qualify a player to participate in one or more games;
         (b) Dispenses, at the player’s request, a cash out ticket that
         has printed upon it the game identifier and the player’s credit
         balance;
         (c) Shows on a video screen or other electronic display,
         rather than on a paper ticket, the results of each game played;
         (d) Shows on a video screen or other electronic display, in
         an area separate from the game results, the player’s credit
         balance;
         (e) Selects randomly, by computer, numbers or symbols to
         determine game results; and
         (f) Maintains the integrity of the operations of the terminal.
Idaho Code § 67-429B(1).
   4
     The Tribes contend that section 24.d was added to the Compact only
because it was not clear at the time of the Compact’s negotiation that other
Indian gaming was covered by section 4 as gaming Idaho permitted “for
any purposes by any person, organization or entity.” Our subsequent deci-
sion in Artichoke Joe’s, 353 F.3d at 731, made clear that tribes were “enti-
ties” within the meaning of this language. According to the Tribes, that
decision makes the automatic provision of section 4 applicable here and
section 24.d becomes surplusage. We agree with the district court, how-
ever, that we must interpret each section according to the intent of the par-
ties when the two sections were negotiated.
17554     STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES
891 (9th Cir. 2003) (per curiam); see also Restatement (Sec-
ond) of Contracts § 203 (1981). We agree with the district
court, therefore, that an amendment of the Tribes’ Compact is
required for the Tribes to be able to operate their video gam-
ing machines as a result of the permitted operation of such
games by other tribes in Idaho.

   [3] We reject, however, the State’s contention that section
24.d requires renegotiation of the Tribes’ Compact in order to
arrive at the necessary amendment. Section 24.d provides
that, when any other tribe is permitted by compact to conduct
class III games not permitted by the Tribes’ Compact, the
Compact “shall be amended to permit the Tribes to conduct
those same additional games . . . .” (Emphasis added). This
plain language leaves no room for negotiation; it mandates an
amendment to permit one thing — the operation of the same
games conducted by other tribes under their compacts. Con-
tract terms are to be given their ordinary meaning, and when
the terms of a contract are clear, the intent of the parties must
be ascertained from the contract itself. Hal Roach Studios,
Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1549 (9th
Cir. 1990) (amended opinion); City of Idaho Falls v. Home
Indem. Co., 888 P.2d 383, 386 (Idaho 1995). The ordinary
meaning of section 24.d makes the amendment of the Com-
pact mandatory and leaves nothing to negotiate.

   The other provisions of the Compact are consistent with
our conclusion that section 24.d amendments are mandated
and do not reopen the Compact to renegotiation. These provi-
sions contain no substantive requirements for amendments.
The procedure for amending the Compact is set forth in sec-
tions 23-25. Section 25 provides that the Compact can be
amended only in writing by the State and the Tribes “as pro-
vided in Section 23.” Section 23 states that “all notices
required or authorized to be served under this Compact shall
be served” upon the Idaho State Gaming Agency and the
Chairman of the Tribes’ Business Council. Section 23 does
           STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES                17555
not outline any other amendment procedures. Section 24.b5
concerns renegotiation and states that either Idaho or the
Tribes may request renegotiation, but the Compact remains in
effect until the renegotiation is complete or the Compact is
replaced.

   The Compact contains no sunset provision and sets no
expiration date for the Compact or any of its provisions. Nei-
ther party can unilaterally terminate the Compact. Nothing in
the Compact indicates that renegotiation is required before an
amendment is adopted pursuant to section 24.d. If Idaho
wanted to condition section 24.d amendments on renegotiat-
ing the Compact, it should have bargained for that term as it
appears to have done with regard to section 11.6 Because the
Compact is clear, we do not need to consider the other tribes’
gaming compacts to evidence the intent of the parties to this
Compact that a section 24.d amendment does not require
renegotiation of the Compact.

II.   The Limitations on Numbers of Gaming Machines
      and the School Payments in Idaho Code § 67-429C
      Do Not Apply To The Tribes

   Idaho argues that section 24.d’s language referring to the
games permitted by other tribes’ compacts requires that the
amendment mandated by section 24.d include the limitations
in Idaho Code § 67-429C because the other Idaho tribes have
amended their gaming compacts to include those limitations.7
  5
     Nothing in sections 24.a or 24.c is relevant to this dispute.
  6
     Section 11 of the Compact is titled “Management Contract” and pro-
vides that if “the Tribes choose to engage an outside management com-
pany, the Tribes and the State shall negotiate amendments to this Compact
. . . .” (Emphasis added).
   7
     The other tribes have assented to Proposition One’s recommended
terms requiring tribes that operate video gaming machines to: (1) limit the
number of the machines to 5% annual growth and 25% decennial growth
from a January 1, 2002 baseline; and (2) require the tribes to contribute
5% of their annual net gaming income to local educational programs on
or near the reservation. See Idaho Code § 67-429C(1)(b)-(c).
17556     STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES
Specifically, Idaho asks this Court to define “those same addi-
tional games” in section 24.d to include the limitations on
numbers of gaming machines and the requirement of school
payments that the other tribes have adopted in return for
authorization to operate video gaming machines.

   [4] We reject the State’s contention that a limitation on the
number of gaming machines necessarily inheres in the Com-
pact’s language entitling the Tribes “to conduct those same
additional games.” The plain meaning of “same additional
games” refers to the games themselves and not the number of
machines. The Idaho Code itself reflects this distinction. A
tribal video gaming machine is defined by its operating mech-
anism. See Idaho Code § 67-429B(1). No quantity restriction
is included in the term “tribal video gaming machine.”
Instead, the statute’s quantity and growth restrictions on tribal
video gaming machines, proposed for amended compacts, are
located in a different section from the one used to define the
gaming machines. Compare § 67-429B (defining tribal video
gaming machines) with § 67-429C(1)(b) (recommending that
tribes adopt a quantity and annual growth restriction on the
number of tribal video gaming machines). Thus, the state stat-
utory scheme buttresses the conclusion that is apparent from
the words of section 24.d of the Compact itself: the Compact
provides that the Tribes will be permitted (by mandatory
amendment) to conduct the games permitted other tribes. The
ordinary meaning of “games” does not encompass a limitation
on numbers or of increases in numbers of gaming machines.

  [5] The quantity and growth restrictions on tribal video
gaming machines to which the other tribes became subject
were not unilaterally imposed on those tribes. Section 67-
429C provided that tribes with existing contracts “may”
amend their compacts in the manner offered by the statute.
The other tribes agreed to accept the statutory package of
amendments in return for benefits offered by those amend-
ments that were not included in their existing compacts. The
Shoshone-Bannock Tribes, however, did not agree to amend
          STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES         17557
their Compact and chose instead to rely on their Compact’s
existing provisions to confer the necessary permission to
operate the video gaming machines. This the Tribes were enti-
tled to do, and they may not be subjected to the number limi-
tations of the state statutory package that would have applied
had the Tribes agreed to amend under section 67-429C. The
fact that the Tribes may now be in a technically better posi-
tion than the other tribes is purely a function of the terms of
the Compact that Idaho and the Tribes voluntarily entered
into.

   [6] The Tribes’ case is even stronger with regard to the
payments to educational programs and schools. As with the
limitation on numbers of machines, there is no justification
for reading a school payment requirement into the plain
meaning of “additional games.” But in addition, section 19 of
the Compact prohibits Idaho from imposing its desired school
payments on the Tribes’ gaming operation. Section 19.b bars
the State from “impos[ing] any tax, fee, charge or assessment
upon the Tribes or the Gaming operation.” It prohibits Idaho
from collecting, and the Tribes from paying, “any Idaho tax
or contribution in lieu of taxes or fees on or measured by
gaming transactions, gaming devices permitted under this
Compact, gross or net Gaming revenues, or the Tribes’ net
income.” Idaho’s desire to impose a requirement of educa-
tional and school payments on the Tribes’ video gaming oper-
ations is a “tax or contribution” that is “measured by . . . net
Gaming revenues.” Thus, section 19.b precludes interpreting
section 24.d’s “same additional games” language to authorize
unilateral imposition of school payments on the Tribes.

   It is true that the prohibition on taxation in section 19.b
echoes a similar prohibition in the IGRA. See 25 U.S.C.
§ 2710(d)(4). It is also true that, despite this statutory prohibi-
tion, states and tribes have negotiated compacts that provided
for payments by the tribes to the states. See, e.g., In re Indian
Gaming Related Cases, 331 F.3d 1094, 1111-14 (9th Cir.
2003). The theory on which such payments were allowed,
17558     STATE OF IDAHO v. SHOSHONE-BANNOCK TRIBES
however, was that the parties negotiated a bargain permitting
such payments in return for meaningful concessions from the
state (such as a conferred monopoly or other benefits). See id.
Although the state did not have authority to exact such pay-
ments, it could bargain to receive them in exchange for a quid
pro quo conferred in the compact. See id.

   Nothing of the sort has occurred here. The Compact as
negotiated between the Tribes and Idaho retained the prohibi-
tion against taxes or payments in section 19.d, and the Tribes
did not bargain away their immunity from such taxes or pay-
ments in the Compact. The fact that other tribes have accepted
a package of benefits and burdens when they voluntarily
amended their compacts does not change the terms of the
Compact between the Tribes and Idaho. That Compact pro-
hibits the imposition of the payments that Idaho would now
require.

                       CONCLUSION

   The Tribes are entitled to a mandatory amendment of the
Compact stating that they are authorized to conduct tribal
video gaming, as the other tribes have been permitted to do.
The limitations on numbers of machines and the requirement
of educational payments set forth in Idaho Code section 67-
429C do not apply to the Tribes or their gaming operation.
Although Idaho may seek to renegotiate the Compact under
section 23 at any time, it may not force the Tribes to the nego-
tiating table or unilaterally terminate the Compact. The Tribes
are fully authorized to use tribal video gaming machines free
from the requirements of Idaho Code section 67-429C unless
the Tribes agree to a renegotiated or replacement Compact
that contains those restrictions. The district court’s judgment
accordingly is

  AFFIRMED.