a/k/a Rincon Band of Luiseno Indians · 2010. 3. 27. · Pilar M. Thomas, Arizona State Bar No. 022063 Admitted Pro Hac Vice LEWIS ANDROCA LLP 40 North Central Avenue Phoenix, Arizona

2078296.1

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Stephen Hart, Arizona State Bar No. 010273Admitted Pro Hac ViceKimberly A. Demarchi, Arizona State Bar No. 020428Admitted Pro Hac VicePilar M. Thomas, Arizona State Bar No. 022063Admitted Pro Hac ViceLEWIS AND ROCA LLP40 North Central AvenuePhoenix, Arizona 85004-4429Facsimile (602) 262-5747Telephone (602) 262-5311

Kevin V. DeSantisBUTZ DUNN DENSANTIS AND BINGHAM101 West Broadway, Suite 1700San Diego, California 92101Facsimile (619) 231-0341Telephone (619) 233-4777

Scott CrowellAdmitted Pro Hac ViceCROWELL LAW OFFICE1670 Tenth Street WestKirkland, Washington 98033Facsimile (425) 828-8978Telephone (425) 828-9070

Attorneys for Plaintiff Rincon Band of Luiseno Mission Indians

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

Rincon Band of Luiseno Mission Indians of the Rincon Reservation, a/k/a Rincon San Luiseno Band of Mission Indians a/k/a Rincon Band of Luiseno Indians

Plaintiff,

vs.

Arnold Schwarzenegger, Governor of California; State of California,

Defendants.

))))))))))))))

No. 04cv1151 (WMc)

REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT ON DECLARATORY CLAIM

Date: August 7, 2009Time: 2:00 p.m.Courtroom: CJudge: The Honorable William McCurine, Jr.

Case 3:04-cv-01151-WMC Document 273 Filed 07/31/09 Page 1 of 11

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2078296.1

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I. Introduction.

Since the compact at issue was signed, the Rincon Band - along with other

California Tribes and various California state agencies - has been raising the ambiguity in

Section 4.3.3.2 and asking for revisions to the Proposition 1A Compact to clarify the

language at issue. The State has refused to negotiate an amendment to fix its poorly

written language, and the issue of the provision’s meaning is finally briefed and ready for

resolution by the Court in this declaratory action.1 In its memorandum of points and

authorities, the Rincon Band set forth the applicable canons of construction and statutory

interpretation, which provide a clear path for this Court to establish the number of gaming

device licenses available in the statewide pool.

Now, the State finally concedes that the provision is ambiguous. But rather than

engaging in a meaningful discussion of how best to interpret the language in light of the

language used and the surrounding provisions of the Compact, the State suggests that if

there is no extrinsic evidence demonstrating a single shared understanding of the meaning,

the provision (and possibly the entire Tribal-State Compact) must fail for lack of a meeting

of the minds. Through these arguments, the State seeks to further delay resolution of this

issue by engaging in a discovery process that the State has not demonstrated will add

anything to the factual record already available, and potentially to escape any obligation to

issue licenses at all. The State’s effort to delay or escape performance of its obligations to

the Tribes with whom the citizens of California directed it to compact should be rejected

and a declaratory judgment should be issued forthwith so that this issue can be resolved

once and for all.

1 Indeed, the State’s refusal to negotiate to fix its own poorly written language formed part of the basis for the Tribe’s claim of failure to negotiate in good faith as required by IGRA. This claim was not the basis of this Court’s ruling on the good faith issue, but has been preserved by Rincon on appeal.


2078296.1REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OFMOTION FOR PARTIAL SUMMARY JUDGMENT ON DECLARATORY CLAIM No. 04 CV 1151 W (WMc)

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II. The CGCC Is Not a Necessary Party.

The State contends that the California Gambling Control Commission is a

necessary party under Rule 19 that must be added before a declaration regarding the

meaning of Section 4.3.2.2 can be issued. The CGCC is an agency of the State of

California, which is a party. The State’s response fails to articulate how the CGCC could

have any “interest” in the outcome of these proceedings that is somehow separate from

that of the State, or how a declaration of the meaning of the State’s obligations under the

Compact would not be sufficient guidance to permit the CGCC to exercise its duties as the

State’s agent under that Compact. Proceeding in the absence of the CGCC - but in the

presence of the State of which it is a part - does not deprive this Court of the ability to

issue the declaratory relief sought by Rincon or impair any interest of the State in

defending its interpretation of the Compact. See Fed. R. Civ. P. 19(a)(1) (definition of

necessary party).2

Moreover, the Compact provisions for dispute resolution do not call for inclusion of

political subdivision of the State but rather refer to disputes between the Tribe and the

State. (Ex. 8 to Rincon’s Notice of Lodgement (“Rincon NIL”) (Compact § 9).) CGCC

was not a signatory to the Compact, and this litigation is over interpretation of the

Compact.

III. Principles Governing Interpretation of the Compact.

The Rincon Band’s memorandum of points and authorities contains exhaustive

analysis of the specific language of the Tribal-State Compact, consistent with the general

rule of contract interpretation that contract interpretation begins with the language of the

agreement itself, attempting to read that language using its ordinary meaning. Idaho v.

2 The Rincon Band does not object to the joinder of the CGCC as a party to this action, as it stated when the State first raised this Rule 19 argument (unsuccessfully) in 2004. (See docket no. 28 at 21.) The Rincon Band does object to any further unnecessary delay in resolution of the declaratory claim.



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Shoshone-Bannock Tribes, 465 F.3d 1095, 1099 (9th Cir. 2006); see also Tanadgusix

Corp. v. Huber, 404 F.3d 1201, 1205 (9th Cir. 2005) (contract must be construed “by

reading it as a whole and interpreting each part with reference to the entire contract”)

With the exception of brief references to the definition of “non-Compact Tribes”

and the unsupported proposition that zero is not a number,3 the State’s responsive

memorandum does not address the meaning of the words actually used in the Compact at

all, instead focusing on the alleged need for discovery into “extrinsic evidence” of the

intended meaning of the Compact provision that, the State contends, this Court must

consider before it can apply more general rules of contract construction such as contra

preferentum, or the rule that language must be interpreted against its drafter.4

But the Rincon Band does not rely exclusively on the doctrine of contra

preferentum to support its arguments. Instead, the Rincon Band’s analysis is supported by

several canons of contract interpretation: the rule that a contract’s language controls,5 the

rule that contracts must be interpreted to avoid surplusage,6 the rule that ambiguous terms

must be construed in favor of Indian interests,7 and the doctrine of contra preferentum.8

3 Notably, even the State treats zero as a number. (See Ex. 1 to Second Declaration of Kimberly A. Demarchi (California Gambling Control Commission Gaming Device License Application instructing Tribal applicants to enter the number of licenses, including “zero” as appropriate).)4 Because the State has not addressed the meaning of the specific language at issue, the Rincon Band will not repeat its prior arguments regarding that language but will rely on its prior explication of the language in its memorandum of points and authorities supporting its motion.5 Shoshone-Bannock Tribes, 465 F.3d at 1099; Huber, 404 F.3d at 1205.6 Beal Bank v. Crystal Props., LTD, 268 F.3d 743, 748 (9th Cir. 2001); Cree v. Waterbury, 73 F.3d 1400, 1405 (9th Cir. 1996).7 Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 766 (1985); Antoine v. Washington, 420 U.S. 194, 198 (1975); Artichoke Joe's Cal. Grand Casino v. Norton, 353 F.3d 712, 729 (9th Cir. 2003); Guidiville Band of Pomo Indians v. NGV Gaming, LTD., 531 F.3d 767, 785 (9th Cir. 2008); see also EEOC v. Karuk Tribe Hous. Auth., 260 F.3d 1071, 1032 (9th Cir. 2001).8 Slottow v. Am. Cas. Co., 10 F.3d 1355, 1361 (9th Cir. 1993); see also Cal. Civ. Code § 1654



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(See Rincon’s Memorandum of Points and Authorities, docket no. 252, at 6-8.) So the

State’s assertion that contra preferentum must be considered after extrinsic evidence has

been evaluated, even if true, is entirely beside the point, because contra preferentum is not

the sole basis on which the Rincon Band prevails in the analysis of the Compact.9 This

Court can and should determine the meaning of the Compact provision using all of the

applicable principles of contract interpretation, including contra preferentum as

appropriate.

IV. There Is No Need to Conduct Additional Discovery.

The State has failed to adequately support its request for additional discovery as a

bar to entry of summary judgment. The parties have already exchanged disclosures in this

case, including thousands of pages of documents produced by Rincon and proffered as

parts of the administrative record on bad faith. (See docket nos. 159-67.) The State -

which has previously opposed the taking of depositions of persons involved in negotiating

the Compact - cannot now delay summary judgment based on unsupported assertions that

yet more evidence may be available. Indeed, the State has failed to even submit the

affidavit required by Fed. R. Civ. P. 56(f) in order to support its argument.10 In light of

this failure - and its failure to marshal contraverting evidence within its own control, such

as the declarations of State agents involved in the negotiating process, the State’s request

for additional factual discovery should be disregarded. See also Fed. R. Civ. P. 56(e)(2)

(opposing party’s obligation is to “set out specific facts showing a genuine issue for trial”).

9 Moreover, the rule that contra preferentum can be applied only after all other canons are unsuccessful in resolving meaning is a California statutory rule, and California statute does not necessarily control the interpretation of the Compact. See Shoshone-Bannock Tribes, 465 F.3d at 1098 (Tribal-State compacts are interpreted using generally applicable principles of contract interpretation). 10 See also Bank of America, NT 7 SA v. PENGWIN, 175 F.3d 1109, 1118 (9th Cir. 1999) (discussing Rule 56(f) prerequisites); Carpenter v. Universal Star Shipping, SA, 924 F.2d 1539, 1547 (9th Cir. 1991) (same).



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V. There Is No Factual Barrier to Entry of Summary Judgment.

The evidence before this Court - almost all of which has been provided by Rincon -

reveals no factual barrier to the entry of summary judgment on the declaratory claim.

Despite the fact that the State would be the possessor of any such evidence, it has

come forward with no evidence from which a factfinder could conclude that the State

communicated, to Rincon, its understanding that Section 4.3.2.2 established a statewide

pool of 32,151.11 Absent such evidence, the State’s discussion of the burden of

contracting parties to come forward and address known differences in interpretation is

wholly irrelevant.

The State’s assertion that Rincon assented to its interpretation by conduct is also

wholly unsupported by evidence. Rincon’s return of licenses to the statewide pool

acknowledges nothing other than that the Compact establishes a pool - a matter that is not

in dispute.12 (See Pinal Declaration at Ex. 1.) And the request of Rincon’s Chairman that

the CGCC help to resolve the confusion about the meaning of Section 4.3.2.2 once and for

all does not manifest assent to the State’s interpretation but rather demonstrates that

Rincon has been consistently raising and trying to resolve its dispute with the State over

the right way to read the Compact’s language. (See Ex. 2 to Pinal Declaration at 19:19-20;

11 Indeed, this is not the number that the Governor’s negotiator claims that he had in mind during the negotiations, or the number asserted by the Governor’s office in the press release it issued shortly after the negotiations concluded. (Rincon’s Statement of Facts in Support of Motion for Partial Summary Judgment (“Rincon SOF”) at ¶ 26; Rincon NIL at Ex. 11.) Moreover, the only evidence cited by the State for the proposition that Rincon knew of and concealed its contrary interpretation is the statement of another Tribal Chair, who claims that some unknown individual, with no identified affiliation with Rincon, in some unidentified meeting said something about a differing interpretation. (See Ex. 3 to Declaration of Randy Pinal (“Pinal Declaration”) at 45:7-16.) This statement constitutes inadmissible hearsay, lacks foundation, and, even if admissible, would not establish that Rincon knew of and concealed an alternative interpretation.12 Moreover, by that time, Rincon and other Tribes had already made known to the State their dispute regarding interpretation of Section 4.3.2.2 - nothing about the cited letter suggests that Rincon was changing its position regarding the meaning of that section. (See, e.g., Ex. 19 to Rincon’s NIL (letter sent one year earlier raising issue of size of statewide pool and contrary interpretation).)



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see also Rincon SOF at ¶¶ 36, 37, 38, 41, 46.) The State’s failure to come forward with

evidence of Rincon’s assent by conduct renders that evidentiary issue likewise irrelevant.

The State also has not come forward with evidence creating a factual issue

regarding application of the doctrine of contra preferentum. The State does not dispute

that it wrote the provision at issue, and the rule of contra preferentum applies when there

is a drafter - irrespective of the amount of disparity in negotiating power between the

parties. See, e.g., Slottow v. Am. Cas. Co., 10 F.3d 1355, 1361 (9th Cir. 1993); see also

Cal. Civ. Code § 1654. Moreover, the State has not presented admissible evidence

creating an issue of material fact regarding whether Rincon was at a negotiating

disadvantage - neither the blanket statement (and contested) of its negotiator that he was

willing to answer questions nor the fact that another Tribe later negotiated a compact

change the fact that the Compact Rincon accepted was one presented to it by the State with

a two-hour window in which to accept or reject that Compact. (Rincon SOF ¶ 11;

compare Ex. 7 to Rincon’s NIL (Judge Norris’s letter asking that Tribal Chairs notify the

Governor’s Office “no later than 10:00 p.m. tonight” with a formal signing to follow at

10:30 a.m. the next morning).)

That leaves only one factual issue asserted by the State - “extrinsic evidence”

supporting the State’s interpretation of the Compact. Careful review of the evidence to

which the State points, using the principles it identifies, demonstrates that the evidence in

question does not support the State’s analysis. Multiple agents of the state - including the

CGCC and the State Auditor - have taken the position that the Compact provision has

multiple potential meanings.13

13 Those admissions include the State’s responsive memorandum (at 10), as well as the statements of the CGCC and the State Auditor (Rincon SOF at §§ 21, 31), both of whom are State agents and whose out-of-court statements are admissible non-hearsay admissions of a party opponent under Fed. R. Evid. 801(d)(2).



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As Judge Damrell reasoned in the Colusa summary judgment ruling, there is no

need to delve into extrinsic evidence here because the State has not provided any true

extrinsic evidence. Various post-signing statements as to what the language means are not

evidence as to what the parties understood it to mean at the time:First, the circumstances under which the Compact was entered into does not aid the court in discerning the parties’ intent. Indeed, the submissions of the parties reveal that there was no clear consensus between the parties regarding the maximum number of Gaming Devices allowed under the Compact at the time the agreements were executed. . . . . Furthermore, the evidence demonstrates that there was no consistent course of conduct between the parties and that there continued to be debate about the number of devices authorized under the Compact. . . . Accordingly, the court finds that the extrinsic evidence does not reveal a plain intent or meaning that was either understood by the parties at the time the Compact was executed or followed by the parties in their subsequent relationships.

(Ex. 26 to Rincon NIL at 39:2-7, 39:15-18, & 40:10-14.)

The only statement of contemporaneous intent that the State has produced - despite

its obligation as the party opposing summary judgment to produce evidence - is a

statement by the State’s negotiator, and the State mischaracterizes the available evidence

regarding his position.14 The number of gaming device licenses that Judge Norris has

declared he thought were available does not match the State’s current position regarding

the meaning of the contract (Ex. 11 to Rincon NIL (Norris Declaration).) The State

attempts to explain away the discrepancy as based on a lack of information about

underlying facts, and states that “the Commission’s figure reflects close adherence to the

principal tenet of the Compact negotiated by Judge Norris” but based on accurate

14 The State declares, without supporting citation and in contradiction to evidence provided by Rincon regarding widespread confusion and debate regarding the number of available licenses, that “many tribes accepted” the State’s calculation without challenge. (Response at 2.) Absent any supporting evidence, this contention should be disregarded.



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information. But in May 2000, long after the negotiation of the compacts was complete

and full information presumably available, Judge Norris wrote a letter stating that there

were 15,400 licenses available, unless a tribe certified that it would not operate all 350 of

its allotment under Section 4.3.1 (in which case the number would increase) - a position

wholly inconsistent with both the State’s current number and its method of calculation,

because it incorporates a notion of forebearance that no other reader of the Compact has

ever adopted . (See Ex. 26 to Rincon NIL at 39 n. 21.) Thus, the State cannot plausibly

rely on Judge Norris’s declaration to establish that he had a single number in mind or to

established some fixed intent of the parties at the time the Compact was executed. The

proffered extrinsic evidence is insufficient to create a triable issue of fact regarding the

intended meaning of both parties to the Compact.

VI. This Court Should Interpret the Compact, Not Invalidate It.

As a last resort, the State suggests that, based on the apparent confusion of the

parties over how exactly the statewide formula was supposed to work, the entire provision

- or even the entire compact - might be invalid for lack of a meeting of the minds. (State’s

Responsive Memorandum at 18.) The State’s reckless claim that the Compact could be

invalid because of its own failure to write a comprehensible provision should be rejected.

There is no dispute that the contracting parties agreed to some statewide cap on the

number of gaming device licenses that would be available, and a cap that would be based

on the number of tribes and the number of gaming device licenses currently in operation.

Given this substantial agreement, the Court can and should look to the actual language of

the contract in order to avoid having to invalidate the entire Compact. Cf. Restatement

(Second) of Contracts § 204 (“When the parties to a bargain sufficiently defined to be a

contract have not agreed with respect to a term which is essential to a determination of

their rights and duties, a term which is reasonable in the circumstances is supplied by the

court.”); see also Green Tree Financial Corp v. Randolph, 531 U.S. 79 at n. 1 (2000)



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(implying term using community fairness standard); Goichman v. Rhueban Motors, Inc.,

682 F.2d 1320, 1325 (9th Cir. 1982) (implying reasonable price). This Court should

examine the language of the provision, in context, and determine the most reasonable

interpretation of that language, using applicable canons of interpretation.

In the alternative, if this Court were to adopt the State’s assertion that the entire

Compact must be invalidated because of the ambiguity, then this Court should hold that

the State has failed to negotiate in good faith as required by IGRA, and immediately order

the remedial provisions of IGRA to take effect, because the State has repeatedly refused

Rincon’s requests to amend the Compact to address the ambiguity. The State cannot

rebuff that request for years and then suddenly embrace the ambiguity to avoid having a

court resolve the dispute about what the Compact means.

VII. Conclusion.

For the foregoing reasons, as well as those stated in Rincon’s memorandum of

points and authorities in support of its motion, this Court should grant the Rincon

summary judgment on its declaratory claim and find that the total number of gaming

device licenses available statewide to signatories of the Proposition 1A Compacts is

64,001 or, in the alternative, 42,700 as determined by the Eastern District of California.

This Court should further order that the State proceed to conduct a license pool draw in

accordance with the provisions of the Compact to distribute any additional available

licenses.

RESPECTFULLY SUBMITTED this 31st day of July, 2009.



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LEWIS AND ROCA LLP

By s/ Kimberly A. DemarchiStephen HartKimberly A. DemarchiPilar M. Thomas

BUTZ DUNN DENSANTIS AND BINGHAMKevin V. DeSantis

CROWELL LAW OFFICEScott Crowell

Attorneys for PlaintiffRincon Band of Luiseno Mission Indians

CERTIFICATE OF SERVICE

I hereby certify that on July 31, 2009, I electronically transmitted the attached

document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a

Notice of Electronic Filing to the following CM/ECF registrants:

Peter H. Kaufman [email protected]

I declare under penalty of perjury under the laws of the State of California the

foregoing is true and correct and that this declaration was executed on June 12, 2009, at

Phoenix, Arizona.

Kimberly A. Demarchi s/ Kimberly A. DemarchiDeclarant Signature


mailto:[email protected]

2056088.2

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Stephen Hart, Arizona State Bar No. 010273Admitted Pro Hac ViceKimberly A. Demarchi, Arizona State Bar No. 020428Admitted Pro Hac VicePilar M. Thomas, Arizona State Bar No. 022063Admitted Pro Hac ViceLEWIS AND ROCA LLP40 North Central AvenuePhoenix, Arizona 85004-4429Facsimile (602) 262-5747Telephone (602) 262-5311

Kevin V. DeSantisBUTZ DUNN DENSANTIS AND BINGHAM101 West Broadway, Suite 1700San Diego, California 92101Facsimile (619) 231-0341Telephone (619) 233-4777

Scott CrowellAdmitted Pro Hac ViceCROWELL LAW OFFICE1670 Tenth Street WestKirkland, Washington 98033Facsimile (425) 828-8978Telephone (425) 828-9070

Attorneys for Plaintiff Rincon Band of Luiseno Mission Indians

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

Rincon Band of Luiseno Mission Indians of the Rincon Reservation, a/k/a Rincon San Luiseno Band of Mission Indians a/k/a Rincon Band of Luiseno Indians

Plaintiff,

vs.

Arnold Schwarzenegger, Governor of California; State of California,

Defendants.

))))))))))))))

No. 04cv1151 (WMc)

SECOND DECLARATION OF KIMBERLY A. DEMARCHI IN SUPPORT OF RINCON’S MOTION FOR PARTIAL SUMMARY JUDGMENT ON DECLARATORY CLAIM

Date: August 7, 2009Time: 2:00 p.m.Courtroom: CJudge: The Honorable William McCurine, Jr.

I, Kimberly A. Demarchi, declare:

1. I am a partner at Lewis and Roca, LLP, on of the firms that is counsel of

record for Plaintiff, Rincon Band of Luiseno Mission Indians (“Rincon”). This declaration

is based on my review of the documents exchanged by the parties in this litigation and/or

publicly available documents and is true and correct to the best of my personal knowledge.

2. Attached as Exhibit 1 to this Declaration is a true and correct copy of a June

5, 3003 letter from the California Gambling Control Commission to the Rincon Band, with

Case 3:04-cv-01151-WMC Document 273-1 Filed 07/31/09 Page 1 of 7

2056088.2DECLARATION OF KIMBERLY A. DEMARCHI IN SUPPORT OF MOTION FOR PARTIALSUMMARY JUDGMENT ON DECLARATORY CLAIM No. 04 CV 1151 W (WMc)

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attached Gaming Device License Application, as produced by the Rincon Band in this

litigation with Bates numbers RIN 1327-1330.

Executed this 31st day of July, 2009 at Phoenix, Arizona.

/s/ Kimberly A. DemarchiKimberly A. Demarchi

CERTIFICATE OF SERVICE

I hereby certify that on July 31, 2009, I electronically transmitted the attached

document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a

Notice of Electronic Filing to the following CM/ECF registrants:

Peter H. Kaufman [email protected]

I declare under penalty of perjury under the laws of the State of California the

foregoing is true and correct and that this declaration was executed on June 12, 2009, at

Phoenix, Arizona.

Kimberly A. Demarchi s/ Kimberly A. DemarchiDeclarant Signature


mailto:[email protected]






Documents

a/k/a Rincon Band of Luiseno Indians · 2010. 3. 27. · Pilar M. Thomas, Arizona State Bar No. 022063 Admitted Pro Hac Vice LEWIS ANDROCA LLP 40 North Central Avenue Phoenix, Arizona