In Chicken Ranch Rancheria v. State of California, 21-15751 (9th Cir. July 28, 2022), the Chicken Ranch Rancheria of Mewuk Indians and other tribes (collectively, “Tribes”) alleged that the State of California (“State”) violated the Indian Gaming Regulatory Act (“IGRA”) by breaching its duty to negotiate in good faith. The United States District Court for the Eastern District of California found that the State’s demand for tribal enforcement of state domestic support orders was per se evidence of bad faith. Additionally, the District Court found that many of the other disputed provisions, while not a per se violation of the State’s good faith duty, had a tenuous connection to gaming and thus required the State to provide “meaningful concessions” in exchange for demanding these provisions. The District Court found that the State failed to do so and thus had not negotiated with the Tribes in good faith. The State appealed. 

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IGRA imposes limits on state negotiations with tribes via the duty of good faith and by circumscribing the permissible topics of negotiation

The United States Court of Appeals for the Ninth Circuit explained that under IGRA, Class III gaming is permitted on Indian lands only if a tribe and the state enter a tribal-state compact that the Secretary of the Interior then approves. Because the compact requirement skews the balance of power over gaming rights in favor of the states, IGRA imposes on states an obligation to engage in compact negotiations in good faith. Furthermore, a tribe may sue in federal court for a state’s violation of its duty of good faith. 

Additionally, IGRA circumscribes the permissible topics of negotiation, setting forth seven permitted topics in which tribes and states may reach agreements. Specifically at issue in this case was the seventh topic, a catch-all provision that states: “any other subjects that are directly related to the operation of gaming activities.” The Court found that the seven-topic list of permissible topics of negotiation is exhaustive.

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California crossed the line in negotiating far outside IGRA’s permitted list of compact negotiation topics

California insisted that the tribes enact ordinances granting their tribal courts jurisdiction over state spousal and child support orders for gaming facility employees. California also insisted that the tribes adopt various California environmental laws with various reporting requirements and construction limitations. Additionally, California insisted that the tribes broadly adopt California tort law as part of tribal law and waive their sovereign immunity for tort claims in tribal court. 

The Court explained that none of these disputed provisions were “directly related to the operation of gaming activities” as required by IGRA. The Court rejected California’s argument that the topics were related to the operation of gaming activities because, without gaming activities, there would be no employee wages to garnish, no construction projects that would need to be built to support gaming, and no relevant personal injuries that would have occurred on tribal land. The Court explained that this type of circular argument had previously been rejected and was essentially limitless. 

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When a state negotiates for compact provisions that fall well outside of IGRA’s permissible topics of negotiation, the state has not acted in good faith

The Court held that a state cannot negotiate well outside the enumerated topics in IGRA while simultaneously acting in good faith. The Court found that the State effectively sought to use the Class III contracting process as leverage to impose its general policy objectives on the Tribes, which a state may not do. Therefore, California failed to act in good faith in its compact negotiations with the Tribes, triggering IGRA’s remedial provisions.

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The District Court erred in applying a “meaningful concessions” analysis

Furthermore, the Court found that the district court erred in relying on the “meaningful concessions” framework. A “meaningful concessions” analysis does not apply to request topics that are well outside the seven permitted topics in IGRA. Furthermore, even when a state seeks to negotiate on a topic permitted by IGRA, a  “meaningful concessions” analysis only applies to demands for taxes, fees, or other revenue-sharing provisions. 

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Disposition

The Court held that by negotiating for topics well outside IGRA’s permitted list, the State did not bargain in good faith and directed the parties to proceed to IGRA’s remedial framework under the district court’s continued supervision.