California Tribes Seek Attorneys’ Fees After Governor Acknowledges Bad Faith

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A new reply brief has been filed in the litigation between California tribes and the State. The Chicken Ranch Rancheria of Me-Wuk Indians is the primary plaintiff in the case, which involves California gaming compacts.

The compacts in question were initially set to expire on the last day of 2020. However, there have been multiple extensions to that expiration date as negotiations over new compacts have dragged on.

The State and the Tribe are in agreement on many points. However, the State insisted on including topics unrelated to gaming. These include provisions for recognizing and enforcing state court judgments against gaming industry employees and a waiver of tribal sovereign immunity for tort claims.

The Ninth Circuit Court of Appeals ruled 2-1 this summer that California had not negotiated in good faith. The Court found that it had exceeded the permissible topics for inclusion in compact negotiations. The State was, therefore, in violation of the Indian Gaming Regulatory Act (IGRA), which imposes a duty on states to engage in good-faith negotiations for tribal gaming.

However, that decision did not end the litigation. The Tribes are now seeking to recover more than $1.1 million in attorneys’ fees.

Far-Reaching Implications

Law 360 reported on Nov 18 that Governor Gavin Newsom recently conceded that the State had not negotiated in good faith [paywall].

The ruling by the Ninth Circuit Court of Appeals wasn’t significant only for the Tribes. It also represents a substantial blow to other states that may be considering using compact negotiations as leverage for ancillary items. The Ninth Circuit panel concluded that IGRA is not an omnibus negotiation tool for other matters of tribal relations.

The Quest for Compensation

Following the Ninth Circuit decision, there has been a growing debate over whether the State of California should have to compensate the Tribes for their attorneys’ fees. Generally speaking, each party in a federal case is responsible for paying their own lawyers. There are exceptions, however.

The California Tribes argue that this case falls under the Kent exception. They claim that their claims have a fundamental basis in State law. The Tribes argue that the federal Court should therefore award attorneys’ fees as a matter of State law.

They cite California’s exceptional waiver of sovereign immunity for IGRA claims. The Tribes argue that the statute that waives the State’s sovereign immunity brings the matter under state law. That, they say, allows for recovery of legal fees.

The Tribes contend that the only mechanism for them to address the State’s bad faith in negotiation was through the sovereign immunity waiver. IGRA itself does not afford any mechanism to address a state’s bad-faith negotiations.

Sovereign Immunity Here, but Not There?

The State has argued that waiving its sovereign immunity for suits over bad faith negotiations does not automatically waive it in regard to attorneys’ fees stemming from such claims.

The Tribes say that the State has failed to establish that claim. It references Section 1021.5 of the California Code of Civil Procedure. That cites a 1980 case in which the Court found:

The Legislature has in the precise terms of Code of Civil Procedure Section 1021.5 waived sovereign immunity to the extent of authorizing attorney’s fees against ‘public entities’ as a generic group provided the other preconditions are met.

The Tribes argue that federal court procedure does not bar the recovery of attorneys’ fees and costs. By their reckoning, a federal court can treat the State like any other defendant when it comes to legal fees.

The Tribes also claim that California waived its sovereign immunity through its “litigation conduct.”

They point to the fact that the State did not assert its sovereign immunity at any point during the case. They even failed to raise the issue in response to the Tribes’ request for attorneys’ fees in the complaint.

Proportional to the Burden?

The Tribes argue that the award of fees is also appropriate because they undertook a financial burden to vindicate their rights.

Undertaking litigation is costly. In this case, victory lacked a “direct pecuniary benefit,” which the Tribes say makes compensation warranted.

What to Make of This Case?

The dispute over attorneys’ fees is a relatively minor aspect of this case. The meat of the matter has already been resolved.

Gov. Newsom’s acknowledgment of bad faith means any further appeals are almost certainly off the table. Resolving the fee dispute will be a step forward in the compacting process.

The most important aspect of the case is that the Ninth Circuit decision represents an important warning to other states that IGRA is not an opportunity to force tribal governments to the table on unrelated issues. It’s important to note, though, that California’s position is unusual because it has waived its sovereign immunity, so there’s no guarantee that other tribes in other states would obtain the same result.

About the Author

John Holden

John Holden is a writer at Bonus, focused on legal and regulatory issues in the gambling industry. He is a full-time academic but has been writing for a number of gaming publications since 2018. He is the author of more than 50 academic publications and hundreds of mainstream articles on the regulation of the gaming industry.

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