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State v. U.S. Department of Interior

United States District Court, District of Columbia

February 15, 2019

STATE OF CONNECTICUT and MASHANTUCKET PEQUOT TRIBE Plaintiffs,
v.
U.S. DEPARTMENT OF THE INTERIOR and RYAN ZINKE, Secretary of the Interior Defendants, and MGM RESORTS GLOBAL DEVELOPMENT, LLC, Defendant-Intervenor.

          MEMORANDUM OPINION GRANTING IN PART PLAINTIFFS' MOTION TO AMEND COMPLAINT

          RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before this Court is the latest volley in a contentious, long-running battle over a stalled casino project in East Windsor, Connecticut. The state of Connecticut (the “State”) and the Mashantucket Pequot Tribe claim that the United States Secretary of the Interior has unlawfully declined to approve an agreement that would allow them to begin constructing the casino. Defendants-the Secretary, the Department of the Interior, and MGM Resorts Global Development, LLC-argue that the Secretary has violated no law. Having failed to convince this Court of their first theory of the case, Plaintiffs-the State and the Pequot-seek to amend their complaint and take a second bite at the apple. While Plaintiffs' motion appears to be the product of tactical timing more than newly-discovered information or legal theories, allowing the case to proceed would not unduly prejudice Defendants. And while one of Plaintiffs' three proposed claims would not survive a motion to dismiss, the Court cannot say that amendment would be futile as to the other two claims. Thus, for the reasons stated below, the Court will allow Plaintiffs to amend their complaint in certain respects.

         II. BACKGROUND[1]

         A. The Indian Gaming Regulatory Act

         The Indian Gaming Regulatory Act (“IGRA”) governs Class III casino gaming- blackjack, roulette, slot machines, and other casino games-on tribal land. 25 U.S.C. §§ 2701 et seq.; 25 C.F.R. § 502.4; Amador Cty. v. Salazar, 640 F.3d 373, 376 (D.C. Cir. 2011). It mandates that a tribe must obtain authorization from a state before conducting Class III gaming on land within that state's borders. 25 U.S.C. § 2710(d)(1)(C). That authorization may be obtained in one of two ways: (1) negotiating a tribal-state compact with the state, see id. § 2710(d)(3)(A); or (2) asking the Secretary to impose secretarial procedures, see id. § 2710(d)(7)(B).

         A tribal-state compact is “an intergovernmental agreement executed between Tribal and State governments under the [IGRA] that establishes . . . the terms and conditions for the operation and regulation of the tribe's Class III gaming activities.” 25 C.F.R. § 293.2. If the Secretary does not explicitly approve or disapprove a tribal-state compact within 45 days after the Office of Indian Gaming receives it, [2] the compact shall be automatically approved “to the extent the compact is consistent with” the IGRA. 25 U.S.C. § 2710(d)(8)(A)-(C); 25 C.F.R. §§ 293.10-12. The Secretary may disapprove a compact for one of three reasons: (1) it violates the IGRA, (2) it violates any other provision of Federal law that does not relate to jurisdiction over gaming on tribal land, or (3) it violates the United States' trust obligations to Native Americans. 25 U.S.C. § 2710(d)(8)(B); 25 C.F.R. § 293.14. Once a compact is approved, the Secretary must publish that approval in the Federal Register within 90 days from the date of receipt. 25 U.S.C. § 2710(d)(8)(D); 25 C.F.R. § 293.15(b). The compact becomes effective when its approval is published. 25 U.S.C. § 2710(d)(3)(B); 25 C.F.R. § 293.15(a). The Department's regulations apply these same procedural and substantive requirements to compact amendments. See 25 C.F.R. §§ 293.4, 293.10.

         Secretarial procedures govern class III tribal gaming when a tribe and a state cannot reach good faith agreement on a compact. 25 U.S.C. § 2710(d)(7)(B)(vii)(II). These procedures result from a series of forced negotiations between the tribe and the state, including mediation. See id. § 2710(d)(7)(A), (B). If the tribe and the state ultimately cannot agree on a compact, “the Secretary shall prescribe, in consultation with the Indian tribe, procedures” for Class III gaming activities “which are consistent with the proposed compact selected by the mediator . . . the provisions of [the IGRA], and the relevant provisions of the laws of the [s]tate.” Id. § 2710(d)(7)(B)(vii)(I). The Department has not issued regulations governing the secretarial procedures or procedure amendments at issue in this action.[3]

         B. Relevant Facts and Procedural History

         In 1989, the Pequot sought to open a casino in Connecticut. See Mashantucket Pequot Tribe v. Connecticut, 913 F.2d 1024, 1026 (2d Cir. 1990), cert. denied, 499 U.S. 975 (1991). However, the Pequot and the State could not agree on a tribal-state compact to govern the Pequot's gambling activities. Id. at 1027. The Pequot accordingly availed themselves of the IGRA's secretarial procedures mechanism, and in 1991 the Secretary imposed procedures (the “Pequot Procedures”) on the Pequot and the State. See Compl. ¶ 25, ECF No. 1; Notice of Final Mashantucket Pequot Gaming Procedures, 56 Fed. Reg. 24, 996 (May 31, 1991). The Pequot's casino has operated under these procedures ever since. In 1994 the State and another tribe, the Mohegan Tribe of Indians of Connecticut (the “Mohegan”) (together with the Pequot, the “Tribes”), executed a tribal-state compact (the “Mohegan Compact”) allowing the Mohegan to operate their own casino within the State. See Compl. ¶ 24.[4]

         In return for the State allowing the Tribes to operate casinos, the Pequot Procedures and Mohegan Compact Memoranda of Understanding mandate that the State receive a percentage of the Tribes' gross operating revenues from certain gambling activities. See generally Pequot Procedures MOU; Mohegan Compact MOU. They also mandate that if the State permits “any other person” to engage in those activities, the State is no longer entitled to its royalty payments (the “exclusivity clauses”). See id. By their terms both the Pequot Procedures and the Mohegan Compact may be amended only by written agreement of the Tribes and the State, and the amendments do not become effective until the Secretary approves them and publishes notice of that approval in the Federal Register in accordance with 25 U.S.C. § 2710(d)(3)(B).[5] See Pequot Procedures § 17; Mohegan Compact § 17.

         In 2015, the Tribes agreed to form a joint venture, MMCT Venture LLC (“MMCT”), to build and operate an off-reservation, commercial casino in East Windsor, Connecticut.[6] Decl. of Uri Clinton (“Clinton Decl.”) ¶¶ 17-19, ECF No. 11-2; see also MMCT's Articles of Organization, Mem. Supp. MGM's Mot. Leave Intervene Ex. A, ECF No. 11-3. The proposed East Windsor casino project threatened MGM's plans in the region. MGM was in the midst of constructing a casino in Springfield, Massachusetts, a mere twelve miles north of East Windsor. See Pls.' Opp'n to Defs.' Partial Mot. to Dismiss at 9, ECF No. 27; Clinton Decl. ¶¶ 13, 17, 20.[7]MGM also planned to pursue a casino project in Bridgeport, Connecticut. See Clinton Decl. ¶¶ 5, 8. It thus lobbied against legislative approval of the Tribes' casino, arguing that Connecticut should implement a competitive selection process for the right to operate the State's first commercial casino. Id. ¶ 6. Those efforts failed, and the Tribes secured their casino project's conditional approval in 2017 through the passage of Public Act 17-89.[8] 2017 Conn. Acts 17-89 (Reg. Sess.). This setback notwithstanding, MGM continued to push for a Bridgeport casino. See Clinton Decl. ¶¶ 8-10.

         Public Act 17-89 states that MMCT “is authorized to conduct authorized games at a casino . . . at 171 Bridge Street, East Windsor.” 2017 Conn. Acts 17-89 § 14(b) (Reg. Sess.). Its passage did not, however, remove all obstacles from the Tribes' path to operating Connecticut's first commercial casino. Rather, it provides that its “authorization shall not be effective unless”:

(1) the Tribes and the State's governor execute “amendments to” the Pequot Procedures and the Mohegan Compact, and their memoranda of understanding, creating a special exemption for MMCT such that “authorization of MMCT . . . to conduct [casino] games in the [S]tate does not terminate” the Tribes' obligation to pay the State royalties from their gaming activities;
(2) the amendments “are approved or deemed approved by the Secretary . . . pursuant to the [IGRA] . . . and its implementing regulations”;
(3)-(4) the amendments “are approved by” the Connecticut legislature; and
(5) the Tribes pass resolutions providing that the State may sue the Tribes if MMCT fails to pay any fees or taxes due to the State.

Id. § 14(c). To satisfy the Act's conditions, the State and the Tribes agreed to amend the Pequot Procedures and the Mohegan Compact to exempt MMCT from the exclusivity clauses. Compl. ¶ 27.

         During the amendment process the Tribes allegedly requested technical assistance from the Office of Indian Gaming, and according to Plaintiffs that Office “repeatedly informed representatives of the Tribes that it intended to approve” the amendments. Id. ¶¶ 28-31. The Tribes and the State duly approved and executed the amendments according to Tribal and State law, id. ¶ 33, and in late July and early August 2017, the Tribes requested that the Office of Indian Gaming formally approve the amendments. See Compl. ¶ 32; First Am. Compl. (“FAC”) Ex. 1, ECF No. 60-2 at 21-69. Instead, the Secretary's office “return[ed]” the amendments to the Tribes and the State “to maintain the status quo, ” stating:

We find that there is insufficient information upon which to make a decision as to whether a new casino operated by the Mohegan and Mashantucket Pequot Tribes (Tribes) would or would not violate the exclusivity clauses of the Gaming Compact [and Pequot Procedures]. The Tribes have entered an agreement with the State whereby they have agreed that the exclusivity [clauses] will not be breached by this arrangement. Therefore, our action is unnecessary at this time.

See Mem. Supp. Pls.' Mot. (“Pls.' Mem.”) Ex 4, ECF No. 60-2 at 91-93;[9] see also Compl. ¶ 37. This response prompted the Tribes and the State to file suit in this Court.

         The Tribes and the State initially claimed that because the Secretary did not explicitly disapprove their proposed amendments to the Pequot Procedures and the Mohegan Compact within 45 days, the IGRA required that the Secretary deem the amendments approved by law and publish notice of that approval in the Federal Register. See id. ¶¶ 40-60. Shortly after the complaint was filed, the Secretary approved the proposed amendments to the Mohegan Compact and published that approval.[10] See Tribal-State Class III Gaming Compact Taking Effect in the State of Connecticut, 83 Fed. Reg. 25, 484 (June 1, 2018); First Joint Status Report at 1, ECF No. 41. This Court then concluded that the procedural requirements governing the Secretary's approval of tribal-state compacts and compact amendments-including amendments to the Mohegan Compact-do not govern the Secretary's approval of secretarial procedures and procedures amendments-including amendments to the Pequot Procedures. Connecticut v. U.S. Dep't of Interior, 344 F.Supp.3d 279, 318-19 (D.D.C. 2018). The Court dismissed the initial complaint on those grounds. Id. at 319-20.

         Undeterred, the remaining Plaintiffs-the State and the Pequot-seek to press on with new theories. They have moved to amend their complaint to assert three new claims, discussed in greater detail below. See Pls.' Mot. For Leave to Amend Compl., ECF No. 60; FAC. Although the proposed claims are different than Plaintiffs' original claims, they arise from the same event: The Secretary's refusal to approve, or explicitly disapprove, the proposed amendments to the Pequot Procedures. The proposed claims also arise under the same cause of action as the original claims: The Administrative Procedure Act (“APA”), 5 U.S.C. § 706. Despite these similarities, Defendants argue that the Court should deny Plaintiffs' motion to amend their complaint. Fed. Defs.' Opp'n to Pls.' Mot., ECF No. 62; MGM's Opp'n to Pls.' Mot., ECF No. 63. The issue has been fully briefed and is ripe for the Court's consideration.

         III. LEGAL STANDARD

         Federal Rule of Civil Procedure 15(a) permits a plaintiff to amend its complaint once as a matter of course within 21 days of serving it or within 21 days of the filing of a responsive pleading. Fed.R.Civ.P. 15(a)(1). Otherwise, the plaintiff may amend its pleading only with the opposing party's written consent-which has been denied in this case-or the Court's leave. Fed.R.Civ.P. 15(a)(2).

         “The decision to grant or deny leave to amend . . . is vested in the sound discretion of the trial court.” Commodore-Mensah v. Delta Air Lines, Inc., 842 F.Supp.2d 50, 52 (D.D.C. 2012) (citing Doe v. McMillan, 566 F.2d 713, 720 (D.C. Cir. 1977)). And Rule 15 instructs courts to “freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2); see also Belizan v. Hershon, 434 F.3d 579, 582 (D.C. Cir. 2006) (explaining that Rule 15 “is to be construed liberally”). Generous standard notwithstanding, courts may deny leave to amend for such reasons as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962). “Amendments that do not radically alter the scope and nature of the action . . . are especially favored.” United States ex rel. Westrick v. Second Chance Body Armor, Inc., 301 F.R.D. 5, 8 (D.D.C. 2013) (quoting Estate of Gaither ex rel. Gaither v. District of Columbia, 272 F.R.D. 248, 252 (D.D.C. 2011)). Finally, “[t]he party opposing the amendment bears the burden to show why leave should not be granted.” Flaherty v. Pritzker, 322 F.R.D. 44, 46 (D.D.C. 2017) (citing Dove v. Washington Metro. Area Trans. Auth., 221 F.R.D. 246, 247 (D.D.C. 2004)).

         IV. ANALYSIS

         Plaintiffs seek to add three claims to their complaint. First, Plaintiffs argue that “Federal Defendants' purported ‘return' of the [Pequot Procedures amendments] was arbitrary and capricious on its face, ” particularly given the Secretary's approval of the identical Mohegan Compact amendment. Pls.' Mem. at 7, ECF No. 60-1; FAC ¶¶ 60-66. Second, Plaintiffs argue that “Federal Defendants' failure to approve the [Pequot Procedures amendments] was the product of improper political influence.” Pls.' Mem. at 7; FAC ¶¶ 68-72. Third, Plaintiffs argue that the proposal ...


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