California COA Briefs in Sharp Image Gaming v. Shingle Springs Miwok
Interesting and important case. The appeal is from a $30 million judgment against the Shingle Springs Band of Miwok Indians in favor of a developer of a gaming facility that failed in the 1990s, before the Tribe partnered with a new developer and spent hundreds of millions of dollars to open the existing Red Hawk Casino. The case went to trial after the NIGC’s final agency action ruling the main contract at issue was void as an unapproved management agreement.
[T]he Superior Court erred in assuming subject matter jurisdiction over this breach of contract lawsuit by purporting to overturn a federal agency’s binding determination that the contract was unenforceable under a preemptive federal statute. It was also error to assume jurisdiction over a sovereign Indian nation after finding the Tribe did not clearly and unequivocally waive its immunity.
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Once the NIGC took final agency action ruling Sharp’s ELA was a management contract that was void for lack of agency approval, this case was effectively over—or at least it should have been. The decision of the NIGC, the federal agency charged with approving and disapproving management contracts under IGRA, is binding on lower courts unless successfully challenged in a United States District Court. AT&T, 295 F.3d 899, 906, 909-10. Sharp opposed the Tribe’s efforts to stay the Superior Court action to permit Sharp to initiate proceedings in the only proper forum: federal district court. . . . Instead, Sharp convinced the Superior Court to reach the merits of the NIGC’s decision and enforce the very revenue sharing provisions the NIGC deemed illegal. . . . Sharp’s election to proceed without first challenging the NIGC’s final agency action is dispositive of the viability of Sharp’s ELA: it is void unless and until Sharp brings a proper federal court challenge, and any claims predicated on the ELA’s validity fail as a matter of law.
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The Superior Court erred by failing to dismiss this case on mandated federal sovereign immunity principles. In ruling on the Tribe’s jurisdictional motion to dismiss, the Court erroneously applied inapposite state law contract interpretation cases when the question is controlled by federal law. . . . The Court also erred, as a matter of law, by failing to treat the defense as a question that needed to be resolved at the outset of the case, as opposed to one appropriate for a jury. . . . Finally, the Superior Court erred when it issued a ruling that should have compelled dismissal, since it found that the Tribe’s reading of the waiver provision in Sharp’s contracts was “reasonable” given the evidence regarding the waiver’s actual scope—i.e., that the waiver of immunity did not reach Sharp’s claims, and was limited to the gaming facility that Sharp and the Tribe had partnered to build, Crystal Mountain Casino.