in the united states district court for the … · e. equitable estoppel is inapplicable here under...

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Case No.: CV 1955 LAB AJB

AMENDED [WITH TABLES] MOTION TO DISMISS OPPOSITION

Robert A. Rosette (Cal. Bar No. 224437) Cheryl A. Williams (Cal. Bar No. 193532) Kevin M. Cochrane (Cal. Bar No. 255266) ROSETTE & ASSOCIATES, PC 193 Blue Ravine, Suite 255 Folsom, CA 95630 Telephone: (916) 353-1084 Facsimile: (916) 353-1085 Attorneys for Plaintiff PAUMA BAND OF LUISENO MISSION INDIANS

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF CALIFORNIA

PAUMA BAND OF LUISENO MISSION INDIANS OF THE PAUMA & YUIMA RESERVATION, a/k/a PAUMA LUISENO BAND OF MISSION INDIANS, a/k/a PAUMA BAND OF MISSION INDIANS, a federally recognized Indian Tribe,

Plaintiff,

vs.

STATE OF CALIFORNIA; CALIFORNIA GAMBLING CONTROL COMMISSION, an agency of the State of California; and ARNOLD SCHWARZENEGGER, as Governor of the State of California,

Defendants.

Case No.: CV 1955 LAB AJB AMENDED [WITH TABLES] PLAINTIFF PAUMA’S OPPOSITION TO STATE DEFENDANTS’ MOTION TO DISMISS COMPLAINT FOR EQUITABLE, DECLARATORY AND INJUNCTIVE RELIEF Date: January 19, 2010 Time: 11:15 a.m. Dept: 9 Judge: The Honorable Larry A. Burns

Case 3:09-cv-01955-LAB-AJB Document 15 Filed 01/05/10 of 31

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i Case No.: CV 1955 LAB AJB


TABLE OF CONTENTS

I. INTRODUCTION AND SUMMARY OF ARGUMENT.................................................................. 1

II. ARGUMENT ...................................................................................................................................... 3

A. Pauma’s Complaint States A Viable Claim For Mistake Of Fact................................................... 3

B. The Complaint Alleges A Viable Claim For Mistake Of Law. ...................................................... 9

C. The Complaint Properly Alleges Sufficient Facts Constituting A Claim For Rescission Based On Frustration Of Purpose Or Failure Of Consideration. ................................................................... 11

D. Pauma’s Seventh And Eight Claims For Relief Properly Assert Illegal Taxation Claims, Which This Court Has Jurisdiction And Remedial Authority Over. ........................................................ 14

E. Equitable Estoppel Is Inapplicable Here Under California And Federal Law.............................. 20

F. Pauma Has Standing To Bring Suit On The 1999 Compact For A Breach Of Its Terms............. 23

G. Pauma’s Claims Are Ripe For Review Because The CGCC Is Presently Executing The Eastern District’s Final Order On The Size Of The Gaming Device License Pool. .................................. 24

III. CONCLUSION ............................................................................................................................. 25


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ii Case No.: CV 1955 LAB AJB


TABLE OF AUTHORITIES

CASES

Abbott Laboratories v. Gardner, 387 U.S. 136 (1967) ......................................................................... 3, 25

Adams v. Heinsch, 89 Cal. App. 2d 300 (1948) ........................................................................................ 20

Agua Caliente Band of Mission Indians v. County of Riverside, 442 F.2d 1184 (9th Cir. 1971), cert. denied, 405 U.S. 933 S. Ct. 930 (1972)........................................................................... 18

Airs Int’l Inc. v. Perfect Scents Dist., Ltd., 902 F. Supp. 1141 (N.D. Cal. 1995) ................................. 2, 24

B.E. Campbell v. Rainey, 127 Cal. App. 747 (1932.................................................................................. 10

Bollard v. Cal. Province of the Society of Jesus, 196 F.3d 940 (9th Cir. 1999)........................................ 14

Cabazon Band of Mission Indians v. Wilson, 124 F.3d 1050 (9th Cir. 1997) .......................... 2, 17, 18, 19

Cachil Dehe Band of Wintun Indians, et al. v. State of California, et al., Civ. Case No. 04-2265 (E.D. Cal.) ............................................................................................................................. 20

Cal. Bagel Co., LLC v. Am. Bagel Co., 2000 U.S. Dist. LEXIS 22898, *33-34, fn 67 (C.D. Cal. June 9, 2000)........................................................................................................................ 8

Calabrese v. Rexall Drug & Chem. Co., 218 Cal. App. 2d 774 (1963).................................................... 11

City Lincoln-Mercury Co. v. Lindsey, 52 Cal. 2d 267 (1959)................................................................... 21

Colby v. Title Ins. & Trust Co., 160 Cal. 632 (1911)................................................................................ 21

Comer v. Micro, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006) ..................................................................... 21

Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99 (1957) ................................................................................... 3

Cook v. King Manor & Convalescent Home, 40 Cal. App. 3d 782 (1974)............................................... 21

Cooley v. County of Calaveras, 121 Cal. 482 (1898) ............................................................................... 10

Crocker-Anglo Nat’l Bank v. Kuchman, 224 Cal. App. 2d 490 (1964) ...................................................... 7

Donovan v. RRL Corp., 26 Cal. 4th 261 (2001).............................................................................. 1, 4, 5, 6

Eluschuk v. Chemical Engineers Termite Control, Inc., 246 Cal. App. 2d 463 (1966)............................ 23

Enodis Corp. v. Employers Ins. Co. of Wausau, 2003 WL 25781254 (C.D. Cal. 2003) .......................... 23

Fairlane Estates v. Carrico Constr. Co., 228 Cal. App. 2d 65 (1964) ..................................................... 13

Fewel & Dawes v. Pratt, 17 Cal. 2d 85 (1941)......................................................................................... 21

G.M. Acceptance Corp. v. Brown, 2 Cal. App. 2d 646 (1934) ................................................................. 13

GDF Int’l, S.A., v. Associated Electric & Gas Ins. Services Ltd., 2003 WL 926790, *2 (N.D. Cal. 2003).................................................................................................................................. 23

Gilligan v. Jamco Develop. Corp., 108 F.3d 246 (9th Cir. 1997)............................................................... 3

Grant v. State Farm Life Ins. Co., 2007 WL 3119738, *3 (E.D. Cal. 2007) ............................................ 23

Han v. Mobil Oil Corp., 73 F.3d 872 (9th Cir. 1995) ............................................................................... 23

Harper v. Kaiser Cement Corp., 144 Cal. App. 3d 616 (1983) ................................................................ 21

Harris v. Rudin, Richman & Appel, 95 Cal. App. 4th 1332 (2002) .......................................................... 10

Hatchwell v. Blue Shield of Calif., 198 Cal. App. 3d 1027 (1988) ........................................................... 23

Howard v. Everex Sys., 228 F.3d 1057 ....................................................................................................... 3

Idaho v. Shoshone-Bannock Tribes, 465 F.3d 1095 (9th Cir. 2006)................................................... 19, 20


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iii Case No.: CV 1955 LAB AJB


In re GVF Cannery, Inc., 188 B.R. 651 (Bankr. N.D. Cal. 1995) ............................................................ 21

In re Indian Gaming Related Cases, 331 F.3d 1094 (9th Cir. 2003) .............................................. 2, 15, 17

International Bus. Lists, Inc. v. Am. Tel. & Tel. Co., 147 F.3d 636 (7th Cir. 1998)................................. 23

Irvine v. Cargill Investor Services, Inc., 799 F.2d 1461 (11th Cir. 1986) ................................................ 21

Kaneb Services, Inc. v. Federal Sav. and Loan Ins. Corp., Inc., 650 F.2d 78 (5th Cir. 1981).................................................................................................................................................... 21

Krobitzsch v. Middleton, 72 Cal. App. 2d 804 (1946) .............................................................................. 14

Main St. Etc. Co. v. Los Angeles Traction Co., 129 Cal. 301 (1900) ....................................................... 14

Merced County Mut. Fire Ins. Co. v. Cal., 233 Cal. App. 3d 765 (1991)................................................... 7

Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1973)........................................................................... 19

Montana v. Blackfeet Tribe of Indians, 471 U.S. 759 (1985) ................................................................... 19

Mosher v. Mayacamas Corp., 215 Cal. App. 3d 1 (1989) ...................................................................... 8, 9

Motown Record Corp. v. Brockert, 160 Cal. App. 3d 123 (1984) ............................................................ 14

Neitzke v. Williams, 490 U.S. 319 (1989) ................................................................................................... 3

No. 84 Employer-Teamster Joint Council Pension Trust Fund v. Am. W. Holding Corp., 320 F.3d 930 (9th Cir. 2003)................................................................................................................. 3

Okla. Tax Comm’n v. Chickisaw Nation, 515 U.S. 450 (1995) ................................................................ 15

Patriot Sci. Corp. v. Korodi, 504 F. Supp. 2d 952 (S.D. Cal. 2007)......................................................... 13

Pauma Band of Luiseno Mission Indians v. Harrah’s, 2009 Cal. App. Unpub. LEXIS 7720 (2009) ......................................................................................................................................... 12

Quinault Indian Nation v. Grays Harbor County, 310 F.3d. 645 (9th Cir. 2002) .................................... 19

Regan v. Albin, 219 Cal. 357 (1933) ......................................................................................................... 21

Rincon Band of Luiseno Mission Indians of Rincon Reservation v. Schwarzenegger, 2008 WL 6136699 (S.D. Cal. Apr. 29, 2008) ......................................................................... 2,13, 14, 16, 22

Rincon Band of Luiseno Mission Indians of the Rincon Reservation v. Schwarzenegger, et al., Civ. Case No. 04-1151 (S.D. Cal)................................................................................................. 20

Rued v. Cooper, 119 Cal. 463 (1897).......................................................................................................... 9

San Pasqual Band of Mission Indians v. State of California, Civ. Case No. 06-0988 (S.D. Cal.) ..................................................................................................................................................... 20

Schultz v. Contra Costa, 157 Cal. App. 3d 242 (1984)........................................................................... 4, 9

Selna v. Selna, 125 Cal. 357 P. 15 (1899)................................................................................................. 21

Skull Valley Band of Goshute Indians v. Nielson, 376 F.3d 1223 (10th Cir. 2004).................................. 25

Spector v. Pete, 157 Cal. App. 2d 432 (1958)........................................................................................... 21

Stermer v. Bd. of Dental Examiners, 95 Cal. App. 4th 128 (2002)............................................................. 9

Thomas v. Krug, 139 Cal. App. 2d Supp. 941 (1956)................................................................................. 9

2ds Ins. Co. v. Workmen’s Comp. Appeals Bd., 68 Cal. 2d 7 (1965)........................................................ 23

United Paperworkers Intern. Union, AFL-CIO v. Misco, Inc., 484 U.S. 29 (1987)................................. 19

United States v. Redwood City, 640 F.2d 963 (9th Cir. 1981) .................................................................... 3

United States v. the Spokane Tribe of Indians, 139 F.3d 1297 (9th Cir. 1998) ........................................ 18


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iv Case No.: CV 1955 LAB AJB


Van Meter v. Bent Constr. Co., 46 Cal. 2d 588 (1956) ............................................................................... 7

Waegemann v. Montgomery Ward & Co, Inc., 713 F. 2d 452 (9th Cir. 1983) ......................................... 13

Waldrip v. Hamon, 136 F. Supp. 412 (E.D. Okla. 1955) .......................................................................... 23

Wash. Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260 (5th Cir. 2004) ..................................................... 21

Wells v. Comstock, 46 Cal. 2d 528 (1956) ................................................................................................ 21

Williams v. Puccinelli, 236 Cal. App. 2d 512 (1965).................................................................................. 9

Wingerter v. San Francisco, 134 Cal. 547 (1901) .................................................................................... 10

Wisconsin v. Ho-Chunk Nation, 512 F.3d 921 (7th Cir. 2008) ................................................................. 20

Wood v. Imperial Irr. Dist., 216 Cal. 748 (1932)...................................................................................... 21

OTHER AUTHORITIES

17A Am.Jur.2d Contracts, § 507............................................................................................................... 14

25 U.S.C. § 2701 ......................................................................................................................................... 5

25 U.S.C. § 2702 ................................................................................................................................. 13, 19

25 U.S.C. § 2710 ........................................................................................................... 2, 14, 15, 16, 17, 18

28 Am. Jur. 2d Estoppel and Waiver § 65 ................................................................................................ 21

30 Cal. Jur., Estoppel and Waiver § 28..................................................................................................... 21

5 Williston on Contracts § 1500.................................................................................................................. 7

California Civil Code § 1577 ...................................................................................................................... 3

California Civil Code § 1578 ...................................................................................................................... 9

California Civil Code § 1607 .................................................................................................................... 20

California Civil Code § 1608 ................................................................................................................ 2, 20



California Civil Code § 1689 ...................................................................................... 1, 2, 3, 10, 11, 14, 19


California Evidentiary Code § 623.............................................................................................................. 8

Rest. 2d., Contracts, § 152, com. C ............................................................................................................ 5

Rest. 2d., Contracts, § 279 ........................................................................................................................ 24

Rest. 2d., Contracts, § 154 .......................................................................................................................... 7

Rest. 2d., Contracts, § 503 .......................................................................................................................... 4

Witkin, Summary of California Law, 9th ed., Contracts, § 378 ................................................................. 9

Witkin, Summary of California Law, 9th ed., Contracts, § 442 ................................................. 2, 9, 11, 21

Witkin, Summary of California Law, 9th ed., Contracts, § 787 ............................................................... 11


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1 Case No.: CV 1955 LAB AJB


I. INTRODUCTION AND SUMMARY OF ARGUMENT

Plaintiff Pauma Band of Luiseno Indians (“Pauma”) submits this memorandum in opposition to

State Defendants’ Motion to Dismiss Complaint for Equitable, Declaratory and Injunctive Relief

(“MTD”). Defendants’ attack on Plaintiff’s complaint is based almost entirely on improper factual

conclusions and misinterpretation of the relevant law, and must, therefore, be denied.

Plaintiff sufficiently pleads rescission based on mistake of fact and/or law because the Complaint

more than satisfies the requirements of Cal. Civ. Code § 1689 and the California Supreme Court in

Donovan v. RRL Corp., 26 Cal. 4th 261, 280 (2001). While the State argues that Pauma bears the risk of

mistake in contracting because the Tribe was aware of a controversy regarding the size of the license

pool, no such facts are properly before the Court on a motion to dismiss. Moreover, none of the

documents improperly submitted with Defendants’ Request for Judicial Notice (“RJN”) establish

Pauma’s knowledge at the time of contracting.1 As the case most relied upon by Defendants makes

clear, whether the parties bargained for future uncertainties as to the law or facts is a question of the

parties’ intentions at the time of contracting and cannot be decided as a matter of law at the motion to

dismiss stage. Guthrie v. Times-Mirror Co., 51 Cal. App. 3d 879, 885-86 (1975).

Pauma also sufficiently pleads its frustration of purpose/failure of consideration claim. This

claim alleges that Pauma did not get the benefit of its bargain due to the State’s misrepresentations

regarding the license pool, meaning that the State receives over 25 times per year more from Pauma

while Pauma has essentially received no concessions in return. Pauma already had the right to operate

1050 machines, had the ability to reach 2,000 machines, and already had exclusive gaming rights under

the 1999 Compact. Thus, the Complaint alleges that several intervening events, which both parties

assumed would NOT happen, have rendered the State’s consideration meaningless: (1) the revelation

that the State misinterpreted the 1999 compact and wrongfully withheld licenses under the 1999

compact and (2) the failure of Pauma’s development plans upon which the compact payments were

structured. Moreover, the harm caused to Pauma as a result of the 2004 Compact frustrates the intent of

the 2004 Compact and IGRA to promote Tribal self-sufficiency and economic development. Further,

1 Plaintiff objects to Defendants’ RJN in the concurrently filed Plaintiff’s Objection to Defendants’ Request for Judicial Notice (“Obj. to RJN”) on the ground that the “facts” Defendants seek to notice are subject to dispute, and therefore, not properly the subject of judicial notice.


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Rincon Band of Luiseno Mission Indians of Rincon Reservation v. Schwarzenegger, 2008 WL 6136699

(S.D. Cal. Apr. 29, 2008), provides authority showing that the State’s concessions (i.e., consideration) in

exchange for Pauma’s exponentially increased payments were not meaningful, and that offering market

exclusivity already possessed by Pauma in the 1999 Compact and by Pala in the 2004 compact is legally

insufficient. Nonetheless, whether there is material failure in consideration to be rendered to the

rescinding party is a question of fact not capable of determination on a motion to dismiss. Calabrese v.

Rexall Drug & Chemical Co., 218 Cal. App. 2d 774 (1963).

Further, Plaintiff’s IGRA claims properly assert violations of IGRA that render the 2004

Compact void due to illegality and therefore subject to rescission. Defendants’ narrow reading of IGRA

ignores Ninth Circuit precedent suggesting that §§ 2710(d)(3)(C) and (d)(4) create stand-alone bases for

jurisdiction where State fees required by a compact constitute an illegal tax. See Cabazon Band of

Mission Indians v. Wilson, 124 F.3d 1050 (9th Cir. 1997) (rejecting similar argument as that made by

the State here to limit federal court jurisdiction over IGRA claims). See also In re Indian Gaming

Related Cases, 331 F.3d 1094, 1112-13 (9th Cir. 2003) (“Coyote Valley II”) (establishing the test for

determining whether a state fee required under a compact is a permissible assessment that is reasonably

related to the regulation of Indian Gaming, the adverse effects therefrom, or the support of Non-

Compact Tribes, or a form of “revenue sharing” that is unlawful (i.e. illegal tax) if not counter-balanced

by concessions of sufficient value). Even so, Pauma need not establish a private right of action under

IGRA to rescind an illegal contract. See Cal. Civ. Code § 1689 (providing for rescission “[i]f the

contract is unlawful for causes which do not appear in its terms or conditions, and the parties are not

equally at fault”) and § 1608 (“[i]f any part of a single consideration for one or more objects, or of

several considerations for a single object, is unlawful, the entire contract is void”).

Nor can Defendants’ equitable estoppel argument save the 2004 Compact as an illegal contract.

“Since an illegal contract is void, it cannot be ratified by any subsequent act, and no person can be

estopped to deny its validity.” Witkin, Summary of California Law, 9th ed., § 442. Further, California

law provides precedent for reviving the parties’ obligations under the 1999 Compact in place of the

illegal 2004 Compact. Airs Int’l Inc. v. Perfect Scents Dist., Ltd., 902 F. Supp. 1141, 1148 (N.D. Cal.

1995) (applying California law: if substituted contract found void, prior contract then becomes


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enforceable again), meaning that Pauma has standing to bring a declaratory relief action on the 1999

Compact. In addition, the Complaint establishes standing to bring a declaratory relief action based on

the 1999 Compact because the license pool may be depleted by other 1999 Compact Tribes should

Pauma be required to first resolve the instant suit as to the 2004 Compact before bringing its declaratory

relief claim on the 1999 Compact. See Abbott Laboratories v. Gardner, 387 U.S. 136 (1967) (ripeness

determination turns on the “fitness of the issues for judicial decision” and “the hardship to the parties of

withholding court consideration”). Accordingly, the instant motion should be denied in its entirety.

II. ARGUMENT

“The motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted.”

Gilligan v. Jamco Develop. Corp., 108 F.3d 246, 249 (9th Cir. 1997) (internal quotations omitted). A

12(b)(6) dismissal is proper only in “extraordinary” cases. United States v. Redwood City, 640 F.2d

963, 966 (9th Cir. 1981). A motion to dismiss must be denied “unless it appears beyond doubt that the

plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v.

Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102 (1957); Howard v. Everex Sys., 228 F.3d 1057, 1060 (9th

Cir. 2000). In considering a motion to dismiss, “[a]ll allegations of material fact made in the complaint

are taken as true and construed in the light most favorable to the plaintiff.” No. 84 Employer-Teamster

Joint Council Pension Trust Fund v. Am. W. Holding Corp., 320 F.3d 930, 931 (9th Cir. 2003).

Accordingly, even where the allegations appear improbable, they must be accepted as true for the

purposes of the motion. Neitzke v. Williams, 490 U.S. 319, 328-329 (1989).

A. Pauma’s Complaint States A Viable Claim For Mistake Of Fact.

California Civil Code § 1689(b)(1) provides that a party may rescind a contract “[i]f the consent

of the party rescinding, or of any party jointly contracting with him, was given by mistake, or obtained

through duress, menace, fraud, or undue influence, exercised by or with the connivance of the party as to

whom he rescinds, or of any other party to the contract jointly interested with such party.” California

Civil Code § 1577 provides that “[m]istake of fact is a mistake, not caused by the neglect of a legal duty

on the part of the person making the mistake, and consisting in . . . [b]elief in the present existence of a

thing material to the contract, which does not exist, or in the past existence of such a thing, which has

not existed.” Here, both parties either mistakenly believed in, or the State misrepresented, the existence


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of a past fact: that Pauma could not obtain additional licenses under the 1999 Compact. Complaint,

¶¶ 44-46, 60, 73-74, 78-79, 83-84, 88-89. Either way, Pauma sufficiently alleges that its consent to the

2004 Compact was given under the mistaken belief that it could not get additional licenses under the

1999 Compact, a belief caused by the State’s assertion of that fact. Id.

“Mutual mistake, whether of fact or law, which affects an essential element of the contract and is

harmful to one of the parties is subject to rescission by the party harmed.” Guthrie, 51 Cal. App. 3d

879, 884 (1975). Here, the parties’ mistake of fact as to Pauma’s inability to obtain additional licenses

under the 1999 Compact was material to the 2004 Compact. Pauma’s purpose in entering the

amendment was to obtain the additional 950 licenses required by its developer for its destination resort

casino, an amendment which would not have been necessary but for the State’s misrepresentation as to

the size of the 1999 Compact’s license pool. Complaint, ¶¶ 43-46. Further, the mistake in entering the

2004 Compact is harmful to Pauma because it must pay an exponentially higher amount to the State to

operate up to 2000 machines, which it already had the ability to do for a significantly lower amount

under the 1999 Compact. Id., ¶ 74, 79, 89, 95; See Schultz v. Contra Costa, 157 Cal. App. 3d 242

(1984) (Where a mistake of one party has a material effect on agreed performances, the contract is

voidable by him). Therefore, Pauma has sufficiently pled its mutual mistake of fact claim.

Even assuming that the mistake was unilateral on Pauma’s part, the Tribe nonetheless alleges a

valid claim for unilateral mistake. California long embraced the Restatement standard requiring a

plaintiff claiming unilateral rescission to show that the defendant either knew of or caused the mistake.

See Donovan v. RRL Corp., 26 Cal. 4th 261, 280 (2001), citing Rest. 2d, Contracts, § 503. The

California Supreme Court relaxed this standard by holding that if a party cannot meet this requirement,

he is entitled to rescission if: (1) he made a mistake regarding a basic assumption upon which he made

the contract; (2) the mistake has a material effect upon the agreed exchange of performances that is

adverse to him; (3) he does not bear the risk of mistake; and (4) the effect of the mistake is such that

enforcement of the contract would be unconscionable. Id. at 280-82.

In this case, Pauma need not reach the Donovan four-part test because the State either knew of

the mistake regarding the size of the license pool or caused the mistake by misinterpreting the 1999

Compact. Nevertheless, as explained more fully below, Pauma can meet the Donovan test by showing


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that: (1) Pauma made a mistake regarding a basic assumption upon which it made the contract – the

alleged necessity of paying 25 times more to obtain rights it already had under the 1999 Compact;

(2) the mistake had a material effect upon the agreed exchange of performance that is adverse to Pauma

because Pauma is essentially paying 25 times more for something that has little or no value at all;

(3) Pauma does not bear the risk of mistake because it is reasonable to allocate the risk to the State for

causing the misinterpretation of the 1999 Compact and in light of the State’s superior bargaining power;

and (4) the effect of the mistake is such that enforcement of the contract would be unconscionable and

cause economic hardship to Pauma, instead of promoting tribal self-sufficiency as intended by the

Compact (Complaint, Ex. B, p.1) and IGRA (see 25 U.S.C. § 2701(1)), by requiring higher fees for

rights denied under the 1999 Compact.

The allegations here are far more egregious than those in Donovan where the Court granted

rescission for a unilateral mistake of fact claim. In Donovan, the court refused to allow one party to take

advantage of an unfair, one-sided contract where the party seeking to rescind made a 32 percent error in

the price term of the contract where an ad incorrectly stated a lower sale price for a car. Donovan, 26

Cal. 4th at 293. The State now seeks to enforce an unfair, one-sided contract against Pauma with a price

term error of 2460 percent. Complaint, ¶¶ 8-9, 79, 89, 107. These alleged facts are similarly

unconscionable where the State is taking advantage of such an egregious result. Pauma’s allegations

also easily meet the materiality requirement set forth by the Donovan Court. “In establishing a material

mistake regarding a basic assumption of the contract,” the party seeking rescission “can satisfy [the

materiality] requirement by showing that the exchange not only is less desirable for the [party seeking

rescission], but is also more advantageous to the other party.” Donovan, 26 Cal. 4th at 282, citing Rest.

2d Contracts, § 152, com. C, p. 388. That the bargained for exchange in the 2004 Compact strongly

favors the State and is less desirable for Pauma is without question. The price terms of the 2004

Compact were certainly material to both Pauma and the State, but the value that Pauma received for that

price is minimal or worthless because Pauma in fact already had the right to operate 2,000 machines. In

essence, Pauma agreed to pay 25 times more in compact fees for what it already had. Logic dictates that

paying something for nothing is as material a mistake as a party can make.

Yet the State makes the incredulous assertion that price terms and consideration are collateral


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matters not material to the compact. Defendants cite nothing in support of this outrageous proposition.

Nor do they cite any law requiring that the contract explicitly explain the mistake or contain terms

describing all facts relevant to the mistake. See MTD, at 7. Indeed, the California Supreme Court

rescinded the contract in Donovan even though the purchase offer failed to explain that the seller was

receiving much less than the car was worth, which is akin to what Defendants incorrectly argue is

required here. The State’s misrepresentation regarding the size of the license pool is what caused the

mistaken consent and artificially inflated the value of the 2004 Compact. Once the true size of the

license pool was revealed, the decreased value of the 2004 Compact and the mistake were also revealed.

Nonetheless, despite the State’s urging that Pauma’s ability to obtain 2,000 licenses under the

1999 Compact and to build a destination resort casino were not material to amendment of the Compact,

the intent of the parties at the time of execution of the 2004 Compact is a factual issue that cannot be

determined on a motion to dismiss. The Complaint alleges that Pauma’s inability to obtain 2,000

licenses under the Compact, which it needed for its destination resort casino plans, was the “essential

part of the inducement for the [] 2004 Compact and a basic assumption upon which the 2004 Compact

was predicated.” Complaint, ¶¶ 74, 79, 84, 89. Otherwise, it makes no sense whatsoever for Pauma to

agree to pay over 25 times more to operate the same 1050 licenses under its temporary tent structure or

to obtain rights to operate 2,000 machines if the State hadn’t mistakenly denied it the right to obtain

these machines under the 1999 Compact. Both parties were aware that the 2004 Compact was

predicated on the assumption that the casino expansion would take place and that the State required

Pauma to pay higher fees to obtain the requisite 2,000 machines. Pauma should be entitled to conduct

discovery and present evidence on the parties’ understanding at the time of contracting, rather than the

Court usurping the fact finder’s role at this stage based solely on Defendants’ assertion that these are

“collateral” matters simply because they are not explicitly stated in the contract.

While the State argues that Pauma was aware of uncertainty regarding the size of the license pool

and bore the risk of mistake in amending its compact, equitable principles prevent such a result where

the mistake was caused by Pauma’s good faith reliance on the State’s misrepresentations regarding the

size of the license pool, particularly where the CGCC held itself out to tribes as the final authority in

good faith administration of the 1999 Compact terms. Complaint, ¶ 60; see § D, infra (State has duty


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under IGRA to act in good faith even after Compact is executed). Accordingly, the Court should find it

reasonable to allocate to the State the risk of mistake. See Rest. 2d., Contracts, § 154 (a party bears the

risk of mistake when “the risk is allocated to him by the court on the ground that it is reasonable in the

circumstances to do so”). Courts are likely to grant rescission under analogous situations where a

party’s misrepresentations, even if innocent, caused the other party to consent to the contract by mistake.

See Merced County Mut. Fire Ins. Co. v. Cal., 233 Cal. App. 3d 765 (1991) (valid claim alleged where

plaintiff issued policy based on State’s mistaken assertion that liability coverage for State was a

condition of lease between the State and the insured); Crocker-Anglo Nat’l Bank v. Kuchman, 224 Cal.

App. 2d 490, 497 (1964) (“The rule enunciated here follows the majority rule allowing rescission for

innocent misrepresentation . . . . This is a rule founded in justice; for ‘. . . it would be unjust to allow

one who has made false representations, even innocently, to retain the fruits of a bargain induced by

such representations.’”), citing 5 Williston on Contracts § 1500, p. 4189. See also Van Meter v. Bent

Constr. Co., 46 Cal. 2d 588, 595 (1956) (“There is even more reason for not barring a plaintiff from

equitable relief [in rescission action] where his negligence is due in part to his reliance in good faith

upon the false representations of a defendant, although the statements were not made with intent to

deceive”). Even assuming the State’s misrepresentations regarding the license pool were innocent,

Pauma has nonetheless alleged a valid mutual or unilateral mistake of fact claim.

In addition, the State argues facts that are not properly before the Court to conclude that Pauma

bears the risk of mistake in contracting because the Tribe was aware of a controversy regarding the size

of the license pool at the time of contracting.2 Yet the only facts Defendants’ Request for Judicial

Notice supports is that State Legislative Analysts interpreted the 1999 Compact license pool more

broadly than the State ultimately did and that Pauma was aware of the State’s dispute with the Rincon

tribe after execution of the 2004 Compact. Neither fact speaks to Pauma’s knowledge at the time of

contracting or establishes that Pauma bore the risk of a later judicial decision expanding the size of the

license pool. Again, these are factual issues that cannot be determined on a motion to dismiss.

While the State attempts to muddy the waters by arguing that there was no fact or settled law

2 Plaintiff objects to Defendants’ RJN in the concurrently filed Obj. to RJN on the grounds that: (1) the “facts” Defendants seek to notice are disputed, and therefore, not properly the subject of judicial notice; and (2) consideration of disputed facts within public records on a motion to dismiss is improper.


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upon which the parties were mistaken, just a murky controversy regarding the size of the license pool,

the State affirmatively asserted for years the “fact” and “law” that the license pool only provided for

32,151 licenses, and the Complaint alleges that this fact predicated the 2004 Compact. Complaint, ¶¶ 7-

8, 45-46, 56, 73-74, 78-79, 83-84, 88-89. The State should be estopped from retracting its prior

assertions regarding the size of the license pool in order to argue that Pauma bears the risk of mistake for

accepting the State’s misrepresentations. See Cal. Evid. Code § 623 (“Whenever a party has, by his own

statement or conduct, intentionally and deliberately led another to believe a particular thing true and to

act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to

contradict it”).3 Rather, the State’s error should require that it bear the risk of mistake.

Finally, the case most heavily relied upon by Defendants actually supports Pauma’s claims:

It would be inappropriate, however, at the demurrer stage to determine the validity of the Times’ contention that the kind of mistake alleged does not render the contract voidable. It cannot be said as an abstract legal proposition that a mistaken judgment, with knowledge of the law and the facts, concerning the legal effect a court will give to a transaction cannot form the basis for rescission for mutual mistake of law . . . .[U]nless we know the nature of the legal advice on which the parties relied and their state of mind at the time they contracted, we cannot infer solely from the facts alleged that the parties doubted the validity of the transaction and therefore assumed the risk that the contract might be found to be violative of the federal antitrust laws….We therefore conclude that construing the complaint liberally, as we must, it pleaded a mistake of law sufficient to survive a general demurrer. Guthrie, 51 Cal. App. 3d at 885-886, (emphasis added). 4

Thus, the State’s argument that Pauma assumed the risk of uncertainty regarding the license pool cannot,

as a matter of law, carry the day here where facts regarding the intent and judgment of the parties at the

time of contracting and the nature of legal advice relied upon are not properly before the Court.5

3 “Because Evidence Code [§] 623 establish[es] evidentiary presumptions applicable to state law causes of action, they must be utilized by federal courts adjudicating such claims.” Cal. Bagel Co., LLC v. Am. Bagel Co., 2000 U.S. Dist. LEXIS 22898, *33-34, fn 67 (C.D. Cal. June 9, 2000). 4 The fact that the Court dismissed the plaintiff shareholders’ rescission claim is of no import here. The Court held that the plaintiffs stated no viable mistake claim because they suffered no injury as a result of selling their shares in a newspaper publishing company to a corporation for $15 million, even though the corporation subsequently sold the newspaper company at a profit when a federal court found the corporation’s ownership of the newspaper an antitrust violation. Such is not the case here where Pauma is losing millions per year as a result of the State’s misinterpretation of the 1999 Compact license pool. 5 The additional cases cited by Defendants in support of this argument are distinguishable and inapplicable. In Mosher v. Mayacamas Corp., 215 Cal. App. 3d 1 (1989), the parties contracted for the sale of real estate. After the tax laws changed in a manner negatively affecting the value of the property sold, the buyer sought to rescind the contract. Id. at 3-4. The Court held on summary judgment that there was no actionable mistake based on any facts existing at the time of contracting that affected the value of the property at the time of contracting. Id. at 6-8. That is not the situation here where the terms of the 1999 Compact were in existence and mistakenly interpreted by the State at the time the parties executed the 2004 Compact. Further, while neither party was to blame for the change in the tax law in


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B. The Complaint Alleges A Viable Claim For Mistake Of Law.

Modern California case law applies a similar standard to mistake of law as the one applicable to

mistake of fact. See Witkin, 9th ed., Contracts, § 378 (“Relief is proper and commonly given, where a

mutual mistake relates to a specific private right; i.e., ignorance as to legal rights or obligations under a

contract (mistake of law) is treated in much the same way as mistake of fact.”), citing Rued v. Cooper,

119 Cal. 463, 468 (1897). California Civil Code § 1578 defines a “mistake of law” as “[a]

misapprehension of the law by all parties, all supposing that they knew and understood it, and all

making substantially the same mistake as to the law.”

Here, Pauma and the State both misapprehended the law regarding the size of the 1999 Compact

license pool, both supposing that they knew and understood the need for the 2004 amendment, which led

them both to make the same mistake in entering the 2004 Compact. Complaint, ¶¶ 8, 43, 46, 60, 73-74,

83-84. This situation is analogous to that in other cases where courts have treated the mistake as one of

fact, allowing relief where a party mistakenly believed that the law would allow development of

purchased real estate in a certain manner. See Williams v. Puccinelli, 236 Cal. App. 2d 512 (1965)

(lease rescinded where plaintiff discovered condition of leased property would not support construction

of restaurant and bar); Thomas v. Krug, 139 Cal. App. 2d Supp. 941 (1956) (purchase contract for realty

rescinded where both parties mistaken as to purchaser plaintiff’s ability to obtain zoning variance to

operate plant); Schultz, 157 Cal. App. 3d 242 (1984) (plaintiff allowed to rescind property purchased at

tax sale upon discovering that he was unable to build a residence on the property). Courts are therefore

likely to grant rescission where the parties are mistaken as to the rescinding party’s ability to obtain the

intended benefits of the contract, substantially reducing or eliminating the value of consideration. The

same is true here where Pauma did not benefit from paying higher compact fees in exchange for the

desired 2000 licenses already available under the 1999 Compact, which virtually eliminated the value of

Mosher, the State caused the mistake from which it now reaps an enormous benefit at Pauma’s expense. Stermer v. Bd. of Dental Examiners, 95 Cal. App. 4th 128 (2002), is similarly inapposite. There, the plaintiff entered into a plea bargain with the Board in settlement of the disciplinary charges pending against him, but sought rescission of the agreement when his conviction was overturned in the superior court. The Court denied rescission of the agreement because plea bargains are in essence based on accepting lesser punishment to avoid the gamble that one might either defeat the charge or face a higher penalty. Id. at 133-34. That Pauma bargained to avoid a similar risk cannot be said here where the amendment was not a settlement of a pending charge or dispute.


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consideration received from the State in exchange for the amended compact. Complaint, ¶ 8, 95.

Thus, whether classified as mistake of fact or law, relief is allowed where, as here, the confusion

as to the law is one of the basic facts motivating the parties to enter the agreement. Assuming the State

did not intend to mislead Pauma, both parties believed and were mistaken as to the fact that Pauma

could not obtain more than 1050 licenses under the 1999 Compact, which both parties understood was

the basic fact motivating Pauma to enter the 2004 Compact. Complaint, ¶ 45-46, 56, 73-74, 78-79, 83-

84, 88-89. Thus, Pauma has sufficiently alleged a claim for rescission based on mistake of fact or law.

Although the State once again argues that the parties bargained for future legal uncertainties,

Guthrie states that whether legal issues were uncertain to the parties at time of contracting and made part

of the bargain is not an issue suited to determination on a motion to dismiss. Defendants also concede

that their argument is contradicted by Harris v. Rudin, Richman & Appel, 95 Cal. App. 4th 1332

(2002).6 There, the parties reached a settlement agreement to resolve a malpractice claim regarding trust

work performed by the firm. Unbeknownst to the parties, the law changed retroactively shortly before

the agreement was reached whereby the plaintiff would not likely suffer any damages as a result of the

law firm’s trust work. The Court held that rescission was available to defendants because both parties

were mistaken as to the applicable law and the parties would not have entered the agreement had they

known the truth. Such is also the case here because neither party would have entered the 2004 Compact

had the truth regarding the actual size of the license pool been known; i.e., Pauma would not have

needed to pay millions more for the right to operate 2,000 machines and the State could not have

demanded the 2004 Compact fees in exchange for Pauma’s right to operate 2,000 machines. Thus,

Pauma mistake of law is sufficiently alleged as a matter of law.

6 The other cases cites by Defendants are inapposite. Not only do they pre-date modern cases allowing for rescission based on mistake of law, neither case even involved an action for rescission of a contract based on mistake of law. See B.E. Campbell v. Rainey, 127 Cal. App. 747 (1932) (plaintiff sought recovery of an assessment paid pursuant to a law later declared to be unconstitutional), and Wingerter v. San Francisco, 134 Cal. 547, 548 (1901) ([“Cal.Civ. Code § 1689] cannot be invoked to sustain an action for the recovery of taxes or other public debts voluntarily paid under a statute which is afterwards declared to be unconstitutional.”). Indeed, the language Defendants quote from these cases (MTD at p. 10) dates back to 1898 in Cooley v. County of Calaveras, 121 Cal. 482, 486 (1898), which also advanced the antiquated notion that “[e]very man is to be charged at his peril with a knowledge of the law.” Id. Here, Pauma does not seek recovery of moneys paid pursuant to a law later declared unconstitutional, but rescission of amended contract terms made under a misinterpretation of the original contract, which was subsequently enforced by the Eastern District according to its plain meaning.


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C. The Complaint Properly Alleges Sufficient Facts Constituting A Claim For

Rescission Based On Frustration Of Purpose Or Failure Of Consideration.

Defendants misconstrue Pauma’s frustration of purpose/failure of consideration claim as based

solely on the inability to build a destination resort casino and the failure to provide an exclusive gaming

monopoly. Rather, this claim alleges that Pauma did not get the benefit of its bargain due to the State’s

misrepresentations regarding the license pool, meaning the State received over 25 times more per year

more while Pauma essentially received no concessions in return. Pauma already had the right to operate

1050 machines, had the ability to reach 2,000 machines, and already had exclusive gaming rights under

the 1999 Compact. Complaint, ¶¶ 54, 55, 69, 73, 93-96107-108, Ex. A, §§ E, 12.4. Several intervening

events, which both parties assumed would NOT happen, have rendered the State’s consideration

meaningless: (1) the revelation that the State misinterpreted the 1999 compact and wrongfully withheld

licenses under the 1999 compact and (2) the failure of Pauma’s development plans, through no fault of

its own, upon which the compact payments were structured. Further, whether there is material failure in

consideration to be rendered to the rescinding party is a question of fact not capable of determination on

a motion to dismiss. Calabrese v. Rexall Drug & Chem. Co., 218 Cal. App. 2d 774 (1963).

California Civil Code § 1689(b) provides that “[a] party to a contract may rescind the contract:

(i) ”[i]f the consideration for the obligation of the rescinding party fails, in whole or in part, through the

fault of the party as to whom he rescinds;” (ii) ”[i]f the consideration for the obligation of the rescinding

party becomes entirely void from any cause;” or (iii) ”[i]f the consideration for the obligation of the

rescinding party, before it is rendered to him, fails in a material respect from any cause.” Similarly, the

doctrine of frustration of purpose as grounds for rescission or excuse for performance has been

explained on a theory of “failure of consideration” where the “value of counterperformance” is

substantially lessened or destroyed for one party to the bargain. See Witkin, Summary of California

Law, Contracts, § 787 (9th ed.). Here, any one of the circumstances upon which rescission may be

granted for failure of consideration can be shown by Pauma.

First, the consideration provided by the State for the 2004 Compact, the ability to operate 2,000

gaming devices, failed through the State’s faulty interpretation of the 1999 Compact license pool. Thus,

the consideration failed through the fault of the State, as provided by § 1689(b). Second, the


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consideration provided by the State either became entirely void or failed in a material respect “from any

cause.” Again, Pauma already had the ability to obtain the right to operate 2,000 machines under the

1999 Compact but for the State’s misinterpretation of the Compact’s provisions. Pauma’s ability to

operate 2,000 gaming devices as required by its destination resort casino developer was its primary

purpose in amending the 1999 Compact.7 Complaint, ¶¶ 4, 8, 46, 50, 73, 78, 93. Further, Pauma’s

ability to operate a destination resort casino was a basic assumption upon which the 2004 Compact was

formed, or else Pauma would not have had space to house 2,000 machines in its temporary tent structure

or the revenue intended to support the 2004 Compact payments. Complaint, ¶¶ 8, 50, 53, 93-94.

Evidence of the intent of the parties is also found within the terms of the 2004 Compact itself. See

Complaint, Ex. B, § 4.3.2.2 (increased Revenue Sharing Trust Fund payments payable “after March 31,

2008, or the completion of [Pauma’s] new Gaming Facility, whichever comes first”), emphasis added.

Thus, the parties contemplated both that Pauma’s destination resort casino would be completed by

March 2008 at the latest and that the Tribe needed to have the new facility in place to support the

increased payments. Through no fault of Pauma, its initial developer backed out upon a merger with a

rival gaming company and the Tribe’s next partner backed out of the project when the economy soured,

leaving Pauma unable to find alternate financing. Complaint, ¶ 6, 52.8 Id. Pauma is thus unable to reap

the benefits of the bargain because it can operate little more than 1,050 machines within its temporary

sprung tent structure for which it paid $315,000 per year under the 1999 Compact. Complaint, ¶¶ 94-95.

The State argues that Pauma received consideration from the 2004 Compact in the form of the

right to operate an unlimited number of gaming devices, increased exclusivity provisions with respect to

its geographic gaming region, and an extended compact term until 2030 (instead of the 2020 expiration

7 Although the State cites Pauma Band of Luiseno Mission Indians v. Harrah’s, 2009 Cal. App. Unpub. LEXIS 7720 (2009) (“Harrah’s”), nothing in that opinion states that Pauma planned or intended to operate more than 2,000 machines. See id., at *4 (“Caesars’s obligations under the proposed deal depended on Pauma’s ability to obtain authorization from the State of California to operate 2,000 slot machines”). 8 Again, the State’s reliance on disputed facts at the pleadings stage is inappropriate where the parties’ intentions cannot be established. See Obj. to RJN. The State argues, based on the Harrah’s opinion, that Pauma was aware it’s casino project might not happen because Pauma’s Council voted to affirm the 2004 Compact despite awareness that Caesar’s might not develop the project. MTD, p. 12. However, the opinion also states that Pauma was still in discussions with Caesars and had several parties interested in developing its project when the compact was ratified including “Hard Rock, Station Casinos and Foxwoods.” Harrah’s, 2009 Cal. App. Unpub. LEXIS 7720 at *8.


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date of the 1999 Compact). None of these things constitute sufficient consideration for the 2460 percent

increase in compact payments. One, the compact fees for operation of gaming devices above 2000 are

so onerous as to be illusory and Pauma knew that it did not have the financial or physical capacity to

operate more than 2,000 gaming devices at the time of the amendment or in its planned destination

casino resort. See Complaint, ¶¶ 47-49, Ex. B, § 4.3.1(b) (total cost of operating 2500 machines under

2004 Compact is $23,075,000; 3000 is $29,675,000; 4000 is $48,175,000). Two, the 2004 Compact has

significantly harmed the Tribe’s economy, a result antithetical to that anticipated by the parties and in

fact frustrates the stated purpose of the 2004 Compact, consistent with IGRA’s policies (see 25 U.S.C.

§ 2702(1), to “enhance[] tribal economic development and self-sufficiency.”9 Id., ¶ 9, Ex. B, p.1.

Three, the exclusivity provisions in the 2004 Amendment are identical to those in Pala’s 2004

Amended Compact so that the State is already required to limit gaming in the same geographic region as

promised to Pauma. See Complaint, ¶ 96, Ex. B, § 3.2(b); see also Patriot Sci. Corp. v. Korodi, 504

F. Supp. 2d 952, 963 (S.D. Cal. 2007), citing G.M. Acceptance Corp. v. Brown, 2 Cal. App. 2d 646, 650

(1934) (“It is a uniform rule of law that a consideration for an agreement is not adequate when it is a

mere promise to perform that which the promissory is already legally bound to do.”); Fairlane Estates v.

Carrico Constr. Co., 228 Cal. App. 2d 65, 71 (1964) (a written agreement to pay more for the same

performance is unenforceable). While the State argues without support that Pauma was aware of the

identical benefit conferred on the Pala Band at the time of contracting, this shared exclusivity fails to

provide sufficient consideration for the Tribe’s increased burdens under the 2004 Compact in light of the

fact that the other bargained for benefits have failed while the State provides nothing beyond what it is

already required to do under the 1999 Compact. See Rincon, 2008 WL 6136699, at *12 (concluding that

exclusivity was already provided by the State to the Rincon tribe and all other compacting tribes under

the 1999 Compact and could not be new consideration for a modified compact). In addition, the Court

in Rincon found under a totality of circumstances analysis that the concessions offered by the State -- a

lengthened compact term, additional devices and exclusivity provisions -- failed to provide meaningful

9 Thus, the harm alleged here as a result of the frustration of purpose and failure of consideration is far beyond the decrease in expected profits cited by Defendants in Waegemann v. Montgomery Ward & Co, Inc., 713 F. 2d 452 (9th Cir. 1983). Pauma intends to offer evidence at trial (1) showing that the State would reap 100% of the profit for any gaming devices Pauma operates in excess of 2,000 and (2) quantifying the harm caused by the 2004 Compact payments on the Tribe’s economy.


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concessions in exchange for the increased compact fees demanded from the Rincon tribe. See Id, at

*12-13 (S.D. Cal. 2008).10 Thus, any alleged consideration received by Pauma in the 2004 Compact,

strikingly similar to that offered by the State to Rincon and found lacking, is insufficient or illusory.

Finally, courts have interpreted California Civil Code § 1698, which governs contract

modifications, as requiring that written contract modification meet all the requirements of an initial

contract, including consideration. Motown Record Corp. v. Brockert, 160 Cal. App. 3d 123, 133 (1984).

Courts have also held that where a modification to a contract imposes new and onerous burdens on one

party, consideration is required. See Main St. Etc. Co. v. Los Angeles Traction Co., 129 Cal. 301, 305

(1900) (new and onerous obligations in supplemental agreement require consideration); Krobitzsch v.

Middleton, 72 Cal. App. 2d 804 (1946) (same). Accordingly, additional consideration was required to

support any amendment of the 1999 Compact. See Rincon, 2008 WL 6136699, at *13 (finding

concessions offered by State insufficient even under “basic contract law principles governing

modification”), citing 17A Am.Jur.2d Contracts, § 507 (“A valid modification of a contract must satisfy

all the criteria essential for a valid original contract, including offer, acceptance, and consideration”).

As any such consideration the State promised Pauma in exchange for the 2004 Compact payments has

failed in whole or in part, § 1689 provides that Pauma has sufficiently alleged a claim for rescission

based on “failure of consideration,” or in the alternative, “frustration of purpose.”

D. Pauma’s Seventh And Eight Claims For Relief Properly Assert Illegal Taxation

Claims, Which This Court Has Jurisdiction And Remedial Authority Over.

In an attempt to eviscerate Pauma’s claims based on IGRA, the State mischaracterizes the claims

as mere bad faith negotiation claims under 25 U.S.C. § 2710(d)(7)(A)(i) and (d)(7)(B)(ii) so that it can

argue that jurisdiction is not only lacking but pointless under 25 U.S.C. § 2710(d)(7)(B)(iii)-(iv) because

the Tribe’s statutory remedies vanished upon the conclusion of the Compact.11 Despite the State’s

posturing, Pauma’s Seventh and Eighth claims for relief are based on the State imposing impermissible

fees on the Tribe in violation of 25 U.S.C. § 2710(d)(3)(C)(iv) and (d)(4). Complaint, ¶¶ 47-50, 54, 79,

10 While the Rincon decision is not alleged as an intervening event, contrary to the State’s facetious assertion, it provides authority showing that the State’s concessions were not meaningful. 11 This is not a proper basis for a 12(b)(1) motion. See Bollard v. Cal. Province of the Society of Jesus, 196 F. 3d 940, 951 (9th Cir. 1999) (“Any non-frivolous assertion of a federal claim suffices to establish federal question jurisdiction, even if that claim is later dismissed on the merits under Rule 12(b)(6)”).


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89, 102, and 109. Section 2710(d)(3)(C)(iii) provides that a tribal-state compact can include provisions

requiring a tribe to pay a state fees that are “necessary to defray the costs of regulating such [gaming]

activity.” Based upon this provision, the State created the “Special Distribution Fund,” which enabled it

to collect fees from compacting tribes for six limited purposes: (a) grants for programs designed to

address gambling addiction; (b) grants for the support of state and local government agencies impacted

by tribal gaming; (c) compensation for regulatory costs incurred by the State Gaming Agency and the

State Department of Justice in connection with the implementation and administration of the compact;

(d) payment of shortfalls that may occur in the RSTF; and (e) any other purposes specified by the

legislature. Coyote Valley II, 331 F.3d 1094, 1113 (9th Cir. 2003). Pursuant to the ejusdem generis

principle, the Ninth Circuit limited subsection (e) to “purposes that are directly related to gaming.” Id.

Thus, assessments designed and necessary to cover the costs associated with the regulation of Indian

gaming are “clearly appropriate” and comply with § 2710(d)(3)(C)(iii).

However, apart from necessary regulatory assessments or bargained for RSTF contributions, a

state is not permitted to use the compact to “impose” any other “tax, fee, charge, or other assessment” on

an Indian tribe. 25 U.S.C. § 2710(d)(4). This is in accordance with the time-honored principle that,

absent Congressional abrogation, a state’s taxing power does not reach reservation land or reservation

Indians. Okla. Tax Comm’n v. Chickisaw Nation, 515 U.S. 450, 458 (1995). Yet, a state does not

impose one of these assessments if it offers a tribe meaningful concession in return. Coyote Valley II,

331 F.3d at 1112. Rather, this type of counter-balanced demand is a permissible extension of the State’s

bargaining power. Id. (“Where a State offers meaningful concessions in return for fee demands, it does

not exercise ‘authority to impose’ . . . [i]nstead, [it] exercises its authority to negotiate, which IGRA

clearly permits.”). Thus, the question of whether a fee demanded by the State amounts to an unlawful

tax in violation of §§ 2710(d)(3)(C)(iii) and (d)(4) turns on the amount and type of fee demanded and

the meaningfulness of the concession the State offered in return. Id.

In the present action, Pauma plans on showing this Court that the State used the 2004 Compact to

circumvent long-standing principles of federal Indian law and impose a tax on the Tribe in violation of

IGRA. Supporting this claim are the allegations in the Complaint, most notably that “Pauma is required

to pay $7.75 million in annual compact fees to the State to operate 1,050 gaming devices that would


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have cost the Tribe $315,000 annually to operate under the 1999 Compact,” and that the new payment is

“25 times” the amount the Tribe paid under the 1999 Compact, resulting in an extra “$26 million to the

State.” Complaint, ¶ 5, 54. In exchange for this enormous influx of revenue, the State provided Pauma

with three concessions, all of which are significantly less meaningful than the right to monopolistically

engage in Class III gaming that the Tribe already received from the State under the 1999 Compact for

approximately four percent of the price of the newest concessions: an extension on the life of the

compact, the ability to operate an unlimited number of machines, and protections against non-Indian

Class III gaming competition that would trigger only after the passage of a State Constitutional

amendment rescinding the tribal monopoly over Class III gaming. Complaint, ¶¶ 55-58, 60-61, 73, 78,

83, 88, 96. The Southern District recently published the State’s acknowledgment that the financial

demands required from Pauma in connection with these concessions are similar to those demanded from

the Rincon Band. Rincon, 2008 WL 6136699, *6 (S.D. Cal. Apr. 29, 2008) (“The terms of this proposal

are similar to those accepted by the Pauma and Pala Bands (tribes, like Rincon, that face similar

competitive constraints given their location and proximity to the Pechanga band’s casino

complex) . . . .”). These similar terms resulted in a scheme that would have provided the State with

95.67% of the revenue Rincon would have generated by operating the additional 900 gaming devices.

Id. at *14 (“Under the analysis conducted by the State’s own expert . . . [the amended compact] would

provide the State with an unrestricted fee for use in its general fund of $37.9 million dollars while

Rincon would make only $1,716,000[.]”). The Southern District held that this arrangement violated

§ 2710(d)(4)’s prohibition against State taxation. Considering the similarity of the terms the State

proposed to Rincon and Pauma, as is evident by Pauma’s twenty-five fold increase in annual payments

simply to operate at the same gaming device level, there is certainly sufficient evidence to support an

illegal taxation theory of liability that would entitle Pauma to relief.

Aside from the merits of any illegal taxation claim, the State’s tactic of arguing that the only way

Pauma can bring its Seventh and Eighth Claims for Relief before this Court is under the IGRA’s bad

faith negotiation provision at 25 U.S.C. § 2710(d)(7)(A)(i) is strikingly similar to one it argued in vain

over ten years ago, when it argued that California tribes lacked the jurisdiction under their then-existing

Compacts to contest the State’s ability to collect license-fess from racing associations operating on


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Tribal lands. See Cabazon Band of Mission Indians v. Wilson, 124 F.3d 1050 (9th Cir. 1997). In

Cabazon, the State’s argument was that federal courts only have jurisdiction over three types of the

IGRA claims: actions (1) arising from the failure of the state to conduct good faith negotiations to enter

into a Tribal-state compact, (2) seeking to enjoin a Class III gaming activity conducted on Indian lands

in violation of a compact, or (3) brought by the Secretary of the Interior to require a tribe and the state to

mediate the failure to conclude a compact. Id. at 1056 (citing 25 U.S.C. § 2710(d)(7)(A)(i)-(iii)).

The Ninth Circuit methodically dismissed this argument on three separate grounds. First, the

Court found that jurisdiction was appropriate because the case implicated “remedies for breach of

contract,” one of the seven permissible topics that a tribe and state could discuss during compact

negotiation under 25 U.S.C. § 2710(d)(3)(C), which states in full:

Any Tribal-State compact negotiated under subparagraph (A) may include provisions relating to

(i) the application of the criminal and civil laws and regulations of the Indian tribe or the State that are directly related to, and necessary for, the licensing and regulation of such activity;

(ii) the allocation of criminal and civil jurisdiction between the State and the Indian tribe necessary for the enforcement of such laws and regulations;

(iii) the assessment by the State of such activities in such amounts as are necessary to defray the costs of regulating such activity;

(iv) taxation by the Indian tribe of such activity in amounts comparable to amounts assessed by the State for comparable activities;

(v) remedies for breach of contract;

(vi) standards for the operation of such activity and maintenance of the gaming facility, including licensing; and

(vii) any other subjects that are directly related to the operation of gaming activities.

Here, the Court is presented with an analogous situation as Pauma’s illegal taxation claim strikes

at the heart of both subsections (iii) and (vii). In fact, as previously discussed, subsection (iii) and its

related IGRA provision at § 2710(d)(4) are directly responsible for birthing the Ninth Circuit precedent

establishing the test for determining whether a state fee required under a compact is a permissible

assessment that is reasonably related to the regulation of Indian Gaming, the adverse effects therefrom,

or the support of Non-Compact Tribes, see Coyote Valley II, 331 F.3d at 1113, or a form of “revenue

sharing” that is unlawful (i.e. illegal tax) if not counter-balanced by concessions of sufficient value, Id.

at 1112. This is the very question underlying Claims Seven and Eight. Thus, harkening to the opinion


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of the Cabazon court, the existence of this subsection and its related provision is clear evidence that

Congress intended to provide Pauma with a federal forum if the State assessed fees that were outside the

scope of those that are permissible under IGRA. See Cabazon 124 F.3d at 1056 (“Our conclusion is

bolstered by IGRA’s express authorization of a compact to provide remedies for beach of compact.”).

Moreover, Compact § 9.4(a)(1), which removes the State’s sovereign immunity from suit for all “issues

arising under this Gaming Compact” also suggests that this Court has jurisdiction over the illegal

taxation question, since the terms constituting the illegal tax are immortalized in Compact § 4.3.1(b).

Second, the Court found that the State’s constrained reading of the IGRA, which argued federal

courts were remiss to assume jurisdiction over a tribe’s IGRA claim unless it fell within one of three

categories, failed to do justice to the importance of the federal interest in enforcing Tribal-state compacts

in federal court. Cabazon, 124 F.3d at 1056. This is presumably grounded in the federal policy that

Indians have “a special status in our country and [they are] justifiably entitled to very special

protection,” Agua Caliente Band of Mission Indians v. County of Riverside, 442 F.2d 1184, 1188 (9th

Cir. 1971), cert. denied, 405 U.S. 933, 92 S. Ct. 930 (1972), principles that extend in the IGRA context

to protecting tribes from “recalcitrant states,” United States v. the Spokane Tribe of Indians, 139 F.3d

1297, 1299 (9th Cir. 1998). To this end, the Court quoted the district court, as follows:

It would be extraordinary were the statute to provide justification to entertain a suit to force the State to negotiate a compact yet provide no avenue of relief were the State to defy or repudiate that very compact. Such a gap in jurisdiction would reduce the elaborate structure of IGRA to a virtual nullity since a state could agree to anything knowing that it was free to ignore the compact once entered into. IGRA is not so vacuous.

This same potential for inequity identified in Cabazon would be present here if the Court adopts

the State’s argument that an illegal taxation claim comes under IGRA’s bad faith negotiation provision

and expires upon the conclusion of a compact. This view not only disregards the language of the

compact and Ninth Circuit precedent suggesting that §§ 2710(d)(3)(C) and (d)(4) create stand-alone

bases for jurisdiction, but would effectively close the halls of justice to any tribe who first discovered the

impropriety of the State’s demands – whether they are related to fee payments or any other material

financial or regulatory term – after conclusion of the compact. This is particularly troubling where, as

here, the State was either mistaken about or misrepresented the material fact that compelled the Tribe


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back to the negotiating table, thus altering the financial terms it considered acceptable.

Finally, Defendants’ argument that the Court lacks remedial power because the possible forms of

relief are limited to an order to conclude a compact is without merit. Federal courts apply general

principles of contract law to interpret Tribal-state gaming compacts. Idaho v. Shoshone-Bannock Tribes,

465 F.3d 1095, 1098 (9th Cir. 2006) (“Shoshone”). Contracts that are against an explicit, “well defined

and dominant” public policy are voidable. United Paperworkers Intern. Union, AFL-CIO v. Misco, Inc.,

484 U.S. 29, 42 (1987) (“[The Court’s action] is a specific application of the more general doctrine,

rooted in common law, that a court may refuse to enforce contracts that violate law or public policy”).

There are few policies in the field of federal Indian law that are more well-defined and dominant than

the oft-repeated and steadfastly adhered to notion than State taxation of a tribe is illegal absent express

Congressional approval. See Quinault Indian Nation v. Grays Harbor County, 310 F.3d. 645, 648 (9th

Cir. 2002) (“It is a well established principle of Indian law that state and local governments lack the

power to tax reservation Indians or their land ‘[a]bsent cession of jurisdiction of other federal statutes

permitting it’” (quoting Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148 (1973)). See Montana v.

Blackfeet Tribe of Indians, 471 U.S. 759, 765 (1985) (Stating that the Supreme Court has never wavered

from the its view that the tribal exemption from state taxation, which is a corollary of the federal

government’s plenary powers over Indian affairs, is intractable unless Congress abrogates it in an

“unmistakably clear” manner); California v. Cabazon Band of Mission Indians, 480 U.S. 202, 215 n. 17

(1987) (Stating the prohibition on state taxation is a “per se rule”). Thus, given the fact that the State

has presented no authority in this or any other suit presenting an illegal taxation claim that Congress

intended the IGRA to serve as a vehicle for state taxation, particularly in light of the statutory scheme’s

aim to “promote[ ] tribal economic development, self-sufficiency, and strong tribal government,” see

25 U.S.C. § 2702(1), the Court has authority to void the 2004 Compact and reinstate the 1999 Compact.

Assuming Defendants are correct in arguing that, in spite of the law supporting jurisdiction cited

above, the IGRA provides no private right of action here, Plaintiff’s claim for rescission of an illegal

contract would still stand. Cal. Civ. Code § 1689 provides for rescission “[i]f the contract is unlawful

for causes which do not appear in its terms or conditions, and the parties are not equally at fault.” This

is the case here where (1) the terms of the compact are illegal not on their face but only when analyzed


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under the IGRA; and (2) the parties are not equally at fault because the State reaps the benefit of the

illegal taxation at Pauma’s expense. Further, Cal. Civ. Code § 1607 provides that “[t]he consideration

for a promise must be lawful” and Cal. Civ. Code § 1608 provides that “[i]f any part of a single

consideration for one or more objects, or of several considerations for a single object, is unlawful, the

entire contract is void.”

In addition, California law places illegal contracts in three groups: (1) those contrary to express

statutes; (2) those contrary to the policy of express statutes; and (3) those otherwise contrary to good

morals. Cal. Civ. Code § 1667. Accordingly, an action to rescind a contract due to illegality of an

express statute is not akin to a claim based on the express statute itself. For example, a plaintiff sought

rescission of a lease in which he leased his apartment to defendant lessee at a rate above what rental

regulations allowed. Adams v. Heinsch, 89 Cal. App. 2d 300 (1948). The court granted the relief sought

even though the plaintiff had no claim under the regulations themselves. Id. at 304-305. Similarly, the

Court has authority to rescind the compact based on principles of California contract law and the

compact’s violations of IGRA’s express provisions and policies promoting tribal economic development

and self-sufficiency without Pauma having to establish an independent claim under the IGRA.

E. Equitable Estoppel Is Inapplicable Here Under California And Federal Law.

The State also advances an equitable estoppel argument to convince the Court that relief is not

warranted because Pauma has accepted the benefits of the 2004 Compact. If this were correct, no party

would be permitted to challenge the legality of a contract the moment it derived some gain from it,

including any of the other compacting Tribes who have brought post-execution suits challenging: the

size of the gaming device license pool under § 4.3.2.2(a)(1) (see Rincon Band of Luiseno Mission

Indians of the Rincon Reservation v. Schwarzenegger, et al., Civ. Case No. 04-1151 (S.D. Cal); Cachil

Dehe Band of Wintun Indians, et al. v. State of California, et al., Civ. Case No. 04-2265 (E.D. Cal.); San

Pasqual Band of Mission Indians v. State of California, Civ. Case No. 06-0988 (S.D. Cal.)); the scope of

a compact’s arbitration clause (see Wisconsin v. Ho-Chunk Nation, 512 F.3d 921, 938 (7th Cir. 2008));

or the scope of compact’s clause pertaining to the permissible forms of Class III games (see Idaho v.

Shoshone-Bannock Tribes, 465 F.3d 1095, 1097 (9th Cir. 2006)). Simply put, this is not the law. “Since

an illegal contract is void, it cannot be ratified by any subsequent act, and no person can be estopped to


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deny its validity.” Witkin, Summary of California Law, 9th ed., §442, citing, among others, Colby v.

Title Ins. & Trust Co., 160 Cal. 632 (1911); Wood v. Imperial Irr. Dist., 216 Cal. 748, 759 (1932);

Regan v. Albin, 219 Cal. 357, 360 (1933); Fewel & Dawes v. Pratt, 17 Cal. 2d 85, 91 (1941); Wells v.

Comstock, 46 Cal. 2d 528, 532 (1956); Spector v. Pete, 157 Cal. App. 2d 432, 436 (1958); City Lincoln-

Mercury Co. v. Lindsey, 52 Cal. 2d 267, 274 (1959); Cook v. King Manor & Convalescent Home, 40

Cal. App. 3d 782, 792 (1974) (citing and quoting Witkin text). Thus, the 2004 Compact cannot be

ratified by the conduct of the parties because the Compact’s fee provisions violate IGRA.

Further, the principal authority cited by the State in support of its equitable estoppel argument is

inopposite, as the complete rule “precludes a party from claiming the benefits of a contract while

simultaneously attempting to avoid the burdens that contract imposes.” Comer v. Micro, Inc., 436

F.3d 1098, 1101 (9th Cir. 2006), citations omitted. Legal treatises and sister circuits fully articulate the

rule as, “a party with full knowledge of the facts, which accepts the benefits of the transaction, contract,

statute, regulation, or order may not subsequently take an inconsistent position to avoid the

corresponding obligations or effects.” See Wash. Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260, 268

(5th Cir. 2004) (Party cannot have it “both ways” by attempting to vindicate contract’s rights while

simultaneously avoiding its burdensome aspects), citations omitted; Kaneb Services, Inc. v. Federal Sav.

and Loan Ins. Corp., Inc., 650 F.2d 78, 81 (5th Cir. 1981); 28 Am. Jur. 2d Estoppel and Waiver § 65.

In this case, the doctrine is inapplicable because nothing before the Court suggests that the Tribe

is in material breach of contract or that it otherwise deviated from the regulatory burdens placed upon it

by the 2004 Compact. In re GVF Cannery, Inc., 188 B.R. 651, 661 (Bankr. N.D. Cal. 1995) (Stating

that under California law, the party claiming estoppel has the burden of proving it by clear and

convincing evidence, “such that the matter is not left to speculation.” (citing Selna v. Selna, 125 Cal.

357, 58 P. 15 (1899); Harper v. Kaiser Cement Corp., 144 Cal. App. 3d 616 (1983); 30 Cal.Jur.,

Estoppel and Waiver § 28 (3d ed. 1987))); See also Irvine v. Cargill Investor Services, Inc., 799 F.2d

1461, 1463 (11th Cir. 1986) (“The burden of proving all facts essential to working an estoppel rests on

the party asserting it.”); Second, the question of whether Pauma had full knowledge of the facts

surrounding the 2004 Compact has to be answered in the negative, as the Complaint alleges that the

State misinformed the Tribe that the only way it could potentially reach the 2,000 machine benchmark


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was by amending its compact. Complaint, ¶¶ 7-8, 43-46, 55-58. Third, the benefits Pauma purportedly

received under the 2004 compact have not been triggered, thus rendering acceptance or return thereof

impossible.12 Under the terms of the 2004 Compact, Pauma received three benefits: an extension on the

life of the compact, an increase in the number of Class III devices the Tribe is permitted to operate, and

a contingent form of increased gaming exclusivity. See Rincon, 2008 WL 6136699 (S.D. Cal. Apr. 29,

2008) (holding that the concessions the State offered in exchange for the amended compacts, “more

devices and time,” were not meaningful under totality of circumstances). However, the benefit from the

extension on the compact’s term does not commence until January 1, 2021, the day after the expiration

date of the 1999 Compact. Complaint, Ex. 1, § 11.2.1. Similarly, Pauma will not realize the benefit of

the increased gaming exclusivity until the passage of a State Constitutional amendment permitting non-

Indian businesses to operate gaming devices within the geographical vicinity of the Tribe’s reservation.

See Rincon, 2008 WL 6136699 at *13 n.11 (“In order for non-Indian tribes to operate gaming devices in

California, a new state Constitutional Amendment would have to pass requiring one of three of the

following events: (1) a legislative proposal supported by a supermajority vote of the Legislature and a

majority vote of the citizenry, (2) a constitutional convention, or (3) an initiative petition signed by eight

percent of the voters and then a majority vote of the citizens of California.”). Finally, while Pauma is

operating slightly more than the 1050 gaming devices than it did under the 1999 Compact, it is still

drastically below the figure it should have the ability to operate under the 1999 Compact if the CGCC

correctly construed its terms. Complaint, ¶¶ 7, 8, 55 and 58. Thus, the alleged benefits of the 2004

Compact are either premature or speculative, and wholly concessions Pauma has yet to realize.

Accordingly, the State’s invocation of the equitable estoppel doctrine is entirely off-base because

there is no injury to the State and nothing for Pauma to remedy. This doctrine simply has no application

here where the State incorrectly attempts to use the equitable remedy as a sword to dispel legal claims

instead of a shield to protect a party from the iniquitous acts of others.

12 Nonetheless, Pauma can stipulate to limit its operations to only those rights it held under the 1999 Compact or otherwise allege this in an amended complaint, if necessary.


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F. Pauma Has Standing To Bring Suit On The 1999 Compact For A Breach Of Its

Terms.

The State next claims that Pauma lacks standing to bring a claim for breach of the 1999 Compact

because the Tribe acknowledged that the 1999 Compact is “not presently valid and enforceable.”

Contract modification occurs where parties add, change, or cancel elements of a contract but leave the

general purpose and effect of the original contract undisturbed. Han v. Mobil Oil Corp., 73 F.3d 872,

876-77 (9th Cir. 1995); International Bus. Lists, Inc. v. Am. Tel. & Tel. Co., 147 F.3d 636 (7th Cir.

1998). The modification only supersedes those terms to which it relates. Travelers Ins. Co. v.

Workmen’s Comp. Appeals Bd., 68 Cal. 2d 7 (1965). The remainder of the original contract remains

intact, Eluschuk v. Chemical Engineers Termite Control, Inc., 246 Cal. App. 2d 463 (1966), and the

original contract and modification are to be read together, “so as to give effect to every part, if

reasonably practical,” as “each clause help[s] to interpret the other,” Cal. Civ. Code § 1641. A party to a

modified contract has standing to seek relief on the modification or the original contract. Waldrip v.

Hamon, 136 F. Supp. 412, 413 (E.D. Okla. 1955) (“[A]s there is no privity of contract between [the

defendant] and the ‘other plaintiffs’ . . . these other plaintiffs have no standing to seek recovery based

upon alleged breaches of the . . . contract, and modifications thereto.”). See Grant v. State Farm Life

Ins. Co., 2007 WL 3119738, *3 (E.D. Cal. 2007) (Parties in privity of contract have standing to sue on

the contract); Enodis Corp. v. Employers Ins. Co. of Wausau, 2003 WL 25781254 (C.D. Cal. 2003)

(Party to a contract has standing to sue for breach of contract); GDF Int’l, S.A., v. Associated Electric &

Gas Ins. Services Ltd., 2003 WL 926790, *2 (N.D. Cal. 2003) (Party to contract has standing to sue for

its enforcement), citing Hatchwell v. Blue Shield of Calif., 198 Cal. App. 3d 1027, 1034 (1988).

Despite the State’s deceptive linguistic spinning, Pauma never acknowledged that the 1999

Compact is invalid. Rather, the relevant language the State cites to in the Complaint simply asks the

Court to nullify the 2004 Compact so the original, in full, would be valid and enforceable. Complaint,

¶ 68 (“[B]ecause the 2004 Compact is void, its predecessor – the 1999 Compact – should be deemed

valid and enforceable.”). Setting aside semantics, Pauma’s characterization of the status of the 1999

Compact in the Complaint has no bearing on the contract’s actual validity or the Tribe’s right to sue


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thereunder, both of which are issues that are determined according to general principles of contract law.

These principles clearly state that a party’s standing to bring suit on a contract does not disappear once it

is modified. Furthermore, the State’s focus on the need for standing under the 1999 Compact may be

entirely ill-placed, as federal precedent interpreting California law provides grounds for reviving the

parties’ obligations under the 1999 Compact should the Court void the 2004 Compact. Airs Int’l Inc. v.

Perfect Scents Dist., Ltd., 902 F. Supp. 1141, 1148 (N.D. Cal. 1995) (applying California law: if

substituted contract found void, prior contract then becomes enforceable again). This remedy is also

supported by the Restatement of Contracts: “[T]o the extent that the substituted contract is vulnerable

on such ground as mistake, misrepresentation, duress or unconscionability, recourse may be had on the

original duty.” Rest. 2d Contracts, § 279 (1981). Thus, the 2004 Compact serves as a bridge enabling

the Court to reach Pauma’s claims on the 1999 Compact in a consolidated suit. Requiring Pauma to

separate its claims into two suits, one to rescind the 2004 compact and another to interpret the 1999

Compact, is a waste of judicial resources, a deprivation of the requested remedy given the depletion of

the license pool (see § II(G), infra), and untenable as Defendants cite nothing in support. Thus, this

Court should find that the 1999 Compact is an integrated part of the Tribe’s aggregate compact with the

State, providing the Tribe with standing to bring suit for breach of its current and former terms.

G. Pauma’s Claims Are Ripe For Review Because The CGCC Is Presently Executing

The Eastern District’s Final Order On The Size Of The Gaming Device License

Pool.

In a convoluted final twist, the State essentially argues that any of Pauma’s claims pertaining to

the 1999 Compact, including its claim that this Court reinstate the license pool provision at

§ 4.3.2.2(a)(1) that was superseded by amendment, are not ripe for review. According to the State’s

circular logic, a tribe seeking judicial revival of the gaming device license pool compact term under the

1999 Compact must first unilaterally and extra-judicially reinstate the relevant compact; request to

participate in a license pool draw; upon having the request denied, meet and confer with the State to re-

reinstate the relevant language of the 1999 Compact; and then, should the State deny that as well, bring

suit for reinstatement of the 1999 Compact. In other words, to bring a suit for reinstatement of the 1999

Compact, the Tribe would have to first unilaterally reinstate the compact.

Besides the fact that satisfying the State’s requirement would be entirely implausible, this catch-


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22 bears no relationship to the test the Supreme Court set forth for determining whether an issue if ripe

for review, which requires that a court evaluate the “fitness of the issues for judicial decision” and “the

hardship to the parties of withholding court consideration,” Abbott Laboratories v. Gardner, 387 U.S.

136 (1967), so as to determine whether “the harm asserted has matured sufficiently to warrant judicial

intervention,” Skull Valley Band of Goshute Indians v. Nielson, 376 F.3d 1223, 1234 (10th Cir. 2004).

Here, the size of the gaming device license pool is an issue fit for review because the Eastern

District has already set this number at 42,700 and allowed every current 1999 Compact Tribe to

participate in a license draw to obtain some of the 10,459 newly-available licenses. See Colusa, 629

F. Supp. 2d 1091, 1113 (E.D. Cal. Apr. 22, 2009) (interpreting § 4.3.2.2(a)(1) to provide for 42,700

licenses); Colusa, 2009 WL 2579051 (E.D. Cal. Aug. 19, 2009) (stating that the CGCC is required to

hold a license draw for the additional licenses, open to all signatory tribes, within 45 days of entry of

judgment); Colusa, 2009 WL 2971547 (E.D. Cal. Sep. 11, 2009) (District Court order denying the

State’s motion to stay the license draw); Order, Colusa, No. 09-16942 (9th Cir. Oct. 1, 2009) (Ninth

Circuit order denying the State’s emergency motion to Stay the license draw). Further, the ongoing

administration of the expanded license pool means that Pauma will suffer irreparable hardship if the

Court does not consider the issue at this time. The October 5, 2009 license draw alone removed 1,878

licenses from the pool – approximately eighteen percent (18%) of the total made available by the

Eastern District. Given that a 1999 Compact Tribe can request that the CGCC conduct monthly license

draws by simply submitting a written request to the agency, see Complaint, Ex. 1, § 4.3.2.2(a)(30(vi)

(“Rounds shall continue until tribes cease to make draws, at which time draws will be discontinued for

one month or until the Trustee is notified that a tribe desires to acquire a license, whichever last

occurs.”), the license pool could be depleted by the time Pauma is able to participate if this Court delays

consideration of the issues presented in this matter. Thus, the Court should find that the harm Pauma

faces has “matured sufficiently” to warrant consideration of its claims.

III. CONCLUSION

For all the foregoing reasons, Defendants’ Motion to Dismiss should be denied in its entirety. In

the alternative, the Court should grant Pauma leave to amend the original Complaint in this action to

cure any perceived deficiencies.


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RESPECTFULLY SUBMITTED this 5th day of January, 2010.

ROSETTE & ASSOCIATES PC

By: /s/ Cheryl A. Williams Robert A. Rosette Cheryl A. Williams Kevin M. Cochrane 193 Blue Ravine Road, Suite 255 Folsom, California 95630 Telephone: (916) 353-1084

Attorneys for Plaintiff, Pauma Band of Luiseno Mission Indians


in the united states district court for the … · e. equitable estoppel is inapplicable here under...

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