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Gambling and the Law®:
Court Rules Tribal Casino Is Merely A Casino

The United States Court of Appeals, District of Columbia Circuit, has declared that, at least for labor law, tribal casinos are to be treated exactly the same as casinos that are owned by private citizens.  (San Manuel Indian Bingo and Casino v. N.L.R.B., 475 F.3d 1306, 374 U.S.App.D.C. 435, February 09, 2007.)  In other words, a tribal casino is not a part of a government, but merely just another privately owned business.

The holding has enormous implications. At a minimum, it means that the National Labor Relations Act (“NLRA”) (29 U.S.C. §§ 151 et seq.) and all regulations of the National Labor Relations Board (“NLRB”) apply to all employees at Indian casinos. This includes the laws surrounding the right to unionize, the major issue of dispute in the fight over new compacts in California.

At the maximum, the case could result in the virtual end of tribal sovereignty. Courts would never openly declare that tribes are not sovereign governments. But courts that are hostile to Indian sovereignty, especially sovereign immunity, may use this decision to find that almost every federal and state statute and regulation applies to Indian casinos and to any other tribal business that is not limited to members of that tribe.

The case began with a dispute between two unions anxious to capture the workers at the San Manuel’s Indian Bingo and Casino, the closest tribal gaming to Los Angeles. The Hotel Employees and Restaurant Employees International Union (“HERE”) was denied access to the casino for organizing while its rival, the Communications Workers of America, was not. On January 18, 1999, and again on March 29, 1999, HERE filed an unfair labor practice charge with the NLRB. It charged that the Casino “has interfered with, coerced and restrained employees in the exercise of their [collective bargaining] rights, and has dominated and discriminatorily supported the [CWA] by allowing CWA representatives access to Casino property …, while denying the same-or any-right of access to representatives of the Charging Party ….”

As is the normal practice when a tribe faces a formal legal challenge such as this, the Tribe appeared specially, seeking dismissal for lack of subject matter jurisdiction. The Tribe asserted the NLRA does not apply to the actions of tribal governments on their reservations. The matter was transferred to the NLRB in Washington, D.C., and on May 28, 2004, the NLRB issued a decision and order finding the tribe was subject to the NLRA. Naturally, the NLRB then ruled discriminating in favor of one union over another was an unfair labor practice.

On appeal the major question was whether the tribe’s casino is subject to the nation’s labor laws. The tribes main arguments were its inherent sovereign immunity and specific language in the NLRA that exempted “any State or political subdivision thereof” from the definition of “employer.” (NLRA § 2(2), 29 U.S.C.A. § 152(2).)

In a long, detailed decision, the Court of Appeals ruled against the tribe on all counts.

The Court focused on the facts that most of the patrons and even employees were not members of the tribe, that casinos are not a traditional part of Indian life, and that the gaming operation was only a way to raise money, and not an essential part of the tribe’s self-government.

The decision itself is a significant crack in the wall of sovereign immunity protecting tribes from federal and state laws. But perhaps more importantly, the Court then declared a fundamental change in the way courts will decide in the future if any law applies to a tribe.

It is well-established that tribes have sovereignty. (See, Kiowa Tribe v. Mfg. Techs., Inc., 523 U.S. 751, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998).) This includes the right to be exempt from federal and state laws and not to be sued without their consent. Tribes can voluntarily give up some of their sovereignty, as they often do when signing contracts.

Tribal sovereignty can also be taken away by Congress. Until now, courts have held that this can only happen if there is an express statement by Congress limiting a tribe’s sovereignty.

This Court ruled that the express statement is required only when a federal or state law will interfere with a tribe’s governmental functions. In all other cases, outside laws apply to Indians, unless there is a clear indication that they are exempt.

This turns existing law on its head. It used to be that tribes were safe in assuming a law, say the requirement that casinos report large cash transactions to the U.S. Treasury, did not apply to them, because there was no express statement that tribes were required to file these reports. Now the assumption has to be the opposite: All federal and state laws, including all statutes and regulations, apply to tribal casinos unless there is an explicit statement in the law itself that tribes are exempt.

The immediate impact of this decision was political, rather than legal. It added a heated political battle in Congress to the heated political battle being waged over new casino compacts in California. Congress is probably going to approve a bill allowing workers to organize by merely signing cards, called a “card check,” rather than through secret elections. But President Bush has vowed to veto the bill. This is exactly the issue that prevented recent compacts from being approved by the California Legislature.

Republican Gov. Arnold Schwarzenegger pulled a brilliant political move by announcing, right before the election, that he had signed compacts with some of the tribe’s major gaming tribes. The compacts would greatly expand these tribal casinos, letting some have 7,500 slot machines, and give a healthy share, up to 25% of gaming revenue, to the financially struggling state.

But the compacts have a provision the unions hate: 30% of employees must first declare that they want to organize, then there is a secret ballot where a majority must vote to unionize. The unions argue this method of organizing allows employers, such as tribes, to influence their employees’ decisions.

The Democrats were forced to decide whether to betray the tribes by not approving the compacts, or the unions by approving them. They decided to postpone their decision until after the election, keeping the unions happy, but resulting in the tribes pouring millions of dollars into Republican campaigns.

Now, this Court has made it clear that federal law does apply to how unions get organized, or not, in Indian casinos. Tribes, as employers, can now demand secret elections – unless Congress changes the law. So, how should Democrats, who control both the California Assembly and Senate vote? The pending compacts would prevent unions from organizing the way they want, through “card checks;” unless and until lawmakers in Washington, D.C., say the opposite. At the time this is written, the compacts have been approved by the State Senate but are facing great opposition in the State Assembly.

Tribes are considering appealing this case to the U.S. Supreme Court. One of their major arguments is that this case creates a double standard: No one looks at state lotteries as being merely private businesses.

So, should the tribe appeal? Tribes are right to be worried. The door has certainly been opened. This opinion is not limited to the NLRA or even to federal law. Many states would love to impose their laws on tribes and their lands.

This decision does appear to conflict with recent rulings holding that tribes have sovereign immunity for everything they do, even pure commercial transactions. But if the Supreme Court hears this case, tribes may lose even more. The Supreme Court has made it clear that it hates tribal sovereign immunity. In the Kiowa case, a majority of the high court called upon Congress to eliminate tribal sovereign immunity, while the dissent would eliminate it themselves. This case would give the Supreme Court the opportunity to declare that all laws, and lawsuits, apply to tribes unless they directly interfere with tribal governmental functions or there is an express declaration regarding the tribe in an act of Congress.

It is easy to see why tribes get so frustrated with what they see as “white man’s” laws. Tribes had near absolute sovereignty, as long as they were living in poverty, isolated from the rest of American society. No one cared, until they gained economic and political power. Now it might all be taken away.

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© Copyright 2007. Professor I. Nelson Rose is recognized at one of the leading authorities on gambling law, often serving as an expert witness and consultant to governments and industry. His books include Gaming Law in a Nutshell (1st and 2nd editions), Internet Gaming Law (1st and 2nd editions) and Gaming Law: Cases and Materials. His Facebook page is Gambling And The Law (https://www.facebook.com/GamblingAndTheLaw); Twitter: Gambling_And_The_Law@LawOfGambling; and website, www.GamblingAndTheLaw.com.