Pauma Band of Luiseno Mission Indians of the Pauma & Yuima Reservation v. California (343 F. Supp. 3d 952, 2018)

(1) DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (ECF No. 37);

(2) GRANTING DEFENDANTS' CROSS-MOTION FOR SUMMARY JUDGMENT (ECF No. 36); AND

(3) DIRECTING ENTRY OF JUDGMENT UNDER RULE 54(b)

Hon. Cynthia Bashant, United States District Judge

OVERVIEW

This action stems from an effort to negotiate a new tribal-state gaming compact under the Indian Gaming Regulatory Act. The Pauma Band of Luiseno Mission Indians of the Pauma & Yuima Reservation ("Pauma" or "Tribe") seeks to offer new forms of gambling at its casino in Northern San Diego County. To make this possible, the Tribe entered into compact negotiations with the State of California and Governor Edmund G. Brown, Jr. (collectively, "State") to expand its gaming rights. However, Pauma now claims the State has failed to negotiate with the Tribe in good faith. Pauma brings suit to trigger a remedial scheme that is designed to result in a new gaming compact.

Presently before the Court are Pauma's and the State's cross-motions for summary judgment on the Tribe's bad faith negotiation claims. (ECF Nos. 36, 37.) The parties have also submitted a joint record of their negotiations. (Joint Record of Negotiations ("JR"), ECF Nos. 32-1 to 32-4.) The Court held oral argument on the motions. (ECF No. 48.)

There is no shortage of animosity between the parties. When they commenced negotiations to reach a new gaming compact, Pauma and the State were embroiled in litigation concerning an amendment to the parties' operative compact. Unsurprisingly, the parties' negotiations became contentious and unproductive at times. But the joint record does not demonstrate the State has failed to negotiate in good faith. The State met with Pauma several times and expressed a willingness to agree that the Tribe could offer additional forms of gambling at its casino. The State also reached out to other parties for information and obtained sample agreements to help Pauma and the State negotiate a new compact. In addition, to guide the parties' future discussions, the State transmitted a first draft of a new compact. Although Pauma now takes issue with the terms proposed in this initial draft, the Tribe never objected to these terms or otherwise responded to the State's proposal. Finally, at the time Pauma stopped participating in the negotiations and filed this lawsuit, nothing indicated the State was unwilling to continue to negotiate with the Tribe to reach a compromise.

The Court cannot conclude on this record that the State has failed to negotiate in good faith. Consequently, for the following reasons, the Court denies Pauma's motion for summary judgment, grants the State's cross-motion for summary judgment, and directs entry of judgment on the claims at issue under Federal Rule of Civil Procedure 54(b).

BACKGROUND

I. Indian Gaming Regulatory Act

There is a "weathered past between Native American tribes and the State of California" when it comes to tribal gaming, and the story starts well before the turn of the century. See Pauma Band of Luiseno Mission Indians of Pauma & Yuima Reservation v. California , 813 F.3d 1155, 1159 (9th Cir. 2015) ; see also In re Indian Gaming Related Cases , 331 F.3d 1094, 1095-1107 (9th Cir. 2003) (" Coyote Valley II ").

"In the 1970s, some California tribes began to operate bingo halls on their lands as a way to generate revenue." Coyote Valley II , 331 F.3d at 1095. These operations "were controversial because the tribes generally refused to comply with state gambling laws, a situation that developed into a serious point of contention with [the] state government[ ]." Id. (alterations in original) (quoting Flynt v. Cal. Gambling Control Comm'n , 104 Cal. App. 4th 1125, 1132, 129 Cal.Rptr.2d 167 (2002) ).

California responded by attempting to enforce its "bingo statute" against the tribes. See California v. Cabazon Band of Mission Indians , 480 U.S. 202, 206, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987) ; see also Cal. Penal Code § 326.5. A dispute erupted between the State and two tribes, culminating in the Supreme Court's decision in California v. Cabazon Band of Mission Indians , 480 U.S. 202, 206, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987). The tribes prevailed-the Supreme Court held California lacked the authority to enforce its bingo statute on tribal lands. Id. at 221-22, 107 S.Ct. 1083.

"After the Court's decision in Cabazon , States sought recourse on Capitol Hill." Coyote Valley II , 331 F.3d at 1096. Within a year, "Congress attempted to strike a delicate balance between the sovereignty of states and federally recognized Native American tribes by passing" the Indian Gaming Regulatory Act ("IGRA" or "Act"), 25 U.S.C. §§ 2701 - 21. Pauma , 813 F.3d at 1160. To summarize the Act:

IGRA was Congress' compromise solution to the difficult questions involving Indian gaming. The Act was passed in order to provide "a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments" and "to shield [tribal gaming] from organized crime and other corrupting influences to ensure that the Indian tribe is the primary beneficiary of the gaming operation." 25 U.S.C. § 2702(1), (2). IGRA is an example of "cooperative federalism" in that it seeks to balance the competing sovereign interests of the federal government, state governments, and Indian tribes, by giving each a role in the regulatory scheme.

Artichoke Joe's v. Norton , 216 F.Supp.2d 1084, 1092 (E.D. Cal. 2002) (alteration in original), aff'd , 353 F.3d 712 (9th Cir. 2003).

To accomplish its purpose, IGRA "creates a framework for regulating gaming activity on Indian lands." Michigan v. Bay Mills Indian Cmty. , 572 U.S. 782, 134 S.Ct. 2024, 2028, 188 L.Ed.2d 1071 (2014) (citing 25 U.S.C. § 2702(3) ). "The Act divides gaming on Indian lands into three classes-I, II, and III."

Seminole Tribe of Fla. v. Florida , 517 U.S. 44, 48, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). IGRA then "assigns authority to regulate gaming to tribal and state governments depending on the class of gaming involved." Big Lagoon Rancheria v. California , 789 F.3d 947, 949 (9th Cir. 2015) (en banc).

The final category-Class III gaming-"includes the types of high-stakes games usually associated with Nevada-style gambling." Coyote Valley II , 331 F.3d at 1097. "As a result, Class III gaming is subjected to the greatest degree of control under IGRA's regulations." Pauma , 813 F.3d at 1160. A tribe may conduct Class III gaming "only if such activities are conducted pursuant to a Tribal-State Compact entered into by the tribe and a state that permits such gaming, and the Compact is approved by the Secretary of the Interior." Id. (citing Coyote Valley II , 331 F.3d at 1097 ); see also 25 U.S.C. § 2710(d)(1), (3)(B). Thus, IGRA contemplates that a tribe and the relevant state shall negotiate to enter into a compact that (i) permits Class III gaming and (ii) may address various regulatory issues related to this type of gaming. 25 U.S.C. § 2710(d)(3)(A), (C).

II. 1999 Gaming Compact

"Despite IGRA's negotiation and compact framework, several unresolved conflicts ... developed between the State of California and Indian tribes surrounding class III gaming and, especially, gaming devices in casinos. See Hotel Emps. & Rest. Emps. Int'l Union v. Davis , 21 Cal. 4th 585, 596, 88 Cal.Rptr.2d 56, 981 P.2d 990 (1999). In particular, "[s]ome gubernatorial administrations were hostile to tribes conducting Class III gaming because it was then prohibited by California's Constitution, and so the State refused to negotiate with the tribes to permit it." Pauma , 813 F.3d at 1160.

As a result, a coalition of tribes "went directly to the people of California" and "drafted and put on the November 1998 State ballot Proposition 5." Coyote Valley II , 331 F.3d at 1100. Proposition 5 required the State to enter into a model compact with tribes to allow certain Class III gaming activities. Id. ; see also Flynt , 104 Cal. App. 4th at 1136, 129 Cal.Rptr.2d 167. Proposition 5 passed, but the tribes' victory was short-lived. The California Supreme Court held that the gaming rights the proposition conferred on the tribes violated the California Constitution's "anticasino provision." Hotel Emps. , 21 Cal. 4th at 615, 88 Cal.Rptr.2d 56, 981 P.2d 990. "Undeterred, the voters of California responded by amending the California Constitution on March 7, 2000, to create an exception for certain types of Class III Indian gaming notwithstanding the general prohibition on gambling in the State." Pauma , 813 F.3d at 1161 (citing Coyote Valley II , 331 F.3d at 1103 & n.11 ).

Meanwhile, in 1999, a group of tribes had started negotiating with the State to enter into nearly identical compacts under IGRA. See Coyote Valley II , 331 F.3d at 1101-07 (detailing the course of negotiations). "In April 2000, Pauma joined more than sixty other tribes who ultimately signed" a copy of this compact-the "1999 Compact." Pauma , 813 F.3d at 1161.

Central to the 1999 Compact "is a formula to calculate the number of gaming devices California tribes are permitted to license." Cachil Dehe Band of Wintun Indians of Colusa Indian Cmty. v. California , 618 F.3d 1066, 1069 (9th Cir. 2010). "The total number of slot machines allowed was restricted by contract language that authorized the continued operation of existing machines, permitted tribes who were not yet operating machines to operate up to 350 machines, and provided a formula for a limited license pool for the remaining machines." Id. at 1069. The agreement allocates these limited licenses "according to a detailed draw process." Id. at 1071. "The draw process, which includes tiers of priority for different tribes, was designed to skew the distribution of the available licenses towards those Compact Tribes that did not yet conduct large gaming operations." Id. Given that Pauma signed a copy of the 1999 Compact, the Tribe was subject to the limited license pool and this draw process.

III. 2004 Amendment and Rescission

Over the next few years, an accounting agency-and then the State itself- administered various draws from the license pool under the 1999 Compacts. See Colusa , 618 F.3d at 1071-72. Yet, by the end of 2003, "the State informed the tribes that the collective license pool had been exhausted." Pauma , 813 F.3d at 1161. "At the time, Pauma was set to enter into a contract with Caesars to build a Las Vegas-style casino in place of Pauma's tent facility near San Diego, but needed more gaming licenses to do so." Id. at 1161-62 ; see also Pauma Band of Luiseno Mission Indians v. Harrah's Operating Co. , No. D050667, 2009 WL 3069578 (Cal. Ct. App. Sept. 28, 2009) (summarizing Pauma's plan to contract with Caesars to compete with the Rincon tribe, which had already associated with Harrah's to build a Nevada-style casino near Pauma's smaller casino). Thus, despite Pauma's request for 750 additional licenses from the license pool draw, it received only 200 licenses. Pauma , 813 F.3d at 1161.

To obtain the remaining licenses it needed, the Tribe started negotiating with the State to amend Pauma's iteration of the 1999 Compact "to abolish the license pool provision and gain access to an unlimited number of licenses." Pauma , 813 F.3d at 1161. The State in return "demanded substantially more money per operable license during negotiations." Id. (citing Rincon Band of Luiseno Mission Indians v. Schwarzenegger , 602 F.3d 1019, 1025 (9th Cir. 2010) ). Pauma succeeded in securing an amendment to the compact-the "2004 Amendment"-and the right to operate more machines, but the Tribe also agreed to pay substantially higher fees. Id. Pauma's annual payment for the 1,050 Class III gaming machines it was currently operating at its casino increased from $315,000 under the 1999 Compact to $7.75 million under the 2004 Amendment. Id.

As Pauma sought reprieve from the depleted gaming license pool through an amendment to the 1999 Compact, two other tribes adopted a different approach. They sued the State in federal court to challenge its "interpretation of the formula for the license pool" in the 1999 Compact, arguing the formula authorized more gaming licenses than the State claimed. Colusa , 618 F.3d at 1069. By this time, the "opaquely drafted and convoluted" license formula had caused the State and certain tribes to be "mired in disputes for much of the period since the bilateral Compacts were signed." Id. Ultimately, in 2010, after the district court ruled in favor of the tribes, the Ninth Circuit closely examined the murky license pool provisions. Id. at 1070, 1073-82. The Court of Appeals concluded that "40,201 licenses were authorized for distribution statewide through the license draw process." Id. at 1082. This amount was significantly more than the limit the State had placed on the license pool-approximately 23,500-when informing the tribes the pool was depleted. See id. at 1078.

While the federal court system resolved the other tribes' challenge to the license pool provision, Pauma's putative deals to expand its casino with a Las Vegas-style operator were falling through. Pauma , 813 F.3d at 1162. "[T]he economic recession of 2008 struck and no deal was ever completed." Id. at 1162 n.4. Consequently, Pauma was still operating its same 1,050 gaming devices at its casino. Id. Yet, the Tribe "continued paying California the exorbitantly expensive 2004 Amendment prices for the[se] same machines it acquired under the 1999 Compact provisions." Id.

Pauma took action: "Shortly after the district court's decision in the action challenging the license pool formula, Pauma filed a complaint asserting eighteen claims attacking the formation of the 2004 Amendment under various theories, including mistake and misrepresentation." Pauma , 813 F.3d at 1162. This prior litigation centered on whether the State had "misrepresented a material fact as to how many gaming licenses were available when negotiating with Pauma to amend its Compact." See id. at 1159-60. In April 2010, the district court "granted Pauma's request for injunctive relief from the annual $7.75 million payments, permitting Pauma to revert to the 1999 Compact rate." Id. at 1162. On interlocutory appeal, the Ninth Circuit "left the injunction in place but remanded to the district court for reconsideration of the preliminary injunction factors in light of recent cases," including-by then-the Ninth Circuit's decision interpreting the 1999 Compact's license pool formula summarized above. Id.

After several more years of litigation, the district court entered summary judgment in favor of Pauma on its misrepresentation claim against the State. Pauma , 813 F.3d at 1162. In 2015, the Ninth Circuit affirmed. Id. at 1167. The Ninth Circuit reasoned that the State misrepresented the number of licenses available because "[t]he formula for calculating the license pool never changed-it just took over a decade to reach a final judicial interpretation which settled a longstanding dispute over the number of licenses it authorized." Id. at 1166. Further, the State's representation to Pauma in 2003 that the license pool was depleted was material and induced Pauma to enter into the 2004 Amendment to acquire more gaming devices. Id. In light of this material inducement, the Court of Appeals held Pauma was entitled "to rescission of the amendment and restitution" in the amount of $36.2 million, which was the sum of the payments Pauma made under the 2004 Amendment in excess of what would have been owed under the original 1999 Compact. Id. at 1173.

Yet, the Tribe had hoped for greater relief. Although the district court's judgment discharged the 2004 Amendment's onerous obligations and allowed Pauma to recoup millions of dollars in payments, the Tribe was still left with the 1999 Compact and its limitations. Thus, prior to the appeal, Pauma had asked the district court to vacate its judgment to allow Pauma to again move for summary judgment on two claims alleging the State negotiated the 2004 Amendment in bad faith in violation of IGRA. Pauma Band of Luiseno Mission Indians of the Pauma & Yuima Reservation v. State of California , No. 3:09-cv-1955-CAB-MDD, 2014 WL 12570173, at *1-2 (S.D. Cal. June 6, 2014). Through this strategy, Pauma aspired to obtain an order compelling renegotiation of the agreement "so the Tribe can obtain a successor to [the 1999 Compact]." Id. at *2. The district court denied this additional relief, concluding:

Although [ ] IGRA may allow a court to reform or rescind an unlawful agreement (which is what Pauma wanted until now), it does not allow the Court to turn back the clock and compel re-negotiation of an agreement actually reached ten years ago, let alone one that has been rescinded and never would have been negotiated in the first place in light of the relief the Court has already granted in this case.

Id. at *5.

Pauma cross-appealed this determination, but the appeal failed.

Pauma , 813 F.3d at 1171-73. The Ninth Circuit agreed with the district court that IGRA's remedy for bath faith negotiation was inapplicable because Pauma had "agreed to the 2004 Amendment and did not challenge the negotiation process under IGRA" beforehand. Id.

IV. Successor Compact Negotiations

It is against this backdrop-the 1999 Compact's limited license pool, an amendment based on unrealized hopes of expansion, and years of litigation to unwind the 2004 Amendment-that the present dispute emerges. As the parties appealed the district court's rulings in Pauma's action challenging the 2004 Amendment, the Tribe set the gears in motion to possibly obtain a successor to the 1999 Compact by another avenue-new negotiations. On November 24, 2014, Pauma sent the State a request to "commence formal renegotiations" pursuant to Section 12.2 of the 1999 Compact "and/or" the 2004 Amendment. (JR 1.) This provision states:

This Gaming Compact is subject to renegotiation in the event the Tribe wishes to engage in forms of Class III gaming other than those games authorized herein and requests renegotiation for that purpose, provided that no such renegotiations may be sought for 12 months following the effective date of this Gaming Compact.

(1999 Compact § 12.2, ECF No. 1-2.)

To trigger this provision, Pauma identified two types of Class III gaming not authorized by the 1999 Compact that it wished to conduct. (See JR 2.) First, Pauma formally requested renegotiation "on the basis that the Tribe wishes to offer...on-track betting at an on-reservation horse track that it plans to construct following the renegotiation of the agreement(s)." (Id. ) Second, Pauma stated it was seeking to offer additional types of lottery games at its casino. (Id. ) The 1999 Compact allows Pauma to operate "any devices or games that are authorized under state law to the California State Lottery." (1999 Compact § 3(c).) Pauma sought to "supplement the lottery games it offers by obtaining the right to conduct any games that are not currently authorized under State law to the California State Lottery." (Id. ) Further, Pauma identified in its request examples of unauthorized lottery games, including those games that "use traditional, non-electronic punchboards"; "are played on video terminals"; and "are part of a unique tribal lottery system." (JR 2-3.)

Beyond identifying its desired new gambling rights, Pauma highlighted that the 1999 Compact provides that, following a request for renegotiation, "the 'parties shall confer promptly and determine a schedule for commencing negotiations within 30 days of the request,' and the renegotiations ... 'shall be governed, controlled, and conducted in conformity with the provisions and requirements of IGRA, including those provisions regarding the obligation of the state to negotiate in good faith and the enforcement of that obligation in federal court.' " (JR 3 (quoting 1999 Compact § 12.3).) Finally, the Tribe requested that the negotiations be kept strictly confidential. (JR 3-4.)

On December 15, 2014, the State responded to Pauma's request, agreeing to commence negotiations regarding a compact that addresses the additional forms of gaming identified by Pauma, but noted that Class III gaming activities "not authorized in California" fall outside the governor's "constitutional authority to negotiate" and are "not appropriate subjects for inclusion in a Compact." (JR 5 (citing 25 U.S.C. § 2710(d)(1)(B) ; Cal. Const. art. IV, § 19, subds. (e) & (f) ).) The State suggested an initial meeting on December 24, 2014, at the Governor's Office in Sacramento, California. (Id. ; see also JR 9 (explaining why this specific date was chosen to comply with the deadline in Pauma's letter and that the State had tried to discuss any scheduling issues with Pauma).) The State also requested that the parties discuss at their initial meeting "preliminary issues, such as process and confidentiality, with the objective of confirming the scope of the confidentiality agreement, as raised in [Pauma's] letter, and a timeframe for, and the scope of, our negotiations." (JR 6.)

Through the exchange of additional letters, in which the parties discuss accommodating schedules and who will attend the first meeting, the parties agreed to meet in San Diego, California, on January 16, 2015. (JR 8-16.)

A. First Meeting

At their initial meeting, the parties discussed preliminary matters and Pauma's potential horse racing venture. Because the State has never entered into an on-track horse racing compact with a tribe, it sought details into Pauma's operation, which Pauma deferred discussion of as premature because the Tribe was hesitant to "substantially invest in the project" before knowing whether it would "have the ability to conduct on track betting at all." (JR 18; see also JR 21.) The State pointed out that it had "entered into off-track wagering compacts and that those might be used as a starting point for Pauma's proposed facility." (JR 21.) Further, to facilitate the process, the State "offered to bring in someone from the California Horse Racing Board" to assist the parties with their discussions. (JR 18; accord JR 21.)

As to Pauma's request for expanded lottery games, the parties offer differing recollections of their discussions. (Compare JR 18, with JR 21-22.) The State's memorialization provides that it "asked for examples of the types of lottery games Pauma is considering," and that the Tribe's counsel "referred the State to the games listed in the Tribe's November 24, 2014 letter." (JR 21.) Pauma then referenced a prior Ninth Circuit decision concerning tribal gaming rights in California, to which the State then reiterated its "need to understand the scope of games that Pauma intends to offer to help identify issues and establish a legal framework for future negotiations." (JR 22.) Last, the State "suggested both sides research the general legal framework for the lottery games further," prior to the parties' next meeting. (Id. )

Pauma, on the other hand, recalls that the State-in addition to asking for legal support for Pauma's position-also described the expanded lottery games "issue as 'murky' and requiring further research." (JR 18.) Moreover, Pauma contends it asked the State to provide its "position in writing as to the games underlying the negotiations before the next meeting, and [the State] agreed to do so." (Id. ) The State disputes this claim. (JR 22.)

Beyond the gaming rights issues, the State recalls that, upon being asked if the Tribe sought "further amendments to its compact," Pauma's counsel "responded that at this time the Tribe wishes to focus on the additional games and nothing broader." (JR 22.) Further, according to the State, "Pauma indicated it had prepared to discuss solely confidentiality and scheduling issues at the meeting," and the State's follow-up letter notes that "it is hopeful" the parties "can discuss Pauma's proposals to operate a live horse racing facility and offer additional lottery games in more detail at [their] next meeting." (Id. )

Finally, the parties discussed scheduling their "next meeting in approximately May 2015, as the parties' participating attorneys face[d] appellate briefing deadlines over the next few months"-presumably related to the then-ongoing 2004 Amendment litigation. (JR 20; see also JR 18.)

B. Second Meeting

1. Prelude

A few months passed before the parties reengaged. By this point, the tenor of the negotiations was quickly deteriorating. On May 8, 2015, Pauma sent the State a letter disputing California's summary of the parties' first meeting and reiterating the Tribe's position on its request for expanded lottery games. (JR 23-25.) Pauma's Chairman particularly took issue with the State's contention that it did not agree to provide its position on the expanded lottery games issue in writing before the next meeting:

While sensitive to the fact that the State is resistant to put anything in writing out of fear of creating a coherent record for any future bad faith suit, I am more concerned by the amount of time and money Pauma may expend going through an undefined and seemingly inefficient process in which it may be simply spinning its wheels.

(JR 24.) The Tribe then requested that the State identify "before our next meeting ... the games over which the State is and is not willing to negotiate." (Id. ) Next, Pauma takes issue with the State's proposed process for formulating an on-track horse racing compact, with the Tribe asking the State to meet with the State Horse Racing Board "to formulate the State's position regarding the civil regulations it would like to negotiate for during forthcoming meetings." (JR 25.)

Last, after raising these grievances, Pauma asks to postpone the next negotiation meeting to accommodate the parties' appeals in the 2004 Amendment litigation:

Although this letter may appear to ask a lot from the State on a relatively short schedule, the recent orders in the pending compact litigation have essentially guaranteed that our attorneys will be largely preoccupied until the oral argument scheduled for July 10, 2015. In light of that, the prudent thing to do would be to delay ou[r] next negotiation session from the May 2015 date we contemplated during our first meeting to some point shortly following the scheduled date for the oral argument.

(JR 25.)

On May 27, 2015, the State responded to Pauma's communication, agreeing to transcribe the parties' future negotiations "so we can focus our energy on discussing and resolving issues, rather than arguing about statements made at prior meetings." (JR 26.) The State also stood by its prior summary of the first meeting, characterizing "the Tribe's posture at that meeting" as being "primarily oriented towards seeking a legal position from the State without providing a clear description of the kinds of horse racing or lottery games it sought to conduct." (Id. ) Beyond this back-and-forth, the State requested Pauma's Chairman provide it with "dates in early August that would be convenient for you to meet in Sacramento so we can continue our discussions." (Id. )

Pauma's counsel replied to the State on August 5, 2015, and provided proposed dates at the end of the month for the parties to continue their negotiations. (JR 27.) The Tribe also, again, conveyed its perception that the State was exhibiting a lack of willingness to negotiate for the expanded gaming rights Pauma requested:

Given the lack of a concrete response from the State over the past eight months as to whether or not it is actually willing to negotiate for these rights, Pauma has no choice but to simply construe your silence as a tacit affirmation that these forms of games are indeed available so the discussion of terms that both parties seemingly desire can finally take place.

(JR 27.)

The parties continue to spar by correspondence as they settle on a date for their second meeting and discuss other miscellaneous matters. (JR 29-37.) Ultimately, the parties would agree to meet in Sacramento at the California Attorney General's Office on September 8, 2015, for a transcribed and recorded negotiation session. (JR 33-37.)

2. Negotiation Session

The parties discussed several topics at their second meeting. That being said, a disagreement is interspersed throughout their negotiations. This debate concerns how the parties should move towards reaching an actual compact. The State's negotiator, "having reviewed the back and forth," proposes that "the best way to move forward" is for Pauma to "just draft compact language on those two issues" that the Tribe feels needs "to be addressed in the compact." (JR 42.) The State justifies this request by stating it "will be the best way to at least move things forward so [the parties] are not just arguing about positions" and "are actually working on language that ultimately hopefully will lead to a compact." (JR 42-43.) Pauma, on the other hand, wants more input from the State before getting started. (JR 75-76.)

i. Horse Wagering

As to substance, the parties first discussed Pauma's on-track horse wagering request. (JR 42-76.) Pauma expressed that it is "going to be very difficult for us to come up with what a horse racing compact is supposed to be -- look like." (JR 43.) Although the State previously entered into compacts providing for off-track wagering, these compacts are "15 or 20 pages" and "[r]elatively simple." (Id. ) In contrast, Pauma stated a compact providing for operation of a horse race track potentially implicates a wide range of horse racing regulations that "cover a whole slew of things," like weeks of operation and charity racings. (JR 43; see also JR 50- 51.) In response, the State asked Pauma to "do [its] best" and come up with a draft- with placeholders as necessary-to "start[ ] the ball moving." (Id. ) The State also explained that it brought the Executive Director of the California Horse Racing Board to the meeting because of the complexity of a tribe conducting on-track betting in California. (JR 44.)

During this discussion, the Executive Director informed Pauma that he believes the Tribe's involvement with the horse racing business "would be very well received" because it is "a declining industry" with "tracks closing." (JR 45.) The State also encouraged Pauma to include "off-track wagering" as part of its plans, and the State informed Pauma that it had worked with the Executive Director and his staff "to update the older provisions" in compacts concerning off-track wagering. (JR 46.)

After more discussion, the State requested that Pauma put together a "shell of something that lays out what" the Tribe is looking for, and the Tribe pushed back because it believed that creating a first draft would be "a massive undertaking," (JR 49), and there are "massive amounts of regulations" that the parties may need to consider, (JR 50). The State then repeats its willingness to work with Pauma, as tribal on-track wagering has not been done in California, and the State wants to "try to figure out the best way to do it."

(JR 54-55.) The parties thereafter continued to discuss issues related to on-track wagering with the Executive Director, as well as continue their debate about Pauma needing to make the first attempt at a draft compact. (JR 56-76.)

ii. Supplemental Lottery Games

As for the lottery games issue, Pauma asks to "work on the language today." (JR 39.) Its counsel states that in his view, this issue is "incredibly simple" when compared to the horse racing topic. (JR 76-77.) The State, however, again asks Pauma to "put together something and [the State] will respond," with its preference to "just get the ball rolling with some exchange of documents so we can focus on language." (JR 78.)

Pauma then shares its position on the lottery issue, including what it believes is the relevant state law framework. (JR 43-47.) The State admits that "there is a question there," and that the parties may need to "go back and research the history" to determine if the Tribe can engage in lottery games beyond those games authorized to the California State Lottery. (JR 47.) The parties continue to debate this issue, until they reach a flashpoint:

Pauma's Counsel: ... We just want the rights to do lottery games. And I know this is a sensitive area for the State since the [State] lottery makes like $5 billion per year.

State's Negotiator: Right. And it goes to all of our kids' education, right? I mean --

Pauma's Counsel: I know. And our kids can't even get education. And that's why we are trying to fix this, Joe.

....

State's Negotiator: I mean, actually, to make the point, it does go to schools statewide, right?

....

State's Negotiator: And it benefits all of our kids, right?

Pauma's Counsel: I get it. But you -- I don't know if protectionism is, like, a valid concern under IGRA, though. You know, there is a way to provide tribes with equal rights.

State's Counsel: Actually, it is valid under IGRA. If you look at IGRA, one of the things that the State is entitled to negotiate over is to protect its own gambling industry. I'm not suggesting we would do that. But that's expressed in IGRA.

Pauma's Counsel: That's a - that's a colorful interpretation ....

State's Counsel: It's straight language. It's not colorful interpretation.

(JR 52-55.) Pauma presses onward, with the State eventually responding that the issue is what exact games the state constitution may permit the Tribes to conduct because the relevant constitutional provision simply states "lottery games." (JR 56- 57.)

The parties take a break and return, but the negotiations quickly break down. (See generally JR 96-109.) Pauma's counsel starts employing sarcasm. (See JR 102 (remarking that Pauma wants to race "some elephants" and "donkeys" at its track, and it is "going to be something else"). And these comments draw the ire of the State's negotiator. (See JR 109 ("No. You are being sarcastic. And it's just ridiculous.").) Eventually, the State's negotiator expresses that he believes the parties "can make a lot of progress on the horse racing side." (JR 112.) As to the lottery issue, the State says, "we will see where that goes too. I mean, let's get some language and we will respond. At least we will have a framework of - you know, we'll have the issues ... I mean, just arguing back and forth, with all respect, isn't really moving us anywhere." (JR 113.)

iii. Scope of Negotiations

Toward the end of the parties' meeting, the State's negotiator asks to focus "on the next step" and inquires: "What's the time line? What do we need to do?" (JR 114.) These questions prompt Pauma's counsel to bring up the start date of the future compact they are negotiating for. (Id. ) Yet, when Pauma wants to broaden the topics of discussion, the State resists. (JR 117.) Its negotiator emphasizes that Pauma was "clear that it" only wanted to negotiate regarding "on-track horse racing and issues related to lottery games." (Id. ; see also JR 120.) The debate over this issue quickly degenerates. More sarcasm is employed by Pauma's counsel, again drawing the ire of the State's negotiator. (See JR 86-126.)

Needless to say, the parties make limited progress during the rest of the meeting. At the end, the State's position is twofold. (JR 140.) First, if Pauma seeks to broaden the negotiations, the State requests that Pauma adhere to the 1999 Compact by sending a letter that clarifies the scope of the negotiations. (Id. ) Second, the State asks Pauma to send the State "some compact language" regarding the horse racing and expanded lottery games issues. (Id. )

C. Resolution of Scope of Negotiations Dispute

About a month later, Pauma sends the State a letter criticizing the State's conduct at the second meeting. (JR 174-81.) After acknowledging the meeting "had a promising start," Pauma characterizes the State as trying "to bring the meeting to an end" by asking Pauma to "unilaterally draft the horse racing and on-track wagering regulations for its compact by distilling down the many hundreds of pages of convoluted State laws that have developed over the past eighty years and now govern these activities." (JR 174.) Pauma's Chairman continues: "And this says nothing about the State's abject refusal to discuss the lottery games topic even when Pauma's counsel proposed a simple one sentence revision to the language currently in ... the 1999 Compact ... to account for those games that are ... not 'authorized' to the California State Lottery[.]" (JR 175.)

In addition, Pauma objects-at length-to the State's position that the parties' negotiations are limited to the additional gaming rights Pauma identified in its initial request. (JR 176-77.) Pauma also suggests the State is dodging the cooperative negotiation process "simply because of bad feelings arising out [of the prior] litigation or a desire to protect the State Lottery from tribal competition." (JR 177.)

The State responds several weeks later. (JR 182-84.) It initially focuses on the parties' dispute as to the scope of negotiations. (JR 182-83.) After incorporating excerpts from the parties' prior letters, the State concludes:

Pauma did not previously request to negotiate subjects outside of section 12.2. Pauma now seeks to expand the scope of the negotiations to include subjects not encompassed by section 12.2 and that the State has not agreed to renegotiate since receiving Pauma's November 24, 2014 letter. Under the terms of the compact, the State is under no obligation to renegotiate any matters beyond the scope of those identified in, or related to, your initial request and declines to do so.

(JR 183.)

The State also follows-up on the horse racing issue, noting that since the parties' last meeting, the State has "reached out to the National Indian Gaming Commission to obtain information regarding other tribes that may be conducting on-track betting." (JR 183.) The State shares the fruits of its effort by attaching a "Compact Addendum between the Sisseton-Wahpeton Sioux Tribe and the State of North Dakota addressing pari-mutuel horse racing" to serve as a reference for the parties' further discussions. (JR 183, 185-205.) In closing, the State reports that it is "preparing a draft off-track wagering compact for discussion and will forward it to you soon" and "look[s] forward to reviewing Pauma's proposals regarding a framework for final compact language addressing the new forms of gaming that it proposes to offer-horse racing and lottery games." (JR 184.)

Several weeks later, Pauma reacts to the State's steadfast position on the scope of negotiations by triggering the 1999 Compact's dispute resolution process. (JR 206.) In identifying the dispute, Pauma notes:

The amount of time the parties have spent going in circles about these issues should eliminate any need to reiterate the problems let alone provide gross specificity, but it should go without saying that the prevailing dispute relates to the proper interpretation of Sections 12.2 and 12.3 of the compact, the position the State has taken in regards to such issues over the course of the last year of negotiations, whether the State has negotiated in good faith during this time, and related issues.

(JR 206.) The Tribe also expresses its "hope that the parties will approach the future meeting ... and any ensuing ones in good faith, thereby eliminating any need for federal court involvement." (JR 207.)

Several days later, the State acknowledges Pauma's dispute resolution request and suggests the parties meet on December 4, 2015. (JR 208.) The State also summarizes the steps it has taken to move the parties forward on the horse racing issue and also attaches "for discussion a draft compact addendum that would authorize a satellite wagering facility." (Id. ; see also JR 210-21.) As for the expanded lottery games issue, the State notes that it has "asked for draft compact language and received nothing but lengthy letters from [Pauma] or [its] lawyers that seek to blame the State for the lack of progress, but fail to do anything to help the parties move forward towards the conclusion of a compact." (JR 209.)

In follow-up e-mails, the parties discuss scheduling and the location of the dispute resolution meeting. (JR 222-27.) Pauma presses for an in-person meeting near its reservation, but the State pushes back reportedly due to the short notice and a lack of contract carrier flights to San Diego on the agreed-upon date. (JR 225-27.) Pauma again presses the State, suggesting its representatives fly into Ontario instead. (JR 224.) The State's negotiator repels Pauma, taking issue with what the State believes is the Tribe's manipulation of the holiday season:

With all due respect, your comments about inconvenience and difficulty of scheduling lack credibility and are difficult to take seriously when you requested this meeting ... at approximately 9 p.m. on the evening before Thanksgiving .... It appears that you intentionally waited until the evening before a four day holiday weekend to request a meeting within ten days so you can find some basis to argue that the State is not in compliance with its compact obligations. You appear to be implementing a strategy of obtaining a compact by litigation rather than negotiation. IGRA should not be manipulated by either party to avoid the obligation to negotiate in good faith towards the conclusion of a compact. We have tried, and will continue to try to work with you in good faith. We worked over the holiday to provide a response and present draft compact language on the Monday after the holiday. Despite your many letters and e-mails, the State has yet to receive a single word of proposed compact language from the Tribe. I believe we'd do more to further the interests of the Tribe and the State if we spent more time on developing a compact, than arguing about scheduling.

(JR 223.)

The parties met on December 4, 2015, to discuss their scope of negotiations dispute. (JR 228.) Afterwards, Pauma e-mailed the State two letters to support the Tribe's interpretation of the renegotiation provision of the 1999 Compact. (JR 228-33.) The State agreed to provide a response within a week. (See JR 228.)

The State did. (JR 234-35.) Its response provides that the "exchange of information, as well as the discussion at our meeting of December 4, 2015, was helpful to frame the disputed issue," but the State concludes its interpretation of the 1999 Compact's renegotiation provision, "as consistently applied, is supported by the specific compact language and reflects the intention and understanding of compact parties." (JR 234.) That said, the State agrees to broaden the scope of negotiations:

However, rather than focus additional time and energy on this dispute, the State is amenable and now agrees, pursuant to section 12.1 of the compact, to enter into negotiations for a new or amended tribal-state gaming compact .... To be clear, this letter reflects the State's understanding that both parties are amenable to considering all aspects of the existing compact and other appropriate provisions to ensure that we are able to achieve our mutual objectives.

(JR 234.) Next, the State cautions Pauma that it is engaged in "compact negotiations with a large number of tribes," emphasizing that it is committed to develop a new compact but wants to "be up front with [the Tribe] about the demands on [the State's] time to ensure that we set realistic timeframes." (JR 235.) Finally, the State requests Pauma provide a date for a future meeting, and the State's negotiator notes that he is "amenable to conducting many of our meetings by phone to avoid cost and inconvenience and to allow us to focus our efforts on productive negotiations." (Id. )

Several days later, the Tribe replied to the State's offer "to negotiate under the voluntary negotiation provision of" the 1999 Compact. (JR 236.) The Tribe asks the State to confirm that negotiations under the voluntary provision will include the new forms of gaming Pauma is seeking. (Id. ) The Tribe's Chairman then informs the State he will contact it "in short order about scheduling the next negotiation session and the issues" to be addressed at that meeting once the scope of the current negotiations are confirmed. (Id. )

A few weeks later, the State confirms that "the entire compact" is up for negotiation. (JR 238.) The State then reiterates that it "has provided Pauma with draft compact language on the issue of off-track betting and a complete compact previously approved by the Department of the Interior governing tribal horse racing in another state." (Id. ) The State's response next provides: "We have requested, but not received, the Tribe's plans for on-track betting and proposed language regarding authorized lottery games. We look forward to receiving and reviewing such documentation as part of the next step in our negotiations to ensure they move forward in a constructive manner." (Id. )

D. The State's Draft Compact

With the parties' dispute concerning the scope of negotiations resolved, Pauma's counsel sends the State a letter several weeks later. (JR 239-41.) The letter does not include further negotiation on the horse racing provision; it instead focuses solely on the Tribe's request for expanded lottery games. (JR 244-45.) Further, the Tribe's counsel tells the State:

Pauma prefers to conduct the negotiations in a piecemeal fashion, focusing on one material issue and then moving on to the next only after the parties have largely agreed on language for the final compact. It is my view that structuring the negotiations in such a manner will foster productivity and allow the parties to seek court guidance regarding a particular issue should an impasse arise while simultaneously remaining free to negotiate the other issues that come under the ambit of these negotiations.

(JR 241.)

As to the lottery games, Pauma's counsel suggests "two revisions" to the 1999 Compact to provide the Tribe with the gaming rights it seeks. (JR 240-41.) These revisions involve inserting a definition for the term "Lottery" and amending the scope of permitted lottery games to broaden it to include at least nine categories of additional lottery games. (Id. ) In closing, the Tribe informs the State that as it considers Pauma's letter, the Tribe "will begin to formulate positions on other topics-including the horse racing-so the parties may turn to those once we have reached a consensus on the lottery provisions." (JR 241.)

When the State does not respond to Pauma's piecemeal negotiation proposal in the next several weeks, Pauma follows-up. (JR 242-43.) The Tribe emphasizes that it has been "four hundred and seventy (470) days since Pauma conveyed its request to commence renegotiations of the 1999 Compact" and "respectfully request[s] that the Office of the Governor expedite its response" to Pauma's most-recent proposal. (JR 242.)

In a response several weeks later, the State declines Pauma's offer to "conduct negotiations in a piecemeal fashion." (JR 244.) The State rationalizes:

Such an approach has no basis in the dispute resolution framework created within the Indian Gaming Regulatory Act (IGRA) that governs the possibility of an impasse in the negotiations, limits the ability of the parties to achieve consensus by giving and taking on the wide range of issues that are addressed in bilateral compact negotiations, and is remarkably inefficient.

(Id. )

Next, in addressing Pauma's lottery games proposal, the State argues that the governor's authority to negotiate for lottery games under the California Constitution's tribal gaming provision "has always been understood to encompass those games authorized for play by the California State Lottery." (JR 244.) That said, the State tells Pauma that it "is willing to negotiate to authorize Pauma to offer certain additional lottery games to be enumerated in the compact." (Id. ) The State continues:

Specifying the games provides clarity as to the scope of the authorization, avoids future disputes between the parties, and mitigates the risk of running afoul of other prohibitions on how lottery games may be conducted, such as the keno game offered by the California State Lottery that was found to be an illegal banked game by the Supreme Court in Western Telcon, Inc. v. California State Lottery (1996) 13 Cal. 4th 475 [53 Cal.Rptr.2d 812, 917 P.2d 651].

(Id. ) "Furthermore, the State expressly takes issue with Pauma's ability under IGRA to seek to negotiate 'devices or games that are authorized to any other state lottery or any other multi-state lottery association,' 'lottery games that are played on video terminals,' 'tribal lottery systems' or other lottery systems to the extent operated or conducted off tribal lands, and 'video lottery games that dispense coins or currency.' " (JR 244-45.) Finally, the State tells Pauma that it will provide the Tribe with "a complete draft document to guide our future discussions within the next few weeks." (JR 245.)

Several weeks later, the State sends Pauma a "draft compact" by e-mail. (JR 246-382.) In a margin comment to the draft compact's authorization of Class III gaming, the State notes that it "is open, as indicated in prior correspondence, to discussion regarding the authorization of additional enumerated [lottery] games." (JR 261.) The State also comments that it "has proposed" an off-track wagering compact "that can be incorporated as an Appendix or negotiated and concluded as a separate class III gaming compact." (Id. ) Pauma, however, did not respond to either the State's letter explaining its position on the additional lottery games or its proposed draft compact.

V. This Action

A few months later, the Tribe filed this action. In its Second Amended Complaint, Pauma brings a torrent of twenty claims against the State for "bad faith negotiation" under IGRA. (Second Am. Compl. ("SAC") ¶¶ 210-310.) The Tribe requests that this Court "find that the State failed to negotiate in good faith under Section 2710(d)(7)(B)(iii) of IGRA and trigger the statutory remedial scheme set forth in Section 2710(d)(7)(B)(iii)-(vii)." (Id. Prayer ¶ 1.) Pauma now moves for summary judgment on sixteen of its bad faith claims. (ECF No. 37.) The State, in turn, moves for summary judgment on all twenty of Pauma's IGRA claims. (ECF No. 36.)

LEGAL STANDARD

"A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought." Fed. R. Civ. P. 56(a). Summary judgment is appropriate where the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is genuine if "the evidence is such that a reasonable [factfinder] could return a verdict for the nonmoving party." Id.

ANALYSIS

I. IGRA's Good Faith Requirement

IGRA provides that-upon receiving a tribe's request to negotiate a compact permitting Class III gaming-"the State shall negotiate with the Indian tribe in good faith to enter into such a compact." 25 U.S.C. § 2710. Provided that 180 days have elapsed since the tribe's request to negotiate, the tribe "may initiate a cause of action" in federal court "arising from the failure of a State ... to conduct such negotiations in good faith." Id. § 2710(d)(7)(A)(i), (B)(i).

IGRA does not define the term "good faith." See 25 U.S.C. § 2710 ; see also id. § 2703 (listing definitions for the Act). But the statute does provide that in evaluating whether a state has negotiated in good faith, the court:

(I) may take into account the public interest, public safety, criminality, financial integrity, and adverse economic impacts on existing gaming activities, and

(II) shall consider any demand by the State for direct taxation of the Indian tribe or of any Indian lands as evidence that the State has not negotiated in good faith.

Id. § 2710(d)(7)(B)(iii). Further, in addition to providing these two criteria for assessing good faith, IGRA lists seven permissible negotiation topics for tribal-state compacts. Id. § 2710(d)(3)(C). The compact may include "provisions relating to" any of the following:

(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 [gaming] 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 such 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.

Id. These seven topics, however, are "circumscribed by one key limitation on state negotiating authority: 'Except for any assessments that may be agreed to under [ § 2710(d)(3)(C)(iii) ], nothing in this section shall be interpreted as conferring upon a State ... authority to impose any tax, fee, charge, or other assessment upon an Indian tribe ...." Rincon , 602 F.3d at 1028 (quoting 25 U.S.C. § 2710(d)(4) ). "IGRA limits permissible subjects of negotiation in order to ensure that tribal-state compacts cover only those topics that are related to gaming and are consistent with IGRA's stated purposes." Id. at 1028-29 (footnotes omitted).

Given IGRA's structure, the Ninth Circuit has reasoned "that the function of the good faith requirement and judicial remedy is to permit the tribe to process gaming arrangements on an expedited basis, not to embroil the parties in litigation over their subjective motivations." Rincon , 602 F.3d at 1041. Consequently, "good faith should be evaluated objectively based on the record of negotiations, and ... a state's subjective belief in the legality of its requests is not sufficient to rebut the inference of bad faith created by objectively improper demands." Id.

Beyond this guidance, "IGRA's legislative history also makes clear that the good faith inquiry is nuanced and fact-specific, and is not amenable to bright-line rules." See Coyote Valley II , 331 F.3d at 1113 ; see also S. Rep. No. 100-446, at 14 (1988) ("The terms of each compact may vary extensively depending on the type of gaming, the location, the previous relationship of the tribe and State, etc."). Further, a state is not "guilty of bad faith" in compact negotiations simply because "it takes a 'hard line' negotiating position" with the tribe. See Rincon , 602 F.3d at 1038. "[A] 'hard line' stance is not inappropriate so long as the conditions insisted upon are related to legitimate state interests regarding gaming and the purposes of IGRA." Id. at 1039 (emphasis in original). Yet, if the "hard line" position "results in a 'take it or leave it offer' to the tribe to either accept nonbeneficial provisions" outside the scope of those topics authorized by IGRA or go without a compact, the State acts in bad faith. See id.

IGRA also includes a burden-shifting mechanism for bad faith claims. The initial burden is on the tribe, which must introduce evidence that: (1) "a Tribal-State compact has not been entered into"; and (2) the State has either failed to respond to the tribe's request "in good faith" or has failed to respond to the request altogether. 25 U.S.C. § 2710(d)(7)(B)(ii)(I)-(II). The burden of proof then shifts to "the State to prove that the State has negotiated with the Indian tribe in good faith to conclude a Tribal-State compact governing the conduct of gaming activities." Id. § 2710(d)(7)(B)(ii).

If the court concludes the state has failed to negotiate in good faith, IGRA provides for a multi-step remedy. First, the court shall order the state and tribe to conclude "a compact within a 60-day period." 25 U.S.C. § 2710(d)(7)(B)(iii). If, however, the parties are still unsuccessful in reaching an agreement, they must "submit to a mediator appointed by the court a proposed compact that represents their last best offer for a compact." Id. § 2710(d)(7)(B)(iv). The mediator then chooses the proposed compact that "best comports with the terms of [IGRA] and any other applicable Federal law and with the findings and order of the court." Id. Finally, "[i]f the State does not accept the mediator's chosen compact within 60 days, the Secretary of the Interior shall prescribe, consistent with the mediator's chosen compact and with the terms of IGRA, the conditions upon which the tribe may engage in class III gaming." Coyote Valley II , 331 F.3d at 1098 (citing 25 U.S.C. 2710(d)(7)(B)(vii) ).

There are two significant decisions from the Ninth Circuit interpreting the good faith requirement-both involving the State of California-that further guide this Court.

A. Coyote Valley

In Coyote Valley II , 331 F.3d 1094 (9th Cir. 2003), the Ninth Circuit applied IGRA's good faith standard to consider a challenge to several provisions in the 1999 Compact. There, the court summarized the lengthy background underpinning the 1999 Compacts, including California's negotiations with various tribes to formulate this agreement. Id. at 1095-1106. The plaintiff Coyote Valley tribe initially signed a letter of intent to enter into the 1999 Compact, but it then held off over concerns with the agreement. Id. at 1106. The tribe ultimately brought suit against California alleging bad faith negotiation, and the district court ruled against the tribe. Id. at 1107.

On appeal, the Ninth Circuit classified Coyote Valley's bad faith arguments into "two kinds." Coyote Valley II , 331 F.3d at 1109. First, the court considered the tribe's "procedural" objection "that the State's conduct during negotiations- specifically its dilatory tactics over the course of a seven-year period-constitutes bad faith." Id. Having reviewed "the history of negotiations," the Ninth Circuit held it could not "conclude ... as a procedural matter, the State has refused to negotiate in good faith." Id. It reasoned that the record showed California Governor Gray Davis's Administration had "actively negotiated" with the tribes, "including Coyote Valley," despite that the Davis Administration did not have the obligation to do so before the ratification of the state constitutional amendment permitting tribal gaming. Id. at 1110. "Moreover, at the time Coyote Valley filed its amended complaint with the district court ..., the State remained willing to meet with the tribe for further discussions." Id. Thus, the Ninth Circuit concluded that to the extent the tribe had a "valid objection to negotiations by the Davis Administration," the objection was to the substance of several provisions in the 1999 Compact, not "to the timing and procedures of" the negotiations. Id.

Turning to the tribe's substantive objections, the Ninth Circuit analyzed Coyote Valley's challenges to three provisions contained in the 1999 Compact. Coyote Valley II , 331 F.3d at 1109. The first provision was the 1999 Compact's establishment of a "Revenue Sharing Trust Fund" "that grants a maximum of $1.1 million dollars to each of the State's non-gaming tribes each year." Id. at 1105 (citing 1999 Compact § 4.3.2.1.). This revenue sharing fund is financed by the compacting tribes' gaming device license fees. Id. Coyote Valley argued that because this fund "requires payments from compacting tribes that go beyond amounts neces