Casino Lawyer Magazine The International Masters of Gaming Law

Volume 3 Number 3 Summer Issue 2007

Gambling and the Law©: Court Rules Tribal Casino Merely a Casino
By I. Nelson Rose

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.[1] 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 minimum, it means the National Labor Relations Act (NLRA)[2] and all regulations of the National Labor Relations Board (NLRB) apply to all employees at Indian casinos. This includes laws surrounding the right to unionize, the major issue of dispute in the fight over new compacts in California.

At 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 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 property 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 (CWA), was not. On Jan. 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 sought 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 that 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 tribe's 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." [3]

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 employees - of the casino 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, 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 if any law applies to a tribe in the future.

It is well established that tribes have sovereignty.[4] 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 Indian tribes, 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 state's major gaming tribes. The compacts would greatly expand those tribes' casinos, letting some have 7,500 slot machines, and give a healthy share, up to 25 percent of gaming revenue, to the financially struggling state. But the compacts have a provision the unions hate: To unionize, 30 percent of employees must first declare they want to organize, and then there is a secret ballot where a majority must vote in favor of the union. 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 was 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.[5] 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.

[1] San Manuel Indian Bingo and Casino v. N.L.R.B., 475 F.3d 1306, 374 U.S.App.D.C. 435, Feb. 9, 2007.

[2] 29 U.S.C. §§ 151 et seq.

[3] NLRA § 2(2), 29 U.S.C.A. § 152(2).

[4] See, Kiowa Tribe v. Mfg. Techs. Inc., 523 U.S. 751, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998).

[5] Such as Kiowa, Footnote 4.