The 9th Circuit Court of Appeals has ruled in favor of the Pauma Band of Luiseño Indians in its dispute over overpayments with the state of California.
A panel for the court ruled that the state owes $32 million because, although its 1999 compact allowed Pauma to operate 2,000 slot machines the California Gambling Control Division misled the tribe and prevented it from achieving that number. The division stated that there was a limited “pool” of slot machines and that once it was exhausted that no more machines could be allowed, even if a tribe had not deployed its limit.
The tribe did not dispute the opinion of the division and renegotiated its compact with the state in 2004. The compact allowed an unlimited number of slots in return for higher payments to the state.
However, after other tribes began challenging the state’s interpretation Pauma joined them.
Writing for the 2-1 majority Judge Richard C. Tallman wrote, “Pauma continued paying California the exorbitantly expensive 2004 amendment prices for the same machines it acquired under the 1999 compact provisions.” He added, “a contract provision has only one true meaning – what it meant when written – even though the parties may later dispute the correct interpretation.”
He also wrote, “the 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.”
The state has been ordered to refund the $32.2 million to the tribe. It could choose to request an en banc opinion from the entire appeals court.
The state waived its sovereign immunity from lawsuit by the tribe when it signed the compact the court ruled.