State Court Held Proper Forum For Casino

New York Law Journal
By: Leigh Jones
June 25, 2001

MINEOLA - A claim under the Federal Indian Gaming Regulatory Act does not preempt subject-matter jurisdiction in state court, a Nassau County Supreme Court justice has determined.

Justice Geoffrey J. O'Connell found that a dispute over the management of the Akwesasne Casino in the Catskills, which involved a claim under the Indian Gaming Regulatory Act (IGRA), was properly in state court, despite arguments by the defendant that the federal statute's intent precluded state jurisdiction.

Recovery of Losses

In President R.C.-St. Regis Management Co. v. Park Place Entertainment Corp., 8931-00, the plaintiffs sought to recover for alleged losses incurred from developing and operating the Akwesasne Casino, owned by the St. Regis Mohawk Tribe, under a federally approved management agreement. The casino sits on an Indian reservation in Hogansburg.

Specifically, President R.C. wanted to enforce a purported letter of agreement between itself, the tribe and Park Place Entertainment for gaming operations of the casino. President R.C. charged that Park Place Entertainment induced it to enter into the agreement, which permitted Park Place to purchase President R.C.'s interest in the management agreement and to receive exclusive rights to the tribe's present and future casino activity.

President R.C. contended that Park Place Entertainment never intended to pay for the purchase or to give a future financial interest in the Catskill casino to President R.C. The St. Regis Mohawk Tribe was not named as a defendant.

In its motion to dismiss, Park Place Entertainment asserted that while IGRA does not explicitly discuss preemption of state jurisdiction concerning Indian gaming matters, its legislative history indicates that preemption is a clear intent in the law's enactment.

1988 Statute

IGRA was enacted by Congress in 1988 and was designed as a comprehensive statute governing the operation of gaming facilities on Indian lands. Its purpose is to provide a statutory basis for operating Indian gaming, to promote economic development and to shield tribes from organized crime.

Under the law, Indian tribes have the exclusive right to regulate gaming activity on Indian lands so long as the activity is not prohibited by federal law and does not violate state criminal law and public policy.

In arguing against the defendant's motion to dismiss, President R.C. claimed that the statute does not explicitly prohibit state courts from hearing cases under the law. President R.C. contended that without a statement in the legislation vesting federal courts with exclusive jurisdiction, IGRA claims may be heard in state courts.

Justice O'Connell, in his June 8 decision, agreed, though he questioned whether IGRA properly applied to the action.

"[T]he structure of the IGRA is that of a regulatory statute, not a creation of substantive rights and remedies. The court finds that it not only does not preempt the plaintiffs' claims in this action, but is of questionable relevance due to the private nature of the claims asserted here," he wrote.

The judge added that the Appellate Division, Third Department previously determined that IGRA did not apply to actions brought by individuals to enforce the terms of a private business agreement.

Meltzer, Lippe, Goldstein & Schlissel, in Mineola, represented President R.C. Cadwalader, Wickersham & Taft, New York, represented Park Place Entertainment.