Bettor Racing, Inc. v. National Indian Gaming Commission

812 F.3d 648, 2016 U.S. App. LEXIS 1456, 2016 WL 362285
CourtCourt of Appeals for the Eighth Circuit
DecidedJanuary 29, 2016
Docket15-1335
StatusPublished
Cited by5 cases

This text of 812 F.3d 648 (Bettor Racing, Inc. v. National Indian Gaming Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bettor Racing, Inc. v. National Indian Gaming Commission, 812 F.3d 648, 2016 U.S. App. LEXIS 1456, 2016 WL 362285 (8th Cir. 2016).

Opinion

BENTON, Circuit Judge.

The National Indian Gaming Commission (“NIGC”) fined Bettor Racing, Inc. $5 million for violations of the Federal Indian Gaming Regulatory Act. The Act requires NIGC to approve all contracts for the operation of gaming activities at tribal casinos. 25 U.S.C. § 2711(a). Contract approval “shall be evidenced by a Commission document dated and signed by the chairman. No other means of approval shall be valid.” 25 C.F.R. § 533.1(b). “[T]he regulations mandate that any management contract that does not receive approval is void, and that any attempted modification of an approved contract that does not comply with the regulations and does not receive approval, is also void.” Turn Key Gaming, Inc. v. Oglala Sioux Tribe, 164 F.3d 1092, 1094 (8th Cir.1999). ■ The Act further requires tribes to maintain the “sole proprietary interest” in the gaming activities; management contractors cannot collect more than 30% (or in some cases 40%) of the net revenues. §§ 2710(b)(2)(A), 2711(c).

Bettor Racing contracted to operate its pari-mutuel betting business at the casino of the Flandreau Santee Sioux Tribe. NIGC did not approve the contract until after Bettor Racing had begun operating at the casino.. The parties made two modifications to the contract, creating a check-swap scheme: Bettor Racing would pay *651 the full amount due under the initial contract and the Tribe would repay Bettor Racing with a “bonus.” NIGC approved neither. Under the check-swap scheme, Bettor Racing received more than 40% of the net revenues.

NIGC sent a “Notice of Violation” to the Tribe and Bettor Racing. The Tribe settled with NIGC; Bettor Racing did not. NIGC found Bettor Racing had committed three violations of the Act: (1) managing a tribal gaming operation without an approved management contract, (2) operating under unapproved modifications, and (3) holding a proprietary interest in the pari-mutuel betting operation. The Notice offered Bettor Racing the chance to correct the violations by reimbursing the Tribe $4,544,75s. 1 Bettor Racing did not make this payment. NIGC issued a Civil-Fine Assessment, fining Bettor Racing $5 million for the three violations. Bettor Racing appealed the Notice and Civil-Fine Assessment. The Office of Hearing Examiners granted summary judgment to NIGC.

Bettor Racing sought judicial review, arguing NIGC (1) acted arbitrarily and capriciously in finding the three violations, (2) acted arbitrarily and capriciously and in violation of the Eighth Amendment in setting the fine, and (3) denied Bettor Racing due process by making the determinations without holding a hearing. The Tribe intervened. On cross-motions for summary judgment, the district court 2 dismissed the case. Having jurisdiction under 28 U.S.C. § 1291, this court affirms.

I.

This court reviews de novo a district court’s decision on whether an agency action violates the Administrative Procedure Act. Friends of the Norbeck v. United States Forest Serv., 661 F.3d 969, 975 (8th Cir.2011). An agency’s decision is set aside only if “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” 5 U.S.C. § 706(2)(A). A decision is arbitrary and capricious if

the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). This court will not substitute its own judgment so long as the agency has “examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” Id. (quotation omitted).

II.

Bettor Racing challenges the three violations, insisting it acted without requisite scienter because the Tribe represented that NIGC had approved the initial contract, modifications, and check-swap scheme. Rejecting this argument, NIGC concluded that scienter “is neither expressly nor impliedly required to establish wrongful intent or intent to violate the law. In other words, the lack of knowledge *652 . cannot be raised as an affirmative defense.”

NIGC has the authority to “levy and collect appropriate civil fines ... against ... a management contractor engaged in gaming for any violation....” 25 U.S.C. § 2713(a)(1) (emphasis added). The Act is silent as to scienter. NIGC’s interpretation controls unless “arbitrary, capricious, or manifestly contrary to the statute.” Te-amBank, N.A. v. McClure, 279 F.3d 614, 619 (8th Cir.2002), quoting Chevron, U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).

By the Act’s plain language, no scienter is required to establish a violation under § 2713. Cf. § 2711(e)(1)(C) (prohibiting NIGC from approving a management contract if a party has “knowingly and willfully” provided materially important false statement). Nor is scienter required to justify a fine. See, e.g., Northern Wind, Inc. v. Daley, 200 F.3d 13, 19 (1st Cir.1999) (“As a general matter, scienter is not required to impose civil penalties for regulatory violations when the regulation is silent as to state of mind.”). Instead, NIGC considers -scienter when determining the seriousness of the violation, and thereby the amount of the fine. 25 C.F.R. § 575.4(d) (“The Chairman may adjust the amount of a civil fine based on the degree of fault of the respondent in causing or failing to correct the violation, either through act or omission.”). This is a permissible construction of the statute. See Chevron, 467 U.S. at 843, 104 S.Ct. 2778.

Absent a scienter requirement, the undisputed facts establish the violations.

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812 F.3d 648, 2016 U.S. App. LEXIS 1456, 2016 WL 362285, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bettor-racing-inc-v-national-indian-gaming-commission-ca8-2016.