State of Connecticut v. Zinke ( 2019 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
STATE OF CONNECTICUT and :
MASHANTUCKET PEQUOT TRIBE :
:
Plaintiffs, : Civil Action No.: 17-2564 (RC)
:
v. : Re Document No.: 60
:
U.S. DEPARTMENT OF THE INTERIOR :
and RYAN ZINKE, Secretary of the Interior :
:
Defendants, :
:
and :
:
MGM RESORTS GLOBAL :
DEVELOPMENT, LLC, :
:
Defendant-Intervenor. :
MEMORANDUM OPINION
GRANTING IN PART PLAINTIFFS’ MOTION TO AMEND COMPLAINT
I. INTRODUCTION
Before this Court is the latest volley in a contentious, long-running battle over a stalled
casino project in East Windsor, Connecticut. The state of Connecticut (the “State”) and the
Mashantucket Pequot Tribe claim that the United States Secretary of the Interior has unlawfully
declined to approve an agreement that would allow them to begin constructing the casino.
Defendants—the Secretary, the Department of the Interior, and MGM Resorts Global
Development, LLC—argue that the Secretary has violated no law. Having failed to convince
this Court of their first theory of the case, Plaintiffs—the State and the Pequot—seek to amend
their complaint and take a second bite at the apple. While Plaintiffs’ motion appears to be the
product of tactical timing more than newly-discovered information or legal theories, allowing the
case to proceed would not unduly prejudice Defendants. And while one of Plaintiffs’ three
proposed claims would not survive a motion to dismiss, the Court cannot say that amendment
would be futile as to the other two claims. Thus, for the reasons stated below, the Court will
allow Plaintiffs to amend their complaint in certain respects.
II. BACKGROUND 1
A. The Indian Gaming Regulatory Act
The Indian Gaming Regulatory Act (“IGRA”) governs Class III casino gaming—
blackjack, roulette, slot machines, and other casino games—on tribal land. 25 U.S.C. §§ 2701 et
seq.; 25 C.F.R. § 502.4; Amador Cty. v. Salazar, 640 F.3d 373, 376 (D.C. Cir. 2011). It
mandates that a tribe must obtain authorization from a state before conducting Class III gaming
on land within that state’s borders. 25 U.S.C. § 2710(d)(1)(C). That authorization may be
obtained in one of two ways: (1) negotiating a tribal-state compact with the state, see id. §
2710(d)(3)(A); or (2) asking the Secretary to impose secretarial procedures, see id. §
2710(d)(7)(B).
A tribal-state compact is “an intergovernmental agreement executed between Tribal and
State governments under the [IGRA] that establishes . . . the terms and conditions for the
operation and regulation of the tribe’s Class III gaming activities.” 25 C.F.R. § 293.2. If the
Secretary does not explicitly approve or disapprove a tribal-state compact within 45 days after
the Office of Indian Gaming receives it, 2 the compact shall be automatically approved “to the
1
The Court’s recent Memorandum Opinion in this action contains additional background
detail. See Connecticut v. U.S. Dep’t of Interior, 344 F. Supp. 3d 279, 289–94 (D.D.C. 2018).
2
The Office of Indian Gaming is housed within the Department, and its “duties and
responsibilities include the administrative review and analysis of the statutory and regulatory
2
extent the compact is consistent with” the IGRA. 25 U.S.C. § 2710(d)(8)(A)–(C); 25 C.F.R. §§
293.10–12. The Secretary may disapprove a compact for one of three reasons: (1) it violates the
IGRA, (2) it violates any other provision of Federal law that does not relate to jurisdiction over
gaming on tribal land, or (3) it violates the United States’ trust obligations to Native Americans.
25 U.S.C. § 2710(d)(8)(B); 25 C.F.R. § 293.14. Once a compact is approved, the Secretary must
publish that approval in the Federal Register within 90 days from the date of receipt. 25 U.S.C. §
2710(d)(8)(D); 25 C.F.R. § 293.15(b). The compact becomes effective when its approval is
published. 25 U.S.C. § 2710(d)(3)(B); 25 C.F.R. § 293.15(a). The Department’s regulations
apply these same procedural and substantive requirements to compact amendments. See 25
C.F.R. §§ 293.4, 293.10.
Secretarial procedures govern class III tribal gaming when a tribe and a state cannot reach
good faith agreement on a compact. 25 U.S.C. § 2710(d)(7)(B)(vii)(II). These procedures result
from a series of forced negotiations between the tribe and the state, including mediation. See id.
§ 2710(d)(7)(A), (B). If the tribe and the state ultimately cannot agree on a compact, “the
Secretary shall prescribe, in consultation with the Indian tribe, procedures” for Class III gaming
activities “which are consistent with the proposed compact selected by the mediator . . . the
provisions of [the IGRA], and the relevant provisions of the laws of the [s]tate.” Id. §
2710(d)(7)(B)(vii)(I). The Department has not issued regulations governing the secretarial
procedures or procedure amendments at issue in this action. 3
requirements of IGRA and related statutes, policy development, and technical assistance to tribal
and state stakeholders.” Office of Indian Gaming, Overview, https://www.bia.gov/as-ia/oig.
3
The Department has promulgated regulations allowing the Secretary to prescribe
secretarial procedures when a state raises an Eleventh Amendment sovereign immunity defense
to a tribe’s lawsuit alleging that the state did not negotiate in good faith. See 25 C.F.R. § 291.1.
Those regulations do not apply here because the State did not assert an Eleventh Amendment
3
B. Relevant Facts and Procedural History
In 1989, the Pequot sought to open a casino in Connecticut. See Mashantucket Pequot
Tribe v. Connecticut, 913 F.2d 1024, 1026 (2d Cir. 1990), cert. denied, 499 U.S. 975 (1991).
However, the Pequot and the State could not agree on a tribal-state compact to govern the
Pequot’s gambling activities. Id. at 1027. The Pequot accordingly availed themselves of the
IGRA’s secretarial procedures mechanism, and in 1991 the Secretary imposed procedures (the
“Pequot Procedures”) on the Pequot and the State. See Compl. ¶ 25, ECF No. 1; Notice of Final
Mashantucket Pequot Gaming Procedures, 56 Fed. Reg. 24,996 (May 31, 1991). The Pequot’s
casino has operated under these procedures ever since. In 1994 the State and another tribe, the
Mohegan Tribe of Indians of Connecticut (the “Mohegan”) (together with the Pequot, the
“Tribes”), executed a tribal-state compact (the “Mohegan Compact”) allowing the Mohegan to
operate their own casino within the State. See Compl. ¶ 24. 4
In return for the State allowing the Tribes to operate casinos, the Pequot Procedures and
Mohegan Compact Memoranda of Understanding mandate that the State receive a percentage of
the Tribes’ gross operating revenues from certain gambling activities. See generally Pequot
Procedures MOU; Mohegan Compact MOU. They also mandate that if the State permits “any
defense to the Pequot’s lawsuit leading to the Pequot Procedures. See Mashantucket Pequot
Tribe v. Connecticut, 913 F.2d 1024, 1032 (2d Cir. 1990), cert. denied, 499 U.S. 975 (1991); see
also Opportunity to Comment on Pequot Procedures, 56 Fed. Reg. 15,746 (Apr. 17, 1991).
4
The Pequot Procedures and the Mohegan Compact, along with their Memoranda of
Understanding (“MOU”), are available at http://www.portal.ct.gov/DCP/Gaming-
Division/Gaming/Tribal-State-Compacts-and-Agreements (the “Pequot Procedures,” “Pequot
MOU,” “Mohegan Compact,” and “Mohegan MOU”). The Court may take judicial notice of
these documents as public records incorporated by reference in the complaint and the proposed
amended complaint. See Fed R. Civ. P. 12(b)(6); Felder v. Johanns, 595 F. Supp. 2d 46, 58–59
(D.D.C. 2009) (citing EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir.
1997); Marshall Cty. Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 n.6 (D.C. Cir. 1993));
Compl. ¶¶ 24–25, 27; First Am. Compl. (“FAC”) ¶¶ 3, 21–25, ECF No. 60-2.
4
other person” to engage in those activities, the State is no longer entitled to its royalty payments
(the “exclusivity clauses”). See id. By their terms both the Pequot Procedures and the Mohegan
Compact may be amended only by written agreement of the Tribes and the State, and the
amendments do not become effective until the Secretary approves them and publishes notice of
that approval in the Federal Register in accordance with 25 U.S.C. § 2710(d)(3)(B). 5 See Pequot
Procedures § 17; Mohegan Compact § 17.
In 2015, the Tribes agreed to form a joint venture, MMCT Venture LLC (“MMCT”), to
build and operate an off-reservation, commercial casino in East Windsor, Connecticut. 6 Decl. of
Uri Clinton (“Clinton Decl.”) ¶¶ 17–19, ECF No. 11-2; see also MMCT’s Articles of
Organization, Mem. Supp. MGM’s Mot. Leave Intervene Ex. A, ECF No. 11-3. The proposed
East Windsor casino project threatened MGM’s plans in the region. MGM was in the midst of
constructing a casino in Springfield, Massachusetts, a mere twelve miles north of East Windsor.
See Pls.’ Opp’n to Defs.’ Partial Mot. to Dismiss at 9, ECF No. 27; Clinton Decl. ¶¶ 13, 17, 20. 7
MGM also planned to pursue a casino project in Bridgeport, Connecticut. See Clinton Decl. ¶¶
5, 8. It thus lobbied against legislative approval of the Tribes’ casino, arguing that Connecticut
should implement a competitive selection process for the right to operate the State’s first
commercial casino. Id. ¶ 6. Those efforts failed, and the Tribes secured their casino project’s
5
This provision states that “[a]ny [s]tate and any Indian tribe may enter into a [t]ribal-
[s]tate compact governing gaming activities on the Indian lands of the Indian tribe, but such
compact shall take effect only when notice of approval by the Secretary of such compact has
been published by the Secretary in the Federal Register.” 25 U.S.C. § 2710(d)(3)(B).
6
The Court will refer to casinos on tribal land as “tribal casinos,” and casinos on state
land as “commercial casinos.”
7
That casino opened in 2018. Id. ¶¶ 13–16.
5
conditional approval in 2017 through the passage of Public Act 17-89. 8 2017 Conn. Acts 17-89
(Reg. Sess.). This setback notwithstanding, MGM continued to push for a Bridgeport casino.
See Clinton Decl. ¶¶ 8–10.
Public Act 17-89 states that MMCT “is authorized to conduct authorized games at a
casino . . . at 171 Bridge Street, East Windsor.” 2017 Conn. Acts 17-89 § 14(b) (Reg. Sess.). Its
passage did not, however, remove all obstacles from the Tribes’ path to operating Connecticut’s
first commercial casino. Rather, it provides that its “authorization shall not be effective unless”:
(1) the Tribes and the State’s governor execute “amendments to” the Pequot
Procedures and the Mohegan Compact, and their memoranda of understanding,
creating a special exemption for MMCT such that “authorization of MMCT . . . to
conduct [casino] games in the [S]tate does not terminate” the Tribes’ obligation to
pay the State royalties from their gaming activities;
(2) the amendments “are approved or deemed approved by the Secretary . . .
pursuant to the [IGRA] . . . and its implementing regulations”;
(3)–(4) the amendments “are approved by” the Connecticut legislature; and
(5) the Tribes pass resolutions providing that the State may sue the Tribes if MMCT
fails to pay any fees or taxes due to the State.
Id. § 14(c). To satisfy the Act’s conditions, the State and the Tribes agreed to amend the Pequot
Procedures and the Mohegan Compact to exempt MMCT from the exclusivity clauses. Compl. ¶
27.
During the amendment process the Tribes allegedly requested technical assistance from
the Office of Indian Gaming, and according to Plaintiffs that Office “repeatedly informed
8
Public Act 17-89 is available at https://www.cga.ct.gov/2017/ACT/pa/pdf/2017PA-
00089-R00SB-00957-PA.pdf. The Court takes judicial notice of this Act as a public record.
See Cannon v. District of Columbia, 717 F.3d 200, 205 n.2 (D.C. Cir. 2013) (taking judicial
notice of document posted on the District of Columbia’s Retirement Board website); Johnson v.
Comm’n on Presidential Debates, 202 F. Supp. 3d 159, 167 (D.D.C. 2016) (taking judicial
notice of “political and statistical facts that the Federal Election Commission has posted on the
web”).
6
representatives of the Tribes that it intended to approve” the amendments. Id. ¶¶ 28–31. The
Tribes and the State duly approved and executed the amendments according to Tribal and State
law, id. ¶ 33, and in late July and early August 2017, the Tribes requested that the Office of
Indian Gaming formally approve the amendments. See Compl. ¶ 32; First Am. Compl. (“FAC”)
Ex. 1, ECF No. 60-2 at 21–69. Instead, the Secretary’s office “return[ed]” the amendments to
the Tribes and the State “to maintain the status quo,” stating:
We find that there is insufficient information upon which to make a decision as to
whether a new casino operated by the Mohegan and Mashantucket Pequot Tribes
(Tribes) would or would not violate the exclusivity clauses of the Gaming Compact
[and Pequot Procedures]. The Tribes have entered an agreement with the State
whereby they have agreed that the exclusivity [clauses] will not be breached by this
arrangement. Therefore, our action is unnecessary at this time.
See Mem. Supp. Pls.’ Mot. (“Pls.’ Mem.”) Ex 4, ECF No. 60-2 at 91–93; 9 see also Compl. ¶ 37.
This response prompted the Tribes and the State to file suit in this Court.
The Tribes and the State initially claimed that because the Secretary did not explicitly
disapprove their proposed amendments to the Pequot Procedures and the Mohegan Compact
within 45 days, the IGRA required that the Secretary deem the amendments approved by law and
publish notice of that approval in the Federal Register. See id. ¶¶ 40–60. Shortly after the
complaint was filed, the Secretary approved the proposed amendments to the Mohegan Compact
and published that approval. 10 See Tribal-State Class III Gaming Compact Taking Effect in the
State of Connecticut, 83 Fed. Reg. 25,484 (June 1, 2018); First Joint Status Report at 1, ECF No.
41. This Court then concluded that the procedural requirements governing the Secretary’s
9
The Court takes judicial notice of these letters because they were incorporated by
reference in the complaint and the proposed amended complaint. See Fed R. Civ. P. 12(b)(6);
Felder, 595 F. Supp. 2d at 58–59; Compl. ¶ 37; FAC ¶¶ 50–52.
10
Because the Mohegan received the relief sought in the complaint, the parties stipulated
to the dismissal of the Mohegan’s claims. See generally Stipulation of Dismissal, ECF No. 40.
7
approval of tribal-state compacts and compact amendments—including amendments to the
Mohegan Compact—do not govern the Secretary’s approval of secretarial procedures and
procedures amendments—including amendments to the Pequot Procedures. Connecticut v. U.S.
Dep’t of Interior, 344 F. Supp. 3d 279, 318–19 (D.D.C. 2018). The Court dismissed the initial
complaint on those grounds. Id. at 319–20.
Undeterred, the remaining Plaintiffs—the State and the Pequot—seek to press on with
new theories. They have moved to amend their complaint to assert three new claims, discussed
in greater detail below. See Pls.’ Mot. For Leave to Amend Compl., ECF No. 60; FAC.
Although the proposed claims are different than Plaintiffs’ original claims, they arise from the
same event: The Secretary’s refusal to approve, or explicitly disapprove, the proposed
amendments to the Pequot Procedures. The proposed claims also arise under the same cause of
action as the original claims: The Administrative Procedure Act (“APA”), 5 U.S.C. § 706.
Despite these similarities, Defendants argue that the Court should deny Plaintiffs’ motion to
amend their complaint. Fed. Defs.’ Opp’n to Pls.’ Mot., ECF No. 62; MGM’s Opp’n to Pls.’
Mot., ECF No. 63. The issue has been fully briefed and is ripe for the Court’s consideration.
III. LEGAL STANDARD
Federal Rule of Civil Procedure 15(a) permits a plaintiff to amend its complaint once as a
matter of course within 21 days of serving it or within 21 days of the filing of a responsive
pleading. Fed. R. Civ. P. 15(a)(1). Otherwise, the plaintiff may amend its pleading only with the
opposing party’s written consent—which has been denied in this case—or the Court’s leave.
Fed. R. Civ. P. 15(a)(2).
“The decision to grant or deny leave to amend . . . is vested in the sound discretion of the
trial court.” Commodore-Mensah v. Delta Air Lines, Inc., 842 F. Supp. 2d 50, 52 (D.D.C. 2012)
8
(citing Doe v. McMillan, 566 F.2d 713, 720 (D.C. Cir. 1977)). And Rule 15 instructs courts to
“freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2); see also Belizan v.
Hershon, 434 F.3d 579, 582 (D.C. Cir. 2006) (explaining that Rule 15 “is to be construed
liberally”). Generous standard notwithstanding, courts may deny leave to amend for such
reasons as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure
to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party
by virtue of allowance of the amendment, [or] futility of amendment.” Foman v. Davis, 371 U.S.
178, 182 (1962). “Amendments that do not radically alter the scope and nature of the action . . .
are especially favored.” United States ex rel. Westrick v. Second Chance Body Armor, Inc., 301
F.R.D. 5, 8 (D.D.C. 2013) (quoting Estate of Gaither ex rel. Gaither v. District of Columbia, 272
F.R.D. 248, 252 (D.D.C. 2011)). Finally, “[t]he party opposing the amendment bears the burden
to show why leave should not be granted.” Flaherty v. Pritzker, 322 F.R.D. 44, 46 (D.D.C.
2017) (citing Dove v. Washington Metro. Area Trans. Auth., 221 F.R.D. 246, 247 (D.D.C.
2004)).
IV. ANALYSIS
Plaintiffs seek to add three claims to their complaint. First, Plaintiffs argue that “Federal
Defendants’ purported ‘return’ of the [Pequot Procedures amendments] was arbitrary and
capricious on its face,” particularly given the Secretary’s approval of the identical Mohegan
Compact amendment. Pls.’ Mem. at 7, ECF No. 60-1; FAC ¶¶ 60–66. Second, Plaintiffs argue
that “Federal Defendants’ failure to approve the [Pequot Procedures amendments] was the
product of improper political influence.” Pls.’ Mem. at 7; FAC ¶¶ 68–72. Third, Plaintiffs argue
that the proposal containing the Pequot Procedures amendments itself is a compact under the
IGRA, subject to the IGRA’s compact approval procedures. Pls.’ Mem. at 8; FAC ¶¶ 74–87.
9
Defendants argue that Plaintiffs’ motion should be denied for two reasons. First, they
contend that Plaintiffs have unduly delayed raising their new claims. Fed. Defs.’ Opp’n at 6.
Second, they contend that Plaintiffs’ new claims are futile because they cannot survive a motion
to dismiss. Id. The Court addresses each contention in turn. Though it frowns on Plaintiffs’
apparent gamesmanship in filing their motion when they did, that gamesmanship does not rise to
the level of undue delay justifying denying Plaintiffs’ motion. And while one of Plaintiffs’
proposed claims cannot survive a motion to dismiss, two likely can. Accordingly, the Court
grants Plaintiffs’ motion in part.
A. Amendment Would Not Cause Undue Delay
Rule 15 does not prescribe a time limit in which a plaintiff may seek to amend a
complaint. See Fed. R. Civ. P. 15(a). “Accordingly, a court should not deny leave to amend
based solely on time elapsed between the filing of the complaint and the request for leave to
amend.” Appalachian Voices v. Chu, 262 F.R.D. 24, 27 (D.D.C. 2009) (citing Atchinson v.
District of Columbia, 73 F.3d 418, 426 (D.C. Cir. 1996)). Rather, “[c]onsideration of whether
delay is undue . . . should generally take into account the actions of other parties and the
possibility of any resulting prejudice.” Atchinson, 73 F.3d at 426 (citing Sinclair v. Kleindienst,
645 F.2d 1080, 1085 (D.C. Cir. 1981)); see also Caribbean Broad. Sys., Ltd. v. Cable & Wireless
P.L.C., 148 F.3d 1080, 1084 (D.C. Cir. 1998); In re Vitamins Antitrust Litig., 217 F.R.D. 30, 33
(D.D.C. 2003) (“[D]elay without resulting prejudice to [the plaintiff] is not sufficient to warrant
denial of plaintiffs’ motion.”).
Defendants fail to show that they will be prejudiced by Plaintiffs’ alleged untimeliness.
Nor could they. This case is in its infancy; Plaintiffs filed their motion to amend the complaint
less than a year after filing the initial complaint, and approximately two weeks after the Court
10
dismissed that complaint. The Court has not yet required Defendants to produce the
administrative record. See Connecticut, 344 F. Supp. 3d at 294. And although Defendants have
added certain factual allegations to their proposed amended complaint, their new claims arise
from the same core set of events underlying the initial complaint—the Secretary’s “return” of the
proposed Pequot Procedures amendments. See Hill v. U.S. Dep’t of Def., 70 F. Supp. 3d 17, 20
(D.D.C. 2014) (granting motion to amend where the “proposed amended complaint . . . [did] not
meaningfully expand or alter the scope of [the plaintiff’s] claims” and the defendant did “not
argue that any prejudice resulted from [the] plaintiff’s failure to seek to amend earlier.”).
Seemingly conceding that Plaintiffs’ motion to amend does not prejudice them directly,
Defendants urge this Court to take a stand against what they view as Plaintiffs’ unfair
gamesmanship. See Fed. Defs.’ Opp’n at 7. Defendants claim that Plaintiffs had the information
necessary to amend their initial complaint before this Court dismissed it. Id. at 8. Instead,
according to Defendants, Plaintiffs “wait[ed] in the wings” with their proposed amendments,
seeking to assert them only when their first bite at the apple failed. Id. at 9 (quoting ACA Fin.
Guar. Corp. v. Advest, Inc., 512 F.3d 46, 57 (1st Cir. 2008)); see also MGM’s Opp’n at 7–9.
There appears to be some truth to this assertion. Plaintiffs admit that their initial
complaint contained “many of the facts on which the [new] theories of recovery are based.” Pls.’
Mem. at 11; see also Pls.’ Reply at 7, ECF No. 65 (“Perhaps Plaintiffs could have moved to
amend to add Count II . . . sooner.”). To the extent Plaintiffs’ proposed claims rely on the
Secretary’s approval of the Mohegan compact amendment, that approval occurred months before
the Court dismissed Plaintiffs’ initial complaint. See FAC ¶ 57. To the extent Plaintiffs’
proposed claims rely on a refashioned interpretation of the IGRA, they could have advocated that
interpretation at any time. It is wholly implausible that Plaintiffs did not become aware of
11
“Federal Defendants’ new reading of IGRA and its regulations” until the Court dismissed
Plaintiffs’ initial complaint, given that Federal Defendants asserted that “reading” in their motion
to dismiss filed months before. See Pls.’ Mem. at 11. And as Federal Defendants note, Plaintiffs
themselves admitted their “interest” in waiting for the Court to evaluate their initial complaint
before amending it. Joint Status Report at 3–4 (June 18, 2018), ECF No. 41. 11
Defendants also correctly note that courts in this jurisdiction have denied motions to
amend where the plaintiff either could have sought the amendment much earlier, or was
attempting to evade a dispositive order. Those cases, however, typically involve (1) prejudicial
circumstances not present here, see Sai v. TSA, 326 F.R.D. 31, 34–35 (D.D.C. 2018) (leave to
amend sought after “four years and . . . a deluge of motions, supplemental submissions,
conferences, and disputes”); Nat’l Sec. Counselors v. CIA, 960 F. Supp. 2d 101, 136 (D.D.C.
2013) (leave to amend sought “nearly a year after the Court already granted its prior motion to
dismiss in relevant part”); Becker v. District of Columbia, 258 F.R.D. 182, 185 (D.D.C. 2009)
(leave to amend sought after a five-year delay and after discovery had closed); Standing Rock
Sioux Tribe v. U.S. Army Corps of Eng’rs, No. 16-1534, 2019 WL 161950, at *2 (D.D.C. Jan.
10, 2019) (leave to amend sought after the court “issued numerous lengthy Opinions, including
expedited ones on preliminary-injunction motions”) (2) later stages of litigation, see Brown v.
FBI, 744 F. Supp. 2d 120, 123 (D.D.C. 2010) (leave to amend sought after the plaintiff’s “claims
were dismissed and summary judgment was entered against him”); Key Airlines, Inc. v. Nat’l
Mediation Bd., 745 F. Supp. 749, 750–51 (D.D.C. 1990) (leave to amend sought after the Court
11
Plaintiffs argued in that status report that delaying amendment until after the Court’s
decision would “best conserve judicial resources.” Joint Status Report at 4. Of course, this
would only be true if the Court denied Defendants’ motion to dismiss. Instead, the Court has
expended more judicial resources evaluating what are essentially two motions to dismiss, rather
than one.
12
granted summary judgment against the plaintiff); or (3) requests to expand the litigation beyond
the initial complaint’s scope, see Brown, 744 F. Supp. 2d at 123 (denying motion to add claims
arising under statutes not initially raised). And although ACA Financial involved circumstances
similar to those here, it is not binding on this Court.
The Court does not condone Plaintiffs’ gamesmanship, nor does it appreciate addressing
in two opinions what it could have addressed in one. However, because this action is at an early
stage and because allowing Plaintiffs to amend their complaint will not unduly prejudice
Defendants, the Court will not deny Plaintiffs’ motion for undue delay.
B. Amendment Would Not Be Entirely Futile
“Denial of leave to amend based on futility is warranted if the proposed claim would not
survive a motion to dismiss.” Onyewuchi v. Gonzalez, 267 F.R.D. 417, 420 (D.D.C. 2010)
(citing James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996)); see also Williams
v. Lew, 819 F.3d 466, 471 (D.C. Cir. 2016). In other words, “review for futility ‘is, for practical
purposes, identical to review of a Rule 12(b)(6)’ motion to dismiss.” Driscoll v. George
Washington Univ., 42 F. Supp. 3d 52, 57 (D.D.C. 2012) (quoting In re Interbank Funding Corp.
Sec. Litig., 629 F.3d 213, 215–16 (D.C. Cir. 2010)).
Thus, “[i]n assessing a motion for leave to amend, the Court is required to assume the
truth of the allegations in the proposed amended complaint and construe them in the light most
favorable to the movant.” Flaherty, 322 F.R.D. at 46 (citing Caribbean Broad., 148 F.3d 1080,
1086 (D.C. Cir. 1998)). However, the Court need not accept the proposed complaint’s legal
conclusions as true, see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), nor must the Court presume
the veracity of legal conclusions that are couched as factual allegations, see Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). The proposed amended complaint “must contain sufficient
13
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal,
556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). If the proposed amended complaint fails to
meet this standard, the Court may deny Plaintiffs’ motion as futile.
As noted, Plaintiffs’ proposed amended complaint contains three counts, each of which
asserts a slightly different APA violation. First, Plaintiffs claim that the Secretary’s decision to
“return” the proposed Pequot Procedures amendments without approving them is arbitrary and
capricious on its face. FAC ¶¶ 59–66. Second, Plaintiffs claim that the Secretary’s decision was
impermissibly influenced by political pressure, rendering it arbitrary and capricious. Id. ¶¶ 67–
72. Third, Plaintiffs claim that their agreement to amend the Pequot Procedures was itself a
tribal-state compact under the IGRA, and thus that the Secretary was required by law to deem the
Pequot Procedures amendments approved. Id. ¶¶ 73–87. Defendants argue that none of these
counts plausibly state an APA violation. See Fed. Defs.’ Opp’n at 11; MGM’s Opp’n at 10.
Under the APA, a reviewing court shall “hold unlawful and set aside agency action,
findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). The arbitrary and capricious
standard of review requires a court to determine whether the action at issue was based on
“reasoned analysis.” Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto Ins.
Co., 463 U.S. 29, 57 (1983); see also Cty. of L.A. v. Shalala, 192 F.3d 1005, 1021 (D.C. Cir.
1999). Generally, an agency has engaged in reasoned analysis when the administrative record
indicates that it “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.’” State
Farm, 463 U.S. at 43 (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168
(1962)). “Where, however, the administrative record indicates that an agency ‘relied on factors
14
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 [made a decision that] is so implausible that it could not be ascribed to a difference in
view or the product of agency expertise,’ it has acted in an arbitrary and capricious manner.”
Kort v. Burwell, 209 F. Supp. 3d 98, 108 (D.D.C. 2016) (quoting State Farm, 463 U.S. at 43).
Although this standard is not “particularly demanding,” Pub. Citizen, Inc. v. FAA, 988 F.2d 186,
197 (D.C. Cir. 1993), and a reviewing court may “uphold a decision of less than ideal clarity if
the agency’s path may reasonably be discerned,” Bowman Transp., Inc. v. Ark.-Best Freight
Sys., Inc., 419 U.S. 281, 286 (1974) (citing Colo. Interstate Gas Co. v. Fed. Power Comm’n, 324
U.S. 581, 595 (1945)), a court is not to “supply a reasoned basis for the agency’s action that the
agency itself has not given,” State Farm, 463 U.S. at 43 (quoting SEC v. Chenery Corp., 332
U.S. 194, 196 (1947))).
Applying these principles and the IGRA’s text to Plaintiffs’ proposed amended
complaint, the Court concludes that Plaintiffs’ first two counts state plausible claims to relief, but
their third count is unsupported by the plain text of the Department’s regulations. Accordingly,
Plaintiffs’ proposed amended complaint would be futile only in part. Before explaining its
reasons for reaching this conclusion, however, the Court must dispose of a threshold issue raised
by Federal Defendants: Whether Plaintiffs have challenged a final agency action.
1. Final Agency Action
The APA limits judicial review to “final agency action for which there is no other
adequate remedy in a court.” 5 U.S.C. § 704 (emphasis added). Thus, without final agency
action, “there is no doubt that [Plaintiffs] would lack a cause of action under the APA.” Reliable
Automatic Sprinkler Co. v. Consumer Prod. Safety Comm’n, 324 F.3d 726, 731 (D.C. Cir. 2003);
15
see also Flytenow, Inc. v. FAA, 808 F.3d 882, 888 (D.C. Cir. 2015). An agency action is “final if
two independent conditions are met: (1) the action ‘mark[s] the consummation of the agency’s
decisionmaking process’ and is not ‘of a merely tentative or interlocutory nature;’ and (2) it is an
action ‘by which rights or obligations have been determined, or from which legal consequences
will flow.’” Soundboard Ass’n v. FTC, 888 F.3d 1261, 1267 (D.C. Cir. 2018) (quoting Bennett
v. Spear, 520 U.S. 154, 177–78 (1997)), petition for cert. filed, No. 18-722 (Nov. 30, 2018). “An
[action] must satisfy both prongs of the Bennett test to be considered final.” Id. (quoting Sw.
Airlines Co. v. U.S. Dep’t of Transp., 832 F.3d 270, 275 (D.C. Cir. 2016)). These principles
dictate that Plaintiffs have challenged final agency here, despite Federal Defendants’ arguments
to the contrary.
First, the Secretary’s letter “returning” the proposed Pequot Procedure amendments was,
for all intents and purposes, the consummation of the Secretary’s decisionmaking process.
Plaintiffs asked the Secretary to approve their proposed amendments. See FAC Ex. 1. The
Secretary reviewed the proposed amendments and declined to approve or deny them. To the
extent that decision may be construed as agency inaction, it is reviewable “discrete” inaction.
See 5 U.S.C. § 551(13) (defining “agency action” as including a “failure to act”); Norton v. S.
Utah Wilderness All., 542 U.S. 55, 62–64 (2004) (“[A] ‘failure to act’ is properly understood to
be limited, as are the other items in § 551(13), to a discrete action.”); Amador Cty. v. Salazar,
640 F.3d 373, 382 (D.C. Cir. 2011) (holding that the Secretary’s refusal to approve or disapprove
a tribal-state compact, allowing the compact to become deemed approved under the IGRA, was
“discrete” inaction justifying judicial review).
In addition, neither the Secretary’s letter, the IGRA, or the Pequot Procedures themselves
provide an avenue by which Plaintiffs may seek additional review and approval of their proposed
16
amendments. It appears that Plaintiffs’ only recourse is to re-submit the proposal to the
Secretary and start the process anew. Without judicial review, the Secretary could keep
Plaintiffs in a perpetual cycle of re-submitting the proposed Pequot Procedures amendments,
only to have the Secretary “return” them for another re-submission. See Sackett v. EPA, 566
U.S. 120, 127 (2012) (agency order was final where it was “not subject to further agency
review”); Soundboard Ass’n, 888 F.3d at 1268–69 (advisory letter from agency staff was not
final agency action because the plaintiff “could, but did not, seek an opinion from the [agency]
itself”); Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 437 (D.C. Cir. 1986) (where the agency had
“provided its final word on the matter,” judicial review was appropriate).
Federal Defendants note that the letter’s text suggests a preliminary, rather than final,
decision. The letter states that “action on the Amendment is premature and likely unnecessary,”
and that “there is insufficient information upon which to make a decision.” FAC Ex. 4, ECF No.
60-2 at 93. True, this language suggests that a final decision may be forthcoming at some point.
But the letter states that the Department has “completed [its] review of the Amendment” and is
“return[ing] the Amendment” to Plaintiffs. Id. The Secretary’s assertion that review is complete
belies any suggestion that further review is likely. Moreover, the letter does not identify the
additional information necessary to make a “final” decision, nor does it request anything of
Plaintiffs. Couching a final decision in preliminary terms does not make it less final. See Scenic
Am., Inc. v. U.S. Dep’t of Transp., 836 F.3d 42, 56 (D.C. Cir. 2016) (rejecting the agency’s
“boilerplate” statement that it “may provide further guidance in the future as a result of
additional information”); XP Vehicles, Inc. v. U.S. Dep’t of Energy, 118 F. Supp. 3d 38, 60, 78–
79 (D.D.C. 2015) (holding that an agency’s letter declining to approve the plaintiff’s loan
application was final agency action where the letter stated that the agency “would take no further
17
action with respect to [the plaintiff’s] application until such time as [it] . . . submitted an
application that is substantially complete”).
Second, the Secretary’s letter imposes significant legal and practical consequences on
Plaintiffs. Plaintiffs seek to amend the Pequot Procedures’ exclusivity clause, and thereby alter
the contractual relationship between the State and the Pequot. Amending the Pequot Procedures
would also satisfy Connecticut Public Act 17-89’s final outstanding condition, and thereby
authorize construction of the East Windsor casino. And the Pequot Procedures can only be
amended with the Secretary’s approval, a condition imposed by the Secretary. Pequot
Procedures § 17. The Secretary’s denial of that approval thus ossified Plaintiffs’ legal
relationship and Connecticut law. The Secretary’s letter need not, as Federal Defendants claim,
“compel[] the plaintiff to do anything,” Fed. Defs.’ Opp’n at 13; preventing Plaintiffs from
moving forward with their casino project is enough under these circumstances. See Soundboard
Ass’n, 888 F.3d at 1268 (suggesting that an agency’s action is final where the plaintiff is
“trapped without recourse due to the indefinite postponement of agency action”).
The cases relied upon by Federal Defendants are not to the contrary, because they did not
involve concrete, immediate consequences for the plaintiffs. Independent Equipment Dealers
Association v. EPA involved an agency letter restating “in an abstract setting—for the umpteenth
time—[the agency’s] longstanding interpretation” of a regulation. 372 F.3d 420, 427 (D.C. Cir.
2004). The D.C. Circuit held that such “purely informational” agency communications are not
final agency action. Id. at 427–28. That court similarly held in Reliable Automatic Sprinkler
that “a statement of the agency’s intention to make a preliminary determination . . . and a request
for voluntary corrective action” were not final agency action because they did not impose an
obligation, deny a right, or fix a legal relationship with respect to the plaintiff. 324 F.3d at 731–
18
32. Here, however, the Secretary’s letter returning the Pequot Procedures amendments is not
purely informational. It prevents Plaintiffs from altering their legal relationship with each other,
it defeats the passage of Connecticut Public Act 17-89, and it thwarts Plaintiffs’ East Windsor
casino plans. “Judicial review is authorized ‘when administrative inaction has precisely the same
impact on the rights of the parties as denial of relief, [because] an agency cannot preclude
judicial review by casting its decision in the form of inaction rather than in the form of an order
denying relief.’” Fort Sill Apache Tribe v. Nat’l Indian Gaming Comm’n, 103 F. Supp. 3d 113,
121 (D.D.C. 2015) (alteration in original) (quoting Sierra Club v. Thomas, 828 F.2d 783, 793
(D.C. Cir. 1987)). The Secretary’s decision to decline approving the Pequot Procedures
amendments denied Plaintiffs relief, and the Court may review that decision.
2. Count I
Having overcome that threshold obstacle, the Court must now consider, in determining
whether Plaintiffs’ motion to amend should be granted, whether Plaintiffs’ three proposed
amended claims are futile because they would not survive a motion to dismiss. First, Plaintiffs
claim that the Secretary’s letter “returning” the proposed Pequot Procedures amendments
without approving or disapproving them was “arbitrary and capricious on its face.” Pls.’ Mem.
at 12; FAC ¶¶ 60–66. Plaintiffs’ proposed amended complaint and briefing add color to this
claim. The FAC states that (1) the Secretary was “legally required to either affirmatively
approve the [proposed amendments] or disapprove of [them] for one of the articulated reasons”
in the IGRA, id. ¶ 62; and (2) “there is no legitimate basis to treat as approved the identical
Mohegan Compact [amendments] and not approve the” proposed Pequot Procedures
amendments, id. ¶ 64. Plaintiffs’ briefing frames the claim more broadly, stating that the
Secretary “provided no legitimate basis to ‘return’ the [proposed amendments] as opposed to
19
approving [them].” Pls.’ Mem. at 12. Plaintiffs’ allegations are sufficient to survive a motion to
dismiss, and are thus not futile.
As noted, to avoid a finding that a challenged agency action was arbitrary or capricious,
the “agency must [have] . . . articulate[d] a satisfactory explanation for its action.” PPL
Wallingford Energy LLC v. FERC, 419 F.3d 1194, 1198 (D.C. Cir. 2005) (quoting State Farm,
463 U.S. at 43)). Here, Plaintiffs have sufficiently alleged that the Secretary’s explanation for
“returning” the proposed Pequot Procedures amendments without approving or disapproving
them was not satisfactory, at least based on the record before the Court at this stage. The
Secretary’s letter states that “there is insufficient information upon which to make a decision.”
FAC Ex. 4 at 93. But it does not explain what additional information is necessary. The
Secretary’s letter also states that “action is unnecessary” because the Pequot have “entered an
agreement with the State whereby they have agreed that the exclusivity provisions will not be
breached by” the Tribes’ joint venture. Id. But the Secretary’s action is in fact necessary
because the “agreement” between the Pequot and the State, by its text, requires the Secretary’s
approval. See FAC Ex. 1. Because the Secretary apparently did not grapple with that paradox—
“returning” the proposed amendments invalidated the very “agreement” upon which the
Secretary’s decision was based—neither Plaintiffs, nor the Court at this stage, could understand
why the agency “chose to do what it did.” Tourus Records, Inc. v. DEA, 259 F.3d 731, 737
(D.C. Cir. 2001) (quoting Henry J. Friendly, Chenery Revisited: Reflections on Reversal and
Remand of Administrative Orders, 1969 Duke L.J. 199, 222 (1969)).
Thus, to the extent the Secretary explained his decision, Plaintiffs sufficiently allege that
the explanation was conclusory at best. And “conclusory statements will not do; an ‘agency’s
statement must be one of reasoning.’” Amerijet Int’l, Inc. v. Pistole, 753 F.3d 1343, 1350 (D.C.
20
Cir. 2014) (quoting Butte Cty. v. Hogen, 613 F.3d 190, 194 (D.C. Cir. 2010)); see also CS-360,
LLC v. U.S. Dep’t of Veteran Affairs, 846 F. Supp. 2d 171, 188, 192 (D.D.C. 2012) (remanding
the defendant agency’s decision to deny the plaintiff’s application for inclusion on a list of
veteran-owned small businesses, where “several of the grounds cited by the [agency] as a basis
for denying [the plaintiff’s] application . . . are described in such generalized and ambiguous
terms that the Court is essentially left to guess as to the precise basis for the agency’s decision”).
Defendants identify certain flaws in Plaintiffs’ explanation of their claim, but Defendants
have not shown that the claim would be rejected at the motion to dismiss stage. First,
Defendants take issue with the IGRA provisions upon which Plaintiffs appear to ground their
claim. Plaintiffs’ proposed amended complaint states that the Secretary could only disapprove
the proposed Pequot Procedures amendments if the amendments violate “the IGRA, Federal law,
or the trust obligations of the United States,” and it cites 25 U.S.C. § 2710(d)(8)(B) in support.
FAC ¶¶ 60–61. The FAC also states that § 2710(d)(8)(D) required the Secretary to publish the
amendments’ approval in the Federal Register, if approved. Id. ¶ 63. However, as Federal
Defendants note, § 2710(d)(8) governs the approval and disapproval of tribal-state compacts, and
this Court previously held that secretarial procedures—such as the Pequot Procedures—are not
subject to the IGRA provisions governing compacts. 12 Fed. Defs.’ Opp’n at 13–14; see also
12
Plaintiffs correctly note that the Court’s prior Memorandum Opinion did not concern
the substantive bases on which the Secretary can disapprove a tribal-state compact or secretarial
procedures. See Connecticut, 344 F. Supp. 3d at 306–07. Rather, it concerned the time in which
the Secretary must approve or disapprove a tribal-state compact compared to the time in which
the Secretary must impose secretarial procedures. See id. That Opinion’s logic, however,
applies equally to both issues. By its plain terms the IGRA imposes different substantive and
procedural requirements on the Secretary’s treatment of tribal-state compacts than on the
Secretary’s treatment of secretarial procedures. Thus, the requirements governing tribal-state
compacts do not apply to secretarial procedures.
21
Connecticut, 344 F. Supp. 3d at 318–19. Accordingly, § 2710(d)(8) does not govern the actions
the Secretary must take with respect to the Pequot Procedures. 13
Second, Defendants take issue with Plaintiffs’ reliance on the Secretary’s decision to
deem the Mohegan Compact amendments approved. Plaintiffs’ proposed amended complaint
states that “there is no legitimate basis” for the Secretary to approve the Mohegan Compact
amendments but not the proposed Pequot Procedures amendments. FAC ¶ 64. And it is true that
“an agency action is arbitrary when the agency offered insufficient reasons for treating similar
situations differently.” Transactive Corp. v, United States, 91 F.3d 232, 237 (D.C. Cir. 1996).
But, Defendants note, the Secretary’s action with respect to the Mohegan Compact amendments
appears to be less decisive than Plaintiffs would have the Court believe. The Secretary merely
acknowledged that the Mohegan Compact amendments became “deemed approved” under the
IGRA after 45 days. See 83 Fed. Reg. at 25,484-01 (citing 25 U.S.C. § 2710(d)(8)(C)). The
Secretary does not appear to have considered the merits and legality of the Mohegan Compact
amendments. See id. (stating that the Mohegan Compact amendments are “considered to have
been approved, but only to the extent [they are] consistent with IGRA”). And again, the IGRA
provision requiring that the Mohegan Compact amendments be deemed approved, 25 U.S.C. §
2710(d)(8)(C), does not apply to the proposed Pequot Procedures amendments. 14 See Fed.
Defs.’ Opp’n at 14–15; MGM’s Opp’n at 10–12.
13
That is not to say that the IGRA provides no principles to guide the Secretary’s
imposition of secretarial procedures and procedure amendments. 25 U.S.C. § 2710(d)(7), which
governs secretarial procedures, states that the Secretary shall prescribe procedures “which are
consistent with the proposed compact selected by the mediator . . . the [IGRA], and the relevant
provisions of the laws of the [s]tate.” Id. § 2710(d)(7)(B)(vii)(I).
14
As the Court noted in its prior Memorandum Opinion, there is a practical reason for
this difference. See Connecticut, 344 F. Supp. 3d at 313–14. Tribal-state compacts result from
negotiations between a tribe and a state; they thus simply require the Secretary’s sign-off to the
22
That said, Plaintiffs’ allegations are difficult to evaluate without the benefit of a full
administrative record. Given documents showing the Department’s decision-making process, it
may become apparent that the Secretary had good reason to neither approve or deny the
proposed Pequot Procedures amendments. On the other hand, given the same documents,
Plaintiffs may demonstrate that the Secretary’s disparate treatment of the proposed Mohegan
Compact amendments and Pequot Procedures amendments was improper, despite their different
statutory postures. At this stage, the Court may only consider Plaintiffs’ proposed allegations,
certain judicially noticed material, and the Secretary’s letter “returning” the proposed Pequot
Procedures amendments; a letter providing little explanation for the Secretary’s action. “[A]
fundamental requirement of administrative law is that an agency set forth its reasons for
decision; an agency’s failure to do so constitutes arbitrary and capricious agency action.”
Amerijet, 753 F.3d at 1350 (quoting Tourus Records, 259 F.3d at 737). Plaintiffs’ proposed
amended complaint plausibly alleges that the Secretary failed to sufficiently explain his
treatment of the proposed Pequot Procedures amendments. Plaintiffs will have the opportunity
to prove that allegation at the summary judgment stage. They may amend the complaint to add
proposed Count I.
3. Count II
Second, Plaintiffs claim that the Secretary’s decision to not approve the proposed Pequot
Procedures amendments was the result of improper political influence. FAC ¶¶ 69–71.
According to Plaintiffs, this political influence rendered the Secretary’s decision arbitrary and
extent that they are consistent with the IGRA. Secretarial procedures, on the other hand, require
the Secretary to consider the tribe’s wishes and state and federal law, and then draft procedures
accordingly. There is no document for the Secretary to “deem approved” to the extent it is
consistent with the IGRA, because the Secretary must create that document and ensure its
consistency with the IGRA before it is approved. See 25 U.S.C. § 2710(d)(7)(B)(vii)(I).
23
capricious. Id. ¶ 71. Plaintiffs’ allegations in support of this claim are again sufficient to survive
a motion to dismiss, and are thus not futile.
As an initial matter, each party claims that the other side has misstated the standard the
Court should apply to this “political influence” claim. In reality, they cite two different
formulations of the same standard. Plaintiffs argue that the Secretary’s decision was arbitrary
and capricious if “extraneous factors intruded into the calculus of [the Secretary’s]
consideration,” as the result of political pressure. Pls.’ Reply at 23 (quoting ATX, Inc. v. U.S.
Dep’t of Transp., 41 F.3d 1522, 1527 (D.C. Cir. 1994)); see also D.C. Fed’n of Civic Ass’ns v.
Volpe, 459 F.2d 1231, 1246 (D.C. Cir. 1971) (holding that an agency decision to approve a
bridge project would be arbitrary and capricious where it was “based in whole or in part on the
pressures emanating” from a United States Representative), cert. denied, 405 U.S. 1030 (1972).
Defendants, on the other hand, argue that the Secretary’s decision was arbitrary and capricious
only if “(1) ‘the content of the pressure upon the [decision-maker] [was] designed to force him to
decide upon factors not made relevant by Congress in the applicable statute’ and (2) ‘the
[decision-maker’s] determination [was] affected by those extraneous considerations.’” MGM’s
Opp’n at 16 (quoting Sierra Club v. Costle, 657 F.2d 298, 409 (D.C. Cir. 1981)). Both
formulations suggest that an agency’s decision may be arbitrary and capricious if political
pressure influenced the decision in a manner not dictated by the relevant statutes and
regulations. 15 In other words, Plaintiffs must plausibly allege that political pressure caused the
15
As Plaintiffs note, Defendants’ formulation of the standard is pulled from a D.C.
Circuit opinion evaluating an agency rulemaking, which did not occur here and which may allow
for more political wrangling than an agency’s adjudication of an individual request. See Costle,
657 F.2d at 409 (“We believe it entirely proper for Congressional representatives vigorously to
represent the interests of their constituents before administrative agencies engaged in informal,
general policy rulemaking.”). That said, the standard delineated in Costle was based directly on
24
Secretary to rely on “considerations not made relevant by Congress in the” IGRA. 16 Volpe, 459
F.2d at 1246.
This standard involves two requirements. First, Plaintiffs must demonstrate that political
pressure was applied to the agency’s decisionmakers. See Aera Energy LLC v. Salazar, 642 F.3d
121, 221 (D.C. Cir. 2011) (evaluating whether “the agency successfully insulated its final
decisionmaker from the effects of political pressure”); ATX, 41 F.3d at 1529 (focusing on the
“nexus between the pressure and the decision maker”). Second, Plaintiffs must demonstrate that
the pressure caused those decisionmakers to rely on improper factors. See id., 41 F.3d at 1528
(holding that political pressure is only concerning when it “shapes the agency’s determination of
the merits” of a decision); Schaghticoke Tribal Nation v. Kempthorne, 587 F. Supp. 2d 389, 410
(D. Conn. 2008) (“The issue for the Court to determine is whether the evidence presented shows
that the pressure exerted can be deemed to have actually influenced the decision maker who
issued the [decision].”).
At this stage, drawing all inferences in favor of Plaintiffs, their allegations in the
proposed amended complaint satisfy both requirements. First, Plaintiffs allege that political
pressure was brought to bear on the officials responsible for approving amendments to the
Pequot Procedures: The Secretary and his team. See 25 U.S.C. § 2710(d)(7)(B)(vii); Pequot
Procedures § 17. According to Plaintiffs, in the months leading up to the agency’s action, the
the Volpe standard. See id. at 408–09; Fed. Defs.’ Opp’n at 16; MGM’s Opp’n at 19. The
parties’ disagreement appears to be more of terminology than of substance.
16
Even “the appearance of bias or pressure” may be sufficient to render a quasi-judicial
agency decision arbitrary. ATX, 41 F.3d at 1527. Plaintiffs admit that the decision at issue here
was not quasi-judicial, so they must meet the more stringent Volpe standard. See Pls.’ Reply at
24; see also Sokaogon Chippewa Cmty. (Mole Lake Band of Lake Superior Chippewa) v.
Babbitt, 929 F. Supp. 1165, 1176 (W.D. Wis. 1996) (“A determination that the appearance of
bias standard does not apply to [agency] decisionmaking does not mean that all contacts with the
agency are permissible; it means only that interaction with the agency is not improper per se.”).
25
Secretary had private meetings and conversations with a United States Senator, Dean Heller, and
the White House Deputy Chief of Staff, Rick Dearborn, both of whom pressured the Secretary to
not approve the proposed Pequot Procedures amendments. See FAC ¶¶ 43, 48–49. Around the
same time, according to Plaintiffs, United States Representative Mark Amodei similarly
pressured Assistant Deputy Secretary of the Interior James Cason. See id. ¶¶ 46–47. Plaintiffs
note that Senator Heller and Representative Amodei represent the citizens of Nevada, in which
MGM is a major employer and political backer. Id. ¶¶ 40–42, 45. And they state that Mr. Cason
told the Tribes that the Department was receiving political pressure to not approve the proposed
Pequot Procedures amendments. Id. ¶ 44. Plaintiffs have thus plausibly alleged a “nexus”
between the political pressure and the agency decision makers. ATX, 41 F.3d at 1530. 17
Second, Plaintiffs allege that the political pressure caused the Secretary to make a
decision that was not dictated by the IGRA. Plaintiffs claim that up until days before the
Secretary’s decision, “the Tribes were assured by Department officials that once they submitted
the [proposed amendments] the Department would approve them.” FAC ¶ 30; see also id. ¶¶
35–39. Plaintiffs identify multiple meetings, conversations, and letters in which these alleged
assurances were made. See id. ¶ 29 (technical assistance letter), ¶ 36 (meeting with Mr. Cason);
id. Ex. 2 (Department email chain referencing a “draft approval letter” for the Pequot Procedures
amendments), ECF No. 60-2 at 71–79. However, according to Plaintiffs, the Secretary reversed
course at the eleventh hour and “returned” the proposed Pequot Procedures amendments to
17
MGM asserts that even if forces opposed to the Tribes’ casino project pressured the
Secretary to kill the project, Plaintiffs also pressured the Secretary in the opposite direction.
MGM’s Opp’n at 18–19. Such a claim is not before the Court, however, and two wrongs do not
make a right.
26
Plaintiffs in a letter cc’ing the Nevada congressional delegation. See id. ¶¶ 49–50, 52; id. Ex. 4
at 93.
Plaintiffs’ allegation that the Secretary “suddenly [] reverse[d] course” creates the
plausible inference that political pressure may have caused the agency to take action it was not
otherwise planning to take. 18 ATX, 41 F.3d at 1529 (“If the decision maker were suddenly to
reverse course or reach a weakly-supported determination . . . we might infer that pressure did
influence the final decision.”); cf. Press Broad. Co., Inc. v. FCC, 59 F.3d 1365, 1370 (D.C. Cir.
1995) (noting that the agency’s “quick reinstatement of [a competitor’s] permit on the basis of
flawed reasoning . . . falls squarely within the holding of ATX”). And the vague, cursory
reasoning provided in the Secretary’s “return” letter—the only decision-related record before the
Court—provides the Court with no basis, at this stage, to conclude that the decision to neither
approve or deny Plaintiffs’ proposed procedure amendments was based on appropriate
considerations. See XP Vehicles, 118 F. Supp. 3d at 78–79 (allowing the plaintiffs’ APA claim
to survive a motion to dismiss where the plaintiffs alleged that their loan application “was
sidelined in favor of those submitted by competitor companies with political connections” and
the agency’s reason for the denial was a “mere pretext” to protect the competition).
The administrative record or other evidence may ultimately demonstrate that the alleged
political pressure did not occur or affect the Secretary’s decision. See Aera Energy, 642 F.3d at
221 (“[O]ur political influence cases emphasize the value of establishing a full scale
administrative record which might dispel any doubts about the true nature of the agency’s
18
Apparently, Plaintiffs are not alone in this theory. Plaintiffs note that several media
outlets and the Department’s Inspector General are investigating the conduct underlying the
decision not to approve the Pequot Procedures amendments. See FAC ¶¶ 55–56; Pls.’ Notice of
Suppl. Auth., ECF No. 66.
27
action.” (alterations and internal quotation marks omitted)). But at this stage, Plaintiffs have
plausibly alleged that significant political pressure was brought to bear on the issue and the
Secretary may have improperly succumbed to such pressure. Because Defendants have failed to
demonstrate that these allegations would be futile, Plaintiffs may amend the complaint to add
proposed Count II. 19
4. Count III
Third, and finally, Plaintiffs claim that their agreement to amend the Pequot Procedures is
itself a “tribal-state gaming compact under the IGRA and its implementing regulations.” FAC ¶
78. Plaintiffs thus claim that the IGRA required the Secretary to deem the proposed amendments
approved 45 days after they were submitted, and to publish that approval in the Federal Register
shortly thereafter. Id. ¶¶ 80–84. This creative twist on Plaintiffs’ previous arguments does not
hold up to the statutory text.
In interpreting the IGRA and its implementing regulations, this Court must start “with the
plain meaning of the text, looking to the ‘language itself, the specific context in which that
language is used, and the broader context of the statute as a whole.’” Blackman v. District of
Columbia, 456 F.3d 167, 176 (D.C. Cir. 2006) (quoting United States v. Barnes, 295 F.3d 1354,
1359 (D.C. Cir. 2002)). Likewise, the Court’s interpretation of Plaintiffs’ proposed amendments
to the Pequot Procedures, “like statutory and treaty interpretation, must begin with the plain
meaning of the language.” Am. Fed’n of Gov’t Emps., Local 2924 v. Fed. Labor Relations Auth.,
19
This conclusion should not be read to suggest any impropriety or illegality in the
actions of Senator Heller, Representative Amodei, or Mr. Dearborn. “They are surely entitled to
their own views on [the Tribes’ casino plans], and [the Court] indicate[s] no opinion on their
authority to exert pressure” on the Secretary. Volpe, 459 F.2d at 1249. The Court concludes
merely that Plaintiffs have plausibly alleged that the Secretary considered extraneous factors in
declining to approve the proposed Pequot Procedures amendments.
28
470 F.3d 375, 381 (D.C. Cir. 2006). The Court’s analysis here begins and ends with that plain
meaning.
First, the Court must define a tribal-state compact. The IGRA does not provide a
definition but, as Plaintiffs note, the Department’s regulations do. The relevant regulations state
that a
Compact or Tribal–State Gaming Compact means an intergovernmental agreement
executed between Tribal and State governments under the Indian Gaming
Regulatory Act that establishes between the parties the terms and conditions for the
operation and regulation of the tribe’s Class III gaming activities.
25 C.F.R. § 293.2 (emphasis added). This definition prompts the question of what it means to
“establish” the terms and conditions of gaming. Neither the IGRA nor the Department define the
term “establish,” but common definitions of “establish” are instructive here. Black’s Law
Dictionary defines the term, in relevant part, as “to enact permanently . . . [t]o make or form; to
bring about or into existence.” Establish, Black’s Law Dictionary (10th ed. 2014). Webster’s
Dictionary similarly defines “establish” as “to institute . . . permanently by enactment or
agreement” or “to bring into existence.” Establish, Merriam-Webster’s Dictionary (Jan. 25,
2019), https://www.merriam-webster.com/dictionary/establish. Thus, a tribal-state compact is an
agreement creating the terms under which the tribe may conduct gaming.
Next, the Court must determine whether Plaintiffs’ proposed Pequot Procedures
amendments meet that definition. The proposal is framed as an “agreement” between the Pequot
and the state. FAC Ex. 1 at 48. It, in relevant part, seeks to “modify” and “amend” certain
sections of the Pequot Procedures. Id. at 48–49. Those amendments prevent the creation of “a
business entity jointly and exclusively owned by the [Pequot] and the [Mohegan]” from
triggering certain rights for the Pequot under the Procedures, such as the right to conduct Class
III gaming based on a state law amendment, id. at 48, or the right to negotiate a tribal-state
29
compact governing types of Class III gaming that were not permitted when the Procedures were
imposed, but were “subsequently so permitted by the state,” id. at 49. In other words, the
proposal seeks to prevent the establishment of the Tribes’ joint venture under Connecticut law
from disrupting the existing framework—the Pequot Procedures—governing the Pequot’s
gaming activities.
The proposed Pequot Procedures amendments plainly fall outside of the Department’s
definition of a tribal-state compact. The proposal may be an “intergovernmental agreement
executed” between the Pequot and the State, unlike the Pequot Procedures. But it does not
“establish” the terms and conditions of the Pequot’s Class III gaming activities. Those terms and
conditions are already established by the Pequot Procedures. The proposed amendments do not
replace the Pequot Procedures and enact new terms and conditions, but merely protect those
terms and conditions against the creation of the Tribes’ joint venture. Plaintiffs’ proposal makes
this clear: it seeks to “confirm” that “the enactment of any Connecticut law to authorize” the
Tribes’ joint venture “shall not affect the rights and responsibilities of the [Pequot] under the
[Pequot] Procedures.” FAC Ex. 1 at 48 (emphasis added). Thus, Plaintiffs’ proposed Count III
cannot withstand a motion to dismiss, and amendment would be futile.
V. CONCLUSION
For the reasons stated above, the Court concludes that allowing Plaintiffs to amend their
complaint would not cause undue delay, but would be futile as to proposed Count III because
that claim could not survive a motion to dismiss. See Foman, 371 U.S. at 182. Thus, exercising
its discretion under Federal Rule of Civil Procedure 15, the Court GRANTS IN PART
Plaintiffs’ Motion to Amend (ECF No. 60). It is hereby ORDERED that on or before February
22, 2019, Plaintiffs may file an amended complaint containing Counts I and II of their proposed
30
amended complaint (ECF No. 60-2), but not Count III. An order consistent with this
Memorandum Opinion is separately and contemporaneously issued.
Dated: February 15, 2019 RUDOLPH CONTRERAS
United States District Judge
31