People Against a Casino Town

The following document was filed on July 8, 2004.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

PLAINTIFFS'  MEMORANDUM
IN SUPPORT OF MOTION FOR REMAND

Case No.  CV-06175-AA

I. INTRODUCTION

Plaintiffs move this Court for an order remanding this matter to the Circuit Court of the State of Oregon for Lane County. Remand is necessary because there is no subject matter jurisdiction in this Court as the removal sought is substantively and procedurally defective under 28 U.S.C. 1441 and 1446.

II. FACTS

Plaintiffs filed a declaratory judgment action in Lane County Circuit Court on March 9, 2004. In their complaint, Plaintiffs seek judgment against the State Defendants as follows:

1. A declaration that the Constitution of Oregon, Article XV, section 4(12) prohibits the kind of casino set out in the compact dated January 8, 2003, ("the Compact"), between the State of Oregon and the Confederated Tribes of Coos, Umpqua and Siuslaw Indians ("the Tribes");

2. A declaration that the Compact is unconstitutional, illegal and void under state law on the grounds that it permits the operation of a casino contrary to Oregon Constitution, Article XV, section 4(12);

3. A declaration that Governor Kulongoski, as successor Governor to Governor Kitzhaber (signer of the Compact for the State) had no authority under state law to lawfully enter into the Compact for the State of Oregon;

4. A declaration that the Compact is unconstitutional, illegal and void as a matter of state law; and

5. A declaration that the Compact is unconstitutional, illegal and void as it contravenes the Oregon Constitution, including Article III, section 1 and Article IV, section 1, separation of powers provisions.

The complaint seeks no declaratory relief, nor any declaration of any kind against the Tribes.

On April 7, 2004, the Tribes filed a Motion to Dismiss, asserting dismissal on the basis of the Tribes' alleged sovereign immunity. State Defendants did not respond to the Tribes' Motion to Dismiss. Plaintiffs responded on May 7, 2004.

The State Defendants removed the case on June 7, 2004. In their notice of removal at paragraph 5, State Defendants state in reference to Plaintiffs' response to the Tribes' Motion:

"Plaintiffs' response asserts, for the first time, that the Compact permits unlawful Class III gaming in violation of IGRA, 25 U.S.C. 2710(d)(1)(B) and (C), and that defendant Confederated Tribes are not immune to suit for unlawful Class III gaming in violation of IGRA."

State Defendants go on, at paragraph 8 of the notice of removal to state:

"This is a civil action in which this court has original jurisdiction under 28 U.S.C. 1331 and is one that may be removed to this Court by the defendants [here the State Defendants with "consent" of the Tribes] herein, pursuant to the provisions of 28 U.S.C. 1441, in that it arises under IGRA."

III. LEGAL STANDARD FOR REMOVAL (FEDERAL QUESTION)

Only state court cases "that originally could have been filed in federal court may be removed to federal court by the defendant." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987), Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 163 (1997) (stating that "[t]he propriety of removal thus depends on whether the case originally could have been filed
in federal court"). District Courts have original federal question jurisdiction in "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. §1331. An action "arises under" federal law if either federal law creates the cause of action, or the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law. Franchise Tax Bd. v. Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983); Morongo Band of Indians v. Cal. St. Bd. of Equal., 858 F.2d 1376, 1383 (9th Cir. 1988).

Federal question jurisdiction (28 U.S.C. 1331) is generally determined by application of "the well-pleaded complaint rule," which provides that "federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc., 482 U.S. at 392, citing Gully v. First National Bank, 299 U.S. 109, 112-113, (1936). This rule ensures that the plaintiff may remain "the master of claim; he or she may avoid federal
jurisdiction by exclusive reliance on state law." Caterpillar Inc., 482 U.S. at 392. The Caterpillar court said it this way:

"[A] defendant cannot, merely by injecting a federal question [of his own] into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated. If a defendant could do so, the plaintiff would be the master of nothing. Congress has long since decided that federal defenses do not provide a basis for removal." 482 U.S. at 398-399, 107 S. Ct. at 2433.

The mere presence of a federal issue in a state cause of action does not automatically confer federal question jurisdiction. Lippitt v. Raymond James Fin. Servs., 340 F.3d 1033, 1040 (9th Cir. 2003). Rather, jurisdiction must exist as of the time the action is commenced, and the court must look to the original complaint to determine if such jurisdiction exists. Morongo Band of Mission Indians, 858 F.2d at 1380.

In Oklahoma Tax Comm'n v. Graham, 489 U.S. 838, (1989), the State of Oklahoma sued an Indian Tribe to recover excise taxes on bingo games and sales of cigarettes. The Supreme Court reversed the trial court's denial of remand stating that federal jurisdiction "must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose." Id. at 840-841. The Court also noted that, "[t]he possible existence of a
tribal immunity defense ... did not convert [state claims] into federal questions, and there was no independent basis for original federal jurisdiction to support removal." Id. at 841.

The removal statute is strictly construed against removal. Hofler v. Aetna US Healthcare of Cal., 296 F.3d 764, 767 (2002).

There are a few exceptions to the well-pleaded complaint rule. For example, under the artful pleading exception, the court may uphold removal if it concludes that the plaintiff has artfully pleaded the claims so as to avoid removal to federal court by omitting necessary federal questions. Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475 (1998). If the only claim involved is one arising under federal law, a federal court may uphold removal. Id. However, the artful pleading exception does not apply where plaintiff has a viable state law claim, as well as a federal claim, as well as a federal claim, and simply chooses to sue on the state claim. See Redwood Theatres, Inc. v. Festival Enter. Inc., 908 F.2d 477, 479 (9th Cir. 1990).

Also, certain causes of action based solely on federal statutes such as ERISA may provide a basis for removal on the basis of complete preemption. Lippitt, 340 F.3d at 1042. However, complete preemption only applies when the federal statute at issue provides the exclusive cause of action for the claim asserted and also sets forth procedures and remedies governing that cause of action.   A lengthy discussion of complete preemption is unnecessary here as "IGRA includes no provisions which address a state's allocation of authority or procedure to enter gaming compacts or more generally how to determine whether a state and tribe have entered into a valid compact.  Pueblo of Santa Ana v. Kelly, 104 F.3d at 1557-1558, (10th Cir. 1997).

IV. ARGUMENT

State Defendants notice of removal is substantively flawed (lack of federal question subject matter jurisdiction) and procedurally flawed (untimely filing of notice of removal).

A. This Court does not have Federal Question Subject Matter Jurisdiction in this Action.

The State's remand of this case was improper for three reasons: (1) there are no federal questions presented on face of the "well-pleaded" complaint; (2) the action does not "arise under" a federal law; and (3) Plaintiffs have not used "artful pleading" to avoid federal court. Each argument is discussed below:

1. Well Pleaded Complaint Rule confirms that no federal jurisdiction can be proved.

Plaintiffs' state court declaratory judgment complaint pleads solely state law claims; it seeks a declaration that the Compact and the Governor's actions in executing the Compact were unconstitutional. Long after the original removal period expired, the State Defendants removed the action, alleging that removal was proper because Plaintiffs' Response
to the Tribes' Motion to Dismiss mentioned potential IGRA violations. In their Notice of Removal, the State Defendants concede that the Complaint contains no allegations involving federal questions. Specifically, State Defendants' Notice of Removal confirms that federal questions were discussed "for the first time" in Plaintiffs' Response to the Motion to Dismiss, when Plaintiffs alleged that unlawful Oregon Tribal casinos might violate IGRA. (Footnote 1)

(Footnote 1) "Plaintiffs' response asserts, for the first time, that the Compact permits unlawful Class III gaming in violation of IGRA, 25 U.S.C. § 2710(d)(1)(B) and (C), and that defendant Confederated Tribes are not immune to suit for unlawful Class III gaming in violation of IGRA."  Defendant's Notice of Removal of Action Under 28 U.S.C. § 1441(B) (emphasis added).

Thus, jurisdiction cannot be established based federal questions that may arise during the course of the litigation in connection with some defense, allegation, or counterclaim. Franchise Tax Board, 463 U.S. at 10. Removal is unavailable unless there appears that there is some substantial, disputed question of federal law that is the necessary element of the well-pleaded state claims, or that the claim is really one of federal law. Id. at 13.

The State Defendants acknowledge that Plaintiffs' well-pleaded complaint makes no mention of a federal question. Nothing in the Complaint provides even a remote basis for removal. Indeed, the provisions of IGRA that the
State Defendants cite in their removal notice pertain expressly to gambling on "Indian Lands." In this case, however, Plaintiffs are not suing the State Defendants about gambling on "Indian Lands." The Plaintiffs are suing the State Defendants over the question of whether the State has yet properly "entered into" a gambling compact at all. The State Defendants may wish the matter to be otherwise stated; but, it is not. None of the questions presented in the Plaintiffs' state declaratory judgment action turn on an interpretation of IGRA; they turn only on interpretation of state law and the state constitution.

As Plaintiffs' well-pleaded complaint asserts no federal questions, it cannot support removal of the action to federal court.

2. This action does not "arise under" federal law.

State Defendants contend, without support, that federal jurisdiction applies because this matter "arises under" IGRA. 28 U.S.C. § 1331. Plaintiffs assert that such a suggestion strains credulity.

Federal court has jurisdiction only if the action "arises under" federal law and either federal law creates the cause of action, or the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law. Franchise Tax Bd., 463 U.S. at 27-28.

The state powers and state powers questions raised in the Complaint do not "arise under IGRA or under IGRA compacts; they arise under state law."  State ex rel Clark, 570.) That is because IGRA defers to state law, allowing
casino-type gaming activities "only if such activities are. . . located in a State that permits such gaming for any purpose by any person, organization or entity." 25 U.S.C. § 2710(d)(B) (1988). And, those questions contemplated by IGRA, whether the State permits such gaming activities, are precisely and solely the questions that the Complaint asks the court to consider.

Plaintiffs readily concede that their Response to the Tribe's Motion to Dismiss asserts that the Compact permits unlawful Class III gaming in violation of IGRA, and that defendant Confederated Tribes are not immune to suit for unlawful Class III gaming in violation of IGRA. This response addressed the collateral issues of whether the Tribes should be present when important Oregon Constitutional issues are determined on the merits. Whether or not the Tribes were (or will be) present in the state declaratory judgment action does not effect the relief sought by Plaintiffs ­ - i.e., does not affect the state law declarations regarding state constitutional issues that have nothing to do with the Tribes or tribal power.

Furthermore, Plaintiffs are not suing "the Tribes" for any "violations" of IGRA.  Plaintiffs have no power to substitute themselves for federal enforcement authorities of the United States Attorney in Oregon or the State Attorney General as to these potential criminal violations of IGRA. Rather, Plaintiffs filed a state declaratory judgment action, seeking Oregon State court declarations, aimed at State Defendants, challenging violations of state constitutional principles.

State Defendants' assertions are more than a stretch, they amount to a mangling of the "well pleaded complaint" rule and the "arises under" predicates of § 1441.  State Defendants are attempting to commandeer Plaintiffs' complaint by sweeping aside the critical state constitutional issues and focusing on federal power issues that are, at best, tangential to this litigation.  This court must deny State Defendants' attempts to steer Plaintiffs' Complaint away from the core state constitutional issues that Plaintiffs seek to litigate.

As nothing in that action can be said to "arise under" IGRA, this matter should be remanded to Oregon State Courts.

3. Plaintiffs have not "artfully pleaded" the case to avoid federal jurisdiction.

Removal might be appropriate where a plaintiff has used "artful pleading" to disguise a federal claim as a state claim. Rivet, 522 U.S. at 475. However, removal is not appropriate unless the sole claim involved arises under federal law. Id. The artful pleading exception does not apply even where plaintiff has a viable state law claim, as well as a federal claim, and simply chooses to sue on the state claim. Redwood Theatres, Inc. v. Festival Enter. Inc., 908 F.2d 477, 479 (9th Cir. 1990).

To prevail on this ground, State Defendants must establish that the constitutional allegations set forth in the complaint are merely cleverly disguised federal claim s brought in state court. Since Plaintiffs' Complaint only states a valid state law claim under ORS 28.020, State Defendants cannot  seriously contend that Plaintiffs' claim should "really" be a federal claim.  The State Defendants argue, without support, that the present action arises under IGRA.  However, the mere mention of IGRA does not convert a state cause of action with only a tangential federal element into a substantial federal question. Berg v. Leason, 32 F.3d 422, 425-26 (9th Cir. 1994).

State Defendants cannot show that this action is one artfully pleaded to avoid federal court jurisdiction.

B. The State's Notice of Removal is Procedurally Flawed as it was Not Timely Filed.

State Defendants failed to timely file their motion to remove as they filed the Notice of Removal well beyond the 30-day requirement of 28 U.S.C. § 1446. State Defendants thereby waived their right to remove and their Notice of Removal was improper. This matter must be remanded.

Under 28 USC § 1446(b), a defendant must normally file a notice of removal within thirty days of receipt of the initial pleading setting forth the claim for relief upon which such action or proceeding is based.  However, if the "case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant . . . of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." 28 USC § 1446(b). State Defendants were served with Plaintiffs' complaint on April 6, 2004. They filed the Notice of Removal on June 7, 2004, 62 days after they were originally required to remove the matter.

As justification for their late removal, State Defendants claim the "first ascertained" provisions of § 1446(b) apply. They argue that they only realized the federal question posed by IGRA for the "first time" when Plaintiffs responded to the Tribes' motion to dismiss. Such an allegation is truly difficult to conceive. State Defendants were aware of the
potential interplay between IGRA months and even years before the time they removed this action.

First, Plaintiff's original Complaint noted that the "Compact authorizes the Tribes to operate a Class III gaming facility as defined in the Indian Gaming Regulatory Act 25 U.S.C. C §§ 2701-21 (the "Proposed Casino") on lands controlled by the Tribes near Florence, Oregon ("The Hatch Tract")." Complaint at p 2.  From the first pleading in this case, State Defendants knew or should have known that IGRA was tangentially involved in the action.  If State Defendants had a theory that IGRA provided federal question jurisdiction, they should have removed when they first noted the references
to IGRA allegations in the Complaint. Akin v. Big Three Indus, Inc. (E.D. Tex. 1994) 851 F. Supp. 819, 825. Reference to the specific arguments that ultimately arise need not be explicit. Federal courts expect defendants to
"scrutinize" the originating pleading to investigate any clues about whether federal jurisdiction is appropriate. Kanter & Eisenberg v. Madison Associates, 602 F.Supp. 798 (D. Ill 1988). A defendant does not get a new 30-day removal period if that defendant sits idly by while the original removal period runs having failed to exercise due diligence in investigating if federal jurisdiction is appropriate. See Kaneshiro v. North American Co for Life & Health Ins. 496 F. Supp. 452, 460 (D. Haw. 1980).

State Defendants were not only put on notice from the Complaint, they were already aware that IGRA was an issue collateral to the litigation based on briefings on prior cases between these parties between Oregon state courts, e.g. Lane Co. Circuit Court Case No. 16-03-23044, and Oregon Supreme Court Case No. S50824.  Furthermore, State Defendants were well aware of IGRA's relevance to tribal gaming as they had direct negotiations with the Tribes
to formulate the Compact. Indeed, the Compact itself is flavored with discussions that contemplate the very issues that are noted in Plaintiffs' response to the Tribes' Motion to Dismiss. See Compact at 4, 14, 34, 56.

Here, State Defendants knew that IGRA tangentially related to the matters of this lawsuit. However, they failed to assert their theory that IGRA raised federal jurisdiction until it was too late to do so. State Defendants cannot now properly make the allegation, however flawed, that they have already waived by missing their statutory deadline. . Cantrell v. Great Republic Ins. Co. 873 F2d 1249, 1255 (9th Cir. 1989) (where defendant should have known that plaintiff's claims were based on federal question, notwithstanding plaintiff's "artful pleading," removal must be effected within 30 days of receipt of complaint). Feigned surprise as to the relevance of IGRA, months or years after they were aware of the issue, cannot set aside the permanence of the State Defendants' waiver of a right to remove.

C. Sanctions: Compliance with 28 U.S.C. 1446(a)

State Defendants have wrongfully removed this action. Indeed, nothing in the Notice of Removal shows this Court should have jurisdiction over this state declaratory judgment action that seeks declarations of Oregon constitutional law. Even if there was originally a right to remove, which there is not, that right has long since been waived.

This Court should award Plaintiffs their reasonable attorneys fees and appropriate costs in resisting the removal, and, any other relief provided under 28 U.S.C. 1441(a) and Fed. R. Civ. P. 11 as incorporated therein.

IV. CONCLUSION

State Defendants claim that only after the Plaintiffs responded to the Tribes' Motion to Dismiss did they become aware of a "federal question."  Apparently, only they are aware of what the "federal claim" in the state declaratory judgment pleading really is.  State Defendants have been aware for years, both in the context of this case and other proceedings, of how IGRA works and does not work.  Surely, as state constitutional officers, they are aware that IGRA leaves to states (and to state courts) how to decide to "enter into" a compact in the proper exercise of state power.  This is a fundamental function of state sovereignty that IGRA does not disrupt, nor, obviously, does IGRA make the proper exercise of state constitutional power a "federal question."  For the foregoing reasons, Plaintiffs respectfully request that this matter be remanded to the Lane County Circuit Court as this Court lacks subject matter jurisdiction and that the Court award their reasonable attorney fees and costs under 28 U.S.C. § 1441(a).

DATED this 7th day of July, 2004.             

HUTCHINSON, COX, COONS, DUPRIEST, ORR & SHERLOCK, P.C.
By: William H. Sherlock, OSB #90381
E. Bradley Litchfield, OSB #99311
Of Attorneys for Plaintiffs
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