Gaming the [Torts] System — THIS WEEK IN TORTS

You can learn a lot about the seedier side of life through movies. What would Hollywood be without murder, drugs, prostitution, robbery, and all sorts of torious activities? It would be like a film festival showing only adaptations of Waiting for Godot. But fortunately [for entertainment purposes, anyway!], we DO have those things in movies, even if they are disproportionate relative to the real world. And when Hollywood does choose to show us the seedier side of life, it often sets the scene at a casino. Ocean’s Eleven, Casino Royale, the Hangover, Fear & Loathing in Las Vegas, etc etc.

Why casinos? At the end of the day, it must have something to do with gambling. You gamble with your money and you gamble with your life to some degree. And the same drugs, prostitution, and organized crime that are synonymous with the cinema are also synonymous with casinos. But they are not beyond the purview of the law, and something that happens in a casino can be subject to criminal law, a tort, a contract etc. It was in a casino hotel room, after all, where OJ Simpson committed the acts that finally led him to jail.

But it turns out that some casinos may be beyond the purview of the law when it comes to their own wrongdoing. An example is the Foxwoods Resort Casino in Connecticut. You can sue Caesars Palace in Las Vegas, you can sue Casino Royale in Monaco, but for some matters, you can’t sue Foxwoods in Connecticut or anywhere else.

It all comes down to something called sovereign immunity. Under the principle of sovereign immunity, a state generally cannot be sued without its consent. There are a huge number of exceptions, but the theory is strong and enforced. It applies to countries and states, but rarely municipalities. And it also applies to the governments of Native American tribes. We don’t need to get into a lengthy discussion of what happened when Europeans came to America, but in theory they recognized that tribes were independent nations. That recognition extends to the modern era, as the US Federal Government still considers Native American tribes to be “domestic dependent nations.”

A Land of Many Domestic Dependent Nations

Because of tribal sovereignty, things that happen within an Indian Reservation are not necessarily subject to the jurisdiction of the surrounding state. Activities that may be illegal in Arizona are not necessarily illegal on the Navajo Reservation, and vice-versa. And so, in the 1980s, some Native American tribes (and related financial backers) saw an opportunity. Gambling is highly lucrative, addictive, and illegal in most states (well most gambling). But the laws that ban gambling in New York City may not apply in the Akwesasne Mohawk Reservation in upstate New York. Over time, Tribes saw and began to exploit this discrepancy. It started organically, but it soon became big business. In 1988 Congress passed the Indian Gaming Regulatory Act, which established the National Indian Gaming Commission in an attempt to “provide some legislative basis” and some regulation of gaming on Native American reservations.

There is a lot of debate about whether this regulation is effective, but by 2011, there were roughly 460 gambling institutions operated by 240 Native American tribes across the U.S. Most of them are small like Mono Wind Casino in Auberry, CA. But a few are massive and among the largest casinos in the world. And among those, none is bigger than Foxwoods. Bigger than any casino in Las Vegas, it is the largest casino in the U.S. and the second largest in the world.

Foxwoods is located in the Mashantucket Pequot Indian Reservation, which itself is situated within the borders of the town of Ledyard, Connecticut. Before Foxwoods came to town, the tribe boasted membership numbers potentially as low as the single digits, but today that number is edging closer to 1000. There is some serious controversy about the growing membership of the Pequot Tribe, and whether its growth is due more to money than to cultural or historical affiliation. Because the money involved here is huge, relatively speaking. To put it in perspective, the Foxwoods Casino Resort has over 5500 slot machines compared to 1000 members. If the United States as a whole had that person-to-slot-machine ratio, there would be 1,625,000,000 slot machines within our borders. In 1995, it is claimed that the tribe brought in around $750,000 in revenue per member. The financial picture today is not nearly as rosy due to massive, massive debt. Where members could once expect $100,000 per year each in payments from the casino, as of 2012, they receive no money from the casino.

Now back to torts. Maybe you can see where this is all going, but it turns out that because the Mashantucket Pequot Tribe owns and operates the Foxwoods Casino Resort, it is really, really hard to sue Foxwoods. Again, this is all due to sovereign immunity. In tribal, state, and federal courts the Pequot Tribe will argue that Foxwoods is a de facto part of the the tribe itself, given that it is run by the Mashantucket Pequot Tribal Nation Gaming Commission. So in theory, if you slip and fall at the Palm Casino in Las Vegas you can sue the Palm. But if you slip and fall in Foxwoods, you’re out of luck.

We say in theory, because the Tribe has chosen to waive components of its sovereign immunity. Title 12, Chapter 1 of Mashantucket Pequot law states:

“The Mashantucket Pequot Tribal Council recognizes that it is in the best interest of the Tribe to provide a forum to address civil causes of action, including civil actions by or against the Tribe, tribal enterprises, tribal members and any other person or entity who, through their residence, presence, business dealings, other actions or failures to act, or other significant minimum contacts with the Tribe or on tribal lands, are entitled to civil redress or incur civil obligations. For purposes of this law, ‘tribal lands’ means Indian country, as that term is defined in 18 U.S.C. § 1151. The intent of this law is that the jurisdictional powers of the Mashantucket Pequot Tribal Court shall be exercised to the fullest extent possible and construed to serve the ends of justice.”

In order to comply with this sovereign immunity waiver, potential litigants need to follow specific procedures, including being represented by a tribal court lawyer, but the law provides a recourse for most wrongs. Yet there is a great, big, gaping exception to this waiver of sovereign immunity, in that the law states that individuals cannot sue the tribe for any gaming losses:

“There shall be no cause of action in the tribal court for alleged gaming losses, the jurisdiction of which has been specifically reserved for consideration by the Mashantucket Pequot Gaming Commission. For purposes of this section, ‘gaming loss’ means any claim brought to recover damages for pecuniary loss resulting from the engagement by any person in activities classified as ‘class I gaming,’ ‘class II gaming,’ or ‘class III gaming,’ as those terms are defined in the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701–2721.”

As a result, a case against Foxwoods was recently dismissed by the U.S. Supreme Court on the basis of tribal sovereignty. Cheung “Kelly” Yin Sun won over $1 million playing baccarat at Foxwoods, but was accused of cheating and denied her winnings. Sun has perfected a technique called “edge sorting,” which means she can identify upside-down cards by recognizing tiny differences on the edges of the cards. In her suit, she claimed she had not cheated and that Foxwoods should be required to give her the money she had rightfully won. Whether edge sorting should be considered cheating is up for serious debate. But up and down the federal court chain, Sun’s claims were never substantively heard, as Foxwoods lawyers successfully argued that the courts did not have jurisdiction over the matter due to sovereign immunity. In most non-Native American casinos (even in Europe!), this issue could have been fully litigated.

Sovereign immunity issues relative to torts and Native American Casinos can pop up in settings that have nothing to do with lost winnings. In Lewis v. Clarke, a lawsuit against Mohegan Sun, (another successful casino also located on a Native American reservation in Connecticut) the plaintiffs were rear-ended by a car driven by a Mohegan Sun employee and suffered significant injuries. At the time of the accident, the employee was driving guests of the casino to their hotel and thus was acting within the scope of his employment. The defendant argued that as an employee of the casino, the tribe’s sovereign immunity also protected him from the liability in Connecticut state court. The U.S. Supreme Court disagreed and refused to extend sovereign immunity protections to individual tribal employees.

The fact that both 2017 cases -- Sun and Lewis -- focused on tribal immunity shows that the issue is alive and well. Given both history and current affairs, the institution of sovereign immunity as it relates to Native American tribes makes sense. It is a powerful statement about those tribes and their important role in the larger community. But when it comes to casino liability, it does sometimes feel like a loophole. If we’ve learned anything from all of our Hollywood casino movies, it’s that you’ve got to be careful when you step on that gaming floor. But you might just need to be a little more careful at places like Foxwoods, because it’s possible the court system won’t have your back.

-Ellis & Acton