United States v. Garrett

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 03-4569
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
GARLAND BENNETT GARRETT, JR.,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Wilmington. Terrence W. Boyle,
Chief District Judge. (CR-01-140-BO)
Submitted: August 25, 2004 Decided: February 15, 2005
Before WILKINS, Chief Judge, TRAXLER, Circuit Judge, and Roger W.
TITUS, United States District Judge for the District of Maryland,
sitting by designation.
Affirmed by unpublished opinion. Judge Titus wrote the opinion, in
which Chief Judge Wilkins and Judge Traxler joined.
R. Daniel Boyce, BOYCE & ISLEY, P.L.L.C., Raleigh, North Carolina;
William Woodward Webb, Sr., William Woodward Webb, Jr., EDMISTEN &
WEBB LAW FIRM, Raleigh, North Carolina; Anthony Brannon, BRANNON
STRICKLAND, P.L.L.C., Raleigh, North Carolina, for Appellant.
Frank D. Whitney, United States Attorney, Anne M. Hayes, Christine
Witcover Dean, Assistant United States Attorneys, OFFICE OF THE
UNITED STATES ATTORNEY, Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
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TITUS, District Judge:
Cape Fear Music Company, Inc. (Cape Fear) and the Appellant,
Garland Bennett Garrett, Jr. (Garrett) were indicted by a grand
jury in the United States District Court for the Eastern District
of North Carolina for conducting a gambling business in violation
of 18 U.S.C. §§ 1955 & 2, as well as conspiracy, wire fraud, mail
fraud and money laundering. Garrett filed two motions to dismiss
the second superseding indictment, which contained 276 counts.
Following denial of his motions, Garrett entered a conditional plea
of guilty to Count Two pursuant to Rule 11(a)(2) of the Federal
Rules of Criminal Procedure, reserving the right to appeal the
denial of his motions to dismiss. The remaining counts were
dismissed without prejudice pursuant to a written plea agreement,
and Garrett was sentenced to five months of imprisonment, two years
of supervised release, and a $5,000 fine. Garrett and Cape Fear
were jointly ordered to forfeit $750,000. Garrett then appealed,
challenging the denial of his motions to dismiss. Finding no
error, we affirm.
I.
Garrett’s motions to dismiss the second superseding indictment
were based on the grounds that: 1) North Carolina was violating his
equal protection rights enumerated in the Fourteenth Amendment and
the Declaration of Rights of the North Carolina Constitution by
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prosecuting him for the same activities in which Native American
tribes are permitted to engage; and 2) North Carolina’s gaming laws
violate the dormant commerce clause. For the reasons stated on the
record at a hearing held before the district court on September 12,
2002, the district court denied the motions. J.A. 232.
Garrett’s arguments below and in this Court stem from various
state and federal laws and regulations which permit gambling to
occur on Native American lands by Native American tribes, see J.A.
102 (Tribal - State Compact Between the Eastern Band of Cherokee
Indians and the State of North Carolina), but deny the same
privilege to non-Native American citizens, such as Garrett. Thus,
when he provided video gambling games for numerous establishments,
including the Elks Lodge of Wilmington, North Carolina, he was
charged with violations of various gambling laws. Garrett asserts,
and the Government does not deny, that if the same activities
occurred on Native American tribal land and were administered by
Native American tribes or assignees thereof, then those individuals
would not have been charged with a crime. Gaming is permitted on
Native American lands pursuant to the legal framework set forth in
the Indian Gaming Regulatory Act (IGRA).
The IGRA permits Class III gaming activities, see 25 U.S.C.
§ 2703(6)-(8) (2004), on Indian lands provided that five
requirements are met. 25 U.S.C. § 2710(d)(1). To be lawful the
gaming activities must be
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(A) authorized by an ordinance or resolution that (i) is
adopted by the governing body of the Indian tribe having
jurisdiction over such lands, (ii) meets the requirements
of subsection (b) of this section, and (iii) is approved
by the Chairman, (B) located in a State that permits such
gaming for any purpose by any person, organization, or
entity, and (C) conducted in conformance with a Tribal-
State compact entered into by the Indian tribe and the
State[.]
25 U.S.C. § 2710(d)(1)(A), (B), & (C). The IRGA, known
colloquially as a “cooperative federalism” statute, contemplates
joint federal and state regulation. See Artichoke Joe’s California
Grand Casino v. Norton, 353 F.3d 712, 715 (9th Cir. 2003)
(hereinafter “Artichoke Joe’s”). In this case, the laws of North
Carolina are implicated.
North Carolina, in accordance with the IGRA, permits gaming by
federally recognized Indian tribes on tribal lands provided that
such gaming is authorized by a Tribal-State Compact. N.C. Gen.
§ 71A-8 (2004). North Carolina facilitates gaming by Native
Americans on tribal lands by specifically granting the Governor the
power and duty “[t]o negotiate and enter into Class III gaming
compacts, and amendments thereto, on behalf of the State consistent
with State law and the [IGRA], as necessary to allow a federally
recognized Indian tribe to operate gaming activities in this State
as permitted under federal law.” N.C. Gen. § 147-12 (2004).
In August, 1994, then North Carolina Governor James B. Hunt,
Jr. entered into the Tribal - State Compact between the Eastern
Band of Cherokee Indians and the State of North Carolina. J.A.
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100-21. North Carolina, citing the IGRA and acknowledging that the
Eastern Band of Cherokee Indians is a federally recognized Indian
tribe, id. at 101, authorized, subject to various regulations,
Class III gaming, the operation of video gaming devices, and the
administering of raffles. Id. at 104-15. The Compact therefore
explicitly permits the Eastern Band of Cherokee Indians to be
purveyors of video poker, while other laws of North Carolina
criminalize these same activities. See N.C. Gen. Stat. §§ 14-292,
14-295, 14-296, 14-301, 14-302, 14-303, 14-304, 14-305, 14-306.
II.
Garrett argues that North Carolina’s laws permitting Native
American-run gambling on tribal lands, but denying the same to all
other citizens, violates his equal protection rights as guaranteed
by the Fourteenth Amendment, his due process rights as guaranteed
by the Fifth Amendment, the equal protection guarantee in the
Declaration of Rights of the North Carolina Constitution, and the
“dormant” Commerce Clause. Specifically, Garrett argues that it is
unconstitutional that Harrah’s, in business with the Eastern Band
of Cherokee Indians, is immune from North Carolina and federal
laws, while he, in business with, inter alia, the Elks Club, should
be prosecuted under the same laws. Appellant’s brief at 7.
Garrett’s assertions are clearly contrary to previous holdings
of the Supreme Court, which have carved-out a legitimate special
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class for Native American gaming preferences due to the unique
historical relationship between the United States and Native
American nations, as well as constitutional authorization emanating
from the “Indian commerce clause.” U.S. CONST. ART. I sect. 8.
Thus, following the Supreme Court’s guidance in this area of
jurisprudence, we affirm the district court’s denial of Garrett’s
Motions to Dismiss.
A.
Garrett argues that North Carolina laws authorizing Native
American gaming violate the Fourteenth Amendment’s guarantee of
equal protection of the laws. He contends that because the Native
American gaming preferences favor Native Americans based solely on
their race, such laws should be subjected to strict scrutiny.
Garrett acknowledges the Supreme Court’s decision in Morton v.
Mancari, 417 U.S. 535 (1974), where the Court held that
“legislation that singles out Indians for particular and special
treatment[]” shall be upheld “where the preference is reasonable
and rationally designed to further Indian self-government,” id. at
554-55, but contends that the Supreme Court’s more recent decision
in Adarand Constructors v. Peña, 515 U.S. 200 (1995) requires a
departure from the application of the rational basis review for
Native American preferences. In Adarand, the Supreme Court stated
that “all governmental action based on race . . . should be
subjected to detailed judicial inquiry to ensure that the personal
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right to equal protection of the laws has not been infringed.” Id.
at 227. Thus, Garrett argues that the Court’s broad statement in
Adarand means that “Mancari’s days are numbered.” Williams v.
Babbitt, 115 F.3d 657, 665 (9th Cir. 1997) (citing Stuart Minor
Benjamin, Equal Protection and the Special Relationship; The Case
of Native Hawaiians, 106 YALE L.J. 537, 567 (1996)).
The argument that Adarand has changed the level of scrutiny
for Native American preferences has been rejected by other courts.
See Am. Fed’n of Gov. Employees, AFL-CIO v. United States, 330 F.3d
513, 517, 519-21 (D.C. Cir. 2003) (hereinafter “Am Fed’n”).
Garrett does not attempt distinguish Am. Fed’n, but instead relies
on Williams v. Babbitt, 115 F.3d 657 (9th Cir. 1997) for the
proposition that if the government’s preference does not “relate[]
to native land, tribal or communal status, or culture[]” then the
preference should be subjected to strict scrutiny. Id. at 664.
Garrett further contends that, unlike Mancari (where the preference
clearly related to self-government, i.e., a statute permitting
hiring preferences for the Bureau of Indian Affairs), the
preference in this case is not clearly related to uniquely Indian
issues and should not receive rational basis review.
Garrett’s reliance on Williams is misplaced. The same court
that decided Williams subsequently upheld a California gaming
preference for Native Americans, similar to the one at issue in
this case. Artichoke Joe’s, 353 F.3d 712. Artichoke Joe’s
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succinctly explained the differences between Williams and
situations in which gaming preferences are given to Indian tribes.
Because Garrett has relied so heavily upon a decision from our
sister circuit, and the analysis in Artichoke Joe’s is consistent
with Mancari and its progeny, we find it appropriate to quote this
decision at length:
Plaintiffs’ suggestion that Williams controls the outcome
of the present case ignores the obvious distinctions
between an unqualified preference for individual native
Alaskans [at issue in Williams] and the limited
preference for tribes reflected in the text of IGRA [at
issue in this case]. The operative terms of IGRA
expressly relate only to tribes, not to individual
Indians. . . . Further, through IGRA’s compacting
process, and through its reliance on tribal governments
and tribal ordinances to regulate class III gaming, the
statute relates to tribal status and tribal self-
government. The very nature of a Tribal-State compact is
political; it is an agreement between an Indian tribe, as
one sovereign, and a state, as another. . . .
Additionally, unlike the legislation construed in
Williams, IGRA pertains only to Indian lands. Like the
vast majority of statues by which Congress fulfills its
obligations to the Indian tribes, IGRA regulates
activities only on Indian lands. . . . Accordingly, IGRA
falls squarely within the rule of Mancari. Williams
continued to recognize that a statue relating to tribal
self-government, to tribal status, or to Indian lands is
subject to rational-basis review. IGRA is just such a
statute, notwithstanding the dictum in Williams that
doubted whether Congress could give “Indians a complete
monopoly on the casino industry.” As our lengthy
discussion of the statue has made clear, IGRA does not
give “Indians” a monopoly; it neither relates to
“Indians” (as distinct from federally recognized tribes)
nor, itself, creates a monopoly.
Artichoke Joe’s, 353 F.3d 734-35 (internal citations omitted). We
concur with the Ninth Circuit’s interpretation of Mancari in
relation to Tribal-State Compacts under the IRGA.
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Considering this application of Mancari, Garrett’s argument
that the Court’s decision in Adarand requires Native American
gaming preferences to be subjected to strict scrutiny must be
rejected for two reasons. First, Adarand held that “all racial
classifications . . . must be analyzed by a reviewing court under
strict scrutiny.” Adarand, 515 U.S. at 227 (emphasis added).
Preferences given to Indian tribes, however, are not racial
preferences; they are “political rather than racial in nature.”
Mancari, 417 U.S. at 554 n. 24; see also Rice v. Cayetano, 528 U.S.
495, 519-20 (2000); Artichoke Joe’s, 353 F.3d at 734. Therefore,
Adarand’s broad statement does not require that the IGRA or the
laws authorizing North Carolina’s Tribal - State Compact be
subjected to strict scrutiny. Second, even if we did not recognize
the distinction between racial and political preferences, we find
it difficult to conclude, as Garrett suggests, that Mancari, a case
dealing with Native American preferences, is not more on point than
Adarand. Therefore, we find the Supreme Court’s discussion in
Agostini v. Felton, 521 U.S. 203 (1997) to be instructive.
In Agostini, the Supreme Court offered guidance to the lower
federal courts, explaining that the Court “do[es] not hold[] that
other courts should conclude [that the Supreme Court’s] more recent
cases have, by implication, overruled an earlier precedent.” Id.
at 238. The Court “reaffirmed that ‘[i]f a precedent of [the
Supreme Court] has direct application in a case, yet appears to
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rest on reasons rejected in some other line of decision, the Court
of Appeals should follow the case which directly controls, leaving
to [the Supreme Court] the prerogative of overruling its own
decisions.’” Id. (quoting Rodriguez de Quijas v. Shearson/American
Express, Inc., 490 U.S. 477, 484 (1989)). We find this principle
to be directly implicated in this case and refuse to reject the
reasoning of Mancari by relying on Adarand. See American Greyhound
Racing, Inc. v. Hull, 146 F. Supp. 2d 1012, 1077 (D. Ariz. 2001)
vacated on other grounds 305 F.3d 1015 (9th Cir. 2002).
Applying the rational basis standard for Indian tribal
preferences set forth in Mancari, we hold that the gaming
preferences given to the Eastern Band of the Cherokee Indians are
rationally related to a legitimate governmental interest. The laws
creating this preference “promot[e] the economic development of
federally recognized Indian tribes (and thus their members)[.]” Am.
Fed’n, 330 F.3d at 522-23. The Supreme Court has explicitly held
that this goal constitutes not just a legitimate, but an important
government interest. See California v. Cabazon Band of Mission
Indians, 480 U.S. 202, 216-17 (1987) (explaining that the goals of
tribal self-sufficiency and overall economic development are
“important federal interests.”). It also appears undisputed that
gaming operators derive significant profits from their business.
Therefore, gaming preferences for Indian tribes conducted on tribal
land are a rational means of ensuring the economic development of
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the Eastern Band of Cherokee Indians. For these reasons, North
Carolina’s State-Tribal Compact and the scheme set forth by the
IGRA easily pass muster under the rational basis standard of
review.
B.
Dormant Commerce Clause Claim
Garrett’s second major attack on his prosecution is premised
on an alleged violation of the commerce clause. Although the
commerce clause is an enumerated power of Congress to “regulate
Commerce with foreign Nations, and among the several States and
with the Indian Tribes,” U.S. CONST. ART. I, sect. 8, from very
early in this country’s history the Supreme Court has recognized
that this grant of power to Congress necessarily restricts state
action. See e.g., Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824).
This concept, as alive today as it was in the early 19th century,
see Harper v. Public Service Commission of West Virginia, No. 04-
1444, slip op. at 12 (4th Cir. Jan. 24, 2005) (“[E]ven when
Congress has not acted, the Supreme Court has long recognized that
the Commerce Clause nonetheless divests states of any interest
which unduly burdens interstate commerce.”), has become known as
the “dormant” commerce clause. The dormant commerce clause
prohibits states from burdening interstate commerce or from
discriminating against out-of-state business. See e.g., West Lynn
Creamery, Inc. v. Healy, 512 U.S. 186, 192-94 (1994).
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Garrett argues that “there is clearly discrimination on the
face of the laws and treaties of North Carolina” because “Mr.
Garrett, who provided video poker machines to the Elks Club, was
prosecuted [while] Harrah’s, which operates in and through North
Carolina provid[ing] video poker games in interstate commerce and
advertises in interstate commerce, is immune from prosecution by
state and federal law enforcement authorities[.]” Appellant’s
brief at 36. We cannot agree that this statement asserts a viable
claim for a violation of the dormant commerce clause.*
The dormant commerce clause is violated when the laws of a
state treat in-state entities and out-of-state entities
differently. The Supreme Court has also found a violation of the
dormant commerce clause when state laws were ostensibly applied
*
To the extent that Garrett argues that the dormant commerce
clause is violated because Harrah’s operates in numerous states
while he only operates in North Carolina, he misreads prior case
law. The fact that Harrah’s operates and advertises in numerous
states, and has been granted the ability to engage in gaming
activities in North Carolina, does not suggest a violation of the
dormant commerce clause. If Harrah’s were permitted to engage in
gaming only because it operated in numerous states, while those
businesses that operate only in North Carolina were not permitted
to engage in gaming, then perhaps there might be a violation.
First, that is not the situation in this case. Harrah’s is able to
engage in gaming because of North Carolina’s Tribal-State Compact
with the Eastern Band of Cherokee Indians and the agreement between
Harrah’s and the Eastern Band, not because of Harrah’s “interstate”
character. Second, this would be an unusual type of
discrimination: North Carolina would be discriminating against its
own citizens and in favor of out-of-state businesses. If Garrett’s
dormant commerce clause contention is that North Carolina has
favored an interstate business over his own, simply because it is
an out-of-state, rather than in-state, business, then his argument
must fail.
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equally, yet the burden on interstate commerce outweighed the
benefits of such a law. For example, the Supreme Court invalidated
a state law requiring a particular type of mud flap on trucks
because it was too burdensome to require truckers transporting
goods in interstate commerce to stop at the state line and change
an accessory on their vehicles. Bibb v. Navajo Freight Lines,
Inc., 359 U.S. 520 (1959).
Garrett’s claims are not at all similar to the typical dormant
commerce clause cases. Cf. Beskind v. Easley, 325 F.3d 506 (4th
Cir. 2003) (North Carolina ABC laws treated in-state manufacturers
of wine differently than out-of-state manufacturers and thus
violated the dormant commerce clause). In this case, regardless of
whether a citizen or entity lives in North Carolina or in another
state, that person or entity will be prosecuted for a violation of
gambling laws if gambling mechanisms are provided to non-Native
American establishments, but not be prosecuted when the end users
are Native American-run establishments operating on tribal lands.
Thus, there is no unequal treatment vis-à-vis North Carolinians and
residents of other states. Nor are the North Carolina laws unduly
burdensome on interstate commerce.
The cases cited by Garrett are inapposite. Cases such as
Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984) and Beskind, 325
F.3d 506 dealt with laws that explicitly treated in-state
manufacturers differently than their out-of-state counterparts.
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Such discrimination is not occurring in this case, as both in-state
and out-of-state gambling purveyors are either subjected to, or
exempted from, the laws of North Carolina, depending on their
status or that of their business partners. They are not subjected
to different laws because of their residence inside or outside of
North Carolina. Thus, Garrett’s argument fails to state a
violation of the dormant commerce clause.
For the aforementioned reasons, we affirm the ruling of the
district court.
AFFIRMED
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