PEOPLE v. MIAMI NATION ENTERPRISESRespondents’ Answer to Petition for ReviewCal.March 25, 2014 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA PEOPLE OF THE STATE OF Case No. $216878 CALIFORNIA, Plaintiff and Appellant, . SUPREME COURT FILEDv. MIAMI NATION ENTERPRISES,et al, MAR 28 2014 Defendants and Respondents. Prank «. MeGuire Clerk Deputy Court of Appeal, Second Appellate District, Division 7 Case No. B242644 Superior Court of California, County of Los Angeles Case No. BC373536 Yvette M. Palazuelos, Judge DEFENDANTS AND RESPONDENTS’ ANSWERTO PETITION FOR REVIEW FREDERICKS PEEBLES & MORGAN LLP FREDERICKS PEEBLES & MORGAN LLP Conly J. Schulte (Pro Hac Vice) John Nyhan (SBN 51257) 1900 Plaza Drive 2020 L Street, Suite 250 Louisville, Colorado 80027 Sacramento, California 95811 Telephone: 303-673-9600 Telephone: 916-441-2700 Facsimile: 303-673-9839 . Facsimile: 916-441-2067 cschulte@ndnlaw.com Jnyhan@ndnlaw.com FREDERICKS PEEBLES & MORGAN LLP Nicole E. Ducheneaux (Pro Hac Vice) 3610 North 163" Plaza Omaha, Nebraska 68116 Telephone: 402-333-4053 Facsimile: 402-333-4761 nducheneaux@ndnlaw.com Attorneysfor Defendants/Respondents IN THE SUPREME COURTOF THE STATE OF CALIFORNIA PEOPLE OF THE STATE OF Case No. S216878 CALIFORNIA, Plaintiff and Appellant, vz. MIAMI NATION ENTERPRISES,etal., Defendants and Respondents. Court ofAppeal, Second Appellate District, Division 7 . Case No. B242644 Superior Court of California, County of Los Angeles Case No. BC373536 . - Yvette M. Palazuelos, Judge DEFENDANTSAND RESPONDENTS’ ANSWER TOPETITION FOR REVIEW FREDERICKS PEEBLES & MORGAN LLP FREDERICKS PEEBLES & MORGAN LLP Conly J. Schulte (Pro Hac Vice) John Nyhan (SBN 51257) 1900 Plaza Drive 2020 L Street, Suite 250 Louisville, Colorado 80027 . Sacramento, California95811 Telephone: 303-673-9600 , Telephone: 916-441-2700 Facsimile: 303-673-9839 Facsimile: 916-441-2067 cschulte@ndnlaw.com jnyhan@ndnlaw.com FREDERICKS PEEBLES & MORGAN LLP - Nicole E. Ducheneaux (Pro Hac Vice) 3610 North 163" Plaza Omaha, Nebraska 68116 Telephone: 402-333-4053 Facsimile: 402-333-4761 nducheneaux@ndnlaw.com Attorneysfor Defendants/Respondents TABLE OF CONTENTS TABLE OF CONTENTS. ......cscsssssessssesecsssessssecscssssssssssssssscsucavevcnearatacsesacsusascaeareneses i TABLE OF AUTHORITIES......ccecsscssssssssessssssesessesssssesssssssssvensasseeeseatsussesscssesecssees ii I. INTRODUCTION.....sssssssssssessstssssssssnssssecssssccssssssssneccesserseseees sessssssesssesese 1 I]. STATEMENT OF THE CASE.......ccccssessssssssesssssssscseseneesseseeenees. eeeseeessenes 1 A. Initial Trial Court ProceedingS............cccsssscsessccssssesessseeseesssesssssscersceeens 1 B. The Tribal Entities’ Petition for Writ ofMandate........... seseeeeeaceetaceatenees 2 C. Proceedingsin the Trial Court on Reman....cecessssessessessssssscsstseeeeees 3 D. The Court of Appeal’s Decision in Miami Nation Enterprises...cccccce 4 THT. = ARGUMENT...cccccssssesesesesssesssssessstsesseseseeetacsstestasessseecsssuceseseeasneaesesees 5 A. Miami Nation Enterprises Applied all Six Factors of the Arm-of-the- Tribe Test Set Forth in American Propertyccccccccssssssssssssssrssssesssssesssseees 6 1) - Method of Creation......c.c.ccccccsccsssssssscsesssssasesscessessessssecacscesssacsessessweve 7 2) Purpose esata sseeseessesaessecaeeseenseessssssessssseaeeseseaneseaesensesateceaeesseeseeeensween 7 3) Structure, Ownership, and Management, Including the Amount of Control the Tribe has Overthe Entities ....0......ccccscccccessessssscsesseseersers 7 _ 4) Whetherthe Tribe Intended for the Entities to have Tribal Sovereign TMMUNItY oseeseseceseseceeeceeeseceecsesesesessssscsssessedesssssucscscsasscseeseucnteneseneas 9 5) The Financial Relationship Between the Tribe and the Entities.......... 9 6) Whether the Purposes of Tribal Sovereign Immunity are Served by Granting Immunity to the Entities 0.0...essecseesteceeseseesteesseessecnees 11 B. Supreme Court Review Is Not Necessary to Settle Important Issues of LAWo.ecscsscscescscssesscessssessscesecsessssteccsscsssessescsssussseguccsessssacenaceuseseusssesessees 12 C. The State’s Petition References Improper Evidence That Should Not Weigh In This Court’s Consideration...........Lacessesenececereceessseestsstestseeeeess 15 TV. CONCLUSION ..vssssssssssssusssssssssssssesssssssssseseesannannnesessasssseeectnsssate 16 PROOFOF SERVICE ......essssesssecssssscsesssssssscscsescsesesessssssssssssacscseassceeecneaeesseeeseees 18 i TABLE OF AUTHORITIES Cases Allen v. Gold Country Casino (9th Cir. 2006) 464 F.3d 1044oecesecesssesssssssssssssesscsesscscsssssscsssensecscscessessesesssaesacasescavavses 12 American Property Management Corp. v. Superior Court (2012) 206 Cal.App.4th 491 oo. cccsssscssesesssssssescsssssssssscseacsessecssacecesscscacscacsrensecs passim Ameriloan v, Superior Court (2008) 169 Cal.App.4th 81 oieccecscssssssssessssssscsssssssscacscscevscseasscesssesesseseasscaeersess passim Breakthrough Management Group, Inc. v. Chukchansi Gold Casino and Resort (10th Cir. 2010) . 629 F.3d 1173 woe eeessecessssssssesescsesescsescssssssssscovssevssesssveressusesesasssseseesesesess 4, 6, 12 Cabazon BandofMission Indians v. County ofRiverside (1986) 783 F.2d 900 ....csesesesssseesstescscecsencsesesesssesesscsessssssssvsesssecasscsesesesesecsssesssscsecevaeetes 14 Cash Advance and Preferred Cash Loansv. Colo. (Colo. 2010) 242 P.3d 1099 vecccsescsecsssssecscescssesessssssssecsesnssssssssssssesessacecsececessnssesseasssens 4,12 Federal Trade Com. v. AMG Service,et al. (D.Nev., Jan. 28, 2014, No. 2:12-cv-00536-GMN-VCF) 2014 WL 584781] oo iccccsesssssssessssescssssssssssessacseacsssesscsessessesacssacssecsessvesesenseesess 15 Gavle v. Little Six Inc. (Minn. 1996) S55. N.W.2d 284 ..cccsssssssecssscnessessesssesssssssssessssscacssssvscsesssscavassuvsesuesecessesaesteassess 12 Kiowa Tribe ofOkla. v. Manufacturing Technologies, Inc. (1998) . S23 U.S. 751 vescescssssssscssscseessseseseessecsssessesescssscsvarseseacesasaeacecseaseracatsnes 2, 13, 14 Michigan v. Bay Mills Indian Community (6th Cir. 2012) 695 F.3d 406, cert. granted June 24, 2013, No. 12-515, U.S.ae 16 Native American Distributing v. Seneca-Cayuga Tobacco (2008) S46 F.3d 1288 wosscssecssscecesesesescessesesssessesesssscsessscsssssecececsracacssasstsesavseeesees 14 People ofthe State ofCalifornia v. Miami Nation Enterprises, et al. (2014) 223 CabApp.4th 21 oecsccsessscssssesessssesesessssssssssssssstsssssescscesssssssssseceeses passim Redding Rancheria v. Superior Court (2001) 88 Cal.App.4th 384ooeeccsesssesessessessesessssesessessssscascesssssssscecssacareassesecse 3,4, 12 il Three Affiliated Tribes ofthe Fort Berthold Reservation v. Wold Engineering (1986) 116 US. 877 cceeeseccessssesssscesessnseesesessscsscsessesesessssescsssssscsssassescesesanseavacessaatacsasses 14 Trudgeonv. Fantasy Springs Casino.” 1999) 71 Cal.App.4th 632.0... ccscccscessesesssesscsessssssssssssscsssssscaesneeessereeneereereneeseeses PASSIM Washington v. Confederated Tribes ofthe Colville Reservation(1980) AAT ULS, 134 weecccssecscesescscsetesseeestensecssessassesesessssssececessesusecscsssessessssssseeseaveeene 14 Other Authorities Jon B. Eisenberg,etal., California Practice Guide: Civil Appeals and Writs Ch. 13-B, § 13.75 (2014).........seceseseseveseesesssesessasseseasssceaeaeseasonsacas 14 Rules Cal. Rules of Court, Rule 8.500 v...cccccccccsccsccscsssecssccssescescsssesees 1, 6, 14, 16 iil I. INTRODUCTION In People of the State of California v. Miami Nation Enterprises, et al. (2014) 223 Cal.App.4th 21 (hereinafter “Miami Nation Enterprises’), Division 7 of the Second District Court of Appeal produced an opinionthat is consistent with, andalso clarifies and harmonizes, existing case law setting forth California’s approachto tribal sovereign immunity jurisprudence. In its faithful adherence to both California law and federal Indian law, Miami Nation Enterprises was decided correctly and does not conflict with any decision of another Court of Appeal. Hence, review of this decision is not “necessary to secure uniformity of decision,” nor is it necessary “to settle an important question of law.” (Cal. Rules of Court, Rule 8.500 (b)(1).) The California Department ofBusinessOversight’s (“State”) Petition for Review (“Petition”) makes the manifestly false claim that Miami Nation Enterprises formulated a new arm-of-the-tribe test and creates conflict between the Courts of Appeal. The State mischaracterizes Miami Nation Enterprises, as well as American Property Management Corp. v. Superior Court (2012) 206 Cal.App.4th 491 (hereinafter “American Property”) and Trudgeon v. Fantasy Springs Casino (1999) 71 Cal.App.4th 632 (hereinafter “Trudgeon”), in a misguidedeffort to obtain review of an appropriate result that the State simply does not like. But the State has not set forth any proper grounds for review by this Court pursuant to California Rule of Court 8.500(b). Therefore, the State’s Petition should be denied. _ Hf. STATEMENT OF THE CASE A. Initial Trial Court Proceedings The State initiated the underlying action whenit sued various trade namesutilized by SFS,Inc. (“SFS”) and MiamiNation Enterprises (“MNE”) (collectively “Tribal Entities”) alleging violations ofthe California Deferred Deposit Transaction Law. (Miami Nation Enterprises, supra, 223 1 Cal.App.4th at p. 25.) The Tribal Entities appeared specially and moved to quashthe suit for lack of subject matter jurisdiction based ontribal sovereign immunity. (bid.) MNEis a governmental subdivision of the Miami Tribe of Oklahoma, a federally-recognizedIndian tribe. SFS is a governmental subdivision of the Santee Sioux Nation, also a federally-recognized Indian tribe. (/d. at pp. 24, 30.) Thetrial court denied the motion to quash on the erroneous grounds that tribal sovereign immunity does not apply to off- reservation commercialactivity. (d. at p. 26.) B. The Tribal Entities? Petition for Writ of Mandate yn The Tribal Entities petitioned the Second District Court ofAppeal for a writ of mandate on the issue oftribal sovereign immunity, which Division 7 summarily denied. (Miami Nation Enterprises, supra, 223 Cal.App.4th at p. 26 fn. 4.) This Court granted review and transferred the case back to the Court of Appeal with directions to vacate its order denying writ of mandate and to issue an alternative writ. (Jbid.) On January 14, 2009, the Court of Appeal issued an order granting in part and denying in part the Tribal Entities’ petition for writ of mandate. (Ameriloan v. Superior Court (2008) 169 Cal.App.4th 81, 89 (hereinafter “Ameriloan”).) Relying upon Kiowa Tribe of Okla. v. Manufacturing Technologies, Inc. (1998) 523 U.S. 751 (hereinafter “Kiowa”), the Court ofAppeal concludedthatthe trial court had erred in ruling as a matter of law that the doctrine of tribal sovereign immunity did not apply to the Tribal Entities’ off-reservation commercial activities. (Ameriloan, supra, at pp. 89-90.) The Court of Appeal therefore directed the trial court to vacate its order denying the Tribal Entities’ motion to quash and to apply the principles expressed in Trudgeon, supra, 71 Cal.App.4th 638 and Redding Rancheria v. Superior Court (2001) 88 Cal.App.4th 384 (hereinafter “Redding Rancheria”) to determine whether the Tribal Entities constitute armsof their respective tribes for purposes of tribal sovereign immunity. (Ameriloan, supra, at pp. 97-98.) To this end, the Court of Appeal directed the trial court to conduct limited discovery “directed solely at matters affecting the trial court’s subject matter jurisdiction.” (/d. at pp. 98-99.) | C. Proceedings in the Trial Court on Remand Asdirected by the Court of Appeal in Ameriloan, the trial court on remand allowed limited discovery to proceed on the issue ofits subject matter jurisdiction over SFS and MNE. Specifically, discovery was limited to the issue of whether SFS and MNEarearmsoftheir respectivetribes and thus protected by the Tribes’ sovereign immunity from the State’s suit. (Miami Nation Enterprises, supra, 223 Cal.App.4th at pp. 28-32.) Three years after remand,the trial court held an evidentiary hearing on the Tribal Entities’ renewed motion to quash and, based upon evidence relevant to controlling arm-of-the-tribe jurisprudence, found that the Tribal Entities are sufficiently related to their respective Indian tribes to benefit from tribal sovereign immunity. (/d. at p.31.) The trial court rejected the State’s attempt to overcomethe Tribal Entities’ clear and unequivocalproof that they were arms of their respective Indian tribes with evidence that the Tribal Entities employed third parties to assist them with day-to-day operations and that third parties benefited from the Tribal Entities’ lending operations, as well as the State’s unsupported allegations that the Tribal Entities had violatedtribal law. (d. at pp. 31-32.) The State appealed. D. The Court of Appeal’s Decision in Miami Nation Enterprises Ashere, in the Court ofAppeal, the State urged application ofthe six- factor American Property arm-of-the-tribe test derived from the Tenth Circuit’s analysis in Breakthrough Management Group, Inc. v. Chukchansi Gold Casino and Resort (10th Cir. 2010) 629 F.3d 1173 (hereinafter “Breakthrough”). (See Opening Brief, at pp. 16-35.) The Tribal Entities argued, on the other hand, that the Court of Appeal should disregard the American Property test in favor of an arm-of-the-tribe analysis derived primarily from Trudgeon as directed by the Court of Appeal in Ameriloan, as Ameriloan constituted the law ofthe case. (See Respondent's Brief, at pp. 10-30.) Both American Property and Trudgeonare decisions of the Court of Appeal for the Fourth District, yet their analyses are facially comprised of different factors. And although both the State and the Tribal Entities acknowledged that Trudgeon and American Propertyoverlap: analytically and share similarities, each side urged the Court of Appeal to apply one set of factors primarily. The Court of Appeal wisely rejected the notion that it must choose one analysis to the exclusion of the other. Indeed, it explicitly ruled against the Tribal Entities’ law-of-the-case argument and chose not to disregard American Property in favor of the Trudgeon-Redding Rancheria analysis. (Miami Nation Enterprises, supra, 223 Cal.App.4th at pp. 37-38.) The Court ofAppealfurther refusedto rely solely on the factors inAmerican Property- factors whichthe State itself admits are “non-exhaustive.” (Petition,at p. 9). Rather, the Court of Appeal discussed both Trudgeon and American Property, as well as an arm-of-the-tribe test articulated by the Colorado Supreme Court in Cash Advance and Preferred Cash Loans v. Colo. (Colo. 2010) 242 P.3d 1099, 1107-08, 1109 (hereinafter “Cash Advance”), finding that all of these tests are comprised of “nonexclusive, overlapping factors.. .» that ultimately reach the same relevant inquiry: “Are the tribal entities sufficiently related to their respective tribes to be protected by tribal sovereign immunity?” (Miami Nation Enterprises, supra, at p. 38.) The Court of Appeal, analyzing the underlying principles guiding each of these tests and without rejecting or disregarding any underlyingfactor, astutely distilled them into their most elemental form, holding: Absentan extraordinary set of circumstances. . ., a tribal entity functions as an arm ofthetribe if it has been formed bytribal resolution and according to tribal law, for the stated purpose of tribal economic development and with the clearly expressed intent by the sovereign tribe to convey its immunity to that entity, and has a governing structure both appointed by and ultimately overseen bythetribe. (Ibid.) The Court of Appeal further explicitly adopted American Property’s conclusion that “the tribe’s method and purpose for creating the economic entity are the mostsignificant factors in determining whetherit is protected by a tribe’s sovereign immunity and should be given predominant, if not necessarily dispositive, consideration.” (Jd. at p. 39 [citing American Property, supra, 206 Cal. App. 4th at p. 501].) Consistent with both Trudgeon and American Property, the Court of Appeal then applied the American Property factors and “other elements of the various tests appearing in the case law” to the evidence in the record. (Miami Nation Enterprises, supra, 223 Cal.App.4th at p. 39.) (emphasis added). Relying upon the objective facts pertinentto thesefactors, the Court of Appeal held that the Tribal Entities are arms oftheir respectivetribes for purposes of sovereign immunity from the State’s suit. (/d. at p. 42.) Il. ARGUMENT The State’s Petition represents a transparent attempt to dress-up the Court ofAppeal’s solid, well-reasoned, and precedentially consistent opinion as somejudicial aberration worthy of this Court’s review simply because the State is disgruntled with the result of Miami Nation Enterprises-not ~ because there is any flaw in the Opinion itself. The State shows its desperation on page oneofthePetitionin its inflammatory statement of the “issues presented,” which is wholly unconnected to any legal definition of tribal sovereign immunity or the arm-of-the-tribe test. As set forth fully below, it is clear that, ‘far from disrupting uniformity of decision, Miami Nation Enterprises adds to the stability and clarity of California’s tribal sovereign immunity jurisprudence. Likewise, the federal Indian law issues at play here are well-settled and do not require further review by this Court. Assuch, the Tribal Entities respectfully request that the State’s Petition for Review be denied. | A. Miami Nation Enterprises Applied all Six Factors of the Arm-of-the-Tribe Test Set Forth in American Property. In its effort to obtain Supreme Court review under California Rule of Court 8.500(b)(1), the State attempts to fabricate a conflict or ambiguity between Miami Nation Enterprises and American Property by mischaracterizing both cases. Primarily, the State accuses the Court of Appeal in Miami Nation Enterprises of “adopting” a new test that is in competition with the American Property test (Petition at p. 3), and also “narrower,” “more formalistic” (id. at p. 11) and “in material conflict” with American Property (id. at p. 12). The State’s claims are clearly and unequivocally refuted by a plain reading ofMiami Nation Enterprises. American Property, decided in 2012, adopted a six-part test derived from a decision of the Tenth Circuit Court ofAppeals, Breakthrough, supra, 629 F.3d 1173: “(1) method of creation; (2) purpose; (3) structure, ownership, and management, including the amount of controlthe tribe has over the entities; (4) whether the tribe intendedfor the entities to havetribal sovereign immunity; (5) the financial relationship betweenthe tribe and the entities; and (6) whether the purposesoftribal sovereign immunityare served 6 by granting immunity to the entities.” (American Property, supra, 206 Cal.App.4th at p. 501.) | Contrary to the State’s assertions, the Court of Appealin Miami Nation Enterprises actually applied each ofthese factors to MNEandSFS,as follows: I) Method ofCreation The Court of Appeal expressly found, based on undisputed evidence, that MNE “was created directly under the Miami Tribe’s tribal law as a subordinate unit ofthe tribe itself.” (Miami Nation Enterprises, supra, 223 Cal. App.4th at p. 38.) With regard to SFS,the Court found that, “SFS is a wholly ownedcorporation organized undertribal law.” (/d. atp. 40). | 2) Purpose The Court ofAppealfurther found that MNE’s purposeis to “provide for [the MiamiTribe’s] economic development” (Miami Nation Enterprises, supra, 223 Cal. App.4th at p. 38), and that SFS’s purposeis “furthering the tribe’s sovereign interest in economic development.” (dd. at p. 40.) | 3) Structure, Ownership, and Management, Including the AmountofControl the Tribe has Over the Entities The Court of Appeal engaged in a thorough analysis in considering this third American Property factor. With regard to MNE, the Court summarized the evidenceas follows: MNE’sinitial board of directors consisted of the members of the Tribal Business Committee; the chief of the Miami Tribe . appointed all successor members of the MNEboard with the approval of the Tribal Business Committee; the- current members of the board are members of the Miami Tribe; and the initial officers of MNE werehired by the Tribal Business Committee, includingits currentchief executive officer. MNE Services, Inc. is a wholly owned subsidiary of MNE,created in 2008 pursuant to the Amended Miami Nation Enterprises Act. MNEServices, Inc. processes and approves loan applications pursuant to underwriting criteria approved by MNE. MNE/MNEServices, Inc. transact Internet lending 7 under the trade names Ameriloan, U.S. Fast Cash and United Cash Loans. Their lending activities are subject to tribal laws governing interest rates, loans and cash advanceservices. oe KR As discussed, MNE’s initial board of directors consisted ofthe Miami Tribe’s business committee, and the chief of the tribe - has appointed all successor members of the MNE board in consultation with the business committee; all five members of the board are members of the Miami Tribe. (Miami Nation Enterprises, supra, 223 Cal. App. 4th at pp. 28-29, 39). With regard to SFS,the Court of Appeal stated: SFS’s articles of incorporation mandate that the board of directors of SFS, which consists of the membersof the Tribal Council, manage SFS; and the Tribal Council appointed the - tribe’s business manageras the chief executive officer of SFS. According to the declaration of Robert Campbell, an enrolled member of the Santee Sioux Nation, a memberof the Tribal Council and the treasurer of SFS, “the loan transactions are approved and consummated in Indian lands and within. the jurisdictionof the Santee Sioux Nation.” cK ok | Pursuant to SFS’s articles of incorporation, its board of directors consists of the members of the Tribal Council, who manage SFS; and the Tribal Council appointed the tribe’s business manageras the chief executive officer of SFS. (Ud. at pp. 29-30; 40). Further, with regard to both MNE andSFS,the ~ Court of Appeal concluded: - Yet the Commissioner necessarily concedes, as the evidence demonstrated, under the management agreements MNE and SFS have final decision making authority to approve or disapprove any loans; advance instructions or approval : parameters are established by them to allow the third-party | managers to function on a quick-turnaround basis. Indeed, the 8 agreements expressly provide that the tribal entities have “the sole proprietary interest in and responsibility for the conduct of the business” and that NMS’s day-to-day managementof the operations is “subject to the oversight and control of MNE and SFS,respectively. In other words, MNE and SFS are not merely passive bystanders in the challenged lendingactivities. (id. at p. 41). Thus, contrary to the State’s mischaracterization, the Court of Appeal clearly applied the third American Property factor. 4) Whetherthe Tribe Intendedfor the Entities to have Tribal Sovereign Immunity The State acknowledges that the Court of Appeal applied the fourth factor from American Property to both Tribal Entities. With regard to MNE, the Court stated, “The Miami Tribe expressly provided MNE would enjoy all privileges and immunities of the tribe itself, including ‘the right of sovereign immunity from unconsentedcivil suit’” (Ud. at 29), and “unlike the Sycuan Band’s relationship to U.S. Grant, LLC (see id. at p. 505, 141 Cal.Rptr.3d 802), the Miami Tribe expressly intended for MNEto be covered by tribal sovereign immunity.” (Miami Nation Enterprises, supra, 223 Cal. App.4th at p. at 38). With regard to SFS, the Court observed, “SFS’s articles of incorporation expressly state it enjoys the tribe’s sovereign immunity from suit,” (Miami Nation Enterprises, supra, 223 Cal. App. Ath at p. 30), and “As with MNE, and again unlike the California limited liability company evaluated in American Property, SFS is a wholly owned corporation organized undertribal law and expressly protected from suit by the tribe’s immunity.” (/d. at p. 40). 3) TheFinancial Relationship Between the Tribe and the Entities Contrary to the State’s mistaken assertions, the Court of Appeal applied the fifth American Property factor and analyzed the financial relationship between the Tribe andthe Tribal Entities. With regard to MNE, the Court of Appeal observed: [P]rofits from MNE/MNE Services, Inc. “directly or indirectly enable the Miami Tribe to fundcritical governmental services to its members, such as tribal law enforcement, poverty assistance, housing, nutrition, preschool, elder care programs, schoolsupplies and scholarships.... The cash advance business is a critical component of the Miami Tribe’s economy and governmental operations.” , * ck ok , Profits earned by MNE areutilized by the Miami Tribe to fund critical governmentalservicesto its members includingtribal law enforcement, poverty assistance, preschool and elder care programs. In addition, any tribal funds and other resources used to create, capitalize and operate MNE arenecessarily at risk in its business operations. (Miami Nation Enterprises, supra, 223 Cal. App. 4th at pp. 29, 39). Similarly, with regard to SFS, the Court summarized the evidence in the record as follows: All profits earned by SFS go to the Santee Sioux to help fund its governmentoperationsand social welfare programs.... The Santee Sioux reservation is a severely economically depressed region, and the profits generated by SFS are essential to maintaining a functioning governmentthat is able to provide the essential governmentservices to its members. ok ok All profits earned-by SFS are used by the Santee Sioux to help fund its government operations and social welfare programs, furthering the tribe’s sovereign interest in economic development. Indeed, the evidence before thetrial court was, becausethe reservationis in a severely depressed region, those profits are essential to maintaining a functioning tribal government able to provide necessary services to the tribe’s members. 10 (Id. at pp. 30, 38.) Thus,this factor also weighs in favor of the Court of Appeal’s holding that SFS and MNE are armsoftheir respective Indiantribes. 6) Whether the Purposes of Tribal Sovereign Immunity are Served by Granting Immunity to the Entities The Court of Appeal also squarely addressed the sixth American Property factor, noting that the trial court ruled that “federal policies intended to promote tribal autonomy were furthered by extension of immunity to MNE and SFS.” (Miami Nation Enterprises, supra, 223 Cal. App. 4th at p. 31). The Court ofAppeal cited evidencein the record showing that revenues generated by SFS and MNE are “critical” to their respective Tribes’ “economy and governmental operations”(id. at p. 29) and “essential to maintaining a functioning governmentthatis able to provide the essential government services to its members.” (/d. at p. 30). Lastly, the Court of Appeal expressly held that, “extension of immunity to [MNE] plainly furthers federal policies intended to promote tribal autonomy,” (id. at p. 40 [emphasis added]), and “extension of immunity to [SFS] substantially promotestribal autonomy.” (/bid. [emphasis added].). Thus, the Court of Appeal in Miami Nation Enterprises did not adopt a new “competing test” as the State claims. (Petition at p. 3.) Instead, it considered the entire body of authorities that control and inform the California arm-of-the-tribe landscape including, American Property; Trudgeon; Redding Rancheria; Allen v. Gold Country Casino (9th Cir. 2006) 464 F.3d 1044; Breakthrough; Gavle v. Little Six Inc. (Minn. 1996) 555 N.W.2d 284, and Cash Advance. (Miami Nation Enterprises, supra, at pp. 34-38.) Indeed, the Court ofAppealultimately applied each and every factor in American Property and went evenfurther to analyze the evidence in the 11 record to conclude that “other elements of the various tests appearing in the case law support thetrial court’s arm-of-the-tribe conclusion.” (dd.p. at 39.) The so-called “competing test” about which the State complains here appears in the conclusion of the Opinion below and is merely a summary of what the State admits are “non-exhaustive” factors analyzed in American Property and other cases. That the Court of Appeal appropriately and accurately summarized the “non-exhaustive” and “overlapping” factors succinctly in its conclusion isnot a basis for granting review. | The State goes so far as to baldly misstate Miami Nation Enterprises in order to fabricate a so-called “material conflict” regarding the weight that should be applied to the American Property arm-of-the-tribe factors. (Petition at p. 11.) This argument is nonsensical; as Miami Nation Enterprises explicitly relies upon American Property to determine that the method ofa tribal entity’s creation and the purpose for creating it “are the most significant factors” in the arm-of-the-tribe analysis. (Miami Nation Enterprises, supra, 223 Cal.App.4th at pp. 38-39 [quoting American Property, supra, 206 Cal.App.4th at p. 501 [stating that a number of court decisions “have considered creation of an entity undertribal law as a factor weighing significantly in favor of a conclusion that the entity shares in the tribe’s sovereign immunity’”]].) The State cannot carve out somedistinction _by implying that Miami Nation Enterprises treated “method of creation”as dispositive. (Petition at p. 11.) The Court ofAppeal’s extensive analysis of many arm-of-the-tribe factors other than “method of creation”-including each and every factor analyzed in American Property-could notbe clearer. (Miami Nation Enterprises, supra, at pp. 38-42.) B. Supreme Court Review Is Not Necessary to Settle Important Issues of Law - The “important legal question” that the State insists merits this Court’s review has actually been long-settled by the United States Supreme 12 | Court and is not susceptible to further interpretation or review. In Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc, supra, 523 US. 751, the United States Supreme Court clearly held that tribal sovereign immunity protects tribal entities engaged in off-reservation commercial activity. (Id. at p. 756.) Further, Kiowa confirmed that tribal sovereign immunity “is a matter of federal law andis not subject to diminution by the States.” (Id. at p. 755; accord Trudgeon, supra, 71 Cal.App.4th at p. 636.) Nevertheless, the State claims thatthis Court must settle the question of whether“the arm-of-the-tribe test applied in California’s courts [should] place reasonablelimits on the extension of tribal sovereign immunity to businesses... .” (Petition at p. 13 [emphasis added].) The State urges this Court to reject binding Supreme Court precedent and limit the extension of sovereign immunity to tribal commercial enterprises. The State further urges this Court to disregard undisputed, authenticated tribal organizational documents and resolutionsrelied upon by every arm-of-the-tribe case in the canon andto focus instead on paternalistic allegations or opinions regarding - the role of third parties in the tribal entities’ business. The State even proposes that state courts may make decisions about alleged violations of tribal law. (dd. at pp. 13-14.) As the Court of Appeal in Miami Nation Enterprises correctly concluded, such considerations are clearly contrary to Kiowa, controlling federal precedent, and California precedent. (Miami Nation Enterprises, supra, 223 Cal.App.4th at pp. 39-42 [citing Kiowa, supra, 523 at p. 756; Native American Distributing v. Seneca-Cayuga Tobacco (2008) 546 F.3d 1288 at p. 1294; Cabazon Band ofMission Indians vy. County ofRiverside (1986) 783 F.2d 900 at p. 901; Ameriloan, supra, 169 Cal.App.4th at p. 93].) It is well-settled that “tribal immunity is a matter of federal law and is not subject to diminution by the States.” Kiowa, supra, at p. 756 [citing Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Engineering 13 (1986) 776 U.S. 877, 891; Washington v. Confederated Tribes ofthe Colville Reservation (1980) 447 U.S. 134, 154].) This Court must reject the State’s suggestion that this Court turn a blind eyeto this directive. The State’s true motivation for this Petition is not any legitimate concern with the uniformity of decisionsor that truly important questions of law arepresented. Rather, the State is simply unhappy with the result reached in Miami Nation Enterprises and wants.this Court to provide a different ending. Indeed, the State openly suggests throughout its Petition thatit should be allowed to regulate arms of sovereign Indian tribes that offer short term internet loans, notwithstanding the clear dictates of federal Indian law generally, and California arm-of-the-tribe jurisprudence specifically. But California Rule of Court 8.500 places no weight whatsoever ona party’s displeasure with the result of a Court ofAppeal’s decision. As the California Practice Guide states, “mere disgruntlement with the court of appeal’s decision . . . itself is not a ground for review.” Jon B. Eisenberg, et al., California Practice Guide: Civil Appeals and Writs Ch. 13-B, § 13.75 (2014). That the losing party doesnot like the consequences of an otherwise sound decision does notjustify this Court’s review. 14 C. The State’s Petition References Improper Evidence That Should Not Weigh In This Court’s Consideration The State, in its desperate attempt to concoct a basis for Supreme Court review, cites evidence that is not properly before this Court and, therefore, must be disregarded. The State relies heavily on its own appellate briefs from the Court of Appeal proceeding below, as opposed to record evidence or even the Miami Nation Enterprises opinion. Tellingly, these unsupported “facts” are the most specious and sensational allegations contained in the Petition: that the Tribal Lenders “used threats and other unlawful techniques to collect loans”-(Petition at p. 4) and that the Tribal Entities “violated the tribes’ own laws”(id. at p. 7). Noneofthese hotly-contested allegations were proven below,nor did the trial court make any such findings, as such unfounded and false accusations are unquestionably outside the scope of the limited inquiry at hand-whetherthe state court has subject matter jurisdiction over MNE and SFS. The State’s injection of these unproven andirrelevant allegations is improper and inflammatory. The State’s arguments about alleged violations of tribal law are equally unfounded and were wholly refuted both by the - evidence andatoral argument. (Clerk’s Transcript Vol. 17, pp. 4025, 4091; Transcript of Oral Argument, Jan. 10, 2014, at pp. 26-27.) The State’s brazen citation of preliminary rulings by courts in other proceedings in other jurisdictions is likewise wholly improper. Even the State must recognize that a non-final,initial ruling of a magistrate judge in a separate matter does not provide any evidentiary basis for the State’s accusations here. (Petition at p. 4 fn. 3 [citing Federal Trade Com. v. AMG Service, et al. (D.Nev., Jan. 28, 2014, No. 2:12-cv-00536-GMN-VCF) 2014 WL 584781].) Likewise, the State cannot possibly believe that the U.S. Supreme Court’s grantofcertiorari in a case arising out ofthe Indian Gaming Regulatory Act, with only the most attenuated significance to generaltribal 15 sovereign immunity principles, should have any place in this proceeding. (Petition at p. 12 [citing Michigan y. Bay Mills Indian Community (6th Cir. 2012) 695 F.3d 406,cert. granted June 24, 2013, No. 12-515,_US.__].) If anything, the State’s liberal disregard for the normsofcitation is in keeping with its inaccurate portrayal of the record below. IV.CONCLUSION | Miami Nation Enterprises is the most clear and precedentially consistent articulation of California’s arm-of-the-tribe jurisprudence across the various Court of Appeal Districts. It is based upon and derived from controlling California authorities and has closely adhered to the governing principles of federal Indian law. It has not broken new ground, norhasit unsettled the existing legal landscape. As this Court’s review is not necessary to secure uniformity of decision orto settle an important question oflaw,the Tribal Entities respectfully request that this Court denythe State’s Petition for Review pursuant to California Rule of Court 8.500. Dated: March 24, 2014 | | FREDERICKS PEEBLES & MORGAN LLP John Nyhan ob ben OnnNYHAN (BAR No. 051257) CONLY SCHULTE (PRO HAC Icey NICOLE DUCHENEAUX (PRO HACVICE) Attorneysfor Defendants/Respondents 16 CERTIFICATE OF COMPLIANCE Pursuant to Cal. Rule of Ct. 8.204(c)(1), I certify that the attached Petition for Review contains 4,547 words (excluding the cover, tables, certificates, signature blocks, and attachments), accordingto the count ofthe computer program used to preparethe brief. March 24, 2014 Gabe lion John Nyhan 17 People ofthe State of California, et al. y. MNE d/b/a Ameriloan,et al. California Supreme Court Case No. 8216878 Second Appellate District, Div. Seven, Case No. B242644 ' L.A. County Superior Court Case No. BC373536 CERTIFICATE OF SERVICE I declare J am employed in the County of Sacramento, State of California. My business address is: 2020 L Street, Suite 250, Sacramento, California 95811. I am overthe age of eighteen (l 8) years and not a party to the within action. On March24, 2014,I served the within: DEFENDANTS’ AND RESPONDENTS’ ANSWERTO PETITION FOR REVIEW on the parties listed below, addressed as follows: California Supreme Court Earl Warren Building 350 McAllister Street, Room 250 San Francisco, CA 94102 Original and eight (8) copies L.A. County Superior Court 111 N. Hill Street Los Angeles, CA 90012 Judge Yvette M. Palazuelos Floor 3, Dept. 28 One (1) copy - California Court of Appeal ~ Second Appellate District 18 300 South Spring Street, 2™4 Floor Los Angeles, CA 90013 One (1) copy Counselfor Plaintiff: Uche L. Enenwali Senior Corporations Counsel Department of Business Oversight 320 West4th Street, Suite 750 - Los Angeles, CA 90013-2344 Telephone: (213) 576-7586 One (1) copy _X___ By overnightdelivery service by placing a true copythereof in an overnight delivery envelope and placing the envelopein a Federal Express drop box at Sacramento, California. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on March 24, 2014, at Sacramento, California. MUZONg Balled) Suzanne Balluff _ 19
