     12-1727-cv(L)
     Mashantucket Pequot Tribe v. Town of Ledyard

 1                    UNITED STATES COURT OF APPEALS
 2                        FOR THE SECOND CIRCUIT
 3
 4
 5                            August Term, 2012
 6
 7     (Argued: March 18, 2013                  Decided: July 15, 2013)
 8
 9              Docket Nos. 12-1727-cv(L), 12-1735-cv(CON)
10
11
12                     MASHANTUCKET PEQUOT TRIBE,
13
14                                                     Plaintiff-Appellee,
15
16                                  -v.-
17
18       TOWN OF LEDYARD; PAUL HOPKINS, Tax Assessor, Town of
19      Ledyard; JOAN CARROLL, Tax Collector, Town of Ledyard,
20
21                                                    Defendants-Appellants,
22
23                          STATE OF CONNECTICUT,
24
25                                    Intervenor-Defendant-Appellant.*
26
27
28
29   Before:
30      JACOBS, Chief Circuit Judge, CABRANES   AND   WESLEY, Circuit Judges.
31
32
33
34
35   The Town   of Ledyard and State of Connecticut appeal from the
36   judgment   of the United States District Court for the
37   District   of Connecticut (Warren W. Eginton, Judge), holding
38   that (1)   nothing barred the court from exercising

          *
            The Clerk of the Court is directed to amend the caption as
     listed above.

                                       1
 1   jurisdiction and (2) Connecticut’s personal property tax, as
 2   applied to vendors leasing slot machines to the Mashantucket
 3   Pequot Tribe for use at Foxwoods casino, was barred by the
 4   Indian Trader Statutes, Indian Gaming and Regulatory Act,
 5   and pursuant to the balancing test enunciated in White
 6   Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980). We
 7   hold that the district court (1) appropriately reached the
 8   merits of the case but (2) erred by finding the tax to be
 9   preempted.
10
11        REVERSED and REMANDED.
12
13
14
15
16             ERIC D. MILLER (Benjamin S. Sharp, Jennifer A.
17                  MacLean, on the brief), Perkins Coie LLP,
18                  Seattle, WA and Washington, D.C., for
19                  Defendants-Appellants Town of Ledyard, Paul
20                  Hopkins, and Joan Carroll.
21
22             ROBERT J. DEICHERT, Assistant Attorney General,
23                  for George Jepsen, Attorney General of the
24                  State of Connecticut, Hartford, CT, for
25                  Intervenor-Defendant-Appellant State of
26                  Connecticut.
27
28             SKIP DUROCHER (Mary J. Streitz, James K. Nichols,
29                  on the brief), Dorsey & Whitney LLP,
30                  Minneapolis, MN, for Plaintiff-Appellee
31                  Mashantucket Pequot Tribe.
32
33
34
35
36   WESLEY, Circuit Judge:
37
38        The Mashantucket Pequot Tribe (the “Tribe”) challenges

39   the Town of Ledyard’s (the “Town”) imposition of the State

40   of Connecticut’s (the “State”) personal property tax on the

41   lessors of slot machines used by the Tribe at Foxwoods

                                   2
 1   Resort Casino and MGM Grand at Foxwoods (collectively

 2   “Foxwoods”), located in Ledyard, Connecticut.   See Conn.

 3   Gen. Stat. §§ 12-40 et seq. (the “tax”).   The Tribe filed

 4   complaints in August 2006 and September 2008 on behalf of

 5   two vendors who lease slot machines to the Tribe for use at

 6   Foxwoods.   The Town and the State appeal from a ruling of

 7   the United States District Court for the District of

 8   Connecticut (Warren W. Eginton, Judge) denying their motions

 9   for summary judgment, granting summary judgment to the

10   Tribe, and affording the Tribe injunctive and declaratory

11   relief.

12       As a threshold matter, the Town and State assert that

13   (1) the Tribe lacks standing; (2) the Tax Injunction Act, 28

14   U.S.C. § 1341, strips federal courts of jurisdiction over

15   this action; and (3) principles of comity bar federal courts

16   from deciding this action.   On the merits, the Tribe defends

17   the district court’s order to invalidate the State’s

18   personal property tax as applied to the vendors, asserting

19   that the tax is preempted (1) by the Indian Trader Statutes,

20   25 U.S.C. §§ 261-64; (2) by the Indian Gaming Regulatory Act

21   (“IGRA”), 25 U.S.C. §§ 2701 et seq.; and (3) pursuant to the

22   balancing test enunciated in White Mountain Apache Tribe v.

23   Bracker, 448 U.S. 136 (1980).

                                     3
 1        We hold that: the district court properly exercised

 2   jurisdiction, and the Tribe has standing to pursue this

 3   claim; neither IGRA nor the Indian Trader Statutes expressly

 4   bar the tax; and, under the Bracker test, federal law does

 5   not implicitly bar the tax because State and Town interests

 6   in the integrity and uniform application of their tax system

 7   outweigh the federal and tribal interests reflected in IGRA.

 8   The district court erred in granting summary judgment for

 9   the Tribe and in denying summary judgment for the Town and

10   State.

11

12                              Background

13   I.       The Tax

14        Connecticut imposes a generally-applicable personal

15   property tax for the purpose of revenue collection for the

16   municipalities that assess and collect the tax.     State law

17   requires nonresident owners of personal property, which

18   includes slot machines, to file declarations spelling out

19   the value of their property with the towns where their

20   property is located.    The towns apply a formula to the value

21   of that property and bill the owners accordingly.     Conn.

22   Gen. Stat. § 12-43.    To collect the tax, the Town relies


                                    4
 1   heavily on “the willingness of taxpayers to comply with

 2   State law and file personal property declarations.”      Hopkins

 3   Decl. ¶ 8.    This tax does not apply to Tribal property

 4   located on-reservation.

 5         Connecticut’s towns use these tax proceeds “to fund the

 6   operation of municipal government.”     Id. ¶ 5.   The services

 7   provided by the Town include, inter alia, police and

 8   emergency-services functions, road maintenance, education,

 9   and trash collection.     The Town maintains roads to and

10   throughout the Indian reservation, provides emergency

11   services to the Tribe, buses children living on-reservation

12   to schools, and pays for the education of Tribal children

13   on-reservation.     The annual cost to the Town of educating

14   Tribal children is at least $236,258.1

15   II.        The Gaming Procedures

16         The Mashantucket Pequot Gaming Enterprise (the

17   “Enterprise”) operates Foxwoods, the self-described largest

18   casino and resort in the United States.     The Enterprise

19   employs 10,000 people, of whom approximately 150 are Tribal

20   members.     Although the Tribe has other sources of income,


           1
            The Town actually spends approximately $652,158 per annum,
     but it receives approximately $415,900 in federal aid, leaving
     the Town with $236,258 in non-reimbursed costs.

                                     5
 1   including at least four types of taxes it imposes on on-

 2   reservation activities, the majority of the Tribe’s revenue

 3   comes from the Enterprise.        Slot machines are among the most

 4   popular Enterprise games.

 5          IGRA defines slot machines as Class III games.        See 25

 6   C.F.R. § 502.4.       The Final Mashantucket Pequot Gaming

 7   Procedures, promulgated by the Secretary of the Interior,

 8   governs the Tribe’s use of Class III games.          See Dist. Ct.

 9   Doc. No. 221-13, 56 Fed. Reg. 24996 (1991), 56 Fed. Reg.

10   15746-01 (1991) (“Gaming Procedures”).         Under the Gaming

11   Procedures, the State licenses gaming employees, requires

12   enterprises to register before providing gaming, and

13   collects compensation from the Tribe.         Gaming Procedures at

14   §§ 5-6.       The Enterprise pays twenty-five percent of all

15   proceeds from video facsimile games2 to the State.          These

16   payments exceeded $1.5 billion from 2003 to 2011.          The

17   Enterprise also “reimburse[s] the State for law enforcement

18   and regulatory services related to [] gaming;” this payment

19   was, in total, approximately $56.8 million from 2003-2011.

20   III.          The Lease Agreements and Modifications

21          The Enterprise obtains slot machines from different

22   vendors, including Atlantic City Coin & Slot Company (“AC

            2
                Slot machines are included among “video facsimile games.”

                                         6
 1   Coin”)3 and WMS Gaming Incorporated (“WMS”) (collectively

 2   the “vendors”).    AC Coin is incorporated and based in New

 3   Jersey; WMS is a Delaware corporation with headquarters in

 4   Illinois.     AC Coin and WMS sell some of their slot machines,

 5   but they offer some of their most popular proprietary games

 6   by lease only.4

 7         AC Coin began leasing slot machines to the Tribe in

 8   1997-98.    These leases provided that “[t]axes and any

 9   license fees applicable to the use and operation of the

10   [machines] shall be paid by [the] [c]asino.”      AC Coin Lease

11   10/11/2000.    The agreements further provided that the Tribe:

12         agrees to defend, indemnify, and hold harmless A.C.
13         Coin, its agents, employees, officers, and directors
14         from   and   against  any   and   all   liabilities,
15         obligations, losses, damages, injuries, claims,
16         demands, penalties, costs and expenses . . . of
17         whatsoever kind or nature . . . arising out of the
18         use, operation and possession of the [machines],
19         provided such liabilities are not the direct result
20         of the negligent or intentional conduct of A.C. Coin
21         or its agents, officers, and directors.
22
23   Id.   “AC Coin has used, and continues to use, this standard

24   form tax and indemnification language . . . in leases for


           3
            On June 27, 2013, the Tribe notified the Court that AC
     Coin would cease operations on June 30, 2013. This does not
     affect any of the legal analysis in this case.
           4
            As of October 2009, AC Coin began to make its proprietary
     games available for purchase. See Tribe Brief at 12.

                                     7
 1   both its tribal and non-tribal lessees.”       McCormick Aff. 2.

 2   AC Coin has paid Connecticut’s personal property tax on slot

 3   machines leased to the tribes that operate both Foxwoods and

 4   Mohegan Sun, another Connecticut-based, Indian-run casino.

 5   Despite the permissive language in its leases, AC Coin has

 6   not sought or received reimbursement for the taxes that it

 7   has paid on gaming equipment leased to other casinos and had

 8   not sought reimbursement from the Tribe prior to this

 9   lawsuit.

10       WMS also leased slot machines to the Tribe pursuant to

11   standard form leases, beginning in 1998.       A 1998 lease with

12   the Tribe contained standard language requiring that:

13       [t]axes, licenses and permit fees applicable to the
14       installation or operation of the [machines] shall be
15       paid by the [Tribe]. [The Tribe] shall indemnify and
16       defend WMS from and against any penalty, liability
17       and expense . . . arising from [the Tribe’s] failure
18       to remit such taxes or from any delinquency with
19       respect to such remittance.
20
21   WMS Lease Agreement 10/15/98.       Like AC Coin, WMS “has not

22   sought reimbursement nor has it ever been reimbursed for

23   personal property taxes it has paid on gaming equipment

24   leased to casinos by any casino or Indian tribe, including

25   the . . . Enterprise and the Mohegan Sun casino.”       Town Rule

26   56(a)(1) Statement 7.   Similarly, WMS “does not change the


                                     8
 1   pricing, or lease rate, of leased slot machines because of

 2   personal property tax; the tax is not a factor in lease

 3   pricing.”   Id.

 4       In the late 1990s, the Tribe decided that its vendors

 5   should not be subject to the tax.    Despite the vendors’

 6   initial reluctance, the Tribe persuaded the vendors to

 7   modify the lease agreements to reflect this decision.       The

 8   modified AC Coin lease indicated:

 9       Foxwoods represents that it is not subject to any
10       state or local taxes for any services or sales or
11       leases occurring at Foxwoods’ premises and . . . AC
12       Coin agrees not to file with the local towns or any
13       other applicable jurisdiction, including specifically
14       the Town of Ledyard, a list of property or equipment
15       provided under the Agreement or to pay such tax with
16       respect to such equipment except in the event that AC
17       Coin is legally obligated to do so. In the event
18       [that] AC Coin becomes legally obligated to file
19       and/or pay taxes, AC Coin agrees to immediately
20       notify Foxwoods of such obligation and to reasonably
21       cooperate with Foxwoods in contesting such tax filing
22       and/or payment if so requested by Foxwoods . . . .
23       Foxwoods agrees to hold harmless and/or reimburse AC
24       Coin within thirty (30) days for any taxes or any
25       related cost or expense paid in accordance with this
26       provision.
27
28   Town Rule 56(a)(1) Statement 4-5.

29       The modified language in the WMS lease agreement was

30   substantially identical.   See id.   Despite the

31   modifications, WMS and AC Coin continued to pay personal

32   property taxes until the Tribe pressured them to stop.

                                   9
 1   IV.       Court Actions among the Parties

 2         In 2006, AC Coin pursued and lost an administrative

 3   appeal of the tax to the Town’s Board of Assessment Appeals.

 4   In August 2006, the Tribe and AC Coin filed the complaint in

 5   this action in the United States District Court for the

 6   District of Connecticut.

 7         In July 2008, the Town filed suit in Connecticut

 8   Superior Court to collect unpaid property taxes from WMS.

 9   In September 2008, the Tribe sued in federal court to enjoin

10   the enforcement of the tax against WMS.      The district court

11   consolidated the two federal actions.      The Superior Court

12   has stayed Connecticut’s action against WMS pending

13   resolution of this case.   Town of Ledyard v. WMS Gaming,

14   KNL-cv08-5007839 (Conn. Sup. Ct.).      The State intervened as

15   a defendant in both federal cases.      As relevant here, the

16   parties filed cross-motions for summary judgment, which the

17   district court resolved in favor of the Tribe.

18

19                              Discussion

20         The Town and State offer three independent reasons to

21   dismiss this case for lack of jurisdiction: (1) standing,

22   (2) the Tax Injunction Act (“TIA”), and (3) comity.      The


                                    10
 1   Tribe argues that jurisdiction was proper and that we should

 2   affirm the district court’s opinion that the tax is

 3   preempted by (1) the Indian Trader Statutes, (2) IGRA, and

 4   (3) the Bracker balancing test.    We find that (1) the

 5   district court properly reached the merits of the case, and

 6   (2) the district court erred in holding that the tax was

 7   preempted.

 8   I.   The District Court Properly Exercised Jurisdiction

 9        The district court concluded that none of the

10   Appellants’ challenges to its jurisdiction were persuasive.

11   See Mashantucket Pequot Tribe v. Town of Ledyard, No. 06-cv-

12   1212(WWE), 2007 WL 1238338, *1-2 (D. Conn. Apr. 25, 2007)

13   (“Pequot I”) (denying motion to dismiss based on the TIA and

14   comity); Mashantucket Pequot Tribe v. Town of Ledyard, No.

15   06-cv-1212(WWE), 2012 WL 1069342, *5-6 (D. Conn. Mar. 27,

16   2012) (“Pequot II”) (denying motion to dismiss based on the

17   TIA and lack of standing).   We affirm that conclusion.

18        A.   The Tribe Has Standing to Pursue Its Claim

19        The Town alleges that the Tribe lacks standing to bring

20   this claim.   “To establish Article III standing, an injury

21   must be ‘concrete, particularized, and actual or imminent;

22   fairly traceable to the challenged action; and redressable


                                   11
 1   by a favorable ruling.’”    Clapper v. Amnesty Intern. USA, --

 2   U.S. --, 133 S. Ct. 1138, 1147 (2013) (quoting Monsanto Co.

 3   v. Geertson Seed Farms, 561 U.S. --, 130 S. Ct. 2743, 2752

 4   (2010)).    Only the existence of a concrete, particularized

 5   injury is at issue in this case.

 6       The Tribe argues, inter alia, that it has suffered an

 7   injury-in-fact because the tax infringes upon Tribal

 8   sovereignty.    We agree that the Tribe’s allegations are

 9   sufficient to confer standing.

10       Although Article III’s standing requirement is not

11   satisfied by mere assertions of trespass to tribal

12   sovereignty, actual infringements on a tribe’s sovereignty

13   constitute a concrete injury sufficient to confer standing.

14   This injury, distinct “from the monetary injury asserted by”

15   the taxed parties, implicates “the substantive interest

16   which Congress has sought to protect [in] tribal self-

17   government.”    Moe v. Confederated Salish and Kootenai Tribes

18   of Flathead Reservation, 425 U.S. 463, 469 n.7 (1976)

19   (addressing state taxes imposed on on-reservation Indians

20   directly implicating the tribe’s relationship with its

21   members).    This rule exists because tribes, like states, are

22   afforded “special solicitude in our standing analysis.”

23   Massachusetts v. EPA, 549 U.S. 497, 520 (2007).

                                    12
 1       “The Supreme Court has consistently recognized that a

 2   tribe has an interest in protecting tribal self-government

 3   from the assertion by a state that it has regulatory or

 4   taxing authority over Indians and non-Indians conducting

 5   business on tribal reservations.”    Miccosukee Tribe of

 6   Indians of Fla. v. Fla. State Athletic Comm’n, 226 F.3d

 7   1226, 1230 (11th Cir. 2000) (citing White Mountain Apache

 8   Tribe v. Bracker, 448 U.S. 136 (1980), and Ramah Navajo Sch.

 9   Bd. v. Bureau of Revenue of N.M., 458 U.S. 832, 845 (1982)).

10   In Miccosukee, the Eleventh Circuit held that a tax imposed

11   on revenues gained by a non-Indian boxing promoter from an

12   on-reservation match constituted an affront to sovereignty

13   sufficient to confer standing.    Id. at 1230-31 (collecting

14   cases in which the Supreme Court reached the merits of

15   similar actions).

16       The Town relies on Reich v. Mashantucket Sand & Gravel,

17   95 F.3d 174 (2d Cir. 1996), in which this Court held

18   (without discussing standing) that some statutory

19   interference with tribal sovereignty was permissible, to

20   argue that the alleged infringement of sovereignty at issue

21   here does not confer standing.    However, we must avoid

22   “conflat[ing] the requirement for an injury-in-fact with the


                                  13
 1   . . . validity of [the Tribe’s] claim.”    Dean v. Blumenthal,

 2   577 F.3d 60, 66 n.4 (2d Cir. 2009) (per curiam).     The

 3   standing inquiry only requires that the Tribe establish “an

 4   invasion of a legally protected interest which is (a)

 5   concrete and particularized, and (b) actual or imminent, not

 6   conjectural or hypothetical.”    Lujan v. Defenders of

 7   Wildlife, 504 U.S. 555, 560 (1992) (internal quotations and

 8   citations omitted).

 9       Here, the imposition of state taxes on slot machines

10   operated only by the Tribe’s casino and stored solely on-

11   reservation impinges upon the Tribe’s ability to regulate

12   its affairs and to be the sole governmental organ

13   influencing activities, including possession of property, on

14   its reservation.   The injury in this case is neither

15   speculative nor generalized; there is a real tax with

16   measurable interference in the Tribe’s sovereignty on its

17   reservation.   Miccosukee, 226 F.3d at 1230, 1234.    The Tribe

18   has standing to vindicate these interests.

19       B.   The TIA Does Not Bar This Action

20       The State alleges that the Tribe’s suit is barred by

21   the TIA, which provides that “district courts shall not

22   enjoin, suspend or restrain the assessment, levy or


                                     14
 1   collection of any tax under State law where a plain, speedy

 2   and efficient remedy may be had in the courts of such

 3   State.”   28 U.S.C. § 1341.   The Tribe counters that a tribal

 4   exception recognized in Moe, 425 U.S. at 470-74, undercuts

 5   the TIA’s seemingly sweeping language.     We agree with the

 6   Tribe.

 7       Federal courts “have original jurisdiction of all

 8   [federal claims] brought by any Indian tribe or band with a

 9   governing body duly recognized by the Secretary of the

10   Interior.”   28 U.S.C. § 1362.    In Moe, the Supreme Court

11   permitted a Tribe to challenge, inter alia, the imposition

12   of a state personal property tax imposed on-reservation.

13   425 U.S. at 469.   The Moe Court held that tribes are

14   entitled to “treatment similar to that of the United States

15   had it sued on their behalf.”     Id. at 474.   The Court

16   further noted that the United States could sue to vindicate

17   Indian interests that it had sought to protect through

18   federal legislation and federal programs.       Id. at 473

19   (citing Heckman v. United States, 224 U.S. 413 (1912), and

20   United States v. Rickert, 188 U.S. 432 (1903)).      The tribe

21   was therefore permitted to sue to dispute imposition of

22   state personal property taxes and sales taxes as applied to

23   on-reservation Indians.   Id. at 474-75.

                                      15
 1       If the Tribe were suing to enjoin enforcement of a

 2   state tax imposed directly on the Tribe, the action would

 3   not be barred by the TIA.     Moe, 425 U.S. at 472-74; see also

 4   Sac and Fox Nation of Missouri v. Pierce, 213 F.3d 566, 571-

 5   72 (10th Cir. 2000).     However, otherwise exempt parties are

 6   subject to the TIA when they sue on behalf of non-exempt

 7   institutions.    FDIC v. New York, 928 F.2d 56, 59 (2d Cir.

 8   1991).    Insofar as the Tribe is suing on behalf of the

 9   third-party vendors who are the taxed parties, its suit

10   (like theirs) is barred by the TIA.

11       Here, the Tribe is suing to defend against the Town’s

12   and State’s alleged encroachment upon aspects of tribal

13   sovereignty protected by the Indian Trader Statutes and

14   IGRA.    Courts “‘embrace[] the recognition of the interest of

15   the United States in securing immunity to the Indians from

16   taxation conflicting with the measures it had adopted for

17   their protection.’”     Moe, 425 U.S. at 473 (quoting Heckman,

18   224 U.S. at 441).     Since we are required to decide whether

19   the state tax at issue conflicts with the federal measures

20   enacted for the Tribe’s protection, we have undoubted

21   jurisdiction – notwithstanding the TIA - to perform that

22   task.    Recognizing this requirement, Congress bestowed on


                                     16
 1   the federal courts original jurisdiction over “all” federal

 2   claims brought by tribes.     28 U.S.C. § 1362.   The TIA does

 3   not preclude jurisdiction over a tribe’s suit to enjoin

 4   purportedly preempted state taxation of non-Indians on the

 5   reservation.     See, e.g., Barona Band of Mission Indians v.

 6   Yee, 528 F.3d 1184, 1186 n.1 (9th Cir. 2008).5

 7        C.    Comity Does Not Preclude Federal Jurisdiction

 8        The State alleges that the district court abused its

 9   discretion in failing to dismiss this case under principles

10   of comity.     The Tribe asserts that the State forfeited this

11   claim.    We reject both arguments: the State adequately

12   preserved its comity objection, but the district court was

13   within its discretion in denying the motion to dismiss.      See

14   Joseph v. Hyman, 659 F.3d 215, 218 n.1 (2d Cir. 2011)

15   (“where, as here, a district court dismisses the action

16   based on comity, we review the decision for abuse of

17   discretion”).

18


          5
            The State’s reliance on United States v. Jicarilla Apache
     Nation, –– U.S. --, 131 S. Ct. 2313 (2011), is misplaced.
     Jicarilla addresses the fiduciary exception to the attorney-
     client privilege as related to the United States in its trustee
     relationship with Indian tribes. The opinion relies on analysis
     of the evidentiary privilege and the relationship between the
     United States and Indian tribes; neither is directly at issue
     here. Id.

                                     17
 1        The Tribe points to cases in which courts have held

 2   that arguments raised in the complaint were waived unless

 3   reiterated in opposition to motions for summary judgment.

 4   Tribe Br. 41 (citing, inter alia, Rocafort v. IBM Corp., 334

 5   F.3d 115, 121 (1st Cir. 2003)).       These cases are

 6   unpersuasive in the context of “comity and federalism[,

 7   which] bear on the relations between court systems,

 8   [because] those relations will be affected whether or not

 9   the litigants have raised the issue themselves.”        Washington

10   v. James, 996 F.2d 1442, 1448 (2d Cir. 1993).        Moreover, the

11   district court considered and rejected the comity challenge

12   prior to the motion for summary judgment.       “After [the]

13   final order, the district court’s earlier denial of the

14   motion to remand for lack of subject matter jurisdiction

15   also is reviewable.”    Capitol Hill Grp. v. Pillsbury,

16   Winthrop, Shaw, Pittman, LLC, 569 F.3d 485, 488 (D.C. Cir.

17   2009) (citing CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H.

18   COOPER, FEDERAL PRACTICE AND PROCEDURE § 3740 (3d. ed. 1998)).    “To

19   require [the State] to re-raise [its] objections would be an

20   overly formalistic application of waiver.”       Dexia Credit

21   Local v. Rogan, 602 F.3d 879, 884 (7th Cir. 2010).

22



                                      18
 1       “More embracive than the TIA, the comity doctrine

 2   applicable in state taxation cases restrains federal courts

 3   from entertaining claims for relief that risk disrupting

 4   state tax administration.”   Levin v. Commerce Energy, Inc.,

 5   560 U.S. 413, 130 S. Ct. 2323, 2328 (2010).    The practical

 6   reasons for the stringent application of comity in the

 7   context of state tax law were explained by Justice Brennan:

 8       The special reasons justifying the policy of federal
 9       non-interference with state tax collection are
10       obvious. . . . If federal declaratory relief were
11       available to test state tax assessments, state tax
12       administration might be thrown into disarray, and
13       taxpayers might escape the ordinary procedural
14       requirements imposed by state law.        During the
15       pendency of the federal suit the collection of
16       revenue under the challenged law might be obstructed,
17       with consequent damage to the State’s budget, and
18       perhaps a shift to the State of the risk of taxpayer
19       insolvency. Moreover, federal constitutional issues
20       are likely to turn on questions of state tax law,
21       which, like issues of state regulatory law, are more
22       properly heard in the state courts.
23
24   Perez v. Ledesma, 401 U.S. 82, 128 n.17 (1971) (concurring

25   in part and dissenting in part).    Recognizing the competence

26   of the state courts to adjudicate federal issues “is

27   essential to ‘Our Federalism,’ particularly in the area of

28   state taxation.”   Fair Assessment in Real Estate Ass’n v.

29   McNary, 454 U.S. 100, 103 (1981).

30



                                   19
 1        There is little precedent for applying the comity

 2   doctrine in cases brought by Indian tribes.     Cf. Kiowa Tribe

 3   of Oklahoma v. Lewis, 777 F.2d 587, 592 (10th Cir. 1985)

 4   (affirming the dismissal, on res judicata grounds, of an

 5   issue that had already been litigated and appealed through

 6   the entire Kansas state court system).     The Sixth Circuit

 7   has upheld the dismissal on comity grounds of a lawsuit

 8   brought by a private Indian enterprise.     Chippewa Trading

 9   Co. v. Cox, 365 F.3d 538, 544-46 (6th Cir. 2004).      However,

10   in so holding, the court explicitly relied on the fact that

11   the plaintiff “[wa]s not an ‘Indian tribe or band,’ as the

12   statutory exception [to the TIA] requires.”     Id. at 545.

13   Cf. Winnebago Tribe of Neb. v. Kline, 297 F. Supp. 2d 1291,

14   1301 (D. Kan. 2004).

15        Two factors counsel against dismissing due to comity in

16   this case, brought by an actual Indian tribe and not yet

17   litigated in state court.6   First, there are strong federal

18   interests in determining the contours of the Indian Trader

19   Statutes and IGRA, two federal regulatory regimes that

20   entirely occupy (and preclude state legislation in) fields

          6
            If the Town had brought suit in state court to collect
     unpaid taxes prior to – instead of two years after – commencement
     of this action, the argument for federal deference to the pending
     state action would be stronger.

                                    20
 1   of indeterminate size.    Where Congress has determined that

 2   there are “strong policies . . . favoring a federal forum to

 3   vindicate deprivations of federal rights,” as in the context

 4   of litigation brought by Indian tribes, federal courts

 5   should exercise their lawful jurisdiction.      McNary, 454 U.S.

 6   at 119 (Brennan, J., concurring).      Second, federal courts

 7   have regularly entertained Indian tribes’ challenges to

 8   state taxes.   See, e.g., Washington v. Confederated Tribes

 9   of Colville Indian Reservation, 447 U.S. 134, 138 (1980);

10   Oneida Nation of N.Y. v. Cuomo, 645 F.3d 154 (2d Cir. 2011).

11   Seeing no reason to depart from this precedent, we affirm

12   the denial of the motion to dismiss on comity grounds.7

13   II.       The State Tax Has Not Been Preempted

14         On reaching the merits, the district court held that

15   the tax was preempted by the Indian Trader Statutes, by

16   IGRA, and pursuant to the Bracker balancing test.      Pequot

17   II, 2012 WL 1069342, at *7-12.      We conclude that neither the

18   Indian Trader Statute nor IGRA preempts the tax “expressly

19   or by plain implication,” Cotton Petroleum Corp. v. New


           7
           The State views the district court’s decision not to
     dismiss due to comity as an abuse of discretion, despite the fact
     that such a decision would have made it the first federal court
     to dismiss an Indian tribe’s challenge of a state tax on comity
     grounds.

                                    21
 1   Mexico, 490 U.S. 163, 175-76 (1989), and that the Town and

 2   State interests in the tax, as applied to the vendors,

 3   outweigh the Tribe and federal interests.     The tax is not

 4   preempted.

 5       “‘In determining whether federal law preempts a state’s

 6   authority to regulate activities on tribal lands, courts

 7   must apply standards different from those applied in other

 8   areas of federal preemption.’”    Confederated Tribes of

 9   Siletz Indians of Or. v. Oregon, 143 F.3d 481, 486 (9th Cir.

10   1998) (quoting Cabazon Band of Mission Indians v. Wilson, 37

11   F.3d 430, 433 (9th Cir. 1994)).    “Although a State will

12   certainly be without jurisdiction if its authority is

13   preempted under familiar principles of preemption, we

14   . . . d[o] not limit preemption of State laws affecting

15   Indian tribes to only those circumstances.”     New Mexico v.

16   Mescalero Apache Tribe, 462 U.S. 324, 333-34 (1983).

17       When examining whether a state tax is permissible, “the

18   initial and frequently dispositive question in Indian tax

19   cases is who bears the legal incidence of the tax, [as] the

20   States are categorically barred from placing the legal

21   incidence of an excise tax on a tribe or on tribal members

22   for sales made inside Indian country without congressional


                                  22
 1   authorization.”     Wagnon v. Prairie Band Potawatomi Nation,

 2   546 U.S. 95, 101 (2005) (internal quotation, alterations,

 3   and emphasis omitted).    But here, the parties stipulate that

 4   the legal incidence of the tax falls on the vendors.       The

 5   Supreme Court in White Mountain Apache Tribe v. Bracker laid

 6   out a mode of analysis for courts to use “where, as here, a

 7   State asserts authority over the conduct of non-Indians

 8   engaging in activity on the reservation.”     448 U.S. 136, 145

 9   (1980); see also Wagnon, 546 U.S. at 102.     Under Bracker, a

10   state tax may be invalid because it is “pre-empted by

11   federal law,” or because it “unlawfully infringe[s] on the

12   right of reservation Indians to make their own laws and be

13   ruled by them.”     Id. at 143 (internal quotation marks

14   omitted).

15       In our view, neither the Indian Trader Statutes nor

16   IGRA indicates congressional intent to bar the tax, and

17   subjecting the “tax scheme over on-reservation, non-member

18   activities to ‘a particularized inquiry into the nature of

19   the state, federal, and tribal interests at stake’” leads us

20   to conclude that the tax is a valid exercise of State

21   authority.   Oneida Nation, 645 F.3d at 165 (quoting Bracker,

22   448 U.S. at 145).


                                     23
 1        A.    The Indian Trader Statutes Do Not Bar This Tax

 2        The Tribe argues that the Indian Trader Statutes, 25

 3   U.S.C. §§ 261 et seq., bar any state regulation in “the

 4   field of transactions with Indians occurring on

 5   reservations.”     Central Machinery Co. v. Ariz. State Tax

 6   Comm’n, 448 U.S. 160, 165 (1980).     Adopting a broad view of

 7   the Indian Trader Statutes, the district court held that

 8   “the state tax that is imposed upon the non-Indian entities

 9   for the . . . leased equipment is preempted by the Indian

10   Trader Statutes.”     Pequot II, 2012 WL 1069342, at *7.     We

11   disagree.8

12        “Throughout this Nation’s history, Congress has

13   authorized ‘sweeping’ and ‘comprehensive federal regulation’

14   over persons who wish to trade with Indians and Indian

15   tribes.”     Dep’t of Taxation and Fin. of N.Y. v. Milhelm

16   Attea & Bros., Inc., 512 U.S. 61, 70 (1994) (quoting Warren

17   Trading Post Co. v. Ariz. State Tax Comm’n, 380 U.S. 685,



          8
            The State and Town argue that IGRA has displaced the
     Indian Trader Statutes with respect to gaming operations. While
     this argument has some force, given that IGRA does provide “room”
     for state regulatory authority over gaming, cf. Central
     Machinery, 448 U.S. 166 (“no room” for state regulation under
     Indian Trader Statutes), we need not address that argument here.
     Assuming arguendo that the Indian Trader Statutes apply, they do
     not preempt this generally applicable property tax assessed on
     non-Indian property.

                                     24
 1   687-89 (1965)).    This regulation includes the Indian Trader

 2   Statutes, passed in 18349 “to protect Indians from becoming

 3   victims of fraud in dealings with persons selling goods.”

 4   Central Machinery, 448 U.S. at 165.     These regulations grant

 5   the federal government “sole power and authority . . . to

 6   make such rules and regulations as [it] may deem just and

 7   proper specifying the kind and quantity of goods and the

 8   prices at which such goods shall be sold to the Indians.”

 9   25 U.S.C. § 261.    They also prohibit unrecognized traders

10   (such as AC Coin and WMS)10 from trading with Indians and

11   require “[t]hat no white person shall be employed as a clerk

12   by any Indian trader . . . unless first licensed so to do by

13   the Commissioner of Indian Affairs.”     25 U.S.C. § 264.

14        The Supreme Court initially interpreted these statutes

15   very broadly.     See Milhelm Attea, 512 U.S. at 75; Warren

16   Trading Post, 380 U.S. 685.    The district court relied on

17   this interpretation, holding that wherever a product is

18   bought, sold, or leased by a tribe on-reservation, state



          9
            For a detailed discussion of the history of the Indian
     Trader Statutes and related statutes and laws, see Warren Trading
     Post v. Arizona State Tax Commission, 380 U.S. at 687-90.
          10
            Although invited to do so by the parties, we decline to
     examine whether AC Coin and WMS are in criminal violation of the
     Indian Trader Statutes by virtue of the leases at issue.

                                     25
 1   taxes may not be applied.     Pequot II, 2012 WL 1069342, at

 2   *7. However, in Milhelm Attea, the Supreme Court backed away

 3   from this all-encompassing interpretation: “[a]lthough

 4   language in Warren Trading Post suggests that no state

 5   regulation of Indian traders can be valid, our subsequent

 6   decisions have undermined that proposition.”     512 U.S. at 71

 7   (internal alteration and quotation marks omitted); see also

 8   Cotton Petroleum, 490 U.S. at 175.     “Indian traders are not

 9   wholly immune from state regulation that is reasonably

10   necessary to the assessment or collection of lawful state

11   taxes.”     Milhelm Attea, 512 U.S. at 75.

12       Instead of “depend[ing] on ‘rigid rules’ or on

13   ‘mechanical or absolute conceptions of state or tribal

14   sovereignty,’” preemption under the Indian Trader Statutes

15   involves “‘a particularized inquiry into the nature of the

16   state, federal, and tribal interests at stake . . . to

17   determine whether, in the specific context, the exercise of

18   state authority would violate federal law.’”     Milhelm Attea,

19   512 U.S. at 73 (quoting Bracker, 448 U.S. at 142, 145)

20   (alteration omitted).     Thus where they are implicated, the

21   Indian Trader Statutes require the Bracker balancing

22   analysis.


                                     26
 1       The ability of a state to apply generally-applicable

 2   taxes to non-Indians performing otherwise-taxable functions

 3   on an Indian reservation is well established.      Oneida

 4   Nation, 645 F.3d at 167; Milhelm Attea, 512 U.S. at 73;

 5   Cotton Petroleum, 490 U.S. at 191.      Neither the Tribe’s

 6   interests in economic development and fair dealing nor the

 7   federal interests in protecting the Tribe by monitoring and

 8   regulating its commercial partners are implicated by

 9   Connecticut’s generally-applicable personal property tax.

10   See Colville, 447 U.S. at 156-57.      That is particularly true

11   here, where the incidence of the generally applicable tax

12   falls on the non-Indian’s ownership of property, rather than

13   on the transaction between the Tribe and the non-Indian.

14   Cf. Central Machinery, 448 U.S. at 165 (Indian trader law

15   “pre-empts the field of transactions with Indians” (emphasis

16   added)).   As a result, the Indian Trader Statutes do not

17   preempt the personal property tax “expressly or by plain

18   implication.”   Cotton Petroleum, 490 U.S. at 175-76.

19       B.     IGRA Does Not Bar the Tax

20       The district court also determined that IGRA preempts

21   the tax.   Pequot II, 2012 WL 1069342, at *7-9.     The Tribe is

22   of the view that IGRA completely preempts all state


                                    27
 1   legislation affecting the field of gaming.      While the Tribe

 2   is correct that IGRA preempts certain state regulations

 3   affecting the governance of gaming, the tax at issue here

 4   does not affect the Tribe’s “governance of gaming” on its

 5   reservation, see, e.g., Barona Band, 528 F.3d at 1192.

 6   Therefore, we conclude that IGRA does not preempt the tax.

 7            1.     The Plain Text of IGRA Does Not Bar the Tax

 8       The plain text of IGRA does not bar the tax.      IGRA

 9   insists that “nothing in this section shall be interpreted

10   as conferring upon a State or any of its political

11   subdivisions authority to impose any tax, fee, charge, or

12   other assessment upon an Indian tribe or upon any other

13   person or entity authorized by an Indian tribe to engage in

14   a class III activity.”    25 U.S.C. § 2710(d)(4).    IGRA does

15   confer the authority, however, for states and tribes to

16   include provisions in the Gaming Procedures, “relating to

17   . . . assessment[s] by the State of . . . amounts []

18   necessary to defray the costs of regulating [Class III]

19   activity.”    25 U.S.C. § 2710(d)(3)(C)(iii).

20       In this case, the Gaming Procedures are silent as to

21   the legality of Connecticut’s generally-applicable personal

22   property tax.    Neither the State nor the Tribe sought to


                                     28
 1   include language relating to the personal property tax in

 2   the Gaming Procedures.    As a result, neither the Gaming

 3   Procedures nor, by extension, IGRA explicitly forbids (or

 4   permits) the State to apply its personal property tax to the

 5   vendors.

 6              2.   IGRA Does Not Bar the Tax by Plain Implication

 7        IGRA does not explicitly bar the tax, but the Tribe

 8   asserts that the provisions of IGRA demonstrate

 9   congressional intent to exempt non-Indian lessors of gaming

10   equipment from a generally-applicable state property tax

11   levied on property located within a reservation even though

12   that tax does not produce acute economic effects that

13   interfere with the relevant gaming practices.     IGRA, passed

14   in 1988 in response to the Supreme Court’s decision in

15   California v. Cabazon Band of Mission Indians, 480 U.S. 202

16   (1987),11 was “‘intended to expressly preempt the field in

17   the governance of gaming activities on Indian lands.

18   Consequently, Federal courts should not balance competing



          11
             Although the Cabazon decision is frequently cited as the
     immediate cause of IGRA, Congress had been weighing similar bills
     for four years prior. All of these bills were designed to
     “establish a federal scheme that would pre-empt state regulation
     of Indian gaming.” Alex Tallchief Skibine, The Indian Gaming
     Regulatory Act at 25: Successes, Shortcomings, and Dilemmas, 60
     FED. LAWYER 35, 36 (Apr. 2013).

                                     29
 1   Federal, State, and tribal interests to determine the extent

 2   to which various gaming activities are allowed.’”     Gaming

 3   Corp. of Am. v. Dorsey & Whitney, 88 F.3d 536, 544 (8th Cir.

 4   1996) (quoting S. Rep. No. 446, 100th Cong., 2d Sess. 6

 5   (1988)).   However, “[n]ot every contract that is merely

 6   peripherally associated with tribal gaming is subject to

 7   IGRA’s constraints.”   Casino Res. Corp. v. Harrah’s Entm’t,

 8   Inc., 243 F.3d 435, 439 (8th Cir. 2001).

 9       In determining whether a state tax imposed on a third

10   party is preempted by IGRA’s occupation of the “governance

11   of gaming” field, courts have been quick to dismiss

12   challenges to generally-applicable laws with de minimis

13   effects on a tribe’s ability to regulate its gambling

14   operations.   For example, courts have held that IGRA’s

15   preemptive scope is not implicated in cases involving gaming

16   management and service contracts with a tribe, id. at 438-

17   39; contracts to acquire materials to build a casino, Barona

18   Band, 528 F.3d at 1192; and release of detailed

19   investigative reports on the management of gaming, Siletz,

20   143 F.3d at 487.   Similarly, we conclude that any preemption

21   of the “field” of gaming regulations is not at issue here,

22   where the state tax on property is not targeted at gaming.


                                   30
 1   Instead, we apply the Bracker framework to determine whether

 2   the particular application of this tax conflicts with

 3   federal law.    See Barona Band, 528 F.3d at 1193 (“If we were

 4   to accept the Tribe’s argument that IGRA itself preempts the

 5   state taxation of non-Indian contractors working on tribal

 6   territory, we would effectively ignore Bracker and its

 7   progeny.”).

 8          The Tribe contends that, in order to assure the

 9   legality of a tax of general application, the State was

10   required to include language in the Gaming Procedures

11   reserving the right to apply the property tax to slot

12   machine vendors.    “[U]nder [IGRA], the only method by which

13   a state can apply its general civil laws to gaming is

14   through a tribal-state compact.”    Gaming Corp., 88 F.3d at

15   546.    But under IGRA, mere ownership of slot machines by the

16   vendors does not qualify as gaming, and taxing such

17   ownership therefore does not interfere with the “governance

18   of gaming.”

19          Although the Gaming Procedures outline the Tribe’s use

20   of gaming services, nothing in the Gaming Procedures

21   indicates that it delineates all of the rights and

22   responsibilities of vendors engaged in gaming services.


                                    31
 1   “Gaming services” in the Gaming Procedures is defined as

 2   “the providing of any goods or services to the Tribe

 3   directly in connection with the operation of Class III

 4   gaming in a gaming facility, including . . . manufacture,

 5   distribution, maintenance or repair of gaming equipment.”

 6   Gaming Procedures § 2(m).12   While the Gaming Procedures

 7   prohibit State taxation of “any Tribal gaming operation”

 8   other than those explicitly permitted, Gaming Procedures

 9   § 17(f), they are silent as to taxes imposed on a third

10   party’s ownership of slot machines on the Tribe’s land,

11   which, as explained above, is not “gaming.”

12        Absent the Gaming Procedures, IGRA would not preempt

13   the tax.   With the Gaming Procedures, which are silent on

14   the question of state taxation of the vendors’ property, the

15   analysis is unchanged.

16        IGRA does not directly preempt, by its text or by plain

17   implication, the imposition of Connecticut’s generally-

18   applicable personal property tax.    It also does not


          12
            “Gaming equipment” is separately defined to mean “any
     machine or device which is specially designed or manufactured for
     use in the operation of any Class III gaming activity.” Gaming
     Procedures § 2(i). The “Gaming services” definition therefore
     includes the services of the vendors, who provide slot machines
     to the Tribe to be used as class III gaming devices.

                                    32
 1   explicitly authorize the tax; the Bracker balancing test is

 2   therefore in play.

 3       C.   The Tax Is Not Barred under Bracker

 4       Even when a state law is not barred by the text or

 5   plain implication of a federal statute, “it may unlawfully

 6   infringe ‘on the right of reservation Indians to make their

 7   own laws and be ruled by them.’”     Bracker, 448 U.S. at 142

 8   (quoting Williams v. Lee, 358 U.S. 217, 220 (1959)); see

 9   also Wilson, 37 F.3d at 433.     It may also unlawfully impinge

10   upon the objectives of federal legislation.     See Bracker,

11   448 U.S. at 149.     Such a tax is impermissible if “the

12   imposition of the tax fails to satisfy the Bracker interest-

13   balancing test.”     Wagnon, 546 U.S. at 102.

14       The Bracker test is “a flexible pre-emption analysis

15   sensitive to the particular facts and legislation involved.”

16   Cotton Petroleum, 490 U.S. at 176.     We examine “federal

17   statutes and treaties . . . in light of ‘the broad policies

18   that underlie them and the notions of sovereignty that have

19   developed from historical traditions of tribal

20   independence.’” Ramah, 458 U.S. at 838 (quoting Bracker, 448

21   U.S. at 144-45).     We then weigh the “‘independent but

22   related’ barriers” of (1) possible pre-emption under federal


                                     33
 1   statutes, and (2) “interfere[nce] with [a] tribe’s ability

 2   to exercise its sovereign functions.”     Id. at 837 (quoting

 3   Bracker, 448 U.S. at 142).    Finally, “[t]he State’s interest

 4   in exercising its regulatory authority over the activity in

 5   question must be examined and given appropriate weight.”

 6   Id. at 838.    In balancing interests, “ambiguities in federal

 7   law should be construed generously, and federal pre-emption

 8   is not limited to those situations where Congress has

 9   explicitly announced an intention to pre-empt state

10   activity.”    Id.

11       The Town and State contend that the balancing test does

12   not apply and, in the alternative, that the Town and State

13   interests at issue are more significant than the Tribal and

14   federal interests at play.    We find, first, that the Bracker

15   test applies, and second, that it balances in favor of the

16   Town and State.

17            1.    The Bracker Test Applies

18       The Town makes two arguments in support of its claim

19   that the Bracker test does not apply: (1) the taxed

20   “transaction” takes place off of the reservation, and (2)

21   any needed balancing has already been conducted by the

22   Supreme Court in Thomas v. Gay, 169 U.S. 264 (1898).

23   Neither argument is persuasive.

                                    34
 1        First, “[t]he Bracker interest-balancing test has never

 2   been applied where . . . the State asserts its taxing

 3   authority over non-Indians off the reservation.”      Wagnon,

 4   546 U.S. at 110.   In Wagnon, the Supreme Court held that a

 5   fuel tax imposed on distributors who received fuel off-

 6   reservation and delivered it to the Prairie Band Potawatomi

 7   Nation on-reservation was imposed on off-reservation

 8   transactions not subject to Bracker.     Id. at 101-110.     The

 9   tax at issue in Wagnon applied regardless of the disposition

10   of the fuel because it was triggered by the off-reservation

11   receipt of fuel.   Here, no relevant transaction occurs off-

12   reservation.   Instead, the tax is levied upon slot machines

13   because they are located in the State of Connecticut - here,

14   on the Tribe’s reservation.    Conn. Gen. Stat. § 12-43.

15        Second, the Town points to several late nineteenth-

16   century cases (“Non-Indian Lessee Cases”) in which the

17   Supreme Court upheld taxes on property of non-Indians who

18   resided on Indian reservations.     In Thomas,13 the Court

19   upheld “a tax put upon the cattle of the [non-Indian]

20   lessees [as] too remote and indirect to be deemed a tax upon

          13
            In other cases cited by the parties, the fact patterns
     and analysis mirror Thomas. See Wagoner v. Evans, 170 U.S. 588
     (1898); Utah & N. Ry. Co. v. Fisher, 116 U.S. 28 (1885); Truscott
     v. Hurlbut Land & Cattle Co., 73 F. 60 (9th Cir. 1896).

                                    35
 1   the lands or privileges of the Indians.”    169 U.S. at 273.

 2   Expressly setting aside the argument that “the value of the

 3   lands for such purposes would fluctuate or be destroyed

 4   altogether” by the tax, id., the Court declined to engage in

 5   a structured analysis or to weigh the tribal against the

 6   State interests.

 7       Thomas and the Non-Indian Lessee Cases are similar to

 8   this case insofar as the Court addressed state taxation with

 9   the incidence of the tax falling within Indian land despite

10   the absence of a direct tax on the Indians.    Cf. Colville,

11   447 U.S. at 183-86 (Rehnquist, J., concurring).    However,

12   the law has changed since the 1890s; the Supreme Court has

13   clarified the ways in which courts should evaluate

14   assertions of preemption of state taxes.    Bracker, 448 U.S.

15   at 145.    “Each case ‘requires a particularized examination

16   of the relevant state, federal, and tribal interests.’”

17   Cotton Petroleum, 490 U.S. at 176 (quoting Ramah, 458 U.S.

18   at 838).    Moreover, Congress has established the importance

19   of the specific federal interests at issue by enacting

20   protective legislation such as IGRA.    Cf. Thomas, 169 U.S.

21   at 274-75 (conceding “[t]he unlimited power of [C]ongress to

22   deal with the Indians” but noting that the tax at issue


                                    36
 1   would not “be an interference with congressional power”).

 2   Although Thomas informs our inquiry, we cannot forgo

 3   Bracker’s fact-specific analysis because the Supreme Court

 4   decided a related question 115 years ago.

 5               2.   The State and Town Interests Outweigh the
 6                    Federal and Tribal Interests
 7
 8                    i.   The Federal Interest

 9        For the purposes of the Bracker test, determining

10   relevant federal interests “is primarily an exercise in

11   examining congressional intent, [and] the history of tribal

12   sovereignty serves as a necessary ‘backdrop’ to that

13   process.”    Cotton Petroleum, 490 U.S. at 176.   IGRA,14

14   described at times as Congress’s “strongest and most

15   explicit statement in favor of tribal economic development,”

16   Matthew L.M. Fletcher, The Supreme Court and Federal Indian

17   Policy, 85 NEB. L. REV. 121, 146 (2006), “is intended to

18   promote tribal [economic] development, prevent criminal

19   activity related to gambling, and ensure that gaming

20   activities are conducted fairly.”     Rincon Band of Luiseno

21   Mission Indians of the Rincon Reservation v. Schwarzenegger,

          14
            Because the tax in no way implicates the federal interest
     in ensuring that Tribes are not swindled in unfair transactions,
     the federal interests reflected in the Indian Trader Statutes are
     irrelevant. We therefore focus our inquiry on the federal
     interests reflected in IGRA.

                                     37
 1   602 F.3d 1019, 1034 (9th Cir. 2010), and also to “ensure

 2   that the Indian tribe is the primary beneficiary of the

 3   gaming operation.”     25 U.S.C. § 2702(1)-(2).    Nothing within

 4   IGRA reveals congressional intent to exempt non-Indian

 5   suppliers of gaming equipment from generally applicable

 6   state taxes that would apply in the absence of the

 7   legislation.    IGRA addresses state taxation, 25 U.S.C.

 8   § 2710(d)(4),15 without prohibiting taxes like this personal

 9   property tax.     See, e.g., Container Corp. of Am. v.

10   Franchise Tax Bd., 463 U.S. 159, 196-97 (1983) (holding that

11   if federal legislation speaks to a particular tax without

12   prohibiting it, this undermines a claim that the tax is

13   preempted).

14       The tax, imposed on non-Indian vendors, is likely to

15   have a minimal effect on the Tribe’s economic development.

16   While IGRA seeks to limit criminal activity at the casinos,

17   nothing in Connecticut’s tax makes it likely that Michael

18   Corleone will arrive to take over the Tribe’s operations.


         15
              Section 2710(d)(4) provides in relevant part that

         nothing in this section shall be interpreted as
         conferring upon a State or any of its political
         subdivisions authority to impose any tax, fee, charge, or
         other assessment upon an Indian tribe or upon any other
         person or entity authorized by an Indian tribe to engage
         in a class III activity.

                                      38
 1   Moreover, IGRA presented an opportunity for Congress to

 2   preempt taxes exactly like this one; Congress chose to limit

 3   the scope of IGRA’s preemptive effect to the “governance of

 4   gaming.”     Gaming Corp., 88 F.3d at 550.   As imposed on the

 5   owners of vending machines leased by the Tribe, the tax

 6   entitles the State to a tangential benefit from the Tribe’s

 7   gaming operation, but it does not prevent “the Indian tribe

 8   [from being] the primary beneficiary of the gaming

 9   operation.”    25 U.S.C. § 2702(2) (emphasis added).    The tax

10   therefore has only a minimal effect on federal interests.

11                   ii. The Tribal Interest

12        The tax implicates two Tribal interests – economic

13   development and sovereignty over the reservation - but the

14   parties dispute the magnitude of the tax’s impact on each.

15        The economic effect of the tax on the Tribe is

16   minimal.16    From 2004 to 2011, AC Coin had paid $69,894 in


          16
             Both parties claim that we should disregard the
     magnitude of the tax in evaluating its economic effect on the
     Tribe, albeit for different reasons.
          The Tribe asserts that any tax, regardless of its size, is
     impermissible. The Tenth Circuit has held that, under some
     circumstances, preemption analysis “cannot turn on the severity
     of a direct economic burden on tribal revenues caused by the
     state tax.” Indian Country, U.S.A., Inc. v. Okla. Tax Comm’n,
     829 F.2d 967, 986 n.9 (10th Cir. 1987). In Indian Country, the
     State taxed Indian sales of bingo tickets; the court held that
     IGRA’s regulation of gaming itself is sufficiently comprehensive
     to prevent any tax on casino sales not accounted for in the

                                     39
1   personal property tax.    After several years, at the Tribe’s

2   urging, AC Coin permitted the Tribe to reimburse it for this

3   tax while this lawsuit was pending.     Assuming comparable

4   taxes on WMS,17 this leads to an approximate total tax of



    compact. Id. In Bracker, the state sought to impose a motor
    carrier license tax and a use fuel tax on a subcontractor of a
    tribe’s timber operations. 448 U.S. at 139. The taxes burdened
    contracts for the sale of timber that were often “drafted by
    employees of the Federal Government,” and the federal scheme
    Indian timber regulations were “so pervasive” that there was “no
    room for the[] taxes in the comprehensive federal regulatory
    scheme.” Id. at 147, 148. While IGRA may prevent any tax on
    gaming itself, a tax on personal property possessed by a non-
    Indian on the reservation does not fall within IGRA’s pervasive
    reach. Cf. Casino Res. Corp., 243 F.3d at 439; Barona Band, 528
    F.3d at 1192.
         The Town and the State assert that the tax has no actual
    economic effect on the Tribe. Indeed, the record reflects that
    “the tax is not a factor in lease pricing” and that the vendors
    do not seek reimbursement from Tribal lessees. Tribe Rule
    56(a)(2) Statement 12-14. Insofar as the Tribe challenges this
    assessment, it would constitute a “genuine dispute as to [a]
    material fact,” Fed. R. Civ. P. 56(a); however, we construe the
    record as devoid of genuine dispute on this question, insofar as
    any effect on the Tribe is minimal compared to the other relevant
    interests. Nevertheless, the Tribe did, pursuant to industry
    standard lease agreements, assume contractual liability for the
    taxes incurred by the vendors. Deane Decl. 3-4. The extent of
    the legal liability that the Tribe theoretically incurred is
    relevant, though not particularly weighty, to the calculation of
    the Tribe’s interest, even if the Tribe’s actual cost associated
    with the tax hinged upon the vendors’ decision to seek the
    reimbursement to which they were lawfully entitled. See Denney
    v. Deutsche Bank AG, 443 F.3d 253, 265 (2d Cir. 2006) (listing
    “run[ning] the risk of being assessed a [cost]” as a cognizable
    injury, even if it is not clear that the debtor will seek
    repayment).
         17
           The actual amounts owed by WMS appear to vary
    substantially from year to year, but average approximately
    $10,000 for the years on record.

                                   40
 1   $20,000 per annum.18   Although this is a substantial sum, it

 2   constitutes less than two tenths of one percent of the

 3   $2,300,000 (AC Coin) and $12,900,000 (WMS) in revenue per

 4   annum that the vendors anticipate from their dealings with

 5   the Tribe.

 6        As of September 2011, the Tribe had invested over $1.42

 7   billion in its gaming operations at Foxwoods.     Many of the

 8   vendors’ most popular games are available by lease only, and

 9   the Tribe has elected to pursue leases of a significant

10   duration; however, the challenged tax does not significantly

11   compromise the profitability of these leases.     The Tribe’s

12   payments to the State of twenty-five percent of its gross

13   operating revenues from video facsimile games have exceeded

14   $1.5 billion since 2003.    Even if the Tribe were forced to

15   reimburse the vendors, $20,000 per year would not pose a

16   substantial threat to the revenue the Tribe derives from the

17   vendors’ games, and it does not make the State the “primary

18   beneficiary” of even this part of the Tribe’s gaming

19   operation. The tax’s economic effect on the Tribe is less

20   than minimal.

          18
             The record also reflects that other slot machine
     vendors, including International Gaming Technology and Bally
     Technologies, regularly pay personal property taxes in Ledyard,
     but does not suggest how much they pay.

                                    41
 1       The tax has a moderate effect on tribal sovereignty.

 2   “A tribe’s power to exclude nonmembers entirely or to

 3   condition their presence on the reservation is . . . well

 4   established.”    Mescalero Apache, 462 U.S. at 333.     However,

 5   “[w]e long ago departed from the ‘conceptual clarity of Mr.

 6   Chief Justice Marshall’s view in Worcester [v. Georgia, 31

 7   U.S. 515 (1832)],” “that Indian tribes were wholly distinct

 8   nations within whose boundaries ‘the laws of a State can

 9   have no force.’”     Id. at 331 (quoting Worcester, 31 U.S. at

10   561) (alterations omitted).    The State’s personal property

11   tax, as imposed on the slot machines located entirely on-

12   reservation, overlaps with the Tribe’s ability to set the

13   restrictions to property rights in its sovereign territory.

14   “[U]nder some circumstances a State may exercise concurrent

15   jurisdiction over non-Indians acting on tribal

16   reservations.”     Id. at 333 (citations omitted).    Still, this

17   encroachment into an area of tribal sovereignty, however

18   modest, is a recognized injury that must be considered in a

19   Bracker balancing.

20                   iii. The State and Town Interests

21       In evaluating a State’s economic interests for the

22   purpose of Bracker balancing, we look for “a nexus between


                                     42
 1   the taxed activity and the government function

 2   provided. . . .”     Barona Band, 528 F.3d at 1193; see also

 3   Ute Mountain Ute Tribe v. Rodriguez, 660 F.3d 1177, 1201

 4   (10th Cir. 2011).     In Mescalero, the challenged state

 5   regulation targeted hunting in particular; the Supreme Court

 6   considered State interests to be weaker because the State

 7   did not contribute to hunting or wildlife on the

 8   reservation.     462 U.S. at 341.       Similarly, in Ute Tribe, the

 9   Tenth Circuit noted that the state taxes relating to

10   extraction of oil and gas would be more defensible if the

11   state used the tax’s proceeds to provide related services to

12   the Tribe.     660 F.3d at 1201.

13       “There is nothing unique in the nature of a [generally-

14   applicable] tax . . . that requires a different analysis.”

15   Ramah, 458 U.S. at 843.     However, for a generally-applicable

16   tax, a court may credit the services provided by the State

17   to the Tribe more generally as “related” to the tax.         In

18   Cotton Petroleum, 490 U.S. at 185, 189-91, the Supreme Court

19   permitted application of a generalized tax on oil and gas

20   production to on-reservation production, despite “evidence

21   that tax payments by reservation lessees far exceed[ed] the

22   value of services provided by the State to the lessees, or


                                        43
 1   more generally, to the reservation as a whole.”    Id. at 189.

 2   The Court reasoned that the State could point to “[t]he

 3   intangible value of citizenship in an organized society

 4   [that] is not easily measured in dollars and cents.”      Id.

 5   It also pointed out the “nightmarish administrative burdens”

 6   that would arise from requiring parity between state taxes

 7   and state services.   Id. at 185 n.15.

 8       In this case, the Town has a cognizable economic

 9   interest in imposing the tax.    The Supreme Court has

10   recognized “the dependency of state budgets on the receipt

11   of local tax revenues” and “appreciate[s] the difficulties

12   encountered by [local governments] should a substantial

13   portion of [their] rightful tax revenue be tied up in”

14   litigation.   Rosewell v. LaSalle Nat’l Bank, 450 U.S. 503,

15   527-28 (1981).   The Town’s economic interest therefore

16   exceeds the value of the taxes on slot machines, insofar as

17   a ruling favorable to the Tribe could invite other non-

18   Indian owners of personal property on the reservation to

19   initiate similar actions.   According to the Town, the

20   anticipated litigation from such an event would tie up

21   hundreds of thousands of dollars per year.    Hopkins Decl.

22   ¶ 16.   Moreover, if the legality of the tax hinges upon the


                                     44
 1   extent to which the taxed property is used by the Tribe in

 2   connection with Class III gaming - or other gaming at

 3   Foxwoods - the Town would need to take careful account of

 4   the use to which property owned by non-Indians on the

 5   reservation was put.     This additional level of analysis

 6   would further frustrate the Town’s revenue collection and

 7   would render the State’s tax more difficult and expensive to

 8   administer.

 9       There is a nexus between the tax and the services that

10   the Town provides.     The Town funds “the education and

11   bussing [sic] of the Tribe’s children” and “[t]he

12   maintenance of the roads to the Reservation,” inter alia.

13   Pequot II, 2012 WL 1069342, at *12.     A well-maintained road

14   system that brings in the customers is the lifeblood of the

15   Tribe’s gaming activities.     That the Tribe benefits from

16   generalized governmental functions performed by the Town

17   reinforces the validity of generalized taxes imposed by the

18   Town on third parties with whom the Tribe elects to do

19   business.     Cotton Petroleum, 490 U.S. at 189.   The Town’s

20   economic interest in the generally applicable tax is

21   therefore connected, in some respect, to the generally

22   available services that it provides.


                                     45
 1       The State has an interest in the uniform application of

 2   its tax code.    Requiring the State to consider additional

 3   factors to determine the code’s applicability would make it

 4   less predictable and more difficult to administer.

 5   Furthermore, “‘states have a valid interest in ensuring

 6   compliance with lawful taxes that might easily be evaded.’”

 7   Oneida Nation, 645 F.3d at 165 (alteration omitted) (quoting

 8   Milhelm Attea, 512 U.S. at 73).     The Tribe’s decision to

 9   contractually obligate the vendors not to comply with any

10   future personal property tax assessments required by State

11   law undermines the State’s sovereignty in a meaningful way.

12   The likelihood of additional affronts to State sovereignty

13   increases as the tax’s application becomes more contingent

14   upon the use to which non-Indian third parties put on-

15   reservation property.    The tax system already relies upon

16   the honor code; refusal to pay taxes “erodes the public’s

17   perception of the equity of the system and has the potential

18   of resulting in non-compliance with the reporting

19   requirement.”    Hopkins Decl. ¶ 10.

20       Finally, a State has a separate sovereign interest in

21   being in control of, and able to apply, its laws throughout

22   its territory.    Cotton Petroleum, 490 U.S. at 188.   That


                                    46
 1   interest is diminished where, as here, the sole application

 2   of the state law at issue is on the Tribe’s reservation,

 3   which occupies a unique status within the State.   Finally,

 4   if there is evidence of arbitrage or Tribal efforts to

 5   structure deals so as to avoid the State tax, the State’s

 6   interests are stronger.   See Barona Band, 528 F.3d at 1193-

 7   94.

 8                  iv. Analysis

 9         The Town and State have more at stake than the Tribe.

10   The economic effect of the tax on the Tribe is negligible;

11   its economic value to the Town is not.   The Tribe’s

12   sovereign interest in being able to exercise sole taxing

13   authority over possession of property is insufficient to

14   outweigh the State’s interest in the uniform application of

15   its generally-applicable tax, particularly where, as here,

16   there is room for both State and Tribal taxation of the same

17   activity.   See Cotton Petroleum, 490 U.S. at 188-89.

18   Ultimately, applying a tax that covers all property in the

19   State to non-Indian property located on-reservation is

20   minimally intrusive.   We find the Supreme Court’s holding in

21   Cotton Petroleum to be highly instructive.   As in that case,

22         [t]his is not a case in which the State has had
23         nothing to do with the on-reservation activity, save

                                    47
 1       tax it. Nor is this a case in which an unusually
 2       large state tax has imposed a substantial burden on
 3       the Tribe.   It is, of course, reasonable to infer
 4       that the [State] taxes have at least a marginal
 5       effect    on    the   [price    of]    on-reservation
 6       leases . . . . Any impairment to the federal policy
 7       favoring the [supremacy of the Tribe’s role in
 8       gaming] that might be caused by these effects,
 9       however, is simply too indirect and too insubstantial
10       to support [the Tribe’s] claim of pre-emption. To
11       find pre-emption of state taxation in such indirect
12       burdens on this broad congressional purpose, absent
13       some special factor such as those present in Bracker
14       and Ramah Navajo School Bd., would be to return to
15       the pre-1937 doctrine of intergovernmental tax
16       immunity. Any adverse effect on the Tribe’s finances
17       caused by the taxation of a private party contracting
18       with the Tribe would be ground to strike the tax.
19       Absent more explicit guidance from Congress, we
20       decline to return to this long-discarded and
21       thoroughly repudiated doctrine.
22
23   490 U.S. at 186-87.

24       We recognize that this is arguably a close case.

25   However, the Tribe’s generalized interests in sovereignty

26   and economic development are not significantly impeded by

27   the State’s generally-applicable tax; neither are the

28   federal interests protected in IGRA.   The Town has moderate

29   economic and administrative interests at stake, and the

30   affront to the State’s sovereignty on one hand approximates

31   the affront to the Tribe’s sovereignty on the other.    The

32   balance of equities here favors the Town and State.

33



                                  48
 1            3.   Tribal Sovereignty Does Not Bar the Tax

 2       The Tribe alleges that, independent of all else, tribal

 3   sovereignty poses another hurdle to the imposition of the

 4   tax. The Tribe relies on two categories of cases: the

 5   Bracker line, and the Worcester line.     However,   Bracker and

 6   its progeny only cite tribal sovereignty among the interests

 7   in a balancing test where the incidence of a tax does not

 8   fall on the Tribe.   See, e.g., Bracker, 448 U.S. at 142-45;

 9   see also Wagnon, 546 U.S. at 101-02.    Furthermore, cases

10   such as Worcester, 31 U.S. 515, contain exactly the sort of

11   “mechanical or absolute conceptions of state or tribal

12   sovereignty” repudiated by Bracker.     448 U.S. at 145; see

13   also Mescalero Apache, 462 U.S. at 331.     Neither supports

14   the Tribe’s claim.   Tribal sovereignty is an important

15   consideration for a court weighing interests in the Bracker

16   test, but it is insufficient in itself to bar the State’s

17   generally applicable tax imposed on non-Indians’ ownership

18   of on-reservation personal property.

19

20

21

22


                                   49
 1                             Conclusion

 2       The district court was not barred — by Article III, the

 3   TIA, or comity doctrines — from reaching the merits of this

 4   case.   However, the district court erred in determining that

 5   Connecticut’s generally-applicable personal property tax was

 6   barred by the Indian Trader Statutes, by IGRA, and pursuant

 7   to the Bracker balancing test.

 8       For the foregoing reasons, the opinion and order of the

 9   district court is REVERSED and the case is REMANDED with

10   instructions to enter summary judgment in favor of

11   Appellants.




                                   50
