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Lawsuit vs. casino dismissed, refiled

A $21 million lawsuit from a group that claims it was instrumental in getting Chukchansi Gold Resort & Casino reopened in 2015 has been dismissed from federal court, but was refiled at the state level shortly after that ruling.

The lawsuit, filed by Osceola Blackwood Ivory Gaming Group (OBIG) of Florida in March, contends tribal officials in the summer of 2015 agreed to pay the company 30 percent of net revenues for seven years, allowable under National Indian Gaming Commission rules. The numbers were later negotiated to 25 percent over five years.

The agreement was to manage the resort and casino in order to get it reopened after it was closed in 2014 over a dispute between feuding factions of the tribe.

An election in 2015 made significant changes to the Picayune Rancheria of Indians tribal council, and the company claims the new council breached several aspects of the agreement, costing OBIG $21 million.

The tribe moved to dismiss the suit, on the grounds it was not a matter for federal jurisdiction.

In a 13-page decision file July 27, U.S. District Court Judge Dale A. Drozd agreed, citing cases that showed the company’s claims over violations of a state contract aren’t for federal courts to decide. In his ruling, he wrote that “a state law claim does not raise a substantial federal question simply because it involves a contract that is subject to federal regulation and approval.”

Drozd, out of the Eastern District in California based in Fresno, also said “state law claims that simply ‘center upon the contract and its construction rather than the (federal) statutory basis for the contract’ do not present federal questions.”

In a statement, Tribal Chairwoman Claudia Gonzales alleged OBIG was misrepresenting facts to federal gaming agencies, and the tribe was concerned over the effects from such claims.

“It is clearly a nuisance suit to extort money from this tribe and has no merit,” Gonzales said. “We are confident that this suit will go nowhere.”

Though the suit was dismissed from federal court, it was filed at the state level in Fresno County Superior Court Aug. 2, with a case management conference scheduled for Nov. 27. Nothing in Drozd’s ruling were over the merits of OBIG’s claims.

OBIG’s General Counsel Marla Tusk said the company had no comment, other than “we are looking forward to the expeditious resolution of the case.”


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