Designer Skin LLC v. S & L Vitamins, Inc., et al.
AT&T Corp. v. Coeur d'Alene Tribe
45 F. Supp. 2d 995 (D. Idaho, December 17, 1998), reversed and remanded, 283 F. 3d 1156 (9th Cir., 2002)
The Coeur D'Alene Tribe (the "Tribe") operates a lottery in which participants purchase chances in the hopes of winning a weekly jackpot. To participate in this lottery, an individual must first establish an account by causing money to be delivered to the Tribe at its reservation in Idaho. This can be accomplished in a telephone call authorizing a charge against the participant's credit card. Once the account is established, the participant can purchase a chance by telephone. The price of the chance is deducted from the participant's account, and any resulting winnings are added to it. All of the computers used to run the lottery, including the machines that select the weekly "winner," are found on Tribe lands.
The Lottery was set up in accordance with the Indian Gaming Regulatory Act, 25 U.S.C. ??2701 et seq. ("IGRA"). Pursuant to this Act, the Tribe received permission from the State of Idaho to operate the Lottery in accordance with the terms of a compact between those two authorities. To increase the size of its operations, the Tribe requested that AT&T provide it with a toll free "800" telephone number between the Tribe's Idaho reservation and 33 states. It also sought a connection to the District of Columbia. Each of the designated states operate a State sponsored lottery. The telephone number was admittedly to be used for "lottery wagering." The Attorney Generals for ten states notified AT&T that providing the requested telephone service would violate state law. As a result, under 18 U.S.C. ?1084(d), AT&T was barred from providing the requested telephone service, and declined to do so. Section 1084(d) provides, in applicable part: When any common carrier ... is notified in writing by a ... State ... law enforcement agency, acting within its jurisdiction, that any facility furnished by it ... will be used for the purpose of transmitting or receiving gambling information in interstate ... commerce in violation of ... State ... law, it shall ... refuse the ... furnishing ... of such facility. The matter was presented to the United States District Court for the District of Idaho for resolution. The Tribe argued that its gaming activities were governed by the Federal IGRA, which preempted state regulation of these activities. As such, the Attorney Generals did not have the authority to invoke 18 U.S.C. ?1084(d), because state law was inapplicable to the Tribe's gaming activities.
The court rejected this argument. Its analysis centered on the location of the gaming activities in question, a ruling that could potentially have significant impact for those seeking to use the Internet for gambling operations. The court agreed that the IGRA preempted the regulation of gaming activities occurring on "Indian lands." However, it determined that a customer outside of Idaho who orders a lottery chance in a telephone call placed to the Tribe was conducting an activity off Indian lands subject to state regulation. Said the court: The Tribe's effort to obtain 800 Service so that a player can order chances while outside the limits of the Reservation would have the effect of maintaining a gaming activity off Indian lands and, consequently, take the lottery outside the protective preemption provided by the IGRA .... Because the Tribe's Lottery consists of gaming activities that occur out-of-state and outside the limits of any reservation, state law applies to regulate that conduct.
As a result, the court determined that the Section 1084(d) notices were valid and that AT&T had no obligation to provide the requested phone service.
The full text of the 9th Circuit's decision, reversing the decision of the district court, can be found on a web site maintained by the United States Court of Appeals for the Ninth Circuit.