Federal judge refuses to halt lawsuit vs. Red Hawk Casino
By Dale Kasler dkasler@sacbee.com Published: Wednesday, Oct. 20, 2010
The owners of Red Hawk Casino just can't shake a lawsuit by their former gambling partner.
A federal judge in Sacramento has denied a petition by the Shingle Springs Band of Miwok Indians to block a lawsuit by Sharp Image Gaming. It was the second time in six months that courts have turned back the tribe's efforts to rid itself of Sharp Image's litigation.
Sharp Image, a Chatsworth supplier of gambling devices, is suing the tribe for more than $100 million. The company says the Miwoks broke a contract that established Sharp Image as the tribe's exclusive casino partner.
With last week's decision keeping the lawsuit alive, Sharp Image expects the case to go to trial in February, said the company's lawyer, Matthew Jacobs of Sacramento. The tribe's lead attorney, Paula Yost of San Francisco, couldn't be reached for comment.
The dispute goes back to the 1990s, when the Miwoks opened a casino in a tent-like structure near Highway 50, with financing and other support from Sharp Image.
Built at a time when the ground rules for Indian gaming in California were still hazy, the Crystal Mountain Casino ran into neighbor opposition and other obstacles. It closed in 1997 after 10 months of intermittent operation.
Later, when it became legal for tribes to open full-fledged casinos in California, the Miwoks teamed with management firm Lakes Entertainment Inc. of Minneapolis. The result was Red Hawk, a $500 million casino that opened in late 2008.
Sharp Image sued the tribe for breach of contract in El Dorado Superior Court, more than a year before Red Hawk opened.
In its defense, the tribe argued that Sharp Image had no business trying to grab profits from Red Hawk, a casino it played no role in building. It also tried to have the lawsuit dismissed on grounds of sovereign immunity, which generally prohibits someone from suing an Indian tribe.
The California Supreme Court in April rejected the tribe's legal arguments and said the case must go to trial. The Miwoks then filed suit in U.S. District Court to block the El Dorado County lawsuit, saying the case involved issues that could be resolved only in a federal court.
But in a ruling last week, U.S. District Judge Frank Damrell Jr. dismissed the tribe's suit, sending the matter back to El Dorado Superior Court.