Nation's Restaurant News: N9NE Group, Morongo tribe in dispute after sudden seizure of casino concep

CABAZON, CALIF. -- Just six months after the glitzy, $250 million Morongo Casino Resort debuted here, four of its restaurants, launched by Chicago-based N9NE Group, closed suddenly, leaving the operator in a bitter legal dispute with the Native American tribe that owns the property.

N9NE Group officials said employees at the high-profile N9NE Steakhouse and Belly Italiano restaurants, the SpaceBar lounge and the Desert Rain nightclub arrived for work June 1 only to find themselves barred from entry by armed guards at the hotel near Palm Springs, which is operated by the Morongo Band of Mission Indians. The incident occurred the same day N9NE Group co-founder Michael Morton was attending the funeral of his father, Arnie Morton, founder of the Morton's of Chicago steakhouse chain.

In a statement Morongo tribal chairman Maurice Lyons said the N9NE Group had "expressed interest in having the tribe acquire the ownership and operation of the N9NE Group venues" and had requested a decision by June 1.

"The tribe is honoring that request and is accommodating the N9NE Group with a June 1 termination of their lease," Lyons said in the statement. The nearly 300-plus N9NE Group employees affected, according to casino officials, were invited to apply for jobs at the casino property.

N9NE Group principals, however, say they did not ask for termination of the lease. The company, which also has operations in Chicago and Las Vegas and whose name is pronounced "nine," filed a lawsuit June 6 in U.S. District Court in California that alleges breach of contract by the tribe and seeks a temporary restraining order to stop its use of N9NE Group property, according to court documents.

Morongo management has invoked the doctrine of sovereign immunity, which protects Indian tribes from being sued in U.S. courts without tribal consent or congressional intervention.

A waiver in the N9NE Group's contract with the casino would allow the company to sue in federal court after an attempt to settle by arbitration, both sides agreed. But Morongo officials contend the N9NE Group did not follow legal procedures required to enact the waiver.

Meanwhile, the 150-seat Belly Italiano, a debut concept for the N9NE Group, has been converted to The Restaurant at the Top, featuring a Mediterranean menu developed by casino chef Christophe Douheret.

SpaceBar was renamed the View Lounge and also is operated by casino management, tribe representative Waltona Manion said.

The 200-seat steakhouse and the nightclub operations remained closed as of presstime, while casino management weighed options that included the possibility of bringing in another restaurant operator-partner, Manion added.

Two other restaurants at the Morongo resort--the Potrero Canyon Buffet and the 24-hour Serrano Cafe--will continue to be run by casino management.

Since the December opening, the 44-acre Morongo Casino Resort and N9NE's restaurant concepts have been promoted heavily in print and TV ads throughout the Greater Los Angeles market as a taste of Las Vegas a relatively short drive away. Promoters hoped the development would enliven a quiet corner of a desert enclave known previously for its date farms and outlet malls.

Chicago restaurateur Michael Kornick, who is a N9NE Group partner and its consulting chef, said the Morongo tribe recruited the restaurant company with the hope of re-creating the success the group has had with its four hip and edgy venues at the Palms Casino Resort in Las Vegas.

The N9NE Group operates a signature steakhouse there as well as a lounge called ghostbar, the dance club Rain Las Vegas and the poolside Skin Pool Lounge.

A new, 40-story hotel tower also is under construction at the Palms property, which is scheduled to feature an upscale Italian restaurant and a bar by the N9NE Group as well as a Playboy Club operated by the Palms.

The N9NE Group also includes the original N9NE Steakhouse and ghostbar in Chicago. The group is scheduled to open two restaurants, a nightclub and bar in Dallas next year as part of the $3 billion, 75-acre Victory Park development under construction there.

N9NE co-owner Morton declined to comment about the situation at the Morongo property, but he issued a statement that said, "Any suggestion that N9NE Group closed the venues or pulled out of the casino is simply false."

N9NE Group officials had been in discussions with the resort's management for several months to "resolve several issues of mutual concern," according to the statement.

"Rather than continue these discussions in good faith, Morongo Casino Resort decided to take matters into its own hands and lock N9NE Group out of its venues and corporate offices located in the casino, in breach of the lease agreement. N9NE Group was committed deeply to the success of its Desert Rain, N9NE Steakhouse, SpaceBar and Belly Italiano venues at Morongo Casino."

The statement added: "This unnecessary and unwarranted action amounts to the illegal confiscation of N9NE Group's property. In addition, it is severely impairing the lives of N9NE Group employees at the casino, as well as the lives of their families."

N9NE's statement continued, "We intend to pursue all appropriate legal action to protect our rights and prevent the tribe's unlawful conduct."

Kornick said he suspects the dispute stemmed from personnel changes within the tribal council and disappointment that the casino and hotel "were not doing nearly the volume anticipated." He added, "Nobody's going to believe we didn't want to be there, and no one's going to believe, if things were doing great, they wanted us out."

Since the closures, Kornick said, he has been encouraging line cooks to apply for work at the casino. "But managers don't feel the Indians are truthful; they haven't gotten a fair shake, and they don't want to work in a threatening environment," he remarked.

Manion said the N9NE Group's contention that the dispute "has some connection to tribal politics is simply not valid."

Though she declined to disclose revenue figures, Manion said the resort's business volume has been "unprecedented" and has broken all projections, and the hotel has been "running at full occupancy."

By mid-June about 100 N9NE Group employees had submitted applications for work at the foodservice venues now operated by the casino management, and about 60 had been hired, she added.

"The tribe is absolutely committed to a positive resolution," she said.