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United States v. Tribal Development Corp.

October 25, 1996




Appeal from the United States District Court for the Eastern District of Wisconsin. No. 93-C-494 Thomas J. Curran, Judge.

Before COFFEY, FLAUM, and MANION, Circuit Judges.

FLAUM, Circuit Judge.



We have seen this case before. This is a qui tam action, one of forty-two such actions originally brought in the United States District Court for the District of Minnesota against a number of merchants who supplied Indian tribes with goods and services for the tribes' gaming operations. See United States ex rel. Hall v. Tribal Development Corp., 49 F.3d 1208 (7th Cir. 1995); In re United States ex rel. Hall, 825 F. Supp. 1422 (D. Minn. 1993), aff'd, 27 F.3d 572 (8th Cir. 1994), cert. denied, __ U.S. __, 115 S. Ct. 1112 (1995). Alleging that the contracts between the tribes and the suppliers violated the government approval provisions of 25 U.S.C. sec. 81 and the Indian Gaming Regulatory Act, 25 U.S.C. sec. 2711, and the licensing requirement imposed by 25 U.S.C. sec. 264, plaintiffs sued on behalf of the United States under sec. 81 and 25 U.S.C. sec. 201. Pursuant to sec. 81, plaintiffs sought rescission of the contracts and a refund of monies paid thereunder, one half to be paid to the Treasury for the tribes' use, the other half to the plaintiffs as a reward for their efforts. Plaintiffs also sought recovery of civil penalties and forfeiture of all equipment leased or sold to the tribes. See 25 U.S.C. secs. 201, 264, 2713.

The present action, involving lease contracts for goods and services between the Menominee Tribe and the defendant, Tribal Development Corporation ("TDC"), was transferred to the United States District Court for the Eastern District of Wisconsin on May 17, 1993. On September 15 of the same year, the Wisconsin District Court, adopting the opinion of the Minnesota District Court in the parallel actions, dismissed plaintiffs' case for lack of standing. We reversed, holding that "Congress has authorized these qui tam relators to act on behalf of and in the name of the United States, which means that they are able to invoke the standing of the United States for purposes of satisfying Article III." 49 F.3d at 1216. One member of the panel noted that the Minnesota District Court's opinion provided an alternative basis for dismissal: the Indian tribes were indispensable parties whose absence compelled dismissal under Rule 19 of the Federal Rules of Civil Procedure. 49 F.3d at 1216 (Flaum, J., concurring). The concurrence suggested that on remand the district court perhaps should "apply independently the relevant Rule 19 factors to the particular circumstances of this case." Id.

The district court did precisely that. In an Opinion and Order dated February 28, 1996, the court determined first, that the Tribe was a necessary party under Rule 19(a)(2)(i), next, that the Tribe could not be joined because it enjoyed sovereign immunity, and, finally, that the Tribe was an indispensable party whose absence necessitated dismissal of the action. See United States ex rel. Hall v. Tribal Development Corp., 165 F.R.D. 83 (E.D. Wis. 1996). Applying the four factors set forth in Rule 19(b) to determine whether the Tribe should be deemed an indispensable party, the district court reasoned that a judgment in favor of the plaintiffs undoubtedly would be prejudicial to the Tribe while the plaintiffs' interest in the subject matter of the action was "tenuous and indirect." Id. at 86 (citing United States ex rel. Hall, 825 F. Supp. at 1430). Because we find that the district court properly applied the Rule 19 factors, we affirm.


An initial matter concerns the appropriate standard of review of the district court's Rule 19 dismissal. Appellants argue for de novo review while TDC suggests that the time has come for us to align ourselves with those circuits that have adopted an abuse-of-discretion standard in the Rule 19 context. In Sokaogon Chippewa Community v. Wisconsin, 879 F.2d 300 (7th Cir. 1989), we observed that the more deferential standard has much to recommend it, see id. at 304 (discussing Navajo Tribe v. New Mexico, 809 F.2d 1455, 1471 (10th Cir. 1987)), but we declined to declare ourselves either for or against, and we have declined to do so since, see Wade v. Hopper, 993 F.2d 1246, 1249 (7th Cir.), cert. denied, 510 U.S. 868 (1993); Bourne Co. v. Hunter Country Club, Inc., 990 F.2d 934, 937 (7th Cir.), cert. denied, 510 U.S. 916 (1993); Perrian v. O'Grady, 958 F.2d 192, 196 (7th Cir. 1992). Once again, we postpone the resolution of this question for another day, for under either standard, the district court's ruling passes muster.


Contrary to what the parties appear to believe, this case does not call upon us to resolve any supposed conflict between Rule 19 and the qui tam provisions, or to wrestle with the scope and wisdom of statutes born of a bygone era. (We will cite no nineteenth-century decisions here.) Rather, it calls for a straightforward application of Rule 19 to the particular facts of this case.

Rule 19 sets up a bifurcated analysis. First, a court must determine whether an entity is a necessary party or, in the nomenclature of Rule 19, a "Person to be Joined if Feasible." Fed. R. Civ. P. 19(a). Included in this category under subdivision (a)(2)(i) is any person who "claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may . . . as a practical matter impair or impede the person's ability to protect that interest . . . ." The Tribe clearly satisfies these criteria. A judicial declaration as to the validity of a contract necessarily affects, "as a practical matter," the interests of both parties to the contract. As a party to the lease contracts at issue here, the Tribe has a commercial stake in the outcome of this litigation. It therefore would appear beyond dispute that the Tribe is a necessary party under Rule 19(a).

Nevertheless, the plaintiff-relators object that "the tribe is not a necessary party as its interests are always represented by its trustee, the United States." Although in some circumstances the interests of the United States and an absent tribe might be so aligned as to alleviate any concern for the tribe's ability to protect its interest, this is not always the case. See Confederated Tribes v. Lujan, 928 F.2d 1496, 1500 (9th Cir. 1991) ("[T]he United States cannot adequately represent the Quinault Nation's interest without compromising the trust obligations owed to the plaintiff tribes."); Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir. 1990) ("The United States may adequately represent an Indian tribe unless there is a conflict between the United States and the tribe."). Plaintiffs assume that they, acting for the United States, stand in the shoes of the Tribe, that the Tribe is merely "the beneficiary of the government's recovery." Yet it is more likely, given the Tribe's unwillingness to join the present action, that the Tribe would be aligned against the plaintiff-relators if brought into this suit. We therefore cannot conclude that the presence of the United States in any way alleviates Rule 19(a)'s concern for the Tribe's interest in the lease contracts at issue in this litigation. The Tribe is a necessary party to this action.

A finding that a party is necessary does not end the Rule 19 inquiry, however. Under Rule 19(b), if the necessary party cannot be joined, the court must decide "whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable." Significantly, subdivision (b) uses the term "indispensable" only "in a conclusory sense, and not as the starting point of analysis." 3A James Wm. Moore, Moore's Federal Practice para. 19.07-2 (2d ed. 1996). In other words, the relevant question is "whether in equity and good conscience the action should proceed" without the absent party; "indispensable" is merely the label applied to the absent party in the event that the court should answer this question in the negative. To help courts navigate the path of equity and good conscience, Rule 19(b) lists four factors: (1) the extent to which "a judgment rendered in the person's absence might be prejudicial to the person or those ...

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