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State v. Nation

January 14, 2008; as amended January 16, 2008

STATE OF WISCONSIN, PLAINTIFF-APPELLEE,
v.
HO-CHUNK NATION, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Western District of Wisconsin. No. 05-C-0632-S-John C. Shabaz, Judge.

The opinion of the court was delivered by: Flaum, Circuit Judge.

ARGUED OCTOBER 24, 2007

Before FLAUM, MANION, and WILLIAMS, Circuit Judges.

The State of Wisconsin ("the State") and the Ho-Chunk Nation ("the Nation") are embroiled in a dispute over the validity of certain provisions in the parties' gaming compact ("the Compact") in light of two decisions by the Wisconsin Supreme Court. Efforts to resolve this dispute through the arbitration process set forth in the Compact stalled, leading the State to bring suit in the Western District of Wisconsin to compel arbitration. The district court exercised jurisdiction over the suit and appointed an arbitrator, but on appeal, this Court concluded that federal subject matter jurisdiction was lacking, noting that the Indian Gaming Regulatory Act of 1988 ("IGRA") conferred jurisdiction in three specific instances, none of which were implicated by the case at hand. The State then filed an amended complaint in district court, this time including a claim to enjoin the Nation's class III gaming due to alleged violations under the Compact pursuant to 25 U.S.C. § 2710(d)(7)(A)(ii), one of the three provisions explicitly granting federal courts jurisdiction under the IGRA. The district court found that subject matter jurisdiction existed under this provision. The court also determined as part of its summary judgment order that the Wisconsin Supreme Court's decisions did not invalidate the provisions in the Compact. This interlocutory appeal by the Nation followed. For the following reasons, we affirm that the district court had jurisdiction over the suit and that the Nation's sovereign immunity was abrogated by Congress and waived by the Nation. In addition, we partially vacate and remand the lower court's ruling on the Nation's motion for summary judgment so that the district court may first determine whether any of the State's claims are subject to arbitration.

I. Background

In 1992, the Ho-Chunk Nation, known at the time as the Wisconsin Winnebago Tribe, and then-Governor Tommy Thompson, acting on behalf of the State of Wisconsin, entered into a gaming compact pursuant to the IGRA. This Compact permitted the Nation to conduct certain "class III" gaming, as defined in the IGRA.*fn1 The parties amended the Compact in 1998, and did so a second time in 2003. This "Second Amendment" was the result of negotiations between the Nation and Governor James Doyle, and was approved by the Secretary of the Interior by operation of law, since the Secretary took no action on it within forty-five days of its submission for approval. 25 U.S.C. § 2710(d)(8)(C). The Second Amendment expanded the Nation's class III gaming to include various Vegas-style games and increased revenue-sharing between the Nation and the State. The validity of certain provisions in the Second Amendment is the focus of the parties' dispute.

When the parties initially amended the Compact in 1998, they included a revenue-sharing provision. The Second Amendment greatly expanded this revenue-sharing agreement. The Nation agreed to pay $30 million a year to the State from July 2003-July 2005. After that, the Nation would pay the State an annual percentage of its net win unless either party requested renegotiations. In consideration for these payments, the State agreed to a perpetual term for the Compact, an indemnification clause protecting the Nation from off-reservation gaming, and permission by the Governor for the Nation to pursue gaming at a fourth site. With respect to the Second Amend-ment's Duration clause, the Compact would remain in force in perpetuity unless the parties mutually consented to termination or if the Nation passed a resolution revoking its authority to engage in class III gaming. The Second Amendment also provided that if this Duration provision were found invalid or unenforceable "by a court of competent jurisdiction," the Nation would no longer be required to make payments to the State. The parties would then be required to renegotiate those invalidated provisions pursuant to the Dispute Resolution and Sovereign Immunity provisions in the Compact. The Second Amendment also required that the parties follow a similar renegotiation process if a court found provisions regarding the "Scope of Games" or "Payment to the State" to be invalid, and stated that if any other portion of the Second Amendment were found invalid, the parties would renegotiate in good faith upon either party's request. Coupled with these dispute resolution requirements was a provision governing the parties' sovereign immunity, which both the State and Nation waived with respect to any claim brought by either party to enforce any provision of the Compact.

On May 13, 2004, the Wisconsin Supreme Court decided Panzer v. Doyle, 680 N.W.2d 666 (Wis. 2004), abrogated in part by Dairyland Greyhound Park, Inc. v. Doyle, 719 N.W.2d 408 (Wis. 2006), which addressed the validity of certain provisions in a gaming compact between the State and the Forest County Potawatomi. The Wisconsin Supreme Court made three holdings in the case: (1) the Governor lacked authority to commit the State to compacts lasting in perpetuity; (2) much of the expansion of class III gaming in 2003 was prohibited by the Wisconsin constitution and criminal code; and (3) the Governor lacked inherent or delegated authority to waive the State's sovereign immunity. Id. at 701. The court then expressed its expectation that the parties would renegotiate the amendments to the compact voided by the court's decision. Id.

The Panzer decision cast doubt on the legitimacy of the Compact between the State and the Nation, since the Second Amendment contained duration, class III gaming, and sovereign immunity clauses nearly identical to those invalidated by the Wisconsin Supreme Court. The Nation and State, however, disagreed as to whether the terms of their Compact were immediately invalidated by Panzer, or whether they continued to remain in effect until a court decision was issued with respect to their specific Compact. The Nation took the former position and altered its conduct accordingly. Thus, the Nation: (1) ceased operation of class III gaming added under the Second Amendment; (2) stopped its payments to the State pursuant to the clause permitting the Nation to do so if the Duration provision were found invalid "by a court of competent jurisdiction"; and (3) deemed the State's sovereign immunity revoked, which under the Nation's reading of the Compact, served to automatically revoke its waiver of immunity as well. The State, however, took the latter position, and therefore contended that all the provisions in the Compact were still valid, including the Nation's required revenue-sharing payments to the State.

The parties began to renegotiate the Compact provisions implicated by Panzer, but these efforts stalled, leading the Nation to submit a complaint in arbitration on June 23, 2005. After efforts to find a mutually acceptable arbitrator also failed, the State filed suit on October 28, 2005 in the Western District of Wisconsin, requesting that the court appoint an arbitrator. The court, over the Nation's objections, found that it had jurisdiction and appointed the Honorable William A. Norris, a retired federal judge, as arbitrator. The Nation appealed the denial of its motion to dismiss with this Court. While the appeal was pending, the parties began arbitration before Judge Norris, but stayed the proceedings in May 2006 pending this Court's decision on the Nation's appeal and the Wisconsin Supreme Court's forthcoming opinion in Dairyland Greyhound Park, Inc. v. Doyle, 719 N.W.2d 408 (Wis. 2006).

On July 14, 2006, the Wisconsin Supreme Court decided Dairyland Greyhound Park, in which it determined that amendments to gaming compacts were governed by the language of the Wisconsin Constitution as it existed when the original compacts were entered into. Id. at 442. This decision resulted in Panzer being partially overturned, in that nothing barred the State from negotiating with tribes over class III gaming so long as the original compact pre-dated the 1993 Amendment to the Wisconsin Constitution. Id. at 443. As a result of this decision, the Nation reinstated the class III games it had stopped operating after the Panzer decision.

This Court decided the Nation's appeal on September 1, 2006, holding that the district court lacked subject matter jurisdiction over the suit. State of Wisconsin v. Ho-Chunk Nation, 463 F.3d 655 (7th Cir. 2006) ("Ho-Chunk I"). This Court noted that the Federal Arbitration Act ("FAA") did not itself provide a basis for jurisdiction, and further determined that there was not an independent basis for federal jurisdiction in this case, since none of the three instances in the IGRA where Congress explicitly conferred federal jurisdiction were pled, and this could not be said to be a case arising under federal law. Id. at 659-61.

Following this Court's decision in Ho-Chunk I, the State then filed an amended complaint in the Western District of Wisconsin which included eight causes of action related to the Nation's alleged withholding of revenue-sharing payments and failure to arbitrate. Unlike the State's initial complaint, the amended complaint included a claim pursuant to 25 U.S.C. § 2710(d)(7)(A)(ii) of the IGRA, one of the three specific instances where the Act granted federal jurisdiction. Under this cause of action the State sought to enjoin the Nation's class III gaming on the basis of its alleged Compact violations. The amended complaint also included a claim for breach of contract and sought declarations that the Nation was in violation of the IGRA, that the State had complied with the IGRA by negotiating in good faith, and that the Nation must pay all current and future amounts due under the Compact's revenue-sharing provision. Finally, the State brought claims for the court to compel arbitration for all arbitrable claims, reappoint Judge Norris as arbitrator, and stay the action pending the arbitrator's award.

The Nation for its part, brought counterclaims against the State for breach of contract and violations of the IGRA, requesting that the court order the parties to engage in negotiations according to the procedures set forth in the IGRA. The Nation then brought a motion to dismiss or, alternatively, for summary judgment regarding the State's amended complaint. With respect to federal jurisdiction, the Nation contended that 25 U.S.C. § 2710(d)(7)(A)(ii), which grants federal courts jurisdiction over a claim by a State to "enjoin a class III gaming activity . . . conducted in violation of any Tribal-State compact," was inapplicable in this case and moreover, that the Nation's sovereign immunity barred the district court from hearing the case on any other basis. In the alternative, the Nation also moved for summary judgment, claiming that in light of the Panzer and Dairyland Greyhound Park decisions, it was not acting in violation of the Compact. The Nation also contested the State's efforts to compel arbitration, claiming that the Compact's Dispute Resolution provision was preempted by the IGRA and was not covered by the FAA.

On March 9, 2006, the district court issued its memorandum and order on the Nation's motions. The district court adopted the State's interpretation of 25 U.S.C. § 2710(d)(7)(A)(ii), and thus found that it had jurisdiction over the State's claim to enjoin the Nation's class III gaming activity. The court then exercised supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over the State's remaining claims. The district court then turned to the Nation's motion for summary judgment. With respect to the Panzer decision's effect on the Compact, the district court determined that the Wisconsin Supreme Court's decision did not serve as a finding "by a court of competent jurisdiction" that the Second Amendment's Duration provision was invalid or unenforceable. This finding served to moot the Nation's preemption claim regarding renegotiation under the IGRA, since it was unnecessary for the parties to renegotiate any of the Compact's provisions. As to the Nation's other arguments on summary judgment, the district court determined that federal jurisdiction did exist for the State's claim seeking a declaration it acted in good faith and denied the Nation's claim that the FAA was inapplicable. The district court, however, did grant the Nation's motion for summary judgment on one ground, determining that the State had failed to provide sufficient evidence to support a finding that the Nation had refused to negotiate or arbitrate under the terms of the Compact.

Although the district court's memorandum and order did not constitute a final decision for purposes of appellate jurisdiction, see 28 U.S.C. § 1291, the Nation argues that the district court's finding that the suit was not barred by the Nation's sovereign immunity is appealable under the collateral order doctrine. The Nation has thus brought this interlocutory appeal, claiming: (1) that 25 U.S.C. § 2710(d)(7)(A)(ii) did not grant the district court jurisdiction or abrogate the Nation's sovereign immunity; and (2) that the district court erred in finding that the Panzer decision did not affect the Compact's terms.

II. Analysis

A. Appellate Jurisdiction

As a threshold issue, we have to determine whether we have appellate jurisdiction over this appeal. As a general matter, this Court may only hear appeals "from all final decisions of the district courts." 28 U.S.C. § 1291. This rule, however, is not without exception, and the "collateral order doctrine" provides that certain decisions "are immediately appealable because they 'finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.' " Behrens v. Pelletier, 516 U.S. 299, 305, 116 S.Ct. 834, 133 L.Ed. 2d 773 (1996) (quoting Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 93 L.Ed. 1528, 69 S.Ct. 1221 (1949)). Here, although the district court's decision was not final, the Nation asserts that the issues it is appealing implicate the Nation's sovereign immunity from suit, a subject it contends falls under the scope of the collateral order doctrine.

Tribal sovereign immunity is "a necessary corollary to Indian sovereignty and self-governance," Three Affiliated Tribes of Fort Berthold Reservation v. Wold Engineering, P. C., 476 U.S. 877, 894, 90 L.Ed. 2d 881, 106 S.Ct. 2305 (1986), and extends to suits for injunctive or declaratory relief. Imperial Granite Co. v. Pala Band of Mission Indians, 940 F.2d 1269, 1271 (9th Cir. 1991) (citing Santa Clara Pueblo v. Martinez, 436 U.S. 49, 59, 56 L.Ed. 2d 106, 98 S.Ct. 1670 (1978)). "Suits against Indian tribes are thus barred by sovereign immunity absent a clear waiver by the tribe or congressional abrogation." Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian Tribe, 498 U.S. 505, 509, 111 S.Ct. 905, 909, 112 L.Ed. 2d 1112 (1991). A district court's determination that a tribe's sovereign immunity has been waived by the tribe or abrogated by Congress falls within the ambit of the collateral order doctrine as applied by this Court:

Since sovereign immunity is an immunity from trial and the attendant burdens of litigation, and not just a defense to liability on the merits, the denial of a claim of sovereign immunity is an immediately appealable interlocutory order under the "collateral order doctrine" of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 545-47, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949).

Enahoro v. Abubakar, 408 F.3d 877, 880 (7th Cir. 2005) (quoting Rush-Presbyterian-St.Luke's Medical Center v. The Hellenic Republic, 877 F.2d 574, 576 n.2 (7th Cir. 1989)).

Although a denial of the Nation's sovereign immunity is immediately appealable under the collateral order doctrine, the State contends that this Court should not consider the two specific issues raised by this Nation on appeal. The first issue appealed by the Nation is the district court's finding that it had jurisdiction over the State's second cause of action pursuant to 25 U.S.C. § 2710(d)(7)(A)(ii), which grants federal courts jurisdiction over suits "by a State . . . to enjoin a class III gaming activity . . . conducted in violation of any Tribal-State compact entered into under paragraph (3)." The State has filed a jurisdictional memorandum with this Court contending that this appeal is frivolous and should be dismissed. This argument is without merit. The State mischaracterizes the Nation's claim as questioning courts' interpretation that 25 U.S.C. § 2710(d)(7)(A)(ii) serves as a congressional abrogation of tribal sovereign immunity. See Florida v. Seminole Tribe of Florida, 181 F.3d 1237, 1242 (11th Cir. 1999); see also Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., 523 U.S. 751, 758, 118 S.Ct. 1700, 140 L.Ed. 2d 981 (1998). The Nation however, does not ...


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