Opinion ID: 1608822
Heading Depth: 1
Heading Rank: 3

Heading: The Jurisdictional Argument.

Text: In considering the tribe's argument, we begin with the federal court of appeals' characterization of this dispute in its opinion rejecting federal court jurisdiction. That court viewed the controversy as a routine contract action involving the Tribe, a matter over which federal courts do not have jurisdiction. Iowa Mgmt. & Consultants, 207 F.3d at 489. The consulting firm carefully avoided changing the character of the litigation when refiling the claim in state court. The arbitration agreement provided that it may be enforced in any court of competent jurisdiction. Consequently, we are convinced that, after the federal appeals court ruling rejecting federal court jurisdiction, the consulting firm was left with no place to go other than a state court of general jurisdiction. If we conclude that the Iowa court had jurisdiction to compel arbitration of this dispute, which we do, then the consideration of the tribe's federal-law challenge to the entire agreement (which contention was tendered by the tribe in state court) had to be adjudicated in that forum in order to resolve the entire controversy. The alternative would have been to simply ignore those defenses, a result we are certain the tribe does not advocate. The Supreme Court has recognized that an Indian tribe is not subject to suit in a state court, even for breach of contract, unless Congress has authorized the suit or the tribe has waived its immunity. Kiowa Tribe of Oklahoma v. Mfg. Techs., Inc., 523 U.S. 751, 754, 118 S.Ct. 1700, 1702-03, 140 L.Ed.2d 981, 985 (1998). But, it has also recognized that a tribe may waive this immunity from suit in state court by making a contract that expressly agrees to arbitrate disputes and to permit the enforcement of arbitrable awards in any court of competent jurisdiction. C & L Enters., Inc. v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 532 U.S. 411, 420, 121 S.Ct. 1589, 1595, 149 L.Ed.2d 623, 632 (2001); accord Sokaogon Gaming Enters. Corp. v. Tushie-Montgomery Assocs., Inc., 86 F.3d 656, 661 (7th Cir.1996) (same). In Bruce H. Lien Co. v. Three Affiliated Tribes, 93 F.3d 1412 (8th Cir.1996), the federal court of appeals was faced with an effort to compel arbitration of a contract dispute with an Indian tribe. That action was brought in federal court. In discussing the arbitration clause, the court stated: The Tribes have clearly and unequivocally waived their sovereign immunity under the contract and the parties have chosen binding arbitration as a dispute resolution procedure.... The problem is that the Tribes are challenging the legal validity of the contract itself, specifically the actions of its former Chairman leading to the execution of the contract. This challenge to the document itself therefore calls into question all provisions contained therein (including provisions relating to arbitration, sovereign immunity, and federal district court jurisdiction). Bruce H. Lien, 93 F.3d at 1417. The court held that, if a challenge to the validity of the entire agreement was successful, this would nullify the provisions for mandatory arbitration and waiver of sovereign immunity. The court, in determining the proper forum to adjudicate the validity of the agreement, chose the tribal court subject to review by the federal district court for North Dakota. Id. It is somewhat puzzling why the federal court had jurisdiction to consider the same type of controversy in the Bruce H. Lien case that it rejected for want of jurisdiction in the federal litigation of the present dispute. We assume this has something to do with the exclusive jurisdiction of the tribal court. In the present case, we need not consider possible jurisdiction of a tribal court to resolve a challenge to the validity of the agreement because the tribe has not urged exclusive tribal court jurisdiction to resolve the validity of the contract, and the record reflects that the tribe has no court of competent jurisdiction to resolve this dispute. Based on the conclusions we have reached concerning the posture of the litigation, we affirm that portion of the district court's ruling assuming jurisdiction to hear the application to compel arbitration. We also uphold that court's jurisdiction to resolve the tribe's federal defenses to the validity of the agreement. However, our inquiry does not end at this point. We agree with the premise advanced in Bruce H. Lien, 93 F.3d at 1417, that, if the entire agreement is invalid under federal law, this would also invalidate the provision in the agreement for arbitration of disputes. [1] Consequently, we must consider whether, on the record presented, the federal law challenges to the validity of the entire agreement, including the arbitration clause, were properly resolved by the district court.