Court Opinion

ID: 3018918
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:20:01.24881+00
Date Added: 2024-06-11T12:55:31.525679
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 96-3953
                                   ___________

International Gaming Network,           *
                                        *
      Appellant,                        * Appeal from the United States
                                        * District Court for the District
      v.                                * of South Dakota.
                                        *
Casino Magic Corp.,                     *
                                        *
      Appellee.                         *
                                   ___________

                             Submitted: May 22, 1997

                                  Filed: July 17, 1997
                                   ___________

Before RICHARD S. ARNOLD, Chief Judge, and BOWMAN and MORRIS
      SHEPPARD ARNOLD, Circuit Judges.
                           ___________

MORRIS SHEPPARD ARNOLD, Circuit Judge.

       International Gaming Network, Inc. ("IGN"), appeals a summary judgment
entered in favor of Casino Magic Corporation ("CMC") in an action for tortious
interference with a business relationship that existed between IGN and the
Sisseton-Wahpeton Sioux Tribe (the "Tribe"). The case, here under our diversity
jurisdiction, is governed by South Dakota law. We find that the evidence in the record
is insufficient to support a finding for IGN on its claim, and therefore affirm the
judgment of the district court.1

                                            I.
        The business relationship at issue here had begun by June, 1993, when the
Tribe's governing body, the Tribal Council, effected an agreement with IGN for the
latter to build and manage a casino on tribal land. This agreement was not binding on
the parties, because federal law required that it be approved by the National Indian
Gaming Commission ("NIGC"). See 25 U.S.C. §§ 2701-2721 (Indian Gaming
Regulatory Act). The parties agreed at oral argument as well that the agreement did
not carry with it an implied undertaking on the part of the Tribe not to repudiate it
before the NIGC acted to approve or disapprove it. IGN developed a plan and
submitted a proposal to the NIGC to build and operate a casino for the Tribe.

       Before the NIGC had acted, the Tribe decided to recall the proposal from the
NIGC and to rescind the agreement with IGN. Prior to this action, the Tribe's regular
attorney, Bertram Hirsch (who had not been a part of the original negotiations with
IGN), was asked by the Tribal Council to review the agreement, a review that
ultimately led him to conclude that it was not in the best interests of the Tribe.
Expressions of concern over the agreement had been raised at tribal meetings held at
the district level (the Tribe comprised seven districts), concerns that contributed to the
calling of a public forum that was held on the date that the Tribal Council acted to
rescind the agreement. There was, as well, dissension in the ranks of the Tribal
Council over the agreement.

     There had been, prior to the repudiation of this agreement, only one contact
between CMC and the Tribe that IGN thinks is relevant. There is a dispute as to the

      1
      The Honorable John B. Jones, United States District Judge for the District of
South Dakota.

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characterization of this contact, but the parties agree that, only a few days before the
Council met to rescind the agreement, three agents of CMC entered a Tribe casino in
Watertown, South Dakota, and that a meeting lasting no more than fifteen minutes
occurred between them and certain members of the Tribe's Gaming Commission and
the Tribe's Gaming Board.

      CMC contends that the meeting was merely an impromptu and unplanned
encounter that arose in the course of a training expedition during which its employees
were visiting various casinos. CMC argues, moreover, and IGN does not deny it, that
the Gaming Board and the Gaming Commission were bodies whose function was to
oversee the Watertown casino only, and that no one present at the meeting had any
authority with regard to new casino development.

       IGN, on the other hand, maintains that the meeting was a formal presentation by
CMC designed to steal away the new casino project. It asserts that CMC distributed
company brochures touting its management prowess, and it also points to deposition
testimony suggesting that the CMC agents admitted to being there to discuss a
management contract. There is also some evidence in the record that Alan Johnson,
the Gaming Commissioner for the Tribe's South Dakota gaming operations, was a key
participant in, if not the originator of, the meeting.

        After the action by the Tribe repudiating its agreement with IGN, IGN acted to
try to preserve its relationship with the Tribe. Beverly and Theron Thompson, who had
acted as intermediaries between the Tribe and IGN and who had a stake in IGN's
agreement, faxed a letter to CMC asking that it disavow any interest in the agreement.
The letter stated that "[w]e realize your people were contacted by Alan Johnson.... He
will not be Commissioner in North Dakota. He is the precipitator of the whole
situation." CMC declined to send back a suggested letter that the Thompsons had
attached to their fax, but it did write the Tribe asserting that it had "no interest in

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pursuing any of the services mentioned in the fax sample letter and does not intend to
do so."

       Soon thereafter, Lorraine Rousseau, the chairwoman of the Tribal Council, who
had been a key supporter of the IGN agreement, was removed from her leadership
position. The Tribal Council, under its new leadership, sought to solicit proposals for
the casino, while, at the same time, continuing negotiations with IGN. At this time, the
Tribe's attorney, Mr. Hirsch, wrote the Tribe urging it to discontinue negotiations with
IGN while it was soliciting proposals from others. The Tribe acceded to Mr. Hirsch's
suggestions, and wrote to tell IGN that it was discontinuing negotiations with it in order
to "explore other casino management opportunities."

      The Tribe then solicited proposals from CMC, as well as from Red Rock,
Harrah's, the Mashantucket Pequot Tribe, and several others. The Tribe also informed
IGN that IGN could offer a new proposal if it wished, but it did not. Four proposals
were received. The Tribe selected Harrah's and CMC as finalists and ultimately
entered into an agreement with CMC.

                                             II.
       In order to survive summary judgment, IGN must have evidence that a business
relationship existed between it and the Tribe, and that there was an intentional and
unjustified act to interfere with that relationship by CMC. There must, as well, have
been harm to IGN that can reasonably be attributed to CMC's actions. See Nelson v.
Web Water Dev. Ass'n, Inc., 507 N.W.2d 691 (S.D. 1993); see also Restatement
(Second) of Torts §§ 766-774A at 7-57 (1979).

       While we think it likely that a business relationship of the sort necessary for the
commission of this tort ceased to exist between IGN and the Tribe when the Tribal
Council rescinded the agreement, it is quite obvious that the necessary relationship was
at an end at the time when the Tribe, acting on Mr. Hirsch's advice, notified IGN that

                                           -4-
it was discontinuing negotiations and that the contract was going to be rebid. The only
relevant evidence offered by IGN of CMC's interest in the casino contract before that
time was the meeting at Watertown that we have already adverted to. The difficulty
for IGN with this solitary bit of evidence is that on the present record, even when
viewed in a light most favorable to IGN, IGN cannot carry its burden of showing that
CMC's actions caused the rescission of the agreement.

        IGN's main supporter within the Tribe was Lorraine Rousseau, who, as
chairwoman, orchestrated the negotiations that gave rise to the original agreement. But
her actions with regard to the IGN contract appeared to many in the Tribe to have been
hasty, and a general dissatisfaction with her performance led to her losing political
power. One act of hers that was criticized was that she had shut Mr. Hirsch, the long-
term tribal attorney, out of the IGN negotiations. She testified later that she did not
trust him. After the change of Tribal Council leadership, Mr. Hirsch was brought in to
review the agreement, and, as we have already indicated, he ultimately concluded that
it was not in the best interests of the Tribe. This led directly to a reopening of the
casino business to bids.

       IGN argues on appeal that the question of attorneys was a red herring since the
NIGC had the duty to ensure that a contract between a tribe and casino operators is fair
to an Indian tribe: Therefore, IGN argues, not having Mr. Hirsch involved could not
have hurt the Tribe. IGN, it seems to us, misses the point that Mr. Hirsch's exclusion
from the relevant process, while not necessarily harmful to the Tribe given the NIGC's
oversight, was nevertheless a clearly unpopular act, and bolstered the sentiment shared
by many tribal members that Ms. Rousseau was acting too brashly with respect to the
casino business. Her political downfall was intimately linked to IGN's loss.

       In the face of this evidence of political maneuvering, IGN offers only meager
evidence that CMC's actions at the Tribe's casino at Watertown were what influenced
the Tribe to undo its relationship with IGN. But this contact, which at most involved

                                          -5-
the distribution of brochures, occurred with tribal members who had no authority over
new casino business. Before IGN could prevail, a jury would have to speculate on the
basis of this record that the Watertown meeting caused IGN to lose the business of the
Tribe. That, of course, a jury may not do.

                                           III.
       We find that the record before us cannot support a reasonable inference that but
for CMC's brief encounter with tribal members at Watertown, IGN's advantageous
relation with the Tribe would have been continued. We therefore affirm the district
court's grant of summary judgment in favor of IGN.

      A true copy.

             Attest:

                CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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