Court Opinion

ID: 3045390
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:16:22.747615+00
Date Added: 2024-06-11T11:49:07.171681
License: Public Domain

United States Court of Appeals
                              FOR THE EIGHTH CIRCUIT
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                                      No. 07-3269
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Oglala Sioux Tribe,                      *
                                         *
      Plaintiff - Appellee,              *
                                         *      Appeal from the United States
      v.                                 *      District Court for the District of
                                         *      South Dakota.
C & W Enterprises, Inc.,                 *
                                         *
      Defendant - Appellant.             *

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                                Submitted: June 13, 2008
                                    Filed: September 5, 2008
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Before SMITH and GRUENDER, Circuit Judges, and ROSENBAUM, District
Judge.1
                          ____________

ROSENBAUM, District Judge.

       C & W Enterprises, Inc., appeals from a United States District Court for the
District of South Dakota order permanently enjoining the Second Judicial Circuit Court
of South Dakota (“state court”) from confirming an arbitration award against the Oglala
Sioux Tribe for lack of subject matter jurisdiction. We vacate the permanent
injunction, and remand for further proceedings.

      1
        The Honorable James M. Rosenbaum, United States District Judge for the
District of Minnesota, sitting by designation.
I. Background

      A. The Oglala Sioux/C & W Construction Contracts

       This case has a tortuous procedural history, encompassing no fewer than five
different courts and one arbitral forum. While convoluted, this history is essential to
our analysis.

      The matter began in 2002, when C & W Enterprises, Inc. (“C & W”), itself a
Native American-owned business, entered into four separate contracts with the Oglala
Sioux Tribe (“Oglala Sioux” or “Tribe”). The contracts are referred to as the: (1)
Multi-Gravel project; (2) Manderson to Wounded Knee project; (3) Cuny Table
project; and (4) Base and Blotter project. Each contract obligated C & W to perform
road construction on the Oglala Sioux Pine Ridge Indian Reservation.

      The Oglala Sioux Tribe is federally-recognized. The contracts were funded by
federal funds administered by the Bureau of Indian Affairs, pursuant to the Indian Self
Determination Act, 25 U.S.C. § 450 et. seq.

     The first three contracts contained explicit clauses waiving the Tribe’s sovereign
immunity. Each stated:

      [T]he Oglala Sioux Tribe grants a limited waiver of its immunity for any
      and all disputes arising from this Contract, including the interpretation of
      the agreement and work completed or to be completed under the
      Contract; provided, however, that such waiver extends only to the Oglala
      Sioux Tribe and Transportation’s specific obligations under the Contract;
      and further provided that such waiver shall extend only to the extent
      necessary to permit enforcement by the Subcontractor.

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The three contracts also provided for Claims Resolution, stating:

      The parties agree to bring any and all claims in the first instance to the
      Oglala Sioux Tribe Executive Committee for non-binding mediation, and
      thereafter to the South Dakota Federal District Court, and in the absence
      of Federal Court jurisdiction, the parties agree to arbitration in accordance
      with the Construction Industry Arbitration Rules of the American
      Arbitration Association in effect at the time of this Contract. In the event
      there exists no Federal Court jurisdiction and the parties proceed to
      arbitration, the award rendered by the arbitrator shall be final, and
      judgment may be entered upon it in accordance with the applicable law
      in any court having jurisdiction thereof. In the event either party does not
      timely comply in accordance with the Construction Industry Arbitration
      Rules of the American Arbitration Association, said party waives its right
      to arbitration and judgment may be entered in the amount in dispute in
      accordance with applicable law in any court having jurisdiction thereof.

      The Base and Blotter contract contained different language, and a different
dispute resolution regime:

      The Oglala Sioux Tribal Court will resolve all disputes arising under this
      contract. Tribal substantive laws regarding contracts shall apply to such
      disputes. If no tribal substantive laws regarding contracts exist, then the
      Tribal Court will apply South Dakota law as a guide . . . . The parties
      agree to bring any and all claims in the first instance to the Oglala Sioux
      Executive Committee for non-binding mediation presided over by a
      mutually agreed upon mediator. If mediation fails, then the aggrieved
      party may initiate a civil action in the Oglala Sioux Tribal Court.

      B. Arbitration of Contract Disputes

      The paving path did not run smooth. Disputes arose concerning C & W’s
performance and payment therefor. On August 31, 2005, the parties attempted to
resolve their disputes through non-binding mediation by the Oglala Sioux Tribal
Executive Committee. The attempts were unsuccessful.

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      On January 17, 2006, C & W filed a claim with the American Arbitration
Association (“AAA”) concerning all four contracts, seeking $6 million. The Tribe
communicated to C & W its agreement to arbitrate, and although not required to do so,
agreed to include the Base and Blotter project in the arbitration. The Tribe answered
C & W’s AAA claim, and particularly asserted its own counterclaims under the Base
and Blotter contract. It sought damages of over $1.8 million for breach of that contract.
The Tribe’s answer did not assert sovereign immunity.

      The Tribe moved to dismiss certain claims on grounds of sovereign immunity,
but not with respect to the Base and Blotter contract. In support of that motion, the
Tribe filed a memorandum with the arbitrator, acceding to him consideration of the
Base and Blotter contract. The memorandum stated, in part:

      In the Base and Blotter contract, the limited waiver of sovereign immunity
      extends only to the Oglala Sioux Tribal Court. The Tribe has not
      objected to the claimant’s inclusion of the Base and Blotter claim in the
      Arbitration Demand, however, for the sake of expediency in resolving the
      dispute on its merits.

(Oglala Sioux’s “Legal Mem. in Supp. of Motion to Dismiss Portion of Claim” 3, May
11, 2006 (see Complaint, Ex. K (06-CV-5063-KES)).) The Tribe fully participated in
five months of arbitration – attending hearings, filing a position paper, and serving
discovery requests.

       On June 23, 2006, the Tribe apparently changed course. It moved the arbitrator
to dismiss the Base and Blotter claims from arbitration, claiming sovereign immunity.
Rule R-8(a) of the Construction Industry Arbitration Rules of the AAA (“AAA

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Rules”), however, confers upon the arbitrator the power to decide issues of jurisdiction
and arbitrability. AAA Rule R-8(c) further provides:

      A party must object to the jurisdiction of the arbitrator or to the
      arbitrability of a claim or counterclaim no later than the filing of the
      answering statement to the claim or counterclaim that gives rise to the
      objection.

The arbitrator denied the motion, finding the Tribe’s active participation in arbitrating
the Base and Blotter contract waived its immunity.

       On August 21, 2006, the Tribe filed its initial action in the United States District
Court for the District of South Dakota. It sought to enjoin the arbitrator from hearing,
among other things, claims related to the Base and Blotter contract. Oglala Sioux
Tribe v. C & W Enterprises, Inc., No. 06-5063, 2006 U.S. Dist. LEXIS 61113, at *3
(D.S.D. Aug. 28, 2006). The district court dismissed that case for lack of federal
jurisdiction, and this Court affirmed. Oglala Sioux Tribe v. C & W Enterprises, Inc.,
487 F.3d 1129, 1130 (8th Cir. 2007).

       Following dismissal of the initial action, the arbitrator commenced a two-week
arbitration in Sioux Falls, South Dakota, on August 30, 2006. The record does not
disclose either party’s objection to that location. On January 29, 2007, the arbitrator
entered a final award of $1,250,552.58 in favor of C & W. Following this award, each
party filed separate actions: C & W seeking to enforce the award; the Tribe seeking
to contest it.

       C. State Court Action to Confirm Arbitration Award

       On January 29, 2007, the day of the final arbitration award, C & W filed an
action in South Dakota state court to confirm the award. The action was filed pursuant
to South Dakota’s Uniform Arbitration Act, S.D.C.L. § 21-25A et. seq. The Tribe

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was served on February 26, 2007. When the Tribe declined to answer, C &
W moved for default judgment. The Tribe, having opted against answering, defaulted;
judgment was entered, on May 29, 2007. C & W sought to collect its state court
judgment by obtaining executions on Oglala Sioux property located in South Dakota’s
Hughes and Fall River Counties. On July 10, 2007, the Tribe moved the state court
to quash the executions. The action to quash ended on September 28, 2007, however,
when the federal court issued the injunction presently before us.

      D. Tribal Court Action to Vacate Arbitration Award

       The Tribe filed its own case in the Oglala Sioux Tribal Court, on April 30,
2007, seeking to vacate the arbitration award. C & W defended unsuccessfully, and
the Tribal Court vacated the arbitral award, on July 26, 2007. On March 29, 2008, the
Supreme Court of the Oglala Sioux Tribe affirmed the Tribal Court’s decision vacating
the award, but remanded the matter to the Tribal Court to permit C & W’s discovery
concerning the Tribe’s consent to arbitrate the Base and Blotter contract.

      E. Federal Action to Enjoin State Court

       The Tribe filed the present matter, on March 16, 2007, in the United States
District Court for the District of South Dakota. The Tribe sought: (1) a declaratory
judgment holding the South Dakota state court lacked jurisdiction to confirm or allow
execution on the arbitral award; (2) an injunction barring the state court from
proceeding in these matters; and (3) a declaration that the Oglala Sioux Tribal Court
had exclusive jurisdiction to confirm or vacate the award; or (4) alternatively, that the
district court vacate the arbitration award. On August 16, 2007, the Tribe moved the
district court to stay C & W’s state court action.

       The district court consolidated the Tribe’s motion for temporary relief with its
action for declaratory judgment and permanent injunction, pursuant to Fed. R. Civ.

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P. 65(a)(2). On September 10, 2007, the district court found the state court lacked
jurisdiction to confirm the arbitral award, and permanently enjoined it from exercising
jurisdiction over the matter. The order vacated the state court’s executions, and found
the parties must exhaust their Tribal Court remedies respecting the arbitral award. C
& W appeals.

II. Discussion

      A. Standard of Review

       We have jurisdiction to review C & W’s timely interlocutory appeal pursuant
to 28 U.S.C. § 1292(a). We review the district court’s grant of a permanent injunction
for abuse of discretion. Planned Parenthood Minnesota, North Dakota, South Dakota
v. Rounds, 530 F.3d 724, 733 (8th Cir. 2008) (en banc). “An abuse of discretion
occurs where the district court rests its conclusion on clearly erroneous factual findings
or erroneous legal conclusions.” Id. (citation omitted).

       The standard for issuing a preliminary or permanent injunction is essentially the
same, excepting one key difference. A permanent injunction requires the moving party
to show actual success on the merits, rather than the fair chance of prevailing on the
merits required for a standard preliminary injunction. See id. at 732; Randolph v.
Rodgers, 170 F.3d 850, 857 (8th Cir. 1999). If a court finds actual success on the
merits, it then considers the following factors in deciding whether to grant a permanent
injunction: (1) the threat of irreparable harm to the moving party; (2) the balance of
harms with any injury an injunction might inflict on other parties; and (3) the public
interest. See Planned Parenthood, 530 F.3d at 729 n.3; Dataphase Systems, Inc. v.
C.L. Systems, Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc).

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      B. Success on the Merits

      We begin with the threshold question of whether the Tribe has met its burden
of showing actual success on the merits. Here, actual success turns on the legal
question of whether the South Dakota state court has jurisdiction to enforce the arbitral
award against the Oglala Sioux Tribe. We find that it does.

             1. Waiver of Sovereign Immunity

       Indian tribes generally enjoy sovereign immunity from contract suits in state
court. Kiowa Tribe of Okla. v. Manufacturing Technologies, Inc., 523 U.S. 751, 760
(1998). A tribe may be subject to state suit, however, if Congress has expressly
abrogated tribal immunity, or the tribe has relinquished its immunity by clear waiver.
C & L Enterprises, Inc. v. Citizen Band Potawatomi Indian Tribe, 532 U.S. 411, 418
(2001). In the absence of any Congressional abrogation, we must examine whether
the Oglala Sioux “waived, with the requisite clarity, immunity from the suit [C & W]
brought to enforce its arbitration award.” Id.

       The Supreme Court considered this question in C & L Enterprises. There, the
Citizen Potawatomi Nation (“Potawatomi tribe”) contracted with C & L Enterprises
to construct a Potawatomi-owned building at an off-reservation location. As here, the
C & L Enterprises’s contract contained an arbitration provision explicitly incorporating
the AAA Rules. That contract further contained a choice of law clause, providing for
application of “the law of the place where the Project is located.” Id. at 415. The
Potawatomi tribe abrogated the contract, and C & L Enterprises demanded arbitration.
The Potawatomi tribe replied by asserting sovereign immunity and refusing to
arbitrate, after which the arbitrator entered an award for C & L Enterprises. C & L
Enterprises sued in Oklahoma state court to enforce its award. The Oklahoma trial
court rejected the Potawatomi tribe’s claimed immunity and confirmed the award. The
judgment was ultimately reversed by the Oklahoma Court of Civil Appeals. Id. at 417.

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The appellate court found the Potawatomi tribe had not waived its sovereign immunity
with the requisite clarity, citing Kiowa.2 Id.

        The Supreme Court granted certiorari to resolve a conflict between both state
and federal courts concerning whether an arbitration clause is an express waiver of
tribal immunity for contracts suits. Id. at 417-18. The Court found, as this Circuit has
done previously, that an arbitration clause alone was sufficient to expressly waive
sovereign immunity to a state court enforcement action. See id. at 417-23 (citing
Rosebud Sioux Tribe v. Val-U Constr. Co., 50 F.3d 560, 562 (8th Cir. 1995);
Sokaogon Gaming Enterprise Corp. v. Tushie-Montgomery Associates, Inc., 86
F.3d 656, 661 (7th Cir. 1996); Native Village of Eyak v. GC Contractors, 658 P.2d
756 (Alaska 1983); Val/Del, Inc. v. Superior Court, 703 P.2d 502 (Ariz. Ct. App.
1985)).

      2
        The Oklahoma Court of Civil Appeals initially affirmed the trial court’s order
“holding that the Tribe lacked immunity because the contract giving rise to the suit was
between an Indian tribe and a non-Indian and was executed outside of Indian Country.”
C & L Enterprises, 532 U.S. at 416 (quotations omitted). The Oklahoma Supreme
Court denied review, but the United States Supreme Court granted certiorari, vacated
the appellate court’s decision, and remanded for reconsideration in light of Kiowa,
which had been decided while the contractor’s petition for certiorari was under review.
Id. at 416-17. On remand from the United States Supreme Court, the Oklahoma Court
of Civil Appeals reversed its prior decision finding that, although the arbitration clause
indicated the Potawatomi tribe was willing to waive immunity, the immunity clause did
not meet Kiowa’s standard with sufficient clarity. Id. at 417. The Oklahoma Supreme
Court again denied review. The Supreme Court accepted certiorari and reversed the
Civil Appeals Court’s post-remand decision. Id. at 414, 417-18.
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     The Court found C & L Enterprises’s arbitration clause expressly waived the
Potawatomi tribe’s sovereign immunity, holding:

      [The arbitration clause] has a real world objective; it is not designed for
      regulation of a game lacking practical consequences. And to the real
      world end, the contract specifically authorizes judicial enforcement of the
      resolution arrived at through arbitration. ‘We believe it is clear that any
      dispute arising from a contract cannot be resolved by arbitration, as
      specified in the contract, if one of the parties intends to assert the defense
      of sovereign immunity . . . . The arbitration clause . . . would be
      meaningless if it did not constitute a waiver of whatever immunity the
      Tribe possessed.’

C & L Enterprises, 532 U.S. at 422 (quoting Eyak, 658 P.2d at 760).

       The Supreme Court looked to the AAA Rules expressly incorporated into the
agreement which provide, “the arbitration award may be entered in any federal or state
court having jurisdiction thereof.” Id. at 419 (quoting AAA Rules R-48(c)). The Court
particularly noted that foreign nations - entities possessing full, rather than limited
sovereignty - which enter arbitration agreements waive their immunity regarding
enforcement of the awards arising from those contracts. Id. at 421 n.3.

             2. Contractual Waiver of Immunity

       In the matter now before us, unlike C & L Enterprises’s contract, three of the
parties’ contracts contain an explicit immunity waiver stating “the Oglala Sioux Tribe
grants a limited waiver of its immunity for any and all disputes arising from this
Contract.” See supra. The words are unambiguous. And, as in C & L Enterprises, the
parties agreed to arbitrate any contractual disputes, absent federal jurisdiction.

       The first three contracts specifically provide: “[T]he award rendered by the
arbitrator shall be final, and judgment may be entered upon it in accordance with the

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applicable law in any court having jurisdiction thereof.” See supra. As the Supreme
Court discussed in C & L Enterprises, the arbitration agreement alone is enough to
waive immunity. We find that, in the three contracts containing an explicit waiver of
immunity and an agreement to arbitrate, the Tribe has waived sovereign immunity with
respect to a suit brought to enforce an arbitral award.

      We consider the effect of C & L Enterprises’s choice of law provision
separately, below.

             3. Immunity and the Base and Blotter Contract

        There is no contractual waiver of the Tribe’s sovereign immunity in the Base and
Blotter contract. The Base and Blotter contract contained the Tribe’s consent to suit
in its Tribal Court, with no arbitration provision. A sovereign tribe has full authority
to limit any waiver of immunity to which it consents. See Missouri River Svcs. v.
Omaha Tribe of Neb., 267 F.3d 848, 852 (8th Cir. 2001). Absent any other facts, the
Tribe’s immunity to C & W’s state court suit would remain intact. But other facts
developed.

       C & W’s arbitration demand included claims arising from the Base and Blotter
contract. The Tribe not only raised no objection, it responded, raising its own arbitral
counterclaims under the same contract. The Tribe then went further. In a legal
memorandum to the arbitrator, the Tribe first noted the Base and Blotter contract’s
written waiver extended only to the Oglala Sioux Tribal Court. But as the Tribe
explicitly stated: “The Tribe has not objected to the claimant’s inclusion of the Base
and Blotter claim in the Arbitration Demand, however, for the sake of expediency in
resolving the dispute on its merits.” See supra. Wholly mindful that a waiver of
sovereign immunity must be clearly expressed, we hold that, under these conditions,
where there are contractual arbitration agreements and a tribe actively participates in
that arbitration, and in the course of that arbitration raises its own affirmative claims

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involving a clearly-related matter, the Tribe voluntarily and explicitly waives any
immunity respecting that related matter.

       We recognize, also, the AAA Rules requiring jurisdictional objections to be filed
in the answer. Here, when the Tribe actively opted into the arbitration - including the
Base and Blotter contract - it bound itself to the AAA’s rules and the procedural regime
they encompass. If a tribe were allowed to operate under AAA rules, and after an
adverse decision assert sovereign immunity and then walk away, it would convert
sovereignty from a shield into a sword. A tribe could, with impunity, thumb its nose
at authority to which it had voluntarily acquiesced. Sovereignty does not extend so far.

             4. State Court Jurisdiction

        Having found the Tribe waived its sovereign immunity on all four contracts, we
must consider whether its waiver extends to South Dakota state court enforcement. We
find it does.

       The parties opted to use arbitration, and in doing so, opted for the AAA’s Rules.3
Three contracts specifically incorporate those Rules. The Rules themselves provide
“[t]he parties shall be deemed to have made these rules a part of their arbitration
agreement whenever they have provided for arbitration by the [AAA].” AAA R-1(a).
The Rules further provide that “[p]arties to these rules shall be deemed to have
consented that judgment upon the arbitration award may be entered in any federal or
state court having jurisdiction thereof.” AAA R-49(c). This is certainly not a limitation
requiring recourse to the Tribal Court.

      3
       As the Supreme Court noted in C & L Enterprises, the AAA Rules “are not
secondary interpretive aides that supplement our reading of the contract; they are
prescriptions incorporated by the express terms of the agreement itself.” C & L
Enterprises, 532 U.S. at 419 n.1.
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       The three contracts which included an arbitration clause specifically state: “[T]he
award rendered by the arbitrator shall be final, and judgment may be entered upon it
in accordance with the applicable law in any court having jurisdiction thereof.” See
supra. We reject the Tribe’s contention that it waived immunity only to suit in Tribal
Court - that is not what the contracts say. The parties could have made such an
agreement, but did not do so. Indeed, the text of the Base and Blotter contract makes
this precise choice. And any express limitation imposed by the Tribe on its consent to
suit would have been duly recognized. See Missouri River, 267 F.3d at 852-54.

       Once a party opts for, and participates in, arbitration, however, it is bound by the
arbitrator’s decisions. Sioux Falls, South Dakota, was the site chosen for the hearing
without objection. Under AAA Rule R-11, even in the face of an objection, “the AAA
shall have the power to determine the locale, and its decision shall be final and
binding.” By choosing a hearing forum in South Dakota, the arbitrator ultimately
decided which court would have jurisdiction to confirm the award.

      South Dakota’s Uniform Arbitration Act provides:

      The term ‘court’ means a circuit court of this state. The making of an
      agreement described in § 21-25A-1 providing for arbitration in this state
      confers jurisdiction on the court to enforce the agreement under this
      chapter and to enter judgment on an award thereunder.

S.D.C.L. § 21-25A-4. When it agreed to arbitrate disputes and incorporated the
AAA’s claim resolution procedures into the contracts, and when it participated in the
South Dakota arbitration, the Tribe acquiesced in the arbitrator’s decision, placing
jurisdiction over the award in South Dakota’s courts. Once the Tribe waived its
immunity by agreeing to arbitration, it “constitute[d] a waiver of whatever immunity
the Tribe possessed.” C & L Enterprises, 532 U.S. at 422 (citation omitted).

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             5. C & L Enterprises’s Choice of Law Provision

      The Oglala Sioux ask us to focus on a distinction between one fact in this case,
and another in C & L Enterprises: C & L Enterprises’s contract contained a choice of
law provision. We consider that fact collateral to the C & L Enterprises decision. The
Supreme Court noted the choice of law provision made it “plain enough” that the
Potawatomi tribe had waived immunity to suit in Oklahoma, id. at 419. Fairly read,
however, it is clear the C & L Enterprises decision does not depend on this provision.

       In deciding C & L Enterprises, the Supreme Court favorably cited multiple lower
court cases finding tribes subject to state court suits premised on arbitration agreements
alone. See id. at 417-23 (citing Rosebud Sioux Tribe v. Val-U Constr. Co., 50 F.3d
560, 562 (8th Cir. 1995); Sokaogon Gaming Enterprise Corp. v. Tushie-Montgomery
Associates, Inc., 86 F.3d 656, 661 (7th Cir. 1996); Eyak, 658 P.2d at 760; Val/Del,
Inc. v. Superior Court, 703 P.2d 502 (Ariz. Ct. App. 1985)).

       Going further, the Supreme Court said, due to C & L Enterprises’s choice of law
provision, it did not need to address the argument that tribal waivers should be subject
to the same limitations as state waivers of immunity. Under state sovereign immunity
jurisprudence, ambiguous waivers of sovereign immunity are construed narrowly and
limited to a state’s consent only to be sued in its own courts. See id. at 421 n.4. As
we perceive no ambiguity in the contract before us - indeed, no party has suggested
ambiguity - we find no reason to decide this question either.

        We also decline to adopt a view that the work’s locus, vis-a-vis the reservation’s
borders, distinguishes C & L Enterprises. Here, the work was performed on
reservation land. In the C & L Enterprises project, it was done off-reservation. Kiowa
establishes that whether a state court has jurisdiction over a tribe depends on whether
the tribe has waived its immunity. Kiowa, 523 U.S. at 754. In deciding the question
of whether a tribe has waived immunity to a state court action brought to enforce an

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arbitration agreement, not a single case cited in C & L Enterprises concerned itself
with the performance-location of the contracted service. We do not do so either. Once
a waiver of immunity is established, state court jurisdiction depends on whether state
law provides jurisdiction over a given subject matter. Here, the state court has
jurisdiction because the arbitration occurred in South Dakota, see S.D.C.L. § 21-25A-
4; the locus of the work is irrelevant.

      In light of the Tribe’s agreement to, and full participation in, the arbitration
proceedings held in South Dakota, we find the South Dakota state court has jurisdiction
to confirm the arbitral award and enter judgment thereon.

      C. Other Dataphase Factors

       Having found the Oglala Sioux Tribe waived its sovereign immunity, and having
found state court jurisdiction to confirm the arbitral award, the Tribe has - necessarily -
failed to show any likelihood of success on the merits. Accordingly, we find it
unnecessary to assess the remaining factors for injunctive relief. See Planned
Parenthood, 530 F.3d at 732.

III. Conclusion

      Our determinations compel the conclusion that the lower court’s injunction and
declaration of rights were premised on a manifest error of law and were, perforce, an
abuse of discretion.

     For these reasons, we vacate the previously issued permanent injunction, and
remand for further proceedings in accord with this opinion.
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