Court Opinion

ID: 2799534
Source: CourtListenerOpinion
Date Created: 2015-05-08 15:01:50.104908+00
Date Added: 2024-06-11T11:12:15.125575
License: Public Domain

United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 13-3408
                        ___________________________

                                    City of Duluth

                        lllllllllllllllllllll Plaintiff - Appellee

                                           v.

                  Fond Du Lac Band of Lake Superior Chippewa

                      lllllllllllllllllllll Defendant - Appellant
                                      ____________

                     Appeal from United States District Court
                    for the District of Minnesota - Minneapolis
                                   ____________

                          Submitted: November 12, 2014
                               Filed: May 8, 2015
                                 ____________

Before MURPHY, MELLOY, and BENTON, Circuit Judges.
                          ____________

MURPHY, Circuit Judge.

       The Fond du Luth Casino in downtown Duluth, Minnesota opened in 1986 as
a joint venture between the City of Duluth and the Fond du Lac Band of Lake
Superior Chippewa and is today a profitable tourist attraction owned and operated by
the Band. Congress passed the Indian Gaming Regulatory Act (“IGRA”) in 1988
which changed the legal framework underlying the development of American Indian
casinos such as the Fond du Luth Casino. This new statute led to restructuring of the
prior casino agreements between the Band and the City under a 1994 consent decree
issued by United States District Judge Paul A. Magnuson. Pursuant to this decree the
Band paid the City $75 million in the period from 1994 through early 2009
amounting to 19 percent of gross revenues. The Band stopped making such payments
in 2009 after concluding that they violated IGRA as interpreted by the National
Indian Gaming Commission.

       In July 2011, the Gaming Commission issued a Notice of Violation regarding
the Fond du Luth Casino after determining that the Band’s payments to the City
violated IGRA requirements that tribes are to have the sole proprietary interest in
casinos and are to be their primary beneficiaries. The Gaming Commission ordered
the Band not to resume payments to the City or face fines and closure of the casino.
Shortly thereafter the Band sought relief under Federal Rule of Civil Procedure
60(b)(6) from any obligation for similar payments in the period from 2009 to 2011.
The district court denied relief in November 2011, and the Band appealed. We
reversed in January 2013 and remanded for the district court to consider six factors
relevant to the question of whether the Band was entitled to the relief it had
requested. City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d
1147, 1155 (8th Cir. 2013). On remand the district court failed to consider all of the
factors identified in our January 2013 order, and the Band appeals. We reverse and
remand.

                                          I.

       The relevant facts underlying the issues in this case are discussed in detail in
our most recent opinion in this case, City of Duluth, 702 F.3d at 1150-52, and we
briefly summarize some of that history here. Although the casino was opened as a
joint venture, in 1988 Congress passed IGRA which requires that Indian tribes have
the "sole proprietary interest" in Indian gaming activity. 25 U.S.C. § 2710(b)(2)(A).

                                         -2-
The Band then sought federal declaratory and injunctive relief in the District of
Minnesota on the basis that its 1986 agreement with the City of Duluth did not
comply with IGRA. The district court directed the Band to take this question to the
National Indian Gaming Commission, the agency tasked by Congress with the
responsibility to interpret and enforce IGRA. See 25 U.S.C. § 2706. In 1993, the
Gaming Commission ruled that the 1986 casino agreement violated IGRA, but it
allowed the parties to negotiate a new contract before beginning any enforcement
action.

       The agreement reached between the Band and the City in 1994 was
subsequently approved by the Gaming Commission and then incorporated into the
consent decree by the district court which retained jurisdiction over its enforcement.
Although the Band owns the casino building and the land on which it is located is
reservation land, the decree provided in relevant part that the Band would pay 19%
of the casino's gross revenues to the City as "rent" from 1994 to 2011. A rental rate
for the years 2011 to 2036 would be negotiated later. Such payments to the City had
been characterized as "rent" in a sublease agreement. Before the casino opened in
1986 the Band leased it to a commission made up of representatives of the City and
of the Band. The 1994 decree provided that this commission would sublease the
casino to the Band and assign the rent payments to the City. The Band paid $75
million to the City in such rent from 1994 to 2009.

       In accordance with a resolution passed by its governing body, the Band stopped
making rent payments on August 6, 2009. Prior to that resolution the Gaming
Commission had issued advisory letters stating that casino arrangements similar to
that of the Band violated IGRA's sole proprietary interest rule. The City then
responded by filing its breach of contract suit in the federal district court in
September 2009. The Band answered that certain terms in the 1994 decree were
invalid because they did not comply with IGRA provisions as interpreted by the
Gaming Commission.

                                         -3-
       The Band also sought administrative review of the 1994 agreement by the
Gaming Commission. On July 12, 2011 the Gaming Commission issued a Notice of
Violation ("NOV") after concluding that the 1994 agreement violated IGRA because
"[t]ribes, not third parties, are to possess the sole proprietary interest in and
responsibility for the gaming activity and to be the primary beneficiaries of that
activity." See 25 U.S.C. §§ 2710(b)(2)(A); 2702(2). The Commission ordered the
Band to cease performance under the agreement with the City or face sanctions
including fines and closure of the casino.

       Subsequently the Band moved in the district court for Rule 60(b) relief from
making past and future rent payments. In response the district court granted relief
from making future payments but denied it for the payments withheld from 2009
through 2011. The Band appealed, and we reversed the denial of Rule 60(b) relief
for the 2009 to 2011 payments. City of Duluth, 702 F.3d at 1155. We determined
that the district court had abused its discretion "[t]o the extent [its] decision . . . relied
on an assumption that retrospective relief" was not available under Rule 60(b)(6) for
claims partially covered by Rule 60(b)(5). Id. A change in the law could "represent
so significant an alteration in circumstances as to justify both prospective and
retrospective relief from the obligations of a court order." Id. at 1154; see In re Pac.
Far E. Lines, Inc., 889 F.2d 242 (9th Cir. 1989).

     Our opinion specified several factors that the district court should consider on
remand. Factors that might disfavor relief included the following:

       Both the Band and the City voluntarily agreed to the provisions
       incorporated in the 1994 decree. Moreover, this agreement was initially
       endorsed by the NIGC [Gaming Commission]. While the NIGC had the
       power to change its position, it does not have the authority to punish a
       party for obeying a court order.

                                             -4-
City of Duluth, 702 F.3d at 1155. We also noted "factors favoring relief to be
considered" by the district court on remand:

      Congress vested in the NIGC authority for matters related to the
      regulation of Indian casinos, see 25 U.S.C. § 2706, in order to ensure
      that the primary beneficiaries of Indian gaming operations are to be
      the tribes themselves, see 25 U.S.C. § 2702(2). By the time the Band
      began withholding rent in 2009, the City was on notice that the NIGC's
      views on the validity of the 1994 agreement might well have
      changed. . . . The district court abused its discretion by not examining
      all the relevant factors including whether the NOV issued by the NIGC
      on July 12, 2011, changing its earlier position and ordering the Band to
      cease performance under the consent decree, was an "exceptional"
      occurrence justifying 60(b)(6) relief.

Id. (emphasis added).

      In sum, our opinion specified six factors for the district court to consider on
remand: (1) the parties' voluntary agreement to the 1994 decree; (2) the Gaming
Commission's initial endorsement of the 1994 agreement; (3) the Gaming
Commission's lack of authority to punish a party for obeying a court order; (4) the
congressional policy behind IGRA and the creation of the Gaming Commission,
including Congress's express intent that tribes be the primary beneficiaries of Indian
casinos; (5) that the City was on notice in 2009 of relevant changes in the Gaming
Commission’s views; and (6) that the July 12, 2011 NOV could be an "exceptional"
occurrence justifying relief.

      Before denying any relief under Rule 60(b)(6) on remand, the district court
considered only five of the six factors we had identified in City of Duluth, 702 F.3d
at 1155. The Band appeals.

                                         -5-
                                           II.

      We review the district court decision for abuse of discretion. City of Duluth,
702 F.3d at 1152. A district court abuses its discretion "when a relevant factor that
should have been given significant weight is not considered; when an irrelevant or
improper factor is considered and given significant weight; or when all proper factors
and no improper ones are considered, but the court commits a clear error of judgment
in weighing those factors," or when the court makes an error of law. Id.

       The Band argues that the district court failed to consider "a relevant factor that
should have been given significant weight": that is, the intent of Congress "to ensure
that the primary beneficiaries of Indian gaming operations are to be the tribes
themselves." City of Duluth, 702 F.3d at 1155. We agree. The district court's
memorandum opinion did not discuss this fundamental factor specified in our remand
order.

       IGRA explicitly defined the policies and goals which led to its enactment.
Congress indicated that its intent upon passing IGRA was "to provide a statutory
basis for the regulation of gaming by an Indian tribe adequate . . . to ensure that the
Indian tribe is the primary beneficiary of the gaming operation." 25 U.S.C. § 2702(2).
The Gaming Commission was created "to protect such gaming as a means of
generating tribal revenue." 25 U.S.C. § 2702(3). The "primary beneficiary" rule
arose from Congress's aim "to promote tribal economic development, tribal self-
sufficiency, and strong tribal government" which is "a principal goal of Federal
Indian policy." 25 U.S.C. §§ 2701(4), 2702(1). Congress has noted that for tribes,
gaming income "often means the difference between an adequate governmental
program and a skeletal program that is totally dependent on Federal funding." S. Rep.
No. 100-446, at 3 (1988), reprinted in 1988 U.S.C.C.A.N. 3071, 3072.

                                          -6-
       This congressional policy underlying IGRA and the creation of the Gaming
Commission are factors deserving significant weight in this case. Federal policy and
interests are particularly important in consent decrees. "Consent decrees entered in
federal court must be directed to protecting federal interests . . . [and] further[ing] the
objectives of [federal] law." Frew v. Hawkins, 540 U.S. 431, 437 (2004). Such
decrees must "be modified if . . . one or more of the obligations placed upon the
parties has become impermissible under federal law." Rufo v. Inmates of the Suffolk
Cnty. Jail, 502 U.S. 367, 388 (1992). Here, the Gaming Commission has determined
that rent payments to the City violated the IGRA requirements that a tribe be the sole
proprietor of a casino and also the primary beneficiary of gaming. Congress created
the Gaming Commission and gave it authority over IGRA's interpretation and
enforcement in order to protect such interests.

       The City argues that congressional policy should not weigh strongly in the
Band's favor because IGRA specifies that Indian gaming revenues may also "help
fund operations of local government agencies," 25 U.S.C. § 2710(b)(2)(B)(v). The
record here does not suggest that the "rent" provision in the 1994 decree was ever
intended solely to cover the cost of any city services provided to the casino such as
emergency calls. In its 2011 Notice of Violation letter, the Gaming Commission
found that the "rent" paid to the City from gross revenues had amounted to between
26.6 and 33.5 percent of the casino’s annual net profits. The record suggests that
such a large percentage of casino profits would be grossly disproportionate to the cost
of any city services for the casino. The record also indicates that property taxes (an
ordinary source of funding for local government operations) would have been
$180,930 in 2010 for a non Indian owner of such a casino property, far less than the
$6 million of "rent" payments to the City for that year. The City has provided almost
no evidence regarding the costs of any services to the casino, and at oral argument it
admitted that it had never calculated these costs. The record does indicate, however,
that the City has received substantial benefits from Indian gaming under the 1994
decree.

                                           -7-
      The district court abused its discretion on remand by failing to consider this
congressional policy and its intent that tribes be the primary beneficiaries of Indian
gaming. This factor was identified in our previous remand order, and the record
supports its significance in terms of the Band's request for Rule 60(b)(6) relief.

                                          III.

        We remand to the district court for its reconsideration of the Band's Rule
60(b)(6) motion and direct it to consider all of the factors outlined here and in our
prior remand order. Accordingly, the district court must give proper weight to the
congressional intent that tribes be the primary beneficiaries of Indian gaming as well
as other relevant factors we have previously identified. These include the facts that
the City was on notice in 2009 of relevant actions and policies of the Gaming
Commission and its warning in the 2011 Notice of Violation that the tribe would
violate IGRA by making further rent payments to the city. As discussed in our prior
City of Duluth opinion, such change in the governing law is also relevant to the
question of whether an exceptional circumstance compels a grant of Rule 60(b)(6)
relief. City of Duluth, 702 F.3d at 1154-55; see In re Pac. Far E. Lines, Inc., 889 F.2d
242 (9th Cir. 1989).

      For the reasons stated, we reverse and remand for the district court's
reconsideration of the Band's Rule 60(b)(6) motion in accordance with this opinion
and the relevant law cited.
                       ______________________________

                                          -8-