U.S. v. Turn Key Gaming Inc., 00-3615

• Decision Date: 14 June 2001
• Docket Number: No. 00-3615,00-3615
• Citation: 260 F.3d 971
• Parties: (8th Cir. 2001) UNITED STATES EX REL. JOHN YELLOW BIRD STEELE, APPELLANT v. TURN KEY GAMING, INC.; WAYNE BARBER, APPELLEES Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 971

260 F.3d 971 (8th Cir. 2001)

UNITED STATES EX REL. JOHN YELLOW BIRD STEELE, APPELLANT v. TURN KEY GAMING, INC.; WAYNE BARBER, APPELLEES

No. 00-3615

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: June 14, 2001

Filed: August 16, 2001

Appeal from the United States District Court for the District of South Dakota.

Before Magill, Beam, And Hamilton,¹ Circuit Judges.

Beam, Circuit Judge

The United States and its relator, John Yellow Bird Steele (collectively "the United States"), appeal an adverse grant of summary judgment. We affirm, but on different grounds than those established by the district court.

I.

The relevant facts are largely undisputed. On January 19, 1995, the Oglala Sioux Tribe (the "Tribe") entered into a contract entitled Prairie Wind Casino Rental Agreement ("Rental Agreement") with Turn Key Gaming, Inc. On the same date, the Tribe entered into another contract entitled Prairie Wind Casino Employment Agreement ("Employment Agreement") with Wayne Barber. (Both agreements together hereinafter referred to as the "Agreements").

Under the Rental Agreement, the Tribe agreed to pay Turn Key $100,000 per month for the lease of three modular, movable buildings and their assorted plumbing, trim and other fixtures, gaming equipment, tables and accessories, money counting equipment, snack bar facilities, office furniture, outdoor lighting, a security system and a pick-up truck. The Rental Agreement additionally included sitework to be performed by Turn Key, including the installation of a sewer system, road grading and landscaping. The Rental Agreement additionally included consideration for six months of site preparation previously undertaken by Turn Key.

Under the Employment Agreement, the Tribe hired Wayne Barber, the President of Turn Key Gaming, at a salary of $2000 every two weeks, as an employee to "supervise, oversee and operate under direction and control of the Oglala Sioux Tribe," the Prairie Wind Casino. The Employment Agreement placed Barber under the "direct supervision of" and required him to "report directly to the Executive Director of the Tribe." It also required Barber to keep the land and buildings free of all encumbrances. The Employment Agreement required the signature of the Tribal Treasurer on all casino accounts. It also required tribal approval for all payments in excess of $5000, and retained a right of access to all records and accounts.

Federal law, 25 U.S.C. § 81 ("Section 81"), requires various types of agreements with Indian tribes to be authorized by certain designated federal officials. Accordingly, the parties had the Rental and Employment Agreements authorized by Delbert Brewer, then superintendent of the Pine Ridge Agency. The parties agree that superintendents are not among those officials designated to authorize contracts requiring Section 81 approval.

Both Agreements terminated by their own terms on December 7, 1995, when the National Indian Gaming Commission approved a permanent management agreement. Prior to that date, though, the Tribe paid Turn Key $1,313,151 under the Rental Agreement, and paid Barber $46,200 under the Employment Agreement.

The United States, through its relator, John Yellow Bird Steele, filed this qui tam action pursuant to 25 U.S.C. § 81² in order to recover those payments, which the United States characterizes as illegal. The United States argued that Section 81, through 25 U.S.C. § 1, sets strict limits on who may authorize an agreement with an Indian tribe. As the Agreements were not authorized by a duly empowered individual, the United States continued, the Agreements were void ab initio. The district court disagreed. Looking at the parties' course of conduct, and evidence that Superintendent Brewer apparently received authorization to sign the Agreements, the district court concluded that principles of agency and equity permitted enforcement of the Rental and Employment Agreements. Given its conclusion that the Agreements were properly authorized, the district court declined to address whether the Agreements actually required Section 81 approval.

The United States now reasserts its Section 81 argument and challenges equity and agency as sufficient bases to overcome its strictures. The appellees dispute the United States' characterization of Section 81, and also argue that the Agreements are not subject to its requirements. Because we agree with this latter contention, we affirm.

II.

Section 81 governs all contracts with an Indian tribe whereby the tribe trades consideration for "services for said Indians relative to their lands." 25 U.S.C. § 81. All such agreements must "bear the approval of the Secretary of the Interior and the Commissioner of Indian affairs indorsed upon [them]." Id. Any agreement subject to Section 81, but not so indorsed, "shall be null and void, and all money or other thing of value paid to any person by any Indian or tribe... may be recovered by suit in the name of the United States." Id. For our purposes, in order to be subject to Section 81, the Agreements must be both (1) for services and (2) relative to Indian lands.

Contracts for "Services"

Starting with the "for services" requirement, we immediately run into a bit of an historical oddity. In Green v. Menominee Tribe, 233 U.S. 558 (1914), the Supreme Court applied Section 81 to an oral contract for the provision of logging equipment and supplies to an Indian tribe. The tribe, or its members, destitute and facing starvation, allegedly gave oral consent to a deal whereby traders would supply equipment and supplies and the tribe would conduct logging operations, the results of which would be marketed by an Indian agent who in turn would repay the traders and also remit some portion of the proceeds to the tribe. When the agent failed to repay a trader, he sought payment from the tribe. Id. at 563-66. Turning to Section 81, the Court held "we think... this subject is so clearly within the text of the statute that it suffices to direct attention to such text without going further." Id. at 569.

The problem, of course, is that a contract for goods such as provided by the trader, as opposed to services, quite clearly falls outside the statute's strictures. The Court failed to analyze the text of the statute, but did discuss the equities of the case.

[I]f it be conceded for argument's sake that there is ambiguity involved in determining from the text whether the statute is applicable, we are of the opinion that the case as made is so within the spirit of the statute and so exemplifies the wrong which it was intended to prevent and the evils which it was intended to remedy as to dispel any doubt otherwise engendered.

Id. The Court noted that the nature of the alleged oral contract shifted several times in the courts below. Id. at 569-70. Moreover, the case was really about "upon whom the loss must fall resulting from the failure of the person designated under the asserted contract and who received the money, to discharge his duty by paying it over," and judgment against the tribe would have required them to pay twice for the same goods. Id. at 570-71.

Green stands squarely at odds with our own holding in United States ex rel. Harlan v. Bacon, 21 F.3d 209 (8th Cir. 1994), where we reviewed a sharecrop agreement between a farmer and the Omaha Indian Tribe, whereby the tribe permitted use of the land in return for forty percent of the produce. Id. at 210. The tribe sought to avoid the contract on the grounds asserted here-that the contract was not properly authorized. Without discussing or citing Green, we held that the contract required no such authorization because the tribe exchanged use of the land not for services, but for crops. We found Congress' use of the word "services" quite deliberate-contracts for goods, as opposed to contracts for services, are not covered by Section 81.

We are thus caught between the clear text of the statute and our own plain reading of it in Bacon on the one hand, and the Supreme Court's application of the statute in Green on the other. Were we to apply Green's equity-based reasoning here, we might conclude that, unlike Green, this situation is one with which Congress was not concerned. For here the Tribe negotiated written contracts, seemingly in good faith, and likely with competent counsel, and now it is the Tribe which is trying to escape that obligation on a technicality. See United States ex rel. Steele v. Turn Key Gaming, Inc., 135 F.3d 1249, 1252 (8th Cir. 1998) (noting during prior appeal of this case that the Tribe "unequivocally agrees with Steele that the temporary contracts are invalid"). But we think such a course improper. But see Sac & Fox Tribe of Indians of Oklahoma v. Apex Const. Co., Inc., 757 F.2d 221, 222 (10th Cir. 1985) (affirming on other grounds district court ruling that Section 81 applies only to cases where tribe requires protection from skullduggery).

Rather, we think the better approach is to read Green as creating a remedy for the specific problem before the Court at that time. The Supreme Court had long concerned itself with broad application of the Indian statutes in order to afford the tribes the full protection of the laws against unscrupulous outsiders. See Pueblo of Santa Rosa v. Fall, 273 U.S. 315, 319-20 (1927) (Section 81 protects Indians "unlettered and under national wardship"); In re Sanborn, 148 U.S. 222, 227 (1893) (Section 81 intended to "protect the Indians from improvident and unconscionable contracts"); see also Felix v. Patrick, 145 U.S. 317, 330 (1892) (Indians are "wards of the nation, entitled to a special protection in its courts, and as persons 'in a state of pupilage'"); Pickering v. Lomax, 145 U.S. 310, 316 (1892) (purpose of precursor statute was to "protect the Indian against the improvident disposition of his property"). We think Green flowed naturally with these sentiments and protected a tribe against a gross injustice, but its...