Michigan v. Bay Mills Indian Cmty.

• Decision Date: 15 August 2012
• Docket Number: No. 11–1413.,11–1413.
• Citation: 695 F.3d 406
• Parties: State of MICHIGAN and Little Traverse Bay Bands of Odawa Indians, Plaintiffs–Appellees, v. BAY MILLS INDIAN COMMUNITY, Defendant–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

695 F.3d 406

State of MICHIGAN and Little Traverse Bay Bands of Odawa Indians, Plaintiffs–Appellees,

v.BAY MILLS INDIAN COMMUNITY, Defendant–Appellant.

No. 11–1413.

United States Court of Appeals, Sixth Circuit.

Argued: May 31, 2012.

Decided and Filed: Aug. 15, 2012.

ARGUED:Kathryn L. Tierney, Bay Mills Indian Community, Brimley, Michigan, for Appellant. Margaret Bettenhausen, Office of the Michigan Attorney General, Lansing, Michigan, Conly J. Schulte, Fredericks, Peebles & Morgan, Louisville, Colorado, for Appellees. ON BRIEF:Kathryn L. Tierney, Chad P. DePetro, Bay Mills Indian Community, Brimley, Michigan, for Appellant. Louis B. Reinwasser, Office of the Michigan Attorney General, Lansing, Michigan, Conly J. Schulte, Fredericks, Peebles & Morgan, Louisville, Colorado, John Petoskey, Fredericks Peebles & Morgan LLP, Peshawbestown, Michigan, James A. Bransky, Little Traverse Bay Bands of Odawa Indians, Traverse City, Michigan, for Appellees.

Before: BOGGS, NORRIS, and KETHLEDGE, Circuit Judges.

OPINION

KETHLEDGE, Circuit Judge.

The State of Michigan and the Little Traverse Bay Bands of Odawa Indians (“Little Traverse”) brought this suit to prevent the Bay Mills Indian Community from operating a small casino in Vanderbilt, Michigan. Vanderbilt itself is a small town located in the northern part of Michigan's Lower Peninsula, in forest country more than 30 miles from the nearest Great Lake. Its population, according to Census Bureau estimates, has hovered around 575 residents over the past 10 years. Little Traverse sued Bay Mills on the theory that its Vanderbilt casino (total slot machines: 84) would divert millions of dollars of revenue from Little Traverse's vastly larger casino in Petoskey, Michigan—a high-end community located on the shores of Lake Michigan. The State sued on the more prosaic theory that the Vanderbilt casino is unlawful.

The district court entered a preliminary injunction ordering Bay Mills to stop gaming (a euphemism often unavoidable for our purposes here) at the Vanderbilt casino. We hold that the district court lacked jurisdiction over some of the plaintiffs' claims, and that Bay Mills's sovereign immunity bars the others, at least in the configuration in which the suit comes to us now. Thus we vacate the injunction.

I.

The Indian Gaming Regulatory Act (“the Regulatory Act”) provides that “Class III gaming activities” ( i.e., casino-style gaming, as opposed to, say, bingo halls) “shall be lawful on Indian lands only if” certain requirements are met. 25 U.S.C. § 2710(d). An Indian tribe wishing to conduct gaming activity must adopt a gaming ordinance that is approved by the Chairman of the National Indian Gaming Commission (“the Gaming Commission”), id. § 2710(d)(1)(A)—which is itself an independent federal agency. The tribe must also negotiate with the state to enter a “Tribal–State compact” that will govern the gambling. Id. § 2710(d)(3). Once a compact is entered, the Regulatory Act requires the gambling to conform to the compact. Id. § 2710(d)(1)(C).

Bay Mills is a federally recognized Indian tribe with a reservation in Michigan's Upper Peninsula. In 1993, the tribe entered a Tribal–State compact with the State of Michigan, pursuant to the Regulatory Act. The Gaming Commission approved Bay Mills's tribal gaming ordinance shortly thereafter. Since that time, Bay Mills has operated a casino on its reservation in Chippewa County, Michigan.

In 1997, Congress passed the Michigan Indian Land Claims Settlement Act (“the Settlement Act”), whose purpose was to allocate funds to Bay Mills and other Michigan Indian tribes, in satisfaction of judgments that the Indian Claims Commission had entered in favor of the tribes. SeePub. L. No. 105–143, § 102, 111 Stat. 2652. The Settlement Act directed Bay Mills to deposit a portion of its funds into a land trust, with the earnings from that trust to be “used exclusively for improvements on tribal land or the consolidation and enhancement of tribal landholdings through purchase or exchange.” Id. § 107(a)(3). The Settlement Act also provided that “[a]ny land acquired with funds from the Land Trust shall be held as Indian lands are held.” Id.

In August of 2010, Bay Mills used trust earnings to purchase approximately 40 acres of property in Vanderbilt, Michigan. The property is located more than 100 miles from the tribe's reservation in the Upper Peninsula. Bay Mills then constructed a small casino on the property (initially with 38 electronic gaming machines, later expanded to 84), pursuant to an amended gaming ordinance. Bay Mills began operating the Vanderbilt casino on November 3, 2010.

The State filed suit against Bay Mills the following month, on December 21, 2010. Little Traverse—also a federally recognized Indian tribe—filed suit one day later. Each plaintiff claims that Bay Mills has violated various provisions of its Tribal–State compact. The State additionally claims that Bay Mills has violated state law. Little Traverse moved for a preliminary injunction. The State supported the motion. The district court granted the motion and enjoined Bay Mills from operating the Vanderbilt casino. Bay Mills sought a stay, which the district court denied. The tribe then sought a stay in this court, which we denied.

Bay Mills now appeals the order entering the injunction.

II.

At the outset, Bay Mills argues that the plaintiffs have not shown any injury for purposes of standing. To establish standing, the plaintiffs must show an injury in fact, fairly traceable to the defendant's conduct, that is likely to be redressed by a favorable decision from the court. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Each element of standing “must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at successive stages of the litigation.” Id. at 561, 112 S.Ct. 2130.

Little Traverse's expert predicted that the Vanderbilt casino will cause Little Traverse to lose tens of millions of dollars by diverting customers from its Odawa Casino Resort in Petoskey. The expert noted the proximity of the two properties (about 40 miles), the Vanderbilt casino's location near a major interstate, and that Bay Mills has offered incentives to new customers who show rewards cards from the Odawa resort. Bay Mills's expert identified defects in the methodology of Little Traverse's expert. But even Bay Mills's expert acknowledged the likelihood that at least some of the Vanderbilt casino's gaming revenue would have otherwise gone to the Odawa resort.

Little Traverse's evidence of competitive harm is enough to show an injury in fact for standing purposes. This case is different from a previous one where we refused to find standing based on nothing more than the plaintiff's request that we take judicial notice of the distance between allegedly competing casinos. See Sault Ste. Marie Tribe of Chippewa Indians v. United States, 288 F.3d 910, 915–16 (6th Cir.2002). And because Little Traverse's Tribal–State compact requires it to furnish a portion of its gaming revenue to the State, any loss to Little Traverse will result in a loss to the State. So the State has shown injury as well.

III.

We turn to subject-matter jurisdiction. For each cause of action, federal jurisdiction “must be determined from what necessarily appears in the plaintiff's statement of his own claim ... unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose.” Taylor v. Anderson, 234 U.S. 74, 75–76, 34 S.Ct. 724, 58 L.Ed. 1218 (1914); Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 830, 122 S.Ct. 1889, 153 L.Ed.2d 13 (2002). We consider each of the plaintiffs' causes of action in turn.

A.

The plaintiffs primarily plead claims under the Regulatory Act, alleging that the Vanderbilt casino violates the Tribal–State compact because it is not located on Indian lands. See Bay Mills–Michigan Compact § 4(H) (“The Tribe shall not conduct any Class III gaming outside of Indian lands”). These claims arise under 25 U.S.C. § 2710(d)(7)(A)(ii), which provides:

(7)(A) The United States district courts shall have jurisdiction over—

...

(ii) any cause of action initiated by a State or Indian tribe to enjoin a class III gaming activity located on Indian lands and conducted in violation of any Tribal–State compact ... that is in effect[.]

Two insuperable Article III defects prevent adjudication of these claims. The first is that a statutory prerequisite to jurisdiction is absent. Section 2710(d)(7)(A)(ii) by its terms is conjunctive—that is, the State or tribal plaintiff must meet all of the provision's conditions for jurisdiction to exist, rather than just one or two of them. Thus, § 2710(d)(7)(A)(ii) supplies federal jurisdiction only where all of the following are true: (1) the plaintiff is a State or an Indian tribe; (2) the cause of action seeks to enjoin a class III gaming activity; (3) the gaming activity is located on Indian lands; (4) the gaming activity is conducted in violation of a Tribal–State compact; and (5) the Tribal–State compact is in effect.

The plaintiffs' own pleadings defeat their argument that the Regulatory Act supplies jurisdiction here. In their complaints, the plaintiffs expressly allege that the Vanderbilt casino is not located on Indian lands, which means the plaintiffs cannot meet the third condition (that the “gaming activity [is] located on Indian lands”) recited above. See State's Am. Compl. ¶¶ 22, 26–28; Little Traverse's Am. Compl. ¶¶ 13, 17–18.

The Regulatory Act defines “Indian lands” as:

(A) all lands within the limits of any Indian reservation; and

(B) any lands title to which is either held in trust by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against...