Calvello v. Yankton Sioux Tribe, Civ. 94-4266.

• Decision Date: 01 September 1995
• Docket Number: No. Civ. 94-4266.,Civ. 94-4266.
• Citation: 899 F. Supp. 431
• Parties: James CALVELLO, Plaintiff, v. YANKTON SIOUX TRIBE, Defendant.
• Court: U.S. District Court — District of South Dakota

899 F. Supp. 431

James CALVELLO, Plaintiff, v. YANKTON SIOUX TRIBE, Defendant.

No. Civ. 94-4266.

United States District Court, D. South Dakota, Southern Division.

September 1, 1995.

COPYRIGHT MATERIAL OMITTED

John E. Burke, Sioux Falls, SD, A. Russell Janklow, Woods, Fuller, Shultz & Smith, Sioux Falls, SD, for Plaintiff.

James G. Abourezk, Abourezk Law Offices, Sioux Falls, SD, for Defendant.

MEMORANDUM OPINION AND ORDER

PIERSOL, District Judge.

Plaintiff James Calvello, a former manager of the Fort Randall Casino operated by the defendant Yankton Sioux Tribe, has filed an application for confirmation and enforcement of an arbitrator's award pursuant to the Federal Arbitration Act, 9 U.S.C. § 9. The Yankton Sioux Tribe moves to dismiss the application on the ground that the Tribe enjoys sovereign immunity and may not be required to answer in federal court absent an express waiver of that immunity. Having carefully considered the motion, briefs, supporting documents, and oral arguments of counsel, the Court grants defendant's motion to dismiss.

I. Background

The decision of the federal arbitrator, which is attached to Calvello's application for confirmation, reflects that Gambler's Supply executed a management contract with the Tribe to operate the Fort Randall Casino. Gambler's Supply hired Calvello, a management consultant, to act as operating manager of the casino. The Tribe later paid off the contract with Gambler's Supply in the amount of approximately $1.4 million, ending the management contract.

The Tribe then continued to employ Calvello as casino manager. Calvello and Steve Cournoyer, referred to as former Tribal Chairman and actually the Chairman of the General Council, negotiated an employment contract which they both signed on November 24, 1992. The record contains only one page of this contract and not the entire document. (Doc. 2, Attach. A.) According to other documents in the record, the contract term of employment was a period of five years commencing retroactively on August 3, 1992, and terminating on August 2, 1997. The employment contract provided that Calvello would be paid a base salary of $50,000 per year, with a raise of $5,000 each successive year until his base pay reached $75,000 per year, unless total revenues for the casino fell 85 percent below the 12 months immediately preceding the date of the employment agreement. In addition to base salary, Calvello was entitled to a six-percent commission of the "net profits" as that term was specifically defined in the contract. The employment contract contained a clause that it could not be terminated by either party except for good cause, defined as gross dereliction of duty or loss of the gaming license. The contract provided that the Tribe would pay Calvello the sum of $250,000 for retirement, disability, or any termination of the employment agreement prior to its termination date.

On November 30, 1992, six days after Calvello and Cournoyer signed the contract, the Yankton Sioux Tribe's General Council held an emergency meeting. A motion to terminate Calvello's employment failed. Another motion to disapprove the employment contract succeeded. The Council directed the Tribe's Business and Claims Committee to renegotiate Calvello's contract. Later in the same meeting, a motion passed to remove Calvello as casino manager. He was advised to leave the casino immediately, as the Tribe intended to advertise for a new manager, and he did so. In January 1993, Calvello attended a meeting of the General Council's Fact Finding Committee and asked if his employment had been terminated. He was told that his employment had not been terminated. Gary Montana, who was then acting as the Tribe's attorney, asked Calvello if he would stay on as casino manager for a lesser amount than that contained in the employment contract. Calvello told him he would consult his lawyer. Calvello later refused Montana's suggestion and elected to enforce the employment contract through the arbitration provision contained in section 11 of the contract. The Tribe's counsel participated in the federal arbitration proceeding.

Section 11 of Calvello's employment contract states in its entirety (emphasis added):

ARBITRATION

Any differences, claims, or matters in dispute arising between the Employer and Employee out of or connected with this agreement shall first be submitted by them to arbitration by the American Arbitration Association or its successor and the determination of the American Arbitration Association or its successor shall be final and absolute. The arbitrator shall be governed by the then existing promulgated rules and regulations of the American Arbitration Association or its successor, and the pertinent provisions of law, relating to arbitration. The decision of the arbitrator may be entered as a judgment only in federal court. It is agreed that only a single arbitrator will be utilized.

Calvello and the Tribe's counsel mutually selected the arbitrator, Richard John Miller, through the administrative offices of the American Arbitration Association in Minneapolis. An arbitration hearing occurred on September 24, 1993, in Sioux Falls. Calvello appeared with counsel John Burke, and attorney James Abourezk appeared for the Tribe. The parties submitted evidence and argument, and Calvello submitted a post-hearing brief. The Tribe's attorney declined to file a brief.

In a decision handed down on January 7, 1994, the arbitrator determined that the Tribe terminated Calvello's employment without good cause, but that Calvello's employment contract with the Tribe was null and void and therefore unenforceable because it had not been approved by the Tribal General Council in accordance with Article I, Sections 1 and 2 of the Amended By-Laws of the Tribe. Nonetheless, the arbitrator held that Calvello could collect from the Tribe the six percent share of net profits for the time he served as operating manager because there was no dispute that the Tribal General Council had approved that separate provision at an August 28, 1992 meeting. The arbitrator calculated this amount to be $107,317 and, deducting the $52,000 Calvello received from the Tribe in profit-sharing upon his termination, the arbitrator found that the Tribe owed Calvello $55,317 for net profits.

The arbitrator further found that Calvello was entitled to recover damages under a quantum meruit theory because Calvello conferred valuable services upon the Tribe, turning a dismal casino operation into a thriving business. The arbitrator found that the Tribe would not have reaped the many benefits of the casino if it had not been for Calvello's efforts. The arbitrator awarded Calvello $83,760 in lost compensation for the period spanning the latter months of 1992 through June 1994; $5,000 to reimburse Calvello for a downpayment he made on a home at the direction of the Tribe and eventually lost; $2,000 to reimburse Calvello for the arbitration fee; and prejudgment interest at the applicable legal rate under South Dakota law.

The Tribe did not honor the arbitrator's decision. Calvello filed this application under the Federal Arbitration Act seeking federal court confirmation of the arbitration award and entry of judgment on the award. The Tribe moves to dismiss the application on the ground of sovereign immunity, and Calvello resists.

II. Discussion

To permit this Court to confirm the arbitration award under 9 U.S.C. § 9, Calvello must demonstrate an independent ground for federal subject matter jurisdiction. See General Atomic Co. v. United Nuclear Corp., 655 F.2d 968, 969 (9th Cir.1981), cert. denied, 455 U.S. 948, 102 S.Ct. 1449, 71 L.Ed.2d 662 (1982); GNS, Inc. v. Winnebago Tribe of Nebraska, 866 F.Supp. 1185, 1189 (N.D.Iowa 1994); Wisconsin Comm'r of Ins. v. California Reinsurance Management Corp., 819 F.Supp. 797, 799 (E.D.Wis.1993). See also Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp, 460 U.S. 1, 25 n. 32, 103 S.Ct. 927, 942 n. 32, 74 L.Ed.2d 765 (1983) (noting same principle in dicta). The provisions of § 9 do not themselves confer subject matter jurisdiction on the federal court. General Atomic Co., 655 F.2d at 969.

There is no basis for the assertion of diversity jurisdiction. "Available authority holds that Indian tribes are not citizens of any state for purposes of diversity jurisdiction." Gaines v. Ski Apache, 8 F.3d 726, 729 (10th Cir.1993) (citing Standing Rock Sioux Indian Tribe v. Dorgan, 505 F.2d 1135, 1140 (8th Cir.1974) and Oneida Indian Nation v. Oneida County, 464 F.2d 916, 922-23 (2d Cir.1972), rev'd on other grounds, 414 U.S. 661, 94 S.Ct. 772, 39 L.Ed.2d 73 (1974)). Thus, Calvello may not sue the Tribe in federal court under diversity jurisdiction. See Standing Rock Sioux Indian Tribe, 505 F.2d at 1140.

Calvello asserts that the Court has federal question jurisdiction under 28 U.S.C. § 1331. Because the parties dispute whether Calvello's contract is a management contract under the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. § 2711, or an employment contract that is not covered by the IGRA, the Court finds that it has federal question jurisdiction. See Tom's Amusement Co. v. Cuthbertson, 816 F.Supp. 403, 406 (W.D.N.C.1993) (holding that interpretation of contractual provisions involving Indian gaming under IGRA involves federal question and that diversity jurisdiction existed between non-Indian parties).

The Court must next consider, however, the separate jurisdictional issue of whether Calvello's suit against the Tribe is barred by the doctrine of sovereign immunity. See Black Hills Institute of Geological Research v. United States Dept. of Justice, 967 F.2d 1237, 1240 n. 5 (8th Cir.1992) (ordering district court to determine on remand jurisdictional issue of whether Tribe had expressly waived sovereign immunity), cert. denied, ___ U.S. ___, 115 S.Ct. 61, 130 L.Ed.2d 18 (1994). "Indian tribes have long been recognized as possessing the common-law immunity from...