Casino Resource Corp. v. Harrah's Entertainment, Inc.

• Decision Date: 19 October 2000
• Docket Number: No. 99-2822,99-2822
• Citation: 243 F.3d 435
• Parties: (8th Cir. 2001) CASINO RESOURCE CORPORATION, APPELLANT, v. HARRAH'S ENTERTAINMENT, INC. D/B/A HARRAH'S SOUTHWEST MICHIGAN CASINO CORPORATION, INC.;HARRAH'S SOUTHWEST MICHIGAN CASINO CORPORATION; JOHN DOES, 1-10, APPELLEES. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 435

243 F.3d 435 (8th Cir. 2001)

CASINO RESOURCE CORPORATION, APPELLANT, v. HARRAH'S ENTERTAINMENT, INC. D/B/A HARRAH'S SOUTHWEST MICHIGAN CASINO CORPORATION, INC.;HARRAH'S SOUTHWEST MICHIGAN CASINO CORPORATION; JOHN DOES, 1-10, APPELLEES.

No. 99-2822

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: October 19, 2000

Filed: March 13, 2001

Appeal from the United States District Court for the District of Minnesota.

Before Wollman, Chief Judge, Beam and Morris Sheppard Arnold, Circuit Judges.

Beam, Circuit Judge.

After Harrah's Entertainment, Inc. (Harrah's) entered into a termination agreement that ended its gaming development and management opportunities with the Potawatomi Indian Nation (Nation or Tribe), Casino Resource Corporation (CRC) sued Harrah's for breach of contractual and fiduciary duties and for tortious interference with CRC's "contractual and prospective economic advantage." The district court found that CRC's state law claims are preempted by federal law, which provides no independent cause of action, and, therefore, dismissed CRC's suit. CRC appeals. We reverse and remand.

I. BACKGROUND

In 1994, CRC obtained a right of first refusal to negotiate a gaming management contract with the Nation. CRC subsequently entered into a memorandum of understanding with Harrah's, in which the parties agreed to jointly pursue gaming opportunities with the Nation. Harrah's established a subsidiary (hereinafter also referred to as "Harrah's") to explore the endeavor. Eventually, the subsidiary negotiated various development and management contracts with the Nation, after which Harrah's and CRC entered into a "Technical Assistance and Consulting Agreement" (Consulting Agreement) "to formalize [CRC's] relationship with Harrah's regarding CRC's ongoing role in the development of the proposed Enterprise."¹

On September 12, 1998, Harrah's and the Nation executed a termination agreement that dissolved any prior development or management agreement between them. Among recited impediments to their relationship were the Michigan Legislature's refusal to negotiate a tribal-state gaming compact, as required by the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701 et seq., and an unresolved dispute as to whether the purchase of a riverboat casino (which operated within a non-compete radius restriction) by a Harrah's affiliate amounted to a material breach of all agreements between Harrah's and the Nation. The Bureau of Indian Affairs approved the termination agreement in October of 1998.

On September 14, 1998, CRC filed suit in federal court, asserting diversity jurisdiction and alleging that "[a]lthough the [Consulting Agreement] stated that it was not intended to create a partnership or joint venture between the parties, the parties['] relationship under the Agreement was, in fact, a partnership or joint venture." CRC further alleged that Harrah's "breached the [Consulting Agreement] and the fiduciary duty it owed to CRC and tortiously interfered with CRC['s] contractual and prospective economic advantage by . . . purchasing an interest in a competing casino which caused the Tribe to refuse to do further business with the Harrah's/CRC partnership or joint venture," and by withholding information from CRC.

Harrah's moved to dismiss CRC's complaint pursuant to Federal Rules of Civil Procedure 12 and 56. The district court concluded that, because adjudication would require the court to intrude into the Nation's governance of its own gaming affairs, CRC's state law claims are preempted by IGRA. The court, therefore, dismissed CRC's suit because IGRA provides no independent cause of action.

II. DISCUSSION

We review a district court's grant of a Rule 12(b)(6) motion to dismiss de novo, construing the complaint most favorably to the non-moving party, and will dismiss only if it is clear that no relief can be granted under any set of facts that could be proven consistent with the allegations. Frey v. City of Herculaneum, 44 F.3d 667, 671 (8th Cir. 1995). Similarly, we review the grant of a motion for summary judgment de novo, affirming if the evidence, viewed in the light most favorable to the nonmoving party, shows that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Hughes v. Ortho Pharm. Corp., 177 F.3d 701, 704 (8th Cir. 1999)

"State jurisdiction is pre-empted by the operation of federal law if it interferes or is incompatible with federal and tribal interests reflected in federal law, unless the state interests at stake are sufficient to justify the assertion of state authority." New Mexico v. Mescalero Apache Tribe, 462 U.S. 324, 334 (1983). Congress, by enacting IGRA, has established the preemptive balance between tribal, federal, and state interests in the governance of gaming operations on Indian lands. Gaming Corp. of America v. Dorsey & Whitney, 88 F.3d 536, 548-49 (8th Cir. 1996); 25 U.S.C. § 2710(d)(3)(C); 1988 U.S.C.C.A.N. 3076 (IGRA "expressly preempt[s] the field in the governance of gaming activities on Indian lands"). Therefore, we have said that "[a]ny claim which would directly affect or interfere with a tribe's ability to conduct its own [gaming] licensing process should fall within the scope of [IGRA's] complete preemption." Gaming Corp., 88 F.3d at 549.

In Gaming Corp., management companies pursued claims against a law firm that had represented a Native American tribe during development of a casino. Id. at 539-40. The companies argued that their claims did not affect the tribe because only non-Indian parties were involved. Id. at 549. Rejecting that argument, we reasoned that the tribe's relationship with the firm was not to be overlooked in that the firm was retained to carry out the tribe's congressionally-authorized governmental responsibility. Id. We concluded that those causes of action that would interfere with the tribe's ability to govern gaming fall within IGRA's complete preemption of state law.² Id. at 550.

Gaming Corp. dealt with the regulation of tribal gaming. Id. at 549. In contrast, the instant case presents the issue of whether IGRA preempts state law claims by one non-tribal entity against another, when resolution requires some review of a contract terminating a gaming management arrangement between one of the parties and a tribal entity. Unlike Gaming Corp., where we stifled management companies' attempts to employ state law to circuitously challenge the outcome of an Indian nation's internal governmental decisions, here the challenge is merely to the decisions of a management company. Therefore, Gaming Corp. does not predestine our resolution.

"Congressional intent is the touchstone of the complete preemption analysis." Magee v. Exxon Corp. 135 F.3d 599, 601-02 (8th Cir. 1998). Through IGRA, Congress has sought to bring sundry policy goals to fruition, including protecting tribes' sovereign immunity, protecting tribes' "considerable control of gaming to further their economic and political development," Gaming Corp., 88 F.3d at 549, protecting "the Indian gaming industry from corruption and . . . provid[ing] for extensive federal oversight of all but the most rudimentary forms of Indian gaming," Tamiami Partners v. Miccosukee Tribe of Indians, 63 F.3d 1030, 1033 (11th Cir. 1995). CRC's claims encroach on no IGRA goal.

CRC's claims also fall outside IGRA's protective structure. But cf. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 64 (1978) (finding that, where Congress has sought to achieve competing purposes, courts must be "more than usually hesitant to infer from its silence a cause of action" that will serve one of the legislative purposes but undermine the other); Florida v. Seminole Tribe of Florida, 181 F.3d 1237, 1248 (11th Cir. 1999) ("'when legislation expressly provides a particular remedy or remedies, courts should not expand the coverage of the statute to subsume other remedies'") (citation omitted). Although IGRA addresses management and services contracts to some degree,³ it was not designed to deal with disputes like this,⁴ which, despite CRC's creative characterization, is essentially a dispute between a non-tribal general contractor and non-tribal sub-contractor.⁵ In Bruce H. Lien Co. v. Three Affiliated Tribes, 93 F.3d 1412 (8th Cir. 1996), we distinguished the approval and review process from the determination of the legal validity of a management contract, thereby finding the latter outside the scope of the administrative bodies bearing IGRA responsibilities. Id. at 1417-18. We recognized, however, that:

While the issue of [a management] contract's validity does not raise a federal question per se, certainly there are aspects of . . . [tribal gaming] dispute[s] which do. Particularly where the entire association between the parties (and their various disputes) arise under IGRA, and where the management agreement at issue, once approved, remains so until disapproved by the [Commission].

Id. at 1421. Here, the association between CRC and Harrah's does not arise under IGRA nor is an approved management contract at issue.

Not every contract that is merely peripherally associated with tribal gaming is subject to IGRA's constraints. E.g., International Gaming Network v. Casino Magic Corp., 120 F.3d 135 (8th Cir. 1997); Calumet Gaming Group-Kansas, Inc. v. Kickapoo Tribe of Kan., 987 F. Supp. 1321 (D. Kan. 1997); Gallegos v. San Juan Pueblo Bus. Dev. Bd., Inc. 955 F. Supp. 1348, 1350 (D.N.M. 1997) (finding no federal subject matter jurisdiction where, although unclear whether an agreement was a management contract or lease of slot machines, because the contract was not approved by the Commission Chairman, at most there was only an attempt at forming a management contract). For instance, in Calumet Gaming, the court found that a dispute arising from a consulting agreement was not subject to IGRA and, consequently, there was no need to interpret or apply IGRA to resolve ...