City of Duluth v. Fond Du Lac Band Chippewa

• Citation: 977 F.Supp.2d 944
• Decision Date: 08 October 2013
• Docket Number: Case No. 09–cv–2668 (SRN/LIB).
• Parties: City of DULUTH, Plaintiff, v. FOND DU LAC BAND OF LAKE SUPERIOR CHIPPEWA, Defendant.
• Court: U.S. District Court — District of Minnesota

977 F.Supp.2d 944

City of DULUTH, Plaintiff,

v.FOND DU LAC BAND OF LAKE SUPERIOR CHIPPEWA, Defendant.

Case No. 09–cv–2668 (SRN/LIB).

United States District Court,

D. Minnesota.

Oct. 8, 2013.

David P. Sullivan, Madeira Beach, FL, Gunnar B. Johnson and M. Alison Lutterman, City of Duluth, Robert C. Maki and Shawn B. Reed, Maki & Overom Limited, Duluth, MN, for Plaintiff.

Vanya S. Hogen, Jessica Intermill, and Henry M. Buffalo, Jr., Jacobson, Buffalo, Magnuson, Anderson & Hogen, P.C., Saint Paul, MN, Dennis Peterson, Fond du Lac Band of Lake Superior Chippewa Legal Affairs Office, Cloquet, MN, for Defendant.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, District Judge.

I. INTRODUCTION

This matter is before the Court on remand from the United States Court of Appeals for the Eighth Circuit. The Eighth Circuit reversed this Court's earlier denial of Defendant's request for retrospective relief under Rule 60(b)(6) and remanded that question for further proceedings. City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d 1147, 1156 (8th Cir.2013). Defendant filed a motion for relief under Rule 60(b)(6), [Doc. No. 260], which Plaintiff opposed, [Doc. No. 269]. Also before the Court is Plaintiff's motion to stay proceedings on remand pending the disposition of an action brought by Plaintiff under the Administrative Procedures Act. [Doc. No. 255]. For the reasons set forth below, the Court denies Defendant's Rule 60(b)(6) motion and denies Plaintiff's motion to stay as moot.

II. BACKGROUND

In 1986, Plaintiff City of Duluth (“City”) and Defendant Fond du Lac Band of Lake Superior Chippewa (“Band”) entered into a joint venture to create and operate a casino in downtown Duluth, Minnesota.¹ In 1988, Congress passed the Indian Gaming Regulatory Act (“IGRA”), which requires that Indian tribes have “sole proprietary interest” in and exclusive control of any Indian gaming activity authorized by the Act. 25 U.S.C. § 2710(b)(2)(A).

In 1989, the Band filed suit in federal court (Case No. 5–89–0163), seeking a declaration that the 1986 Agreement with the City violated the IGRA's requirement that an Indian tribe “have the sole proprietary interest and responsibility for the conduct of any gaming activity” on Indian lands. In 1990, United States District Judge Paul A. Magnuson dismissed the Band's action without prejudice, explaining that “the public interest is best served by allowing the Federal regulatory authority established by the IGRA,” the National Indian Gaming Commission (“NIGC”), to review the arrangement regarding the Fond du Luth Casino and give its recommendation. (Dec. 26, 1990, Order at 6 [Doc. No. 10–11].)

Upon review of the 1986 Agreement, the NIGC concluded that the casino's operation violated the IGRA because “the Band does not have the sole ownership or control” of the casino. (NIGC Sept. 24, 1993, Letter at 1–2 [Doc. No. 11–1].) The NIGC Chairman advised the parties that unless the parties “are able to settle the pending dispute, [the NIGC] will be initiating an enforcement action to bring the Fond du Luth gaming operation into compliance with IGRA.” ( Id. at 1.)

The parties' settlement negotiations produced seven new agreements in June 1994 (“1994 Agreements”). These agreements reorganized their relationship to eliminate the joint venture, but the City retained rights regarding various aspects of operating the casino. The parties agreed on an “Initial Term” of seventeen years (from 1994 through March 31, 2011), with an “Extension Term” of twenty-five years (from April 1, 2011 to March 31, 2036). (Sublease and Assignment of Gaming Rights Agreement, at 8–9 [Doc. No. 12–2].) In addition, from 1994 to 2011, the Band was required to pay the City nineteen percent of the casino's gross revenues as “rent.” ( Id. at 11.) The rental rate from 2011 to 2036 was to be negotiated at a later date. ( Id. at 16.) Because the 1994 Agreements required a determination by the NIGC that it did not violate the IGRA, the parties submitted them to the NIGC, which issued its approval. (June 20, 1994, Letter [Doc. No. 11–4].) The NIGC recommended to Judge Magnuson that the 1994 Agreements be approved. ( Id. at 2.) On June 22, 1994, the district court issued an order incorporating the detailed stipulation of the parties into a consent decree. (Stipulation and Consent Order [Doc. No. 11–7].)

Consistent with the terms of this consent decree, the Band paid the City approximately $75 million in rent from 1994 until 2009. The Band then ended payments on the ground that it had been paying the City more than nineteen percent of the casino's gross revenues because certain expenses should have been considered as offsets against revenue. In September 2009, after the Band did not respond to the City's request to cure its breach, the City brought this action to enforce the 1994 Agreements. (Compl. [Doc. No. 1].) The Band filed a counterclaim alleging that the consent decree was inconsistent with the IGRA and should therefore be dissolved. (Answer and Countercl. [Doc. No. 3].)

In December 2009, the City moved for summary judgment. (Pl.'s Mot. for Summ. J. [Doc. No. 7].) In April 2010, this Court ruled that the Band's argument about the legality of the consent decree was barred by res judicata because the decree had been approved by the court and formalized in a judgment. (Apr. 21, 2010, Order, 708 F.Supp.2d at 896–97.) The Court also decided to schedule a trial on the question of whether the Band had overpaid the City between 1994 and 2011. ( Id. at 902–03.) The Court further noted that the consent decree indicated that the payment plan for the 2011–2036 period would be decided by arbitration. ( Id. at 903.) After another round of arguments by the parties, the Court ordered the parties to submit the issues related to the 2011–2036 period to arbitration. (May 13, 2011, Order [Doc. No. 179], 2011 WL 1832786.)

Meanwhile, the Band sought review of the 1994 Agreements by the NIGC. On July 12, 2011, shortly after the parties began arbitration, the NIGC issued a notice of violation (“NOV”). (Notice of Violation [Doc. No. 208–1].) This NOV determined that the provisions in the 1994 consent decree violated the IGRA's “sole proprietary interest” rule, and it ordered the Band to cease performance or face sanctions, including fines and the possible closure of the casino. ( Id. at 18–19.)

On July 14, 2011, the Band informed this Court of the NOV as well as of its intent to seek relief from the consent decree. (July 14, 2011, Letter to District Judge [Doc. No. 202].) On July 22, 2011, the Band moved for dissolution of the consent decree under Federal Rule of Civil Procedure 60(b). (Fond du Lac Band of Lake Superior Chippewa's Mot. for Relief from Consent Order, Summ. J. Order, and Order Compelling Arbitration under Rules 60(b)(5) and 60(b)(6) [Doc. No. 207].) On November 21, 2011, this Court relieved the Band “of any further compliance with its obligations under the 1994 Agreements.” (Nov. 21, 2011, Order, 830 F.Supp.2d at 728.) Regarding “retroactive relief,” it held that the Band could not recover its previously paid rent and that the Band must pay the withheld rent from 2009 to 2011. ( Id.) Finally, the Court stated that a trial would be scheduled later on the issue of “contra-revenues”—that is, whether the Band may recover any overpayments to the City by recognizing certain expenses as offsets against revenues. ( Id.)

Both parties appealed the November 21, 2011, Order. The City appealed the prospective dissolution of the consent decree relating to the 2011–2036 term. The Band appealed the ruling compelling it to pay rent that it had withheld from 2009 to 2011, but did not appeal the ruling that it could not recover the rent already paid from 1994 to 2009. On January 14, 2013, the Eighth Circuit (1) affirmed this Court's ruling under Rule 60(b)(5) relieving the Band of prospective compliance with the 1994 consent decree, and (2) reversed the denial of the Band's request for retrospective relief under Rule 60(b)(6) and remanded that question for further proceedings. City of Duluth, 702 F.3d at 1156. The Eighth Circuit directed this Court to examine all relevant factors as to whether retrospective relief for the 2009–2011 period is available to the Band under Rule 60(b)(6).

III. DISCUSSIONA. Rule 60(b)(6)

1. Standard of Review

Federal Rule of Civil Procedure 60(b) may be used to reconsider a final judgment on grounds including excusable neglect, fraud, newly discovered evidence, or “any other reason that justifies relief.” Fed.R.Civ.P. 60(b); 11 Charles Alan Wright, Arthur R. Miller, and Mary Kay Kane, Federal Practice and Procedure § 2852 (2d ed. 1995). A consent decree is subject to Rule 60(b) the same as any other judgment or decree. Rufo v. Inmates of the Suffolk Cnty. Jail, 502 U.S. 367, 378, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992). Rule 60(b)(6) is a “grand reservoir of equitable power.” Phelps v. Alameida, 569 F.3d 1120, 1135 (9th Cir.2009). It affords courts the discretion to vacate judgments whenever such action is appropriate to accomplish justice. Klapprott v. United States, 335 U.S. 601, 614–15, 69 S.Ct. 384, 93 L.Ed. 266 (1949); Ritter v. Smith, 811 F.2d 1398, 1400 (11th Cir.1987). Such relief, however, is “exceedingly rare” because it requires an intrusion into the sanctity of a final judgment, and therefore, it is available only in “extraordinary circumstances.” In re Guidant Corp. Implantable Defibrillators Prod. Liab. Litig., 496 F.3d 863, 868 (8th Cir.2007). Extraordinary circumstances are not present every time a party is subject to potentially unfavorable consequences as a result of an adverse judgment at which a court properly arrived. Id. Circumstances are exceptional when they “have denied the moving party a full and fair opportunity to litigate his claim” and “have prevented the moving party from receiving adequate redress.” Murphy v. Missouri Dep't of Corr., 506 F.3d 1111, 1117 (8th Cir.2007). A more...