Dairyland Greyhound Park, Inc. v. Doyle, 2006 WI 107 (Wis. 7/14/2006)

• Citation: 2006 WI 107
• Decision Date: 14 July 2006
• Docket Number: No. 2003AP421.,2003AP421.
• Parties: Dairyland Greyhound Park, Inc., Plaintiff-Appellant, v. James E. Doyle, in his official capacity as Governor of the State of Wisconsin, and Stephen E. Bablitch, in his official capacity as Secretary of the Wisconsin Department of Administration, Defendants-Respondents.
• Court: United States State Supreme Court of Wisconsin

Page 1

2006 WI 107

Dairyland Greyhound Park, Inc., Plaintiff-Appellant, v. James E. Doyle, in his official capacity as Governor of the State of Wisconsin, and Stephen E. Bablitch, in his official capacity as Secretary of the Wisconsin Department of Administration, Defendants-Respondents.

No. 2003AP421.

Supreme Court of Wisconsin.

Opinion Filed: July 14, 2006.

APPEAL from an order of the Circuit Court for Dane County, Richard J. Callaway, Judge. Affirmed.

For the plaintiff-appellant there were briefs by Stephen L. Morgan and Murphy Desmond, S.C., Madison, and oral argument by Stephen L. Morgan.

For the defendants-respondents the cause was argued by Thomas C. Bellavia, Maura FJ Whelan, John S. Greene, Charles D. Hoornstra, assistant attorneys general, with whom on the brief was Peggy A. Lautenschlager, attorney general.

An amicus curiae brief was filed by Douglas B.L. Endreson, William R. Perry and Sonosky, Chambers, Sachse, Endreson & Perry, LLP, Washington, D.C., and Howard Bichler and St. Croix Law Office, Webster, on behalf of St. Croix Chippewa Indians of Wisconsin; Kevin L. Osterbauer and Legal Department-Chief Blackbird Center, Odanah, on behalf of Bad River Band of the Lake Superior Tribe of Chippewa Indians; Kris M. Goodwill and Lac Courte Oreilles Legal Department, Hayward, on behalf of Lac Courte Oreilles Band of Lake Superior Chippewa Indians of Wisconsin; Jeffrey A. Crawford, Milwaukee, and Eric N. Dahlstrom and Rothstein, Donatelli, Hughes, Dahlstrom, Schoenburg & Frye, LLP, Tempe, AZ, on behalf of Forest County Potawatomi Community; Andrew S. Caulum and Caulum Law Office, S.C., Madison, on behalf of Sokaogon Chippewa Community (Mole Lake Band of the Lake Superior Chippewa Indians), and there was oral argument by Douglas B.L. Endreson.

An amicus curiae brief was filed by Tori L. Kluess, Jodi L. Arndt, and Liebmann, Conway, Olejniczak & Jerry, S.C., Green Bay, on behalf of the Green Bay Area Chamber of Commerce.

An amicus curiae brief was filed by Michael Murphy and Ho-Chunk Nation Department of Justice, Black River Falls, and Lester J. Marston and Rapport and Marston, Ukiah, CA, on behalf of the Ho-Chunk Nation.

An amicus curiae brief was filed by Grant Langley, Patrick McDonnell, and William J. Domina, Milwaukee, on behalf of the City of Milwaukee and the County of Milwaukee.

An amicus curiae brief was filed by Raymond P. Taffora, Roisin H. Bell, and Michael Best & Friedrich LLP, Madison, on behalf of the Metropolitan Milwaukee Association of Commerce and Associated General Contractors-Greater Milwaukee.

An amicus curiae brief was filed by E. Michael McCann, District Attorney, Milwaukee.

LOUIS B. BUTLER, JR., J.

¶ 1 Dairyland Greyhound Park, Inc. ("Dairyland") appeals from a decision by the Honorable Richard J. Callaway, Dane County Circuit Court, granting summary judgment in favor of the defendants, Governor James E. Doyle and then-Secretary of Administration Marc J. Marotta, both in their official capacities¹ (collectively referred to as "the Governor"), concluding that the 1993 amendment to Article IV, Section 24 of the Wisconsin Constitution ("1993 Amendment") did not affect the 1991-92 Tribal gaming compacts ("Original Compacts") or any extensions to the Original Compacts. The court of appeals certified the appeal to this court to determine the Governor's authority to extend the 11 Original Compacts.²

¶ 2 We conclude that the 1993 Amendment to Article IV, Section 24 of the Wisconsin Constitution does not invalidate the Original Compacts.³ Because the Original Compacts contemplated extending the Compacts and amending the scope of Indian gaming within the Compacts, we further conclude that the parties' right of renewal is constitutionally protected by the Contract Clauses of the Wisconsin and United States Constitutions, and that amendments to the Original Compacts that expand the scope of gaming are likewise constitutionally protected by the Contract Clauses of the Wisconsin and United States Constitutions. We withdraw any language to the contrary in Panzer v. Doyle, 2004 WI 52, 271 N.W.2d 295, 680 N.W.2d 666, that would limit the State's ability to negotiate for Class III games under the Original Compacts.⁴ Accordingly, gaming can be expanded to the extent that the State and Tribes negotiate for additional Class III games.

¶ 3 The essence of what is at issue here is whether Wisconsin should break treaties with Tribes by walking away from its contractual obligations.⁵ Rules of contract interpretation and the Contract Clauses of the United States and Wisconsin Constitutions compel us to conclude that the State must honor its contractual obligations in their entirety. We therefore affirm the order of the circuit court.

¶ 4 This case stems from allegations by Dairyland that the 1993 Amendment deprives the Governor of the authority to permit Wisconsin Tribes to continue conducting casino-type gaming in Wisconsin. Dairyland asserts that Article IV, Section 24 of the Wisconsin Constitution renders all types of Class III gaming illegal, except for certain games that are specifically exempted under the Wisconsin Constitution.⁶ Therefore, according to Dairyland, Class III games that are not specifically exempted under the constitution are not lawful subjects of the State-Tribal Compacts. Dairyland asks this court to reverse the circuit court's decision, to enjoin the Governor from renewing the Original Compacts, and to instruct the Governor to exercise the State's right of nonrenewal according to the terms of the Original Compacts.⁷

¶ 5 The Governor asserts that the 1993 Amendment was not intended to impact the Original Compacts. Relying on the Contract Clauses of the Wisconsin⁸ and United States Constitutions,⁹ and federal preemption under the Supremacy Clause of the United States Constitution,¹⁰ the Governor asserts that the 1993 Amendment does not diminish the State's authority to renew its gaming Compacts with the Tribes.¹¹

¶ 6 In Panzer, 271 Wis. 2d 295, ¶102, this court concluded that the Original Compacts were lawfully entered into and that the question of the Compacts' durability after the 1993 Amendment was a question that may require an analysis under the impairment of Contract Clauses under the United States and Wisconsin Constitutions, as well as under the Indian Gaming Regulatory Act ("IGRA"). The Panzer majority, however, declined to resolve these questions. Id., ¶102. We now address the impairment of contracts issues raised by the Original Compacts and the 1993 change to the Wisconsin Constitution.¹²

I

¶ 7 The facts are undisputed for purposes of this appeal. Following the 1991 decision in Lac du Flambeau Band of Lake Superior Chippewa Indians v. State of Wisconsin, 770 F. Supp. 480 (W.D. Wis. 1991), appeal dismissed, 957 F.2d 515 (7th Cir. 1992),¹³ and pursuant to the Indian Gaming Regulatory Act, 25 USC § 2710(d)(3)(c) (1988),¹⁴ and Wis. Stat. § 14.035,¹⁵ Wisconsin's then-Governor Tommy Thompson negotiated gaming compacts with the 11 Tribes located in the State. Panzer, 271 Wis. 2d 295, ¶25. By June 1992, the State had entered into compacts with each of the 11 Tribes. Id. The Original Compacts initially lasted for seven-year terms, with automatic extensions for five-year terms, subject to the right of either party to issue a notice of nonrenewal prior to the expiration of the term.¹⁶ Id., ¶¶25-26, 32. These Original Compacts permitted the Tribes to engage in certain Class III¹⁷ casino gaming on Tribal land, including blackjack tables, electronic gaming machines, and pull-tab machines.

¶ 8 In April 1993, Wisconsin voters ratified an amendment to the Wisconsin Constitution to limit gaming in Wisconsin. Id., ¶28. The 1993 Amendment changed Article IV, Section 24 to (1) prohibit the legislature from authorizing gambling in any form except for specific games provided for in the amendment;¹⁸ and (2) narrowly define the nature of the state-operated lottery. 1991 EJR 27. See also Panzer, 271 Wis. 2d 295, ¶¶29-31.

¶ 9 The initial 1991-92 compacts were subsequently renewed in 1998 and 1999, each for a term of five years. Id., ¶32. The compacts were again renewed in 2003. Id., ¶33. Since 1992, Class III gaming has continued to be conducted on Tribal land.

¶ 10 Dairyland alleges that it began to lose revenue due to the Class III games allowed on Tribal land. Dairyland first filed this action against then-Governor Scott McCallum on October 23, 2001, claiming that the Governor was not authorized to extend the gaming compacts with the Tribes in light of the 1993 Amendment. Dairyland sought an injunction preventing the Governor from entering into any future compacts and directing the Governor to serve a timely notice of nonrenewal to the Tribes for the existing compacts.

¶ 11 The Dane County Circuit Court, Honorable John C. Albert, originally granted the Governor's motion to dismiss, ruling that the Tribes were indispensable parties and had not been included in the litigation. Dairyland Greyhound Park, Inc. v. McCallum, 2002 WI App 259, ¶1, 258 Wis. 2d 210, 655 N.W.2d 474. The court of appeals concluded that the circuit court erred in finding the Tribes to be indispensable parties in whose absence the action should not proceed. Id. The court of appeals reversed the order dismissing the action and remanded the case to the circuit court for further proceedings on Dairyland's complaint. Id.

¶ 12 On remand, both Dairyland and the Governor moved for summary judgment. The circuit court granted the Governor's motion for summary judgment, relying heavily upon the civil-regulatory and criminal-prohibitory distinction from Lac du Flambeau Band, 770 F. Supp. at 487-88, and determined that because Section 24 does not prohibit Class III Indian gaming, the compacts are lawful. Dairyland Greyhound Park, Inc. v. Doyle, No. 2001CV2906, Order at 12 (Dane Co. Cir. Ct. Feb. 11, 2003).

¶ 13 Dairyland appealed, and the court of appeals asked this court to accept certification on June 2, 2003....