Forest County Potawatomi Community of Wisconsin v. Norquist, s. 93-3503

• Decision Date: 17 January 1995
• Docket Number: Nos. 93-3503,94-1851 and 94-1982,s. 93-3503
• Citation: 45 F.3d 1079
• Parties: FOREST COUNTY POTAWATOMI COMMUNITY OF WISCONSIN, a federally recognized Indian tribe, Gaming Commission of the Forest County Potawatomi Community of Wisconsin, Virginia Jacobson, Chairperson of the Gaming Commission of the Forest County Potawatomi, et al., Plaintiffs-Appellees, v. John O. NORQUIST, Individually and as Mayor of the City of Milwaukee, Grant F. Langley, Individually and as City Attorney for the City of Milwaukee, Philip Arreola, Individually and as Chief of Police of the City of Milwaukee, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1079

45 F.3d 1079

FOREST COUNTY POTAWATOMI COMMUNITY OF WISCONSIN, a federally

recognized Indian tribe, Gaming Commission of the Forest

County Potawatomi Community of Wisconsin, Virginia Jacobson,

Chairperson of the Gaming Commission of the Forest County

Potawatomi, et al., Plaintiffs-Appellees, v. John O. NORQUIST, Individually and as Mayor of the City of

Milwaukee, Grant F. Langley, Individually and as City

Attorney for the City of Milwaukee, Philip Arreola,

Individually and as Chief of Police of the City of

Milwaukee, et al., Defendants-Appellants.

Nos. 93-3503, 94-1851 and 94-1982.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 4, 1994.

Decided Jan. 17, 1995.

Eric Dahlstrom (argued), Michael C. Shiel, Rothstein, Donatelli, Hughes, Dahlstrom & Cron, Phoenix, AZ, Richard W. Hughes, Rothstein, Donatelli, Hughes, Dahlstrom & Cron, Santa Fe, NM, for Forest County Potawatomi Community of Wisconsin, Bingo Com'n, Forest County Potawatomi Community Virginia Jacobson, Gaming Com'n, Forest County Potawatomi Community.

Joseph F. Preloznik, Madison, WI, for Indian Community School of Milwaukee, Inc.

Grant F. Langley (argued), Office of City Atty., Patrick B. McDonnell, Jan A. Smokowicz, Milwaukee City Attys Office, Milwaukee, WI, for John O. Norquist, Grant F. Langley, Philip Arreola, Lee Jensen, City of Milwaukee.

Warren D. Weinstein, Asst. Atty. Gen., Wisconsin Dept. of Justice, Madison, WI, for James E. Doyle.

Stephen Morgan, Murphy & Desmond, Madison, WI, for E. Michael McCann.

Before CUMMINGS, PRATT ^* and MANION, Circuit Judges.

CUMMINGS, Circuit Judge.

Plaintiff Forest County Potawatomi Community of Wisconsin ("Tribe") is a federally recognized Indian tribe. This case involves a dispute over the rights of the Tribe to operate video gaming machines, a Class III gaming activity, at the Tribe's Potawatomi Bingo facility located on Menomonee Valley land in the city of Milwaukee.

The Menomonee Valley land was purchased in July 1990 from the Milwaukee Redevelopment Authority by the United States to be held in trust for the benefit of the plaintiff Tribe. The land was acquired as a site for the Tribe's proposed high-stakes bingo operation. As a prerequisite to the sale of the land, the City of Milwaukee ("City") required that the Tribe enter into a Cooperation and Jurisdictional Agreement ("CJA") which would allow the city to enforce its regulatory ordinances on the Menomonee Valley land. The original CJA, signed by the Tribe on December 13, 1989, exempted the Menomonee Valley land from all local gaming regulation. On March 20, 1990, the City proposed an Amendment to the CJA "to clarify the parties' understanding with respect to the terms and conditions under which Class III gaming would be permissible on the Menomonee Valley Land." Def.App. 140. On March 30, 1990, the City signed the original CJA and on July 25, 1990, all parties signed the Amendment to the CJA. The extent to which the Amendment subjected the Tribe's gaming to local regulation is at the heart of the present dispute.

On March 7, 1991, the Tribe commenced gaming on the Menomonee Valley land, offering for use, among other attractions, approximately 200 video gaming machines. In June 1991, Lac du Flambeau Indians v. State of Wisconsin, 770 F.Supp. 480 (W.D.Wis.1991), held that Wisconsin permitted Class III gaming, opening the way for tribes to negotiate Class III compacts with the State. In March 1992, the National Gaming Commission issued regulations classifying video gaming machines, like those operated at the Menomonee Valley site, as Class III gaming. In June 1992, the Tribe turned off their video gaming machines at the request of the United States Attorney for the Eastern District of Wisconsin until the Tribe entered into a compact with the State as required for Class III gaming under the Indian Gaming Regulatory Act ("IGRA"). On June 9, 1992, defendant Langley, City Attorney for Milwaukee, sent a letter to the Tribe's attorney threatening adverse legal consequences including enforcement actions in city and state courts if the Tribe continued its Class III gaming at the Menomonee Valley site.

On June 3, 1991, the Tribe and the State of Wisconsin negotiated a compact which permitted the operation of 200 video gaming machines at the Menomonee Valley site subject to the "restrictions and provisions" of the earlier CJA and the Amendment thereto. On August 4, 1992, the Secretary of the Interior approved the compact and the video gaming machines were turned back on. The Tribe commenced the present action in the Western District of Wisconsin on the same day. The Tribe's first claim alleged a violation of 42 U.S.C. Sec. 1983. Their second claim alleged that the Tribe had a right established by the IGRA to conduct Class III gaming on its Menomonee Valley land.

On September 1, 1992, the district court preliminarily enjoined defendants from using city and state law to interfere with the Tribe's Class III gaming in the city of Milwaukee. 803 F.Supp. 1526 (W.D.Wis.). On January 26, 1993, the court dismissed the Tribe's Sec. 1983 cause of action for failure to state a claim. 828 F.Supp. 1401 (W.D.Wis.). On September 15, 1993, the district court granted the Tribe summary judgment on its second claim and permanently enjoined defendants from using local, city or state law to interfere with the operation of Class III gaming on the Menomonee Valley trust land by the Tribe or their authorized agents, as permitted under the Forest County Potawatomi Community of Wisconsin and State of Wisconsin Gaming Compact of 1992.

Discussion

I. Jurisdiction

The district court determined that it had jurisdiction to hear this case under both 28 U.S.C. Sec. 1343--based on the Tribe's not "implausible" Sec. 1983 claim--and 28 U.S.C. Sec. 1362 because the action was brought by an Indian tribe and the matter in controversy arose under federal law. Forest County Potawatomi Community, 828 F.Supp. 1401, 1412 (W.D.Wis.1993). Defendants dispute the district court's jurisdiction. The outcome of the case, they argue, depends on the court's interpretation of the CJA, which they claim involves no federal question. Assuming for the sake of argument that the interpretation of the CJA involves no federal question, the defendants nonetheless err when they conclude that the case does not arise under federal law.

Because the district court found that the CJA did not prohibit the Tribe's gaming activities at the Menomonee Valley site, the court did not reach the alternative ground for decision, that the CJA was an invalid cessation of jurisdiction. Def.App. 104. This alternative ground, which the court would have had to reach if it found that the CJA barred the Tribe's video gaming machines, undoubtedly poses a federal question and points to the problem with defendants' argument. "The federal nature of the right to be established is decisive" of whether the action arises under federal law. Gully v. First Nat'l Bank, 299 U.S. 109, 116, 57 S.Ct. 96, 99, 81 L.Ed. 70. The Tribe is seeking to establish the right to operate its video gaming machines free from state or city interference. That right, if it exists, is a federal right whether its source is the IGRA, the Compact, the Indian Commerce Clause or federal recognition of the inherent sovereign powers of an Indian tribe. The CJA is a possible limitation on that right and is raised by the City as a defense, not as part of the Tribe's well-pleaded complaint.

Defendants' characterization of the CJA as a private contract does not bring the Tribe's suit under the holding of Gila River Indian Community v. Henningson, Durham & Richardson, 626 F.2d 708 (9th Cir.1980), on which defendants rely. The Tribe is not seeking relief for breach of contract. It is seeking to enjoin defendants from violating the Tribe's claimed federal immunity.

It is beyond dispute that federal courts have jurisdiction over suits to enjoin state officials from interfering with federal rights. See, Ex parte Young, 209 U.S. 123, 160-162 [28 S.Ct. 441, 454-55, 52 L.Ed. 714] (1908). A plaintiff who seeks injunctive relief from state regulation, on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail, thus presents a federal question which the federal courts have jurisdiction under 28 U.S.C. Sec. 1331 to resolve.

Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n. 14, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490; see also Keetoowah Indians v. State of Okl. ex rel. Moss, 927 F.2d 1170, 1173 (10th Cir.1991) ("We are persuaded that an action such as this by a tribe asserting its immunity from enforcement of state laws is a controversy within [28 U.S.C.] Sec. 1362 jurisdiction as a matter arising under the Constitution, treaties or laws of the United States."). The fact that the district court found that the CJA, even if a valid contractual limitation on the Tribe's immunity, did not bar the Tribe's activities, does not change the fact that the source of the Tribe's right is a federal immunity not a private contract. Consequently, the Gila River case is inapplicable.

II. Direct Appeal

Defendants appeal from the district court's grant of summary judgment in favor of the Tribe. We agree with the district court's interpretation of the CJA and Amendment. The original agreement completely excluded the Tribe's gaming activities from local regulation and control. The Amendment clarified the original agreement by making explicit the conditions that had to be met before the Tribe could operate Class III gaming. Those conditions were: (1) that Wisconsin allow Class III gaming "for any purpose by any person, organization or entity," (2) that the Tribe comply with the IGRA, and (3) that the Tribe comply with all civil regulatory state and local regulations which authorize or regulate such gaming. That the first requirement has been satisfied can no longer be disputed following Lac du...