In re US ex rel. Hall

• Decision Date: 11 June 1993
• Docket Number: 3-92-793,4-92-1159,4-92-1176 to 4-92-1186,3-92-796,4-92-1188 to 4-92-1194,3-92-801 to 3-92-804,3-92-799,3-92-795,Civ. No. 3-92-792,4-92-1175,3-92-798,4-92-1196 to 4-92-1204 and 4-92-1261.,3-92-839
• Parties: In re U.S.A. ex rel. Glenn A. HALL, et al. Litigation.
• Court: U.S. District Court — District of Minnesota

825 F. Supp. 1422

In re U.S.A. ex rel. Glenn A. HALL, et al. Litigation.

Civ. Nos. 3-92-792, 3-92-793, 3-92-795, 3-92-796, 3-92-798, 3-92-799, 3-92-801 to 3-92-804, 3-92-839, 4-92-1159, 4-92-1175, 4-92-1176 to 4-92-1186, 4-92-1188 to 4-92-1194, 4-92-1196 to 4-92-1204 and 4-92-1261.

United States District Court, D. Minnesota, Third Division.

June 11, 1993.

COPYRIGHT MATERIAL OMITTED

Thomas Albers, Lance Riley, Mark Vieno, Minneapolis, MN, for plaintiffs.

Robert Brunig, Craig Diviney, Dorsey & Whitney, Minneapolis, MN, John Van De North, Briggs & Morgan, St. Paul, MN, Justin Perl, Douglas Radunz, John Bonner, III, Michael Berens, Minneapolis, MN, John Furlow, Madison, WI, for defendants.

MEMORANDUM AND ORDER

MAGNUSON, District Judge.

BACKGROUND

Following the 1988 passage of the federal Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701-21 (1988), Indian tribes in Minnesota, Wisconsin and throughout the nation began to operate casinos and other Class II and Class III "gaming" establishments and operations authorized by the Act. See 25 U.S.C. § 2710 (defining various classes of gaming under IGRA). In the course of establishing and operating the tribal gaming enterprises, Indian tribes in Minnesota and Wisconsin transacted business and entered contracts with various outside merchants and vendors for provision of goods and services. Transactions included contracts for sale and rental of gaming machines and equipment, advertising and marketing, training and management services and other goods and services necessary for the operation of tribal gaming facilities.

A number of these tribal gaming operations have prospered, providing much-needed revenue for the tribes and their members. The tribes, apparently satisfied with the contracts and arrangements for provision of goods and services related to their gaming operations, have not sought to revise or challenge those transactions. However, several persons not party to the agreements now seek to challenge them, contending those agreements violate federal law. The "relator-plaintiffs," private citizens suing on behalf of the United States, filed 42 suits in this court against the vendors who provided goods and services to the tribes seeking to void various contracts and transactions entered by Indian tribes in Minnesota and Wisconsin. The relator-plaintiffs (hereinafter plaintiffs) contend that the contracts are void for failure to comply with federal government approval requirements and other statutory provisions of 25 U.S.C. § 81 (1988); the Indian Trader Licensing Act (ITLA), 25 U.S.C. §§ 201 & 261-64 (1988); and the IGRA, 25 U.S.C. §§ 2701-21 (1988).

The plaintiffs seek, inter alia, rescission of the contracts and transactions at issue in these suits and refund of all monies paid by Indian tribes to defendant merchants pursuant to such contracts. If plaintiffs were successful, one-half of the refunded monies would be returned to the Indian tribes while the other half would be paid directly to the plaintiffs, as a reward for their assistance in the enforcement of federal laws. See 25 U.S.C. § 81. Plaintiffs also seek payment of penalties and other compensation pursuant to applicable federal statutes. See, e.g., 25 U.S.C. § 201. The plaintiffs allege they are members of the Lac Courte Oreilles Band of Indians, which is party to contracts involved in four of these lawsuits. They allege no direct connection with the contracting parties in any of the other suits.

These cases were consolidated for pre-trial consideration before this court. Plaintiffs now seek summary judgment in each of these cases. Several defendants also move for summary judgment, while others have filed motions to dismiss.

DISCUSSION

Motion to Dismiss Standard

For the purposes of the defendants' motions to dismiss, the court takes all facts alleged in the plaintiffs' complaints as true. Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir.1990). Further, the court must construe the allegations in the complaints and reasonable inferences arising from the complaints favorably to the plaintiffs. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). A motion to dismiss will be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him to relief." Id. at 187; see Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). The court applies those standards and analysis in the following discussion.

I. STANDING

In order to maintain an action in federal court, all plaintiffs must show they meet the standing requirements of Article III of the United States Constitution. This is a threshold question in every federal case, which determines whether a federal court has the power to hear the suit. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975). In order to establish standing, a plaintiff must make a three part showing: (1) plaintiff must have sustained an injury in fact, i.e. an invasion of a legally protected interest which is concrete and particularized and actual or imminent, not conjectural or hypothetical; (2) there must be a causal connection between that injury and the complained-of conduct; and (3) it must be likely — as opposed to merely speculative — that the injury can be redressed by a favorable decision. Lujan v. Defenders of Wildlife, ___ U.S. ___, ___, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351 (1992) (citations omitted).

A. 25 U.S.C. § 81

The parties agree that Congress enacted 25 U.S.C. § 81 for the protection of American Indians and Indian tribes. See United States ex rel. Shakopee Mdewakanton Sioux Community v. Pan American Mgmt. Co., 616 F.Supp. 1200, 1208 (D.Minn. 1985) (statute was enacted "solely for the protection and benefit of Indians"), appeal dismissed, 789 F.2d 632 (8th Cir.1986). Plaintiffs have not alleged they are members of the class of people the law was intended to protect. Even more significantly, plaintiffs have alleged no actual or concrete injury to themselves or their interests. Therefore, they fail to satisfy the indispensable actual injury requirement for standing to bring suit in federal court. See id. at 1207-08.

The text of 25 U.S.C. § 81 does not contradict this conclusion. The statute provides, in pertinent part:

All contracts or agreements made in violation of this section shall be null and void, and all money or other thing of value paid to any person by any Indian or tribe, or any one else, for or on his or their behalf, on account of such services, in excess of the amount approved by the Commissioner and Secretary for such services, may be recovered by suit in the name of the United States in any court of the United States, regardless of the amount in controversy; and one-half thereof shall be paid to the person suing for the same, and the other half shall be paid into the Treasury for the use of the Indian or tribe by or for whom it was so paid.

25 U.S.C. § 81. The statute does not expressly establish standing for third persons who claim no direct interest in the contract, agreement, goods or services at issue. The statute merely states that suit may be brought in the name of the United States and that the person who prevails in such a suit is entitled to half of the recovery. The statute is silent as to which individuals or entities other than the United States may bring suit to enforce its provisions.¹ Absent compelling evidence of clear congressional intent, this court will not infer or "read into" a statute a provision which effectively waives the Article III "injury in fact" requirement — an indispensable condition of this court's power to hear disputes.² See Lujan, ___ U.S. at ___, 112 S.Ct. at 2136 (injury in fact is element of three-part "irreducible constitutional minimum" for standing); see also Middlesex Cty. Sewerage Auth. v. National Sea Clammers, 453 U.S. 1, 14-15, 101 S.Ct. 2615, 2623-24, 69 L.Ed.2d 435 (1981) (absent clear evidence of congressional intent, courts should not ordinarily read additional remedies into statute which already provides remedies).³

In a similar case, the Eighth Circuit recently reached the same conclusion. A non-Indian plaintiff brought suit pursuant to the same statute, seeking to contest a management contract between an Indian tribe and a management company. Schmit v. International Finance Mgmt. Co., 980 F.2d 498 (8th Cir.1992). Because the plaintiff alleged no injury and was not within the zone of interests protected by 25 U.S.C. § 81, the court held he had no standing to bring the action. Id.

B. 25 U.S.C. §§ 201, 261-64

The preceding standing analysis applies with equal force to the plaintiffs' claims under the Indian Trader Licensing Act (ITLA), 25 U.S.C. §§ 201 & 261-64. Initially, nothing in sections 261-64 discusses who may bring suit to enforce those provisions. Unlike 25 U.S.C. § 81, there is no language in sections 261-64 which could even arguably provide a basis for non-Indian private citizen or qui tam standing. Therefore, the plaintiffs' standing to bring an action pursuant to the ITLA could rest only on 25 U.S.C. § 201.

Congress enacted the "penalties" provision (currently codified at 25 U.S.C. § 201), through which plaintiffs seek standing to enforce the ITLA against the defendants, at the same time as the ITLA, in 1834. The statute provides:

All penalties which shall accrue under this title shall be sued for and recovered in an action in the nature of an action of debt, in the name of the United States, before any court having jurisdiction of the same, in any State or Territory in which the defendant shall be arrested or found, the one half to the use of the informer and the other half to the use of the United States, except when the prosecution shall be first instituted on behalf of the United States, in which case the whole shall be to their use.

25 U.S.C. § 201.

Similar to section 81, this statute is silent regarding which persons other than the United States may bring suit. It...