Teague v. Bad River Band of Chippewa Indians

• Decision Date: 06 July 2000
• Docket Number: No. 98-3484., No. 98-3150
• Citation: 612 N.W.2d 709,236 Wis.2d 384,2000 WI 79
• Parties: Jerry TEAGUE, Plaintiff-Respondent-Petitioner, v. BAD RIVER BAND OF the LAKE SUPERIOR TRIBE OF CHIPPEWA INDIANS, Defendant-Appellant. Jerry TEAGUE, Plaintiff-Respondent-Petitioner, v. BAD RIVER BAND OF the LAKE SUPERIOR TRIBE OF CHIPPEWA INDIANS, Defendant-Appellant, FIRST FINANCIAL BANK, Garnishee.
• Court: Wisconsin Supreme Court

236 Wis.2d 384

2000 WI 79

612 N.W.2d 709

Jerry TEAGUE, Plaintiff-Respondent-Petitioner, v. BAD RIVER BAND OF the LAKE SUPERIOR TRIBE OF CHIPPEWA INDIANS, Defendant-Appellant.

Jerry TEAGUE, Plaintiff-Respondent-Petitioner, v. BAD RIVER BAND OF the LAKE SUPERIOR TRIBE OF CHIPPEWA INDIANS, Defendant-Appellant, FIRST FINANCIAL BANK, Garnishee.

Nos. 98-3150, 98-3484.

Supreme Court of Wisconsin.

Oral argument March 2, 2000.

Decided July 6, 2000.

For the plaintiff-respondent-petitioner there were briefs by John H. Zawadsky, Michael P. Erhard, Andrew W. Erlandson, Beth Ermatinger Hanan and Reinhart, Boerner, Van Deuren, Norris & Rieselbach, S.C., Madison, and oral argument by Michael P. Erhard.

For the defendant-appellant there was a brief by Henry M. Buffalo, Jr., John E. Jacobson and Jacobson, Buffalo, Schoessler & Magnuson, Ltd., St. Paul, Minnesota, and Kevin Osterbauer and Bad River Legal Department, Odanah, and oral argument by John E. Jacobson.

¶ 1. DIANE S. SYKES, J.

This case concerns the interpretation of a statute affording full faith and credit to the judgments of tribal courts in this state. Specifically, the case raises the question of whether under Wis. Stat. § 806.245 (1995-96),¹ a tribal court judgment can be denied full faith and credit because a complaint concerning the same subject matter was filed first in state circuit court. The case arises out of a contract dispute between the Bad River Band of the Lake Superior Tribe of Chippewa Indians (the Band) and Jerry Teague, a non-tribal member who was once employed as the general manager of the Band's casino. After Teague's employment with the casino ended, the parties embarked upon a litigation journey, filing overlapping suits in circuit court and tribal court.

¶ 2. Litigation began when Teague filed a complaint in circuit court seeking arbitration pursuant to the terms of his employment contract. Over a year later, the Band filed its own suit in tribal court, challenging the validity of the contract under tribal law. The tribal court reached judgment first, invalidating the contract. The Band then moved the circuit court for full faith and credit for the judgment pursuant to Wis. Stat. § 806.245. The motion was denied. The circuit court concluded that under the state's "prior action pending" rule, the tribal court, as a court of concurrent jurisdiction, did not properly have jurisdiction over the matter because the case was filed in circuit court first. See Syver v. Hahn, 6 Wis. 2d 154, 94 N.W.2d 161 (1959)

. The court of appeals reversed, and Teague petitioned for review. We now hold that the prior action pending rule of Syver does not apply to these circumstances because an Indian tribal court is a court of an independent sovereign. However, under the circumstances of this case, principles of comity required that the state and tribal courts confer for purposes of allocating jurisdiction between them, in order to avoid both the race to judgment and inconsistent results that occurred here. Accordingly, we reverse.

¶ 3. The Band is a federally recognized Indian tribe, possessing inherent powers of self-government over its members and its territory pursuant to the Indian Reorganization Act of 1934, 25 U.S.C. §§ 461-479. The Band has two fundamental governing documents: its constitution, adopted under section 16 of the Indian Reorganization Act of 1934,² and its corporate charter issued by the Secretary of the United States Department of the Interior under section 17 of the same act.³

¶ 4. In April 1993, Jerry Teague, a non-tribal member, was hired as the general manager of the Bad River Casino, which the Band operates on its reservation in northern Wisconsin. On November 3, 1993, after a probationary period, Teague and then-Bad River Tribal Chairman Donald Moore, Sr., formalized Teague's employment by signing a three-year contract. The contract set forth the terms of Teague's day-to-day employment at the casino and also stated that disputes over termination "shall be submitted for arbitration under chapter 788, Wisconsin Statutes." On March 15, 1995, Teague and Moore's successor, Elizabeth Drake, signed a new contract containing a similar arbitration clause.

¶ 5. On July 19, 1995, Teague left the Band's employ.⁴ In November of that year, he filed a complaint in Ashland County Circuit Court seeking to compel arbitration pursuant to the contracts, and alternately, seeking damages for breach of contract. The Band moved to dismiss, arguing that the arbitration agreement was unenforceable because it stated that disputes over termination should be submitted for arbitration under chapter 788, Wisconsin Statutes, which does not apply to contracts between employers and employees. The Band also invoked its sovereign immunity as a federally recognized Indian tribe. Teague then moved for partial summary judgment on the sovereign immunity issue. ¶ 6. On September 25, 1996, the circuit court, Judge Thomas J. Gallagher, presiding, denied the Band's motion to dismiss, ruling that the reference to the Wisconsin Statutes did not invalidate the arbitration clause because only certain state public sector employment contracts are excluded from the scope of chapter 788. The court also held that the Band implicitly waived its sovereign immunity by including the arbitration clause, since a dispute cannot be arbitrated without such a waiver. Furthermore, the court found that the casino was an "economic affair or enterprise" operating under the Band's corporate charter which contains a "sue and be sued" clause,⁵ and thus, it could not invoke sovereign immunity with respect to its casino activities. The Band then amended its answer, adding the affirmative defense that the 1995 contract was not valid because it did not have the approval of the tribal council and the United States Secretary of the Interior as required by the Band's corporate charter.

¶ 7. Then, in December 1996, the Band filed a complaint in the Bad River Tribal Court seeking a declaration on the validity of the 1995 contract, reasserting its claim that the contract lacked the requisite approval of the Tribal Council. The Band amended its tribal court complaint on January 7, 1997, to request a declaration on the validity of the 1993 contract as well.

¶ 8. The Band then filed a motion in the circuit court, contending that under United States Supreme Court precedent, Iowa Mutual Insurance Co. v. LaPlante, 480 U.S. 9 (1987), and National Farmers Union Insurance Cos. v. Crow Tribe of Indians, 471 U.S. 845 (1985), the circuit court was required to stay its proceedings until the tribal court ruled on the tribal law challenges to the contracts and all tribal remedies were exhausted. Teague countered that the issue of the contracts' validity was not dispositive, since even if they were not properly executed, he was still entitled to rely on the apparent authority of the tribal officials who signed them.

¶ 9. On February 5, 1997, the circuit court held that in light of Teague's "apparent authority" argument, it was under no obligation to stay its proceedings because the tribal court proceedings would not entirely dispose of Teague's claims:

[N]o matter what the tribe does concerning this declaratory judgment action that's before it, which is limited to interpreting whether both, it now turns out, of the contracts under which he worked for a considerable period of time are void because the people that signed them on behalf of the tribe lacked the legal authority to do so under Tribal Law. That is not going to be the end of this case, and I fail to see the judicial economy of — of any theory of Tribal Exhaustion. . .If it was going to be determinative I might go along with it, but it's not going to be. . .The decision ultimately is going to turn on Wisconsin Contract Law. . . .

The court also expressed its opinion that:

[T]he Tribal Court is free to go ahead and do whatever they want to do, and they've got a very limited issue here to decide and it would seem to me that they could schedule this case and get those issues out of the way before I ever get to the rest of this case.

¶ 10. The Band returned to tribal court, amending its complaint to include the allegation that given his position with the Band, Teague could not have formed any reasonable belief that would make the contracts valid under an apparent authority analysis. Teague accepted service of the amended tribal court complaint through counsel on March 25, 1997. Teague did not plead responsively in the tribal court, seek a stay of the tribal court proceedings, or appear before the tribal court in order to challenge its personal or subject matter jurisdiction. However, he did participate fully in discovery, which was conducted simultaneously for both the circuit court and tribal court proceedings.

¶ 11. On May 29, 1997, the Band moved for default judgment in tribal court. On July 25, 1997, the tribal court held a hearing and granted the Band's motion, holding that the contracts were invalid because they were not approved by the tribal council. The tribal court rejected Teague's apparent authority argument, concluding that because of his experience with the Band, he could not reasonably have believed that the contracts were valid without the tribal council's approval. Teague did not appeal in the tribal court system.

¶ 12. Tribal court judgment in hand, the Band returned to the circuit court seeking full faith and credit under Wis. Stat. § 806.245. Pursuant to the requirements of the statute, the Band submitted a copy of its governing documents and tribal court code, as well as the record of the tribal court proceedings and certifications that the Band grants full faith and credit to the judicial records of Wisconsin courts and to the acts of other state governmental entities.

¶ 13. Teague opposed the motion, arguing that Wis. Stat. § 806.245 incorporates the "prior action pending" rule and thus, the tribal court could not have subject...