Wisconsin v. Ho-Chunk Nation

• Decision Date: 14 January 2008
• Docket Number: No. 07-1584.,07-1584.
• Citation: 512 F.3d 921
• Parties: State of WISCONSIN, Plaintiff-Appellee, v. HO-CHUNK NATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

512 F.3d 921

State of WISCONSIN, Plaintiff-Appellee, v. HO-CHUNK NATION, Defendant-Appellant.

No. 07-1584.

United States Court of Appeals, Seventh Circuit.

Argued October 24, 2007.

Decided January 14, 2008.

Matthew J. Flynn (argued), Quarles & Brady, Milwaukee, WI, for Plaintiff-Appellee.

Lester J. Marston (argued), Rapport & Marston, Ukiah, CA, for Defendant-Appellant.

Before FLAUM, MANION, and WILLIAMS, Circuit Judges.

FLAUM, Circuit Judge.

The State of Wisconsin ("the State") and the Ho-Chunk Nation ("the Nation") are embroiled in a dispute over the validity of certain provisions in the parties' gaming compact ("the Compact") in light of two decisions by the Wisconsin Supreme Court. Efforts to resolve this dispute through the arbitration process set forth in the Compact stalled, leading the State to bring suit in the Western District of Wisconsin to compel arbitration. The district court exercised jurisdiction over the suit and appointed an arbitrator, but on appeal, this Court concluded that federal subject matter jurisdiction was lacking, noting that the Indian Gaming Regulatory Act of 1988 ("IGRA") conferred jurisdiction in three specific instances, none of which were implicated by the case at hand. The State then filed an amended complaint in district court, this time including a claim to enjoin the Nation's class III gaming due to alleged violations under the Compact pursuant to 25 U.S.C. § 2710(d)(7)(A)(ii), one of the three provisions explicitly granting federal courts jurisdiction under the IGRA. The district court found that subject matter jurisdiction existed under this provision. The court also determined as part of its summary judgment order that the Wisconsin Supreme Court's decisions did not invalidate the provisions in the Compact. This interlocutory appeal by the Nation, followed. For the following reasons, we affirm that the district court had jurisdiction over the suit and that the Nation's sovereign immunity was abrogated by Congress and waived by the Nation. In addition, we partially vacate and remand the lower court's ruling on the Nation's motion for summary judgment so that the district court may first determine whether any of the State's claims are subject to arbitration.

I. Background

In 1992, the Ho-Chunk Nation, known at the time as the Wisconsin Winnebago Tribe, and then-Governor Tommy Thompson, acting on behalf of the State of Wisconsin, entered into a gaming compact pursuant to the IGRA. This Compact permitted the Nation to conduct certain "class III" gaming, as defined in the IGRA.¹ The parties amended the Compact in 1998, and did so a second time in 2003. This "Second Amendment" was the result of negotiations between the Nation and Governor James Doyle, and was approved by the Secretary of the Interior by operation of law, since the Secretary took no action on it within forty-five days of its submission for approval. 25 U.S.C. § 2710(d)(8)(C). The Second Amendment expanded the Nation's class III gaming to include various Vegas-style games and increased revenue-sharing between the Nation and the State. The validity of certain provisions in the Second Amendment is the focus of the parties' dispute.

When the parties initially amended the Compact in 1998, they included a revenue-sharing provision. The Second Amendment greatly expanded this revenue-sharing agreement. The Nation agreed to pay $30 million a year to the State from July 2003-July 2005. After that, the Nation would pay the State an annual percentage of its net win unless either party requested renegotiations. In consideration for these payments, the State agreed to a perpetual term for the Compact, an indemnification clause protecting the Nation from off-reservation gaming, and permission by the Governor for the Nation to pursue gaming at a fourth site. With respect to the Second Amendment's Duration clause, the Compact would remain in force in perpetuity unless the parties mutually consented to termination or if the Nation passed a resolution revoking its authority to engage in class III gaming. The Second Amendment also provided that if this Duration provision were found invalid or unenforceable "by a court of competent jurisdiction," the Nation would no longer be required to make payments to the State. The parties would then be required to renegotiate those invalidated provisions pursuant to the Dispute Resolution and Sovereign Immunity provisions in the Compact. The Second Amendment also required that the parties follow a similar renegotiation process if a court found provisions regarding the "Scope of Games" or "Payment to the State" to be invalid, and stated that if any other portion of the Second Amendment were found invalid, the parties would renegotiate in good faith upon either party's request. Coupled with these dispute resolution requirements was a provision governing the parties' sovereign immunity, which both the State and Nation waived with respect to any claim brought by either party to enforce any provision of the Compact.

On May 13, 2004, the Wisconsin Supreme Court decided Panzer v. Doyle, 271 Wis.2d 295, 680 N.W.2d 666 (Wis.2004), abrogated in part by Dairyland Greyhound Park, Inc. v. Doyle, 295 Wis.2d 1, 719 N.W.2d 408 (Wis.2006), which addressed the validity of certain provisions in a gaming compact between the State and the Forest County Potawatomi. The Wisconsin Supreme Court made three holdings in the case: (1) the Governor lacked authority to commit the State to compacts lasting in perpetuity; (2) much of the expansion of class III gaming in 2003 was prohibited by the Wisconsin constitution and criminal code; and (3) the Governor lacked inherent or delegated authority to waive the State's sovereign immunity. Id. at 701. The court then expressed its expectation that the parties would renegotiate the amendments to the compact voided by the court's decision. Id.

The Panzer decision cast doubt on the legitimacy of the Compact between the State and the Nation, since the Second Amendment contained duration, class III gaming, and sovereign immunity, clauses nearly identical to those invalidated by the Wisconsin Supreme Court. The Nation and State, however, disagreed as to whether the terms of their Compact were immediately invalidated by Panzer, or whether they continued to remain in effect until a court decision was issued with respect to their specific Compact. The Nation took the former position and altered its conduct accordingly. Thus, the Nation: (1) ceased operation of class HI gaming added under the Second Amendment; (2) stopped its payments to the State pursuant to the clause permitting the Nation to do so if the Duration provision were found invalid "by a court of competent jurisdiction"; and (3) deemed the State's sovereign immunity revoked, which under the Nation's reading of the Compact, served to automatically revoke its waiver of immunity as well. The State, however, took the latter position, and therefore contended that all the provisions in the Compact were still valid, including the Nation's required revenue-sharing payments to the State.

The parties began to renegotiate the Compact provisions implicated by Panzer, but these efforts stalled, leading the Nation to submit a complaint in arbitration on June 23, 2005. After efforts to find a mutually acceptable arbitrator also failed, the State filed suit on October 28, 2005 in the Western District of Wisconsin, requesting that the court appoint an arbitrator. The court, over the Nation's objections, found that it had jurisdiction and appointed the Honorable William A. Norris, a retired federal judge, as arbitrator. The Nation appealed the denial of Fats motion to dismiss with this Court. While the appeal was pending, the parties began arbitration before Judge Norris, but stayed the proceedings in May 2006 pending this Court's decision on the, Nation's appeal and the Wisconsin Supreme Court's forthcoming opinion in Dairyland Greyhound Park, Inc. v. Doyle, 295 Wis.2d 1, 719 N.W.2d 408 (Wis.2006).

On July 14, 2006, the Wisconsin Supreme Court decided Dairyland Greyhound Park, in which it determined that amendments to gaming compacts were governed by the language of the Wisconsin Constitution as it existed when the original compacts were entered into. Id. at 442. This decision resulted in Panzer being partially overturned, in that nothing barred the State from negotiating with tribes over class III gaming so long as the original compact pre-dated the 1993 Amendment to the Wisconsin Constitution. Id. at 443. As a result of this decision, the Nation reinstated the class III games it had stopped operating after the Panzer decision.

This Court decided the, Nation's appeal on September 1, 2006, holding that the district court lacked subject matter jurisdiction over the suit. State of Wisconsin v. Ho-Chunk Nation, 463 F.3d 655 (7th Cir.2006) ("Ho-Chunk I"). This Court noted that the Federal Arbitration Act ("FAA") did not itself provide a basis for jurisdiction, and further determined that there was not an independent basis for federal jurisdiction in this case, since none of the three instances in the IGRA where Congress explicitly conferred federal jurisdiction were pled, and this could not be said to be a case arising under federal law. Id. at 659-61.

Following this Court's decision in Ho-Chunk I, the State then filed an amended complaint in the Western District of Wisconsin which included eight causes of action related to the Nation's alleged withholding of revenue-sharing payments and failure to arbitrate. Unlike the State's initial complaint, the amended complaint included a claim pursuant, to 25 U.S.C. § 2710(d)(7)(A)(ii) of, the IGRA, one of the three specific instances where the Act granted federal jurisdiction. Under this cause of action the State sought to enjoin the Nation's class III gaming on the basis of its alleged Compact violations. The amended complaint also included, a claim for breach of contract and...