UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Transcription

1 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 1 of 41 UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA CITY OF DULUTH, Plaintiff, Civ. No SRN/LIB Related Case Nos.: , and 09-cv-2668 v. FOND DU LAC BAND OF LAKE SUPERIOR CHIPPEWA, Defendant. MEMORANDUM IN SUPPORT OF MOTION OF FOND DU LAC BAND OF LAKE SUPERIOR CHIPPEWA TO DISMISS THE COMPLAINT Henry M. Buffalo, Jr. (MN # ) BUFFALO LAW OFFICE, P.C Frontier Drive Woodbury, MN T: F: Buffalolaw@embarqmail.com Donald J. Simon (DC #256388) Douglas B. L. Endreson (DC #461999) Anne D. Noto (DC #460438) SONOSKY, CHAMBERS, SACHSE, ENDRESON & PERRY, LLP 1425 K Street, N.W. Suite 600 Washington, DC T: F: dsimon@sonosky.com dendreson@sonosky.com anoto@sonosky.com Sean Copeland (MN # ) Fond du Lac Band of Lake Superior Chippewa Legal Affairs Office 1720 Big Lake Road Cloquet, Minnesota T: F: seancopeland@fdlrez.com Counsel for Fond du Lac Band of Lake Superior Chippewa

2 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 2 of 41 TABLE OF CONTENTS TABLE OF AUTHORITIES... iii I. STATEMENT OF FACTS... 2 A. History of the 1986 and 1994 Agreements The 1986 Agreements The illegality of the 1986 Agreements under IGRA The 1994 Agreements... 5 B. The City s 2009 Suit Against the Band... 5 C. The 2011 NOV... 6 D. The Carter Hotel Fee-to-Trust Application... 7 E. The City s State Court Suit... 8 II. STANDARD FOR A MOTION TO DISMISS... 9 III. ARGUMENT A. The City s Claim Based on Section 10 of the 1986 Agreement Fails to State a Claim Upon Which Relief Can Be Granted The Band has not sought to create Indian Country The section 10 consent provision is dormant The Court should defer to the administrative process to decide the fee-to-trust application i

3 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 3 of 41 B. The City s Claim Based on Section 13 of the 1994 Agreement Fails to State a Claim Upon Which Relief Can Be Granted Section 13 of the 1994 Agreement applies only to statutory changes and does not apply to the NIGC s ongoing regulatory oversight of the Band s gaming operations The City s interpretation of section 13 is contrary to public policy The City s section 13 claim is foreclosed by the Court s Rule 60(b) decision CONCLUSION ii

4 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 4 of 41 TABLE OF AUTHORITIES CASES Page(s) Access Telecomm. v. Sw. Bell Tel. Co., 137 F.3d 605 (8th Cir. 1998) Alpharma, Inc. v. Pennfield Oil Co., 411 F.3d 934 (8th Cir. 2005) Armstrong v. Norwest Bank, Minneapolis, N.A., 964 F.2d 797 (8th Cir. 1992) Butler v. Bank of Am., N.A., 690 F.3d 959 (8th Cir. 2012)... 9 Capitol Hill Grp. v. Pillsbury, Winthrop, Shaw, Pittman, LLC, 569 F.3d 485 (D.C. Cir. 2009) Carcieri v. Salazar, 555 U.S. 379 (2009) Carr v. Am. Gen. Assur. Co., No , 2009 WL (D. Minn. Aug. 10, 2009) City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 708 F. Supp. 2d 890 (D. Minn. 2010) ( Duluth I )... 2, 4, 5, 10, 22 City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 2011 WL (D. Minn. Jan. 5, 2011) adopted 2011 WL (D. Minn. Feb. 22, 2011) City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 830 F. Supp. 2d. 712 (D. Minn. 2011) ( Duluth II )... 2, 6, 7, 22, 25, 30 City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d 1147 (8th Cir. 2013) ( Duluth III )... 2, 4-7, 10, 27, 30, 31 iii

5 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 5 of 41 City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 2013 WL (D. Minn. Oct. 8, 2013) (Duluth IV)... 2 City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 843 N.W.2d 577 (Minn. 2014)... 9 City of Geneseo v. Utilities Plus, 533 F.3d 608 (8th Cir. 2008) Cnty. Fuel Co. v. Equitable Bank Corp., 832 F.2d 290 (4th Cir. 1987) Deerbrook Pavilion, LLC v. Shalala, 235 F.3d 1100 (8th Cir. 2000) Geston v. Anderson, 729 F.3d 1077 (8th Cir. 2013) Great Plains Trust Co. v. Union Pacific R. Co., 492 F.3d 986 (8th Cir. 2007) In re Nangle, 274 F.3d 481 (8th Cir. 2001) In re Sac & Fox Tribe of the Miss. in Iowa/Meskwaki Casino Litig., 340 F.3d 749 (8th Cir. 2003) Iowa Elec. Light & Power Co. v. Local Union 204 of IBEW, 834 F.2d 1424 (8th Cir. 1987) Jarecki v. G.D. Searle & Co., 367 U.S. 303 (1961) John Morrell & Co. v. Local Union 304A, 913 F.2d 544 (8th Cir. 1990)... 29, 30 Kansas v. S. Plains Reg l Dir., Bureau of Indian Affairs, 36 IBIA 152 (2001) iv

6 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 6 of 41 Lane v. Peterson, 899 F.2d 737 (8th Cir. 1990)... 28, 29 Marachich v. Spears, 133 S. Ct (2013) Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 132 S. Ct (2012)... 20, 22 McBrearty v. U.S. Taxpayers Union, 668 F.2d 450 (8th Cir. 1982) Metro. Sports Facilities Comm n v. Gen. Mills, Inc., 470 N.W.2d 118 (Minn. 1991) Moses.com Sec., Inc. v. Comprehensive Software Sys., Inc., 406 F.3d 1052 (8th Cir. 2005) Nat l Right to Life Political Action Comm. v. Connor, 323 F.3d 684 (8th Cir. 2003) O Neal v. State Farm Fire & Cas. Co., 630 F.3d 1075 (8th Cir. 2011)... 9 Open Software Found., Inc. v. U.S. Fid. & Guar. Co., 307 F.3d 11 (1st Cir. 2002) Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979)... 28, 29 Richman v. Beck, 257 F.2d 575 (10th Cir. 1958) Rudell v. Comprehensive Accounting Corp., 802 F.2d 926 (7th Cir. 1986) v

7 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 7 of 41 Saud v. Bank of N.Y., 929 F.2d 916 (2d Cir. 1991) Seminole Tribe of Fla. v. Florida, 11 F.3d 1016 (11th Cir. 1994), aff d 517 U.S. 44 (1996) South Dakota v. Dep t of the Interior, 423 F.3d 790 (8th Cir. 2005) South Dakota v. U.S. Dep t of Interior, 787 F. Supp. 2d 981 (D.S.D. 2011) Stahl v. U.S. Dep t of Agric., 327 F.3d 697 (8th Cir. 2003) Stand Up for Cal. v. Dep t of the Interior, 919 F. Supp. 2d 51 (D.D.C. 2013) State ex rel. Friends of Riverfront v. City of Minneapolis, 751 N.W.2d 586 (Minn. 2008) Stringer v. St. James R-1 Sch. Dist., 446 F.3d 799 (8th Cir. 2006)... 9 Taradejna v. Gen. Mills, Inc., 909 F. Supp. 2d 1128 (D. Minn. 2012)... 9, 19 Telford v. Roberts, No , 2013 WL (E.D. Mich. 2013) Texas v. United States, 523 U.S. 296 (1998) Thurston Cnty., Neb. v. Great Plains Reg l Dir., Bureau of Indian Affairs, 56 IBIA 296 (2013) vi

8 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 8 of 41 United States v. Stuart, 688 F.2d 759 (8th Cir. 1982) United States v. Williams, 553 U.S. 285 (2008) United Steel v. Carlisle Power Transmission Prods., 489 F. Supp. 2d 924 (D. Minn. 2007) Util. Elec. Supply Inc. v. ABB Power T & D Co., 36 F.3d 737 (8th Cir. 1994)... 24, 25 Vill. of Hobart, Wis. v. Acting Midwest Reg l Dir., Bureau of Indian Affairs, 57 IBIA 4 (2013) Westley v. Mann, 896 F. Supp. 2d 775 (D. Minn. 2012) Yankton Sioux Tribe v. Podhradsky, 606 F.3d 994 (8th Cir. 2010) STATUTES, REGULATIONS AND RULES 25 U.S.C , 3, 7, 8, 12-14, 17, U.S.C , 3, 7, 12-14, 17, 18 Indian Gaming Regulatory Act (IGRA), 25 U.S.C , U.S.C U.S.C. 2702(1) U.S.C. 2703(7) U.S.C. 2703(8) U.S.C U.S.C. 2710(a) U.S.C. 2710(d) U.S.C. 2710(b)(2)(A) U.S.C vii

9 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 9 of 41 Appeals from Administrative Actions, 25 C.F.R. pt Trust Land Acquisitions, 25 C.F.R. pt , C.F.R , C.F.R (h) C.F.R Land Acquisitions: Appeals of Land Acquisition Decisions, 78 Fed. Reg. 67,928 (Nov. 13, 2013)... 20, 22 Fed. R. Civ. P. 12(b)(6)... 9 Fed. R. Civ. P. 60(b)... 6, 23, 28, 30, 31 LEGISLATIVE AUTHORITIES S. Rep. No (1988) TREATISES 5 Williston on Contracts 12:1 (4th ed.) Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 196 (2012) Black s Law Dictionary 1260 (9th ed. 2009) Webster s New Universal Unabridged Dictionary 1447 (1996) Wright, Miller & Cooper, 18 Federal Practice and Procedure, 4414 (2002 ed.)... 29, 31 viii

10 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 10 of 41 MEMORANDUM OF FOND DU LAC BAND OF LAKE SUPERIOR CHIPPEWA IN SUPPORT OF MOTION TO DISMISS THE COMPLAINT The City of Duluth s complaint alleges two claims against the Fond du Lac Band. The first seeks declaratory and injunctive relief to enforce a provision of a 1986 Agreement that purports to require the City s consent to the creation of additional Indian Country in the City by the Band. The City alleges the Band breached this provision by submitting an application to the Secretary of the Interior to have land taken into trust without the City s consent. That claim is rebutted by the plain language of the 1986 Agreement, by which Indian Country is created only by the placement of land in trust and the designation of that land as part of the Fond du Lac Reservation. The 1986 Agreement does not prohibit the Band from simply applying to have land taken in trust, which is all the Band has done (or may ever do). The City has therefore failed to state a claim on which relief can be granted. The City s second claim seeks damages for breach of a provision of the 1994 Agreement which restricts the parties from seeking any amendment to IGRA or other federal law that would alter or abrogate the 1994 Agreements. The City does not allege that the Band has sought any such amendment. Instead, the City contends that the Band breached this provision in 2010 by requesting that the National Indian Gaming

11 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 11 of 41 Commission (NIGC) determine whether the 1994 Agreements violate current federal law. That request does not constitute an amendment to IGRA or any other federal law, and accordingly this claim fails as well. I. STATEMENT OF FACTS. The City s breach-of-contract claims arise under the same two sets of agreements between the City and the Band that have been the subject of related litigation before this Court and the Court of Appeals since A. History of the 1986 and 1994 Agreements. 1. The 1986 Agreements. On April 1, 1986, the Band and the City entered into a series of agreements to establish a joint venture to operate a casino on Reservation land in downtown Duluth. Compl. 12. Before entering into the 1986 Agreements (but in contemplation of them), the Band applied to the Secretary of the Interior to transfer the casino site into trust for the Band under 25 U.S.C. 465, and to have that trust land declared to be part of the Fond du Lac Reservation under 25 U.S.C Compl. 11. The Secretary accepted the casino site into trust on June 14, 1985, and separately proclaimed the site to be part of the Band s Reservation on January 7, See Compl. 16; Exs City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 708 F. Supp. 2d 890 (D. Minn. 2010) ( Duluth I ); 830 F. Supp. 2d. 712 (D. Minn. 2011) ( Duluth II ); 702 F.3d 1147 (8th Cir. 2013) ( Duluth III ); 2013 WL (D. Minn. Oct. 8, 2013) (Duluth IV). 2 The exhibits, consisting of the contracts and public and administrative records cited in the complaint, are properly considered in a motion to dismiss. See infra pp

12 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 12 of 41 Pursuant to the 1986 Commission Agreement, the City and the Band established a jointly-controlled Duluth-Fond du Lac Economic Development Commission to own and operate the casino. Compl. 12; Ex. 3 at 2-4. The 1986 Agreements gave the Commission control over the casino property through a lease of the site from the Band to the Commission, which was to operate the gaming enterprise and receive 50 percent of the profits, with the other 50 percent to be shared between the Band and the City. The Commission Agreement recited that the City agree[d] to approve the transfer of the Band s land to the United States of America to hold in trust for the Fond du Lac Band, pursuant to 25 U.S.C. 465 and the making of such land part of the Fond du Lac Reservation pursuant to 25 U.S.C Ex. 3 at 15. The Agreement, in section 10, further states that the Band shall not create any additional Indian Country, as defined herein, unless the City of Duluth approves the creation of additional Indian Country. Compl. 15; Ex. 3 at 16 (emphasis added). In section 3(a), the Agreement expressly defines the term Indian Country to mean: all land located within the corporate limits of the City of Duluth which is transferred by the Fond du Lac Band to the United States of America to hold in trust for the Fond du Lac Band pursuant to 25 U.S.C. 465, and which is made part of the Fond du Lac Indian Reservation pursuant to 25 U.S.C Compl. 14; Ex. 3 at The illegality of the 1986 Agreements under IGRA. Two years later, Congress enacted the Indian Gaming Regulatory Act (IGRA), 25 U.S.C , to provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong 3

13 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 13 of 41 tribal governments, id. 2702(1). Congress made IGRA applicable to all Indian-gaming operations, including those like the Fond-du-Luth Casino that pre-dated IGRA s enactment. Id IGRA also established the NIGC as the federal regulatory body to enforce the Act. Id IGRA requires any tribe conducting class II (bingo) or class III (slot machines) gaming, id. 2703(7), (8), to enact a tribal gaming ordinance that must be approved by the NIGC. Id. 2710(a), (d). The ordinance must require the tribe to have the sole proprietary interest and responsibility for the conduct of any gaming activity. Id. 2710(b)(2)(A). Following enactment of IGRA, the Band believed that the joint City-Band ownership of the Fond-du-Luth Casino had been made illegal by IGRA s sole proprietary interest requirement. When the City refused to renegotiate the Agreements, the Band filed suit alleging that the Agreements violated IGRA. See Duluth III, 702 F.3d at The City argued that only the NIGC could review the agreements and, at the City s request, the Court dismissed the Band s complaint without prejudice to allow the NIGC to conduct that review. Duluth I, 708 F. Supp. 2d at 894. In September 1993, the NIGC determined that the 1986 Agreements violated IGRA s sole proprietary interest requirement and issued a Notice of Violation. Duluth III, 702 F.3d at 1150; Compl. 20; Ex. 4. The NIGC found the City-Band joint venture to be unlawful because the Band does not have the sole ownership or control of the... Casino. Duluth I, 708 F. Supp. 2d at 894 (quoting NIGC opinion) (alteration in original). The NIGC deferred enforcement action to give the Band and the City an opportunity to negotiate a new arrangement. Duluth III, 702 F.3d at

14 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 14 of The 1994 Agreements. In 1994, the City and the Band restructured their relationship in an effort to shift ownership and control of the Casino from the Commission to the Band through a series of new agreements that were entered by this Court as a consent order. See Duluth I, 708 F. Supp. 2d at (describing 1994 Agreements). The revised arrangement is set out in a 1994 Umbrella Agreement, Ex. 5, which also incorporates eight sub-agreements as exhibits. One of those was a Sublease by which the Band leased back the casino site from the Commission, and agreed in return to pay rent to the City, consisting of 19 percent of the gross revenues from video gaming machines, for an initial term, with the amount for a renewal term to be later negotiated. Ex. 6 at 11, 13. In another sub-agreement titled Amendments to the Commission Agreement, the City and Band restructured the Commission, modified or abrogated certain provisions of the 1986 Commission Agreement and, in section 2, expressly rendered all other provisions of the 1986 Agreement pertaining to gaming at the Sublease space dormant and of no force or effect for so long as the Sublease is in effect. Ex. 7. Section 10 of the 1986 Commission Agreement the procedures for creating additional Indian Country within the City was one of the provisions that was expressly made dormant by section 2 of the 1994 Amendments. B. The City s 2009 Suit Against the Band. Between 1994 and 2009, the Band paid the City approximately $75 million in rent. Duluth III, 702 F.3d at In 2009, the Band s accountants found that errors 5

15 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 15 of 41 had been made in calculating gross revenues which resulted in Band overpayments to the City. The Band further concluded that the law regarding IGRA s sole proprietary interest requirement had substantially changed since 1994, and that the 1994 agreements violated the law as then interpreted. The Band accordingly ceased to make rent payments. See id. The City filed suit against the Band to enforce the 1994 Agreements. Compl (citing City of Duluth v. Fond du Lac Band, No (D. Minn. filed Sept. 29, 2009)). In April 2010, this Court ruled that the 1994 Agreements were binding on the parties as a consent order, but that the order was subject to modification under Rule 60(b) if the NIGC itself were to conclude that the agreements violated IGRA. Duluth I, 708 F. Supp. 2d at C. The 2011 NOV. The Band then asked the NIGC to review the 1994 Agreements, and so informed this Court. See Duluth II, 830 F. Supp. 2d at 716; Compl. 33, 39. In July 2011, the agency issued an NOV against the Band, concluding that the 1994 Agreements, as written and as implemented, violate IGRA s mandate that the Band retain the sole proprietary interest in and responsibility for its gaming activity. Ex. 8 at 7; Compl. 46. Shortly thereafter, the Band sought relief under Rule 60(b) from the 1994 consent order. Compl. 49. This Court granted the request for relief in part, relieving the Band of any further compliance with its obligations under the 1994 Agreements. Duluth II, 6

16 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 16 of F. Supp. 2d at The parties cross-appealed. Duluth III, 702 F.3d at The City appealed the grant of Rule 60(b) relief, alleging inter alia, that the Band had violated section 13 of the 1994 Agreement by requesting NIGC review of the contracts, and therefore was not entitled to relief. See City Appeal Resp. Br. at 25-27, The Eighth Circuit affirmed this Court s grant of Rule 60(b) relief. Duluth III, 702 F.3d at The Court also noted that [w]hile the City may question the validity of the NIGC s current position, such challenges are properly made [by a suit against the NIGC] under the Administrative Procedure Act. Duluth III, 702 F.3d at In February 2013, the City filed such a lawsuit in district court for the District of Columbia. City of Duluth v. Nat l Indian Gaming Comm n, No (D.D.C. filed Feb. 26, 2013). That case is pending. D. The Carter Hotel Fee-to-Trust Application. On November 17, 2011, the Band applied to have the Secretary of the Interior accept into trust for the Band an approximately one-acre parcel of land (the Carter Hotel parcel) adjacent to the casino site. Compl. 54; Ex. 10. The Band s application to the Secretary was made pursuant to 25 U.S.C. 465 and its implementing regulations, 25 C.F.R. Part 151. Ex. 10 at 1. The City does not allege that the Band has also requested the Secretary to proclaim the Carter Hotel parcel to be part of the Band s Reservation under 25 U.S.C. 467, nor has the Band done so, see Ex. 10. Instead, the City alleges 3 This Court denied the Band s request for retrospective relief. Duluth II, 830 F. Supp. 2d at

17 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 17 of 41 that the Band s trust land application represents the first step in the Band s effort to create additional Indian Country, as defined by Paragraph 3a of the Commission Agreement. Compl. 58. The City has opposed the Band s fee-to-trust application in the administrative proceeding that the Secretary is conducting pursuant to 465, filing in January 2012 extensive objections to the application. Ex. 12. Since that time, and as required by the regulations, 25 C.F.R (h), the Band s application has proceeded through review under the National Environmental Policy Act (NEPA) and under the National Historic Preservation Act (NHPA). The City has participated throughout these proceedings. E.g., Ex. 15. The Band s application remains pending before the Secretary. E. The City s State Court Suit. In April 2012, four months after the City filed comments with the BIA objecting to the Band s trust land application, the City filed a suit against the Band in the Sixth Judicial District Court for the State of Minnesota. See Ex. 17. The City alleged the Band breached Section 10 of the 1986 Commission Agreement by failing to obtain its consent for the Carter Hotel fee-to-trust application, and sought an injunction that would require the Band to withdraw the application. Id. at 6-7. The state district court dismissed the lawsuit after concluding that it lacked subject matter jurisdiction. Id. at The state court noted that the dispute turned on the issue of whether section 10 was dormant under the terms of the 1994 Agreement a question committed to the exclusive jurisdiction of this Court. Id. The City appealed to the Minnesota Court of Appeals, which reversed. Ex. 18 at 1. 8

18 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 18 of 41 But the Minnesota Supreme Court granted discretionary review, reversed the Court of Appeals decision and reinstated the district court dismissal of the action. Ex. 19, City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 843 N.W.2d 577, 579 (Minn. 2014). The Supreme Court held that the state courts lack jurisdiction to decide the question of whether the section 10 consent provision was made dormant by the 1994 Agreement. Id. at According to the Minnesota Supreme Court, questions of the application of the dormancy clause can be resolved only by the United States District Court for the District of Minnesota. Id. at 583. On April 2, 2014, the City filed this action. II. STANDARD FOR A MOTION TO DISMISS When ruling on a motion to dismiss under Rule 12(b)(6), the court tak[es] the factual allegations in the complaint as true and afford[s] the non-moving party all reasonable inferences from those allegations. Butler v. Bank of Am., N.A., 690 F.3d 959, 961 (8th Cir. 2012). However, the Court need not accept as true wholly conclusory allegations or legal conclusions Plaintiffs draw from the facts pled. Taradejna v. Gen. Mills, Inc., 909 F. Supp. 2d 1128, 1133 (D. Minn. 2012) (citations omitted). Dismissal is appropriate if it is clear that no relief can be granted under any set of facts that could be proven consistent with the allegations. O Neal v. State Farm Fire & Cas. Co., 630 F.3d 1075, 1077 (8th Cir. 2011) (quoting Stringer v. St. James R-1 Sch. Dist., 446 F.3d 799, 802 (8th Cir. 2006)). In addition to the allegations of the complaint, a court may consider matters incorporated by reference in the complaint that are central to the plaintiff s claims. 9

19 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 19 of 41 Moses.com Sec., Inc. v. Comprehensive Software Sys., Inc., 406 F.3d 1052, 1063 n.3 (8th Cir. 2005); United Steel v. Carlisle Power Transmission Prods., 489 F. Supp. 2d 924, 928 (D. Minn. 2007). In a contract case, the court may examine the contract documents in deciding the motion to dismiss. Stahl v. U.S. Dep t of Agric., 327 F.3d 697, 700 (8th Cir. 2003). The court may also consider matters of public and administrative record referenced in the complaint. Great Plains Trust Co. v. Union Pacific R. Co., 492 F.3d 986, 990 (8th Cir. 2007); Deerbrook Pavilion, LLC v. Shalala, 235 F.3d 1100, 1101 (8th Cir. 2000). III. ARGUMENT In 1993, as the City recognizes, Compl. 20, the NIGC determined that the 1986 Agreements violate IGRA. Duluth III, 702 F.3d at 1150; Duluth I, 708 F. Supp. 2d at 894. In the 1994 Agreements, the City and Band purported to modify, extend or revive provisions of the 1986 Agreements. But in Duluth II, this Court modified the 1994 consent order under Rule 60(b) and held that the Band and the City are relieved of any further prospective compliance with their obligations under the 1994 Agreements and Order. 830 F. Supp. 2d at 724 (emphasis added). The City s Complaint recognizes this holding. Compl. 50 (this Court grant[ed] the Band prospective relief from continued enforcement of the 1994 consent decree into the 2011 to 2036 period ). Accordingly, any provision of the 1994 Agreements which purports to revive or extend any provision of the 1986 Agreements has no current or prospective effect. For that reason, the 1986 Agreements remain unenforceable. Thus, for all current and prospective purposes, there are no effective and legally binding agreements between the 10

20 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 20 of 41 Band and the City. And that is the basis on which the Band is presently operating its casino in Duluth. The City s Complaint, however, alleges breaches of contract based on events that occurred prior to this Court s November 21, 2011 Rule 60(b) Order. For purposes of this motion to dismiss, the City s allegations are addressed based on the agreements in effect at the time of the alleged breaches. For the reasons set forth below, all of the City s claims should be dismissed. A. The City s Claim Based on Section 10 of the 1986 Agreement Fails to State a Claim Upon Which Relief Can Be Granted. The City fails to state a claim under section 10 of the 1986 Commission Agreement for three reasons. First, section 10 applies only to the creation of Indian Country, as that term is specifically defined in section 3, and the Band is not seeking, and may never seek, Indian Country status for the Carter Hotel parcel. The Band is seeking only trust status for that parcel, and section 10 does not require the Band to obtain the City s consent to an application for land to be taken in trust. Second, even if section 10 otherwise applied here, it was made dormant by the 1994 Agreements and was of no force or effect when the Band applied for trust status on November 17, And finally, the Court should allow the Department of Interior to exercise its primary jurisdiction over any challenge to the Band s fee-to-trust application through the ongoing administrative process in which the City is now participating. For all these reasons, the City s section 10 claim should be dismissed. 11

21 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 21 of The Band has not sought to create Indian Country. The City contends the Band breached Article 10 of the Commission Agreement by making application to place the [Carter Hotel] Parcel into trust without first obtaining the consent of the City. Compl. 69. That contention is defeated by the plain language of the Commission Agreement. Section 10 of that agreement, in pertinent part, states: The City of Duluth shall approve the creation of additional Indian Country, as defined herein, whenever the Mayor and the City Council of the City of Duluth determine that such additional land is essential to the activities of the Commission, and the making of such additional land Indian Country, as defined herein, will not be detrimental to the City of Duluth. The City, in its sole discretion, shall have the right to disapprove the creation of additional Indian Country, as defined herein. The Fond du Lac Band shall not create any additional Indian Country, as defined herein, unless the City of Duluth approves the creation of additional Indian Country as provided in this Paragraph b. Ex. 3 at (emphasis added). Section 3 of that agreement, in turn, provides that Indian Country means: all land located within the corporate limits of the City of Duluth which is transferred by the Fond du Lac Band to the United States of America to hold in trust for the Fond du Lac Band pursuant to 25 U.S.C. 465, and which is made part of the Fond du Lac Indian Reservation pursuant to 25 U.S.C Ex. 3 at 2 (emphasis added). This definition has two elements, and each is based on a separate statute as the vehicle through which that element is accomplished: the land must first be taken in trust under 465 and then made part of the Reservation under 467. The two statutory provisions are entirely distinct. Although tribal land must first be taken into trust under 465 before it can be proclaimed part of a reservation, land can be held in 12

22 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 22 of 41 trust for a tribe without becoming part of the tribe s reservation under Thus, a claim that section 10 has been breached must allege both elements. The City fails to do so. The City alleges only that the Band has applied to have the Secretary take the Carter Hotel parcel into trust under 465, Compl. 53, which it admits is only the first step in the Band s effort to create additional Indian Country, as defined by [section 3], Compl. 58. The City does not allege that the Band has applied to have that parcel made part of the Reservation under 467, and the Band has not done so, Ex Indeed, the Band may never ask the Secretary to declare the Carter Hotel parcel part of its Reservation. 6 In other words, the Carter Hotel parcel may never become 4 See Yankton Sioux Tribe v. Podhradsky, 606 F.3d 994, 1011 (8th Cir. 2010) (holding 467 proclamation is required when the Secretary wishes to establish a new reservation). 5 Because the Carter Hotel parcel is not within the Band s existing Reservation, it would require a separate proclamation under 467 for the land to become Reservation land. Under the Secretary s Proclamation Guidelines, a tribe must specifically request that trust land be proclaimed as part of its Reservation and the BIA must provide 30-day notice of the proposed action... to the state, county, and municipal governments within whose jurisdiction such land is located. Ex. 16 at 3 ( 1, 5). 6 The City s allegation that one of the Band s purposes in acquiring the land is to reestablish[] the Band s reservation land base, see Compl , is unsupported speculation without legal basis. Whatever the Band s purposes are, it has not requested a reservation designation under 467. The documents cited by the City make this clear. The Band s trust application states that it is an Application to Place Land in Trust pursuant to 25 U.S.C. 465, with no request that the land be proclaimed a reservation, nor any reference to 467. Ex. 10 at 1, 3-4. The same is true of the BIA s July 18, 2012 letter, Compl. 55, which clearly states that the BIA was processing the Band s application to take into trust a parcel of land currently held by the Band in fee. Ex

23 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 23 of 41 Indian Country, as defined herein either because the Secretary denies the pending feeto-trust application or because (even if the application is granted) the Band never seeks to add the trust parcel to its Reservation, or the Secretary fails to do so. 7 A trust land application under 465 alone does not violate section 10. That section requires the Band to obtain consent only for the creation of additional Indian Country, as defined herein, and that carefully crafted definition requires both trust status under 465 and reservation status under Ex. 3 at 2, To be sure, the 1986 Agreement could have been written to require the City s consent for the Band simply to seek trust status for land within the City, without regard to its Reservation status. But the Agreement was not so written, and the City is bound by the contract language as drafted, however much it may now wish that language to be different, or broader. See Metro. Sports Facilities Comm n v. Gen. Mills, Inc., 470 N.W.2d 118, 125 (Minn. 1991) (sophisticated parties who contract with assistance of counsel are accountable for the product of their negotiations ). 7 Thus, at a minimum, the City s claim is not ripe for review. A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all. Nat l Right to Life Political Action Comm. v. Connor, 323 F.3d 684, 693 (8th Cir. 2003) (quoting Texas v. United States, 523 U.S. 296, 300 (1998)); see also State ex rel. Friends of Riverfront v. City of Minneapolis, 751 N.W.2d 586, (Minn. Ct. App. 2008) (alleged breach of contract not ripe for judicial review). 8 The drafters could hardly have emphasized this point more. In addition to including a specific definition of the term Indian Country for purposes of the contract, the Agreement uses the cumbersome phrase, Indian Country, as defined herein, 35 times throughout the Agreement, including in section

24 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 24 of 41 The City s section 10 claim should therefore be dismissed for failure to state a claim. 2. The section 10 consent provision is dormant. Even assuming, arguendo, that section 10 could be read to require the City s consent before the Band can submit a fee-to-trust application to the Secretary, that provision was made dormant and of no force or effect pursuant to the 1994 amendments to the 1986 Agreement. Section 2 of the 1994 Amendments the dormancy clause states: Sections 1 through 4, 7(a), 9 through 13 and 15 through 38 of the 1986 Commission Agreement, insofar as they pertain to gaming activities and Ancillary Businesses at the Sublease space, shall be dormant and of no force or effect for so long as the Sublease is in effect. Ex. 7 at 3. (emphasis added); see also Ex. 5 at 3 (same dormancy language). This plain language made section 10 of the 1986 Agreement dormant and of no force or effect on November 17, 2011 when the Band submitted its application to have the Carter Hotel parcel taken in trust. First, section 10 pertain[s] to gaming activities and Ancillary Businesses at the Sublease space. See Ex. 7 at 3. Pertains to is a broad and inclusive phrase that means to have reference or relation, relate to something. Webster s New Universal Unabridged Dictionary 1447 (1996); see also Black s Law Dictionary 1260 (9th ed. 2009) ( pertain defined as [t]o relate to; to concern ). Thus, so long as the invocation of section 10 relates to gaming at the casino (i.e., at the Sublease space ), the dormancy clause applies. 15

25 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 25 of 41 That is the situation here. The Carter Hotel parcel, which is adjacent to the Band s existing Reservation land occupied by the casino, clearly pertains to the Band s gaming activities. As the Band s application for trust status states, that parcel is currently occupied by a vacant, derelict, three-story brick building that formerly housed commercial business space on the street level and a 24-room, resident hotel on the second and third floors. Ex. 10 at 1. The application explains: Acquisition of the Subject Property in trust for the Band will also serve to enhance the Band s economic activities, which fully occupy the adjoining Reservation land The land uses the surrounding the Reservation have a detrimental effect on the Band s on-reservation activities by reducing the level of enjoyment and sense of security for its guests and employees. Acquisition of the Subject Property would allow the Band to provide the necessary attention and commitment that has been lacking in the past in order to rehabilitate one of the parcels adjoining the Reservation. This will help enhance the Band s on-reservation activities by remediating deleterious adjoining land uses and enhancing safety. Ex. 10 at 4-5 (emphasis added). The nexus between the Carter Hotel property and gaming at the casino is also set forth in the formal resolution adopted by the Band s Reservation Business Committee authorizing the filing of the fee-to-trust application: [T]he Subject Property is adjacent and contiguous to the Fond du Lac Reservation located in Duluth, Minnesota and was acquired in order to expand and restore the Band s land base, and to remediate and rehabilitate a blighted property adjoining the Band s Reservation so as to enhance the existing economic activities on that Reservation; Ex. 9 at 1 (emphasis added). 16

26 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 26 of 41 The trust application pertains to, i.e., relates to, gaming at the Sublease space because its objective is to improve the environment immediately adjacent to the Sublease space. The pertains to condition of the dormancy clause thus applies. 9 The Sublease condition of the dormancy clause was also met at the time of the alleged breach because, on November 17, 2011 when the Band submitted its trust application, the Sublease was in effect as part of this Court s 1994 consent order. Accordingly, the 1994 dormancy clause applied to section 10 of the 1986 Agreement at the time of the trust application, so the section 10 consent requirement which the City here seeks to enforce was dormant and of no force or effect. In short, the Band was not obligated to obtain the City s consent when it submitted its application to the Secretary. The City s section 10 claim should accordingly be dismissed for failure to state a claim for this reason as well. 3. The Court should defer to the administrative process to decide the feeto-trust application. The City s claim is defective for another reason as well. The operative restriction in section 10 provides that the Band shall not create Indian Country unless the City 9 Any contrary reading of the dormancy clause that limits the pertains to language only to activity that is literally at the Sublease space would, in the context of section 10, be nonsensical. Since the Sublease space the casino site already is Indian Country, the application of section 10 to the creation of any additional Indian Country (emphasis added) must mean land other than the Sublease space. Thus, in the context of section 10, the pertains to language must be read as applying to land other than the Sublease space, or else it would be impossible for section 10 ever to satisfy the conditions of the dormancy clause. Since section 10 was expressly included in the dormancy clause, any such interpretation is untenable. 17

27 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 27 of 41 approves. But the Band has no authority to create Indian Country. That can be done only by the Secretary, who first must take the land in trust under 465, and then proclaim the land to be an Indian reservation under 467. In other words, only the Secretary has the power to create Indian Country, as section 3 acknowledges by citing specifically to both 465 and 467. Section 10, as written, therefore does not provide the City with a remedy against the Band. The City must instead seek relief before the Secretary, whom Congress has vested with exclusive authority to determine whether to take land in trust and make it part of a reservation. 10 In other words, the Band lacks the authority to make promises about the creation of Indian Country. 11 In these circumstances, the City s only avenue for opposing the feeto-trust application is to participate in the ongoing administrative proceedings before the Secretary that will determine whether the Carter Hotel parcel will be taken in trust. And indeed, the City is already doing so. See infra pp See, e.g., South Dakota v. Dep t of the Interior, 423 F.3d 790, (8th Cir. 2005) (state, city and county brought action for declaratory and injunctive relief against Interior Department to prevent a parcel of land from being taken into trust); Richman v. Beck, 257 F.2d 575, (10th Cir. 1958) (where relief sought... require[s] the Secretary of the Interior to exercise... a power vested in the Secretary then the Secretary of the Interior was an indispensable party defendant ). 11 A contract provision is unenforceable where the party making a promise lacked authority to do so. See City of Geneseo v. Utilities Plus, 533 F.3d 608, 615 (8th Cir. 2008) (power supply contract unenforceable because organization was legally required to obtain Board approval to enter into contract); Telford v. Roberts, No , 2013 WL , at *2 (E.D. Mich. 2013) ( [I]f a party does not have the authority to promise the terms of the contract, the contract is unenforceable. ). 18

28 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 28 of 41 The same conclusion that the City must pursue relief before the Secretary, not here is supported by principles of primary jurisdiction. As this Court has stated: [p]rimary jurisdiction is a common-law doctrine that is utilized to coordinate judicial and administrative decision making. Access Telecomms. v. Southwestern Bell Tel. Co., 137 F.3d 605, 608 (8th Cir. 1998). Although there is no fixed formula for deciding whether to apply the doctrine, id., the doctrine applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body. Alpharma, Inc. v. Pennfield Oil Co., 411 F.3d 934, 938 (8th Cir. 2005) (internal quotation and citation omitted). Taradejna, 909 F. Supp. 2d 1128, 1134 (D. Minn. 2012). Courts apply the doctrine of primary jurisdiction for the promotion of consistency and uniformity within the areas of regulation and the use of agency expertise in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion. Alpharma, 411 F.3d at 938 (quoting Access Telecomm. v. Sw. Bell Tel. Co., 137 F.3d 605, 608 (8th Cir. 1998)); accord Taradejna, 909 F. Supp. 2d at 1134; see also City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 2011 WL , at *2-3 (D. Minn. Jan. 5, 2011) adopted 2011 WL , at *3 (D. Minn. Feb. 22, 2011). When the primary jurisdiction doctrine applies, the district court has discretion either to [stay the case and] retain jurisdiction or, if the parties would not be unfairly disadvantaged, to dismiss the case without prejudice. Taradejna, 909 F. Supp.2d at 1134 (quoting Access Telecomm., 137 F.3d at 609) (alteration in original). 19

29 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 29 of 41 That is what should happen here, so that the City s objections to the proposed trust acquisition can be addressed by the Secretary of Interior, who is the federal official delegated with the exclusive authority to decide tribal trust land applications. The Secretary by regulation has established a formal administrative process to consider and decide such applications. 25 C.F.R. pt This administrative process expressly gives state and local governments an opportunity to raise objections to a proposed trust acquisition. Id (providing right of notice and comment to state or local governments). It also provides interested parties both a right of administrative appeal within the Interior Department before land is taken into trust 12 and also a means of federal court review of any final agency action. See Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 132 S. Ct (2012). State and local governments have successfully opposed tribal trust applications through this process on multiple occasions Land Acquisitions: Appeals of Land Acquisition Decisions, 78 Fed. Reg. 67,928 (Nov. 13, 2013) amending 25 C.F.R ; see also 25 C.F.R. pt See, e.g., Carcieri v. Salazar, 555 U.S. 379, (2009) (reversing trust acquisition decision challenged by State of Rhode Island because agency decision exceeded the Secretary s statutory authority); South Dakota v. U.S. Dep t of Interior, 787 F. Supp. 2d 981, (D.S.D. 2011) (remanding trust acquisition decision following appeal by state, county and city where BIA violated due process by failing to provide documents to plaintiffs); Vill. of Hobart, Wis. v. Acting Midwest Reg l Dir., Bureau of Indian Affairs, 57 IBIA 4, 4-5 (2013) (vacating and remanding regional director s decision to take land into trust challenged by town government); Thurston Cnty., Neb. v. Great Plains Reg l Dir., Bureau of Indian Affairs, 56 IBIA 296, (2013) (vacating in part six land into trust decisions challenged by county where Regional Director s conclusions were not supported by the record); Kansas v. S. Plains Reg l Dir., Bureau of Indian Affairs, 36 IBIA 152 (2001) (vacating a trust acquisition decision challenged by county where Regional Director s analysis was improper). 20

30 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 30 of 41 The City began participating in this administrative process well before it filed this lawsuit. All of the potential adverse harms from the trust acquisition which the City alleges in this lawsuit loss of property taxes, loss of regulatory jurisdiction, effect on historic preservation, see Compl are matters that that the Secretary of the Interior is required to consider in the administrative proceeding. See 25 C.F.R (requiring Secretary to invite local governments to provide written comments as to the acquisition s potential impacts on regulatory jurisdiction, real property taxes and special assessments. ); Ex. 11. Taking up this invitation, the City Attorney, in January 2012, submitted an extensive 13-page, single-spaced letter that recounted the City s version of the history of the City-Band agreements, and raised a host of complaints and objections to the Band s trust application. Ex The City has subsequently been an active participant in the NEPA and NHPA reviews that are part of the administrative process as well. E.g., Ex. 15. The principles of primary jurisdiction are best served by having the City s objections and concerns addressed in the administrative forum where the City can obtain complete relief denial of the application. The Secretary of the Interior has expertise in evaluating the issues raised by the City, and the promotion of consistency and uniformity in application of the standards established by the Department s regulations is best served by allowing these issues to be addressed by the agency with delegated authority for the decision. 14 The Band responded to the City s objections in a February 2012 letter to the BIA Superintendent. Ex

31 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 31 of 41 Maintaining this parallel court claim not only creates a duplicate forum for the City s opposition to the Band s application, but also one that cannot address all (or even most) of the objections the City has already raised in the administrative forum. Finally, as noted above, the City has a right under the APA to judicial review of any decision by the Secretary to grant the Band s application. See Patchak, 132 S. Ct. 2199; 78 Fed. Reg. at 67,930; Stand Up for Cal. v. Dep t of the Interior, 919 F. Supp. 2d 51, (D.D.C. 2013). Although the doctrine of primary jurisdiction is discretionary with the Court, it is discretion that would be wisely exercised here and that would favor dismissal of the City s section 10 claim. B. The City s Claim Based on Section 13 of the 1994 Agreement Fails to State a Claim Upon Which Relief Can Be Granted. In its 2010 decision, this Court held that it would not rule on the legality of the 1994 Agreements until the NIGC initiates an enforcement action regarding the Fond du Luth Casino and proceeds with that action to a final decision on the substantive issue of proprietary interest. Duluth I, 708 F. Supp. 2d at 902. Following that decision, as this Court subsequently noted, The Band then sought review of the 1994 Agreements by the NIGC. Duluth II, 830 F. Supp. 2d at 716. The City now alleges that the Band breached section 13 of the 1994 Agreement by seeking that review. This claim should be dismissed for three reasons. First, section 13 of the 1994 Agreement does not prohibit the Band from asking the NIGC whether its gaming activities comply with current federal law. Second, any such prohibition, even if it could be found in the contract, would be void as contrary to public policy because it 22

32 CASE 0:14-cv SRN-LIB Document 12 Filed 06/02/14 Page 32 of 41 would require the parties to countenance, and even to conceal, the ongoing violation of current federal law. Third, the City s section 13 claim is barred by claim preclusion and issue preclusion because the City raised this claim as a defense in the Rule 60(b) proceedings before this Court, and the claim was rejected when the Court granted relief under Rule 60(b). The City s new section 13 claim is simply an effort to relitigate the same issue and obtain by different means (in the guise of contract damages ) the same share of the Band s gaming revenues that this Court and the Eighth Circuit concluded, in the Rule 60(b) proceedings, would violate IGRA. For all these reasons, the City s section 13 claim should be dismissed. 1. Section 13 of the 1994 Agreement applies only to statutory changes and does not apply to the NIGC s ongoing regulatory oversight of the Band s gaming operations. Section 13 of the 1994 Agreement states: The City and the Band agree not to seek, directly or through the use of paid lobbyists or other agents, any amendment to the Indian Gaming Regulatory Act of 1988, 25 U.S.C et seq., or any other federal law, that would alter or abrogate, or cause the alteration or abrogation, of this Agreement or any of the Exhibits thereto. Ex. 5 at 5. On its face, this provision prohibits the parties from seeking any amendment to IGRA or to any other federal law that would abrogate the 1994 Agreements. The City does not allege that the Band has sought an amendment to IGRA, nor has it. Nor does the City allege that the Band has sought an amendment to any other federal statute within the meaning of section 13, nor has it. The City s claim is instead that the Band violated section 13 when it sought NIGC review of the 1994 Agreements. Compl