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City of Duluth v. Fond Du Lac Band of Lake Superior Chippewa

United States District Court, D. Minnesota

July 28, 2015

City of Duluth, Plaintiff,
Fond du Lac Band of Lake Superior Chippewa, Defendant.

David P. Sullivan, 717 Sunset Cove, Madeira Beach, FL 33708; Gunnar B. Johnson and M. Alison Lutterman, City of Duluth, 410 City Hall, 411 West First Street, Duluth, MN 55802; Robert C. Maki and Shawn B. Reed, Maki & Overom Limited, 31 West Superior Street, Suite 402, Duluth, MN 55802, for Plaintiff.

Donald J. Simon and Anne D. Noto, Sonosky, Chambers, Sachse, Endreson & Perry, LLP, 1425 K Street, N.W., Suite 600, Washington, DC 20005; Henry M. Buffalo, Jr., Buffalo Law Office, 3112 Frontier Drive, Woodbury, MN 55129; and Dennis Peterson, Fond du Lac Band of Lake Superior Chippewa Legal Affairs Office, 1720 Big Lake Road, Cloquet, MN 55720, for Defendant.




This matter is before the Court on remand from the United States Court of Appeals for the Eighth Circuit regarding this Court's denial of Defendant's request for retrospective relief under Rule 60(b)(6) [Doc. No. 260]. Upon reconsideration as mandated by the Eighth Circuit, the Court grants Defendant's request as discussed below.


The factual and procedural background of this case has been discussed extensively in several prior orders issued by this Court and by the Eighth Circuit.[1] Relevant to the present matter, Plaintiff City of Duluth ("City") and Defendant Fond du Lac Band of Lake Superior Chippewa ("Band") entered into a joint venture in 1986 to create and operate a casino in downtown Duluth, Minnesota. In 1988, Congress passed the Indian Gaming Regulatory Act ("IGRA"), which requires that Indian tribes have the "sole proprietary interest" in and exclusive control of any Indian gaming activity authorized by the Act. 25 U.S.C. ยง 2710(b)(2)(A). The following year, the Band filed suit in this District, seeking a declaration that the 1986 Agreement with the City violated the IGRA. The Court dismissed the Band's action without prejudice and directed the Band to seek review by the agency responsible for interpreting and enforcing the IGRA, the National Indian Gaming Commission ("NIGC"). The NIGC concluded that the casino's operation violated the IGRA's "sole proprietary interest" rule, and the NIGC Chairman advised the parties that it would initiate enforcement proceedings unless the parties could negotiate a new contract on their own.

The parties thereafter engaged in settlement negotiations that, in June 1994, resulted in seven new agreements ("1994 Agreements"). Although the 1994 Agreements reorganized the parties' relationship to eliminate the joint venture, the City retained rights regarding various aspects of operating the casino. In addition, the Band was required to pay the City nineteen percent of the casino's gross revenues as "rent" during the "Initial Term" (from 1994 through March 31, 2011). The rental rate for the "Extension Term" (from April 1, 2011 to March 31, 2036) was to be negotiated at a later date.

As required, the parties submitted the 1994 Agreements to the NIGC for approval. The NIGC found that the Agreements were consistent with the IGRA and recommended to the Court that they be approved. On June 22, 1994, the Court issued an order incorporating the detailed stipulation of the parties into a consent decree ("Consent Decree"). Consistent with the terms of this Consent Decree, the Band paid the City approximately $75 million in rent from 1994 until 2009, at which point the Band ceased making payments on the ground that it had been paying more than nineteen percent of the casino's gross revenues because certain expenses should have been offset.

In September 2009, after the Band did not respond to the City's request to cure its breach, the City brought this action to enforce the Consent Decree. The Band filed a counterclaim alleging that the Decree was inconsistent with the IGRA and should be dissolved. The City moved for summary judgment and, in April 2010, this Court ruled that the Band's argument regarding the legality of the Consent Decree was barred by res judicata because the Decree had been approved by the Court and formalized in a judgment. The Court decided to schedule a trial on the question of whether the Band had overpaid the City between 1994 and 2011, but noted that the Consent Decree indicated that the payment plan for the 2011-2036 period would be decided by arbitration. After another round of arguments by the parties, the Court ordered them to submit the issues related to the 2011-2036 period to arbitration. Meanwhile, the Band sought review of the 1994 Agreements by the NIGC and, on July 12, 2011, the NIGC issued a notice of violation ("NOV"). The NOV determined that the provisions in the Consent Decree violated the IGRA's "sole proprietary interest" rule, and it ordered the Band to cease performance or face sanctions.

On July 22, 2011, the Band moved this Court for dissolution of the Consent Decree pursuant to Federal Rule of Civil Procedure 60(b). In a Memorandum Opinion and Order dated November 21, 2011, the Court relieved the Band "of any further compliance with its obligations under the 1994 Agreements." City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 830 F.Supp.2d 712, 728 (D. Minn. 2011) ("City of Duluth III"). Regarding "retroactive relief, " the Court held that the Band could not recover its previously-paid rent and that the Band must pay the withheld rent from 2009 to 2011. Id . Finally, the Court stated that a trial would be scheduled later on the issue of "contra-revenues"-i.e., whether the Band could recover any overpayments to the City by recognizing certain expenses as offsets against revenue. Id. at 715, 727-28.

Both parties appealed the November 2011 Order. The City appealed the prospective dissolution of the Consent Decree relating to the 2011-2036 term, and the Band appealed the portion of the ruling compelling it to pay rent that it had withheld from 2009 to 2011. However, the Band did not appeal the ruling that it could not recover the rent already paid from 1994 to 2009. On January 14, 2013, the Eighth Circuit (1) affirmed this Court's ruling under Rule 60(b)(5) relieving the Band of prospective compliance with the Consent Decree, and (2) reversed the denial of the Band's request for retrospective relief under Rule 60(b)(6) and remanded that question for further proceedings. City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d 1147, 1156 (8th Cir. 2013) ("City of Duluth IV"). The Eighth Circuit directed this Court to examine all relevant factors as to whether retrospective relief for the 2009-2011 period is available to the Band under Rule 60(b)(6). Id. at 1155.

In its October 8, 2013 Memorandum Opinion and Order on remand, this Court evaluated and weighed eight factors:

To be sure, certain factors support the Band's request, namely: (1) the diligence with which the Band sought relief under Rule 60(b)(6) after receiving the NIGC's July 12, 2011, NOV; (2) the close relationship between the 1994 consent decree and the July 12, 2011, NOV; and (3) the fact that by the time the Band began withholding rent in 2009, the City was on notice that the NIGC's views on the validity of the 1994 Agreements might have changed. Other factors, however, prevent the Band's circumstances from rising to the truly extraordinary level required for Rule 60(b)(6) relief, including: (1) the fact that the change in law presented by the July 12, 2011, NOV, alone, is insufficient to grant retrospective relief; (2) the 1994 consent order is a past, executed judgment on which the City has relied; (3) the parties voluntarily and deliberately entered into the terms ...

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