Duluth, City of v. Fond du Lac Band of Lake Superior Chippewa
Filing
273
MEMORANDUM OPINION AND ORDER: 1. Defendant's motion for relief under Rule 60 (b)(6) [Doc. No. 260] is DENIED; 2. Plaintiff's motion to stay [Doc. No. 255] is DENIED as moot; 3. The parties shall contact the Court's chambers to sche dule a trial confined to the issue of the Band's retention of the disputed "contra-revenues." The Court will then rule on the amount owed by the Band to the City for the rent withheld for 2009, 2010, and 2011 (Written Opinion). Signed by Judge Susan Richard Nelson on 10/8/13. (LPH)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
City of Duluth,
Case No. 09-cv-2668 (SRN/LIB)
Plaintiff,
MEMORANDUM OPINION
AND ORDER
v.
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, #402, Duluth, MN 55802, for Plaintiff.
Vanya S. Hogen, Jessica Intermill, and Henry M. Buffalo, Jr., Jacobson, Buffalo,
Magnuson, Anderson & Hogen, P.C., 335 Atrium Office Building, 1295 Bandana
Boulevard, Saint Paul, MN 55108; Dennis Peterson, Fond du Lac Band of Lake Superior
Chippewa Legal Affairs Office, 1720 Big Lake Road, Cloquet, MN 55720, for
Defendant.
SUSAN RICHARD NELSON, United States District Judge
I.
INTRODUCTION
This matter is before the Court on remand from the United States Court of Appeals
for the Eighth Circuit. The Eighth Circuit reversed this Court’s earlier denial of
Defendant’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). Defendant filed a motion for relief
1
under Rule 60(b)(6), [Doc. No. 260], which Plaintiff opposed, [Doc. No. 269]. Also
before the Court is Plaintiff’s motion to stay proceedings on remand pending the
disposition of an action brought by Plaintiff under the Administrative Procedures Act.
[Doc. No. 255]. For the reasons set forth below, the Court denies Defendant’s Rule
60(b)(6) motion and denies Plaintiff’s motion to stay as moot.
II.
BACKGROUND
In 1986, Plaintiff City of Duluth (“City”) and Defendant Fond du Lac Band of
Lake Superior Chippewa (“Band”) entered into a joint venture to create and operate a
casino in downtown Duluth, Minnesota.1 In 1988, Congress passed the Indian Gaming
Regulatory Act (“IGRA”), which requires that Indian tribes have “sole proprietary
interest” in and exclusive control of any Indian gaming activity authorized by the Act. 25
U.S.C. § 2710(b)(2)(A).
In 1989, the Band filed suit in federal court (Case No. 5-89-0163), seeking a
declaration that the 1986 Agreement with the City violated the IGRA’s requirement that
an Indian tribe “have the sole proprietary interest and responsibility for the conduct of
any gaming activity” on Indian lands. In 1990, United States District Judge Paul A.
Magnuson dismissed the Band’s action without prejudice, explaining that “the public
interest is best served by allowing the Federal regulatory authority established by the
1
For a more complete recitation of the facts, see City of Duluth v. Fond du Lac Band of
Lake Superior Chippewa, 702 F.3d 1147 (8th Cir. 2013); City of Duluth v. Fond du Lac
Band of Lake Superior Chippewa, 830 F. Supp. 2d 712 (D. Minn. 2011); City of Duluth
v. Fond du Lac Band of Lake Superior Chippewa, 708 F. Supp. 2d 890 (D. Minn. 2010);
City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, No. 9-2668, 2010 WL
3861371 (D. Minn. July 12, 2010).
2
IGRA,” the National Indian Gaming Commission (“NIGC”), to review the arrangement
regarding the Fond du Luth Casino and give its recommendation. (Dec. 26, 1990, Order
at 6 [Doc. No. 10-11].)
Upon review of the 1986 Agreement, the NIGC concluded that the casino’s
operation violated the IGRA because “the Band does not have the sole ownership or
control” of the casino. (NIGC Sept. 24, 1993, Letter at 1-2 [Doc. No. 11-1].) The NIGC
Chairman advised the parties that unless the parties “are able to settle the pending
dispute, [the NIGC] will be initiating an enforcement action to bring the Fond du Luth
gaming operation into compliance with IGRA.” (Id. at 1.)
The parties’ settlement negotiations produced seven new agreements in June 1994
(“1994 Agreements”). These agreements reorganized their relationship to eliminate the
joint venture, but the City retained rights regarding various aspects of operating the
casino. The parties agreed on an “Initial Term” of seventeen years (from 1994 through
March 31, 2011), with an “Extension Term” of twenty-five years (from April 1, 2011 to
March 31, 2036). (Sublease and Assignment of Gaming Rights Agreement, at 8-9 [Doc.
No. 12-2].) In addition, from 1994 to 2011, the Band was required to pay the City
nineteen percent of the casino’s gross revenues as “rent.” (Id. at 11.) The rental rate
from 2011 to 2036 was to be negotiated at a later date. (Id. at 16.) Because the 1994
Agreements required a determination by the NIGC that it did not violate the IGRA, the
parties submitted them to the NIGC, which issued its approval. (June 20, 1994, Letter
[Doc. No. 11-4].) The NIGC recommended to Judge Magnuson that the 1994
Agreements be approved. (Id. at 2.) On June 22, 1994, the district court issued an order
3
incorporating the detailed stipulation of the parties into a consent decree. (Stipulation
and Consent Order [Doc. No. 11-7].)
Consistent with the terms of this consent decree, the Band paid the City
approximately $75 million in rent from 1994 until 2009. The Band then ended payments
on the ground that it had been paying the City more than nineteen percent of the casino’s
gross revenues because certain expenses should have been considered as offsets against
revenue. 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 1994 Agreements. (Compl. [Doc.
No. 1].) The Band filed a counterclaim alleging that the consent decree was inconsistent
with the IGRA and should therefore be dissolved. (Answer and Countercl. [Doc. No. 3].)
In December 2009, the City moved for summary judgment. (Pl.’s Mot. for Summ.
J. [Doc. No. 7].) In April 2010, this Court ruled that the Band’s argument about 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. (Apr. 21, 2010, Order at 7-9 [Doc.
No. 73].) The Court also decided to schedule a trial on the question of whether the Band
had overpaid the City between 1994 and 2011. (Id. at 18-19.) The Court further noted
that the consent decree indicated that the payment plan for the 2011-2036 period would
be decided by arbitration. (Id. at 19.) After another round of arguments by the parties,
the Court ordered the parties to submit the issues related to the 2011-2036 period to
arbitration. (May 13, 2011, Order [Doc. No. 179].)
Meanwhile, the Band sought review of the 1994 Agreements by the NIGC. On
July 12, 2011, shortly after the parties began arbitration, the NIGC issued a notice of
4
violation (“NOV”). (Notice of Violation [Doc. No. 208-1].) This NOV determined that
the provisions in the 1994 consent decree violated the IGRA’s “sole proprietary interest”
rule, and it ordered the Band to cease performance or face sanctions, including fines and
the possible closure of the casino. (Id. at 18-19.)
On July 14, 2011, the Band informed this Court of the NOV as well as of its intent
to seek relief from the consent decree. (July 14, 2011, Letter to District Judge [Doc. No.
202].) On July 22, 2011, the Band moved for dissolution of the consent decree under
Federal Rule of Civil Procedure 60(b). (Fond du Lac Band of Lake Superior Chippewa’s
Mot. for Relief from Consent Order, Summ. J. Order, and Order Compelling Arbitration
under Rules 60(b)(5) and 60(b)(6) [Doc. No. 207].) On November 21, 2011, this Court
relieved the Band “of any further compliance with its obligations under the 1994
Agreements.” (Nov. 21, 2011, Order at 29 [Doc. No. 231].) Regarding “retroactive
relief,” it 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”—that is, whether the Band
may recover any overpayments to the City by recognizing certain expenses as offsets
against revenues. (Id.)
Both parties appealed the November 21, 2011, Order. The City appealed the
prospective dissolution of the consent decree relating to the 2011-2036 term. The Band
appealed the ruling compelling it to pay rent that it had withheld from 2009 to 2011, but
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
5
60(b)(5) relieving the Band of prospective compliance with the 1994 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, 702 F.3d at 1156.
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).
III.
DISCUSSION
A. Rule 60(b)(6)
1. Standard of Review
Federal Rule of Civil Procedure 60(b) may be used to reconsider a final judgment
on grounds including excusable neglect, fraud, newly discovered evidence, or “any other
reason that justifies relief.” FED. R. CIV. P. 60(b); 11 Charles Alan Wright, Arthur R.
Miller, and Mary Kay Kane, Federal Practice and Procedure § 2852 (2d ed. 1995). A
consent decree is subject to Rule 60(b) the same as any other judgment or decree. Rufo
v. Inmates of the Suffolk Cnty. Jail, 502 U.S. 367, 378 (1992). Rule 60(b)(6) is a “grand
reservoir of equitable power.” Phelps v. Alameida, 569 F.3d 1120, 1135 (9th Cir. 2009).
It affords courts the discretion to vacate judgments whenever such action is appropriate to
accomplish justice. Klapprott v. United States, 335 U.S. 601, 614-15 (1949); Ritter v.
Smith, 811 F.2d 1398, 1400 (11th Cir. 1987). Such relief, however, is “exceedingly rare”
because it requires an intrusion into the sanctity of a final judgment, and therefore, it is
available only in “extraordinary circumstances.” In re Guidant Corp. Implantable
Defibrillators Prod. Liab. Litig., 496 F.3d 863, 868 (8th Cir. 2007). Extraordinary
circumstances are not present every time a party is subject to potentially unfavorable
6
consequences as a result of an adverse judgment at which a court properly arrived. Id.
Circumstances are exceptional when they “have denied the moving party a full and fair
opportunity to litigate his claim” and “have prevented the moving party from receiving
adequate redress.” Murphy v. Missouri Dep’t of Corr., 506 F.3d 1111, 1117 (8th Cir.
2007). A more compelling showing of inequity or hardship is necessary to warrant relief
under Rule 60(b)(6) than Rule 60(b)(5). Twelve John Does v. Dist. of Columbia, 841
F.2d 1133, 1140 (D.C. Cir. 1998) (“otherwise, the ready availability of subsection (6)
would make meaningless the limitation of subsection (5) to judgments with prospective
application.”).
2. Extraordinary Circumstances
In determining whether a matter presents “extraordinary circumstances” for
purposes of Rule 60(b)(6), courts examine several factors. A clear-cut change in the law
is a necessary but insufficient basis for granting relief. Ritter, 811 F.2d at 1401
(“something more than a ‘mere’ change in the law is necessary to provide the grounds for
Rule 60(b)(6) relief.”). Courts also consider: (1) whether the previous, erroneous
judgment of the court has yet to be executed; (2) whether there has been a lengthy delay
before the filing of the Rule 60(b)(6) motion; (3) whether there is a close relationship
between the proceeding that gave rise to the change in the law and the proceeding
currently before the court, including whether the two proceedings “arose out of the same
transaction”; and (4) whether the case raises concerns of comity between the state and
7
federal courts.2 Id. at 1401-03.
The Eighth Circuit, in its mandate for remand, set forth additional considerations
for this Court: (1) the Band and the City’s voluntary agreement to the provisions
incorporated in the 1994 consent decree; (2) the NIGC’s initial endorsement of the 1994
Agreements; (3) the NIGC’s lack of authority to punish a party for obeying a court order;
(4) whether the City was on notice that the NIGC’s views on the validity of the 1994
Agreements might have changed before the July 12, 2011, NOV issued; and (5) whether
the July 12, 2011, NOV was an “exceptional” occurrence justifying Rule 60(b)(6) relief.
City of Duluth, 702 F.3d at 1155. To the extent these considerations overlap with factors
considered by other courts, the Court addresses them together.
a. Change in Law
The Eighth Circuit directed this Court to consider whether the NOV issued by the
NIGC on July 12, 2011—changing its earlier position and ordering the Band to cease
performance under the consent decree—was an “exceptional” occurrence justifying
60(b)(6) relief. City of Duluth, 702 F.3d at 1156. The Band argues that it is, because
without modification, “the Consent Order presents the extraordinary circumstance of
forcing the Band to perform illegal operations.” (Def.’s Mem. of Law in Support of Mot.
for Relief from Consent Order and Summ. J. Order under Rule 60(b)(6) at 4 [Doc. No.
262].) The Band emphasizes that the NIGC’s decision that the 1994 Agreements are
illegal under the IGRA makes any remaining performance of the contractual terms legally
2
The Band represents that there are no concerns of comity between state and federal
courts here. (June 27, 2013, Hr’g Tr. at 13.) Thus, the Court finds that this factor is
neutral toward granting or denying the Band’s requested relief under Rule 60(b)(6).
8
impracticable. (Id. at 5-7.) In response, the City argues that the July 12, 2011, NOV is
not an exceptional occurrence justifying 60(b)(6) relief because changes in law do not
ordinarily have retroactive effect. (Pl.’s Mem. of Law in Opp’n on Remand to Def.’s
Rule 60(b) Mot. at 9-11, 14 [Doc. No. 269].)
Although a change in law is a necessary basis for granting relief, it does not
always provide the truly extraordinary circumstances necessary to reopen a case. See
Collins v. City of Wichita, 254 F.2d 837 (10th Cir. 1958). In Collins, the plaintiffs
challenged the constitutionality of a Kansas statute relating to the notice required to be
given to a landowner in condemnation proceedings. Id. at 838. The statute was upheld
and the judgment became final after appeal. Id. One year later, the United States
Supreme Court decided an identical case and invalidated the statute. Id. The plaintiffs
subsequently sought relief from their judgment under Rule 60(b)(6). Id. The district
court denied the motion and the Tenth Circuit affirmed, stating that “[l]itigation must end
some time, and the fact that a court may have made a mistake in the law, when entering
judgment, or that there may have been a judicial change in the court’s view of the law
after its entry, does not justify setting it aside.” Id. at 839. Persuaded by Collins’
language about the need for finality to litigation, the Court finds that the change in law
presented by the July 12, 2011,3 NOV, alone, is a necessary but insufficient basis to grant
relief under Rule 60(b)(6). Other factors, in addition to the change in law here, are
3
The July 12, 2011, NOV constitutes a change in the law because in direct contrast to the
NIGC’s original approval of the 1994 Agreements, the NOV concludes that the terms of
the 1994 Agreements violate the IGRA and directs the Band to stop complying with the
violative provisions.
9
necessary for the Court to consider in determining whether the circumstances are
sufficiently extraordinary to warrant the requested relief.
As for the City’s argument that changes in law do not ordinarily have retroactive
effect, the Court agrees. See Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208
(1988) (“a statutory grant of legislative rulemaking authority will not, as a general matter,
be understood to encompass the power to promulgate retroactive rules unless that power
is conveyed by Congress in express terms.”). When a change in law makes an impact on
a consent decree or permanent injunction, such judgments typically have both past effects
and future implications. Ritter, 811 F.2d at 1402. Although courts have granted
prospective 60(b)(6) relief because “it would be unjust to give prospective effect to a
judgment now known to be improper,” they have generally “refused to undo the past,
executed effects of the judgments.” Id. Here, the July 12, 2011, NOV explicitly requires
the Band to
. . . cease performance under the 1994 Agreements of those provisions
identified in the NOV as violating IGRA. This applies to the entire 42 year
term of the 1994 Agreements.
(Notice of Violation at 18 [Doc. No. 208-1].) With applicability “to the entire 42 year
term” of the agreements, the NOV has both past effects on and future implications for
compliance with the 1994 consent decree. Regarding the future implications, this Court
granted prospective relief to the Band under Rule 60(b)(5), which the Eighth Circuit
affirmed. City of Duluth, 702 F.3d at 1156. The past effects, for purposes of this motion,
10
concern the unpaid rent due under the 1994 Agreements from 2009 until 2011.4 Because
Congress has not granted NIGC the power to promulgate retroactive rules in express
terms,5 the Court finds that enforcing the NOV for the initial term of the 1994
Agreements—which ended three months before the NOV was issued—would be an
impermissible retroactive application.
b. Execution of the 1994 Consent Decree
Whether the previous, erroneous judgment of this Court has been executed is a
“significant factor” in determining whether the circumstances are extraordinary enough to
warrant relief under Rule 60(b)(6). See Ritter, 811 F.2d at 1401. When a court has
executed a judgment, a “concomitantly greater interest in finality exists.” Id. In Collins,
for instance, the Tenth Circuit affirmed a denial of 60(b)(6) relief, in part because the
judgment had been executed. 245 F.2d at 839. Specifically, the city had entered the land
and installed pipes and appurtenances, and the case involved property rights pertaining to
real estate titles. Id. n.2. And in Hall v. Warden, 364 F.2d 495 (4th Cir. 1966), the court
ruled that a subsequent Supreme Court decision would not be grounds to reopen the
court’s grant of habeas relief because by that time, Hall had been retried in a proceeding
that suppressed a confession and resulted in a mistrial. Id. at 496. By contrast, the court
in Flexiteek Am., Inc. v. PlasTEAK, Inc., No. 8-60996-CIV, 2012 WL 5364263, at *10
4
The initial term of the 1994 Agreements ended on April 1, 2011, and all payments for
that term were due on or before March 31, 2011.
5
25 U.S.C. § 2706 sets forth the powers of the NIGC. Subsection (b)(10) authorizes the
promulgation of rules and guidelines appropriate to implement the provisions of the
IGRA, but does not state that such rules or guidelines can be applied retroactively. 25
U.S.C. § 2706(b)(10). The remainder of § 2706 does not authorize retroactive
application of NIGC rulings or regulations.
11
(S.D. Fla. Sept. 10, 2012), granted relief under Rule 60(b)(6), in part because after the
Patent and Trademark Office invalidated one of the patent claims at issue, the Court
stayed execution of the previous judgment. These examples embody the principle that
Rule 60(b)(6) relief is less warranted when the final judgment being challenged has
caused one or more of the parties to change his legal position in reliance on that
judgment.
The Band argues that the previous, erroneous judgment has not been executed
because it has yet to pay the rent due under the 1994 Agreements for the 2009-2011
period. (June 27, 2013, Hr’g Tr. at 13.) The Court respectfully disagrees. On June 22,
1994, the parties entered into a stipulation, agreeing that (1) dismissal of the Band’s
action with prejudice was warranted; (2) the 1994 Agreements complied with the “sole
proprietary interest” requirement; (3) the NIGC reviewed the 1994 Agreements and
concluded that they conformed with the IGRA; and (4) the 1994 Agreements and all of
its attachments “are in their entirety expressly incorporated into this Stipulation and
Consent Order, and are hereby expressly made a part of it.” (Stipulation and Consent
Order [Doc. No. 11-7].) The parties also informed Judge Magnuson that they “jointly
desire the Court’s approval in order to ensure binding implementation of the settlement
agreement.” (Joint Mem. in Supp. of Proposed Stipulation and Consent Order at 13
[Doc. No. 13-1].) In July 1993, Judge Magnuson issued a consent decree approving the
parties’ stipulation, dismissing the Band’s Complaint with prejudice, and ordering that
the Court retain jurisdiction over the matter to ensure the parties’ compliance with the
1994 Agreements. (Id. at 6 [Doc. No. 11-7].) Since then, no court has stayed execution
12
of this consent decree, and indeed, the Band complied with it until 2009. The Court finds
that the active status of the consent decree here is more akin to the judgments in Collins
and Hall than in Flexiteek, and the City has relied on its right to payments under the 1994
Agreements. Thus, the “significant factor” of the executed consent decree weighs in
favor of denying the Band relief under Rule 60(b)(6).
c. Delay in Filing for Relief Under Rule 60(b)(6)
Next, the Court considers whether the Band delayed in seeking Rule 60(b)(6)
relief. Time is relevant because the longer the delay, “the more intrusive is the effort to
upset the finality of the judgment.” Ritter, 811 F.2d at 1402. On July 12, 2011, the
NIGC issued the NOV. (Notice of Violation [Doc. No. 208-1].) On July 14, 2011, the
Band informed the Court of the NOV and its intent to seek relief from the consent decree.
(July 14, 2011, Letter to District Judge [Doc. No. 202].) On July 22, 2011, the Band
moved for dissolution of the consent decree under Rule 60(b). (Fond du Lac Band of
Lake Superior Chippewa’s Mot. for Relief from Consent Order, Summ. J. Order, and
Order Compelling Arbitration under Rules 60(b)(5) and 60(b)(6) [Doc. No. 207].) Given
this short timeline of events, the Court finds that the Band was diligent in seeking relief
under 60(b)(6). This factor therefore supports granting the Band its requested relief.
d. Relationship Between the 1994 Consent Decree and the July 12,
2011, NOV
Another factor for the Court to consider is whether there is a close relationship
between the two cases at issue: the decision embodying the original judgment and the
subsequent decision embodying the change in law. Ritter, 811 F.2d at 1402. This factor
13
is designed to recognize that under common law, legal rules and principles regularly
evolve. Phelps, 569 F.3d at 1139. The mere fact that law changes over time, however,
cannot upset all final judgments that have predated any specific change in the law. Id.
Instead, it is the nature of the change that matters. Id. If there is a close connection
between the two cases, courts are more likely to find the circumstances sufficiently
extraordinary to justify disturbing the finality of the original judgment. Id.
In Phelps and Ritter, the intervening change in the law directly overruled the
decision for which reconsideration was sought. In Ritter, the intervening Supreme Court
precedent resolved a split between the Eleventh Circuit and the Alabama Supreme Court.
811 F.2d at 1400. In Phelps, the intervening precedent resolved a conflict between
multiple Ninth Circuit panels that had issued contemporaneous but contradictory
memorandum dispositions. 569 F.3d at 1136. Both cases found that this factor weighed
in favor of granting relief under Rule 60(b)(6).
In the instant case, the 1994 consent decree and the July 12, 2011, NOV are
closely related. They involve the same parties and arise out of the 1994 Agreements.
(See June 27, 2013, Hr’g Tr. at 13.) And similar to the changes in law that overruled the
earlier decisions in Phelps and Ritter, the NOV directly contradicts the 1994 consent
decree. Whereas the consent decree found the terms of the 1994 Agreements to be
permissible and in compliance with the IGRA, the NOV determined that the terms of the
1994 Agreements violated the IGRA and directed the Band to cease performance under
the agreements. (Notice of Violation at 18 [Doc. No. 208-1].) Thus, the Court finds that
this factor weighs in favor of granting 60(b)(6) relief.
14
e. The Parties’ Voluntary Agreement to the 1994 Consent Decree
The City argues that relief under Rule 60(b)(6) is unjustified because the parties
voluntarily agreed to the 1994 consent decree. (Pl.’s Second Mem. of Law in Opp’n on
Remand to Def.’s Rule 60(b)(6) Mot. at 14 [Doc. No. 269].) The Band argues that the
parties’ consent to the 1994 Agreements is immaterial in light of its current illegality.
(Def.’s Mot. for Relief from Consent Order and Summ. J. Order under Rule 60(b)(6) at
26 [Doc. No. 260].)
Extraordinary circumstances rarely exist when a party seeks relief from a
judgment that resulted from the party’s deliberate choices. See Ackermann v. United
States, 340 U.S. 193, 198-99 (1950); Coltec Indus., Inc. v. Hobgood, 280 F.3d 262, 274
(3d Cir. 2002) (“courts have not looked favorably on the entreaties of parties trying to
escape the consequences of their own ‘counseled and knowledgeable’ decisions.”). In
Ackermann, which involved the denaturalization of two naturalized German citizens
during World War II, Ackermann decided not to appeal, believing the issue would find
resolution after the war. When his brother-in-law’s appeal succeeded, Ackermann filed
for Rule 60(b)(6) relief from his denaturalization. The Supreme Court held that such
relief was appropriately denied because:
Petitioner made a considered choice not to appeal, apparently because he
did not feel that an appeal would prove to be worth what he thought was a
required sacrifice of his home. His choice was a risk, but calculated and
deliberate and such as follows a free choice. Petitioner cannot be relieved
of such a choice because hindsight seems to indicate to him that his
decision not to appeal was probably wrong . . . There must be an end to
litigation someday, and free, calculated, deliberate choices are not to be
relieved from.
15
340 U.S. at 198. The Supreme Court contrasted Ackermann’s situation with that of
Klapprott v. United States, 335 U.S. 601 (1949), in which Klapprott failed to defend
against denaturalization charges but had been in custody, sick, unable to procure counsel
despite efforts to do so, and preoccupied by efforts to defend against serious criminal
charges. Ackermann, 340 U.S. at 199-200. Under those circumstances, the Supreme
Court noted that “[b]y no stretch of imagination can the voluntary, deliberate, free,
untrammeled choice of petitioner [Ackermann] not to appeal compare with the Klapprott
situation.” Id. at 200.
The Court is sympathetic to the Band’s “dire and uncertain economic
circumstances” when it first “negotiated the best deal it could to bring long-term
opportunity to its members” in 1986. (Def.’s Mot. for Relief from Consent Order and
Summ. J. Order under Rule 60(b)(6) at 26 [Doc. No. 260].) But when the Band later
renegotiated its arrangement with the City, which resulted in the 1994 Agreements, both
parties were represented by counsel when they entered into the agreements. Similar to
Ackermann, who freely and purposefully chose not to appeal, the Band voluntarily and
deliberately chose to agree to the renegotiated arrangement—an agreement that has
benefited both parties significantly. Indeed, the voluntariness and deliberateness of the
Band’s choice are apparent in the Band’s subsequent request to the NIGC to approve the
terms of the 1994 Agreements, and even more so in the parties’ statement to Judge
Magnuson that they “jointly desire the Court’s approval in order to ensure binding
implementation of the settlement agreement.” (Joint Mem. in Supp. of Proposed
Stipulation and Consent Order at 13 [Doc. No. 13-1].) Under these circumstances, the
16
Court finds that the Band made an informed, counseled, and voluntary decision to enter
into the terms of the 1994 Agreements. This consideration weighs in favor of denying
the requested relief under Rule 60(b)(6).
f. The NIGC’s Initial Endorsement of the 1994 Agreements
The Eighth Circuit sets forth the NIGC’s initial endorsement of the 1994
Agreements as a factor for why retrospective relief might be inappropriate. City of
Duluth, 702 F.3d at 1155. The City argues that the parties reasonably relied on the
NIGC’s approval of the renegotiated agreement, because they worked with the NIGC for
months before completing an agreement that satisfied the NIGC and the Department of
Interior. (Pl.’s Second Mem. of Law in Opp’n on Remand to Def.’s Rule 60(b) Mot. at
14 [Doc. No. 269].)
The Court agrees with the City. After Judge Magnuson’s December 26, 1990,
Order, the NIGC reviewed the Fond DuLuth Casino operation. (June 20, 1994, Letter at
1 [Doc. No. 11-4].) On September 24, 1993, the NIGC notified the parties that the joint
venture agreement in effect at the time violated provisions of the IGRA. (Id.) After
being notified of the NIGC’s finding, the parties then began negotiations to bring the
casino into compliance with the IGRA, which resulted in the 1994 Agreements. (Id. at 12.) On June 20, 1994, the Chairman of the NIGC submitted the following in a Report and
Recommendation to Judge Magnuson:
Pursuant to your December 26, 1990, Order, I am writing to report that the
settlement recently concluded between the Fond Du Lac Band and the City
of DuLuth returns ownership and control of the Fond DuLuth Casino to the
Band and is fully consistent with the IGRA. Accordingly, I recommend
that this settlement agreement be approved.
17
(June 20, 1994, Letter [Doc. No. 11-4].) Although the Chairman did not provide an
analysis supporting his recommendation, this statement—particularly on the heels of the
NIGC’s notice that the previous joint venture agreement violated the IGRA, and the
subsequent negotiations resulting in the 1994 Agreements—was reason for the Court and
the parties to accept the terms of the new agreements. The 1994 consent decree remains
valid for the 2009-2011 period at issue. The Court therefore finds that this factor weighs
in favor of denying the Band’s requested relief.
g. The NIGC’s Lack of Authority to Punish for Disobeying a Court
Order
The Band supports its request for Rule 60(b)(6) relief on the ground that
compliance with the 1994 Consent Order will risk daily fines of $25,000 per violation
and closure of the casino. (Def.’s Mem. of Law in Supp. of Mot. for Relief from Consent
Order and Summ. J. Order under Rule 60(b)(6) at 9 [Doc. No. 262].) The City argues
that no sanctions have been imposed, and that either way, the Band has a complete
defense because it is complying with a court order. (Pl.’s Second Mem. of Law in Opp’n
on Remand to Def.’s Rule 60(b) Mot. at 19 [Doc. No. 269].)
The Eighth Circuit observed that although “the NIGC had the power to change its
position, it does not have the authority to punish a party for obeying a court order.” City
of Duluth, 702 F.3d at 1155. Judge Magnuson’s 1994 consent decree, approving and
incorporating the terms of the 1994 Agreements, remains valid regarding the initial term
and awaits the Band’s compliance for the 2009-2011 unpaid rent. Should the NIGC
impose civil fines or close the casino in response to the Band’s compliance with the
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consent order, this Court agrees with the City that the Band has a defense. Thus, this
factor weighs in favor of denying the Band retrospective relief under Rule 60(b)(6).
h. Notice
In its mandate for remand, the Eighth Circuit stated that “[b]y 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 agreement might well have changed.” City of Duluth, 702 F.3d at
1155. The Eighth Circuit reasoned that after the NIGC initially approved the agreement,
it issued several advisory letters noting that “similar arrangements between other tribes
and casinos had been found to violate the sole proprietary interest rule.” Id. The Eighth
Circuit also stated that the “intervening decisions by the NIGC likely were available and
accessible to the parties, and they may well have relevance in ascertaining whether
retrospective relief should be granted.” Id.
The Court has reviewed the NIGC’s advisory letters to which the Eighth Circuit
directs our attention, which were included in this Court’s previous consideration:
• A June 2003 advisory letter from the NIGC, concluding that gaming related
contracts requiring a tribe to pay, ostensibly as rent, 35% of net gaming
revenues for a period of ten years to an outside developer violated the sole
proprietary interest requirement, [Doc. No. 46-4];
• An April 2004 advisory letter from the NIGC, concluding that development
contracts entitling a developer to 75% of net revenue in the first five years and
18% of gross revenue for the next ten years violated the sole proprietary
interest requirement, [Doc. No. 45-13];
• A July 2004 advisory letter from the NIGC, concluding that an outside
developer had acquired an illegal proprietary interest in gaming activity
because the development contracts provided the developer with 75% of net
revenue in the first five years and 16% of gross revenue for the next ten years,
[Doc. No. 46-5];
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• A February 2005 letter from the NIGC Chairman to the Senate Committee on
Indian Affairs recounting some of the situations in which the NIGC opined that
an arrangement between a tribe and an outside party violated the sole
proprietary interest requirement, [Doc. No. 46-3];
• An October 2006 advisory letter from the NIGC, concluding that an outside
party retained to develop two casinos had acquired a proprietary interest in
gaming operations on Indian lands because of “the excessive amount of
revenue it will be paid from the Tribe’s gaming facility relative to the services
provided,” [Doc. No. 45-11]; and
• A June 2007 proposed civil fine assessment by the NIGC, finding that an
outside company hired to manage blackjack and gaming machine operations at
casinos on Indian lands had acquired a proprietary interest in the gaming
activity, in violation of § 2710(b)(2)(A), when the company received 53.8% of
net revenue, [Doc. No. 45-10].
(See Apr. 21, 2010, Order at 13-14 [Doc. No. 73].) None of these documents is directed
to the City or the Band. The City distinguishes the situations in these advisory letters
from its own circumstances, arguing that (1) the advisory letters involve land that the
tribe at issue already owned; (2) none of them had the approval of the NIGC or of a final
consent order; and (3) the Court’s April 21, 2010, Order considered these letters and
nonetheless found the 1994 Agreements to be valid. (Pl.’s Second Mem. of Law in
Opp’n on Remand to Def.’s Rule 60(b) Mot. at 16 [Doc. No. 269].)
This question is a close call, but the Court ultimately finds that the City was on
notice that the NIGC’s views on the validity of the 1994 Agreements might well have
changed. Even if the City did not receive an advisory letter directed to it specifically,
these letters are publicly available on the NIGC website. The City, like everyone else, is
“presumptively charged with knowledge of the law.” Atkins v. Parker, 472 U.S. 115, 130
(1985). Although the circumstances of the advisory letters are technically different from
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those here, they indicate the development of and general changes to the NIGC’s “sole
proprietary interest” analysis. And certainly, by 2011, the City was on full notice that the
NIGC would issue a decision on the Band’s most recent request for review of the 1994
Agreements: the City participated in the process by filing briefs and expert reports. (June
27, 2013, Hr’g Tr. at 29; Aff. of Alan P. Meister [Doc. No. 228-2].) Therefore, the City’s
notice weighs in favor of granting Rule 60(b)(6) relief to the Band.
Having carefully evaluated the factors set forth by the Eighth Circuit and other
courts for Rule 60(b)(6) relief, the Court concludes, however, that the Band’s motion
does not demonstrate the extraordinary circumstances necessary to grant the requested
relief. 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 of the 1994 Agreements; (4) the NIGC recommended
in 1994 that Judge Magnuson approve the settlement agreement; and (5) the Band has a
defense to complying with a valid court order, should it face any sanctions by the NIGC.
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The Court recognizes that the Band has paid approximately $75 million to the City
under the 1994 Agreements, and that requiring it to remit the remaining $10,392,412.40
owed for the 2009-2011 term is a significant burden. But the Court also notes that the
Band has benefited substantially from the 1994 Agreements. From 1994 to 2009, the
Band earned approximately $175 million in net profit. And since the Band stopped
payments in 2009, it has profited more than $20 million while receiving the City’s
services for free. Particularly since the Band has now received complete prospective
relief from the 1994 consent order, the circumstances altogether do not rise to the level of
the truly extraordinary to warrant retrospective relief under Rule 60(b)(6).
B. Motion to Stay
The City has moved to stay the current proceedings on remand pending the
disposition of City of Duluth v. Nat’l Indian Gaming Comm’n, an Administrative
Procedures Act action brought by the City on February 26, 2013. (Pl.’s Mot. to Stay
Proceedings on Remand [Doc. No. 255].) The City argues that the outcome of that case
and the validity of the NIGC’s July 12, 2011, NOV to be there determined is a necessary
and relevant factor for this Court to consider on remand. (Id.)
Because the Court denies the Band’s motion for Rule 60(b)(6) relief, it denies the
City’s motion to stay as moot.
V.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1. Defendant’s motion for relief under Rule 60(b)(6) [Doc. No. 260] is DENIED;
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2. Plaintiff’s motion to stay [Doc. No. 255] is DENIED as moot;
3. The parties shall contact the Court’s chambers to schedule a trial confined to
the issue of the Band’s retention of the disputed “contra-revenues.” The Court
will then rule on the amount owed by the Band to the City for the rent withheld
for 2009, 2010, and 2011.
Dated: October 8, 2013
s/ Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Court Judge
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