Business Deals | Litigation

Fond du Lac Band prevails again in long-running casino case

Friday, May 8, 2015

Artist's rendering of the new exterior of the Fond-du-Luth Casino in Duluth, Minnesota. The tribe is spending $5.5 million to renovate the facility. Image from Fond du Lac Band

The Fond du Lac Band of Lake Superior Chippewa Indians won another round in litigation over its urban casino in Duluth, Minnesota.

The tribe had an agreement to send 19 percent of gross revenues from the Fond-du-Luth Casino to the city. The tribe stopped making payments in 2009 after contributing $75 million.

The National Indian Gaming Commission invalidated the deal but that didn't happen until a notice of violation was issued back in 2011. So a federal judge told the tribe to pay the city another $12 million for the two years in question.

The 8th Circuit Court of Appeals, however, said that was a mistake. The ruling failed to take into account the purpose of the Indian Gaming Regulatory Act -- to ensure that tribes are the "primary beneficiaries" of their casinos -- Judge Diana E. Murphy wrote in the unanimous decision.

Indianz.Com SoundCloud: Oral Arguments in Duluth v. Fond du Lac Band

"Accordingly, the district court must give proper weight to the congressional intent that tribes be the primary beneficiaries of Indian gaming as well as other relevant factors we have previously identified," Murphy wrote. "These include the facts that the city was on notice in 2009 of relevant actions and policies of the gaming commission and its warning in the 2011 notice of violation that the tribe would violate IGRA by making further rent payments to the city."

The decision does not mean the tribe is off the hook yet for the $12 million. But Judge Susan Richard Nelson might not be able to rule any other way when the case is sent back to her, unless the city asks for a rehearing or takes the matter to the U.S. Supreme Court.

In January 2013, the 8th Circuit held that the agreement violated IGRA in a lawsuit that named the tribe as the defendant. The city did not appeal to the Supreme Court.

The existing exterior of the Fond-du-Luth Casino. Photo from Fond du Lac Band

However, the city named the NIGC as the defendant in a lawsuit in a different federal court. A judge in Washington D.C., though, reached the same conclusion as the 8th Circuit last month.

The city could take that decision to the D.C. Circuit Court of Appeals. In the event of a different conclusion from the 8th Circuit, the Supreme Court might be more inclined to take up the matter.

Otherwise, the high court rarely takes Indian gaming cases. Prior to Michigan v. Bay Mills Indian Community in 2014, the last decision that directly addressed an IGRA issue was Chickasaw Nation v. US in 2001.

Turtle Talk has posted documents from the second 8th Circuit case, City of Duluth v. Fond du Lac Band of Lake Superior Chippewa. Audio from the oral arguments last November can be found on the Indianz.Com SoundCloud.

8th Circuit Decision:
Duluth v. Fond Du Lac Band of Lake Superior Chippewa (May 8, 2015)

Prior 8th Circuit Decision:
City of Duluth v. Fond Du Lac Band (January 14, 2013)