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Gaming Corporation of America Golden Nickel Casinos, Inc. v. Dorsey & Whitney, a Partnership, in Re Dorsey & Whitney, a Partnership
Citations: 88 F.3d 536; 1996 U.S. App. LEXIS 15326Docket: 95-3441, 95-3696
Court: Court of Appeals for the Eighth Circuit; June 27, 1996; Federal Appellate Court
Gaming Corporation of America and Golden Nickel Casinos, Inc. filed a lawsuit against the Dorsey. Whitney law firm, alleging violations of state and federal law during Dorsey's representation of a Native American tribe in a casino management licensing process. Dorsey removed the case to federal court, which later remanded it to state court, dismissing several claims and finding no remaining federal questions. Dorsey appealed, arguing that federal questions exist and that the Indian Gaming Regulation Act (IGRA) preempts state law in Indian gaming regulation. Gaming Corp. and Golden Nickel, both Minnesota corporations with overlapping ownership, planned to merge. The Ho-Chunk Nation, a Native American tribe in Wisconsin, sought to establish a casino and negotiated a tribal-state compact in 1992, requiring Dorsey’s representation, while Golden Nickel aimed to manage the casino. Dorsey sought consent from both parties due to potential conflicting interests and received permission to represent the tribe in February 1992. Dorsey stated it ended its representation of Gaming Corp. in April 1993. In October 1992, Golden Nickel and the Ho-Chunk Nation entered into a management agreement for a casino in Baraboo, Wisconsin, with Golden Nickel responsible for financing and maintaining necessary licenses. Golden Nickel obtained a provisional license in May 1993, and both companies applied for permanent licenses later that year, with plans to merge upon approval. Dorsey assisted the tribal gaming commission in evaluating these applications and managed evidence presentation at commission hearings from December 1993 to May 1994. The tribal gaming commission denied the applications for permanent licenses by Gaming Corp. and Golden Nickel, concluding that the owners violated the terms of their provisional license. Specifically, one owner attempted to unduly influence a business committee member for license approval, and the testimonies of the management companies' owners were deemed contradictory and not credible. Additionally, the companies did not sever ties with certain individuals as required. The permanent license applications were denied in July 1994, leading to the termination of the management contract, preventing Golden Nickel from operating the Ho-Chunk Casino. The management companies appealed the commission's decision to the nation's courts and pursued litigation against various parties in Wisconsin state court. On February 9, 1995, they settled with the nation for $42 million in return for releasing all claims and relinquishing control of certain land. Subsequently, on September 17, 1994, the management companies initiated a lawsuit against Dorsey in Minnesota state court, alleging eleven counts of common law violations. They claimed Dorsey unfairly influenced the licensing process to make the companies appear unsuitable and used fraudulent tactics, despite previously indicating the licensing process would be straightforward. They also alleged Dorsey violated a fiduciary duty due to its representation of Gaming Corp., and one count asserted a violation of the Indian Civil Rights Act, seeking damages exceeding $100 million. Dorsey removed the case to federal court in October 1994, asserting that the allegations involved federal questions related to gaming license proceedings under the Indian Gaming Regulatory Act (IGRA) and the Indian Civil Rights Act. Dorsey moved to dismiss the case, arguing that the claims were preempted by IGRA and that the Indian Civil Rights Act does not provide a private right of action. Meanwhile, the management companies sought to remand the case back to state court. In April 1995, the management companies filed a second amended complaint, including an amended count alleging conspiracy under the Indian Civil Rights Act and new counts for due process violations under the Fourteenth and Fifth Amendments. On August 30, 1995, the district court dismissed some claims and remanded others, concluding that state law was not completely preempted by IGRA. It dismissed the due process claims for failure to state a claim and ruled that the conspiracy count related to the Indian Civil Rights Act arose under state law, leading to a remand under 28 U.S.C. 1367(c)(3). Dorsey then sought a writ of mandamus and filed an appeal, contending that the district court had no discretion to remand because IGRA preempted state law and that all claims should be dismissed for failure to state a claim. The management companies assert that the court lacks jurisdiction to hear the appeal or the petition for a writ of mandamus. They cite 28 U.S.C. § 1447(d), which prohibits appellate review of remand orders resulting from improper removal or lack of subject matter jurisdiction, noting that this nonreviewability applies only to cases remanded under § 1447(c). The court clarifies that since the case was not remanded under § 1447(c), the jurisdictional bar does not apply. The district court had federal question jurisdiction due to Count IX of the original complaint alleging a violation of the Indian Civil Rights Act. The court remanded the case under 28 U.S.C. § 1367(c)(3), after determining that no federal claims remained and choosing not to exercise supplemental jurisdiction. Therefore, because the district court maintained subject matter jurisdiction, neither § 1447(d) nor any other statute prevents appellate review. The document addresses whether the case should be reviewed on appeal or via a writ of mandamus. Prior to the Supreme Court's decision in Quackenbush v. Allstate Insurance Company, the court suggested mandamus was the means for reviewing remand orders, due to Thermtron's implications about appeals under the collateral order exception. However, Quackenbush clarified that remand orders, similar to stay orders, can be appealable, as they effectively remove jurisdiction from federal court to state court, leaving no further opportunity for federal appeal. The remand in this case is deemed to have a similar final effect as that in Quackenbush, leading to the conclusion that the appropriate action is to dismiss the petition for a writ of mandamus and proceed with the appeal. Dorsey claims that the district court abused its discretion in remanding the claims, arguing that IGRA completely preempts state law, while the management companies counter that IGRA is not completely preemptive and the remand was warranted. A district court lacks the discretion to remand claims involving federal questions, as established by various circuit court precedents. Generally, a plaintiff can prevent removal to federal court by solely alleging state law claims, adhering to the "well-pleaded complaint rule," which mandates that a federal cause of action must be apparent on the complaint's face for a defendant to remove the case. A federal defense, including claims of federal preemption, does not grant the right to removal. Complete preemption serves as an exception to the well-pleaded complaint rule, occurring when Congress intends for a federal statute to entirely preempt a specific area of law, thereby converting state law claims into federal claims. For a statute to exhibit complete preemption, it must possess "extraordinary pre-emptive power," a determination courts make cautiously. The term "complete preemption" may be misleading, as it does not necessarily encompass all claims, but only those within the statute's preemptive scope. The presence of even one federal claim allows a defendant to remove the entire case to federal court, contrasting complete preemption with preemption as a mere defense, which does not transform a state claim into a federal one. The Supreme Court recognized complete preemption in the context of ERISA and previously in the Labor Management Relations Act and Native American treaty rights. Additionally, other areas of special federal interest have been acknowledged for complete preemption, as seen in relevant case law. A federal appellate court is considering whether the Indian Gaming Regulatory Act (IGRA) completely preempts state laws governing gaming on Indian lands, marking a significant legal inquiry. Previous federal court rulings have recognized IGRA's strong preemptive force, as illustrated in cases like Tamiami Partners, Ltd. v. Miccosukee Tribe of Indians. IGRA's broad regulatory and enforcement provisions, along with comprehensive regulations, indicate Congress's intent for federal dominance in regulating Indian gaming. The Supreme Court's methodology in Metropolitan Life serves as a framework for analyzing IGRA's preemptive effect, emphasizing congressional intent as the guiding principle. A thorough examination of IGRA's text, structure, legislative history, and jurisdiction suggests that Congress aimed to establish federal standards for gaming on Indian lands. IGRA grants Indian tribes the exclusive right to regulate gaming, provided it is not expressly prohibited by federal law and is permissible under state law. The National Indian Gaming Commission (NIGC) is established under IGRA to oversee various aspects of gaming regulation, including licensing and background checks, with broad authority to approve or disapprove gaming-related applications and contracts. IGRA categorizes gaming into three classes, with class I gaming exempt from all regulation, and limits state influence over class II gaming unless states impose a complete ban. States can only set minimum licensing criteria for class II operations and have no authority to make specific decisions about individual gaming operations. Significant state involvement is only permitted through tribal-state compacts for class III gaming. The legislative history of the Indian Gaming Regulatory Act (IGRA) clearly indicates Congress's intent to establish strong preemptive authority over gaming activities on Indian lands. The Senate committee report explicitly states that IGRA aims to preempt state and tribal governance of such activities, suggesting that federal courts should not weigh competing interests in these matters. Although the committee did not formally reference complete preemption, it highlighted Congress's foresight in granting federal courts the role of adjudicating gaming-related issues. In comparing IGRA to other statutes like ERISA and the Labor Management Relations Act, the text notes that both statutes were deemed completely preemptive due to their explicit provisions for federal court jurisdiction. IGRA similarly contains multiple references to federal court jurisdiction, consistently omitting state courts from its language. This exclusive focus on federal courts signals Congress's intention for substantive challenges regarding Indian gaming to occur within the federal judicial system. Furthermore, the legislative history reveals that Congress recognized the historical complexities of federal and state jurisdiction over Native American lands. The Senate committee underscored that state jurisdiction does not extend to Indian lands without explicit congressional authorization and tribal consent. Thus, IGRA establishes a regulatory framework for Indian gaming that prohibits the unilateral imposition of state jurisdiction unless tribes agree to such arrangements through tribal-state compacts, reinforcing tribal sovereignty in the regulation of gaming activities. A tribal-State compact is the mechanism through which a tribe may seek to extend State jurisdiction and apply State laws to activities on Indian land, as outlined in S. 555. This legislation does not permit the extension of State jurisdiction for any other purposes. Any rights relinquished by tribal governments within a compact are specific to that tribe and do not affect other tribes' reserved rights or sovereignty. States have no authority over gaming unless explicitly granted by the Indian Gaming Regulatory Act (IGRA), which requires tribal-state compacts to apply State laws to gaming. These compacts are central to balancing the interests of the federal government, states, and tribes, established through federal law and requiring Secretary of the Interior approval. The influence of the Supreme Court case California v. Cabazon Band of Mission Indians on IGRA is significant, as it determined that states cannot impose regulations on Indian gaming when tribal and federal interests outweigh state concerns. The Court emphasized Indian sovereignty and self-governance over state interests like combatting organized crime. IGRA builds on the Cabazon decision by categorizing gaming into three classes and allowing states to prohibit certain gaming activities only if uniformly prohibited statewide, mandating tribal-state compacts for class III gaming. Congress aimed to balance competing interests in regulating gaming on Indian lands, affirming its authority over Indian affairs. S. 555 acknowledges tribal jurisdiction over bingo and card parlors, with oversight from the National Indian Gaming Commission, while allowing tribal and State governments to enter into compacts for class III gaming, including casinos and slot machines. Congress established a rigid jurisdictional framework under the Indian Gaming Regulatory Act (IGRA), prohibiting federal courts from individually assessing state, tribal, and federal interests in gaming regulation. States cannot enforce laws that regulate gaming but may enforce laws that prohibit specific classes of gaming. This structure aims to prevent inconsistent judicial outcomes, limiting state involvement unless negotiated through tribal-state compacts. The Wisconsin Gaming Compact adheres to this jurisdictional scheme, stating it does not alter civil jurisdiction unless explicitly stated. Complete preemption exists under IGRA, which can lead to the dismissal of all claims, despite courts' reluctance to leave plaintiffs without legal recourse. The intent of Congress, as evidenced by the statute and its legislative history, indicates that IGRA governs Indian gaming, with state regulation occurring within its parameters. The act's preemptive force is further supported by the context of Indian sovereignty, emphasizing federal and tribal interests. Congress holds exclusive authority over tribal matters, derived from the Indian Commerce Clause and treaty powers, reinforcing its plenary power in managing tribal relations. Indian sovereignty and jurisdiction have evolved, with the Supreme Court affirming that Indian commerce is exclusively controlled by the Federal Government. Native Americans benefit from ambiguity in legislation, which should be liberally construed in their favor. A less stringent test applies for preemption in Indian affairs due to unique federal and tribal interests. Unlike non-Indian cases where congressional intent is key, express intent is not necessary for Indian affairs. State jurisdiction is preempted if it conflicts with federal law and tribal interests unless state interests justify its assertion. This reflects ongoing federal support for tribal self-sufficiency and governance, emphasized in the Indian Gaming Regulatory Act (IGRA), which is designed to preempt the field of gaming on Indian lands. The claims in this case relate to Dorsey's representation of the nation regarding gaming license applications and must be assessed individually for preemption. Dorsey argues that any claim implicating Indian gaming regulation is preempted, while management companies contend that only claims requiring interpretation of IGRA should be preempted. The analysis of preemption scope draws parallels with ERISA preemption, where state laws relating to an employee benefit plan are generally preempted, while others may remain viable. IGRA's intent to preempt gaming governance on Indian lands serves as a foundational guideline for understanding congressional intent. Determining whether a claim interferes with tribal gaming governance hinges on the tribal licensing process regulated by the Indian Gaming Regulatory Act (IGRA). Tribes are required to conduct background checks and submit results to the National Indian Gaming Commission (NIGC), and any gaming ordinance must be approved by the NIGC. This licensing process is central to IGRA, which emphasizes the significant role of tribes in gaming regulation. Congress aimed to balance the interests of tribes, states, and the federal government through tribal-state compacts. If a state were to regulate the tribal licensing process outside this compact, it would disrupt this balance. Claims that affect a tribe's licensing process may be subject to complete preemption. Management companies assert their claims do not impact tribal regulation since they involve non-Indian parties, but this fails to recognize the tribe's relationship with Dorsey, which is engaged to assist in licensing decisions. Dorsey contends that the management companies' claims challenge the licensing outcomes, implicating tribal governance. References in the complaint to a "sham licensing process" suggest a coordinated effort to terminate the tribe's relationship with the management companies. The tribe has a vested interest in maintaining the integrity of its decisions against external scrutiny. IGRA reinforces tribal control over gaming to support their economic and political development. The tribe's gaming commission, established under IGRA, oversees the licensing procedures, and an appeals process exists for management companies to contest decisions internally. There is no provision in IGRA or the tribal-state compact allowing management companies to challenge the tribe's internal governmental decisions through state law. Ultimately, management companies engaged in the licensing process seeking a contract with the tribe recognize the tribe’s interest in consensual dealings. Tribes require the ability to engage agents, including legal counsel, to effectively regulate gaming. The expectation of loyalty and candor from these agents is crucial; if litigation could freely examine the attorney-client relationship, the tribe's access to candid legal advice would diminish, undermining the integrity of the licensing process. Congressional requirements for background checks could be compromised if lawyers are restricted in discussing findings from licensing investigations. Certain legal actions, even if the tribe is not a party, could adversely affect its gaming governance. Claims that interfere with a tribe's gaming regulation should be preempted under the Indian Gaming Regulatory Act (IGRA). The parties' briefs primarily addressed broad preemption issues without thoroughly considering that only specific claims might be preempted. Ruling on individual claims at this stage would be premature, though claims intruding on tribal gaming regulation or scrutinizing the relationship between Dorsey (the attorney) and the tribe carry a strong presumption of preemption under IGRA. Any state law applied to the tribal licensing process is impermissible unless a tribal-state compact allows it. Claims under state law that do not interfere with tribal governance may be valid, particularly those alleging violations of duties tied to attorney-client relationships. However, claims relating to Dorsey’s duties during the licensing process are likely fully preempted by IGRA and cannot be remanded to state court, even if they seem to involve state law issues. Dorsey contended that the district court erred in remanding count IX, which initially alleged a violation of the Indian Civil Rights Act (ICRA) but was amended to allege a conspiracy to violate ICRA. Dorsey argued that the amended count arose under federal law. The district court determined that no private right of action exists under ICRA in this context and recognized that the management companies stated a valid conspiracy claim under Minnesota law. The Supreme Court's decision in Merrell Dow established that a state law cause of action that merely incorporates federal law does not arise under federal law. In that case, the negligence claim was based on state law despite referencing a violation of the Food, Drug, and Cosmetic Act, which created a presumption of negligence. However, the current scenario differs because a conspiracy claim under Minnesota law is dependent on an underlying tort, meaning that liability stems from the tort committed by conspirators, not the conspiracy itself. The Minnesota court clarified that there is no independent civil action for conspiracy and recovery requires the pleading of substantive wrongs. The purpose of the conspiracy allegation is to establish vicarious liability and joint tortfeasor identification. In this context, the conspiracy claim arises under federal law for jurisdictional purposes, as it assesses whether the defendants conspired to commit an unlawful act. The Indian Civil Rights Act serves as the basis for the conspiracy claim, contrasting with Merrell Dow, where federal law was just one factor for determining negligence under state law. If state law conspiracy claims, based solely on federal violations, were considered to arise under state law, it would allow parties to evade federal question jurisdiction and establish causes of action where Congress did not intend any. The conclusion is that Count IX was appropriately removed to federal court as it presented a federal question, and remanding it to state court was incorrect due to the presence of federal questions. The district court's order is reversed, and the case is remanded for further proceedings, with the petition for a writ of mandamus dismissed. Additional context includes information about the ownership structure of Golden Nickel and its relationship to Gaming Corp, along with procedural details from 28 U.S.C. 1447 regarding remand motions and jurisdiction. An order remanding a case to state court from which it was removed is generally not subject to appeal, except for cases remanded under section 1443, which are reviewable. Count IX was amended post-removal to allege a conspiracy violating the Indian Civil Rights Act. Management companies cited cases where district courts remanded claims, asserting removal was improper and remand orders were unreviewable under 28 U.S.C. § 1447(d). Notable cases include Nutter v. Monongahela Power Co. and others that highlight the application of § 1447(c) in remands. In this instance, since there was no § 1447(c) remand, review is permitted. The Oneida Nation's lawsuit against New York for rental values of ceded properties was reviewed by the Supreme Court, which reversed lower court rulings, stating that possession issues raised federal questions necessitating reference to U.S. treaties and laws. A district court case, State of Kansas ex rel. Stephan v. Finney, involved the state attorney general determining the legality of Class III gaming, where the district court found that IGRA did not completely preempt state law, allowing state law questions to be resolved independently. Courts have noted IGRA's comprehensive nature in various rulings. Additionally, the Supreme Court deemed a subsection of IGRA unconstitutional under the Eleventh Amendment, which allowed tribes to sue states in federal court for negotiating compacts. The Court acknowledged that if California had prohibited bingo instead of regulating it, state criminal law would have been applicable, as established under Pub. L. 280, which grants certain states criminal jurisdiction over Indian lands. Under 18 U.S.C. 1162, the Supreme Court has established that states lack jurisdiction over Indian lands unless explicitly granted by Congress. In Worcester v. Georgia, the Court affirmed that Indian nations hold rights to their lands until extinguished by the United States, maintaining that their territories are distinct and protected from state laws. This principle was reiterated in Oneida Indian Nation of New York State v. County of Oneida. Dorsey advocates for the Mescalero test to determine complete preemption, but since the Indian Gaming Regulatory Act (IGRA) meets the stricter standard set by the Supreme Court in Metropolitan Life, the Mescalero test's applicability is not necessary. The management companies involved do not claim that Wisconsin's compact with the tribe aimed to alter control over the tribal licensing process; the compact's licensing criteria align with federal standards and allow the tribe to deny licenses regardless of state approval. The focus on how a claim affects tribal governance aligns with the Mescalero test about interference with federal and tribal interests. Finally, the management companies withdrew their appeal following a settlement with the tribe.