807 F.3d 184
7th Cir.2015Background
- The Lac du Flambeau Tribe’s wholly owned corporation issued $50M taxable gaming revenue bonds (2008) secured by casino revenues; Wells Fargo acted as trustee and Godfrey was bond counsel.
- This court previously held the trust indenture was an unapproved IGRA management contract and void (Wells Fargo v. Lake of the Torches), leaving open whether other bond documents and waivers were valid.
- Tribe sued in tribal court (2013) to declare the bond documents void under IGRA and tribal law; Tribal Council expanded tribal-court jurisdiction and appointed a Judge Pro Tempore.
- Financial purchasers (Stifel/Saybrook/LDF/Wells Fargo) and Godfrey sought a federal preliminary injunction to stop the tribal-court action, arguing forum-selection clauses, waivers of sovereign immunity, and lack of tribal jurisdiction.
- The district court preliminarily enjoined the tribal action as to the Financial Entities (but denied injunction to Godfrey). The Seventh Circuit affirmed in part, reversed in part, and remanded: it affirmed non-requirement of tribal exhaustion and valid tribal waivers, affirmed injunction for Financial Entities, and reversed/ remanded denial of injunction for Godfrey.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tribal-court exhaustion was required | Tribal Entities: exhaustion required because matter implicates tribal self-government and tribal-law issues | Financial Entities: forum-selection clauses and choice-of-law waivers show parties agreed to federal/state forum; exhaustion not required | Court: No exhaustion required (Altheimer & Gray controlling); forum-selection clauses dispositive |
| Whether Tribe waived sovereign immunity | Tribal Entities: waivers unenforceable (fraudulent inducement, insufficient language, or void under IGRA) | Financial Entities: Tribal and Bond Resolutions (and other docs) contain clear, broad waivers consenting to W.D. Wis. jurisdiction | Court: Waiver valid and enforceable; resolutions are independent waivers not void as management contracts |
| Whether Bond Documents are unapproved IGRA management contracts (thus void) | Tribal Entities: all bond documents constitute a single management contract tied to the void Indenture, so waivers void ab initio | Financial Entities: only the Indenture was a management contract; collateral documents must independently meet the management-contract test | Court: Applied Wells Fargo precedent — collateral docs are not automatically management contracts; Tribal and Bond Resolutions are not unapproved management contracts |
| Godfrey’s ability to invoke forum-selection clauses and federal jurisdiction | Tribal Entities: Godfrey not a party to bond docs; lacks standing to enforce forum clauses; district court lacked federal question jurisdiction over state-law-based forum argument | Godfrey: as bond counsel closely tied to transaction, it is closely related and has affiliation/mutuality to invoke forum clauses; challenge to tribal jurisdiction raises federal question | Court: Federal question jurisdiction exists (National Farmers Union); Godfrey may invoke forum-selection clauses as a closely related nonparty — remanded for full PI-factor analysis |
Key Cases Cited
- Wells Fargo Bank v. Lake of the Torches Econ. Dev. Corp., 658 F.3d 684 (7th Cir. 2011) (held indenture was an unapproved IGRA management contract and void)
- Altheimer & Gray v. Sioux Mfg. Corp., 983 F.2d 803 (7th Cir. 1993) (tribal-exhaustion doctrine does not apply when parties contractually choose nontribal forum)
- Montana v. United States, 450 U.S. 544 (U.S. 1981) (limits on tribal civil jurisdiction over nonmembers and two narrow exceptions)
- National Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845 (U.S. 1985) (challenge to tribal court jurisdiction presents a federal question under §1331)
- Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316 (U.S. 2008) (Montana exceptions are narrow; tribal authority centers on land and internal governance)
- Strate v. A-1 Contractors, 520 U.S. 438 (U.S. 1997) (limits on tribal adjudicatory jurisdiction over nonmembers and application of Montana)
- Nevada v. Hicks, 533 U.S. 353 (U.S. 2001) (tribal regulatory authority governed by Montana; land ownership is one factor not dispositive)
- Adams v. Raintree Vacation Exchange, LLC, 702 F.3d 436 (7th Cir. 2012) (nonparty may enforce forum-selection clause if closely related to contract via affiliation or mutuality)