Iowa Management v. Sac & Fox Tribe ( 2000 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 99-2538
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Iowa Management & Consultants, Inc., *
*
Appellant, *
* Appeal from the United States
v. * District Court for the Northern
* District of Iowa.
Sac & Fox Tribe of the Mississippi in *
Iowa, Meskwaki Nation, *
*
Appellee. *
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Submitted: January 12, 2000
Filed: March 23, 2000
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Before HANSEN, BRIGHT, and FAGG, Circuit Judges.
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FAGG, Circuit Judge.
The Sac & Fox Tribe of the Mississippi in Iowa, Meskwaki Nation (Tribe)
moved successfully to dismiss Iowa Management & Consultants, Inc.'s (IMCI)
complaint. IMCI appeals, and we affirm.
IMCI contracted to provide certain gaming-related services to the Tribe, but the
relationship ultimately soured and the Tribe suspended the agreement. After IMCI
sought arbitration under the agreement's binding arbitration clause, the Tribe requested
dismissal of the arbitration proceedings, claiming the agreement was a management
contract that required approval by the National Indian Gaming Council (NIGC), see 25
U.S.C. § 2711 (1994); 25 C.F.R. § 533.1 (1999), that the required approval had not
been obtained, and that the agreement was thus void, see id. § 533.7. The arbitration
panel concluded that it did not have jurisdiction over the matter and that the contract
issues had to be resolved elsewhere.
IMCI then filed a complaint in federal district court, alleging the agreement "was
breached when the Tribe 'suspended' it" (Compl. ¶ 4) and requesting an order
compelling both arbitration and the establishment of an escrow account under the terms
of the agreement. IMCI also alleged:
The Tribe's contention is, apparently, that the [agreement] is void as
between the parties and therefore [the Tribe] cannot be forced to continue
with arbitration. . . . The [agreement], contrary to the Tribe's contention,
is a binding and valid Consulting Agreement, not a management contract,
which did not need NIGC approval and is otherwise enforceable against
the Tribe in every respect. . . . A federal question (i.e., is the [agreement]
the type of contract which needs NIGC approval) has now been raised by
the Tribe which must first be resolved before arbitration can continue.
(Compl. ¶¶ 7, 8, 11.) The district court granted the Tribe's motion to dismiss the
complaint for lack of subject matter jurisdiction, concluding IMCI did not present a
federal question in its affirmative allegations and instead impermissibly relied on the
Tribe's anticipated defense to create federal question jurisdiction.
On appeal, IMCI contends the district court improperly concluded IMCI's
complaint failed to state a federal question creating subject matter jurisdiction under 28
U.S.C. § 1331. We disagree. "The presence or absence of federal [] question
jurisdiction is governed by the 'well-pleaded complaint' rule," which provides that the
plaintiff's claim itself must present a federal question "'unaided by anything alleged in
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anticipation of avoidance of defenses which it is thought the defendant may interpose.'"
Oklahoma Tax Comm'n v. Graham, 489 U.S. 838, 840-41 (1989) (citation omitted);
accord Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 10
(1983). Here, IMCI alleges a routine contract action involving the Tribe, a matter over
which federal courts do not have jurisdiction, see TTEA v. Ysleta del Sur Pueblo, 181
F.3d 676, 681 (5th Cir. 1999), and IMCI's anticipatory contention that the Tribe may
invoke the provisions of IGRA as a defense is insufficient to confer federal question
jurisdiction on this court, see id. IMCI's allegation that it is entitled to arbitration under
the Federal Arbitration Act (FAA) also fails to present a federal question because the
FAA "does not create . . . federal [] question jurisdiction [absent] . . . some other
independent basis for federal jurisdiction." Moses H. Cone Mem'l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 25 n.32 (1983).
We thus affirm the district court's dismissal of IMCI's complaint for lack of
subject matter jurisdiction.
BRIGHT, Circuit Judge, dissenting.
I agree with the fundamental importance of the well-pleaded complaint rule. I
also agree that routine, Indian-related contract disputes are not generally matters for the
federal courts. But IMCI's action against the Tribe is not a routine matter, and the well-
pleaded complaint rule has no application here. Indeed, IMCI's complaint makes out
a cause of action over which the district court should exercise jurisdiction, and I
therefore dissent.
The majority opinion quotes from the complaint to support the conclusion that
IMCI relied on the Tribe's "anticipated defense" to establish jurisdiction. When read
in context, however, the quoted language does not purport to establish an affirmative
allegation but rather serves as an informative aside, succinctly describing for the district
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court just how the parties came before it. We must look beyond these passages and
consider what this lawsuit is really about.
First, the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. §§ 2701-2721,
was expressly intended to "preempt the field in the governance of gaming activities on
Indian lands." S.Rep. No. 446, 100th Cong., 2d Sess. 6 (1988), reprinted in 1988
U.S.C.C.A.N. 3076. Thus, management agreements for gaming operations, such as the
agreement at issue here, incorporate the terms of the IGRA by operation of law. See
Tamiami Partners v. Miccosukee Tribe of Indians, 63 F.3d 1030, 1047 (11th Cir. 1995).
As a result, disputes arising under such management agreements are disputes arising
under the laws of the United States for which the district courts enjoy jurisdiction via
28 U.S.C. § 1331. See id.
Second, even if that were not the case, IMCI pleaded a declaratory judgment
action. At bottom, its complaint makes an affirmative request for a declaration of its
right to arbitrate under the contract. (Compl. ¶12). Although the declaratory judgment
statute, 28 U.S.C. § 2201, does not alone offer an independent basis for jurisdiction,
a federal court's jurisdiction will nevertheless be established in such an action when
other grounds for exercising jurisdiction are present. See TTEA v. Ysleta del Sur
Pueblo, 181 F.3d 676, 681 (5th Cir. 1999). Additionally, the IGRA has been held to
support jurisdiction for the issuance of a declaratory judgment. See Oneida Tribe of
Indians of Wis. v. State of Wisconsin, 951 F.2d 757 (7th Cir. 1991) (actual controversy
under the Act warrants declaratory judgment). Most importantly for our purposes, an
independent basis for jurisdiction in declaratory judgment actions may be established
from the perspective of the declaratory defendant. Indeed, as the Supreme Court has
noted, even where declaratory plaintiffs have not otherwise established a basis for
jurisdiction, "[f]ederal courts have regularly taken original jurisdiction over declaratory
judgment suits in which, if the declaratory judgment defendant[] brought a coercive
action to enforce its rights, that suit would necessarily present a federal question."
Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 19 (1983)
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(noting that this approach is consistent with the nature of the declaratory remedy itself).
Put another way:
To establish an independent basis for jurisdiction . . . the plaintiff
need not show that it would state a claim absent the declaratory judgment
statute. Rather, it may show that there would be jurisdiction over a claim
against it.
TTEA, 181 F.3d at 681 (citing 10B Charles A. Wright et al., Federal Practice and
Procedure § 2767, at 651 (1998)). Thus, to establish federal jurisdiction over its own
suit for declaratory judgment, IMCI needed only to show that were IMCI the defendant
in an action brought by the Tribe under the contract, jurisdiction would lie in the federal
courts. In my view IMCI has made the necessary showing.
Finally, it is important to recognize that the specific declaration sought by IMCI
in this case concerns the validity of the arbitration clause in its contract with the Tribe.
This circuit has held that, in the absence of clear and unmistakable evidence to the
contrary, a question regarding the validity of an arbitration clause is not itself subject
to arbitration and is instead a matter for the courts. McLaughlin Gormley King Co. v.
Terminix Int'l Co., L.P., 105 F.3d 1192, 1193-94 (8th Cir. 1997) (citing First Options
of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). As a practical matter then,
there is no other forum in which IMCI may vindicate its rights.
For these reasons, IMCI's complaint against the Tribe establishes jurisdiction in
the federal district court to declare the rights of the parties under the contract and to
resolve the federal questions relating to the application of the IGRA to the parties'
contractual arrangements. I would reverse and remand this case to the district court for
trial.
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A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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