State of Wisconsin v. Ho-Chunk Nation

In the
United States Court of Appeals
For the Seventh Circuit
____________

No. 07-1584
STATE OF WISCONSIN,
Plaintiff-Appellee,
v.

HO-CHUNK NATION,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 05-C-0632-S—John C. Shabaz, Judge.
____________
ARGUED OCTOBER 24, 2007—DECIDED JANUARY 14, 2008
____________

Before FLAUM, MANION, and WILLIAMS, Circuit Judges.
FLAUM, Circuit Judge. The State of Wisconsin (“the
State”) and the Ho-Chunk Nation (“the Nation”) are
embroiled in a dispute over the validity of certain provi-
sions in the parties’ gaming compact (“the Compact”) in
light of two decisions by the Wisconsin Supreme Court.
Efforts to resolve this dispute through the arbitration
process set forth in the Compact stalled, leading the
State to bring suit in the Western District of Wisconsin
to compel arbitration. The district court exercised juris-
diction over the suit and appointed an arbitrator, but on
appeal, this Court concluded that federal subject matter
jurisdiction was lacking, noting that the Indian Gaming
Regulatory Act of 1988 (“IGRA”) conferred jurisdiction in
2 No. 07-1584

three specific instances, none of which were implicated
by the case at hand. The State then filed an amended
complaint in district court, this time including a claim to
enjoin the Nation’s class III gaming due to alleged vio-
lations under the Compact pursuant to 25 U.S.C.
§ 2710(d)(7)(A)(ii), one of the three provisions explicitly
granting federal courts jurisdiction under the IGRA. The
district court found that subject matter jurisdiction ex-
isted under this provision. The court also determined as
part of its summary judgment order that the Wisconsin
Supreme Court’s decisions did not invalidate the provi-
sions in the Compact. This interlocutory appeal by the
Nation followed. For the following reasons, we affirm that
the district court had jurisdiction over the suit and that
the Nation’s sovereign immunity was abrogated by Con-
gress and waived by the Nation. In addition, we partially
vacate and remand the lower court’s ruling on the
Nation’s motion for summary judgment so that the dis-
trict court may first determine whether any of the
State’s claims are subject to arbitration.

I. Background
In 1992, the Ho-Chunk Nation, known at the time as the
Wisconsin Winnebago Tribe, and then-Governor Tommy
Thompson, acting on behalf of the State of Wisconsin,
entered into a gaming compact pursuant to the IGRA. This
Compact permitted the Nation to conduct certain “class
III” gaming, as defined in the IGRA.1 The parties amended
the Compact in 1998, and did so a second time in 2003.
This “Second Amendment” was the result of negotiations
between the Nation and Governor James Doyle, and was

1
For an overview of the IGRA’s purpose, history, and effect on
Tribal-State compacting, see COHEN’S HANDBOOK OF FEDERAL
INDIAN LAW § 12 (Matthew Bender & Company 2005).
No. 07-1584 3

approved by the Secretary of the Interior by operation of
law, since the Secretary took no action on it within forty-
five days of its submission for approval. 25 U.S.C.
§ 2710(d)(8)(C). The Second Amendment expanded the
Nation’s class III gaming to include various Vegas-style
games and increased revenue-sharing between the
Nation and the State. The validity of certain provisions
in the Second Amendment is the focus of the parties’
dispute.
When the parties initially amended the Compact in 1998,
they included a revenue-sharing provision. The Second
Amendment greatly expanded this revenue-sharing
agreement. The Nation agreed to pay $30 million a year
to the State from July 2003-July 2005. After that, the
Nation would pay the State an annual percentage of its
net win unless either party requested renegotiations. In
consideration for these payments, the State agreed to a
perpetual term for the Compact, an indemnification clause
protecting the Nation from off-reservation gaming, and
permission by the Governor for the Nation to pursue
gaming at a fourth site. With respect to the Second Amend-
ment’s Duration clause, the Compact would remain in
force in perpetuity unless the parties mutually consented
to termination or if the Nation passed a resolution revok-
ing its authority to engage in class III gaming. The
Second Amendment also provided that if this Duration
provision were found invalid or unenforceable “by a court
of competent jurisdiction,” the Nation would no longer
be required to make payments to the State. The parties
would then be required to renegotiate those invalidated
provisions pursuant to the Dispute Resolution and Sover-
eign Immunity provisions in the Compact. The Second
Amendment also required that the parties follow a similar
renegotiation process if a court found provisions regard-
ing the “Scope of Games” or “Payment to the State” to
be invalid, and stated that if any other portion of the
4 No. 07-1584

Second Amendment were found invalid, the parties
would renegotiate in good faith upon either party’s re-
quest. Coupled with these dispute resolution requirements
was a provision governing the parties’ sovereign immunity,
which both the State and Nation waived with respect to
any claim brought by either party to enforce any provision
of the Compact.
On May 13, 2004, the Wisconsin Supreme Court decided
Panzer v. Doyle, 680 N.W.2d 666 (Wis. 2004), abrogated in
part by Dairyland Greyhound Park, Inc. v. Doyle, 719
N.W.2d 408 (Wis. 2006), which addressed the validity of
certain provisions in a gaming compact between the
State and the Forest County Potawatomi. The Wisconsin
Supreme Court made three holdings in the case: (1) the
Governor lacked authority to commit the State to com-
pacts lasting in perpetuity; (2) much of the expansion of
class III gaming in 2003 was prohibited by the Wisconsin
constitution and criminal code; and (3) the Governor
lacked inherent or delegated authority to waive the
State’s sovereign immunity. Id. at 701. The court then ex-
pressed its expectation that the parties would renego-
tiate the amendments to the compact voided by the
court’s decision. Id.
The Panzer decision cast doubt on the legitimacy of the
Compact between the State and the Nation, since the
Second Amendment contained duration, class III gaming,
and sovereign immunity clauses nearly identical to
those invalidated by the Wisconsin Supreme Court. The
Nation and State, however, disagreed as to whether the
terms of their Compact were immediately invalidated
by Panzer, or whether they continued to remain in effect
until a court decision was issued with respect to their
specific Compact. The Nation took the former position and
altered its conduct accordingly. Thus, the Nation: (1)
ceased operation of class III gaming added under the
Second Amendment; (2) stopped its payments to the
No. 07-1584 5

State pursuant to the clause permitting the Nation to do
so if the Duration provision were found invalid “by a court
of competent jurisdiction”; and (3) deemed the State’s
sovereign immunity revoked, which under the Nation’s
reading of the Compact, served to automatically revoke
its waiver of immunity as well. The State, however, took
the latter position, and therefore contended that all
the provisions in the Compact were still valid, including
the Nation’s required revenue-sharing payments to the
State.
The parties began to renegotiate the Compact provi-
sions implicated by Panzer, but these efforts stalled,
leading the Nation to submit a complaint in arbitration
on June 23, 2005. After efforts to find a mutually accept-
able arbitrator also failed, the State filed suit on October
28, 2005 in the Western District of Wisconsin, requesting
that the court appoint an arbitrator. The court, over the
Nation’s objections, found that it had jurisdiction and
appointed the Honorable William A. Norris, a retired
federal judge, as arbitrator. The Nation appealed the
denial of its motion to dismiss with this Court. While the
appeal was pending, the parties began arbitration before
Judge Norris, but stayed the proceedings in May 2006
pending this Court’s decision on the Nation’s appeal and
the Wisconsin Supreme Court’s forthcoming opinion in
Dairyland Greyhound Park, Inc. v. Doyle, 719 N.W.2d
408 (Wis. 2006).
On July 14, 2006, the Wisconsin Supreme Court decided
Dairyland Greyhound Park, in which it determined that
amendments to gaming compacts were governed by
the language of the Wisconsin Constitution as it existed
when the original compacts were entered into. Id. at 442.
This decision resulted in Panzer being partially over-
turned, in that nothing barred the State from negotiating
with tribes over class III gaming so long as the original
compact pre-dated the 1993 Amendment to the Wisconsin
6 No. 07-1584

Constitution. Id. at 443. As a result of this decision, the
Nation reinstated the class III games it had stopped
operating after the Panzer decision.
This Court decided the Nation’s appeal on September 1,
2006, holding that the district court lacked subject
matter jurisdiction over the suit. State of Wisconsin v. Ho-
Chunk Nation, 463 F.3d 655 (7th Cir. 2006) (“Ho-Chunk
I”). This Court noted that the Federal Arbitration Act
(“FAA”) did not itself provide a basis for jurisdiction, and
further determined that there was not an independent
basis for federal jurisdiction in this case, since none of
the three instances in the IGRA where Congress explicitly
conferred federal jurisdiction were pled, and this could
not be said to be a case arising under federal law. Id.
at 659-61.
Following this Court’s decision in Ho-Chunk I, the
State then filed an amended complaint in the Western
District of Wisconsin which included eight causes of
action related to the Nation’s alleged withholding of
revenue-sharing payments and failure to arbitrate. Unlike
the State’s initial complaint, the amended complaint
included a claim pursuant to 25 U.S.C. § 2710(d)(7)(A)(ii)
of the IGRA, one of the three specific instances where
the Act granted federal jurisdiction. Under this cause of
action the State sought to enjoin the Nation’s class III
gaming on the basis of its alleged Compact violations. The
amended complaint also included a claim for breach of
contract and sought declarations that the Nation was
in violation of the IGRA, that the State had complied
with the IGRA by negotiating in good faith, and that the
Nation must pay all current and future amounts due
under the Compact’s revenue-sharing provision. Finally,
the State brought claims for the court to compel arbitra-
tion for all arbitrable claims, reappoint Judge Norris as
arbitrator, and stay the action pending the arbitrator’s
award.
No. 07-1584 7

The Nation for its part, brought counterclaims against
the State for breach of contract and violations of the IGRA,
requesting that the court order the parties to engage in
negotiations according to the procedures set forth in the
IGRA. The Nation then brought a motion to dismiss or,
alternatively, for summary judgment regarding the
State’s amended complaint. With respect to federal
jurisdiction, the Nation contended that 25 U.S.C.
§ 2710(d)(7)(A)(ii), which grants federal courts jurisdic-
tion over a claim by a State to “enjoin a class III gaming
activity . . . conducted in violation of any Tribal-State
compact,” was inapplicable in this case and moreover,
that the Nation’s sovereign immunity barred the district
court from hearing the case on any other basis. In the
alternative, the Nation also moved for summary judg-
ment, claiming that in light of the Panzer and Dairyland
Greyhound Park decisions, it was not acting in violation of
the Compact. The Nation also contested the State’s
efforts to compel arbitration, claiming that the Compact’s
Dispute Resolution provision was preempted by the
IGRA and was not covered by the FAA.
On March 9, 2006, the district court issued its memoran-
dum and order on the Nation’s motions. The district
court adopted the State’s interpretation of 25 U.S.C.
§ 2710(d)(7)(A)(ii), and thus found that it had jurisdic-
tion over the State’s claim to enjoin the Nation’s class III
gaming activity. The court then exercised supplemental
jurisdiction pursuant to 28 U.S.C. § 1367 over the State’s
remaining claims. The district court then turned to the
Nation’s motion for summary judgment. With respect to
the Panzer decision’s effect on the Compact, the district
court determined that the Wisconsin Supreme Court’s
decision did not serve as a finding “by a court of competent
jurisdiction” that the Second Amendment’s Duration
provision was invalid or unenforceable. This finding served
to moot the Nation’s preemption claim regarding renegoti-
8 No. 07-1584

ation under the IGRA, since it was unnecessary for the
parties to renegotiate any of the Compact’s provisions. As
to the Nation’s other arguments on summary judgment,
the district court determined that federal jurisdiction
did exist for the State’s claim seeking a declaration it
acted in good faith and denied the Nation’s claim that
the FAA was inapplicable. The district court, however,
did grant the Nation’s motion for summary judgment on
one ground, determining that the State had failed to
provide sufficient evidence to support a finding that the
Nation had refused to negotiate or arbitrate under the
terms of the Compact.
Although the district court’s memorandum and order did
not constitute a final decision for purposes of appellate
jurisdiction, see 28 U.S.C. § 1291, the Nation argues that
the district court’s finding that the suit was not barred
by the Nation’s sovereign immunity is appealable under
the collateral order doctrine. The Nation has thus
brought this interlocutory appeal, claiming: (1) that 25
U.S.C. § 2710(d)(7)(A)(ii) did not grant the district court
jurisdiction or abrogate the Nation’s sovereign immunity;
and (2) that the district court erred in finding that the
Panzer decision did not affect the Compact’s terms.

II. Analysis
A. Appellate Jurisdiction
As a threshold issue, we have to determine whether
we have appellate jurisdiction over this appeal. As a
general matter, this Court may only hear appeals “from
all final decisions of the district courts.” 28 U.S.C.
§ 1291. This rule, however, is not without exception, and
the “collateral order doctrine” provides that certain
decisions “are immediately appealable because they
‘finally determine claims of right separable from, and
No. 07-1584 9

collateral to, rights asserted in the action, too important
to be denied review and too independent of the cause
itself to require that appellate consideration be deferred
until the whole case is adjudicated.’ ” Behrens v. Pelletier,
516 U.S. 299, 305, 116 S. Ct. 834, 133 L. Ed. 2d 773 (1996)
(quoting Cohen v. Beneficial Industrial Loan Corp., 337
U.S. 541, 546, 93 L. Ed. 1528, 69 S. Ct. 1221 (1949)). Here,
although the district court’s decision was not final, the
Nation asserts that the issues it is appealing implicate
the Nation’s sovereign immunity from suit, a subject it
contends falls under the scope of the collateral order
doctrine.
Tribal sovereign immunity is “a necessary corollary
to Indian sovereignty and self-governance,” Three Affili-
ated Tribes of Fort Berthold Reservation v. Wold Engineer-
ing, P. C., 476 U.S. 877, 894, 90 L. Ed. 2d 881, 106 S. Ct.
2305 (1986), and extends to suits for injunctive or declara-
tory relief. Imperial Granite Co. v. Pala Band of Mission
Indians, 940 F.2d 1269, 1271 (9th Cir. 1991) (citing Santa
Clara Pueblo v. Martinez, 436 U.S. 49, 59, 56 L. Ed. 2d
106, 98 S. Ct. 1670 (1978)). “Suits against Indian tribes
are thus barred by sovereign immunity absent a clear
waiver by the tribe or congressional abrogation.”
Oklahoma Tax Comm’n v. Citizen Band Potawatomi
Indian Tribe, 498 U.S. 505, 509, 111 S. Ct. 905, 909, 112 L.
Ed. 2d 1112 (1991). A district court’s determination that
a tribe’s sovereign immunity has been waived by the tribe
or abrogated by Congress falls within the ambit of the
collateral order doctrine as applied by this Court:
Since sovereign immunity is an immunity from trial
and the attendant burdens of litigation, and not just
a defense to liability on the merits, the denial of a
claim of sovereign immunity is an immediately
appealable interlocutory order under the “collateral
order doctrine” of Cohen v. Beneficial Industrial Loan
10 No. 07-1584

Corp., 337 U.S. 541, 545-47, 69 S. Ct. 1221, 1225-26,
93 L. Ed. 1528 (1949).
Enahoro v. Abubakar, 408 F.3d 877, 880 (7th Cir. 2005)
(quoting Rush-Presbyterian-St.Luke’s Medical Center v.
The Hellenic Republic, 877 F.2d 574, 576 n.2 (7th Cir.
1989)).
Although a denial of the Nation’s sovereign immunity
is immediately appealable under the collateral order
doctrine, the State contends that this Court should not
consider the two specific issues raised by this Nation on
appeal. The first issue appealed by the Nation is the
district court’s finding that it had jurisdiction over the
State’s second cause of action pursuant to 25 U.S.C.
§ 2710(d)(7)(A)(ii), which grants federal courts jurisdic-
tion over suits “by a State . . . to enjoin a class III gaming
activity . . . conducted in violation of any Tribal-State
compact entered into under paragraph (3).” The State
has filed a jurisdictional memorandum with this Court
contending that this appeal is frivolous and should be
dismissed. This argument is without merit. The State
mischaracterizes the Nation’s claim as questioning
courts’ interpretation that 25 U.S.C. § 2710(d)(7)(A)(ii)
serves as a congressional abrogation of tribal sovereign
immunity. See Florida v. Seminole Tribe of Florida, 181
F.3d 1237, 1242 (11th Cir. 1999); see also Kiowa Tribe of
Oklahoma v. Manufacturing Technologies, Inc., 523 U.S.
751, 758, 118 S. Ct. 1700, 140 L. Ed. 2d 981 (1998). The
Nation however, does not question these holdings, but
rather argues as a matter of statutory interpretation that
its alleged Compact violations do not provide the State
with a cause of action under 25 U.S.C. § 2710(d)(7)(A)(ii).
This is an unsettled question of law, and we reject the
State’s argument that it is frivolous.
The State also contends that this Court should not
consider the Nation’s second claim on appeal—that the
No. 07-1584 11

district court erred in determining that the Wisconsin
Supreme Court’s decision in Panzer did not constitute
a finding “by a court of competent jurisdiction” that the
Second Amendment’s Duration provision was invalid
or unenforceable. Because this argument is moot if we
find that the district court did not have federal jurisdic-
tion pursuant to 25 U.S.C. § 2710(d)(7)(A)(ii), we first turn
to address the proper interpretation of § 2710(d)(7)(A)(ii).

B. Federal Jurisdiction Under 25 U.S.C.
§ 2710(d)(7)(A)(ii)
In response to Ho-Chunk I, where this Court deter-
mined that no federal jurisdiction existed over the suit,
the State included a claim in its amended complaint
to enjoin the Nation’s class III gaming pursuant to
25 U.S.C. § 2710(d)(7)(A)(ii), one of the three specific
congressional grants of federal jurisdiction in the IGRA.
See Ho-Chunk I, 463 F.3d at 660 (quoting 25 U.S.C.
§ 2710(d)(7)(A)(i)-(iii)). The parties also agree that
25 U.S.C. § 2710(d)(7)(A)(ii), in addition to conferring
federal jurisdiction, also serves as a congressional abroga-
tion of tribal sovereign immunity. See Seminole Tribe of
Florida, 181 F.3d at 1242 (With respect to 25 U.S.C.
§ 2710(d)(7)(A)(ii), it is “clear that Congress abrogated
tribal immunity only in the narrow circumstance in
which a tribe conducts class III gaming in violation of
an existing Tribal-State compact.”); see also Kiowa Tribe of
Oklahoma, 523 U.S. at 758 (“[Congress] has restricted
tribal immunity from suit in limited circumstances.”)
(citing 25 U.S.C. § 2710(d)(7)(A)(ii)). Therefore, the Na-
tion’s sovereign immunity is inextricably wrapped up
with the question of federal subject matter jurisdiction
under the IGRA. We review questions involving these
issues de novo. Samirah v. O’Connell, 335 F.3d 545, 548
(7th Cir. 2003) (“We review de novo the existence of sub-
12 No. 07-1584

ject matter jurisdiction.”); Nelson v. LaCrosse County
Dist. Attorney, 301 F.3d 820, 825 (7th Cir. 2002) (grant or
denial of sovereign immunity, in that case invoked by a
state, is reviewed de novo).
The issue of whether the State properly brought a claim
against the Nation pursuant to 25 U.S.C. § 2710(d)(7)
(A)(ii) is purely a matter of statutory interpretation. The
provision provides:
The United States district courts shall have jurisdic-
tion over— . . .
(ii) any cause of action initiated by a State or
Indian tribe to enjoin a class III gaming activity
located on Indian lands and conducted in violation
of any Tribal-State compact entered into under
paragraph (3) that is in effect, . . .
25 U.S.C. § 2710(d)(7)(A)(ii). Here, the State brought a
claim to enjoin the Nation’s class III gaming on the
basis of the Nation’s refusal to pay the amounts
allegedly due under the Compact’s revenue-sharing
agreement and the Nation’s alleged refusal to submit to
binding arbitration. The sole issue for this Court to decide
is whether this alleged conduct by the Nation constitutes
the type of compact violation for which an injunction
may be granted under this provision.
The district court offered a straightforward interpreta-
tion of 25 U.S.C. § 2710(d)(7)(A)(ii), based on the plain
text of that provision, that is similarly adopted by the
State on this appeal. According to this interpretation, the
statutory language permitting “a State . . . to enjoin a class
III gaming activity . . . conducted in violation of any Tribal-
State compact,” means that the State is able to sue to
enjoin class III gaming whenever “the Tribe fails to comply
with the requirements of the compact.” Wisconsin v. Ho-
Chunk Nation, 478 F. Supp. 2d 1093, 1097 (W.D. Wis.
No. 07-1584 13

2007). Under this reading of the statute, the district court
found, and the State argues on appeal, that the claim was
proper in that it sought to enjoin the Nation’s class III
gaming for the Nation’s alleged failure to comply with the
Compact’s revenue-sharing and dispute resolution provi-
sions. The State supports its position by drawing attention
to other provisions in the IGRA, which reflect that class III
gaming is only permitted when performed in accord with
a Tribal-State compact. 25 U.S.C. § 2710(d)(1)(C) (“Class
III gaming activities shall be lawful on Indian lands only
if such activities are . . . conducted in conformance with a
Tribal-State compact entered into by the Indian tribe and
the State under paragraph (3) that is in effect.”) (emphasis
added); 25 U.S.C. § 2710(d)(2)(C) (“class III gaming
activity on the Indian lands of the Indian tribe shall be
fully subject to the terms and conditions of the Tribal-State
compact entered into under paragraph (3) by the Indian
tribe that is in effect.”) (emphasis added). The State thus
contends that because class III gaming only exists by
virtue of the compact permitting it, it is appropriate for
such gaming to be enjoined whenever the Nation violates
the Compact’s terms.
The Nation argues that the State’s interpretation of
25 U.S.C. § 2710(d)(7)(A)(ii) is too broad in scope, and
offers an alternative interpretation, which it claims is
consistent with the plain text of the statute and the
broader purposes of the IGRA. According to the Nation, the
provision’s language granting district courts jurisdic-
tion over claims brought by a State “to enjoin a class III
gaming activity . . . conducted in violation of any Tribal-
State compact,” means that jurisdiction exists for states
to enjoin a tribe’s class III gaming when that gaming is
being conducted in a manner that violates compact provi-
sions that prescribe how the games are to be played. Under
this reading, jurisdiction for injunctive relief would only
exist for compact violations directly related to the opera-
14 No. 07-1584

tion of class III gaming. Therefore, the provision’s applica-
bility would be limited to compact violations such as the
playing of unauthorized games, the playing of games at
unauthorized locations or during unauthorized hours, or
the wagering of bets outside the agreed upon betting
limits. According to the Nation, the alleged violations
for which the State seeks an injunction—nonpayment of
funds and failure to arbitrate—are not directly related
to the conduct of class III gaming and thus would not
provide a basis for jurisdiction.
This interpretation of 25 U.S.C. § 2710(d)(7)(a)(ii) is
more nuanced than that offered by the State, and the
Nation attempts to bolster its reading of the provision by
referencing the broad purposes of the IGRA. The Act sets
forth three purposes for its enactment: (1) to provide for
Indian gaming for purposes of “promoting tribal economic
development, self-sufficiency, and strong tribal govern-
ments”; (2) to provide for the regulation of Indian gaming
in order to protect it from organized crime, guarantee
the tribe is the primary beneficiary of the gaming, and
“to assure that gaming is conducted fairly and honestly”;
and (3) to create a federal means for regulating Indian
gaming. 25 U.S.C. § 2702. The Nation argues that because
the State is the party seeking an injunction under
25 U.S.C. § 2710(d)(7)(A)(ii), jurisdiction for injunctive
relief is only appropriate when state interests under the
IGRA are implicated. Referencing the purposes of the
Act as set forth in 25 U.S.C. § 2702, the Nation con-
tends that state interests are limited to ensuring gam-
ing is conducted fairly and without the influence of
organized crime, and does not extend to the protection of
the State’s financial interests under the Compact’s
revenue-sharing agreement. It would violate the plain text
of 25 U.S.C. § 2710(d)(7)(A)(ii), however, to narrowly
interpret that provision so as to only reflect state inter-
ests. Although the State of Wisconsin is the party bringing
No. 07-1584 15

suit under 25 U.S.C. § 2710(d)(7)(A)(ii) in this particular
case, the language of that section clearly provides that
federal jurisdiction exists over “any cause of action initi-
ated by a State or Indian tribe to enjoin a class III gaming
activity.”2 25 U.S.C. § 2710(d)(7)(A)(ii) (emphasis added).
While the Nation’s interpretation of 25 U.S.C.
§ 2710(d)(7)(A)(ii) is unduly narrow in scope, the State’s
interpretation suffers from the same flaw at the opposite
end of the spectrum. According to the State and district
court’s reading of 25 U.S.C. § 2710(d)(7)(A)(ii), a state
may enjoin class III gaming for any violation of a Tribal-
State compact. Some provisions included in tribal-state
compacts however, are rather far afield from any of
the state or tribal interests for which the IGRA was
intended. See 25 U.S.C. § 2702. For example, the Compact
between the State and the Nation includes a provision

2
At oral argument, the Nation contended that Congress
included Indian tribes as a party able to seek an injunction
under 25 U.S.C. § 2710(d)(7)(A)(ii) because at the time the IGRA
was enacted, the Act grandfathered in certain tribes that had
licensed their gaming operations to individual Indians, and
Congress wanted to ensure that the tribal governments had a
means of enjoining any illegal gaming activity conducted by
these individuals. We note that such an interpretation is not
evident from the plain text of the provision and that the Nation
has not provided any specific citation to the legislative history
to support its view. Furthermore, regardless of the reason
Congress included Indian tribes in this section, courts have
applied 25 U.S.C. § 2710(d)(7)(A)(ii) so as to permit a suit
brought by a tribe to enjoin class III gaming conducted in
violation of a Tribal-State compact. See In re Sac & Fox Tribe of
the Miss. in Iowa/Meskwaki Casino Lit., 340 F.3d 749 (8th Cir.
2003) (holding that the tribe’s elected council had jurisdiction
under 25 U.S.C. § 2710(d)(7)(A)(ii) to bring a suit against the
tribe’s appointed council to enjoin the appointed council’s al-
leged illegitimate operation of a casino under the terms of the
tribe’s compact with the State of Iowa).
16 No. 07-1584

whereby the Nation will contribute to rehabilitating
the Badger Army Ammunition Base near Baraboo, Wis-
consin. Under the State’s interpretation of 25 U.S.C.
§ 2710(d)(7)(A)(ii), Congress both conferred jurisdiction
and abrogated the Nation’s sovereign immunity so as to
permit the State to enjoin the Nation’s class III gaming
if the Nation were to neglect its obligation to the am-
munition base. More troubling however, is that the State,
in arguing that the Nation’s class III gaming be enjoined
for the Nation’s alleged breach of its revenue-sharing
obligation under the Compact, is urging this Court to
confer jurisdiction for the alleged violation of a provision
that is arguably barred by the IGRA itself.
The validity, under the IGRA, of revenue-sharing
agreements in tribal-state compacts has been a contentious
issue. See COHEN’S HANDBOOK OF FEDERAL INDIAN LAW
§ 12.05 (Matthew Bender & Company 2005). The IGRA
includes a list of seven items which “[a]ny Tribal-State
compact . . . may include provisions relat[ed] to.” 25 U.S.C.
§ 2710(d)(3)(C)(i-vii). While this list provides that states
and tribes may negotiate assessments by the state to
defray its costs in regulating gaming, 25 U.S.C.
§ 2710(d)(3)(C)(iii), and includes a general catchall that
the compact may address “any other subjects that are
directly related to the operation of gaming activities,” 25
U.S.C. § 2710(d)(3)(C)(vii), tribal-state revenue-sharing
agreements are not expressly discussed in this section. See
25 U.S.C. § 2710(d)(3)(C)(i-vii). Moreover, such a revenue-
sharing agreement is at least in tension with 25 U.S.C.
§ 2710(d)(4), which states that “nothing in this sec-
tion shall be interpreted as conferring upon a
State . . . authority to impose any tax, fee, charge, or other
assessment upon an Indian tribe . . . to engage in a class
III activity.” States and tribes commonly circumvent the
prohibitory language in § 2710(d)(4) by having such
payments to the state serve as consideration for the
No. 07-1584 17

tribe’s exclusive operation of its gaming, rather than the
ability to engage in class III gaming itself. COHEN’S
HANDBOOK OF FEDERAL INDIAN LAW § 12.05; Gatsby
Contreras, Note, Exclusivity Agreements in Tribal-State
Compacts: Mutual Benefit Revenue-Sharing or Illegal State
Taxation?, 5 J. GENDER RACE & JUST. 487, 494-95 (2002).
Such is the case in the Compact between the Nation and
the State, where payments to the State were made in
exchange for exclusivity in the area surrounding the
Nation’s gaming operations and advance approval by the
Governor for a potential fourth gaming site for the Nation
in Madison, Wisconsin.
The Department of the Interior has permitted such
revenue-sharing agreements when the State provides
the tribe with “substantial economic exclusivity for
Indian gaming,” COHEN’S HANDBOOK OF FEDERAL INDIAN
LAW § 12.05, n.133 (quoting Letter to Honorable Janet
Napolitano, Governor of Arizona, from Aurene Martin,
Acting Assistant Secretary of Indian Affairs (Jan. 24,
2003)), but the legitimacy of these revenue-sharing
provisions is far from a settled issue. See Matthew L. M.
Fletcher, Bringing Balance to Indian Gaming, 44 HARV.
J. ON LEGIS. 39 (2007) (discussing the still unsettled
validity of these agreements and proposing a legislative
solution). Thus far, the Ninth Circuit is the only one of our
sister circuits to have addressed the validity of these
revenue-sharing agreements, in that case finding them
valid under the IGRA. In re Indian Gaming Related Cases,
331 F.3d 1094 (9th Cir. 2003) (“In re Indian Gaming”).
While we decline to use the case before us to weigh in on
this matter, we do note that the terms of the revenue-
sharing agreements at issue in In re Indian Gaming
are distinct from the one contained in the Compact be-
tween the Nation and the State. In In re Indian Gaming,
the state’s use of the payments made by the tribes
was heavily restricted, with all payments placed in two
18 No. 07-1584

funds, one of which distributed gaming revenue amongst
non-gaming tribes, with the other designed to fund pro-
grams to treat gambling addiction, support local agencies
impacted by Indian gaming, and finance other costs
directly related to gaming operations. Id. at 1105-06. Here,
however, the Nation’s payments to the State are made
without any restrictions or limits on the manner in which
the State may use those funds. Again, we offer no opinion
as to whether this distinction, or any other factor, compels
a different result from that reached by the Ninth Circuit
as to the validity of such revenue-sharing agreements. We
are reluctant, however, to hinge jurisdiction and abroga-
tion of the Nation’s sovereign immunity on a provision that
at a minimum does not appear to have been contemplated
by Congress as being one of the matters tribes and the
states may negotiate over under the IGRA. See 25 U.S.C.
§ 2710(d)(3)(C)(i-vii).
Turning again to the language of the statute, it is
evident that this Court is not compelled by the plain text
of 25 U.S.C. § 2710(d)(7)(A)(ii) to adopt either of the
interpretations offered by the parties to this suit. Both the
State and the Nation focused their reading of 25 U.S.C.
§ 2710(d)(7)(A)(ii) on the language granting district
courts jurisdiction “to enjoin a class III gaming
activity . . . conducted in violation of any Tribal-State
compact.” This, however, ignores critical language in
§ 2710(d)(7)(A)(ii), the full text of which provides:
The United States district courts shall have jurisdic-
tion over— . . .
(ii) any cause of action initiated by a State or
Indian tribe to enjoin a class III gaming activity
located on Indian lands and conducted in violation
of any Tribal-State compact entered into under
paragraph (3) that is in effect, . . .
No. 07-1584 19

25 U.S.C. § 2710(d)(7)(A)(ii) (emphasis added). Paragraph
(3) of the IGRA, the reference to which was ignored by both
parties, governs the negotiation process tribes and
states are to enter into for compacting under the Act. 25
U.S.C. § 2710(d)(3). Therefore, a proper interpretation of
§ 2710(d)(7)(A)(ii) is not that federal jurisdiction exists
over a suit to enjoin class III gaming whenever any clause
in a Tribal-State compact is violated, but rather that
jurisdiction exists only when the alleged violation relates
to a compact provision agreed upon pursuant to the
IGRA negotiation process.
This interpretation of 25 U.S.C. § 2710(d)(7)(A)(ii)
mitigates many of the concerns raised by both the State
and the Nation. The district court expressed a view,
adopted by the State, that the Nation’s interpretation of
25 U.S.C. § 2710(d)(7)(A)(ii) would lead to “the absurd
result that a minor infraction of a compact provision
prescribing gaming hours would support an injunction,
while a major breach going to the heart of the compact
would stand remediless.” Ho-Chunk Nation, 478 F. Supp.
2d at 1097. While under this Court’s interpretation,
25 U.S.C. § 2710(d)(7)(A)(ii) does not extend to all viola-
tions of a Tribal-State compact, as already discussed,
25 U.S.C. § 2710(d)(3)(C) provides a list of seven matters
which a Tribal-State compact negotiated pursuant to the
IGRA may address:
(C) Any Tribal-State compact negotiated under sub-
paragraph (A) may include provisions relating to—
(i) the application of the criminal and civil laws
and regulations of the Indian tribe or the State
that are directly related to, and necessary for, the
licensing and regulation of such activity;
(ii) the allocation of criminal and civil juris-
diction between the State and the Indian tribe
20 No. 07-1584

necessary for the enforcement of such laws and
regulations;
(iii) the assessment by the State of such activities
in such amounts as are necessary to defray the
costs of regulating such activity;
(iv) taxation by the Indian tribe of such activity
in amounts comparable to amounts assessed by
the State for comparable activities;
(v) remedies for breach of contract;
(vi) standards for the operation of such activity
and maintenance of the gaming facility, including
licensing; and
(vii) any other subjects that are directly related
to the operation of gaming activities.
25 U.S.C. § 2710(d)(3)(C)(i-vii). Therefore, so long as the
alleged compact violation relates to one of these seven
items, a federal court has jurisdiction over a suit by a
state to enjoin a class III gaming activity. Limiting the
scope of 25 U.S.C. § 2710(d)(7)(A)(ii) to alleged viola-
tions of the seven items enumerated in 25 U.S.C.
§ 2710(d)(3)(C)(i-vii) also serves to align jurisdiction
under this section with the IGRA’s purposes. Unlike the
Nation’s proposal, this interpretation does not focus
solely upon state interests. However, by limiting 25
U.S.C. § 2710(d)(7)(A)(ii)’s applicability to alleged viola-
tions of those items which Congress determined tribes
and states may negotiate over under 25 U.S.C.
§ 2710(d)(3)(C)(i-vii), this interpretation also ensures
that jurisdiction is not conferred for alleged violations
of provisions ancillary to the IGRA’s purposes. Further-
more, narrowing the focus of 25 U.S.C. § 2710(d)(7)(A)(ii)
to alleged violations of “Tribal-State compact[s] entered
into under Paragraph (3)” is consistent with the other
No. 07-1584 21

provisions referenced by the State as illustrating that
the lawful operation of class III gaming must be done in
accord with a Tribal-State compact, since both sections
cited by the State specifically refer to Tribal-State com-
pacts “entered into under Paragraph (3).” See 25 U.S.C.
§ 2710(d)(1)(C) (“Class III gaming activities shall be law-
ful on Indian lands only if such activities are . . . con-
ducted in conformance with a Tribal-State compact
entered into by the Indian tribe and the State under
paragraph (3) that is in effect.”) (emphasis added); see also
25 U.S.C. § 2710(d)(2)(C) (“class III gaming activity on
the Indian lands of the Indian tribe shall be fully subject
to the terms and conditions of the Tribal-State compact
entered into under paragraph (3) by the Indian tribe
that is in effect.”) (emphasis added).
Having determined that federal jurisdiction under
25 U.S.C. § 2710(d)(7)(A)(ii) is limited to alleged com-
pact violations relating to the seven items listed in
25 U.S.C. § 2710(d)(3)(C)(i-vii), the remaining issue is
whether the provisions allegedly violated by the Nation
fall under that list. In its amended complaint, the State
alleges that the Nation violated the Compact in two ways:
(1) “[b]y refusing to pay all the amounts due” under the
Second Amendment’s revenue-sharing agreement, and
(2) “[b]y refusing to submit to binding arbitration” in
violation of the Compact’s Dispute Resolution provision.
As discussed above, tribal-state revenue-sharing agree-
ments do not expressly appear on the list of items
tribes and states may negotiate over under 25 U.S.C.
§ 2710(d)(3)(C)(i-vii). The payments made to the State
in this case are not limited to the State’s costs of regulat-
ing tribal gaming, see 25 U.S.C. § 2710(d)(3)(C)(iii), and
it is far from certain that the revenue-sharing agree-
ment falls under the catchall for provisions related to
“any other subjects that are directly related to the opera-
22 No. 07-1584

tion of gaming activities.”3 See 25 U.S.C. § 2710(d)(3)
(C)(vii).
Federal jurisdiction under 25 U.S.C. § 2710(d)(7)(A)(ii)
in this case however, does not hinge solely upon whether
the revenue-sharing agreement can be deemed to be a
“subject[ ] . . . directly related to the operation of gaming
activities.” See 25 U.S.C. § 2710(d)(3)(C)(vii). In its
amended complaint, the State also sought an injunc-
tion pursuant to 25 U.S.C. § 2710(d)(7)(A)(ii) due to the
Nation’s alleged breach of the Compact’s Dispute Resolu-
tion provision. The Second Amendment’s inclusion of a
Dispute Resolution provision, compelling the parties to
submit to binding arbitration for “any dispute . . . regard-
ing the interpretation or enforcement of the Compact,”
falls under the ambit of 25 U.S.C. § 2710(d)(3)(C)(v), which
provides that “Tribal-State compact[s] . . . may include
provisions relating to— . . . remedies for breach of con-
tract.” Therefore, the district court properly had juris-
diction, and Congress abrogated the Nation’s sovereign
immunity, with respect to the State’s claim pursuant to
25 U.S.C. § 2710(d)(7)(A)(ii) to enjoin the Nation’s class III

3
In In re Indian Gaming, the State of California granted tribes
the exclusive right to conduct Las Vegas-style class III gaming,
partially in exchange for contributions by the tribes into a
Revenue Sharing Trust Fund, whose funds were distributed
among the State’s non-gaming tribes. In re Indian Gaming, 331
F.3d at 1104-05. The Ninth Circuit found that this arrangement
fell under the 25 U.S.C. § 2710(d)(3)(C)(vii) catchall provision,
because the Revenue Sharing Trust Fund served the IGRA’s
purpose to “promote[ ] tribal economic development, self-suffi-
ciency, and strong tribal governments.” Id. at 1111 (quoting
25 U.S.C. § 2702(1)). In this case, the Nation received largely the
same benefit—exclusivity—as that granted to the California
tribes, but unlike In re Indian Gaming, the Compact between
the Nation and State does not limit what the State may do
with the payments it receives from the Nation.
No. 07-1584 23

gaming due to its alleged refusal to submit to binding
arbitration.

C. Federal Jurisdiction for the State’s Remaining
Causes of Action
“Because we are obligated to consider our jurisdiction
at any stage of the proceedings,” Enahoro, 408 F.3d at
883, we observe that our interpretation of 25 U.S.C.
§ 2710(d)(7)(A)(ii) as it relates to the State’s second cause
of action does not alter the district court’s finding of
jurisdiction over the other claims brought by the State
in its amended complaint.
The State, in its fourth cause of action, sought a declara-
tion that it has negotiated in good faith with the Nation
as required by the IGRA. However, “the Declaratory
Judgment Act is not an independent source of federal
subject matter jurisdiction,” and requires an “independent
basis for jurisdiction.” GNB Battery Technologies v. Gould,
Inc., 65 F.3d 615, 619 (7th Cir. 1995). When a declaratory
judgment is sought, “jurisdiction is determined by whether
federal question jurisdiction would exist over the pre-
sumed suit by the declaratory judgment defendant.” Id.
Such an independent basis for jurisdiction exists with
respect to this claim—the Nation’s ability to bring suit
against the State pursuant to 25 U.S.C. § 2710(d)(7)(A)(i),
which grants federal district courts jurisdiction over “any
cause of action initiated by an Indian tribe arising from
the failure of a State to enter into negotiations with the
Indian tribe for the purpose of entering into a Tribal-State
compact under paragraph (3) or to conduct such negotia-
tions in good faith.” 25 U.S.C. § 2710(d)(7)(A)(i). “ ‘[T]he
separate and distinct jurisdictional question of constitu-
tional dimension’ of whether an ‘actual controversy’ ex-
isted,” GNB Battery Technologies, 65 F.3d at 620, is
also met in this case, because the State’s amended com-
24 No. 07-1584

plaint pled that the Nation’s complaint in arbitration
included allegations that the Nation had engaged in “bad
faith” negotiations in violation of the IGRA.
With respect to the State’s other substantive claims
against the Nation,4 the district court has supplemental
jurisdiction over these claims pursuant to 28 U.S.C.
§ 1367(a) so long as they “derive from a common nucleus of
operative fact” with the original federal claims. Groce v.
Eli Lilly & Co., 193 F.3d 496, 500 (7th Cir. 1999) (quoting
City of Chicago v. International College of Surgeons, 522
U.S. 156, 164-65, 139 L. Ed. 2d 525, 118 S. Ct. 523 (1997))
(stating that the “common nucleus of operative fact”
standard was codified in the statute’s grant of supplemen-
tal jurisdiction over claims “so related to [the federal]
claims . . . that they form part of the same case or contro-
versy”). Such is the case here. The other claims brought
by the State pertain to the same set of circumstances
at issue in the federal claim under 25 U.S.C. § 2710(d)(7)
(A)(ii)—the Nation and State’s attempts to ascertain and
resolve the impact the Wisconsin Supreme Court’s deci-
sions have on their gaming compact.
Finally, the last two causes of action brought by the
State are to enforce the Dispute Resolution provision in
the Compact pursuant to the FAA as it relates to the
arbitrable claims in the amended complaint. As we
stated when this case first came before us, “[t]he FAA
by itself does not provide subject matter jurisdiction for
any dispute; as a result, ‘there must be diversity of citizen-
4
This includes the State’s first cause of action, seeking a
declaration that the Nation is in violation of the IGRA by
allegedly failing to adhere to the Compact’s revenue-sharing
and dispute resolution provisions; third cause of action for
breach of contract based upon the same alleged Compact
violations; and the fifth and sixth causes of action, seeking a
declaration and order that the Nation pay all current and
future amounts allegedly due under the Compact.
No. 07-1584 25

ship or some other independent basis for federal jurisdic-
tion’ to address an arbitration dispute.” Ho-Chunk I, 463
F.3d at 659 (quoting America’s Moneyline, Inc. v. Coleman,
360 F.3d 782, 784 (7th Cir. 2004)). Having found that all
the claims which may be arbitrable are properly before the
district court, the district court has jurisdiction over the
State’s claims to enforce the Dispute Resolution provision
pursuant to the FAA.5 Allied-Bruce Terminix Cos. v.
Dobson, 513 U.S. 265, 273-77, 130 L. Ed. 2d 753, 115 S. Ct.
834 (1995) (interpreting 9 U.S.C. § 2). Thus, the remaining
question is whether the Nation’s sovereign immunity
barred the district court from hearing any of these claims.

D. The Nation’s Sovereign Immunity with Respect
to the State’s Remaining Claims
While federal jurisdiction exists with respect to all the
State’s remaining causes of action, the Nation’s sovereign
immunity still barred these claims from being brought
against it unless this immunity had been waived by
the tribe or “unequivocally” abrogated by Congress. See
C & L Enters., Inc. v. Citizen Band Potawatomi Indian
Tribe, 532 U.S. 411, 418, 121 S. Ct. 1589, 149 L. Ed. 2d
623 (2001); see also Oklahoma Tax Comm’n v. Citizen
Band Potawatomi Indian Tribe, 498 U.S. 505, 509, 111
S. Ct. 905, 909, 112 L. Ed. 2d 1112 (1991). The Supreme

5
The FAA’s applicability in this case depends upon whether the
Compact “affects interstate commerce.” Allied-Bruce Terminix
Cos. v. Dobson, 513 U.S. 265, 273-77, 130 L. Ed. 2d 753, 115
S. Ct. 834 (1995) (interpreting 9 U.S.C. § 2). This Court found
it unnecessary to address this issue when it arose in Ho-
Chunk I, 463 F.3d at 661-62, but the district court, as part of
its ruling on the Nation’s motion for summary judgment, found
that the Compact did affect interstate commerce. We decline
to address on this appeal the merits of the district court’s
decision on this issue.
26 No. 07-1584

Court has held that Congress did not abrogate state
sovereign immunity in the Supplemental Jurisdiction Act,
Raygor v. Regents of Univ. of Minn., 534 U.S. 533, 541-42,
152 L. Ed. 2d 27, 122 S. Ct. 999 (2002), and we find no
indication Congress intended a contrary result with
respect to tribal sovereign immunity under this statute.
Similarly, the State has not argued that 25 U.S.C.
§ 2710(d)(7)(A)(i) or the FAA contains such an abroga-
tion on Congress’s part. Thus, the district court’s ability
to hear these remaining claims depends upon whether
the Nation has waived its sovereign immunity.
The Nation and the State both waived their respective
sovereign immunity in Paragraph 11, Section XXIV.B of
the Second Amendment to the Compact, which provides:
The Nation and the State expressly waive, to the
extent the State or the Tribe may do so pursuant to
law, any and all sovereign immunity with respect to
any claim brought by the State or the Nation to enforce
any provision of this Compact, as amended.
The Nation argues that the Wisconsin Supreme Court’s
decision in Panzer, which held that “[t]he Governor lacked
any inherent authority to waive the state’s sovereign
immunity,” Panzer, 680 N.W.2d at 700, rendered the
State’s sovereign immunity in the Second Amendment
unenforceable, which in turn revoked the Nation’s
waiver of its sovereign immunity. The district court did
not squarely address this issue in its memorandum and
order on the Nation’s motion for summary judgment. The
district court did however, hold that the Panzer decision
did not constitute a determination “by a court of competent
jurisdiction” that the Duration provision in the Second
Amendment was unenforceable or invalid. The Nation
contends that the district court’s decision regarding
Panzer’s effect on the Duration provision’s validity effec-
tively amounted to a determination that the Nation’s
No. 07-1584 27

waiver of its sovereign immunity had not been revoked.
Based on this reasoning, the Nation urges this Court to
review, pursuant to the collateral order doctrine, the
district court’s holding regarding Panzer’s applicability
to the Compact.
The State questions whether the collateral order doc-
trine properly gives this Court appellate jurisdiction to
determine the Panzer decision’s effect on the parties’
Compact. According to the State, even if the Panzer
holding was applicable to the State’s waiver of its sover-
eign immunity in the Second Amendment, this did not
have the effect of revoking the Nation’s waiver of its
sovereign immunity. We find this to be the case, and thus
need not address on interlocutory appeal the merits of
the district court’s finding that Panzer did not render
the Second Amendment’s Duration clause invalid or
unenforceable.
Panzer held that the Governor lacked the “inherent or
delegated power” to waive the State’s sovereign immunity,
and did not address a tribe’s authority to waive its sover-
eign immunity. See Panzer, 680 N.W.2d at 700-01. There-
fore, even if the Wisconsin Supreme Court’s holding in
Panzer served as a finding “by a court of competent jurisdic-
tion” for purposes of the Second Amendment, it would only
constitute a finding that the waiver of the State’s sover-
eign immunity was invalid or unenforceable. The Nation
does not offer a reference to any specific provision in the
Second Amendment that provides that such a finding with
respect to the State’s sovereign immunity serves to
automatically revoke the Nation’s waiver of its immunity.
Instead, the only provisions to explicitly address the
Nation’s ability to revoke its sovereign immunity waiver,
Paragraph 11, Section XXIV.E & F in the Second Amend-
ment, in both cases provide that such a revocation may
only occur when the Nation is unable to obtain a judicial
remedy or resolution as a result of the State’s immunity
28 No. 07-1584

from suit. At no point during the course of this ongoing
litigation between the parties has the State invoked its
sovereign immunity. Therefore, even if the Panzer decision
did serve to invalidate the State’s sovereign immunity
waiver in the Compact, the Nation’s waiver of its immu-
nity remains intact since the State has never invoked its
immunity from suit during the course of litigation with the
Nation. Accordingly, because a contrary determination on
our part with respect to the district court’s holding that
Panzer did not render the Duration provision unenforce-
able or invalid would not negate the Nation’s waiver of
sovereign immunity under the Compact, we hold that we
do not have jurisdiction to address the merits of that
decision on interlocutory appeal.

E. The Second Amendment’s Arbitration Clause
The Nation makes a final argument that, even if we
were to hold, as we do, that the Panzer decision did not
automatically revoke the Nation’s sovereign immunity
waiver, the scope of the Nation’s waiver is still limited
only to arbitration. This is not the case.
First, it is not altogether clear whether all disputes
arising under the Compact are subject to arbitration. The
Dispute Resolution provision in Paragraph 11, Section
XXIII of the Second Amendment does include an arbitra-
tion clause, which provides:
If any dispute arises between the Parties regarding
the interpretation or enforcement of the Compact,
Amendment, and this Second Amendment, except as
otherwise provided in this Second Amendment, that
dispute (“Dispute”) shall be resolved in accordance
with the following procedure: . . .
The section then goes on to provide that the parties will
first meet and confer, but if that process does not lead to
No. 07-1584 29

a mutually satisfactory result, “either Party may serve a
demand for arbitration on the other Party.” If that occurs,
“the Parties shall resolve the Dispute by binding arbitra-
tion,” with actions to compel arbitration, determine
whether an issue is arbitrable, or confirm an award to
be brought in the United States District Court for the
Western District of Wisconsin. This arbitration clause,
however, is arguably in some tension with the first clause
of the Sovereign Immunity section, which states:
Unless the Parties agree otherwise, if a dispute arises
regarding compliance with or the proper interpretation
of the requirements of the Compact, as amended,
under Sections IV (Authorized Class III Gaming),
XXIII (Dispute Resolution), XXIV (Sovereign Immu-
nity), XXXIV (Payment to the State), and XXV (Reim-
bursement of State Costs), the dispute shall be re-
solved by the United States District Court for the
Western District of Wisconsin.
Second Amendment, Paragraph 11, Section XXIV.A.
Similarly, contrary to the Nation’s claim, the provision
waiving the parties’ sovereign immunity is not exclu-
sively limited to the arbitration process set forth in the
Dispute Resolution section:
Nothing contained herein shall be construed to waive
the immunity of the State or the Nation except for
suits arising under Sections XXIII [Dispute Resolution]
and XXIV [Sovereign Immunity, including Section
XXIV.A] of this Compact, as amended. The Nation and
the State expressly waive, to the extent the State or
the Tribe may do so pursuant to law, any and all
sovereign immunity with respect to any claim brought
by the State or the Nation to enforce any provision of
this Compact, as amended. This waiver includes suits
to collect money due to either Party pursuant to the
terms of the Compact, as amended; to obtain an order
30 No. 07-1584

to specifically enforce the terms of any provisions of
the Compact, as amended; or to obtain a declaratory
judgment and/or to enjoin any act or conduct in viola-
tion of this Compact, as amended. This waiver also
includes a suit to enforce Section XXIII [Dispute
Resolution] of this Compact as amended. . . .
Second Amendment, Paragraph 11, Section XXIV.B. If the
Nation’s waiver of its immunity were truly limited solely
to arbitration, only the last sentence of the provision
excerpted above would have been necessary—that the
waiver “includes a suit to enforce Section XXIII of the
Compact as amended.”
Although the provisions discussed above make clear
that the Nation’s waiver of its sovereign immunity was
not limited solely to arbitration proceedings, these
same provisions reflect that the district court had the re-
sponsibility to determine which claims were arbitrable.
The State sought relief under the Compact’s arbitration
process, with its seventh and eighth causes of action
seeking that the court compel the parties to proceed
with binding arbitration on all arbitrable issues. Once the
district court found, as it did in its summary judgment
ruling, that the FAA applied to the Compact, the district
court was charged with determining the scope of this
arbitration agreement. Hill’s Pet Nutrition v. Fru-Con
Constr. Corp., 101 F.3d 63, 65 (7th Cir. 1996). In deter-
mining whether the Nation and State agreed to arbitrate
the claims brought by the State in its amended complaint,
the district court should have “rel[ied] on state contract
law governing the formation of contracts.” James v. McDon-
ald’s Corp., 417 F.3d 672, 677 (7th Cir. 2005). Importantly
for this case, “in deciding whether the parties have
agreed to submit a particular grievance to arbitration, a
court is not to rule on the potential merits of the underly-
ing claims.” Stevens Constr. Corp. v. Chi. Reg’l Council of
Carpenters, 464 F.3d 682, 686 (7th Cir. 2006) (quoting
No. 07-1584 31

AT&T Technologies, Inc. v. Communications Workers of
America, 475 U.S. 643, 649-50, 106 S. Ct. 1415, 89 L. Ed.
2d 648 (1986)). While this Court has recognized that
“where ‘[the] court’s decision on arbitrability collapses into
the same inquiry as [the] decision on the merits,’ a court
may need to touch on the merits of an issue that ordinarily
would be decided in arbitration,” this was not required
of the district court in this case. Id. at 687 (quoting BCS
Ins. Co. v. Wellmark, Inc., 410 F.3d 349, 352 (7th Cir.
2005) (quotation marks omitted)). If the Nation’s waiver
of its sovereign immunity was dependent upon the Panzer
decision’s effect on the Compact, then the district court
may have been justified in addressing that issue on the
merits. Having determined, however, that this finding on
the district court’s part had no bearing on the Nation’s
waiver of its sovereign immunity under the Compact,
this was not a circumstance where the arbitrability of
the issue “collapse[d] into the same inquiry as [the]
decision on the merits.” See id. Therefore, the district court
erred in not first determining the arbitrability of the
State’s claims under the Compact’s Dispute Resolution
provision, before proceeding to address the Nation’s
remaining claims for summary judgment. As a result, we
vacate the district court’s order regarding the Nation’s
motion for summary judgment, with the exception of its
determination that the Compact was subject to the
FAA and that federal jurisdiction existed over the State’s
claim seeking a declaration that it negotiated in good
faith. We remand back to the district court for it to
determine the arbitrability of the State’s causes of action
against the Nation.6

6
We note that one of the claims raised by the Nation in its
motion for summary judgment is that the renegotiation process
set forth in the Dispute Resolution provision, which permits
the arbitrator to decide on substitute provisions in the Compact,
(continued...)
32 No. 07-1584

III. Conclusion
For the foregoing reasons, we AFFIRM that federal
subject matter jurisdiction existed, and that the Nation’s
sovereign immunity was similarly abrogated, with respect
to the State’s second cause of action seeking to enjoin
class III gaming due to the Nation’s alleged violation of
the Compact’s Dispute Resolution provision. We also
VACATE the district court’s order on the Nation’s motion
for summary judgment, with the exception of the district
court’s rulings that the FAA applied to the Compact and
that federal jurisdiction exists over the State’s claim
seeking a declaration that it negotiated in good faith, and
REMAND to the district court to determine which of the
State’s causes of action are subject to arbitration.

A true Copy:
Teste:

________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit

6
(...continued)
is preempted by 25 U.S.C. § 2710(d)(7)(B)(vii) of the IGRA. It
is not necessary for this Court, or the district court on remand,
to address this claim at this time, since the issue will only
become ripe if it is determined that Panzer invalidated or voided
provisions in the Compact.

USCA-02-C-0072—1-14-08