In the
United States Court of Appeals
For the Seventh Circuit
No. 10-2069
W ELLS F ARGO B ANK,
N ATIONAL A SSOCIATION,
as Trustee,
Plaintiff-Appellant,
v.
L AKE OF THE T ORCHES E CONOMIC
D EVELOPMENT C ORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 3:09-cv-00768-rtr—Rudolph T. Randa, Judge.
A RGUED O CTOBER 20, 2010—D ECIDED S EPTEMBER 6, 2011
Before F LAUM, R IPPLE and E VANS , Circuit Judges.
R IPPLE, Circuit Judge. Wells Fargo Bank, N.A. brought
this action in the United States District Court for the
Circuit Judge Evans died on August 10, 2011, and did not
participate in the decision of this case, which is being resolved
by a quorum of the panel under 28 U.S.C. § 46(d).
2 No. 10-2069
Western District of Wisconsin against Lake of the
Torches Economic Development Corporation (“Lake of
the Torches” or “the Corporation”), a tribal corporation
wholly owned by a federally recognized Indian tribe.
Acting in its capacity as trustee, Wells Fargo alleged
that Lake of the Torches had breached a bond indenture
and filed a motion seeking the appointment of a
receiver to manage the trust security on behalf of the
bondholder. The district court held that the indenture
was void because it was a gaming facility management
contract unapproved by the National Indian Gaming
Commission (“NIGC” or “the Commission”). See 25 U.S.C.
§§ 2710(d)(9), 2711(a)(1); 25 C.F.R. § 533.7. Reasoning
that the waiver of the Corporation’s sovereign im-
munity in the indenture was consequently also void, the
district court dismissed the case for lack of subject
matter jurisdiction. Wells Fargo then filed motions to
alter or amend the judgment and for leave to file an
amended complaint to assert claims on its own behalf
and on behalf of the bondholder. The court denied
both motions, and Wells Fargo appealed.
We agree with the district court that the indenture
constitutes an unapproved management contract within
the meaning of the statute and is therefore void. Conse-
quently, Lake of the Torches’ waiver of sovereign im-
munity contained in that document is also void and
cannot serve as a predicate for the district court’s juris-
diction. We further believe that the district court prema-
turely denied Wells Fargo’s motion to file an amended
complaint asserting claims for legal and equitable relief
in connection with the bond transaction. Assuming
No. 10-2069 3
that Wells Fargo has standing to assert the claims of
the bondholder, it is an open issue whether other docu-
ments connected to the bond offering, exclusive of the
indenture, evince an intent on the part of the Corpora-
tion to waive sovereign immunity with respect to
claims in connection with the bond offering filed by
Wells Fargo on behalf of the bondholder or on its own
behalf. Accordingly, we affirm in part and reverse in
part the judgment of the district court.
I
BACKGROUND
A.
Because the task before us is primarily one of statutory
and regulatory interpretation, we begin by setting forth
the basic statutory and regulatory framework estab-
lished by Congress and by NIGC, the agency acting
under the authority of the governing statute.
During the 1970s and 1980s, many Native American
tribes began to take advantage of their exemptions from
certain state regulatory laws to conduct gaming opera-
tions on tribal land, thereby providing a much-needed
source of revenue for the tribes and their members. See
California v. Cabazon Band of Mission Indians, 480 U.S. 202,
218-20 & n.21 (1987). Many states had serious concerns
about the rise of Indian gaming establishments, however,
and Congress attempted to develop a compromise that
would limit federal or state intervention into the sover-
eignty of Indian tribes while furthering legitimate state
4 No. 10-2069
policy goals regulating or prohibiting gambling. See
S. Rep. No. 100-446, at 1-6 (1988), reprinted in 1988
U.S.C.C.A.N. 3071, 3071-76.
At the same time, many members of Congress
expressed concern about the private gaming manage-
ment companies that often contracted with Indian
tribes to develop and operate gaming facilities on tribal
land. In the view of these lawmakers, these management
companies posed two concerns: first, that they would
take advantage of the tribes and bilk them out of
gambling revenues and, second, that they would allow
organized crime to infiltrate Indian gaming operations.
In addition, many federal courts had held that manage-
ment contracts related to tribal land required approval
from the Secretary of the Interior under 25 U.S.C. § 81.1 See
1
At the time, section 81 provided, in relevant part:
No agreement shall be made by any person with any
tribe of Indians, or individual Indians not citizens of the
United States, for the payment or delivery of any
money or other thing of value, in present or in pro-
spective, or for the granting or procuring any privilege
to him, or any other person in consideration of
services for said Indians relative to their lands, . . . unless
such contract or agreement be executed and approved
[by the Secretary of the Interior and the Commissioner
of Indian Affairs].
Wisconsin Winnebago Bus. Comm. v. Koberstein, 762 F.2d 613, 615
(7th Cir. 1985) (quoting 25 U.S.C. § 81) (emphasis added). In
(continued...)
No. 10-2069 5
United States ex rel. Mosay v. Buffalo Bros. Mgmt., Inc., 20
F.3d 739, 740 (7th Cir. 1994). The Secretary, however,
lacked clear statutory standards to apply in evaluating
management agreements. See 25 U.S.C. § 2701(2) (finding
that “[f]ederal courts have held that section 81 of this
title requires Secretarial review of management contracts
dealing with Indian gaming, but does not provide stan-
dards for approval of such contracts”). Congress again
sought to develop a solution that would protect tribes
from unscrupulous contractors and criminals but would
not unnecessarily interfere with the tribes’ sovereignty
or economic self-sufficiency.2
In 1988, Congress addressed these issues by enacting
the Indian Gaming Regulatory Act (“the IGRA” or “the
Act”). Pub. L. No. 100-497, 102 Stat. 2467 (codified at
25 U.S.C. §§ 2701 to 2721). Its stated goals were to create
a comprehensive regulatory framework “for the opera-
tion of gaming by Indian tribes as a means of promoting
tribal economic development, self-sufficiency, and strong
1
(...continued)
2000, Congress amended § 81. See Pub. L. No. 106-179, § 2.
It now reads: “No agreement or contract with an Indian tribe
that encumbers Indian lands for a period of 7 or more years
shall be valid unless that agreement or contract bears the
approval of the Secretary of the Interior or a designee of the
Secretary.” 25 U.S.C. § 81(b).
2
See generally Franklin Ducheneaux, The Indian Gaming Regula-
tory Act: Background and Legislative History, 42 Ariz. St. L.J. 99
(2010) (describing congressional concerns regarding manage-
ment contractors).
6 No. 10-2069
tribal governments,” to “shield [tribes] from organized
crime and other corrupting influences, to ensure that the
Indian tribe is the primary beneficiary of the gaming
operation, and to assure that gaming is conducted
fairly and honestly by both the operator and players.”
25 U.S.C. § 2702(1)-(2).
The Act, which represents the fulfillment of many years
of congressional compromise over Indian gaming, see
S. Rep. No. 100-446, at 1-2, divides gaming operations
into three classes and imposes different regulatory re-
quirements on each.
First, “class I gaming,” which refers to social games
conducted for minimal value and traditional Indian
games connected to tribal ceremonies, 25 U.S.C. § 2703(6),
is left entirely “within the exclusive jurisdiction of the
Indian tribes” and remains unregulated by state or
federal law. Id. § 2710(a)(1).
Second, “class II gaming,” which encompasses bingo,
lotteries and card games in which gamblers play against
one another rather than against the house (poker, for
example), see id. § 2703(7), is subject to a more extensive
set of conditions and regulations. It is permitted only
on tribal lands in states that do not entirely pro-
hibit such gaming and only where the tribal resolution
authorizing the operation is approved by the Chairman
of the Commission. Id. § 2710(b)(1)(A)-(B). The Chair-
man’s approval is contingent on the resolution’s satis-
faction of several conditions, including that it vests the
sole proprietary interest in the operation in the tribe, that
it sets up auditing systems and that it prohibits the
No. 10-2069 7
tribe from spending profits other than for certain, enumer-
ated purposes. Id. § 2710(b)(2).
Finally, “class III gaming,” which includes all other
types of gambling, id. § 2703(8), regulates such activities
as casino games played against the house (e.g., blackjack
and roulette), slot machines and pari-mutuel betting (e.g.,
horse racing). Class III gaming is permitted only if it is
“conducted in conformance with a Tribal-State compact
entered into by the Indian tribe and the State” in which
the tribal lands are located. Id. § 2710(d)(1)(C); see also
Seminole Tribe of Florida v. Florida, 517 U.S. 44, 48-50 (1996)
(describing the tribal-state compact scheme).
The Act vests in the Commission the power to promul-
gate regulations. 25 U.S.C. § 2706(b)(10). In addition, it
provides the Chairman of the Commission with the
authority to review and approve management contracts
entered into by an Indian tribe “for the operation and
management,” id. § 2711(a)(1), of a class II or class III
gaming facility. See id. §§ 2710(d)(9), 2711(a)(1). 3 Under
Commission regulations, unapproved management con-
3
25 U.S.C. § 2710(d)(9) provides that “[a]n Indian tribe
may enter into a management contract for the operation of a
class III gaming activity if such contract has been submitted
to, and approved by, the Chairman.” 25 U.S.C. § 2711(a)(1)
provides that, “[s]ubject to the approval of the Chairman, an
Indian tribe may enter into a management contract for the
operation and management of a class II gaming activity.”
8 No. 10-2069
tracts “are void.” 25 C.F.R. § 533.7.4 The Chairman’s
review of management contracts is subject to standards
set out in the Act and in regulations promulgated by
the Commission. Those standards include background
checks of those involved with the management con-
tractor, provisions setting out responsibility over the
operations of the facility and substantive limits on the
duration of the contract and the amount of compensa-
tion the management contractor may receive for its ser-
vices. See 25 U.S.C. § 2711; 25 C.F.R. §§ 531, 533, 537.
B.
Lake of the Torches is a corporation chartered under
tribal law by the Lac du Flambeau Band of Lake Superior
Chippewa Indians (“the Tribe”) to own and operate the
Lake of the Torches Resort Casino (“the Casino”). The
Casino is a class II and class III gaming facility located
on tribal lands in northern Wisconsin and is operated
pursuant to a tribal-state compact with the State of Wis-
consin.5
4
25 C.F.R. § 533.7 provides: “Management contracts and
changes in persons with a financial interest in or manage-
ment responsibility for a management contract, that have not
been approved by the Chairman in accordance with the re-
quirements of part 531 of this chapter and this part, are void.”
5
The Commission approved a tribal ordinance authorizing
Lake of the Torches to conduct class II and class III gaming on
tribal lands. Letter from Anthony J. Hope, NIGC Chairman, to
(continued...)
No. 10-2069 9
Several years ago, the Tribe decided to diversify its
operations by investing in a project to build a riverboat
casino, hotel and bed and breakfast in Natchez, Missis-
sippi. In order to secure funding for that investment and
to refinance $27.8 million of existing debt, Lake of the
Torches issued $50 million in taxable gaming revenue
bonds. The bonds, which were secured by the revenues
and related assets of the Casino,6 were accompanied by
5
(...continued)
Tom Maulson, Tribe President (Nov. 29, 1993), available at
http://ww w.nigc.gov/Portals/0/NIGC% 20Uploads/Reading
Room/gamingordinances/lcdflmbbndlksuporchpwaind/ordap
pr112993.pdf. In 1992, the Tribe entered into a compact with the
State of Wisconsin to conduct class III gaming at the Casino.
See Amendments to the Lac du Flambeau Band of Lake
Superior Chippewa Indians and the State of Wisconsin
Gaming Compact of 1992 (Dec. 18, 1998), available at
http://www.nigc.gov/Portals/0/NIGC%20Uploads/readingroom/
compacts/Lac%20du%20Flambeau%20Band%20of%20Lake%20
Superior%20Chippewa%20Indians/lacduflambeaucomp021199.
pdf.
6
Specifically, the security interest includes:
(a) the “Pledged Revenues” as defined in the Inden-
ture;
(b) the Corporation’s accounts, deposit accounts,
general intangibles, chattel paper, instruments and
investment property whether now owned or hereafter
acquired and the proceeds of each of the foregoing
and all books, records and files relating to all or any
portion of the Collateral;
(continued...)
10 No. 10-2069
a trust indenture (“the Indenture”) naming Wells Fargo
as trustee. The Indenture set forth several present and
contingent provisions that vested in Wells Fargo and the
bondholder the power to ensure that Lake of the Torches
satisfied its repayment obligations and that Casino reve-
nues would be sufficient to repay the bonds. Under
the terms of the Indenture, Wells Fargo assumed oversight
of Casino revenues, which Lake of the Torches was re-
quired to place into a deposit account controlled by
Wells Fargo. Wells Fargo would use the funds in the
account to repay the bondholders according to the re-
payment schedule. When Lake of the Torches required
funds to pay its operating expenses, it could certify its
need to Wells Fargo and withdraw necessary amounts
from the account.
Because federally recognized Indian tribes are
sovereign entities, they are immune from suit absent
waiver or congressional abrogation. See Kiowa Tribe of
Oklahoma v. Mfg. Techs., Inc., 523 U.S. 751, 754 (1998) (“As
a matter of federal law, an Indian tribe is subject to
6
(...continued)
(c) the Equipment;
(d) all improvements, accessions, appurtenances,
substitutions and replacements to the Equipment,
insurance proceeds and condemnation awards
payable therefrom; and
(e) all proceeds and products of (a), (b), (c) and (d) and
all rights thereto[.]
R.29-1 at 2-3.
No. 10-2069 11
suit only where Congress has authorized the suit or the
tribe has waived its immunity.”); Wisconsin v. Ho-Chunk
Nation, 512 F.3d 921, 928 (7th Cir. 2008).7 Therefore, in
the Indenture, Lake of the Torches agreed to a limited
waiver of its sovereign immunity for suits connected
to the bonds, the Indenture, the corporate resolution
authorizing issuance of the bonds (“the Bond Resolution”)
and related documents (collectively, “the Bond Docu-
ments”). Lake of the Torches also made multiple repre-
sentations—directly and through counsel—that none of
the bond documents “constitute[d] a ‘management con-
tract’ or an agreement that is a ‘collateral agreement’
to a management contract that relates to a gaming
activity regulated by IGRA pursuant to 25 U.S.C. § 2711.”
R.29-6 at 9.
In January 2008, a single purchaser, Saybrook Capital
LLC, purchased the bonds for $50 million. The bonds carry
an interest rate of 12% and are slated to mature on
October 1, 2012. R.50-3 at 3.
7
The parties do not dispute that, although Lake of the Torches
is a corporation operating as a commercial entity, it partakes
of the Tribe’s immunity from suit. We therefore do not
address the issue. We note that the tribal document incor-
porating Lake of the Torches does not waive sovereign immu-
nity and that the parties’ assumption is compatible with the
general assumption prevailing among courts and commentators.
See, e.g., Allen v. Gold Country Casino, 464 F.3d 1044, 1046-47
(9th Cir. 2006); Cohen’s Handbook of Federal Indian Law §§ 7.05[1],
21.02[2] (2005 ed.) (discussing tribal sovereign immunity).
12 No. 10-2069
The Natchez investment proved to be less successful
than originally hoped, leaving the Tribe unenthusiastic
about its bond obligations. According to the complaint, in
October 2009, the Tribe elected a new governing council
that had campaigned on a pledge to repudiate the
bonds. Shortly thereafter, Tribe officials requested that
Wells Fargo transfer $4,750,000 held in the deposit
account to Lake of the Torches, ostensibly for operating
expenses. After Wells Fargo made the transfer, however,
it determined that Lake of the Torches had misrepre-
sented its need for the funds. Wells Fargo therefore re-
quested confirmation from Lake of the Torches that the
money was required to pay operating expenses, but
Lake of the Torches failed to respond and then stopped
depositing Casino revenue in the trust account. Lake of
the Torches since has repudiated its obligations under
the bonds and refuses to repay the $46,615,000 remaining
principal or the interest owed to Saybrook. See R.50-1 at 18-
19; R.50-9 at 2.
C.
On December 21, 2009, Wells Fargo filed this action
against Lake of the Torches for breach of the Indenture.
Wells Fargo also filed an emergency motion requesting
that the court appoint, pursuant to Federal Rule of Civil
Procedure 66 and the terms of the Indenture, a temporary
receiver over the Casino revenues and other assets
pledged as security for the bonds. After preliminary
briefing on the emergency motion, the district court
scheduled an evidentiary hearing for January 6, 2010. The
No. 10-2069 13
day before that scheduled hearing, the assigned district
judge recused herself and another district judge was
assigned to the case. That same day, the newly assigned
district judge canceled the evidentiary hearing and sub-
stituted for it a telephone status conference. Before the
status conference, however, the district court entered a
sua sponte order dismissing the case for lack of jurisdic-
tion. See R.43.
In a written opinion issued five days later, the district
court explained its determination. See Wells Fargo Bank,
N.A. v. Lake of the Torches Econ. Dev. Corp., 677 F. Supp. 2d
1056 (W.D. Wis. 2010). The court held that the Indenture
was a management contract within the meaning of the
Act and that, because it was unapproved by the
Chairman of the NIGC, it was void. Id. at 1057.
The district court based its determination on several
provisions of the Indenture, evaluated in light of Com-
mission regulations. The court first explained that the
Commission defines a management contract as “any
contract, subcontract, or collateral agreement between
an Indian tribe and a contractor or between a contractor
and a subcontractor if such contract or agreement
provides for the management of all or part of a gaming
operation,” id. at 1059 (quoting 25 C.F.R. § 502.15) (em-
phasis added), and a “primary management official”
as one with the “authority to ‘set up working
policy for the gaming operation,’ ” id. (quoting 25
C.F.R. § 502.19(b)(2)). The court determined that “the reg-
ulations demonstrate that a ‘necessary condition for
a management contract is that it grant to a party other
14 No. 10-2069
than the tribe some authority with regard to a
gaming operation.’ ” Id. (quoting Machal, Inc. v. Jena Band
of Choctaw Indians, 387 F. Supp. 2d 659, 665 (W.D. La.
2005)).
With this framework in place, the district court
examined the Indenture and determined that several of
its provisions provide Wells Fargo and Saybrook with
significant authority to set up working policy for the
Casino’s operations. Specifically, the Indenture grants a
security interest in the Casino’s gross revenues; prohibits
Lake of the Torches from making capital expenditures
beyond a certain limit without bondholder approval; pro-
vides for the appointment of a management consultant
if Lake of the Torches fails to meet a specified debt-
service ratio and requires Lake of the Torches to use its
best efforts to implement the consultant’s recommenda-
tions; limits Lake of the Torches’ ability to replace or
remove certain key management personnel without
bondholder consent; gives bondholders the right upon
default to require that Lake of the Torches replace man-
agement personnel; and permits Wells Fargo to seek
the appointment of a receiver of the trust estate upon
default. See id. at 1059-60.
The district court held that these restrictions on the
Corporation “give the bondholders the opportunity to
exert significant control over the management operations
of the Casino Facility.” Id. at 1060. Additionally, the court
determined that the provision for appointing a receiver
over Casino revenues would allow the receiver to “exert[]
a form of managerial control since those monies could
No. 10-2069 15
not be used for other purposes related to the operation
of the Casino Facility.” Id.
Accordingly, the court determined that the Indenture
was a management contract. Because unapproved man-
agement contracts are void, the waiver of sovereign
immunity contained in the Indenture also was void and
the district court was without jurisdiction. Consequently,
it dismissed the case. See id. at 1061.
The district court also rejected Wells Fargo’s conten-
tion that the waiver provision could be severed from
the rest of the Indenture and that Lake of the Torches
should be estopped from challenging the validity of the
Indenture because of its representations in the Bond
Resolution that the Indenture was not a management
contract. According to the court, Wells Fargo’s reliance
on Lake of the Torches’ representations was “completely
unreasonable.” Id. at 1062.
Wells Fargo moved to alter or amend the judgment
and for leave to file an amended complaint to assert
claims under the other bond documents. The district
court denied both motions. See Wells Fargo Bank, N.A. v.
Lake of the Torches Econ. Dev. Corp., No. 09-CV-768, 2010
WL 1687877 (W.D. Wis. Apr. 23, 2010). First, the district
court rejected Wells Fargo’s claim that the court should
not have dismissed the case without the submission of
a motion to do so from Lake of the Torches and should
not have relied on evidence outside the complaint—
specifically, an affidavit from Dean Kevin Washburn, an
16 No. 10-2069
expert witness retained by Lake of the Torches.8 According
to the court, although its “sua sponte dismissal was uncon-
ventional,” it was “a legal ruling based upon undisputed
facts,” and its reliance on the expert’s affidavit “was
merely persuasive legal authority.” Id. at *3. In addition,
the court’s sudden decision to dismiss the case (one
day after the judge was assigned) was justified because
the issue “was brought squarely and immediately
before the [c]ourt in the context of Wells Fargo’s emer-
gency request to appoint a receiver.” Id. at *4.
Second, the district court refused to sever the terms
in the Indenture that provided for management of the
Casino; it took the view that “the management provi-
sions cannot be severed without defeating the primary
purpose of the bargain.” Id. at *3.
Finally, the court determined that any amendment to
the complaint would be futile. Even if Wells Fargo filed
a new complaint amended to include claims under the
Bond Documents (including the bonds and the Bond
Resolution, which, Wells Fargo asserted, also waived
sovereign immunity), that complaint would fail because
the Bond Documents are “collateral agreements” within
the meaning of Commission regulations and, in the view
of the district court, are therefore also void. Id. at *6.
8
Dean Washburn is former general counsel of the Commis-
sion and is now the dean of the University of New Mexico
School of Law. He is at present unaffiliated with the Commis-
sion and was retained by Lake of the Torches to submit
the affidavit.
No. 10-2069 17
Relying on statements by the Commission and by Dean
Washburn, as well as a decision of the Court of Appeals
for the Second Circuit, Wells Fargo had contended
that collateral agreements are void only if they provide
for the management of a gaming operation. The district
court rejected that view and concluded that “failure to
procure NIGC approval in the first instance renders all
of the collateral agreements void ab initio.” Id.
II
DISCUSSION
In this appeal, Wells Fargo submits that the Indenture
is not a management contract and that, even if it is,
the offending provisions should be severed from the re-
mainder of the Indenture. Moreover, Wells Fargo chal-
lenges the procedure under which the district court
dismissed its suit and asserts that amendment to state
other claims for legal and equitable relief would not
have been futile because the remaining Bond Documents
were not void for failure to procure the Chairman’s
approval.
We review a dismissal for lack of subject matter juris-
diction de novo. Estrada v. Holder, 604 F.3d 402, 408
(7th Cir. 2010); Ho-Chunk Nation, 512 F.3d at 929. The
district court’s denial of Wells Fargo’s motions to vacate
the judgment and for leave to file an amended com-
plaint is reviewed for an abuse of discretion. Sound of
Music Co. v. Minnesota Mining & Mfg. Co., 477 F.3d 910,
922 (7th Cir. 2007).
18 No. 10-2069
A.
Before assessing Wells Fargo’s submissions, we must
determine whether the district court properly possessed
jurisdiction over Wells Fargo’s suit for breach of the
Indenture. The district court’s jurisdiction rested on
the statute giving it jurisdiction over suits in which the
amount in controversy exceeds $75,000 and in which the
parties are of diverse citizenship. See 28 U.S.C. § 1332. In
its complaint, Wells Fargo stated that its principal place
of business is in South Dakota, that Lake of the Torches
is a citizen of Wisconsin and that the amount in contro-
versy exceeded $75,000.
One of these assertions requires close scrutiny. Specifi-
cally, we must determine whether Lake of the Torches, a
tribal corporation, ought to be considered a citizen of a
state under the diversity statute. Although neither the
Supreme Court nor this court has addressed the issue
previously, most courts agree that Indian tribes are not
citizens of any state for purposes of the diversity
statute and therefore may not sue or be sued in federal
court under § 1332. See Miccosukee Tribe of Indians of
Florida v. Kraus-Anderson Constr. Co., 607 F.3d 1268, 1276
(11th Cir. 2010), cert. denied, No. 10-717, 2011 WL 2437056
(U.S. June 20, 2011).9 We previously have entertained
9
See also, e.g., Cook v. AVI Casino Enters., Inc., 548 F.3d 718, 722
(9th Cir. 2008); Ninigret Dev. Corp. v. Narragansett Indian
Wetuomuck Hous. Auth., 207 F.3d 21, 27 (1st Cir. 2000); Romanella
v. Hayward, 114 F.3d 15, 16 (2d Cir. 1997) (per curiam); Gaines
(continued...)
No. 10-2069 19
a diversity suit involving a tribal corporation as a party,
see Altheimer & Gray v. Sioux Mfg. Corp., 983 F.2d 803 (7th
Cir. 1993), but we have not stated expressly that corpora-
tions chartered under tribal law are citizens of a state
for purposes of invoking diversity jurisdiction.
Our colleagues in the Eighth Circuit have held that an
unincorporated school board operated by an Indian tribe
and “considered a part of the Indian tribe” is not a
citizen of a state. Auto-Owners Ins. Co. v. Tribal Court of
the Spirit Lake Indian Reservation, 495 F.3d 1017, 1021 (8th
Cir. 2007). However, on the precise point now before
us, both the Ninth and Tenth Circuits have held that
“an entity incorporated under tribal law is the equivalent
of a corporation created under state or federal law for
diversity purposes” and therefore “should be analyzed
for diversity jurisdiction purposes as if it were a state
or federal corporation.” Cook v. AVI Casino Enters., Inc.,
548 F.3d 718, 723 (9th Cir. 2008) (internal quotation
marks omitted); see also Gaines v. Ski Apache, 8 F.3d 726, 729
(10th Cir. 1993) (explaining that a “tribe may . . . charter
a corporation pursuant to its own tribal laws, and such a
(...continued)
v. Ski Apache, 8 F.3d 726, 729 (10th Cir. 1993). See generally
13E Charles Alan Wright et al., Federal Practice and Procedure
§ 3622 (3d ed. 2011) (“The existing judicial authority indicates
that an Indian tribe, as opposed to an individual member
thereof, is not a citizen of any state and is not a foreign state
for diversity or alienage jurisdiction purposes, although
some cases take the contrary position with regard to entities
created by a Tribe.” (footnote omitted)).
20 No. 10-2069
corporation will be considered a citizen of a state for
purposes of diversity jurisdiction”); Stock West, Inc. v.
Confederated Tribes of the Colville Reservation, 873 F.2d
1221, 1226 (9th Cir. 1989). Relatedly, in holding that a
tribal housing agency was a stateless entity under the
diversity statute, the First Circuit indicated that the
result would have been different had the housing
authority been a corporation: “We see no reason why
the Authority (an arm of the Tribe, not separately incorpo-
rated) should be treated any differently for jurisdictional
purposes.” Ninigret Dev. Corp. v. Narragansett Indian
Wetuomuck Hous. Auth., 207 F.3d 21, 27 (1st Cir. 2000)
(emphasis added); cf. Miccosukee Tribe of Indians of
Florida, 607 F.3d at 1276 (stating that the “majority view . . .
is that unincorporated Indian tribes cannot sue or be sued
in diversity” (emphasis added) (quotation marks omitted)).
We have hewn to the mechanical application of a
clear rule “treat[ing] any corporation as a corporation
for diversity purposes” and have noted that the diversity
statute itself does not distinguish between types of corpo-
rations or limit its reach to businesses incorporated
under state law. Hoagland v. Sandberg, Phoenix & Von
Gontard, P.C., 385 F.3d 737, 739, 741 (7th Cir. 2004); see also
Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc.,
No. 09-3975, 2011 WL 2652201, at *3 (7th Cir. July 8,
2011) (en banc) (reaffirming a preference for “administra-
tive simplicity” in jurisdictional rules (quotation marks
omitted)). Indeed, municipal corporations chartered by
states are “treated just like . . . regular business
corporation[s]” under § 1332. City of Clinton v. Moffitt,
812 F.2d 341, 342 (7th Cir. 1987) (citing Moor v. Cnty. of
No. 10-2069 21
Alameda, 411 U.S. 693, 717-18 (1973), and Illinois v. City
of Milwaukee, 406 U.S. 91, 97 (1972)). Moreover, we do
not discern any significant reason that corporations
organized under tribal law and participating in
economic transactions with individuals and businesses
from a variety of states merit different jurisdictional
treatment than their counterparts organized under state
law. Thus, we join our colleagues in the Ninth and Tenth
Circuits and hold that a corporation chartered under
Native American tribal law should be treated as a
citizen of a state pursuant to § 1332(c). Cf. Hoagland,
385 F.3d at 740 (citing with approval cases treating
tribal corporations as state citizens for diversity pur-
poses). We understand the Eighth Circuit’s decision to
apply only to unincorporated tribal agencies. Cf. Auto-
Owners Ins. Co., 495 F.3d at 1021 (quoting Dillon v. Yankton
Sioux Tribe Hous. Auth., 144 F.3d 581, 583 (8th Cir. 1998),
as distinguishing between a tribal agency and “ ‘a
separate corporate entity created by the tribe’ ”). In this
case, then, Lake of the Torches may be considered a
citizen of Wisconsin, and the district court properly
exercised jurisdiction under § 1332.
B.
The primary issue presented by this appeal is
whether the Indenture, which governs the terms of a
bond offering, is a management contract for the opera-
tion of a gaming facility within the meaning of the Act.
Wells Fargo asserts that because the Indenture is essen-
tially a loan document containing “typical provisions
22 No. 10-2069
used by lenders to ensure they can be paid from, and
have recourse to, revenue streams and collateral
sufficient to repay their loan,” it is not a contract for
the management or operation of the Casino and there-
fore lies outside the scope of the Act’s regulation of
management contracts. Appellant’s Br. 24.
1.
Resolution of this issue is, fundamentally, a question
of statutory interpretation. Therefore, we must begin
with the language of the Act. Sections 2710 and 2711,
respectively, permit Indian tribes to “enter into a man-
agement contract for the operation of a Class III
gaming activity” or to “enter into a management contract
for the operation and management of a class II gaming
activity,” only if the contract has been submitted to and
approved by the Chairman of the Commission. 25 U.S.C.
§§ 2710(d)(9), 2711(a)(1).
Notably, the Act does not define “management contract.”
In determining its meaning, however, we cannot limit
ourselves to the isolated words of the statutory text.
Statutory language “must always be read in its proper
context,” McCarthy v. Bronson, 500 U.S. 136, 139 (1991),
because “[t]he meaning—or ambiguity—of certain words
or phrases may only become evident when placed in
context,” Food & Drug Admin. v. Brown & Williamson
Tobacco Corp., 529 U.S. 120, 132 (2000). Accordingly, we
must examine the “language and design of the statute as
a whole.” United States v. Berkos, 543 F.3d 392, 396 (7th
Cir. 2008); see also Foufas v. Dru, 319 F.3d 284, 287 (7th Cir.
No. 10-2069 23
2003) (“To read language acontextually is an almost
certain route to error.”).
In undertaking such a contextual study of the Act’s
provisions, we begin by recalling Congress’s statement
of legislative purpose. As we noted in our prefatory
description of the Act, Congress enacted this legislation
to provide a comprehensive regulatory framework
for gaming operations by Indian tribes that would
promote tribal economic self-sufficiency and strong
tribal governments while shielding them from organ-
ized crime and other corrupting influences. Congress
explicitly expressed a concern that Indian tribes be the
primary beneficiaries of fair and honest gaming opera-
tions. See 25 U.S.C. § 2702(1)-(2). When we turn to the
specific provisions governing the content of manage-
ment contracts, we find that Congress attempted
to implement these legislative goals by conditioning,
through § 2711(b), the Chairman’s approval of a manage-
ment contract on the inclusion in the contract of several
provisions designed to protect the interests of the Indian
tribe. For example, the contract must provide “for
adequate accounting procedures” and “verifiable finan-
cial reports . . . prepared, by or for the tribal governing
body.” 25 U.S.C. § 2711(b)(1). The contract also must
allow tribal officials to have “access to the daily opera-
tions [and] . . . to verify the daily gross revenues and in-
come” of the gaming facility. Id. § 2711(b)(2). In addition,
the contract must provide “for a minimum guaranteed
payment to the Indian tribe that has preference over
the retirement of development and construction costs,”
id. § 2711(b)(3), and it must specify “an agreed ceiling
24 No. 10-2069
for the repayment of development and construction costs.”
Id. § 2711(b)(4). The contract cannot last more than five
years unless the Chairman determines “that the capital
investment required, and the income projections, for
the particular gaming activity require the additional
time.” Id. § 2711(b)(5). Finally, the contract must set out
“grounds and mechanisms” by which it may be termi-
nated. Id. § 2711(b)(6).
The IGRA also governs the fee that the outside party
may receive for its services under the contract. The Chair-
man may approve management contracts “providing for
a fee based upon a percentage of the net revenues of
a tribal gaming activity” only if the Chairman believes
the percentage is “reasonable in light of surrounding
circumstances” and usually only if the percentage is
not more than 30%. Id. § 2711(c)(1). If, however, “the
capital investment required” by the contractor and the
projected return require a larger fee, the Chairman may
approve a fee between 30% and 40% of net revenues. Id.
§ 2711(c)(2).
These statutory provisions do not offer a precise
answer to the question before us—whether Congress
intended to include contracts with third parties whose
primary, or only, role is to infuse capital into a
gambling operation and whose primary interest in par-
ticipation in management matters is the protection of its
investment. Some of the statutory provisions are crafted
seemingly to include a very broad range of business
arrangements, including the one before us. Other provi-
sions appear aimed at more traditional management
No. 10-2069 25
relationships in which the third party operates, for a
fee, the day-to-day staffing and supervision of the
games, other offerings and security at the gaming facility.
An examination of the statutory provisions simply
yields no definitive answer with respect to the breadth
of the term “management contract.” It does, however,
make clear that Congress wrote in broad strokes in
crafting this legislation. There is no solid indication, in
either the language or the structure of the statute, that
Congress intended to limit its regulation of third-
party contractual participation in Indian enterprises to
a particular kind of activity.
When we turn to the pronouncements of the NIGC,
we find the same broad approach to regulation. The
Commission has defined the term “management con-
tract” by regulation as “any contract, subcontract, or
collateral agreement between an Indian tribe and a con-
tractor or between a contractor and a subcontractor if
such contract or agreement provides for the management
of all or part of a gaming operation.” 25 C.F.R. § 502.15
(emphasis added). Notably, this regulatory provision
includes “collateral agreements,” a term that the agency
has interpreted to include land purchase agreements
and development and construction agreements when
those agreements “provide[] for the management of all
or part of a gaming operation,” id.1 0 See Catskill Dev., L.L.C.
10
The Commission defines a “collateral agreement” as “any
contract . . . that is related, either directly or indirectly, to a
(continued...)
26 No. 10-2069
v. Park Place Entm’t Corp., 547 F.3d 115, 130-32 (2d Cir.
2008) (discussing regulatory provisions and deferring to
the NIGC’s decision that a land purchase agreement and
a development and construction agreement should be
characterized as management contracts); United States
ex rel. Bernard v. Casino Magic Corp., 293 F.3d 419, 424-25
(8th Cir. 2002) (deferring to the NIGC’s view that a con-
struction term loan agreement and a consulting con-
tract, when read together, formed a management agree-
ment). Other provisions of tangential relevance are simi-
larly broad.11
10
(...continued)
management contract, or to any rights, duties or obligations
created between a tribe (or any of its members, entities, or
organizations) and a management contractor or subcontractor
(or any person or entity related to a management contractor
or subcontractor).” 25 C.F.R. § 502.5.
11
As the district court noted, the Commission defines the term
“primary management official” as
(a) The person having management responsibility for
a management contract;
(b) Any person who has authority:
(1) To hire and fire employees; or
(2) To set up working policy for the gaming opera-
tion; or
(c) The chief financial officer or other person who has
financial management responsibility.
(d) Any other person designated by the tribe as a
primary management official.
(continued...)
No. 10-2069 27
In an informal NIGC bulletin distinguishing between
management contracts, which require approval, and
consulting agreements, which do not, the Commission
had taken a similarly broad approach in defining a man-
agement contract for the purposes of the Act:
Management encompasses many activities (e.g.,
planning, organizing, directing, coordinating, and
controlling). The performance of any one of
such activities with respect to all or part of a
gaming operation constitutes management for the
purpose of determining whether any contract or
agreement for the performance of such activities
is a management contract that requires approval.
NIGC Bulletin No. 94-5, at 1 (Oct. 14, 1994). This informal
agency pronouncement, while not entitled to deference
under the Supreme Court’s decision in Chevron U.S.A. Inc.
v. Natural Resources Defense Council, Inc., 467 U.S. 837
(1984),12 is of relevance to our inquiry. The Bulletin
follows the same approach as the regulations and demon-
strates a consistent view on the part of the agency that,
11
(...continued)
25 C.F.R. § 502.19. The Commission defines “person having
management responsibility for a management contract” as “the
person designated by the management contract as having
management responsibility for the gaming operation, or a
portion thereof.” Id. § 502.18.
12
See United States v. Mead Corp., 533 U.S. 218, 226-27, 231 (2001);
Catskill Dev., L.L.C. v. Park Place Entm’t Corp., 547 F.3d 115, 127
(2d Cir. 2008); First American Kickapoo Operations, L.L.C. v.
Multimedia Games, Inc., 412 F.3d 1166, 1174 (10th Cir. 2005).
28 No. 10-2069
although determinations “must be made on a case-by-
case basis because they depend on the facts and circum-
stances of the individual situation and the actual day-to-
day relationship between the tribe and the contractor,”
NIGC Bulletin No. 94-5, at 2, the governing statute
requires careful scrutiny of a variety of arrangements
that result in the ongoing control of gaming operations
by non-tribe entities.
Another source of informal agency pronouncement,
informal declination letters from NIGC’s Acting General
Counsel, speak more directly to the precise problem
before us. We approach this source with significant
caution, however. The declination process, by which
entities may seek the view of the General Counsel as to
whether a particular contract is a management contract
requiring the review of the Chairman, is neither contem-
plated by the statute nor authorized by regulation. Nor
do we discern any indication that the views of the
General Counsel are scrutinized formally by the
Chairman or by the NIGC. Nevertheless, because
they embody the considered view of an officer whose re-
sponsibilities include the application of the statute and
the regulations, the letters cannot be excluded entirely
from our consideration.
Our review of these documents reveals the same
pattern discernible in the statute and the regulations.
There is a general concern that the participation of any
party in the actual management of a tribal gaming
facility—whether through a traditional contract to
oversee the daily operations of the facility or through a
No. 10-2069 29
financing scheme that permits the provider of funding
intermittently to interject itself in the management deci-
sions of the facility to ensure the security of its invest-
ment—should be subject to the Chairman’s scrutiny
and approval as a management contact. Although the
General Counsel’s office has drawn more precise lines of
demarcation than we find in other sources, it is not
within the scope of our task today to approve or disap-
prove those distinctions.1 3 Nevertheless, the letters do
confirm our reading of the statutory and regulatory
scheme as providing no particular exemption for
financing arrangements that contain provisions that
implicate the management of a gaming facility.
The absence of such an exemption ought not be sur-
prising in light of the manifest legislative purpose of the
statutory provision. As we have noted, Congress, intent
on fostering and protecting tribal ownership of gaming
facilities and concerned that third parties would take
advantage of tribal entrepreneurial efforts, wrote in
broad strokes to encompass many possible sources
of abuse. Congress was in no position to identify specifi-
cally the “red flags” that would indicate the need
for scrutiny, and it therefore, understandably, left to
the agency charged with the responsibility for admin-
istration of the statute the task of delineating in more
13
Indeed, it appears that, through its regulatory authority, the
Commission should undertake that task at some point in
order to give the entities that it regulates more certain
guidance as to the permissible scope of financing agreements.
30 No. 10-2069
concrete terms which arrangements deserved scrutiny
before implementation.
Unfortunately, we must resign ourselves to the fact
that we do not have the definitive guidance from the
Commission that Congress had anticipated. In the
absence of such careful and comprehensive regulation
by NIGC, we are left with the task of determining
whether the provisions of this particular financial ar-
rangement require the Chairman’s scrutiny. In these
circumstances, we must rely on the general standards
outlined in the Act, the sparse regulatory provisions
and, to the extent that they are informative, the
informal pronouncements of the NIGC in order to
ascertain whether the agreement before us is within the
sphere of regulation established by Congress.
Upon examination of the Indenture Agreement, it
becomes apparent that there are provisions that militate
in favor of characterizing the document as a manage-
ment contract and other provisions that support the
contrary characterization. Supporting the latter charac-
terization, it is notable that the Indenture does not
transfer explicitly to Wells Fargo or to Saybrook, the
bondholder, wholesale responsibility over the daily
operations or maintenance of the Casino, let alone com-
pensate them for doing so. Further, it makes no explicit
provision for the transfer of responsibility over the Ca-
sino’s employment, accounting or financial procedures.
In fact, the Indenture requires Lake of the Torches to
“continue to . . . operate . . .[,] maintain, repair and pre-
serve the Casino Facility,” to ensure that the operation
No. 10-2069 31
of the Casino complies with legal requirements and to
pay operating expenses and taxes. R.6-1 at 41. The Inden-
ture also contemplates that Lake of the Torches will
maintain control over Casino licenses, permits, financial
records, accounting records, budgetary statements, ac-
counts payable and “all other documents, instruments,
reports and records . . . relating to the operation of the
Casino Facility.” Id. at 39; see also id. at 39-40, 42. It does
not involve provisions for development or construction
costs, does not set a term limit for the transfer of
rights (which will be extinguished upon repayment)
and does not allocate to Saybrook or Wells Fargo a per-
centage of the Casino’s revenues. The Indenture sets a
fixed repayment schedule that, although secured by
gaming revenues, is not set as a proportion of it.
On the other hand, there are provisions that are far
more problematic. As we have noted, section 5 of the
Indenture requires that gross revenues from the Casino
be deposited daily in a trust fund, sets numerous condi-
tions on the allocation and disposition of the revenues
and gives Wells Fargo ultimate control over withdraw-
als. We need not determine here the appropriateness of
such an arrangement other than to note that, without
some limitation on Wells Fargo’s discretion to allocate
or condition the release of the Casino’s gross revenues
even to pay operating expenses, this provision bestows
a great deal of authority in an entity other than the Tribe
to control the Casino’s operations. Furthermore, as
the district court noted, section 6.18 of the Indenture
provides that the Corporation cannot incur capital ex-
penditures in excess of 25% of the previous year’s
32 No. 10-2069
capital expenditures without the consent, which may
not be “unreasonably withheld,” of 51% of the bond-
holders. Id. at 43. This provision allows the bondholders
to control the amount that the Corporation can spend
on capital expenditures related to the Casino, a major
prerogative in determining the present and future
direction of any corporate entity. Indeed, the NIGC has
enumerated “[m]aintaining and improving the gaming
facility” as the very first responsibility that must be
allocated in any management contract. See 25 C.F.R.
§ 531.1(b)(1).
In addition, section 6.19 of the Indenture specifies that,
if the debt-service-coverage ratio “falls below 2.00
to 1,” the bondholders can require the Corporation to
“promptly retain an Independent management con-
sultant with sufficient experience in and knowledge
of the gaming industry approved by the Bondholder
Representative” to conduct a review of Casino operations
and to submit a report making “recommendations
as to improving the operations and cash flow of the
Casino.” R.6-1 at 43. This provision requires, further-
more, that the Corporation “use its best efforts to imple-
ment the recommendations” of the consultant within
90 days. Id. We agree with our colleague in the district
court that this provision implicates the apportionment
of management responsibilities for the Corporation. It
permits the consultant, who must be approved by a
representative of the bondholders, effectively to direct
the operations of the Casino and thereby transfers man-
agement responsibility over the gaming operation into
the hands of a party other than the tribe. Cf. United States
No. 10-2069 33
ex rel. Bernard, 293 F.3d at 425 (“The issue is whether
Casino Magic, in fact, had managerial control.” (emphasis
added)).
The Indenture further provides that the Corporation
will not remove or permit the replacement of the Casino’s
general manager, controller or chairman or executive
director of the gaming commission for any reason
without the consent of 51% of the bondholders. R.6-1
at 44. This requirement applies to removal for any
reason, thus potentially tying the hands of the Tribe to
replace key officers even when sound management or
even regulatory compliance concerns require their re-
moval. This provision gives the bondholders truly power-
ful authority over the management of the Corporation
and ensures that they will be able to exercise strong
control over management and compliance issues that
arise in the normal course of the Casino’s operation.
The provisions that we have discussed to this point
affect the day-to-day management of the Corporation
when it is meeting its debt obligations. The Indenture
permits, however, even greater control by the bond-
holders in the case of default. Specifically, the bond-
holders can require the Corporation to hire new manage-
ment of its choosing. Id. at 49. As the district court
held, this provision places very significant management
authority in the hands of the bondholders.
We reiterate that we do not attempt here to delineate
precise guidelines for parties to loan agreements in-
volving an Indian gaming operation, a task better left to
the Commission. Nevertheless, we are firmly convinced
34 No. 10-2069
that, taken together, the provisions discussed above
transfer significant management responsibility to
Wells Fargo and the bondholder and therefore render
the Indenture a management agreement subject to the
approval of the Chairman.1 4
2.
The district court took the view that, because the
contract was a management contract under IGRA and had
not been approved by the Chairman, it was void ab initio
and that the offending provisions could not be severed.
Wells Fargo, however, invites our attention to Olson v.
Paine, Webber, Jackson & Curtis, Inc., 806 F.2d 731 (7th
Cir. 1986), in which we reformed an arbitration provi-
sion in an investment agreement in order to avoid its in-
validation for violating Commodity Futures Trading
14
The district court determined that the provision of the
Indenture providing for the appointment of a court-appointed
receiver to manage the trust security upon default also
rendered the Indenture a management agreement under
IGRA. Because we have determined that the provisions dis-
cussed in the text suffice to establish that the Indenture is a
management contract, we need not determine whether the
provision relating to the appointment of a receiver is
similarly problematic. The reconciliation of the provisions
of IGRA, section 959 of Title 28 of the United States Code
and traditional federal equity practice need not be decided
here and is best left to litigation where the matter has been
explored by the parties more fully than it has been explored
here.
No. 10-2069 35
Commission regulations despite a provision in the reg-
ulations providing that nonconforming agreements
“will be null and void.” Id. at 743 (quoting 41 Fed. Reg.
42944 (1976)). Wells Fargo also points to the Indenture’s
own severability clause, which provides that any illegal
terms in the Indenture should be read out in order to
preserve the remainder of the agreement. According to
Wells Fargo, reformation of the Indenture would
conform with both Olson and the intent of the parties
as expressed in the severability clause.
We cannot accept this argument. As Wells Fargo
readily admits, see Appellant’s Br. 34, IGRA regulations
provide explicitly that management contracts that have
not been approved by the Chairman are void. 25 C.F.R.
§ 533.7.15 The Act is comprehensive legislation recon-
ciling many competing interests and fulfilling the federal
government’s special obligation to protect Native Ameri-
can tribes. See Gaming World Int’l, Ltd. v. White Earth Band
of Chippewa Indians, 317 F.3d 840, 848 (8th Cir. 2003) (“The
regulatory scope of IGRA is . . . far reaching in its super-
visory power over Indian gaming contracts.”). One of
IGRA’s principal purposes is to ensure that the tribes
retain control of gaming facilities set up under the pro-
tection of IGRA and of the revenue from these facilities.
15
Wells Fargo does not contend that this regulation is not
entitled to Chevron deference as a reasonable interpretation of
IGRA’s requirement that parties may enter into management
contracts only if they have been approved by the Chairman
of the NIGC.
36 No. 10-2069
Consequently, the statute provides for pre-screening of
contracts between the tribes and parties desiring to estab-
lish business relationships with the tribes that might
impair this fundamental purpose of the federal statutory
scheme, and it is this comprehensive review that con-
stitutes the core of Congress’s protection for Indian
gaming establishments. The statutory and regulatory
framework is thus fundamentally different from the
simple omission of statutorily required terms at issue in
Olson and incompatible with the presumption against
total invalidity applied in that case. It was reasonable
for the NIGC to determine that, in enacting the statute,
Congress intended that a contract violating this funda-
mental purpose of the statute was void. Given the Com-
mission’s categorical statement about the consequences
for failure to secure approval and the comprehensive
regulatory framework involved, we conclude that the
Commission’s regulation is not subject to reformation
by excision of offending provisions. Cf. First American
Kickapoo Operations, L.L.C. v. Multimedia Games, Inc., 412
F.3d 1166, 1177 n.5. (10th Cir. 2005) (“It may be questioned
whether any part of a contract determined to be void ab
initio, including the severability provisions, may be
enforced.”); Tamiami Partners, Ltd. v. Miccosukee Tribe of
Indians of Florida, 63 F.3d 1030, 1047 & n.59 (11th Cir.
1995) (concluding that IGRA and NIGC regulations so
dominate the field of tribal gaming that they are incorpo-
rated into gaming contracts as a matter of law).
No. 10-2069 37
C.
We also have examined carefully Wells Fargo’s sub-
mission that the district court should have allowed it
leave to file an amended complaint to assert that the
other documents in the case, most especially the bonds
and the Bond Resolution of the Corporation, constitute
independent waivers of the Corporation’s sovereign
immunity that are not dependent on the validity of the
Indenture. In the view of Wells Fargo, even if it
cannot assert a claim for breach of the Indenture, it can
still seek other legal and equitable relief in connection
with the bond transaction from Lake of the Torches on
behalf of itself and the bondholder.
A plaintiff may amend a complaint after entry of a
final judgment “only with leave of court after a motion
under Rule 59(e) or 60(b) had been made and the judg-
ment has been set aside or vacated.” Figgie Int’l, Inc. v.
Miller, 966 F.2d 1178, 1179 (7th Cir. 1992). In this case,
however, the district court sua sponte dismissed the case
for lack of subject matter jurisdiction with prejudice
and entered final judgment before Lake of the Torches
had filed a responsive pleading and without any notice
to Wells Fargo that the court was contemplating such a
course. As such, the district court should have granted
relief from the judgment and permitted Wells Fargo
leave to amend unless it found undue delay, bad faith
or dilatory motive, or if amending the complaint would
have been futile because the amended complaint would
not survive dismissal. See Chaudhry v. Nucor Steel-Indiana,
546 F.3d 832, 838-39 (7th Cir. 2008); Foster v. DeLuca, 545
38 No. 10-2069
F.3d 582, 584-85 (7th Cir. 2008); Frey v. Envtl. Prot. Agency,
270 F.3d 1129, 1131-32 (7th Cir. 2001).
The district court concluded that any amendment
would be futile and therefore refused to grant relief from
the judgment. The district court rested its decision on
essentially two grounds. Primarily, the court determined
that the various transactional documents upon which
Wells Fargo relied were simply collateral to the Indenture
and that the bonds incorporated by reference the Inden-
ture’s terms. As such, the entire transaction, including
all collateral agreements, required the Chairman’s ap-
proval, and the bonds themselves were also management
contracts subject to the Act’s approval requirement.
Without such approval, the collateral Bond Documents
were, in the view of the district court, similarly void.
We do not believe that this analysis can support the
district court’s decision. As our colleagues in the Second
Circuit have held, a document collateral to a management
contract “is subject to agency approval . . . only if it ‘pro-
vides for the management of all or part of a gaming opera-
tion.’ ” Catskill Dev., 547 F.3d at 130 (quoting 25 C.F.R.
§ 502.15). 1 6 In our view, the mere reference to a related
16
See also Catskill Dev., 547 F.3d at 130 n.20 (rejecting an inter-
pretation of IGRA regulations “as requiring NIGC approval of
all collateral contracts” (emphasis in original)); Jena Band of
Choctaw Indians v. Tri-Millennium Corp., 387 F. Supp. 2d 671, 677-
78 (W.D. La. 2005) (“[O]nly those collateral agreements that
should also be considered management contracts because they
(continued...)
No. 10-2069 39
management contract does not render a collateral docu-
ment subject to the Act’s approval requirement.
The district court also believed that the waivers of
sovereign immunity in the collateral documents are void
because the documents are interdependent and support
but one basic transaction, of which the Indenture was
a crucial part. We believe that the district court’s reliance
on this ground was premature. It is not immediately
apparent that the waivers contained in the documents
attached to the proffered amended complaint, when
read separately or together, ought to be construed as
dependent on the validity of the waiver in the Indenture
and that they do not make clear the Corporation’s intent
to render itself amenable to suit for legal and equitable
claims in connection with the bond transaction, see C & L
Enters., Inc. v. Citizen Band Potawatomi Indian Tribe of
Oklahoma, 532 U.S. 411 (2001); Sokaogon Gaming Enter. Corp.
v. Tushie-Montgomery Assocs., Inc., 86 F.3d 656 (7th Cir.
1996). These issues are not susceptible to resolution on
the face of the amended complaint, and Wells Fargo’s
opportunity to file a reply brief was not an adequate
opportunity for the thorough litigation required to
resolve them.
(...continued)
provide for the management of a gaming operation are void
without NIGC approval.”); Kevin K. Washburn, The Mechanics
of Indian Gaming Management Contract Approval, 8 Gaming L.
Rev. 333, 344-45 (2004) (explaining that the Commission
“strictly has jurisdiction to review and approve only ‘manage-
ment contracts’ ” and that the Commission “does not intend
that [unapproved collateral] agreements are void”).
40 No. 10-2069
Another, and more fundamental, issue went
unanswered by the district court in its consideration of
the motion to file the amended complaint. Once the
Indenture is voided, the standing of Wells Fargo to seek
the return of the funds to the bondholder is not self-
evident. Lake of the Torches contested Wells Fargo’s
standing in its briefing before the district court, and
Wells Fargo responded that the failure of an express
trust results in a constructive trust in favor of the benefi-
ciary that preserves the trustee’s standing to litigate on
behalf of the beneficiary. However, the issue was not
explored fully by either party, and it deserves more
comprehensive consideration on remand.
In sum, on remand, the district court should grant
Wells Fargo’s motion for leave to file an amended com-
plaint insofar as it states claims for legal and equitable
relief in connection with the bond transaction. The court
should then address whether Wells Fargo’s standing to
seek such relief on behalf of the bondholder survives
the voiding of the Indenture. It should proceed to
address whether the transactional documents, taken
alone or together, evince an intent on the part of the
Corporation to waive sovereign immunity with respect to
claims by Wells Fargo on its own behalf and, if it has
standing to do so, on behalf of the bondholder.
Conclusion
We conclude that the Indenture constitutes a manage-
ment contract under IGRA and that, as a condition of its
validity, it should have been submitted to the Chairman
No. 10-2069 41
of the NIGC for approval prior to its implementation.
The parties’ failure to secure such approval renders the
Indenture void in its entirety and thus invalidates the
Corporation’s waiver of sovereign immunity. The
district court therefore correctly determined that it was
without jurisdiction with respect to Wells Fargo’s
motion for the appointment of a receiver.
We further conclude that the district court should
have permitted Wells Fargo leave to file an amended
complaint to the extent that it presented claims for legal
and equitable relief in connection with the bond transac-
tion on its own behalf and on behalf of the bondholder.
Upon the filing of such a complaint, the district court
should address the issue of whether, now that the In-
denture has been determined to be void, Wells Fargo
has standing to litigate claims on behalf of the bond-
holder. The court also must determine whether the collat-
eral documents, when read separately or together, waive
the sovereign immunity of the Corporation with respect
to any such claims. If such a waiver is found, the court
may proceed to determine the merits of those claims.
Accordingly, the judgment of the district court is
affirmed in part and reversed and remanded in part. The
parties shall pay their own costs in this appeal.
A FFIRMED IN P ART,
R EVERSED and R EMANDED IN P ART
9-6-11