Judge: Fond du Lac Band must pay Duluth $10.3MA U.S. District Court judge ruled Tuesday that the Fond du Lac Band of Lake Superior Chippewa must pay the city of Duluth at least $10.3 million in casino revenue back payments.
By: Steve Kuchera and Tom Olsen, Duluth News Tribune
A U.S. District Court judge ruled Tuesday that the Fond du Lac Band of Lake Superior Chippewa must pay the city of Duluth at least $10.3 million in casino revenue back payments.
The ruling addresses the period between late 2009, when the band stopped paying the city, and April 2011. It does not affect money the city claims the band owes since that date.
Mayor Don Ness called the ruling by Judge Susan Nelson “an important victory for Duluth” during a City Hall news conference, and said he believes the final amount owed to the city will increase once interest is taken into account.
“(It) gives us confidence that the $12 million owed to the city of Duluth will be paid,” Ness said.
Karen Diver, chairwoman of the band, said she was not surprised by the ruling because Nelson had previously issued the same opinion.
“It was not unexpected because the judge ruled the same way in her previous verdict,” Diver said. “We didn’t have it in our sight that it would be any different this time.”
Diver said her records indicate that the amount in question is just under $10.4 million, but that does not include any interest that may be applied.
According to Duluth City Attorney Gunnar Johnson, the band owed the city more than $12.4 million in principal and interest earlier this year. Nelson ordered the two sides to contact her office to schedule a trial confined to the issue of about $585,000 in disputed revenues.
Before 2009, Duluth had received about $6 million a year in casino payments. The money was a primary funding source for rebuilding city streets. The revenue sharing began in 1986, when the band began operating the Fond-du-Luth Casino on Superior Street.
On Nov. 21, 2011, Nelson issued her original ruling in the case, which was a mixed decision for the parties. She released the band from any obligation to share with the city any future profits from the casino, but ordered the band to honor the profit-sharing agreement that was in place with the city through April 2011. On Dec. 21, 2011, the band and the city both appealed aspects of Nelson’s decisions.
In January, the Eighth Circuit Court of Appeals reversed Nelson’s decision requiring the band to pay the city an estimated $12.4 million in casino revenue back payments. The Court of Appeals sent the question back to Nelson, who again ruled in the city’s favor on this issue.
“The Court recognizes that the Band has paid approximately $75 million to the City under the 1994 Agreements, and that requiring it to remit the remaining $10,392,412.40 owed for the 2009-11 term is a significant burden,” Nelson wrote in her order. “But the Court also notes that the Band has benefited substantially from the 1994 agreements,” earning about $175 million in profits from 1994 to 2009.
“And since the Band stopped payments in 2009, it has profited more than $20 million while receiving the City’s services for free,” Nelson wrote. “(T)he circumstances altogether do not rise to the level of the truly extraordinary to warrant retrospective relief.”
In announcing the ruling, Ness said that the city wants to work with the band.
“There is enough benefit to go around,” he said.
Diver said it will take some time to determine what happens next, but agreed that the suit should be settled soon.
“The tribal council will sit with our legal representatives to determine the next step,” she said. “We continue to hope that all of this can be put to bed so the parties can move on and be compliant with the law.”
Tuesday’s ruling does not end the legal battle in federal courts between the city and the band. In addition to the trial over the amount of disputed revenue, the city filed suit in U.S. District Court in Washington, D.C., earlier this year against the National Indian Gaming Commission over the commission’s Notice of Violation to the band that determined that the city no longer could receive revenue-sharing payments from the Fond-du-Luth Casino.
The city is asking the federal court to overturn the commission’s action of July 2011 that essentially banned the Fond du Lac Band of Lake Superior Chippewa from sharing casino profits with Duluth, as it had from 1984 to 2009.
On Tuesday, Ness said it was inconsistent that new contracts between tribes and cities are being approved across the country while the NIGC voided Duluth’s agreement with Fond du Lac.
Getting the courts to overturn the violation notice will not be easy, Johnson said. But if the courts rule in the city’s favor on that issue “we’re back in the game again” and can try to receive money for the time after April 2011.