The city of Duluth and the Fond du Lac band must continue their legal battle in federal court, the Minnesota Supreme Court ruled this week.
The neighboring governments have been locked in lawsuits since 2009, when the tribe stopped sharing revenue from its downtown casino with the city. On Wednesday, the state’s highest court overruled a lower court and kicked a dispute over the casino’s expansion plans to federal district court.
“We lack jurisdiction over this dispute,” the court ruled. Duluth sued in St. Louis County District Court to stop the tribe from expanding its trust lands to include an old hotel it bought next to its Fond-du-Luth casino in downtown Duluth.
Duluth City Attorney Gunnar Johnson said the court’s ruling merely “clarifies the venue question that some very smart legal minds have differed on.”
Fond du Lac Chairwoman Karen Diver said her band “continues to hope that all of the city’s litigation will be resolved” so that all sides can move on to “a more positive course.”
The Fond-du-Luth was Minnesota’s first casino, built with the combined effort and goodwill of tribal, city, state and congressional leaders.
The Fond du Lac Band of the Lake Superior Chippewa bought a crumbling square block of property in 1986. With the city’s full support, they put the land in trust and used it to build a casino. Both governments signed off on the deal and settled back to share the profits for the next 50 years.
Between 1994 and 2009, the casino pumped an estimated $75 million into city coffers. Those payments stopped in 2009, when tribal leaders announced that the $6 million a year that Duluth was getting could be put to better use helping the band’s members.
The city objected that it needed the funds to repair its roads and to offset the cost of extra traffic and policing that came with a downtown casino.
“To be zeroed out is extremely disappointing and puts the city in a very difficult situation,” Johnson said. “The city has really been struggling to keep its revenues up.”
As difficulties increased, so did the number of lawsuits in the case. The city sued for the lost revenue, despite a 2011 ruling by the National Indian Gaming Commission that ruled the original arrangement violated federal law. Last year, a federal judge ordered the band to pay $10.4 million in back payments to the city but agreed that there would not have to be any future payments.
The dispute over the Carter Hotel property revolves around the tribe’s plan to expand its trust lands to include the hotel, which would deprive the city of any tax revenue from the property.