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Stifel, Nicolaus & Co. v. Lac Du Flambeau Band of Lake Superior Chippewa

U.S. Court of Appeals for the 7th Circuit Docket Nos. 14-2150, 14-2287 Opinion Date: November 24, 2015

In this case, the most recent appeal in a series of suits concerning the sale of bonds by a corporation (the “Corporation”) owned by the Lac du Flambeau Band of Lake Superior Chippewa Indians (collectively, the “Tribal Entities”), the 7th Circuit clarifies the standards applicable to injunctions as well as review of lower-Court decisions and, finally, jurisdiction.


The Corporation was chartered under tribal law to own and operate the Lake of the Torches Resort Casino (the “Casino”) on tribal lands in northern Wisconsin. The Casino  is operated under tribal-state compact with the State of Wisconsin.

In 2007 the Tribe decided to diversify its operations by investing in a project to build a riverboat casino, hotel, and bed and breakfast in Natchez, Mississippi. To secure funding for the investment and refinance some existing debt, the Corporation issued taxable gaming revenue bonds in January 2008. Godfrey, as counsel to the Corporation and bond counsel for the transaction, issued 2 opinion letters as to the meaning of several bond-related documents and the legality of the transaction.

The 2008 bond issue did not go as planned, and Wells Fargo filed suit. In that action, Wells Fargo alleged that the Corporation breached a bond indenture and stated that, as trustee for the bondholders, it wanted a receiver appointed. In that case, the 7th Circuit had held that a bond indenture constituted an “unapproved management contract” under the Indian Gaming Regulatory Act (“IGRA”) and was therefore void.

Procedural History

After more than 3 years of litigating the validity of other bond-related documents in State and Federal Court, the Tribal Entities instituted a Tribal Court action in 2013 seeking a declaration that the bonds at issue were invalid under the IGRA as well as tribal law. The case on appeal before the 7th Circuit arosies from efforts on the part of certain “Financial Entities” and Godfrey & Kahn S.C. to enjoin the Tribal Court action, and was brought in the Western District of Wisconsin. The District Court enjoined the Tribal Entities from proceeding against the Financial Entities but allowed the Tribal action to proceed against Godfrey.

7th Circuit Holding

Godfrey appealed the decision of the District Court, and the 7th Circuit affirmed in part and reversed in part, holding that the District Court

(1) Did not abuse its discretion by enjoining the Tribal Court action against the Financial Entities; but

(2) That it did make errors of law in assessing whether Godfrey had established a “likelihood of success.”

Ultimately the 7th Circuit remanded the case.

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