Lake of the Torches Economic Development Corporation is chartered under tribal law. It operates the Lake of the Torches Resort Casino in northern Wisconsin. Several years ago, the company issued $50 million in revenue bonds in order to finance a riverboat casino in Mississippi. The accompanying indenture named Wells Fargo Bank as trustee. Under the indenture, Wells Fargo was given certain oversight powers with respect to casino revenues. Lake of the Torches also agreed to a limited waiver of its sovereign immunity with respect to lawsuits related to the bonds. The Mississippi casino investment was not a success. Lake of the Torches stopped depositing casino revenue into the Wells Fargo trust account and ultimately repudiated its $46 million bond obligation. Wells Fargo brought suit for breach of the Indenture and sought the appointment of a temporary receiver. Without any notice or hearing, Judge Randa (W.D. Wis.) dismissed the case for lack of jurisdiction. He concluded that the Indenture was a management contract under the Indian Gaming Regulatory Act, that the Indenture was not approved by the National Indian Gaming Commission as required by the Act, that the Indenture was therefore void, that the waiver of sovereign immunity was also void, and that the district court lacked jurisdiction. The court also denied Wells Fargo's request for leave to file an amended complaint asserting claims under the bond documents only. Wells Fargo appeals.

In their opinion, Seventh Circuit Judges Flaum, Ripple, and Evans (who, as a result of his death, did not take part in the decision) affirmed in part and reversed and remanded in part. The Court first addressed its jurisdiction, given that the defendant was a tribal Corporation. It noted that most courts agree that Indian tribes themselves are not citizens of any state for diversity purposes. However, the 9th and 10th Circuits have held that a tribal Corporation is the equivalent of a Corporation created under state law. The Court agreed and concluded that there was no reason to treat a tribal Corporation that engages in commerce differently than its non-tribal counterparts. Turning to the merits, the Court noted that Congress passed the Act in 1988 to provide a comprehensive framework for tribal gaming. The Act requires that any management contract entered into by a tribe for the operation and management of the casino must be reviewed and approved by the Commission Chairman. Failure to do so renders the contracts void. The principal issue on appeal is whether the Indenture is a management contract under the Act. Unfortunately, the term is not defined in the statute. The Court turned to the language and overriding purpose of the Act. Although it conceded that some of the Act's provisions seemed directed at the more traditional management contracts, in which a third-party actually operates the facility, it also found some provisions that seemed to apply more broadly. Ultimately, the Court could find no strong indication that Congress intended to limit the breadth of the term. The Court also looks to statements from the Commission and from its Acting General Counsel, even recognizing that they were not entitled to any particular deference. In the end, it was clear to the Court that Congress was not simply concerned with traditional management contracts but was concerned about any agreement that allowed for some influence in management decisions. Examining the Indenture Agreement in that light, the Court concluded that it was a management agreement under the Act. In doing so, the Court focused on certain indenture provisions that gave Wells Fargo control over the trust account, limited capital expenditures, and allowed, in certain circumstances, the bond holder to retain experts to make recommendations concerning casino operations. The Court also concluded that the regulatory framework did not allow for reformation of the Indenture and removal of any offending provisions. The district court erred, however, in denying Wells Fargo leave to amend. It is premature, on the face of the complaint, to conclude that the bond documents are collateral documents under the Act or that the sovereign immunity waivers contained in those documents are also void as part of the same transaction. The Court remanded to allow Wells Fargo an opportunity to file an amended complaint.