Court vacates judgment against Omaha tribe

Kevin O'Hanlon

Thursday, Sept. 13, 2001 | 9:46 a.m.

LINCOLN, Neb. -- A federal appeals court on Wednesday vacated a $6.4 million judgment in favor of a company that operated a casino for the Omaha tribe of Nebraska.

The ruling stemmed from a failed attempt by Dallas-based Missouri River Services Inc., know as MRS, to build and operate a $3 million casino on the Omaha reservation in northeast Nebraska in 1987.

Federal legislation passed in 1988 sharply limited types of games that could be operated at such facilities, and since Nebraska barred casino gambling, the tribe's casino could only offer high-stakes bingo.

The struggling casino closed in less than a year.

But when Iowa legalized casino gambling, the tribe opened a casino across the Missouri River in Onawa, Iowa, in 1992.

In 1997 MRS objected to the tribe's new casino, claiming it still had a binding contract with the tribe and should have been operator of the new facility. That dispute went to an arbitrator, who awarded MRS the judgment.

In Wednesday's ruling, the 8th U.S. Circuit Court of Appeals said arbitrators' authority to interpret the provisions of contracts, while broad, "is not unlimited."

The language of the contract could not reasonably be understood to include proceeds from the second casino, the court said.

"It is well-established that the arbitrator may interpret ambiguous language, but he may not, however, disregard or modify unambiguous contract provisions," wrote Judge Donald Ross. "In other words, if the arbitrator interprets unambiguous language in any way different from its plain meaning, the arbitrator amends or alters the agreement and acts without authority."

Ross said the contract expressly said that any award could be satisfied only from property or profits from the Nebraska casino, which had been approved by the Bureau of Indian Affairs.

"The contractual language cannot reasonably be construed to include proceeds generated under a different agreement the tribe had executed with a different party to conduct ... gaming in a different state," Ross said.

John G. Nelson, an attorney for MRS, did not immediately return a telephone call to his office seeking comment.

The tribe hailed the ruling, said its attorney, Lyman Larsen.

"It will allow its Iowa casino business to continue to provide for the needs of the members of the Omaha tribe," Larsen said.