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Business Law Today

February 2022

Recent Developments in Tribal Court Litigation 2022

Ryan Dreveskracht, Heidi McNeil Staudenmaier, and Paloma Diaz

Recent Developments in Tribal Court Litigation 2022

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§ 1.1 Tribal Litigation & The Third Sovereign

We have been writing this annual update of cases relevant to tribal litigation for years. Recognizing that the average practitioner consulting this volume may not have much experience with federal Indian law, we have endeavored to provide historical context and citations to most relevant circuit and even district court cases in every volume. This resulted in a chapter that had grown to almost seventy pages in length and had increasingly made it difficult for the reader to identify the most recent cases.

Beginning with the 2019 Edition, we decided to change the format of this chapter to both be more consistent with the other chapters in this volume, and to focus on the cases decided in the last year. This chapter continues with that format and focuses on cases decided between Oct. 1, 2020, and Oct. 1, 2021. While other chapters have arranged themselves by circuit, we begin with a Supreme Court overview and then structure this chapter’s subsections around sovereigns: Indian Tribes, the United States, and the fifty sister States. Within each subsection we provide a concise overview with more limited and deliberate citation, followed by longer and more intentional discussion of recent cases. We hope the reader appreciates the change in format and we welcome comments via email to any of the chapter authors.

Retired Supreme Court Justice Sandra Day O’Connor has aptly referred to tribal governments as the “third sovereign” within the United States. Much like federal and state governments, tribal governments are elaborate entities often consisting of executive, legislative, and judicial branches. Tribes are typically governed pursuant to a federal treaty, presidential executive order, tribal constitution and bylaws, and/or tribal code of laws, implemented by an executive authority such as a tribal chairperson, governor, chief, or president (similar to the U.S. president or a state’s governor), and a tribal council or senate (the legislative body). Tribal courts adjudicate most matters arising from the reservation or under tribal law.

Indian tribes are “distinct, independent political communities, retaining their original natural rights” in matters of local self-government. Thus, state laws generally “have no force” in Indian Country. While in the eyes of federal and state government, tribes no longer possess “the full attributes of sovereignty,” they remain a “separate people, with the power of regulating their internal and social relations.”

This chapter explores the repose of tribal sovereignty, federal plenary oversight of that sovereignty, and perennial state encroachment upon that sovereignty. Federal trial and appellate courts issue more than 650 written opinions in cases dealing with Indian law each year, and settle, dismiss, or resolve without opinion countless others. This chapter introduces those cases most relevant to a business litigation focused audience.

§ 1.2 Indian Law & The Supreme Court

§ 1.2.1 The 2020–2021 Term

The Supreme Court hears an average of between two and three new Indian law cases every year. During the 2020–2021 term, the Court decided two Indian law cases.

United States v. Cooley, 141 S. Ct. 1638 (2021). The U.S. Supreme Court declared unanimously that tribal police officers have the authority to temporarily detain and search non-Natives on public rights-of-way through Indian lands if they are suspected of violating federal or state law. This ruling is significant for Indian Country as it solidifies rights by tribes to exercise their sovereignty while removing previous limitations.

The Court’s decision reversed the Ninth Circuit Court of Appeals’ ruling that tribal safety patrol officers lacked the power to detain and search the defendant, Joshua James Cooley because he was a non-Native. Cooley was initially arrested on tribal lands after an officer searched his vehicle, where evidence was found leading to a federal drug and firearms possession charge. Cooley moved to suppress the evidence found in the search, arguing the tribal police officer lacked the authority to investigate and detain him because he is a non-Native. The Ninth Circuit agreed and ruled in favor of Cooley.

In overturning the Ninth Circuit, the Supreme Court based its decision on the long-standing Federal Indian Law precedent of United States v. Montana, stating that tribes do not have jurisdiction over non-Natives on reservations unless their behavior “threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe.” The Court ruled that the power of tribal officers to detain and investigate non-Natives on highways running through tribal lands is an exercise of sovereign authority necessary to protect tribal communities against threats to their health and welfare. Justice Stephen Breyer wrote the opinion and stated that ruling otherwise “would make it difficult for tribes to protect themselves against ongoing threats” such as “non-Native drunk drivers, transporters of contraband, or other criminal offenders operating on roads within the boundaries of a tribal reservation.”

Arguably, the most significant piece of Justice Breyer’s opinion is that the charges Cooley faced were not tribal allegations, but arose under “state and federal laws that apply whether an individual is outside a reservation or on a state or federal highway within it.” This means there is now precedent in place authorizing tribal police officers to investigate and temporarily detain non-Native motorists if there is suspicion of state and federal crimes—and not simply alleged violations of tribal law.

Justice Alito wrote a one-paragraph concurrence clarifying when tribal police officers have authority on public rights-of-way. Essentially, he wrote tribal officers have the power to stop non-Natives if: (1) the officer has a “reasonable suspicion that the motorist may violate or has violated federal or state law;” (2) the search was necessary to protect themselves or others; and (3) the officer has probable cause to detain the motorist until a non-tribal officer arrives on the scene.

The Cooley decision is important for tribes to continue acting in a sovereign capacity to protect their tribal lands and those who live and travel within their boundaries.

Yellen v. Confederated Tribes of the Chehalis Rsrv., 141 S. Ct. 2434 (2021). In a 6-3 decision, the Supreme Court held that Alaska Native Corporations (“ANCs”) are entitled to COVID-19 relief funds, solidifying that ANCs qualify as Indian tribes under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. In this ruling, SCOTUS reversed a unanimous Washington D.C. Circuit panel that initially sided with the Plaintiff tribes and against ANCs.

Justice Sotomayor, writing for the majority, indicated ANCs qualify for funding under the CARES Act because in the Indian Self-Determination and Education Assistance Act (“ISDEAA”), which created a federal legal definition of “tribe,” ANCs were included. The opinion states: “under the plain meaning of ISDEAA, ANCs are Indian tribes regardless of whether they are also federally recognized ‘tribes’ or not.” Specifically, the ISDEAA defines an Indian tribe as “any Indian tribe, band, nation or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established under the Alaska Native Claims Settlement Act (“ANCSA”), which is recognized as eligible for the special programs and services provided by the United States to the Indians because of their status as Indians.” Therefore, since the ISDEAA includes ANCs in the definition of an Indian tribe, and the CARES Act is also a federal statute using the term Indian tribe for eligibility purposes, the Supreme Court held ANCs are eligible for CARES Act funds.

The Plaintiff tribes argued this decision would potentially open doors for other non-federally recognized Indian groups to be reorganized under the ISDEAA. However, the Court disagreed and stated that ANCs are “entities created by federal statute and granted an enormous amount of special federal benefits as part of a legislative experiment tailored to the unique circumstances of Alaska and recreated nowhere else.” Justice Sotomayor further indicated that the “[C]ourt’s decision today does not vest ANCs with new and untold tribal powers, as respondents fear,” but “[i]t merely confirms the powers Congress expressly afforded ANCs and that the executive branch has long understood ANCs to possess.” Based on this ruling, ANCs are unambiguously “Indian tribes” under the ISDEAA.

Justice Gorsuch, joining with Justices Thomas and Kagan, writing for the dissent, indicated the “recognized as eligible” clause in the ISDEAA refers to the “government-to-government recognition that triggers eligibility for the panoply of benefits and services the federal government provides to Indians” and ANCs are not eligible for CARES Act funding. The dissent argued the plain meaning of the definition is far from clear and said “[e]ven if we could somehow set aside everything we know about how the term is used in Indian law and the CARES Act itself, it’s far from clear what plain meaning the court alludes to or how ANCs might fall within it.”

§ 1.2.2 Preview of the 2021–2022 Term

As of October 20, 2021, the Supreme Court has granted certiorari in two Indian law cases for the 2021–2022 term: Denezpi v. United States and Ysleta del Sur Pueblo v. Texas. In Denezpi v. United States, the case presents the following question: “Is the Court of Indian Offenses of Ute Mountain Ute Agency a federal agency such that Merle Denezpi’s conviction in that court barred his subsequent prosecution in a United States District Court for a crime arising out of the same incident?” In Ysleta del Sur Pueblo v. Texas, the case presents the following question: “Whether the Restoration Act provides the Pueblo with sovereign authority to regulate non-prohibited gaming activities on its lands (including bingo), as set forth in the plain language of Section 107(b), the Act’s legislative history, and this Court’s holding in California v. Cabazon Band of Mission Indians, or whether the Fifth Circuit’s decision affirming Ysleta I correctly subjects the Pueblo to all Texas gaming regulations.” If any new cases are granted and decided, they will be included in next year’s volume.

§ 1.3 The Tribal Sovereign

§ 1.3.1 Tribal Courts

More than half of the 574 federally recognized tribes have created their own court systems and promulgated extensive court rules and procedures to govern criminal and civil matters involving their members, businesses, and activity conducted on their lands. Notwithstanding federal restrictions on tribal adjudicatory power, tribes have extensive judicial authority. As the complexity of life on reservations has increased, so has Congress’s willingness to enhance and aid tribal courts’ adjudicatory responsibilities.

While tribal courts are similar in structure to other courts in the United States, the approximately 275 Indian courts currently functioning throughout the country are unique in many significant ways. It cannot be overemphasized that every tribal court is different and distinct from the next. For example, the qualifications of tribal court judges vary widely depending on the court. Some tribes require tribal judges to be members of the tribe or to possess law degrees, while others do not. Some tribal courts meet regularly and have a fairly typical court calendar, while others may meet on Saturdays or only a couple days a month in order to meet the more limited needs of a court system serving a smaller population or particularly isolated tribal community.

Tribal courts can have their own admissions rules and counsel should not assume that because they are licensed in the state where the tribal court is located that they can automatically appear in tribal court. While many tribes allow members of the state bar to join the tribal bar, often for a nominal annual fee, the requirements vary from one tribe to another. For example, the Navajo tribe has its own bar exam that tests knowledge of Navajo tribal law.

Counsel should keep this uniqueness in mind when addressing a tribal court orally or in writing. If counsel has never appeared before a particular tribal court, it would be wise to solicit common court practices from persons who regularly appear before the court.

Tribal court jurisdiction depends largely on: (1) whether the defendant is a tribal member; and (2) whether the dispute occurred in Indian Country, particularly lands held in trust by the United States for the use and benefit of a tribe or tribal member, or fee lands within the boundaries of an Indian reservation. These two highly complex issues should be analyzed first in any tribal business dispute.

In the context of a tribe’s civil authority, the important distinction is between tribal members and non-members (whether or not the non-member is an Indian). Generally, tribal courts have jurisdiction over a civil suit by any party, member, or non-member against a tribal member Indian defendant for a claim arising on the reservation. Even in tribal court, claims against the tribe itself require a waiver of tribal immunity. Indian tribes also generally have regulatory authority over tribal member and non-member activities on Indian land.

In the “path-making” decision of Montana v. United States, however, the U.S. Supreme Court held that a tribal court cannot generally assert jurisdiction over a non-tribal member when the subject matter of the dispute occurs on land owned in fee by a non-member, explaining that “exercise of tribal power beyond what is necessary to protect tribal self-government or to control internal relations is inconsistent with the dependent status of tribes, and so cannot survive without express Congressional delegation.” To help lower courts determine when the assertion of tribal power is necessary, the Court articulated two exceptions: (1) a tribe may have civil authority over the activities of non-tribal persons who enter into consensual relations with the tribe or its members via a commercial dealing, contract, lease, or other arrangement; or (2) the tribe has civil authority over non-Indians when their actions threaten or have a direct effect upon the “political integrity, the economic security, or the health or welfare of the tribe.”

These exceptions are “limited,” and the burden rests with the tribe to establish the exception’s applicability. The first exception specifically applies to the “activities of non-members,” and the second exception is extremely difficult to prove, as it must “imperil the subsistence of the tribal community.” These exceptions have, oddly, become known as the “Montana rule.”

There are new opinions issued every year on the limits of tribal court jurisdiction that are built upon Montana and its exceptions. This section highlights a couple of the most relevant.

Smith v. Landrum, 334 Mich.App. 511, 965 N.W.2d 253 (Mich. Ct. App. Oct. 29, 2020). Plaintiffs, who were not American Indians, brought quiet title action seeking a prescriptive easement over land located on the L’Anse Indian Reservation and owned by a non-Indian Defendant. Previous owners in the chain of title were tribal members, but the land was transferred to non-Indians in 2012. At the time of the dispute, the land was not held in trust for the tribe or any tribal member. At the trial level, Defendant argued on his motion for summary disposition that the state court lacked subject-matter jurisdiction to impose the easement, even when the current landowner and parties were non-Indians. In contrast, Plaintiffs argued that the state court had subject-matter jurisdiction because “the land [was] owned in fee simply by Defendant, and [was] not held in trust by the United States government for an Indian person.” The trial court opined that either tribal court, or a federal district court, had jurisdiction over the dispute, however, the Michigan Court of Appeals disagreed.

On appeal, the court addressed whether a state court had subject-matter jurisdiction to decide such an easement dispute when Plaintiffs and Defendant were non-Indians and the land was located on an Indian reservation. In deciding this issue, the court relied on the Williams test and the Montana rule. Williams and its progeny provide that a state may assert jurisdiction over a dispute involving a non-Indian and arising within an Indian reservation if: “(1) the state’s exercise of authority is not preempted by incompatible federal law; and (2) the state’s exercise of authority does not infringe on the right of reservation Indians to make their own laws and be ruled by them.” With neither party raising any issues of federal preemption, the court turned to the second Montana exception in addressing the second Williams prong. The court concluded that “the exercise of state jurisdiction over this easement dispute would in no way interfere with the tribe’s power to control and govern its members and internal affairs.” Neither party was an Indian, and the land was neither land held in trust for the tribe nor owned by an Indian. Accordingly, the court held that the presumption was against tribal jurisdiction, and the state court had jurisdiction to decide the easement dispute.

Ute Indian Tribe of the Uintah & Ouray Rsrv. v. McKee, 482 F. Supp. 3d 1190 (D. Utah 2020). The Ute Indian Tribe of the Uintah and Ouray Indian Reservation sued Gregory McKee and associated companies, who owned land on the reservation that was not owned or held by the Tribe, to enforce the Tribal Court’s judgment. The Tribal Court found that Mr. McKee and the associated companies had failed to prove their right to use water the United States owned in trust for the Tribe, awarding the Tribe $142,718 in damages for water misappropriation. Both parties moved for summary judgment. The district court denied the Tribe’s motion and granted the non-members’ motion. In concluding that it had jurisdiction over the suit, the district court relied on MacArthur v. San Juan County for the proposition that enforcing a tribal court order rests on the Tribe’s regulatory and adjudicatory authority, which is “a matter of federal law giving rise to subject matter jurisdiction.”

Moving on, the court determined that the Tribal Court lacked jurisdiction to decide the water misappropriation dispute. Mr. McKee was not a member of the Tribe, and the tribal resources were on land held in fee by non-members. Accordingly, the Tribe would have authority to regulate non-members’ conduct only pursuant to the Montana exceptions. The land in question was conveyed by the United States to Mr. McKee’s predecessors in interest, including an easement binding him and the associated companies at the time of the dispute. Additionally, Mr. McKee leased a separate parcel of land from the Tribe, consenting to Tribal jurisdiction over his use of the leased property. However, the court concluded that neither Montana exception supports jurisdiction in this case.

Focusing on Montana’s first exception, the court disagreed with the Tribe’s argument that the existing easement created a consensual relationship between Mr. McKee and the Tribe. Neither Mr. McKee nor the Tribe were parties to the conveyance, and the record showed no evidence that the parties ever entered into an agreement relating to the easement. Additionally, the court could not construe the existing lease to confer Tribal jurisdiction over conduct “wholly unrelated to the lease.” The Tribe presented no evidence that Mr. McKee used the disputed water on the leased land. Turning to the second exception, the court reasoned that the diversion of a total of $142,718 worth of water over sixteen years did not meet the threshold of “catastrophic for tribal self-government.” In summary, the Tribe failed to prove that either Montana exception applied. Because the Tribe lacked authority to regulate the disputed water diversion, the district court found that the Tribal Court lacked jurisdiction over the dispute in the first instance. Accordingly, the court granted Mr. McKee’s motion for summary judgment.

McCormick, Inc. v. Fredericks, 946 N.W.2d 728 (N.D. 2020). In 2010, McCormick and Fredericks created Native Energy Construction wherein Fredericks was the majority owner. Fredericks also served as Native Energy’s President, while McCormick and Northern Improvement provided management services to Native Energy for a 5% management fee. In 2014, the parties executed a purchase agreement for Fredericks’s purchase of McCormick’s interest in Native Energy. However, Fredericks could not complete the purchase and the business was involuntarily dissolved in May 2015. In 2016, McCormick, individually and derivatively on behalf of the entities, brought an action against Fredericks, alleging breach of contractual and fiduciary duties, conversion, and other claims. Fredericks filed counterclaims for similar allegations and requested a judicially supervised winding up of Native Energy. A three-day trial followed in 2018, where the jury found Fredericks breached his fiduciary duties and awarded McCormick damages. However, Fredericks argued that the district court lacked jurisdiction to decide his counterclaim related to the management fee.

Regarding his counterclaim, Fredericks asserted that the Three Affiliated Tribes of the Fort Berthold Reservation had jurisdiction because “the management fee agreement was a contract made on the reservation between [] McCormick, a non-Indian, and Fredericks, a tribal member.” The Supreme Court of North Dakota disagreed, finding that Fredericks failed to show how the Montana exception applied. In relevant part, the Court found that Fredericks had not claimed that the management fee involved “a consensual relationship with the tribe.” Instead, Fredericks’ claims arose from his ownership interest in Native Energy, a North Dakota LLC. Accordingly, the district court had jurisdiction to decide the parties’ claims, and the Court had jurisdiction to decide the appeal.

Big Horn Cty. Elec. Coop., Inc. v. Big Man, 526 F.Supp.3d 756 (D. Mont. Feb. 26, 2021). Big Horn County Electric Cooperative (“BHCEC”) filed an action against Big Man and several Judges and Justices of the Crow Tribal Health Board (“Tribal Defendants”). BHCEC sought declaratory and injunctive relief in response to a civil action brought against BHCEC in Crow Tribal Court. BHCEC provided electrical service to Big Man, an enrolled member of the Crow Tribe, but terminated that service in January 2012. Big Man sued BHCEC in Tribal Court, alleging that BHCEC’s actions violated the Crow Law and Order Code, which prohibited such termination during certain winter months. BHCEC filed suit in the district court, asserting that the Crow Tribal Court lacked jurisdiction over BHCEC, a non-Indian entity. Magistrate Judge Cavan found that the land was tribal trust land and subject to tribal jurisdiction, and that, even if the land was alienated to non-tribal members, Montana exceptions allowed the Tribe to exercise jurisdiction. BHCEC timely objected, but after examining the issues, the district court adopted Judge Cavan’s recommendations in full.

The district court agreed with Judge Cavan’s conclusion that Big Man’s homesite was properly considered tribal land, rejecting BHCEC’s objections on this issue. The homesite was “designated tribal trust land owned by the Tribe and held in trust by the United States.” Accordingly, the Tribe had the right to condition BHCEC’s conduct therein. However, the district court also stated that even if the land was alienated from the Tribe’s control, the Tribe had jurisdiction to adjudicate the dispute under both Montana exceptions. Pursuant to the first exception, the court concluded that BHCEC “[had] chosen to avail itself of the Tribe’s customer base and in doing so created a consensual relationship.” Similarly, the court found that termination of electric service during the winter months “had a direct effect on the health and welfare of the Tribe and therefore satisfie[d] the second Montana exception.” Termination of electric service during the cold winter months would “clearly imperil[] the health and welfare of any Tribal member who obtain[ed] the service from BHCEC—a class of approximately 1,700 members —and therefore the Tribe itself.” The court granted Tribal Defendants’ motion for summary judgment, but BHCEC filed an appeal with the Ninth Circuit, which remains unresolved at the time of this writing.

§ 1.3.2 Exhaustion of Tribal Court Review

The doctrine of exhaustion of tribal remedies reflects the ongoing tension between tribal and federal courts. If a tribal court claims jurisdiction over a non-Indian party to a civil proceeding, the party usually is required to exhaust all options in the tribal court prior to challenging tribal jurisdiction in federal district court. If tribal options are not exhausted prior to bringing suit in federal court, the federal court will likely dismiss or stay the case.

Ultimately, the question of whether a tribal court has jurisdiction over a nontribal party is one of federal law, giving rise to federal questions of subject matter jurisdiction. Thus, non-Indian parties can challenge the tribal court’s jurisdiction in federal court. Pursuant to this doctrine, a federal court will not hear a matter arising on tribal lands until the tribal court has determined the scope of its own jurisdiction and entered a final ruling. Ordinarily, a federal court should abstain from hearing the matter “until after the tribal court has had a full opportunity to determine its own jurisdiction.” And again, notwithstanding a provision that appears to vest jurisdiction with an arbitrator, several federal courts have ruled that a tribal court should be “given the first opportunity to address [its] jurisdiction and explain the basis (or lack thereof) to the parties.”

After the tribal court has ruled on the merits of the case and all appellate options have been exhausted, the non-tribal party can file suit in federal court, whereby the question of tribal jurisdiction is reviewed under a de novo standard. The federal court may look to the tribal court’s jurisdictional determination for guidance; however, that determination is not binding. If the federal court affirms the tribal court ruling, the nontribal party may not relitigate issues already determined on the merits by the tribal court.

There are several exceptions to the exhaustion doctrine. First, federal courts are not required to defer to tribal courts when an assertion of tribal jurisdiction is “motivated by a desire to harass or is conducted in bad faith . . . or where the action is patently violative of express jurisdictional prohibitions, or where exhaustion would be futile because of the lack of an adequate opportunity to challenge the court’s jurisdiction.” Second, when “it is plain that no federal grant provides for tribal governance of non-members’ conduct on land covered by Montana’s main rule,” exhaustion “would serve no purpose other than delay.” Third, where the primary issue involves an exclusively federal question, exhaustion of tribal remedies may not be mandated.

Because litigation is expensive, the question of whether the defendant is required to exhaust their tribal court remedies before challenging the jurisdiction of the tribal court is regularly litigated. Several of these cases were decided in the last year.

Cross v. Fox, 497 F. Supp. 3d 432 (D.N.D. 2020). Plaintiffs were members of the Mandan, Hidatsa, and Arikara Native American Tribes (“MHA”) and have diagnosed health problems that limit their mobility. Plaintiffs brought action against tribal officials in federal district court asserting that the rule requiring non-residents of the tribal reservation to return to the reservation to vote, while permitting residents of the reservation to vote by absentee ballot, impermissibly burdened their ability to vote, in violation of the Indian Civil Rights Act (“ICRA”) and the Voting Rights Act (“VRA”).

The Defendants filed a Motion to Dismiss for lack of subject matter jurisdiction and a failure to exhaust tribal remedies. Plaintiffs argued that because the federal district court has jurisdiction over their federal statutorily-based VRA claims, they should be relieved of tribal exhaustion requirements for the ICRA claims. Plaintiffs argued that the district court should excuse tribal exhaustion on the basis that the MHA Tribal Court is not an adequate judicial forum to hear their claims.

In its analysis, the district court outlined the principles underlying the tribal court exhaustion requirement and highlighted that “even where a federal question exists, due to considerations of comity, federal court jurisdiction does not properly arise until available remedies in the tribal court system have been exhausted.” This is to ensure certain interests of both tribal and federal courts are advanced including: “(1) supporting tribal self-government and self-determination; (2) promoting the orderly administration of justice in the federal court by allowing a full record to be developed in the Tribal Court; and, (3) providing other courts with the benefit of the tribal courts’ expertise in their own jurisdiction.” Thus, the District Court declined to waive exhaustion, holding that this was purely an intra-tribal dispute into which it would not interject itself.

United States v. Hump, No. 3:19-CV-03020-RAL, 2021 WL 274436 (D.S.D. Jan. 27, 2021). The United States moved for summary judgment in a lawsuit that it brought against Defendants David and Karen Hump (“the Humps”). In 1974, Congress authorized the creation of the Indian Loan Guarantee and Insurance Program (“ILGP”), which allowed the Secretary of Interior to guarantee up to ninety percent of the unpaid principal and interest due on loans made by lenders to qualified Indian borrowers. If a borrower defaults on a loan guaranteed by the ILGP, the lender can submit a claim for loss to the Department of Interior (“DOI”).

In 2004, Farmers State Bank of Faith, South Dakota (“the Bank”) sought loan guarantees from the DOI under the ILGP for loan funds issued to the Humps to acquire interests in Indian trust land. The DOI issued loan guarantees in February 2004, and the Bank consolidated the Humps’ earlier notes. The Humps filed for Chapter 12 bankruptcy in October 2005. Id. The Bank submitted a claim for a loss for $1,411,362.25 to the DOI, and in 2007, the DOI paid the Bank’s claim. Once their Chapter 12 Reorganization Plan was confirmed in 2007, the Humps executed and delivered a promissory note to the United States to repay the loan by September 2034. The promissory note allowed for acceleration of the entire debt in the event of default.

The Humps defaulted on their Promissory note, making their final payment in December 2014. In 2018, the DOI accelerated and declared the remaining debt ($1,211,782.16) immediately due. After all other efforts to collect failed, the United States brought this action to foreclose the mortgage, sell the property, and collect any remaining deficiency.

The Humps challenged this action, in part, claiming that the United States had not fulfilled its requirement to first exhaust tribal court remedies. The Court disagreed, stating that exhaustion of tribal court remedies was not necessary in the current case. The Court held that the United States was not required to exhaust its remedies in tribal court because tribal self-government and self-determination were not implicated in this matter. Rather, this was a dispute between the United States and individuals who have defaulted on a loan guaranteed by the federal government under a federal program. Although the Indian trust land was located within Cheyenne River Sioux Indian Reservation, the Tribe was not involved in this action in any capacity.

JW Gaming Dev., LLC v. James, No. 3:18-CV-02669-WHO, 2021 WL 2531087 (N.D. Cal. June 21, 2021). Plaintiff JW Gaming Development, LLC (“JW Gaming”) previously obtained a judgment that defendant Pinoleville Pomo Nation (“PPN”), a federally recognized tribe, was liable for breaching a loan agreement by failing to pay. Shortly after judgment was entered, PPN constituted its Tribal Court for the first time. PPN filed a civil complaint in the Tribal Court that sought to: “(1) declare the judgment issued in this case invalid; (2) limit and control—indeed, vitiate—the scope of enforcement of that judgment; and (3) impose roughly eleven million dollars in liability on JW Gaming for alleged fraud stemming from the same loan agreement here.” PPN argued that the Tribal Court did not have authority to issue any injunction.

Before consideration of the motions filed by JW Gaming, the district court needed to address whether JW Gaming needed to exhaust its tribal court remedies as PPN claimed. The Court stated that the requirement of tribal court exhaustion is not absolute and that there are several exceptions under which the movant need not exhaust tribal court remedies before seeking or obtaining injunctive relief in federal court.

Here, the Promissory Note in the dispute included a waiver of tribal court exhaustion, and the Court asked two questions: “Can exhaustion be waived in this case? And if it can be, has it been waived here?” The Court concluded that the answer to both was “yes.”

To answer the first question, the Court relied on the Supreme Court ruling in Merrion v. Jicarilla Apache Tribe, which established that a tribe, as a sovereign, can waive its rights to exercise one of its sovereign powers. However, PPN did not contest that exhaustion could be waived, but instead argued that no waiver occurred. To address this second question of waiver, the Court deferred to the Supreme Court and Ninth Circuit which have both uniformly laid out the standard for waiver of sovereign powers as requiring the power be “expressly waived in unmistakable terms within the contract” at issue. The district court held that the Promissory Note provision was an express, clear, and unequivocal waiver and therefore, exhaustion of tribal court remedies had been waived and was not required in this case.

Fettig v. Fox, No. 1:19-CV-096, 2020 WL 9848691, (D.N.D. Nov. 16, 2020), report and recommendation adopted, No. 1:19-CV-00096, 2020 WL 9848706 (D.N.D. Dec. 3, 2020). Plaintiffs are members of the Mandan, Hidatsa, and Arikara Native American Tribes (“MHA”) who own a beneficial interest in land Allotments 1110A and 1111A held in trust by the United States and located within the exterior boundaries of the Fort Berthold Indian Reservation (“Fort Berthold”). Defendants include the MHA Nation’s Section 17 Corporation and tribal office holders. Plaintiffs primary complaint was that Defendants in 2013 installed an underground water pipeline (the “2013 Pipeline”) across Allotments 1110A and 1111A without first securing an easement from the United States acting in its trust capacity through the Department of the Interior’s (“DOI”) Bureau of Indian Affairs (“BIA”). Plaintiffs allege that the 2013 Pipeline is a trespass. Plaintiffs also allege that defendants temporarily ran an aboveground pipeline across their allotments without first obtaining an easement.

Defendants argued in their brief that this was a purely tribal dispute and the action should be dismissed for failure to exhaust tribal court remedies. However, Defendants also claimed in their brief that the United States owned the 2013 Pipeline. The district court therefore analyzed the question of the necessity of tribal exhaustion through both lenses—if the United States owned it and if the Tribe or one of its entities owned it.

If the United States did own the pipeline, the court stated that this would be straight forward. It would not be a purely tribal dispute and there would be no tribal remedies to exhaust with respect to Plaintiffs’ request for injunctive relief. After all, the United States did not consent to be sued in tribal court.

If the 2013 Pipeline was owned by the Tribe or one of its entities, the court contends that an argument can be made that tribal court exhaustion is not required. Specifically the court states that, “federal law has left no room for tribal court adjudication when it comes to a request for injunctive relief in a situation where an allottee’s land is being used for right-of-way purposes without the requisite grant of right-of-way—either by an easement granted by the United States or a federal court condemnation judgment. And, if that is the case, tribal-court exhaustion arguably would not be required due to the tribal court's lack of power to adjudicate the dispute and requiring exhaustion would serve no purpose other than delay.”

Despite this analysis, the Court ultimately withheld a decision on the question of tribal-court exhaustion on the basis that the tribal defendants committed on the record to the court that if it required BIA exhaustion, they would not make the argument for tribal-court exhaustion and would allow the BIA’s consideration of the issues to play out.

Loonsfoot v. Brogan, No. 2:21-CV-89, 2021 WL 1940400 (W.D. Mich. May 14, 2021). This was a habeas corpus action brought by two pretrial detainees under 25 U.S.C. § 1303. Petitioners were detained by Respondent Baraga County Sheriff Joseph Brogan pursuant to orders from the Keweenaw Bay Indian Community Tribal Court and are enrolled tribal members of the Keweenaw Bay Indian Community Ojibwa tribe of Michigan.

While the Court acknowledged that it considers habeas petitions filed by persons under the custody of a state or the United States, the Keweenaw Bay Indian Community was neither. Petitioners asked the Court to order their release from pretrial detention and argued that their attempts to exhaust their remedies in tribal courts were futile.

The Court found that Petitioners had not given the tribal trial court, nor the tribal appellate court, an opportunity to resolve the constitutional issues they raised in their habeas petition. Further, Petitioners did not allege any facts to support the inference that exhaustion would be futile. On this basis, the Court dismissed the petition without prejudice.

Ledford v. Ledford, No. 1:20-CV-00170-MR-DSC, 2021 WL 2014871 (W.D.N.C. May 19, 2021). Plaintiff, who was not tribally affiliated, brought action against her stepson and his sons, who are all members of the Eastern Band of Cherokee Indians (EBCI). Plaintiff’s deceased husband (Defendants’ father and grandfather and EBCI member) attempted to leave Plaintiff a life estate in the home they shared. The home is a part of the EBCI reserve, and in subsequent judicial proceedings the Tribal Council of the EBCI invalidated the life estate provision of the will and evicted Plaintiff. Plaintiff alleged that Defendants provided false testimony that contributed to the Tribal Council’s decision and brought this action in Federal Court alleging subject matter jurisdiction based upon diversity of citizenship. Defendants moved to dismiss for several reasons including Plaintiff’s failure to exhaust tribal remedies.

The district court held that Plaintiff had not shown that the court’s exercise of jurisdiction would be proper in part due to her failure to exhaust tribal remedies. Specifically, Plaintiff had the opportunity to challenge Tribal Council’s decision on her husband’s will under Cherokee Code § 117-40 and failed to properly do so. She also had the opportunity to appeal her eviction order from the Tribal Court to the Cherokee Supreme Court under Cherokee Code § 7-2(e) and again failed to properly do so. Thus, Defendants’ Motion to Dismiss was granted and the Complaint dismissed with prejudice.

Becker v. Ute Indian Tribe of Uintah & Ouray Rsrv., 11 F.4th 1140 (10th Cir. 2021). The dispute involved a former land division manager for the Ute Indian Tribe, asserting that the Ute courts have the authority to decide whether the tribe’s employment agreement with him was valid. The Tenth Circuit panel overturned a Utah federal judge’s ruling that the tribe had waived the requirement that Plaintiff had to exhaust tribal remedies for his claims that the tribe breached his contract by failing to pay him monthly compensation after his employment was terminated. The Tenth Circuit concluded that the questions the tribe had raised regarding the validity of the agreement, as well as the threshold question of whether the tribal court has jurisdiction over the parties’ dispute, must be resolved in the first instance by the tribal court itself.

The court further held that the waiver provision in the agreement would only have been applicable if the agreement was determined to be valid; however, the tribe asserted nonfrivolous challenges to the validity of the agreement. The court ruled that tribal exhaustion did not apply to Plaintiff’s claims and noted that although there are some exceptions to the exhaustion rule, Plaintiff had not shown that they should apply in this case. The court remanded the case to be dismissed.

§ 1.3.3 Tribal Sovereignty & Sovereign Immunity

An axiom in Indian law is that Indian tribes are considered domestic sovereigns. Like other sovereigns, tribes enjoy sovereign immunity. As a result, a tribe is subject to suit only where Congress has “unequivocally” authorized the suit or the tribe has “clearly” waived its immunity. The U.S. Supreme Court, in a 2008 decision, pronounced that tribal sovereign immunity “is of a unique limited character.” Unlike the immunity of foreign sovereigns, the immunity enjoyed by sovereign tribal governments is limited in scope and “centers on the land held by the tribe and on tribal members within the reservation.”

Nontribal entities must be aware that, absent a clear and unequivocal tribal immunity waiver, tribes and tribal entities may not be subject to suit should a deal go bad. With regard to contracts, “[t]ribes retain immunity from suits . . . whether those contracts involve governmental or commercial activities and whether they were made on or off a reservation.”

Tribal immunity generally shields tribes from suit for damages and requests for injunctive relief, whether in tribal, state, or federal court. Sovereign immunity has been held to bar claims against the tribe even when the tribe is acting in bad faith.

Tribes enjoy the benefit of a “strong presumption” against a waiver of their sovereign immunity. Moreover, federal courts have made clear that simply participating in litigation does not waive the tribe’s sovereign immunity. Any waiver of tribal sovereign immunity “cannot be implied but must be unequivocally expressed.”

Exactly what contract language constitutes a clear tribal immunity waiver is somewhat unclear. The Supreme Court in C & L Enterprises, Inc. v. Citizen Band Potawatomi Indian Tribe of Oklahoma ruled that the inclusion of an arbitration clause in a standard-form contract constitutes “clear” manifestation of intent to waive sovereign immunity. In C & L Enterprises, the tribe proposed that the parties use a standard-form contract that contained an arbitration clause and a state choice-of-law clause. Although the contract did not clearly mention “immunity” or “waiver,” the Supreme Court believed the alternative dispute resolution (ADR) language manifested the tribe’s intent to waive immunity.

Finally, waivers of immunity must come from a tribe’s governing body and not from “unapproved acts of tribal officials.” Attorneys must evaluate a tribe’s structural organization to determine precisely which tribal agents have authority to properly waive tribal sovereign immunity or otherwise bind the tribal entity by contract. If attorneys do not have a working knowledge of pertinent tribal documents, they risk leaving their clients without an enforceable deal. Below are summaries from some of the most relevant sovereign immunity cases of the last year.

**Immunity may be asserted by tribal corporations, as well as tribal governments. Some recent sovereign immunity cases dealing with tribal corporations are collected and discussed in § 1.3.4.

Engasser v. Tetra Tech, Inc., No. 219CV07973ODWPLAX, 2021 WL 911887 (C.D. Cal. Feb. 9, 2021). The court held that when a tribe enters into a Professional Services Agreement (“PSA”) that includes a Dispute Resolution provision, this does not act as a waiver of tribal sovereign immunity. In previous cases, courts have come to this conclusion where “the dispute resolution procedure was not binding, the tribe did not unequivocally submit to a court’s jurisdiction, or the tribe expressly retained its sovereign immunity.” Here, the PSA clearly stated that nothing in the PSA acts as a waiver of sovereign immunity. Additionally, the provision did not contemplate binding arbitration, nor did it “reflect an unequivocal intent to submit to the jurisdiction of a particular court.” Accordingly, because the PSA did not act as a clear and unequivocal waiver of tribal sovereign immunity, the tribal entity was immune from suit for lack of jurisdiction.

Muscogee (Creek) Nation v. Poarch Band of Creek Indians, 525 F.Supp.3d 1359 (M.D. Ala. Mar. 15, 2021). Here, the court considered a tort-of-outrage claim where Defendants knowingly excavated Plaintiffs’ sacred burial grounds after Defendants came to own the land containing such burials. Both sides of the suit included tribal entities. Defendants included tribal officials named in their official capacity. Because precedent is silent regarding whether sovereign immunity applies when tribal entities exist on both sides of a lawsuit, the district court held that sovereign immunity is still applicable unless waived by either side. With no explicit waiver present, both tribes could still assert sovereign immunity. To determine whether such immunity also applied to the individual tribal officials, the court looked to Idaho v. Coeur d’Alene Tribe. Idaho v. Coeur d’Alene Tribe explains that certain suits may be subject to tribal sovereign immunity, regardless of whether they are brought against the sovereign or its officials, so long as they invoke “special sovereignty interests.” Where the relief sought would effectively result in the tribe’s loss of title for lands it has long held as its own, such special sovereignty interests bar the claim.

Here, Plaintiffs asked the court “to order [Defendants] to cease the activities [they] currently carr[y] out [on the property], alter the site drastically at the [P]laintiffs’ direction to transform it back into the condition in which they desire it to remain, and then leave the land alone.” In light of this, the court found that the conditions in this case were sufficiently similar to those in Coeur d’Alene, thus invoking special sovereignty interests. Accordingly, the claims against Defendants were dismissed on tribal sovereign immunity grounds.

Weaver v. Gregory, No. 3:20-CV-0783-HZ, 2021 WL 1010947 (D. Or. Mar. 16, 2021). Eric Weaver (“Plaintiff”) filed suit against Ron Gregory (“Defendant”) alleging that he was subjected to retaliation after reporting harassment and discrimination during his time as a tribal police officer. Plaintiff sued Defendant individually, not in his official capacity as a member of the Warm Springs Tribe. While Plaintiff contended that the tribe waived its sovereign immunity under Chapter 390 of the Warm Springs Tribal Code, the court found that such chapter is only applicable to “activities by the Warm Springs law enforcement personnel conducted under SB 412—i.e., the enforcement of criminal and traffic laws of the State of Oregon.”

Here, Plaintiffs’ alleged harassment on the job did not implicate such laws. Additionally, the court refused Plaintiffs interpretation of precedent that the location of the tortious actions, whether on or off tribal land, makes a difference. However, to the extent Plaintiff’s claims were made against Defendant in his individual capacity, those were not protected under tribal sovereign immunity. Because recovery against Defendant for his individual actions does not “disturb the sovereign’s property,” those claims could proceed. The claims against Defendant in his official capacity as a tribal authority, though, were barred under tribal sovereign immunity.

Jensen v. Budreau, No. 20-CV-997-BBC, 2021 WL 1546055 (W.D. Wis. Apr. 20, 2021). Defendants were the tribal entity Red Cliff Band of Lake Superior Chippewa and a patrol officer who works for the tribe’s police department. Plaintiff contended that Defendants violated her Fourth and Fifth Amendment rights by failing to give her medical care or allow her to rinse her eyes after being sprayed with pepper spray. Plaintiff pointed out that pursuant to Wis. Stat. §§ 165.92(3), “unless otherwise provided in a joint program plan under § 165.90(2)” or an agreement between the tribe and state, “a tribe is liable for all acts and omissions of its law enforcement officers while they are acting within the scope of their employment.” Additionally, under § 165.92(3m)(a), where a tribal law enforcement officer enforces laws of the state, the tribe must: “waive sovereign immunity ‘to the extent necessary to allow the enforcement in the courts of this state of its liability’ . . . or maintain adequate liability insurance that provides that the insurer will waive the sovereign immunity defense up to the limits of the insurance policy.” Accordingly, two actions were relevant. First, the tribe had an agreement with the state that did not modify the tribe’s liability. Second, Defendants’ attorney submitted a claim to the tribe’s insurance company, thus suggesting that the tribe may have waived its immunity at least in part. The court found that neither of these actions were compelling. Because a waiver must be expressly given, the court held that the circumstances were not sufficient to overcome tribal sovereign immunity, and the claims were barred.

Self v. Cher-Ae Heights Indian Cmty. of Trinidad Rancheria, 274 Cal. Rptr. 3d 255 (2021), review denied (Apr. 28, 2021). Plaintiffs were two individuals who commonly used a parcel of coastal land for recreational and business purposes. Plaintiffs brought this suit after Defendant Cher-Ae Heights Indian Community of the Trinidad Rancheria (“Cher-Ae”) acquired such parcel of land in fee absolute. During the process of entering the land into trust, Plaintiffs initiated a quiet title suit to a public easement for vehicle access and parking on the property. Plaintiffs asserted that the “immovable land” exception should apply here to bar a tribal sovereign immunity defense, but the court disagreed. The Supreme Court explained the immovable land exception in State of Georgia v. City of Chattanooga, describing that “when a state purchases real property in another state, it is not immune to suit over rights to the property.” However, the Supreme Court has never extended this exception to tribes.

Here, the court offered three reasons why it should be deferential to Congress to determine whether immunity is available under these circumstances. First, it has been the Supreme Court’s standard practice to defer to Congress regarding tribal immunity. Second, Congress has long been deeply entrenched in the public policy of supporting tribal land acquisition. Finally, the facts here operate as a “poor vehicle for extending the immovable property rule to tribes” because Plaintiffs do not claim any ownership interest in the property; they are mainly pursuing an easement. Accordingly, the court found that tribal sovereign immunity “bars a quiet title action to establish a public easement for coastal access on property owned by an Indian tribe,” and Plaintiffs’ claims failed for lack of merit.

Dutchover v. Moapa Band of Paiute Indians, No. 219CV01905KJDBNW, 2021 WL 1738869 (D. Nev. May 3, 2021). In this case, Plaintiff alleged that he was wrongfully harassed and retaliated against while working as a police officer for the Moapa Tribal Police Department. Dismissing the Plaintiff’s complaint, the court held that the tribe did not expressly waive its sovereign immunity, and so the suit was barred. Furthermore, the court reasoned that simply entering into a federal contract and “enacting, promoting, and adhering to federal law, including Title VII” does not in itself waive immunity. Here, Defendants funded Plaintiff’s employment with a federal grant and had policies in place offering protection “similar to those offered by Title VII.” Ultimately, these actions, considered together, were not sufficient to waive sovereign immunity.

Great Plains Lending, LLC v. Dep’t of Banking, No. 20340, 2021 WL 2021823 (Conn. May 20, 2021). Great Plains Lending (“GPL”) and Clear Creek were created by the Otoe-Missouria Tribe of Indians (“Tribe”) to offer lending services. After an investigation, the Department of Banking allegedly found that loans offered by the entities violated Connecticut’s usury and banking laws. Accordingly, the Department’s commissioner issued temporary cease and desist orders, orders for restitution to Connecticut residents, and a notice of intent for permanent cease and desist letters, as well as to impose civil penalties. To determine whether such actions could proceed against the tribal entities, this case contemplated three primary questions concerning tribal sovereign immunity under the arm of the tribe doctrine. First, which party bears the burden of proof to establish that the entity is an arm of the tribe? Second, what legal standard governs that inquiry? Lastly, to what extent does a tribal officer share the tribe’s immunity for his actions connected to the business entity?

Considering the first inquiry, the court found that the burden rests on the party seeking immunity under the arm of the tribe doctrine. A tribe itself does not share in this burden when establishing its own sovereign immunity, but entities seeking immunity by extension bear the burden of “demonstrating the existence of that relationship and the entity’s ultimate entitlement to share in tribal sovereign immunity.” The court reasoned this approach by noting that the entity seeking immunity will have the best access to evidence for proving the relationship.

Next, the court turns its attention to determining which test is proper for an arm of the tribe inquiry. Ultimately, the multi-pronged test in Breakthrough Management Group, Inc. v. Chukchansi Gold Casino & Resort, is found to be the most fitting. This test called courts to consider several factors when determining if a sufficient relationship exists between the entity and the tribe: (1) method of creation; (2) purpose; (3) control; (4) tribal intent; and (5) financial relationship. The court slightly altered the test, explaining that the sixth factor, tribal policy, should color the consideration of the remaining five factors.

Ultimately, the court found that all five factors weigh in favor of extending tribal sovereign immunity to Great Plains: the entity was created under tribal law for the purpose of generating revenue for the Tribe, the entity’s officers are appointed by the tribal council and the entity is ultimately controlled by tribal officials, the Tribe unequivocally voiced its intent to extend immunity to the entity, and the Tribe wholly owns and acts as primary beneficiary of the entity. Overall, the entity promotes tribal self-governance and economic development, and denying sovereign immunity would directly interfere with the policies of the Tribe. On the other hand, there was much less evidence detailing a relationship between Clear Creek and the Tribe. Accordingly, tribal sovereign immunity extended to Great Plains, but may not necessarily extend to Clear Creek.

In light of this determination, the court chose to extend partial immunity to John R. Shotton as chairman of the Tribe. The court stated that such immunity extends where the Tribe is the real party in interest, which is the case here, and the individual was acting in his capacity as a tribal official. There was no evidence in the record that Shotton’s activities went beyond the scope of his tribal authority, so he was afforded immunity from the civil penalties sought against him. However, tribal sovereign immunity does not protect against injunctive relief ordered by the Department, so he may be enjoined from “violating Connecticut usury and banking laws in connection with his duties for the [T]ribe and the entities.” Moreover, the judgment was reversed insofar as it required further proceedings to determine whether Great Plains was an arm of the Tribe, but the judgment is granted insofar as it requires further proceedings to make such a determination for Clear Creek and Shotton’s involvement with the latter entity.

Cayuga Indian Nation of New York v. Seneca Cty., New York, 978 F.3d 829 (2d Cir. 2020), cert. denied, No. 20-1210, 2021 WL 2301979 (U.S. June 7, 2021). In this case, Appellees are a tribe (“Cayuga”) who refused to pay taxes on acquired parcels of land located in Seneca County. Appellants (“Seneca County”) pursue two main arguments: (1) that Cayuga was subject to such taxes under the “immovable property exception” to tribal sovereign immunity; and (2) that the U.S. Supreme Court case City of Sherril v. Oneida Indian Nation of New York, ended immunity for tax foreclosure actions, like the one here.

To the first argument, the court noted that the issue here is beyond the scope of the exception. The exception has been interpreted in the past to solely apply where there are “competing claims to a right or interest in real property.” Here, the main claim involved money, not property, and the remedy sought for such financial debt merely implicated property. Additionally, a plain reading of the Restatement (Second) of Foreign Relations Law of the United States also denies application of the exception; no case since the Restatement’s inception has applied the exception where a foreign sovereign’s nonpayment of taxes was at issue.

Turning to Seneca County’s second argument, the court agreed with past courts’ interpretation that “Sherrill does not strip tribes of their immunity from suit in tax foreclosure proceedings.” Because the right to impose taxes on tribes for acquired land and a tribe’s right to immunity from suit are distinct, a party may demand compliance with state laws while also facing limitations in the ways that it may enforce such laws. Here, satisfactory avenues existed that Seneca County may pursue to collect the taxes, aside from the remedy of foreclosure. Seneca County may “enter into an agreement with the tribe ‘to adopt a mutually satisfactory regime for the collection of this sort of tax’” or Seneca County may seek legislation. Accordingly, because such alternatives existed and are feasible, Seneca County is barred from seeking foreclosure for Cayuga’s nonpayment of taxes under tribal sovereign immunity, and the district court’s judgment to that effect is affirmed.

Dotson v. Tunica-Biloxi Gaming Comm’n, 835 F. App’x 710 (5th Cir. 2020), cert. denied, No. 20-7721, 2021 WL 2405253 (U.S. June 14, 2021). Here, the court held that the Tunica-Biloxi Gaming Commission was an arm of the Tunica-Biloxi Tribe of Louisiana. As such, the Commission was sheltered from suit regarding alleged violations of gaming regulations and laws, fabricating evidence, falsifying documents, defaming Plaintiff, lying under oath, and falsifying error codes on a slot machine. While Plaintiff contended that the suit could move forward because he sued a casino employee, a specific official, this argument was not persuasive to the court. Here, the court refused to consider whether a suit may be brought solely against a tribal official, instead focusing on the person’s immunity under the arm of the tribe doctrine. Because tribal sovereign immunity extended to the Gaming Commission, and accordingly to its employees, the suit could not move forward against an employee in his/her official capacity with the Commission. Accordingly, the district court’s dismissal of Plaintiff’s claims was affirmed.

Ledford v. E. Band of Cherokee Indians, No. 1:20-CV-00005-MR-WCM, 2020 WL 6693133 (W.D.N.C. Nov. 12, 2020), aff'd as modified, 845 F. App’x 260 (4th Cir. 2021). April Ledford (“Plaintiff”) filed suit against the Eastern Band of Cherokee Indians (“Defendant”) under the Indian Civil Rights Act of 1968 (“ICRA”), alleging that Defendant violated her due process rights by terminating a life estate she held in Cherokee, North Carolina. Considering Defendant’s Motion to Dismiss for lack of subject-matter jurisdiction and Plaintiff’s amended complaint, the court held that Defendant did not expressly waive sovereign immunity. First, the court stated Defendant did not waive its tribal sovereign immunity simply by breaking its own laws, “acting beyond the scope of its authority, or acting in bad faith.” Additionally, contrary to Plaintiff’s interpretation, it was not Congress’s intention to pass the ICRA as a vessel for such claims. Because both arguments failed, Defendant’s motion was granted, and Plaintiff’s complaint was dismissed.

State ex rel. Workforce Safety & Ins. v. Cherokee Servs. Grp., LLC, 955 N.W.2d 67 (N.D. 2021). In this case, Workforce Safety and Insurance (“WSI”) sent a cease and desist letter to Hudson Insurance to stop writing workers’ compensation coverage in North Dakota. Hudson Insurance provides such coverage to the Cherokee Nation and several Cherokee entities. Additionally, WSI brought action against several Cherokee entities and Steven Bilby (the executive manager of the entities), alleging that they were liable for unpaid workers’ compensation premiums. While the Cherokee Nation owns no sovereign land in North Dakota, tribal sovereign immunity may still extend if the arm of the tribe doctrine applies. To make such determination, the court adopted the six-prong test laid out in Breakthrough Management Group, Inc. v. Chukchansi Gold Casino and Resort.

Initially, the court established that the Cherokee Nation made no waiver of its immunity. Turning back to the test, the court stated that the following non-exhaustive factors should be analyzed to decide whether the Cherokee Nation’s immunity extends to the Cherokee entities, and accordingly, Hudson Insurance and Bilby: (1) how the economic entities are created; (2) their purpose; (3) their structure, ownership, and management, including the extent of tribal control; (4) the tribe’s intent to share its immunity; (5) the financial relationship between the tribe and entities; and (6) the policy behind tribal sovereign immunity, and whether recognizing immunity in this case would further such policy. Ultimately, the court did not itself employ the test, instead reversing the lower judgment and remanding the issue of whether immunity extends under the arm of the tribe doctrine to the administrative law judge.

§ 1.3.4 Tribal Corporations

A majority of non-Alaskan tribes are organized pursuant to the Indian Reorganization Act of 1934 (IRA). Under Section 16 of the IRA, a tribe may adopt a constitution and bylaws that set forth the tribe’s governmental framework and the authority given to each branch of its governing structure. A tribe may also incorporate under Section 17 of the IRA, under which the Secretary of the U.S. Department of the Interior issues the tribe a federal commercial charter.

Through Section 17 incorporation, the tribe creates a separate legal entity to divide its governmental and business activities. The Section 17 corporation has a federal charter and articles of incorporation, as well as bylaws that identify its purpose, much like a state-chartered corporation. Section 17 incorporation results in an entity that largely acts like any state-chartered corporation.

An Indian corporation may also be organized under tribal or state law. If the entity was formed under tribal law, formation likely occurred pursuant to its corporate code; but it could have also occurred by tribal resolution (i.e., specific legislation chartering the entity). Under federal common law, the corporation likely enjoys immunity from suit. However, it is unclear whether a tribal corporation’s sovereign immunity is waived through state incorporation such that the entity may be sued in state court.

Therefore, when negotiating a tribal business transaction, counsel should consult the tribe’s governmental and corporate information—for example, treaty or constitution, federal or corporate charters, tribal corporate code—which, taken together, identify the entity with which you are dealing, the authority of that entity, and any applicable legal rights and remedies.

There are comparatively few cases decided on the basis of tribal corporate formation, but tribal corporations are often able to claim immunity from suit. In addition to IRA Section 17 entities, Native Alaskan communities are organized as corporations under some unique provisions within the Alaska Native Claims Settlement Act. Below find a discussion of recent cases dealing with tribal corporations.

** Some Cases Dealing with Tribal Corporations are discussed in 1.3.3 because they deal with whether a Tribal Corporation may assert their tribe’s sovereign immunity

Jim v. Shiprock Associated Sch., Inc., 833 F. App’x 749 (10th Cir. 2020). Plaintiff (Ms. Kim Jim) sued her employer (Shiprock Associated Schools, Inc.), a private corporation that served the Navajo Nation, for discrimination under Title VII. The employer-corporation moved for summary judgment, claiming the protection of Title VII’s “exception for Indian tribes.” The district court determined that the employer was an Indian tribe, granting summary judgment based on the Title VII exception. Plaintiff appealed the district court’s decision, the Tenth Circuit affirmed.

The central issue of the case was whether the district court properly characterized the corporation as an Indian tribe. The Tenth Circuit reviewed the district court’s determination de novo, explaining that “[w]hether an entity is a tribal entity depends on the context in which the question is addressed.” Although the Tenth Circuit had not previously addressed tribal characterization in the context of Title VII, it found that “courts elsewhere have considered an entity an ‘Indian tribe’ under Title VII when a tribe created and controlled the enterprise” in question.

On appellate review, the Court first found that the corporation was created by the Navajo Nation. The Court cited the Navajo Nation’s statutes which empower the tribe to establish local school boards. Under this authority, the Court reasoned, “the Navajo Nation’s Board of Education empowered the corporation to operate educational programs.” The Court further noted that the corporation must operate such educational programs “under the Tribally Controlled Schools Act [(25 U.S.C. §§ 2501–11)].”

Due to the corporation’s educational purpose, the Court explained that it “acts through a local school board whose members are elected under the Navajo Election Code,” which requires each board member to be “enrolled in the Navajo Nation.” In addition to the board members, the Navajo Nation, the Court noted, “comprise[d] over 98% of the students and roughly 80% of the school employees.”

Despite what the Court categorized as “the heavy involvement of tribal members,” Plaintiff argued that the corporation was not a tribal entity because: (1) “some students and employees [were] not members of an Indian tribe”; and (2) “the corporation was formed under state law.” The Court, however, concluded that each of “these observations do little to diminish the role of the Navajo Nation.”

The Court then found that the corporation “operate[d] under tribal oversight” because the school board, which was under the control of the corporation, remained ultimately “accountable to the Navajo Nation for educational performance.”

Accordingly, the Court affirmed the district court’s determination that the corporation was “an ‘Indian tribe’ under Title VII” because the corporation served the Navajo community, obtained its governing board from the Navajo Nation, followed Navajo law, and oversaw schools populated by Navajo students and staffed by Navajo employees.

Nguyen v. Cache Creek Casino Resort, No. 2:20-cv-1748-TLN-KJN PS, 2021 WL 22434 (E.D. Cal. Jan 4, 2021), adopted in full, No. 2:20-cv-01748-TLN-KJN, 2021 WL 568212 (E.D. Cal. Feb. 16, 2021) (appeal filed). Plaintiff (Hung M. Nguyen) sued defendant Cache Creek Casino Resort, an enterprise controlled by the Yocha Dehe Wintun Nation (“the Tribe”), regarding Plaintiff’s detainment and ejection from the Casino’s premises. Cache Creek entered a special appearance to contest the court’s subject matter jurisdiction, arguing that “as an enterprise wholly owned by a sovereign tribal entity, the court has no power to rule on [Plaintiff’s] claims.” The central issue before the Court was “whether a tribal entity can be sued in federal court,” which “involves examining whether: (A) the enterprise ‘functions as an arm of the tribe;’ and (B) the tribe has waived its immunity.”

The Court first explained that, in the Ninth Circuit, courts “consider five factors when ‘determining whether an entity is entitled to sovereign immunity as an arm of the tribe: (1) the method of creation of the economic entities; (2) their purpose; (3) their structure, ownership, and management, including the amount of control the tribe has over the entities; (4) the tribe's intent with respect to the sharing of its sovereign immunity; and (5) the financial relationship between the tribe and the entities.’” Applying the five factors to this case, the Court determined that Cache Creek Casino was an arm of the Yocha Dehe Wintun Nation. The Court came to this conclusion because the Cache Creek Casino was wholly owned and operated by the Tribe, governed by a tribal council, and generated revenue for the benefit of the Tribe.

The Court then determined that Plaintiff had failed to provide “evidence that the Tribe [had] ‘unequivocally expressed’ an intent to waive its immunity to suit in a federal court.” Consequently, the Tribe’s immunity remained intact, the court lacked subject-matter jurisdiction, and Plaintiff’s claims had to be dismissed.

Dutchover v. Moapa Band of Paiute Indians, No. 219CV01905KJDBNW, 2021 WL 1738869 (D. Nev. May 3, 2021). Plaintiff (Eddie Dutchover) sued the Moapa Band of Paiute Indians (“the Tribe”), eight individual Tribe members, the Moapa Tribal Council, and Moapa Tribal Enterprises for the hostile work environment Plaintiff endured as a police officer with the Moapa Tribal Police Department.

Plaintiff recounted various incidents of derogatory name-calling and disparate treatment, arguing that the Tribe member’s hostility occurred because of his “Caucasian/Hispanic” race. Due to the racial nature of the allegations, Plaintiff brought several claims alleging violations of Title VII, Equal Protection, and the Civil Rights Act of 1871. The Tribe, claiming sovereign immunity, moved to dismiss the case.

In response, Plaintiff argued “that there is a corporate entity created by the Tribe that runs the police department, is the actual employer, and does not enjoy sovereign immunity.” The Tribe argued “that there is no corporate entity that runs the police department, but if there were, it would be an arm of the Tribe and enjoy sovereign immunity.” The Court agreed with the Tribe.

The Court explained that “certain factors” are considered “[t]o determine if an entity is an arm of a tribe that enjoys sovereign immunity”; specifically, “courts consider: (1) the method of creation of the economic entities; (2) their purpose; (3) their structure, ownership, and management, including the amount of control the tribe has over the entities; (4) the tribe’s intent with respect to the sharing of its sovereign immunity; and (5) the financial relationship between the tribe and the entities.” Applying these factors to the case, the Court concluded that “whatever corporation may exist to manage the police department would be an arm of the Tribe that enjoys sovereign immunity.”

The Court reached its conclusion because there was no evidence that the Tribe intended to create a corporate entity that would not share in the Tribe’s immunity and “[m]any of the defendants s[a]t on the Tribe’s governing board, indicating that the Tribe ha[d] involvement and control over any such corporate entity.” Consequently, the claims against the Tribe and the corporate entity Plaintiff alleged to have controlled the police department were dismissed.

State ex rel. Workforce Safety & Ins. v. Cherokee Servs. Grp., LLC, 955 N.W.2d 67 (N.D. 2021). Workforce Safety Insurance (“WSI”) initiated an administrative proceeding against Cherokee Services Group, LLC; Cherokee Nation Government Solutions, LLC; Cherokee Medical Services, LLC; Cherokee Nation Technologies, LLC (collectively referred to as the “Cherokee Entities”); Steven Bilby, the executive general manager of the Cherokee Entities; and Hudson Insurance Company (“Hudson”) for unpaid workers’ compensation premiums under North Dakota’s workers’ compensation laws. WSI ordered the Cherokee Entities to pay the unpaid premium and determined that Bilby was personally liable for any balance that remained unpaid. WSI also ordered Hudson to cease and desist from writing workers’ compensation coverage in North Dakota.

Following WSI’s issued order, the Cherokee Entities, Bilby, and Hudson requested an administrative hearing. During the hearing, WSI’s collections supervisor did not dispute that the Cherokee Entities wholly owned by the Cherokee Nation acted as an arm of the tribe. Consequently, the administrative law judge (“ALJ”) reversed WSI’s decision, concluding the Cherokee Entities and Bilby are protected by tribal sovereign immunity. Additionally, the ALJ found that WSI had no authority to issue cease and desist orders to insurance companies like Hudson. WSI appealed the ALJ’s order to the district court. The district court concluded that the Cherokee Entities and Bilby were not entitled to sovereign immunity. The district court also held that WSI has authority to issue a cease and desist order to Hudson. The Cherokee Entities, Bilby, and Hudson appealed the district court judgment.

On appeal, the Cherokee Entities argued that the Cherokee Nation is entitled to tribal sovereign immunity and the sovereign immunity extends to the Cherokee Entities as arms of the tribe. Tribal sovereign immunity, the Cherokee Entities claimed, would preclude WSI from enforcing workers’ compensation laws against them. The Supreme Court of North Dakota first noted that it has “previously concluded [that] state charted corporations and business owned by tribal members are not arms of the tribe”; however, because “the Cherokee Entities are organized under the laws of the Cherokee Nation,” an analysis “to determine whether an entity qualifies as an arm of the tribe” may proceed.

The Supreme Court of North Dakota adopted the Tenth Circuit’s “non-exhaustive six-part test to determine whether a tribal entity qualifies as an arm of the tribe.” Specifically, “[t]he test examines: (1) the method of creation of the economic entities; (2) their purpose; (3) their structure, ownership, and management, including the amount of control the tribe has over the entities; (4) the tribe’s intent with respect to the sharing of its sovereign immunity; (5) the financial relationship between the tribe and the entities; and (6) the policies underlying tribal sovereign immunity and its connection to tribal economic development, and whether these policies are served by granting immunity to the economic entities.” Looking to these factors, the Court concluded that the ALJ found that the Cherokee Entities are wholly owned by the Cherokee Nation, which only addressed the first step of the test. Consequently, the Court remanded to the ALJ to make further findings, consider all the factors given in the test, and determine whether the Cherokee Entities qualify as an arm of the Cherokee Nation entitled to sovereign immunity.

Manzano v. S. Indian Health Council, Inc., No. 20-CV-02130-BAS-BGS, 2021 WL 2826072 (S.D. Cal. July 7, 2021). Plaintiff (Carolina Manzano) sued her former employer, South Indian Health Council, Inc. (“SHIC”), alleging harassment and wrongful termination. SHIC was formed by seven tribes—the Barona Band of Mission Indians, the Campo Band of Mission Indians, the Ewiiaapaayp Band of Kumeyaay Indians, the Jamul Indian Village of California, the La Pasta Band of Mission Indians, the Manzanita Band of the Kumeyaay Nation, and the Viejas Band of Kumeyaay Indians—to provide health care to the Native and non-Native residents of its service area.

SHIC initially began as a satellite operation of the Indian Health Council in Pauma Valley, operating out of trailers on the Sycuan reservation. In 1982, SHIC incorporated as a nonprofit corporation and moved to the Barona Reservation. In 1987, SHIC’s Board of Directors acquired land in Alpine, California, which was placed into federal trust and remained the entity’s permanent location. SHIC’s health services were provided under self-determination contracts with the Indian Health Services, a federal agency within the Department of Health and Human Services, which recognized SIHC as a tribally-operated service unit. In response to Plaintiff’s suit, SHIC moved to dismiss, claiming entitlement to tribal sovereign immunity.

The central issue before the Court was whether SICH, as a tribal organization but not a tribe itself, was entitled to sovereign immunity. First, the Court noted that “[t]ribal sovereign immunity ‘extends to business activities of the tribe, not merely to governmental activities.’” The Court then explained that when a tribe does establish “an entity to conduct certain activities,” the entity is entitled to immunity only “if it functions as an arm of the tribe.”

To determine whether an entity is considered an arm of the tribe, the Court explained that the following factors are relevant: “(1) the method of creation of the entity; (2) its purpose; (3) its structure, ownership, and management, including the amount of control the tribe has over the entity; (4) the tribe’s intent with respect to the sharing of its sovereign immunity; and (5) the financial relationship between the tribe and the entity.” Applying these factors to the case, the Court concluded that SIHC is an arm of the tribe and entitled to tribal sovereign immunity.

With regards to SIHC’s method of creation, the Plaintiff argued “that SIHC’s articles of incorporation do not describe SIHC as a tribal corporation or specify any tribal status or affiliation,” and, therefore, should not be viewed favorably for purposes of the five-factor analysis. The Court disagreed, concluding that “articles of incorporation that are silent regarding sovereign immunity are not dispositive of an entity’s claim to sovereignty.” Additionally, the Court addressed Plaintiff’s argument “that SICH’s incorporation solely under state law defeats a favorable finding on [the first] factor,” explaining that the “case law is indeterminate on this point.” Specifically, the Court noted that some “[c]ourts have held that an entity’s state incorporation does not preclude tribal status [] where the entity is also incorporated under tribal law,” whereas other courts, outside the context of sovereign immunity, “have held that incorporation does not change an entity’s tribal status.” Consequently, the Court found that “[b]ecause the majority of case law does not consider state incorporation detrimental to tribal status,” SIHC’s state incorporation did not weigh against its claim of immunity.

Big Sandy Rancheria Enterprises v. Bonta, 1 F.4th 710 (9th Cir. 2021). In July 2018, Big Sandy Rancheria Enterprises (“Big Sandy”), a federally charted tribal corporation wholly owned and controlled by the Big Sandy Rancheria of Western Mono Indians (“the Tribe”), sued the Attorney General of California (“Attorney General”) and the Director of the California Department of Tax and Fee Administration (“the Director”), seeking declaratory and injunctive relief. Specifically, Big Sandy, a wholesale cigarette distributor, challenged California’s cigarette excise tax as applied to its distribution business, arguing that tribal sovereignty preempted the law. Big Sandy was chartered under section 17 of the Indian Reorganization Act (“IRA”) and its controlling Tribe was federally recognized.

The Director and Attorney General moved to dismiss Big Sandy’s tax claim on jurisdictional grounds under the Tax Injunction Act. This Act prohibits district courts from “enjoining, suspending or restraining the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.” Although the Director and Attorney General acknowledged the existence of an exemption to the Tax Injunction Act available to Indian Tribes, each asserted that Big Sandy was not itself an Indian tribe or band and, therefore, could not invoke the federal courts’ jurisdiction under 28 U.S.C. § 1362. In response, Big Sandy argued that it was a federally recognized Indian tribe, rather than merely a federally-chartered corporation wholly owned by a federally recognized Indian tribe. The district court agreed with the Director and Attorney General, dismissing Big Sandy’s tax claim for lack of jurisdiction. Big Sandy appealed.

The central issue before the Ninth Circuit with regards to Big Sandy’s tax claim was whether Big Sandy’s status “as [an] ‘incorporated tribe’ under section 17 of the [IRA]” equated to being considered “an ‘Indian tribe or band’ for jurisdictional purposes.” The Ninth Circuit, considering the relevant statutory language, legislative history, and circuit precedent narrowly construing § 1362, concluded that Big Sandy was “not an ‘Indian tribe or band’ within the meaning of § 1362.” Specifically, while reviewing numerous authorities, the Court found support for “the district court’s construction of ‘Indian tribe or band’ as [being] limited to ‘the Tribe in its constitutional form,’ as distinct from its corporate form.’” The Court also noted that “the Tribe, not [Big Sandy], appears on the Federally Recognized Indian Tribes List,” and that Big Sandy failed to “allege that the federal government, in issuing the Tribe a section 17 charter, recognized [Big Sandy] as a distinct political entity or government.” Instead, the Court determined that section 17’s “incorporated tribe” language merely “suggests that the entity is an arm of the tribe.” Consequently, the district court was found to have properly dismissed Big Sandy’s claim.

Great Plains Lending, LLC v. Dep't of Banking, No. 20340, 2021 WL 2021823 (Conn. May 20, 2021). On May 4, 2011, the Otoe-Missouria Tribe of Indians (“the Tribe”), through the Tribal Council, adopted the Otoe-Missouria Tribe of Indians Limited Liability Company Act (“the LLC Act”) and the Otoe-Missouria Tribe of Indians Corporations Act (“the Corporations Act”). The Tribe created Great Plains Lending LLC (“Great Plains”) and American Web Loan, Inc., doing business as Clear Creek Lending (“Clear Creek”) (collectively, “Tribal Entities”), pursuant to the LLC Act and the Corporations Act, respectively. John R. Shotton, chairman of the Tribe served as secretary and treasurer of both Tribal Entities.

Following an investigation by the Department of Banking (“Department”), the Commissioner of Banking (“Commissioner”) found that the Tribal Entities “had violated Connecticut’s banking and usury laws by making small consumer loans to Connecticut residents via the Internet without a license to do so.” On October 24, 2014, the Commissioner issued temporary cease and desist orders to the Tribal Entities and Shotton (collectively, “Plaintiffs”), orders that restitution be made to the Connecticut residents, and a notice of intent to issue permanent cease and desist orders, as well as impose civil penalties. Plaintiffs responded by filing a motion to dismiss the administrative proceedings for a lack of jurisdiction. The Commissioner denied the motion to dismiss. On administrative appeal, the trial court determined that the Tribal Entities possessed sovereign immunity in the administrative proceeding and remanded the case back to the Commissioner. The Commissioner, however, once again denied Plaintiff’s motion to dismiss, concluding that the entities had failed to demonstrate they were arms of the Tribe. Plaintiffs appealed.

On appeal, the trial court rendered judgment sustaining the appeal and remanded the case to the Commissioner for further proceedings regarding Plaintiff’s entitlement to tribal sovereign immunity. Plaintiffs appealed, claiming that the trial court should have rendered judgment in their favor as a matter of law. The Commissioner and Department (collectively, “Defendants”), cross appealed, challenging the legal standard adopted by the trial court and its decision to remand the case for further administrative proceedings. The Supreme Court of Connecticut granted review to address three significant issues of first impression with respect to whether a business entity shares an Indian tribe’s sovereign immunity as an arm of the tribe. Specifically, the Court “consider[ed]: (1) which party bears the burden of proving the entity’s status as an arm of the tribe; (2) the legal standard governing that inquiry; and (3) the extent to which a tribal officer shares in that immunity for his or her actions in connection with the business entity.”

With respect to the second consideration, the Court adopted the first five Breakthrough factors, which included: “(1) the method of creation of the economic entities, (2) the purpose of those entities; (3) the structure, ownership, and management of the entities, including the amount of control the tribe has over them; (4) the tribe’s intent with respect to sharing its sovereign immunity; [and] (5) ‘the financial relationship between the tribe and the entities.’” Under the first factor, the Court focused on the law under which the Tribal Entities were formed, finding that “[b]ecause both entities were created under tribal law on the [T]ribe’s own initiative,” the factor weighed heavily in favor of arm of the tribe status. Applying the remaining four factors, the Court found “that Great Plains [was] an arm of the tribe entitled to tribal immunity” but that, with regards to Clear Creek, a remand for further proceedings was necessary because the record was “insufficient to support a similar conclusion.”

Yellen v. Confederated Tribes of the Chehalis Rsrv., 141 S. Ct. 2434 (2021). On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), allocating eight billion dollars “of monetary relief to ‘Tribal governments.’” Under the CARES Act, the term “Tribal government” was defined as “the ‘recognized governing body of an Indian tribe.’” “Indian tribe,” in turn, was defined under the CARES Act by reference to its definition in the Indian Self-Determination and Education Assistance Act (“ISDA”). ISDA defined “Indian tribe” as “any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act, which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.”

On April 23, 2020, the Treasury Department determined that Alaska Native corporations (“ANCs”), while not federally recognized tribes, were eligible for CARES Act relief and set aside more than five-hundred million dollars for them. Despite ISDA’s express inclusion of ANCs in the definition of “Indian tribe,” several federally recognized Indian tribes challenged the Treasury Department’s determination, “arguing that only federally recognized tribes are Indian tribes under ISDA” and, thus, “under the CARES Act.” The district court disagreed, “ultimately enter[ing] summary judgment for the Treasury Department and the ANCs.” The court of appeals reversed, concluding that “the recognized-as-eligible clause is a term of art requiring any Indian tribe to be a federally recognized tribe.” The Supreme Court of the United States granted certiorari to “determine whether ANCs are eligible for the CARES Act funding set aside by the Treasury Department.”

The central question before the Court was whether ANCs satisfy ISDA’s definition of Indian tribe. Justice Sotomayor, writing for the majority, concluded that “[u]nder the plain meaning of ISDA, ANCs are Indian tribes, regardless of whether they are also federally recognized tribes.” Consequently, the court of appeals was reversed, and the ANCs were found to be entitled to CARES Act funding.

§ 1.4 The Federal Sovereign

§ 1.4.1 Indian Country & Land Into Trust

The IRA authorizes the Secretary of the Interior to take land into trust for the benefit of an Indian tribe’s reservation. In 2009, however, the U.S. Supreme Court issued a landmark ruling reversing the Interior’s prior interpretation of the IRA, 25 U.S.C. § 465, now located at 25 U.S.C. § 5108, and limiting the Secretary’s ability to take land into trust on behalf of tribes. Carcieri held that the Secretary may only acquire land in trust for tribes that (1) were “under federal jurisdiction” in 1934, and (2) currently enjoy federal recognition. This effectively precludes certain tribes from avoiding state tax and regulatory compliance, or conducting gaming or other economic development activities on newly acquired or reacquired lands.

Despite the Carcieri ruling, Interior seems willing to issue final decisions on fee-to-trust applications by tribes that were recognized, restored, or reaffirmed after June 1934 on the basis that the tribe may have been under the jurisdiction of the United States in 1934 even if that recognition was not formally documented. Interior will continue processing applications for tribes that have enjoyed uninterrupted, formal recognition since June 1934 and for tribes that can point to a non-IRA statute granting the Secretary acquisition authority. In sum, any non-Indian party looking to enter into a joint venture with a tribe to develop Indian lands not yet in trust status must pause to consider the implications of Carcieri.

In response to the Carcieri decision, in 2014, the Interior Department issued a Memorandum that provided guidance on the meaning of “under federal jurisdiction.” The Solicitor’s M-37029 Memorandum outlined a two-part test for interpreting the phrase “under federal jurisdiction.” The first part of this inquiry examines whether, before June 18, 1934, the federal government took an action or series of actions through a course of dealings or other relevant acts reflecting its obligation to, responsibility for, or authority over, an Indian tribe, bringing such tribe under federal jurisdiction. The second prong examines whether this jurisdictional status remained intact in 1934. Satisfying either prong will suffice to establish that the tribe was “under federal jurisdiction.” In a recent decision, Confederated Tribes of Grand Ronde Community of Oregon v. Jewell, the D.C. Circuit Court of Appeals upheld Interior’s application of the two-part test outlined in M-37029. M-37029 appears to be a non-statutory Carcieri fix.

As if Carcieri were not complicated enough, in 2012, the U.S. Supreme Court issued its opinion in Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. .Patchak. In that case, a local landowner by the name of David Patchak launched a legal challenge against the Interior Secretary’s decision to take the tribe’s land into trust for the purpose of gaming. Importantly, Patchak did not allege that he had a legal interest in the land to be taken into trust. Rather, Patchak brought an action under the APA asserting that the IRA did not authorize the Department of Interior to take land into trust for the tribe. The remedy Patchak sought was for the issuance of an injunction prohibiting the Interior from taking the land into trust. The basis for the injunction, in Patchak’s opinion, was that the requirements of the IRA were to be satisfied per the Supreme Court’s opinion in Carcieri. Both the federal government and the tribe argued that only the Quiet Title Act (QTA) could grant the waiver of sovereign immunity. Under the theory advanced by the defendants, the APA waiver of sovereign immunity was negated.

The Court determined that the QTA only applies to quiet title actions where a person claims an interest in the property that conflicts with, or is superior to, the government’s claim in the property. In addition, because the exception causing the APA waiver of sovereign immunity to be negated did not apply, the Court held Patchak had standing under the APA to pursue his challenge.

The result of this decision is that any party claiming harm to property nearby proposed trust land, even damage to an “aesthetic” interest, has legal standing under the APA to bring a lawsuit. This creates considerable risk for casino developers because the statute of limitations under the APA is considerably longer than that of the QTA, creating much more time for a party to challenge Interior’s trust transaction.

The Interior Department revised its land-into-trust regulations at Part 151 in response to the Patchak decision during the Obama Administration, in late 2013. This “Patchak Patch” provides that if the Interior Secretary or Assistant Secretary approves a trust acquisition, the decision represents a “final agency determination” subject immediately to judicial review. If a BIA official issues the decision, however, the decision is subject to administrative exhaustion requirements before it becomes a “final agency action.” In this instance, parties must file an appeal of the BIA official’s decision within 30 days of its issue. If no appeal is filed within the 30-day administrative appeal period, the BIA official’s decision becomes a “final agency action.” In October 2017, the Trump Administration’s Interior Department announced a consultation regarding a rulemaking that would reverse the “Patchak Patch,” and impose a much newer criteria for off-reservation land-into-trust applications. Assuming that rulemaking results in new Part 151 regulations, litigation will certainly follow.

A brief discussion of several of the year’s most prominent cases involving the diminishment of an Indian reservation and/or the taking of land into trust follow:

Little Traverse Bay Bands of Odawa Indians v. Whitmer, 998 F.3d 269 (6th Cir. 2021): In 2015, the Little Traverse Bay Bands of Odawa Indians (the “Band”) filed a lawsuit seeking a declaration that the Treaty of 1855 created a permanent reservation. To fully understand this case, a brief history of the Band’s interactions with the federal government is necessary.

Prior to the colonization of the Americas, the Band inhabited a section of land that is now considered northern Michigan. As settlers moved to this land, the Band contacted President Andrew Jackson seeking to sell some of their land and, in return, be allowed to stay in Michigan. In 1835, the government agreed, and the Band ceded around fourteen million acres to the United States, retaining 100,000 acres for themselves. In 1855, seeking a more permanent arrangement, the Band began negotiations with the federal government to purchase hundreds of individual tracts of land in Michigan. This finalized agreement was called the Treaty of 1855.

Under federal law, Indian Country is land set apart for the use of Indians under the superintendence of the government. In this case, the Court held that as the treaty provided for individually owned allotments of land, it did not create a collective Indian reservation. The Court looked to the Treaty’s text and the accompanying negotiations to determine that both the Band and the federal government intended to provide tribal members with individual titles to non-federally governed land instead of a communal title—which would have been more indicative of a reservation.

Eastern Band of Cherokee Indians v. U.S. Dep’t of Interior, No. CV 20-757 (JEB), 2021 WL 1518379 (D.D.C. Apr. 16, 2021): In 2018, the Catawba asked the Bureau of Indian Affairs (“BIA”) to take a 16-acre parcel of land in North Carolina—the Kings Mountain Site—into trust so that they could build a casino on it. After the BIA agreed, the Eastern Band of Cherokee Indians (“EBCI”), who have their own North Carolina casinos, filed an action under the Administrative Procedure Act (“APA”) stating that the casino construction could destroy Cherokee artifacts or remains. While the Catawba are headquartered in South Carolina, around 253 members reside in North Carolina. As such, they are governed by both the South Carolinian specific Settlement Act (“Settlement Act”) and the Indian Gaming Regulatory Act (“IGRA”). EBCI claims that (1) the Settlement Act categorically bars the Catawba from operating a casino under IGRA; (2) the Settlement Act precludes the Catawba from having land taken into trust under the Indian Reorganization Act (“IRA”); and (3) the Kings Mountain Site is not eligible for gaming activities under IGRA. The Court disagreed on all three counts.

Looking to the text of the Settlement Act, the Court determined that it was only intended to apply to the Catawba’s actions in South Carolina. Under this interpretation, the Court found that IGRA governs the Catawba in North Carolina. Therefore, the Kings Mountain Site was properly taken into trust under the IRA and the Catawba may operate a casino on its land under IGRA. Having resolved claims one and two in the Catawba’s favor, the Court held that the Kings Mountain Site fits under the “restored lands” exception to the general rule that lands taken into trust after October 17, 1988 may not be used for gaming. Rejecting many of EBCI’s arguments, the Court determined that the Kings Mountain Site undoubtably meets the definition of “restored lands,” and affirmed that gaming could take place on the land.

Kalispel Tribe of Indians v. U.S. Dep’t of Interior, 999 F.3d 683 (9th Cir. 2021): In 2001, the Department of Interior (“DOI”) took a 145-acre parcel of land into trust for the Spokane Tribe. The Spokane Tribe immediately began the process to request a new gaming establishment, but the administrative process took over ten years to complete. During this process, the Kalispel Tribe of Indians objected multiple times asserting that the new gaming facility—proposed to be located two miles from a Kalispel casino—would cause them significant economic harm and render them unable to meet existing debt obligations. After undertaking an objective analysis of Kalispel’s financial projections, the Secretary concluded that if the new casino were permitted to open, Kalispel would be able to fulfill its loan obligations. Therefore, the Secretary found that the proposed gaming facility would be in the Spokane Tribe’s best interest and would not be detrimental to the surrounding community—meeting the requirements put forth under IGRA. In 2017, Kalispel sued the Secretary in federal district court alleging that the Secretary’s determination violated IGRA. The district court held that the determination complied with IGRA, was supported by substantial evidence, and was neither arbitrary nor capricious—a ruling Kalispel appealed.

The Ninth Circuit agreed with the district court and affirmed. Under IGRA, off-reservation gaming must be: (1) in the best interest of the Indian Tribe; and (2) not be detrimental to the surrounding community. Here, Kalispel argued that as the additional gaming would cause any detriment to a nearly Indian tribe, it should not be allowed—regardless of the net impact on the surrounding community. Using the principals of statutory interpretation, the Court interpreted “surrounding community” to include “local governments and nearby Indian Tribes located within a 25-mile radius of the site of the proposed gaming establishment.” While the Court agreed that Kalispel is undoubtably part of the surrounding community, they disagreed with the argument that any detriment to Kalispel is an overall detriment to the surrounding community. Holding that IGRA requires the Secretary to weigh the many adverse interests of the surrounding community when deciding if there is a net detrimental effect, the Court rejected Kalispel’s argument that any detriment to Kalispel precluded the Secretary from authorizing the gaming facility. Kalispel’s argument that the Secretary’s determination was arbitrary and capricious because it failed to fully consider the economic detriments to Kalispel was also rejected. Looking to the administrative record, the Court found that there was ample evidence that the Secretary properly considered and weighed the detriments with the benefits when making the determination. The Court thus held that the Secretary’s decision was neither arbitrary nor capricious.

Hardwick v. United States, No. 79-cv-01710-EMC, 2020 WL 6700466 (N.D. Cal. Nov. 13, 2020): The Buena Vista Rancheria of Me-Wuk Indians (the “Tribe”) filed this suit seeking an order requiring the BIA to take restored Rancheria lands into trust under the 1983 Stipulated Judgment (the “Judgment”). The Judgment restored the reservation status of seventeen Rancherias and provided a mandatory trust election provision wherein class members could restore the enumerated rancherias to trust status. In both 1996 and 2010, the Tribe requested that the BIA take the Rancheria into trust. The BIA denied these requests stating that the Rancheria was ineligible to be brought into trust under the mandatory trust provisions of the Judgment as the Tribe did not meet the requirements of a class member, or successor in interest. The Court disagreed.

As the Judgment’s text did not define either term, the court relied on the plain meaning from Black’s Law Dictionary and held that status as a class member or successor in interest does not turn on the legal form of entity and, as such, is not restricted to individuals. The Tribe thus was a valid class member under the Judgment and could properly invoke the mandatory trust election provision.

Stand Up for Cal.! v. State of Cal., 64 Cal. App. 5th 197 (2021). In 2005, the North Fork Tribe submitted an application requesting that the BIA take a 305-acre parcel of land into trust for the purpose of gaming. In 2011, the Secretary authorized the land for gaming and in 2012, the Governor concurred, fulfilling an IGRA requirement. In 2014, California voters rejected Proposition 48—the statute ratifying the tribal-state compact—and therefore rejected the ratification of the North Fork gaming project. The issue before the Court was if the voter rejection of Proposition 48 invalidated the Governor’s concurrence. The Court found that legislative changes could restrict or eliminate the Governor’s concurrence. From this, the Court held that the voter’s rejection of the compact-ratifying statute was an expression of their intent to reject gaming on the 305-acre parcel and therefore impliedly expressed their will to annul the Governor’s concurrence. Reversing and remanding for further proceedings, the Court instructed the trial court to overrule North Fork’s demurrers.

Stand Up for Cal.! v. U.S. Dep’t of Interior, 994 F.3d 616 (D.C. Cir. 2021). In 2013, the California based Wilton Rancheria tribe petitioned the Department of the Interior (“DOI”) to take a plot of land into trust for gaming use. In 2017, the Department agreed and acquired title to a 30-acre parcel known as Elk Grove. Subsequently, a group of plaintiffs including Stand Up for California! (“Stand Up”) brought suit against DOI claiming that the Department: (1) incorrectly delegated the authority to acquire land to an official who could not wield the authority; (2) was barred from acquiring land on behalf of Wilton members as the Tribe was distributed assets under the Rancheria Act; and (3) failed to adhere to National Environmental Protection Act (“NEPA”) obligations when selecting the Elk Grove location. The court dismissed all three claims.

With respect to claim one, the court interpreted the relevant statues and regulations—most importantly 25 C.F.R. § 151.12—to mean any BIA official can decide to take land into trust for DOI as long as they are subject to administrative review. Therefore, the court held that DOI properly delegated the decision-making authority, affirming the district court. Stand Up’s second claim—that the Rancheria Act precludes DOI from taking land into trust on behalf of Wilton members—was similarly dismissed. The court stated that a court-approved settlement to restore recognition of a tribe and Indian status for members can invalidate the limitations of the Rancheria Act. Further, the court held that as the Rancheria Act has no impact on DOI with regards to the Wilton Rancheria, it was irrelevant that some members may have received assets. Finally, with respect to the third claim, the court held that DOI met their responsibilities under NEPA when preparing the required Environmental Impact Study (“EIS”). An EIS must simply adequately consider and disclose the environmental impact of the proposed action. The court determined that DOI undertook a thorough analysis of potential issues, properly notified the public of their plans to select the Elk Grove location and provided adequate time for public comment—as evidenced by the active participation of Stand Up during the comment period. Finding all arguments to be without merit, the Court dismissed claim three.

§ 1.4.2 Federal Approval for Reservation Activity

Due to the unique trust status of Indian lands, contracts involving those lands are subject to various forms of federal oversight. The Secretary of the Interior must approve any contract or agreement that “encumbers Indian lands for a period of seven or more years,” unless the Secretary determines that approval is not required. Federal regulations explain that “[e]ncumber means to attach a claim, lien, charge, right of entry, or liability to real property.” Encumbrances may include leasehold mortgages, easements, and other contracts or agreements that, by their terms, could give to a third party “exclusive or nearly exclusive proprietary control over tribal land.”

Per Section 81’s year 2000 revisions, the Interior Secretary will not approve any contract or agreement if the document does not (1) set forth the parties’ remedies in the event of a breach; (2) disclose that the tribe can assert sovereign immunity as a defense in any action brought against it; and (3) include an express waiver of tribal immunity. Leaseholds for Indian lands, which typically run 25 years, also require secretarial approval. Failure to secure secretarial approval could render the agreement null and void. Therefore, if the transaction implicates tribal lands, counsel should analyze whether the Secretary must approve the underlying contract or lease. Regardless of whether Secretary approval is necessary, all parties should be careful how they draft agreements which may encumber the land. If the contract pertains to a tribal casino, the parties must also consider whether the contract should be submitted to the National Indian Gaming Commission (NIGC) for approval pursuant to the Indian Gaming Regulatory Act (IGRA). Any “management agreement” for a tribal casino or “contract collateral to such agreement” requires NIGC approval to be valid and enforceable. The NIGC has recently found that certain consulting, development, lease, and financing documents that confer management authority to the consultant, developer, landlord, or lender thereby constitute a management contract that is void unless approved by the NIGC.

Non-Indian contractors must also consider whether they need to obtain an Indian Traders License from the BIA and/or a tribal business license to properly do business with a tribe. Federal regulations do not preclude certain tribes from imposing additional fees on non-Indian contractors. Failure to obtain appropriate licenses could subject the contractor to a fine or forfeiture, if not tribal qui tam litigation.

With much tribal and media fanfare, in 2012, President Obama signed into law the Helping Expedite and Advance Responsible Tribal Homeownership (HEARTH) Act. As noted above, prior to the passage of this bill, under 25 U.S.C. § 415 every lease of a tribe’s lands must undergo federal review and approval by the Secretary of the Interior under a sprawling, burdensome set of regulations. The HEARTH Act changes that scheme of Indian land leasing by allowing tribes to lease their own land. The Act gives tribal governments the discretion to lease restricted lands for business, agricultural, public, religious, educational, recreational, or residential purposes without the approval of the Secretary of the Interior. Tribes are able to do so with a primary term of 25 years, and up to two renewal terms of 25 years each (or a primary term of up to 75 years if the lease is for residential, recreational, religious, or educational purposes).

There are some caveats, though. First, before any tribal government can approve a lease, the Secretary must approve the tribal regulations under which those leases are executed (and mining leases will still require the Secretary’s approval). Second, before the Secretary can approve those tribal regulations, the tribe must have implemented an environmental review process—a “tribal,” or “mini” National Environmental Policy Act—that identifies and evaluates any significant effects a proposed lease may have on the environment and allows public comment on those effects. The HEARTH Act authorizes the Interior Secretary to provide a tribe, upon the tribe’s request, with technical assistance in developing this regulatory environmental review process. HEARTH Act implementing regulations went into effect in 2013. As of October 2018, the BIA lists twenty-six tribes whose regulations have been approved to exercise the enhanced rights of sovereignty associated with taking control over the leasing of tribal land. The following highlights one case decided in the last year.

Texas v. Alabama Coushatta Tribe of Texas, No. 9:01-CV-299, 2021 WL 3884172 (E.D. Tex. Aug. 31, 2021): In 2016, the Alabama Coushatta Tribe of Texas (the “Tribe”) sought guidance from the National Indian Gaming Commission (the “NIGC”) regarding whether the Tribe’s lands were eligible for gaming. The NIGC determined that the Indian Gaming Regulatory Act of 1988 (“IGRA”) applied to the Tribe. Accordingly, the NIGC determined that the Restoration Act, which bars gaming that violates Texas law, did not apply. As a result, the Tribe opened a facility offering electronic bingo gambling games. The State of Texas sought to enjoin these operations, arguing that the Restoration Act applies to the Tribe. The Fifth Circuit subsequently found that the Restoration Act and the Texas law it invokes, and not the IGRA, governs the permissibility of gaming operations on the Tribe’s lands.

On remand, the State of Texas sought to hold the Tribe in contempt for continuing the gaming operations. The Eastern District Court of Texas once again held that the Restoration Act does not apply to the Tribe. The court stated that the Restoration Act has been interpreted by the Fifth Circuit as prohibiting tribes from engaging in any gaming activity prohibited by Texas law. Under Texas’s Bingo Enabling Act, bingo is a permissible gaming activity so long as the act’s requirements are complied with, such as receiving a license. As a result, the court found that because Texas regulates bingo gaming, that gaming activity is not prohibited by the laws of the State of Texas within the meaning of Section 207(a) of the Restoration Act. The court concluded that the Tribe’s bingo gaming is not subject to the laws of Texas, including the Restoration Act, unless and until the state prohibits that gaming activity outright.

§ 1.4.3 Labor and Employment Law & Indian Tribes

When Indian tribes act as commercial entities and hire employees, they are not subject to the same labor and employment laws as nontribal employers. For example, state labor laws and workers’ compensation statutes are inapplicable to tribal businesses. Moreover, tribal employers may not be subject to certain federal labor and employment laws.

Tribal employers are ordinarily exempt from antidiscrimination laws. Both Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act expressly exclude Indian tribes, and state anti-discrimination laws usually do not apply to tribal employers. In addition, tribal officials are generally immune from suits arising from alleged discriminatory behavior.

The circuits remain severely split regarding the application of federal regulatory employment laws to tribal employers. The Eighth and Tenth Circuits have refused to apply to tribes such laws as the Occupational Safety and Health Act (OSHA), the Employee Retirement Income Security Act (ERISA), the Fair Labor Standards Act (FLSA), the National Labor Relations Act (NLRA), and the Age Discrimination in Employment Act (ADEA), because doing so would encroach upon well-established principles of tribal sovereignty and tribal self-governance.

Conversely, the Second, Seventh, and Ninth Circuits have applied OSHA and ERISA to tribes. Moreover, the Seventh and Ninth Circuits lean toward application of FLSA to tribes. These circuits reason that, because Indian tribes are not explicitly exempted from these statutes of general applicability, the laws accordingly govern tribal employment activity. Following this reasoning, the Department of Labor has stated that the FMLA applies to tribal employers. However, aggrieved employees may experience difficulty enforcing federal employment rights due to the doctrine of sovereign immunity. For example, the Second Circuit has held that, because Congress did not explicitly authorize suits against tribes in the language of the FMLA or the ADEA, tribal employers cannot be sued for money damages in federal court by employees under these statutes.

Questions remain concerning whether federal statutes of general applicability extend beyond the labor and employment arena where they do not affirmatively contemplate whether Indian tribes govern tribal or reservation-based activities. For example, do federal franchise laws apply in Indian Country? What about the federal Copyright Act or other federal intellectual property statutes? What about Sarbanes-Oxley? While subject to the split in circuits discussed immediately above, it is unclear in which federal jurisdictions a court would hold that such federal laws apply to tribes.

In the last year, federal courts have continued to decide cases involving the application of federal labor and employment rules to tribal employers. More generally, courts have grappled with how to apply statutes of general applicability to tribal sovereigns. Several of the most prominent cases from the last year are discussed below:

Scalia v. Red Lake Nation Fisheries, Inc., 982 F.3d 533 (8th Cir. 2020): Red Lake Fisheries, Inc. (the “Fishery”) is a fishery operating on the Red Lake Indian Reservation in Minnesota, a corporation organized under tribal law and comprised solely of tribal members. The Fishery received two citations under the Occupational Safety and Health Act (OSHA) after a boat capsized on a reservation lake and two employees drowned. OSHA proposed a penalty of $15,521. The Fishery contested both the citations and the penalty. An administrative law judge (“ALJ”) granted the Fishery’s motion to dismiss. The Secretary of Labor argued that OSHA applied to tribal businesses unless Congress stated otherwise and thus, the ALJ erred in granting the motion. The Eighth Circuit Court of Appeals (1) found that OSHA enforcement would dilute the principles of tribal sovereignty; (2) noted that OSHA completely omits mention of Indian commerce when defining “employer;” and (3) observed that the Red Lake Reservation had “preserved for the [Red Lake] Band [of Chippewa Indians] an independence not experienced on other reservations.” Thus, the Court held that even if OSHA were to apply to Indian activities in other circumstances, it did not apply here where the corporation was organized under tribal law and was comprised exclusively of enrolled Tribe members.

Miller v. United States, 992 F.3d 878 (9th Cir. 2021): Plaintiff was a police officer with The Reno-Sparks Indian Colony (The “Tribe”). Pursuant to a self-determination contract with the Bureau of Indian Affairs, the Tribe’s employees were deemed to be federal government employees for the purpose of Federal Tort Claims Act coverage. The Tribe terminated Plaintiff’s employment, alleging that Plaintiff had fraudulently filed an unemployment claim. Plaintiff denied the allegation and stated he was the victim of identity theft, but the termination was upheld. Plaintiff filed an administrative wrongful termination claim with the Department of Interior claiming that he was the victim of “continuous employment harassment” and the termination was retaliation for the workplace harassment complaint that Plaintiff filed with the Tribe. He also claimed he was denied a proper investigation as guaranteed by department policy. The Department of Interior denied Plaintiff’s claim and informed him of his right to sue in federal court. Plaintiff filed suit against the United States alleging the same facts as he did in the administrative claim. In addition, Plaintiff found out that the Tribe knew that he was the victim of identity theft before they upheld the termination, so he amended his complaint to add claims of negligent and grossly negligent termination.

To determine whether the discretionary function exception barred Plaintiff’s claims, the court considered if “(1) the act or omission on which the claim is based ‘involves an element of judgment or choice’; and (2) ‘that judgment is of the kind that the discretionary function exception was designed to shield.’” Because the Tribe was not bound to act in a particular way, the decision to terminate an employee was a discretionary choice, satisfying the first prong of the test. In evaluating the second prong, the court noted that the inquiry about whether the judgment was intended to be shielded was an objective one: whether the employer’s actions were susceptible to policy analysis and not whether the subjective intent was actually based on policy considerations. The court stated that hiring employees is the type of policy judgment that Congress intended the discretionary function exception to shield. Because terminating employees is just the flip side of hiring, termination decisions are equally shielded. Thus, the claims rooted in retaliation were covered by the discretionary function exception.

However, Plaintiff’s second claim, alleging a lack of investigation pursuant to policy, was based upon a violation of procedural rules whereas the other claims were based upon retaliation. The procedural violation could not satisfy the first prong of the test, whether there was an element of choice in the act, because the Tribe’s policy documents created a mandatory duty to investigate. Accordingly, the exception could not apply. Similarly, the claim for negligent and grossly negligent termination was not covered under the exception because the BIA handbook mandated that Tribal employees could not be disciplined for exonerated allegations; thus, the Tribe lacked discretion to fire Plaintiff on grounds that it knew to be false and unsubstantiated. On these final claims, the court remanded the case.

Chicken Ranch Rancheria of Me-Wuk Indians v. Newsom, 1:19-CV-0024 AWI SKO, 2021 WL 1212712 (E.D. Cal. Mar. 31, 2021): California (the “State”) entered into class III gaming compacts with a number of Indian Tribes that were set to end on December 31, 2020, with an automatic extension to June 30, 2022. The Tribal Plaintiffs negotiated with the State to come up with a new agreement to replace the 1999 compacts. However, the Tribal Plaintiffs alleged that the State negotiated in bad faith by exceeding the scope of the permissible subjects of negotiation pursuant to Section 2710(d)(3)(C) of the Indian Gaming Regulatory Act (“IGRA”), which limits the subjects of negotiation to topics related to gaming and those consistent with the IGRA’s purpose.

The Tribal Plaintiffs first objected to provisions about employment standards. The anti-discrimination provision precluded employers from engaging in discrimination of persons in protected groups seeking to work or working for the gaming operation or gaming facility. The minimum wage provision required compliance with the State’s minimum wage law and the federal minimum wage laws under the Fair Labor Standards Act. The final employment standard provision required the Tribal Compact to enact a Tribal Labor Relations Ordinance in order for gaming activities to continue. The court held that the catch-all provision of Section 2710(d)(3)(C)(vii) (“any other subjects that are directly related to the operation of gaming activities”) covered all three employment standards provisions because without the operation of gaming activities, the jobs would not exist and without the jobs, the operation of gaming activities could not exist. However, because of the indirect connection to gaming activities, the State needed to provide meaningful concessions in exchange for making demands to these topics. The State argued that their negotiations represented meaningful concessions and the court held that this holistic bundled approach was disapproved of. Instead, a specific concession should have been made for each topic—a quid pro quo.

The Tribal Plaintiffs also objected to a provision which required the enactment of an ordinance that granted the tribal court jurisdiction and authority to recognize and enforce tribal or state earnings withholding orders, such as spousal and child support, entered against any person employed at the gaming operation or gaming facility. The court agreed with the Tribe’s argument that this topic was beyond the permitted scope and not related to the operation of gaming activities because of spousal and child support obligations, though affected by employment, would exist even in the absence of the gaming job.

Because the State could not show that it had offered meaningful concessions in regard to the employment provisions nor that the earnings withholding provision, neither was a permissible topic under Section 2710(d)(3)(C) and the court adjudicated that the State did not negotiate in good faith.

Ohlsen v. United States, 998 F.3d 1143 (10th Cir. 2021): The United States Forest Service entered into an agreement, under the authority of the Cooperative Funds and Deposits Act (“CFDA”), with the Isleta Pueblo for a forest protection project involving the cutting and masticating of trees. The agreement established the Pueblo employees were not federal employees for any purposes, including the Federal Tort Claims Act (“FTCA”). The Forest Service directed the Pueblo to masticate wood that had already been slashed and left on the forest floor to decrease the risk of wildfire in a high priority treatment area. The wood on the floor had reached levels well beyond the agreed-upon limit by that time. While doing so, the masticator struck a rock, caused a spark, and ignited the surrounding bush. The fire continued for three months, burning 17,912 acres, and destroying property.

Insurance companies and owners of destroyed property filed suit against the U.S. government based upon the negligence of Pueblo crewmembers. The government asserted that the claim was barred because the Pueblo crewmembers were independent contractors, an exception under the FTCA. Plaintiffs argued that the CFDA required the Pueblo workers to be considered federal employees. The court disagreed and interpreted the statutory language to mean that the CFDA excludes cooperators from being deemed federal employees outside the FTCA or Federal Employees Compensation Act rather than automatically including them in either instance.

Having decided that the CFDA did not automatically render the Pueblo workers as federal employees, the court applied the Lilly test to determine whether the workers were independent contractors. First, court noted that the intent between the parties was clear because the agreement unequivocally stated that the Pueblo workers “shall not be deemed to be Federal employees for any purposes. . . .” Second, the government’s control over specifications, safety, and precise performance requirements encompasses general supervisory authority rather than control over day-to-day operations—a power retained by the Pueblo. The other Lilly factors were not disputed and thus the court considered these two to be dispositive. Thus, the Pueblo were independent contractors and the U.S. government could not be subject to tort liability for the Pueblo’s negligence under the FTCA.

Dutchover v. Moapa Band of Paiute Indians, 219CV01905KJDBNW, 2021 WL 1738869 (D. Nev. May 3, 2021): Plaintiff worked as a police officer for the Moapa Band of Paiute Indians (the “Tribe”) where he was allegedly the victim of harassment and a hostile work environment. Plaintiff alleged that the Tribe had waived sovereign immunity by entering into a federal contract and by enacting, promoting, and adhering to federal law, including Title VII. Plaintiff alleged that the policies and training that the Tribe offered, including an anti-discrimination training offered by a federal employee, signaled an adoption of Title VII and thus a waiver of sovereign immunity. The court disagreed because a waiver of sovereign immunity must be express and cannot be implied through behaviors such as the training Plaintiff described. Because the Tribe had not waived sovereign immunity, Plaintiff’s claims arising out of the workplace conduct, including a § 1983 claim and Title VII claim, were dismissed.

Plaintiff also argued that there was a corporate entity created by the Tribe that ran the police department and, as the actual employer, did not enjoy sovereign immunity. The Tribe denied the existence of such an entity and argued that even if such an entity did exist, it would be an arm of the Tribe covered by sovereign immunity. The court agreed because there was no indication that the Tribe intended to create a corporation that didn’t share sovereign immunity, especially where many of the defendants sat on the Tribe’s governing board indicating the Tribe’s involvement and control over any such corporate entity. The court held that a waiver of a tribe’s sovereign immunity cannot be implied through behavior such as workplace training; it must be express. Where a tribe is involved with and maintains control over a corporate entity, the entity, even as an actual employer, is an arm of the tribe that enjoys sovereign immunity.

Butler v. Leech Lake Band of Ojibwe, CV 20-2332(DSD/KMM), 2021 WL 2651981 (D. Minn. June 28, 2021): Plaintiff, employed as a Director with the Leech Lake Band of Ojibwe (the “Band”), brought suit against the Band and two managers of the Band for age discrimination under the Age Discrimination in Employment Act of 1967 (“ADEA”); violation of the Equal Pay Act (EPA); retaliation, harassment, intimidation, and wrongful demotion and termination, all under Title VII of the Civil Rights Act of 1964 (“Title VII”); and violations of state law.

The court held that it did not have jurisdiction over the claims because the ADEA, EPA, and Title VII, all specifically exempt tribal employers from this suit. Without an explicit waiver of sovereign immunity, those claims could not proceed. The individually named managers, also employees of the Band, could not be sued in an individual capacity because Title VII and the ADEA did not provide for such liability. While the EPA does not prohibit individual liability, the court reasoned that since the Plaintiff could not bring the EPA claim against the Band, she also could not bring the EPA claim against individual officers of the Band. With all the federal law claims dismissed, the court declined to extend pendent jurisdiction over the remaining state law claims. The court held that without an explicit waiver, a tribal employer retains sovereign immunity and cannot be sued under the Age Discrimination in Employment Act of 1967, Equal Pay Act, nor Title VII.

Great Plains Lending, LLC v. Dep't of Banking, No. 20340, 2021 WL 2021823 (Conn. May 20, 2021): The Plaintiffs, Great Plains Lending, LLC, American Web Loans, Inc. (doing business as Clear Creek Lending), and John R. Shotton (chairman of the Otoe-Missouria Tribe of Indians (the “Tribe”), were investigated by the Defendants, the Commissioner of Banking (“Commissioner”) and the Department of Banking. The investigation found that the Plaintiff companies were violating Connecticut’s banking and usury laws by making small consumer loans with excessive interest rates to state residents via the internet without a license to do so. The Commissioner ordered the Plaintiff companies to cease and desist, pay restitution to the state residents, and pay civil penalties. The Plaintiffs filed a motion to dismiss the administrative proceedings for a lack of jurisdiction alleging that the companies were arms of the tribe and Shotton was entitled to sovereign immunity because he was acting within his official capacity as an employee of the Tribe. The motion was dismissed and this appeal followed.

First, the court found that the companies did indeed enjoy sovereign immunity as arms of the Tribe. Next, the court stated that two conditions needed to be met for sovereign immunity to extend to a Tribe’s employee or officer: (1) the Tribe, not the individual, is the real party in interest; and (2) the Tribal official acted within the scope of his/her/their authority. In evaluating the first prong of the test, the court observed that the Defendant “department is seeking relief from Shotton nominally because of his official policy-making capacity as a high ranking officer of the Tribe and an officer of the entities, rather than as a result of his personal actions taken within the scope of his official capacity.” Because Shotton was targeted for his ranking and status rather than his personal actions, the court determined the Tribe was the real party in interest.

Turning to the second prong, the court noted that it was not enough to allege that Shotton’s actions were a violation of state law to establish that his actions were outside his capacity as a corporate official. Because the Defendants failed to allege or prove that any actions were taken to further Shotton’s personal interests, as distinct from the tribe’s interests, the court found that Shotton was acting within his official capacity. Putting together the two prongs, the court held that the Tribe’s sovereign immunity extended to Shotton as an official of the Tribe.

The court ultimately held that the burden of proving that a company or entity is an arm of the Tribe entitled to sovereign immunity falls on the company or entity claiming the entitlement. Two conditions must be met for sovereign immunity to extend to a Tribe’s employee or officer: (1) the Tribe, not the individual, must be the real party in interest; and (2) the Tribal official must have acted within the scope of his/her/their authority.

Manzano v. S. Indian Health Council, Inc., 20-CV-02130-BAS-BGS, 2021 WL 2826072 (S.D. Cal. July 7, 2021): Plaintiff brought claims of harassment and wrongful termination against her former employer, Defendant Southern Indian Health Council, Inc. (“SIHC”). Pursuant to Title V of the Indian Self-Determination and Education Assistance Act (“ISDEAA”), SIHC entered into a compact with the Indian Health Service (“IHS”) in which the IHS transferred authority to SIHC to make decisions about the federal funding and execution of federal programs, services, functions, and activities for the benefit of American Indians. Defendant moved to dismiss the case based on Tribal sovereign immunity.

Plaintiff made evidentiary objections to the Compact agreement. Plaintiff stated that the Compact agreement was untimely, not relevant, and not properly authenticated. Because these evidentiary issues concerned facts essential to the issue of sovereign immunity, the court first resolved them, in favor of the Defendants, before using a five-step analysis to determine whether SIHC was entitled to Tribal sovereign immunity.

First, the method of creation weighed toward sovereign immunity because SIHC operated on Tribal land, provided health care to tribal communities, was comprised of federally recognized tribes, all of which were passed resolutions authorizing SIHC to assume authority from the government for the services provided. The fact that SIHC was incorporated under state law did not defeat a favorable finding on this factor. SIHC’s purpose was to provide healthcare to Tribal communities and the Compact agreement was to promote the autonomy of member tribes in healthcare. The second factor also weighed in favor of SIHC. Third, the structure, ownership, and management weighed in favor of SIHC because SIHC was fully managed by member tribes through their representatives on the managing board who were enrolled members of each Tribe. Fourth, while not explicit in the Compact agreement, there were indications that there was Tribal intent for SIHC to share in sovereign immunity. Specifically, (1) the transfer of power between IHS and SIHC document stated that it was for the benefit of the tribes because it would “allow SIHC to better assert its sovereign status and that of its Members by assuming greater funding for and control over its operations;” (2) SIHC entered into the Compact “to carry out the services provided by the SIHC in a manner consistent with the Compact and SIHC's self-governance” (emphasis added); and (3) the ISDEAA stated that when an Indian tribe authorizes an inter-tribal consortium, such as the SIHC, the consortium has the same rights and responsibilities as a Tribe, including Tribal sovereign immunity. Last, the financial relationship between SIHC and the Tribes supports findings of sovereign immunity because SIHC would have been unable to receive funding without the involvement of Tribes. Altogether, the court found SIHC was entitled to Tribal sovereign immunity as an arm of the Tribe.

The court then considered whether the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) abrogated SIHC’s Tribal immunity. USERRA’s definition of an employer does not include Tribes or Tribal organizations and had no unequivocal expression of abrogation. Looking to the legislative history, the Court noted that a House Report stated that an explicit statement to include tribes was necessary as to avoid confusion about interpretation; however, the recommendation was not adopted and so the court was unable to find that Congress unambiguously sought to override Tribal sovereign immunity and apply USERRA to Tribal employers.

Finally, the court rejected Plaintiff’s argument that Defendant waived sovereign immunity by failing to raise it in bylaws or corporate filings because waivers of sovereign immunity must be express rather than implied. The case was dismissed for lack of subject matter jurisdiction.

Jim v. Shiprock Associated Sch., Inc., 833 Fed. Appx. 749 (10th Cir. 2020): Plaintiff sued her employer, Shiprock Associated Schools, Inc., (the “corporation”) a private corporation that served the Navajo Nation, for discrimination under Title VII. To decide whether to characterize the corporation as an Indian tribe for the purposes of Title VII, the court considered whether the Tribe created and controlled the enterprise. The court determined that here, the corporation was created under the auspices of the Navajo Nation and the Nation’s statutes authorized chapters to establish local school boards. The Navajo Nation Board of Education, in turn, empowered the corporation to operate educational programs. Every board member was required to be an enrolled member and most students and employees were also members. Further, the corporation operated under tribal oversight. Though the school received funding from the U.S. Bureau of Indian Education, it was tribally controlled. Ergo, the private corporation constituted an Indian Tribe and was held to be exempt from Title VII.

Beetus v. United States, 4:19-CV-00044-SLG, 2021 WL 1093617 (D. Alaska Mar. 22, 2021): Plaintiff alleged that she was sexually assaulted by an employee of the Native Village of Tanana’s Culture Camp while she attended the camp as a minor. The camp was organized, managed, and funded pursuant to an ISDEAA contract between the United States and the Tanana Tribal Council (“TTC”) and/or the Tanana Chiefs Conference (“TCC”). Plaintiff brought various tort claims claiming that the assault committed against her was proximately caused by TCC/TTC’s failure to adequately safeguard minors and Plaintiff asserted that since TTC/TCC were carrying out their ISDEAA contractual duties at the time of the incident, the United States was instead liable for the tort of the tribal employee pursuant to Section 314 of the Federal Tort Claims Act. The U.S. government moved to dismiss for lack of subject matter jurisdiction.

To determine whether the act of the Tribal employee fell within Section 314, the court employed the Ninth Circuit’s Shirk test in which the court first determines whether the alleged activity is encompassed by the ISDEAA contract and then decides whether the tortious action falls within the scope of the tortfeasor’s employment, as defined by the contract, under state law.

Though the U.S. tried to argue that TTC was an independent contractor not covered under the Federal Torts Claim Act, the court found that: (1) TCC’s funding agreement with the U.S. extended coverage to TTC; (2) the funding agreement between TCC and the U.S. authorized TCC to carry out functions pertaining to health and safety at the camp; and (3) because TCC’s funding agreement extended to TTC, TTC employees were authorized to carry out functions pertaining to health and safety at the camp. Accordingly, the first prong was met—the tortious action, negligent supervision and failure to train, was encompassed by the ISDEAA contract.

The court declined to determine whether the second prong was met—i.e., whether the tortfeasor’s actions fell within the scope of employment—because the U.S. only argued that an assault cannot be within the scope of employment and the Plaintiff also pleaded claims of negligent hiring and supervision, both of which are facially within the scope of employment. In light of the findings, the court denied the U.S.’s motion to dismiss.

Unite Here Local 30 v. Sycuan Band of the Kumeyaay Nation, 20-CV-01006 W (DEB), 2020 WL 7260672 (S.D. Cal. Dec. 10, 2020): Plaintiff, a labor union seeking to represent Sycuan Casino Resorts, filed a motion to dismiss Defendant Sycuan Band of Kumeyaay Nation’s (the “Tribe”) counterclaim for declaratory relief. The Tribe owned the Casino Resort and, pursuant to the Indian Gaming and Regulatory Act, entered into a compact with the State of California. California required the Tribe to adopt an ordinance which set out procedures for organizing casino employees into a union. The ordinance required the Tribe to enter into a contract if the union offered a writing stated it would comply with the terms of Section 7 of the ordinance. The Union alleged that it offered such a writing by delivering a letter to the Tribe’s top elected official and thus the Tribe automatically accepted the offer under the ordinance terms. The Tribe in turn denied that it entered a contract and alleged that federal law, the National Labor Relations Act, preempted and invalidated the ordinance.

The Union sought to compel arbitration pursuant to the ordinance; the Tribe filed a counterclaim seeking a declaratory judgment stating that federal law preempted and invalidated California's requirement that the Tribe enter into a contract with the Union. Because all the facts were admitted, the court found that a contract was formed. Further, the ordinance clearly had an arbitration agreement which included a limited waiver of sovereign immunity for the purpose of arbitration. Though it did not explicitly state that the Tribe agreed to arbitrate issues of preemption, the court found that it was broad enough to apply to the present issue. Ergo, the counterclaim was dismissed as to not interfere with the arbitrator’s rightful authority.

Engasser v. Tetra Tech, Inc., 519 F.Supp.3d 703 (C.D. Cal. 2021): Tetra Tech, Inc. entered into an agreement with the California Department of Resources Recycling and Recovery to clean up after the Camp Fire which burned a significant amount of the ancestral land of the Mechoopda Indian Tribe of Chico Rancheria, California. Tetra Tech entered into an agreement with the Mechoopda Cultural Resource Preservation Enterprise (“Mechoopda”) to provide Tribal monitoring of the cleanup. Mechoopda was a wholly owned and unincorporated entity of the Tribe and thus immune from suit, pursuant to sovereign immunity, absent a waiver. The agreement between Tetra Tech and Mechoopda called for the parties to indemnify and defend one another against losses and claims caused by the other’s misconduct or omissions and to resolve disputes arising out of or related to the agreement prior to commencing litigation. The agreement stated that “[a]ny court with competent jurisdiction shall have the authority to enforce this provision and to determine if the meet and confer process has been satisfied,” but also stated that “[n]othing herein shall be construed as a waiver of sovereign immunity.”

A Mechoopda Tribal monitor filed suit against Tetra Tech for wage-and-hour violations under the Fair Labor Standards Act and California law. Tetra Tech demanded Mechoopda to defend and indemnify Tetra Tech; Mechoopda did not, and Tetra Tech filed a third-party complaint. The court found that Mechoopda did not waive sovereign immunity where the contract expressly stated it was not waived and the consent to jurisdiction was not clear and unequivocal. Thus, the court dismissed Tetra Tech’s complaint against Mechoopda.

Reed v. Hyatt, 1:19-CV-00122-MR, 2020 WL 5899100 (W.D.N.C. Oct. 5, 2020): Plaintiff alleged that he was unlawfully detained by the Defendants, police officers employed by the Cherokee Police Department. Plaintiff alleges that the officers struck him and aggressively pressed on his neck causing him to spit. Plaintiff alleged that the office interpreted the spitting as voluntary and struck him in the face. The Plaintiff, while detained during pretrial, filed a § 1983 suit against the officers. However, the court reaffirmed prior case law by holding that Tribal employees are not state employees and thus cannot be state actors for the purposes of § 1983. Thus, the court dismissed the suit.

Soloniewicz v. Sugar Factory, LLC, HHBCV196118245S, 2020 WL 9074514 (Conn. Super. Ct. Dec. 30, 2020): A restaurant, Sugar Factory, operated in a Connecticut Tribal casino. A wage dispute arose between the restaurant and a server. The Tribe had no wage laws and so the claim was filed under state law. Sugar Factory argued that the court had no jurisdiction over the case because the restaurant was located on a Tribal reservation. The court rejected this contention because sovereign immunity strips a court of jurisdiction when the dispute directly affects the Tribe, its members, employees, or their agents—none of which were relevant here. The motion to dismiss was denied.

Mendenhall v. United States, 3:20-CV-00312 SLG, 2021 WL 2004780 (D. Alaska May 19, 2021): Plaintiff was assaulted by a security guard, Mr. Ireton, employed by the Alaska Native Tribal Health Consortium (“ANTHC”). ANTHC employees are deemed federal employees for the purposes of the Federal Tort Claims Act (“FTCA”), so Plaintiff sued the United States pursuant to the FTCA alleging: (1) Mr. Ireton and another the security guard acted negligently during the encounter; (2) ANTHC managers and/or supervisors failed to train or monitor Mr. Ireton; and (3) Mr. Ireton and another security guard violated Plaintiff’s civil and constitutional rights during the encounter.

The United States asserted that Plaintiff could not bring the negligence claim under the FTCA because intentional torts are an exception to the FTCA’s waiver of sovereign immunity. Plaintiff responded that his complaint asserted the employee’s negligence, not an intentional tort. The court disagreed because “without the intentional tortious actions of the security guards, Plaintiff would have no claim for relief.” The complaint, though couched in terms of negligence, arose from an intentional tort and so the court held it was barred.

Regarding the Plaintiff’s claims for negligent training and supervision, the United States asserted that the claim was barred either because Plaintiff did not properly exhaust his administrative remedies or because the discretionary function exception applied. The court disagreed with the United States about the administrative remedies because the Plaintiff provided information in the administrative claim form about the location and date of the incident, the nature and extent of his injury, and a description of how the incident occurred. This was sufficient to give notice to the Department of Health and Human Services to commence an investigation. However, the court did agree that the claim was barred by the discretionary function exception because the statutory chapter that the Plaintiff asserted mandated training for licensed security guards also stated that an employer is not required to seek licensure for employees providing unarmed security on the employer’s premises. Because the guards in question were providing unarmed security on ANTHC’s premises, the statutory scheme did not mandate training nor licensure. Last, the court dismissed the civil and constitutional rights claims because the security guards were not state actors and were federal actors only for the purposes of the FTCA.

§ 1.4.4 Federal Court Jurisdiction

Federal court jurisdiction is limited to cases that invoke a federal court’s limited subject matter jurisdiction. Such cases may involve a federal question or claims that are brought involving diversity of citizenship. Litigation that arises from a deal with a federally recognized tribe, or otherwise has federal overtones, does not necessarily present a federal question that will allow a federal district court to assume jurisdiction, nor does the possibility that a tribe may invoke a federal statute in its defense confer federal court jurisdiction. Moreover, courts have generally held that a tribe is not a citizen of any state for diversity purposes and, therefore, cannot sue or be sued in federal court based on diversity jurisdiction. However, courts are split on whether a business incorporated under federal statute, state law, or tribal law can qualify for diversity jurisdiction. Because the potential judicial forums for commercial litigation arising out of Indian Country are likely restricted to state or tribal court, choosing federal court as the choice of venue may not make sense.

The following highlights several of the more relevant cases decided in the last year.

Big Sandy Rancheria Enterprises v. Becerra, 1 F.4th 710 (9th Cir. 2021). Big Sandy Rancheria Enterprises (“BSRE”), a tribal corporation wholly owned by the Big Sandy Rancheria of Western Mono Indians (“the Tribe”), sought declaratory and injunctive relief against the Attorney General of California and the Director of the California Department of Tax and Fee Administration, claiming it was exempt from California cigarette tax regulations on inter-tribal sales of tobacco. The district court granted Defendants’ motion to dismiss for lack of jurisdiction. BSRE appealed.

The Ninth Circuit affirmed. The Tax Injunction Act (“TIA”) prohibits district courts from enjoining the assessment of any state tax where a plain and speedy remedy is available in State court. Federally recognized Indian tribes, however, are exempt from the TIA because federal law “confers federal jurisdiction over claims ‘brought by any Indian tribe.’” But here, the claims were brought by BSRE—not the Tribe. The BSRE is a tribal corporation, which the Ninth Circuit determined not to be a “Indian tribe or band” within the meaning of § 1362. In other words, the court held that the language of § 1362 is limited to tribes in their constitutional—not corporate—form. In support of its conclusion, the court noted that section 17 of the Indian Reorganization Act allows tribal corporations to waive sovereign immunity for economic purposes and that “it would be odd to allow a section 17 corporation to selectively claim the benefits of sovereignty in order to challenge a tax.” Accordingly, the court held that the TIA’s jurisdictional bar applied to BSRE and affirmed the district court’s dismissal of BSRE’s claim for lack of jurisdiction.

Cole v. Alaska Island Cmty. Servs., 834 Fed. App’x 366 (9th Cir. 2021). Plaintiff Cole brought an antitrust action against Southeast Alaska Regional Health Consortium (“SEARHC”) and Alaska Island Community Services (“AICS”). SEARHC is a consortium of federally recognized Alaska tribes, and AICS merged into SEARHC before this action and does not exist as a separate entity. The district court denied Cole’s claims for lack of subject matter jurisdiction due to SEARHC’s tribal sovereign immunity. On appeal, the Ninth Circuit affirmed, briefly noting that SEARHC satisfied the “arm of the tribe” test and was thus entitled to sovereign immunity. Because Cole did not meet his burden of proving the existence of subject matter jurisdiction, the Ninth Circuit affirmed the district court’s dismissal of his claims.

Holtz v. Oneida Airport Hotel Corp., 826 Fed. App’x 573 (7th Cir. 2020). Plaintiff Holtz sued her former employer Oneida Airport Hotel Corporation (“the Hotel”), an Oneida Nation-owned hotel, for wrongfully terminating her under the Indian Civil Rights Act. Holtz asserted various federal, state, and tribal law claims. Defendants removed the case to federal court, after which the district court dismissed the suit based on the doctrine of tribal sovereign immunity and, alternatively, Holtz’s failure to state a claim upon which relief could be granted. Holtz appealed.

The Seventh Circuit affirmed the dismissal, but only on the alternative basis that Holtz failed to state a claim. The court declined to apply the “arm of the tribe” test to determine whether the Hotel was entitled to sovereign immunity because the record was too thin to make a determination. But making such a determination was unnecessary since the Court had an alternative basis for affirming the dismissal. Since Holtz’s allegations only “amount[ed] to a conspiracy to wrongfully terminate her employment,” she did not state a claim upon which relief could be granted. Accordingly, the Fifth Circuit affirmed the district court’s dismissal without addressing the jurisdictional issues raised by the Hotel’s potential entitlement to sovereign immunity.

Mitchell v. Bailey, 982 F.3d 937 (5th Cir. 2020). Plaintiff Mitchell, a Texas resident, asserted state-law claims in federal court against both the Hoopa Valley Tribe and one of its members, Bailey, in his official capacity. Asserting both federal-question and diversity jurisdiction, Mitchell sought to recover damages for an injury he sustained allegedly due to the Tribe’s and Bailey’s negligence while participating in the Tribe’s disaster-relief efforts in Wimberley, Texas, following severe flooding in the area. The district court granted Defendants’ motion to dismiss on the grounds that Mitchell’s claims were barred by the doctrine of tribal sovereign immunity as enunciated in Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc. Mitchell appealed.

The Fifth Circuit vacated the district court’s judgment but affirmed the dismissal on the grounds that the district court lacked original jurisdiction. First, since Mitchell did not assert any federal claims, there was no federal question which might support federal-question jurisdiction. The court noted that “[t]he prospect of a tribal sovereign immunity defense does not, in and of itself, ‘convert a suit otherwise arising under federal law into one which, in the statutory sense, arises under federal law.’” The court in effect reaffirmed the principle that “[u]nder the well-pleaded complaint rule, an anticipatory federal defense is insufficient for federal jurisdiction.”

Second, the Fifth Circuit found that the district court had no diversity jurisdiction over the case. The Fifth Circuit held for the first time that “Indian tribes are not citizens of any state for the purpose of diversity jurisdiction.” In other words, tribes are “‘stateless entities’ for the purpose of diversity jurisdiction.” And since “the presence of a single stateless entity as a party to a suit destroys complete diversity,” the Fifth Circuit found that district court lacked diversity jurisdiction. Accordingly, the Fifth Circuit vacated the district court’s judgment and affirmed the order of dismissal.

Oneida Indian Nation v. Phillips, 981 F.3d 157 (2d Cir. 2020). The Oneida Nation of New York (“the Nation”) sued Phillips, a member of the Nation and the purported owner of a parcel of tribal land. The Nation sought declaratory and injunctive relief arising out of Phillips’ assertion of rights over the land. In granting judgment for the Nation, the district court found that there were no issues of material fact because Phillips conceded that the parcel of land was located within the Nation’s reservation as recognized by the governing treaty. Crucially, the district court dismissed Phillips’s counterclaim as barred by sovereign immunity. Phillips appealed.

The Second Circuit affirmed. In justifying its exercise of jurisdiction over the case, the court held that “tribal sovereign immunity . . . is not synonymous with subject matter jurisdiction” because: (1) “[t]ribal sovereign immunity can be waived” whereas a lack of subject matter jurisdiction cannot; (2) “tribal sovereign immunity operates essentially as a . . . defense” whereas subject matter jurisdiction is “fundamentally preliminary” and an “absolute stricture” on the court; and (3) “a waiver of sovereign immunity cannot, on its own, extend a court’s subject matter jurisdiction.” The court then highlighted “the divergence of opinion as to the precise nature of tribal sovereign immunity” but found no need to address or resolve it in this case.

Judge Menashi concurred in the judgment, but he concluded that the court’s dicta regarding sovereign immunity were “misguided.” Menashi disagreed with the court’s speculation that “tribal sovereign immunity should perhaps be reconceptualized as belonging to some category of jurisdiction” that is not synonymous with subject matter jurisdiction. In Judge Menashi’s view, Circuit precedent is clear that “tribal sovereign immunity deprives a court of subject-matter jurisdiction over a lawsuit” and that “tribal sovereign immunity is coextensive with federal sovereign immunity.” Thus, Judge Menashi elected not to deviate from precedent which holds that tribal sovereign immunity is “a limit on a court’s subject-matter jurisdiction.” But because he believed Phillips’s counterclaim failed on the merits, he concurred in the judgment.

Engasser v. Tetra Tech, Inc., No. 2:19-CV-07973-ODW, 2021 WL 911887 (C.D. Cal. Feb. 9, 2021) (appeal filed). Defendant Tetra Tech entered into a Professional Services Agreement (“PSA”) with Mechoopda Cultural Resource Preservation Enterprise (“MCRPE”), an unincorporated entity wholly owned by the Mechoopda Indian Tribe of Chico Rancheria (“the Tribe”). The purpose of the PSA was for Tetra Tech to employ tribal monitors to supervise cleanup after a fire that burned some of the Tribe’s ancestral land. Plaintiff Engasser, a tribal monitor employed by Tetra Tech, sued Tetra Tech for wage-and-hour violations under the Fair Labor Standards Act and California law on behalf of himself and a putative class of other tribal monitors. Tetra Tech filed a third-party complaint against MCRPE seeking indemnification pursuant to a provision in the PSA. MCRPE moved to dismiss Tetra Tech’s complaint on the grounds that MCRPE had not waived its tribal sovereign immunity.

The district court granted the motion noting that the sovereign immunity of a tribe extends to its economic and governmental activities, so long as the acting entity functions as an arm of the tribe. The court found that MCRPE was an “arm of the tribe” and was thus entitled to sovereign immunity. Although entities like MCRPE sometimes waive sovereign immunity in agreements like the PSA at issue in this case, MCRPE expressly preserved its sovereign immunity in the PSA and did not include in the PSA any provisions that often amount to a waiver of sovereign immunity. Accordingly, the court held that MCRPE was entitled to sovereign immunity and granted its motion to dismiss.

Stalnaker v. Bonnell as Tr. of United States of Am. & Totonaca Tribe of Mexico Irrevocable Tr., No. 4:20-CV-3100, 2021 WL 37534 (D. Neb. Jan. 5, 2021). Plaintiff sued Defendants under the Nebraska Uniform Fraudulent Transfer Act in state court. Defendants removed to federal court, asserting both federal question and diversity jurisdiction. Defendants partially based their assertions of diversity and federal question jurisdiction on the presence of the (apparently fictitious) Totonaca Tribe of Mexico in the suit. Plaintiff moved to strike Defendants’ Notice of Removal, and the magistrate judge recommended that the case be remanded to state court.

The district court accepted the recommendation. It questioned whether the tribe was truly present in the case and noted that, even if it were present, “an Indian tribe is not a citizen of any state and cannot sue or be sued in federal court under diversity jurisdiction.” The court also rejected Defendants’ assertion of federal question jurisdiction, citing Peabody Coal Co. v. Navajo Nation, for the principle that “the presence of a tribal sovereign as a party is not by itself sufficient to raise a federal question.” Accordingly, the case was remanded to state court.

Nguyen v. Cache Creek Casino Resort, No. 2:20-cv-1748-TLN-KJN PS, 2021 WL 22434 (E.D. Cal. Jan 4, 2021), adopted in full, No. 2:20-cv-01748-TLN-KJN, 2021 WL 568212 (E.D. Cal. Feb. 16, 2021) (appeal filed). Plaintiff Nguyen sued the Cache Creek Casino Resort (“the Casino”), asserting various state- and federal-law claims arising from Nguyen’s detention on the Casino’s premises. The Casino, owned by the Yocha Dehe Wintun Nation (“the Tribe”), moved to dismiss, arguing that it was an “arm of the tribe” and that it had not waived sovereign immunity.

The magistrate judge agreed that the Casino was an arm of the tribe because: 1) the Casino, which was formed as a tribal business, is wholly owned and operated by the Tribe; 2) the Casino is governed by a tribal council; and 3) revenues generated by the Casino are for the benefit of the Tribe. The magistrate judge also agreed that the Resort had not waived its sovereign immunity: “Without an unequivocal waiver of sovereign immunity from a tribe or an authorization from Congress, federal courts lack the requisite subject-matter jurisdiction to rule on matters involving tribes.” Here, on a tribal–state compact and the Tribe’s adoption of the accompanying Tort Claims Ordinance, the magistrate judge concluded that the Tribe’s express waiver regarding tort claims applied only to its administrative process, where a three-member commission would review any such claims. The Ordinance did not evince intent to waive its immunity to suit in federal court. Accordingly, the magistrate judge found that the Casino had a valid sovereign immunity defense.

Grondal v. United States, 513 F.Supp.3d 1262, (E.D. Wash. 2021). In a complex dispute arising out of a lease, Defendant Wapato Heritage asserted a crossclaim against its codefendants, the Colville Tribes. Wapato Heritage argued that when the Colville Tribal Enterprise Corporation (“CTEC”), an instrumentality of the Colville Tribes, waived sovereign immunity in a lease agreement, it also waived the Tribes’ sovereign immunity. Applying a provision of the Colville Tribal Code that prohibits tribal corporations from waiving the Tribes’ sovereign immunity, the district court found that CTEC had not waived the Tribes’ sovereign immunity. Wapato Heritage also asserted an alternative argument that the Colville Tribes waived sovereign immunity through their litigation conduct in this case. Although “[c]ertain litigation conduct may constitute a waiver,” the court found that the Tribes’ participation in the litigation did not amount to “sufficiently clear litigation conduct” constituting a waiver of sovereign immunity. Indeed, the Tribes had been asserting sovereign immunity from the outset of litigation.

Separately, Wapato Heritage asserted a claim against the U.S. government, citing 28 U.S.C. § 1353 for the proposition that federal district courts have jurisdiction over any “civil action involving the right of any person, in whole or in part of Indian blood or descent, to any allotment of land under any Act of Congress or Treaty.” Because Wapato Heritage is an LLC and not a “person . . . of Indian blood or descent,” the court found it could not exercise jurisdiction over its claims against the government. Thus, the district court rejected all of Wapato Heritages jurisdictional arguments and dismissed the claims premised on them.

Loring v. Daly, No. CV 19-05133-PHX-JAT (JFM), 2021 WL 2105571 (D. Ariz. May 25, 2021). Plaintiff Loring, who was previously confined in the Salt River Pima Maricopa Indian Community’s Department of Corrections (“Salt River DOC”), brought a civil rights action against Salt River DOC’s director and lieutenant director under 42 U.S.C. § 1983 and the Religious Land Use and Incarcerated Persons Act. Defendants moved to dismiss, arguing that the court did not have subject matter jurisdiction due to tribal sovereign immunity.

The court granted Defendants’ motion. Although sovereign immunity does not bar suits for damages against tribal officials in their individual capacities, the court found that Loring’s individual-capacity claims were masked official-capacity claims. This is because his alleged injuries “arise from a policy, practice, or custom of the Salt River DOC, over which Defendants have policymaking authority, at the direction of the Community Council, which is an official-capacity claim.” Additionally, Loring’s claims were primarily aimed at changing Salt River DOC policy. Accordingly, Defendants had a valid sovereign-immunity defense, and the Court dismissed Plaintiff’s claims.

Debraska v. Oneida Bus. Comm., No. 20-C-1321, 2020 WL 6204320 (E.D. Wis. Oct. 22, 2020). Plaintiffs, members of the Oneida Nation, sued Defendants Oneida Business Committee, Oneida Election Board, and Oneida Tribe of Indians of Wisconsin for actions they took in relation to the 2020 Oneida Nation Primary Election. Defendants filed a motion to dismiss, to which Plaintiffs failed to reply. The district court granted the motion based on Plaintiffs’ failure to respond and based on the substantive arguments in Defendants’ motion that the court lacked jurisdiction over all of Plaintiffs’ claims.

First, the court agreed with Defendants that the First and Fourteenth Amendments of the U.S. Constitution are not applicable to Indian Nations as separate sovereigns pre-existing the Constitution. Second, the court agreed that the Indian Civil Rights Act does not create a private right of action to secure the rights contained therein and thus does not provide a basis for federal question jurisdiction. Third, the court agreed that a 42 U.S.C. § 1983 action is unavailable to persons alleging deprivation of constitutional rights under color of tribal law and thus did not provide a basis for federal jurisdiction. Finally, the court agreed that it lacked jurisdiction over Plaintiffs’ claims arising under tribal law. Accordingly, the court granted Defendants’ motion to dismiss.

Lac Courte Oreilles Band of Lake Superior Chippewa Indians of Wisconsin v. Evers, No. 18-CV-992-JDP, 2021 WL 1341819 (W.D. Wis. Apr. 9, 2021) (appeal filed). Plaintiffs, four Ojibwe Tribes, believed that the State of Wisconsin and several of its municipalities improperly taxed certain reservation properties allotted to the them by an 1854 Treaty. Accordingly, the tribes sought declaratory and injunctive relief from various officers of the State of Wisconsin as well as several Wisconsin townships and their assessors. As this was a civil matter, brought by federally recognized Indian tribes, arising under the laws and treaties of the United States, the court held that it had subject-matter jurisdiction under 28 U.S.C. § 1331 and § 1362.

Mille Lacs Band of Ojibwe v. Cty. of Mille Lacs, 508 F. Supp. 3d 486 (D. Minn. 2020). Plaintiffs, including the Mille Lacs Band of Ojibwe (“the Tribe”), brought action against County of Mille Lacs and certain County officials, seeking declaratory judgment that the Tribe possessed inherent tribal authority to establish a police department with authority to investigate violations of federal, state, and tribal law within its reservation. Defendants contended that there was no basis under federal law for the court to exercise federal question subject matter jurisdiction over Plaintiffs’ claims.

The court rejected Defendants’ arguments, holding that “questions of federal common law can serve as a basis for the exercise of federal question subject matter jurisdiction” and that “[f]ederal courts have often treated the scope of a tribe’s inherent sovereign authority as a matter of federal common law.” Since Plaintiffs raised issues of federal common law—i.e., issues of tribal sovereignty—on the face of their well-pleaded complaint, the court held that it had subject matter jurisdiction over their claims.

Newtok Vill. v. Patrick, No. 4:15-cv-00009 RRB, 2021 WL 735644 (D. Alaska Feb. 25, 2021). Plaintiffs, including Newtok Village (“the Tribe”), brought a number of claims against a group of former members of the Tribe who claimed to comprise the true Newtok Village tribe. The Defendants argued that the court lacked subject matter jurisdiction because Plaintiffs failed to present a federal question in their complaint. The court disagreed, noting that “a suit against Defendants allegedly impersonating a recognized tribal governing body potentially falls under a variety of federal statutes, particularly in light of the fact that such misrepresentation interferes with federal government contracts [made pursuant to the Indian Self-Determination Act].” Accordingly, the court found that Plaintiffs’ complaint was adequate to establish federal question jurisdiction.

South Dakota v. Frazier, No. 4:20-cv-03018-RAL, 2020 WL 6262103 (D.S.D. Oct. 23, 2020). The State of South Dakota filed a lawsuit against the Cheyenne River Sioux Tribe (“the Tribe”) and the Tribe’s Chairman Harold Frazier (“the Chairman”) in both his individual and official capacity because he directed the Tribe to post signs purporting to lower the speed limit on a federal highway without notifying the State. The Tribe argued that the court lacked subject matter jurisdiction and that sovereign immunity barred the suit against both the Tribe and the Chairman.

The court disagreed with the Tribe’s jurisdictional arguments but partially agreed with its sovereign-immunity arguments. Regarding jurisdiction, the court noted that “federal law controls which party has the authority to determine the speed limit on a federal highway located within an Indian reservation.” Thus, the court held that it had subject matter jurisdiction. The court, however, held that sovereign immunity prevented suit against the Tribe—but not against the Chairman in his official capacity to the extent injunctive relief was sought. As the court explained, tribal immunity does not bar a suit for injunctive relief against individuals, including tribal officers, responsible for unlawful conduct. Accordingly, the court dismissed the State’s claims against the Tribe but enjoined the Chairman from altering highway signage.

§ 1.5 The State Sovereign

With billions of dollars being exchanged in Indian Country, state government is naturally looking for a piece of the action, giving rise to tax clashes between tribes and their business partners, and states and counties. These conflicts are primarily decided under the “federal preemption doctrine,” which asks whether a state’s attempted regulation or taxation of non-Indian activities in Indian Country is preempted by federal statutes or treaties, taking into account overarching notions of tribal sovereignty.

Generally, state taxes apply to everyone “outside a tribe’s reservation” and are “federally preempted only where the state law is contrary to express federal law.” Within Indian Country, on the other hand, “the initial and frequently dispositive question in Indian tax cases is who bears the legal incidence of the tax.” When the legal incidence falls on tribes, tribal members, or tribal corporations, “[s]tates are categorically barred” from implementing the tax.

When the legal incidence falls on non-Indians, however, a more nuanced analysis applies. Although, historically, the U.S. Supreme Court asked whether any assertion of state power on Indian land would impinge on the tribal right to make its own laws and be ruled by them, in recent years, the High Court has moved away from that inherent tribal sovereignty analysis in favor of a federal preemption regime. Because Congress does not often explicitly preempt state law, the Supreme Court and the lower federal courts engage in a balancing act to determine whether tribal self-governance rights, bolstered by federal laws, preempt state laws. This balancing act weighs a state’s interest in policing non-Indian conduct against combined federal and tribal interests in regulating affairs that arise out of tribal lands within the state’s boundaries.

In New Mexico v. Mescalero Apache Tribe, the Supreme Court explained that “state jurisdiction is preempted by the operation of federal law if it interferes or is incompatible with federal and tribal interests embodied in federal law, unless the state interests at stake are sufficient to justify the assertion of state authority.” In Mescalero, the Court held that New Mexico could not impose its own fishing and hunting regulations on non-Indians on the reservation because of strong federal interests in “tribal self-sufficiency and economic development” and a lack of state interests.

When non-Indian parties operate in Indian Country, lawyers must proactively evaluate whether, or to what extent, a state or local government’s interest in policing or taxing conduct that relates to neighboring tribal lands outweighs relevant federal and tribal interests pertaining to that same conduct arising within those lands.

The issues of preemption and infringement are regularly litigated in the federal courts. The following highlights several of the more relevant cases decided in the last year.

Big Sandy Rancheria Enterprises v. Bonta, No. 19-16777, 2021 WL 2448226 (9th Cir. June 16, 2021). The US Court of Appeals for the Ninth Circuit evaluated whether California cigarette tax regulations apply to intertribal cigarette sales by a federally chartered tribal corporation. Big Sandy Rancheria Enterprises (“Big Sandy”), a cigarette distributor owned by a federally recognized Indian tribe, challenged California’s imposition of a cigarette excise tax (“Cigarette Tax”) on its intertribal transactions. Big Sandy also claimed that California’s cigarette distribution regulations, as well as the licensing, recordkeeping, and reporting requirements, were preempted by federal law and tribal sovereignty.

The district court dismissed Big Sandy’s claim that the Cigarette Tax should not apply to its distribution of cigarettes to other Indian tribes. Dismissing for lack of subject matter jurisdiction, the district court noted that the Tax Injunction Act prohibits district courts from enjoining, suspending, or restraining the collection of any tax under state law where a remedy may be had in state court. This jurisdictional bar extends to both injunctive and declaratory relief to limit the ability of a federal district court to interfere with taxes, which are a local concern.

Despite this jurisdictional barrier, Big Sandy pointed out an exception to the Tax Injunction Act under 28 U.S.C. § 1362, which grants district courts jurisdiction over actions brought by Indian tribes. The Ninth Circuit nevertheless affirmed the decision below, finding that Big Sandy was not an Indian tribe within the meaning of § 1362. Rather, Big Sandy was classified as a federally chartered corporation under the Indian Reorganization Act. Accordingly, in forming the corporation, Big Sandy waived tribal sovereign immunity and therefore could not invoke the exception under § 1362. Thus, the Ninth Circuit affirmed dismissal of the tax claim.

The district court also dismissed Big Sandy’s challenge to California’s regulations governing cigarette distributions, as well as the licensing, reporting, and recordkeeping requirements. The Ninth Circuit affirmed this decision, finding that application of the challenged regulations did not violate principles of tribal self-governance. The Court further reasoned that federal regulation under the Indian Trader Statutes did not preempt the challenged regulations. The Ninth Circuit joined the Tenth Circuit and the Oklahoma Supreme Court in treating intertribal sales made outside of the tribal enterprise’s reservation as “off reservation” activity. As such, tribal sovereignty principles did not preclude California from regulating Big Sandy’s intertribal cigarette sales under the challenged regulations.

Rogers Cty. Bd. of Tax Roll Corr. v. Video Gaming Techs., Inc., 141 S. Ct. 24 (2020). The Supreme Court denied the petition for a writ of certiorari over a 2019 Oklahoma Supreme Court case. In that case, a non-Indian owner of electronic gaming equipment (“Gaming Company”) leased the equipment to a business entity of the Cherokee Nation. The Gaming Company sued the Rogers County Board of Tax Roll Corrections (“County Board”), seeking review of the assessment of ad valorem taxes on the leased equipment. The Gaming Company argued that because the equipment was leased exclusively to the Cherokee Nation for gaming, it was preempted from taxation under federal law. Applying the Bracker test, the Supreme Court of Oklahoma ultimately found the ad valorem taxation of leased gaming equipment to a tribe’s business entity preempted by the Indian Gaming Regulatory Act.

Justice Thomas dissented from the Supreme Court’s denial of certiorari, arguing that disagreement among courts on the issue merited review. Justice Thomas also highlighted the opportunity to clarify the application of preemption principles among federal, state, and tribal law. Ultimately, Justice Thomas emphasized that this denial of certiorari would lead to amorphous preemption law and “geographical happenstance” with respect to a state’s ability to raise revenues.

Pickerel Lake Outlet Ass’n v. Day Cty., 953 N.W.2d 82 (S.D. 2020). The Pickerel Lake Outlet Association (“Lake Association”) and non-Indian owners of permanent improvements around the lake (collectively “Plaintiffs”) challenged ad valorem property taxes assessed against them by Day County. The Plaintiffs claimed that federal law preempted taxation because their structures were located on land held in trust for the Sisseton-Wahpeton Oyate Indians (“Tribe”). The circuit court upheld the disputed taxes and the Plaintiffs timely appealed. Id.

The Lake Association leased the trust land surrounding the lake from the Bureau of Indian Affairs (“BIA”). As a result, the Tribe collected ad valorem property taxes from the Plaintiffs for their structures. However, Day County also assessed taxes against the Plaintiffs for the same structures. Here, the Plaintiffs objected to the assessment of taxes by Day County, theorizing that federal law expressly or implicitly prohibits the taxing of permanent improvements located on trust land without regard to ownership. The Plaintiffs based this objection on a provision of the Indian Reorganization Act of 1934 (“IRA”), which exempts land acquired pursuant to its requirements from state and local taxes.

First, the Supreme Court of South Dakota assessed whether 25 U.S.C. § 5108, a statute within the IRA, expressly preempted Day County from taxing the structures. Given that the terms of § 5108 were inapplicable to this case, the Plaintiff’s argument that § 5108 preempted taxation was conditioned upon the requirement that the Tribe’s land was acquired under the IRA. Because the Court was unable to find any support to indicate that the land was ever transferred by way of fee-to-trust under the IRA, the preemption argument under § 5108 failed.

Next, the Court evaluated whether a provision of Article XXII of the South Dakota Constitution (“Provision”) expressly preempted the taxes. The Provision requires that states provide a disclaimer of title and jurisdiction over Indian lands within the state. However, because the language of the Provision contemplated land held by Indians, not structures owned by non-Indians, Day County was not expressly preempted from assessing ad valorem taxes on the structures.

Lastly, the Court evaluated the legislative scheme to determine whether Day County was impliedly preempted from assessing the taxes. The principal question, then, was whether the federal government intended to control, regulate, and manage taxation of structures owned by non-Indians on trust land and prohibit state regulation of the same area. Based on the express language and congressional intent, the Court found that Day County’s taxation did not implicate Indians, and thereby did not implicate federal law. Thus, the Court affirmed, finding that federal law did not preempt the assessment of ad valorem property taxes on structures owned by non-Indians on trust land.

Warehouse Mkt. Inc. v. State ex. Rel. Oklahoma Tax Comm’n, 481 P.3d 250, 252 (Okla. 2021). The sublessee of a commercial building located on federally restricted tribal land brought an interpleader action in district court. The sublessee sought determination of whether sales tax was owed to the Oklahoma Tax Commission (“OTC”) or the Muscogee (Creek) Nation (“Tribe”). The sublessee sought to interplead the sales tax to the court to determine who was entitled to the taxes, as well as whether the OTC could tax the sublessee at all. The district court dismissed the Tribe on sovereign immunity grounds and further held that the OTC could not collect the sales tax until the dispute between the OTC and the Tribe was resolved in another forum.

Upon review, the Supreme Court of Oklahoma determined that the sublessee’s action constituted a tax protest, not an interpleader action. As such, the exhaustion of administrative remedies was a jurisdictional prerequisite to seeking relief in the trial court. The Court reasoned that once the trial court dismissed the Tribe on sovereign immunity grounds, it was without authority to take further action, shifting the cause from interpleader to a tax protest. The Court further explained that the Oklahoma Legislature mandated a specific procedure for taxpayers to follow when challenging tax assessments, which requires an administrative process that cannot be bypassed. Therefore, because administrative remedies with respect to both the OTC and the Tribe had not been exhausted, the Oklahoma Supreme Court reversed and remanded with instructions to dismiss.

S. Point Energy Ctr. LLC v. Arizona Dep’t of Revenue, No. 1 CA-TX 20-0004, 2021 WL 1623343 (Ariz. Ct. App. Apr. 27, 2021). In this case, the Arizona Court of Appeals consolidated five lawsuits brought by taxpayers challenging the State’s power to tax property located on tribal land. South Point Energy Center LLC, a non-Indian taxpayer (“Taxpayer”), owned and operated an electrical generating plant (“Plant”) on land leased from the Fort Mojave Indian Tribe (“Tribe”). The Taxpayer sued to recover property taxes paid on the Plant. The tax court granted summary judgment to the Arizona Department of Revenue (“ADOR”), finding that tribal sovereignty did not preempt taxation of the Plant. On appeal, the Taxpayer argued that the tax court erred on several grounds. These grounds included rejecting the notion that 25 U.S.C. § 5108 preempts state property taxes on tribal land, failing to categorize the Plant as a permanent improvement, and erroneously applying the Bracker balancing test.

Upon review, the Court found that the tax court erred in failing to classify the Plant as tax exempt permanent improvement under § 5108, which preempts taxation of land held in trust by the United States for an Indian tribe. The Court cited several federal cases applying the text of § 5108 and concluded that taxes of permanent improvements on trust land are exempt regardless of ownership. Accordingly, the Court vacated the grant of summary judgment and held that § 5108 established a categorical exemption for permanent improvements on Indian land held in trust by the United States.

The Court highlighted failure of the tax court to recognize that federal law, rather than state law, governs whether property is a permanent tax-exempt improvement under § 5108. The Court noted that despite a Lease provision requiring the Taxpayer to remove all improvements at the end of the term, both parties preliminarily agreed that the Plant contained both personal property and permanent improvements. Hence, the Court determined that the factors set out in Whiteco Industries should be used to evaluate the classification of Plant assets. The Court remanded the case to determine which of the Plant assets constitute permanent improvements under Whiteco, as well as whether property taxes on the non-permanent improvement assets are preempted under Bracker.

Flandreau Santee Sioux Tribe v. Terwilliger, 496 F. Supp. 3d 1307, 1309 (D.S.D. 2020). The Flandreau Santee Sioux Tribe (“Tribe”) sought a declaration that federal law preempted a statewide excise tax on gross receipts (“Tax”) against a non-Indian contractor for casino renovations performed on the reservation. In 2018, the district court granted summary judgment on the Tribe’s federal preemption claim under the Indian Gaming Regulatory Act (“IGRA”). Because the district court found for the Tribe under both prongs of the Bracker test, the court did not reach the Tribe’s claim that the Tax was also preempted under the Indian Trader Statutes. The defendants subsequently appealed to the Eighth Circuit Court of Appeals, which reversed the district court’s holding that imposition of the Tax was preempted under IGRA. Accordingly, the Tribe now seeks a declaration prohibiting imposition of the Tax on the contractor and a refund for amounts paid.

On remand, the Court held that the Tax was preempted by both IGRA and the Indian Trader Statutes. With respect to the Indian Trader Statutes, the Court explained that the term “trade” includes the sale of construction materials and services to Indians on reservation land, thereby expressly preempting the Tax. However, even if the Indian Trader Statutes did not expressly preempt the Tax, the Court noted that the Tax would nevertheless be preempted under the Bracker test. Thus, the Court found the Tax preempted by the Indian Trader Statutes.

With respect to IGRA, the Court held that the Tax was not expressly preempted by federal law. However, because preemption is not limited to cases of express preemption, the Court applied the Bracker balancing test to assess the federal, tribal, and state interests.

Federal Interests: With respect to tribal sovereignty, the Court noted the federal policy in favor of tribal self-sufficiency, particularly as it relates to tribal gaming. The Court pointed to ample evidence demonstrating the extensive regulations IGRA places on Indian gaming. Given the federal involvement in ensuring the quality of gaming and protecting tribal self-sufficiency, the Court concluded that the federal government has a strong interest in the regulation of Indian gaming facilities. Accordingly, this federal interest weighed against the imposition of the Tax. Additionally, the Court noted that the Tax undermined the Tribe’s ability to generate revenue from gaming and reduced demand for casino activities. Because casino renovations are directly tied to increased gaming revenue, the Tribe’s ability to generate revenue was hindered in direct contradiction to the federal goals set forth under IGRA. The Court highlighted that gaming revenues are used by the Tribe to fund programs such as social services, transportation, and housing. Based on this evidence, the Court held that the federal interests weighed against imposition of the Tax.

Tribal Interests: After weighing the federal interests, the Court turned to an evaluation of the tribal interests at stake. Because the Tribe reimbursed the contractor for the full amount of the Tax, the economic burden of the Tax ultimately fell on the Tribe, weighing against the imposition of the Tax. Additionally, the Tax hindered principles of tribal sovereignty by impeding the Tribe’s ability to fully realize gaming revenue and allocate funds appropriately. Similarly, the Tax interfered with the Tribe’s ability to make its own laws and be governed by them, frustrating notions of tribal sovereignty and self-determination. Thus, overall tribal interests also weighed against imposition of the Tax.

State Interests: Lastly, in assessing the State’s interests and justifications for imposing the Tax, the Court noted the requirement that South Dakota demonstrate a clear nexus between the taxed activity and the government function provided. The Court found that the sporadic, indirect, and de minimis State contributions provided to the Tribe, contractor, and project demonstrated a lack of state interest. This, coupled with the minimal impact of the Tax on the State’s general fund, ultimately weighed against the Tax. Applying the Bracker test, the Court held that South Dakota’s interest in imposing the Tax did not outweigh the federal and tribal interests. Therefore, the Tax was preempted by federal law under IGRA and the Indian Trader Statutes. Accordingly, the Court ordered judgment in favor of the Tribe.

Town of Ledyard v. WMS Gaming, Inc., No. 20418, 2021 WL 1567671 (Conn. Apr. 21, 2021). This case stems from a state court suit in which the Mashantucket Pequot Tribal Nation (“Tribal Nation”) challenged the authority of the State of Connecticut and the Town of Ledyard (“Town”) to impose property taxes on slot machines owned by a gaming company and leased to the Tribal Nation. The state action was stayed pending the outcome of a federal court action filed by the Tribal Nation. In the federal action, the Tribal Nation alleged that the Town lacked the authority to impose the property tax because it was preempted by federal regulation and infringed upon the Tribal Nation’s sovereignty. In the present action, the Town sought attorney’s fees pursuant to General Statutes § 12-161a. This statute allows a trial court to award attorney’s fees to a municipality if the fees were incurred as a result of proceedings to collect delinquent personal property taxes.

In 2012, the federal court proceeding concluded when the district court determined that federal law preempted the Town’s authority to impose the taxes. Thereafter, the parties executed a stipulation agreeing that the Town was entitled to reasonable attorney’s fees incurred in the underlying state action. However, the parties disagreed regarding the collection of attorney’s fees in connection to the Tribal Nation’s federal action. The trial court concluded that the gaming company was also liable for the attorney’s fees in connection with the federal action pursuant to § 12-161a. On remand, the Appellate Court disagreed, concluding that the statutory language required a more restrictive nexus to the collection proceeding in which the attorney’s fees were requested. On appeal, the Town claimed that the Appellate Court improperly construed § 12-161a to limit collection of attorney’s fees to only those incurred in the state court action.

Here, the Court agreed with the Town, finding the Appellate Court’s interpretation of § 12-161a too constrained. The Court followed general rules of statutory interpretation to determine the meaning of “as a result of and directly related to” within the context of § 12-161a. Finding the phrase ambiguous, the Court turned to extratextual sources and concluded that the legislature did not intend for a municipality to only be entitled to fees incurred in the state court action of delinquent personal property taxes. Instead, the legislature avoided using such specific language in order to attain a broader reach. Therefore, because the Tribal Nation and the gaming company coordinated to bring the federal lawsuit, the fact that the gaming company was not a formal party to the action did not bar the Town’s entitlement to attorney’s fees. Accordingly, a municipality may be entitled to attorney’s fees incurred in a related federal action that is “a result of and directly related to” a state tax collection proceeding. The court noted, however, that the holding was limited to the breadth of § 12-161a as applied to this specific case.

Aquinnah/Gay Head Cmty. Ass’n. Inc. v. Wampanoag Tribe of Gay Head (Aquinnah), 989 F.3d 72, 75 (1st Cir. 2021). The Commonwealth of Massachusetts sought declaratory judgment that the Indian Land Claims Settlement Act of 1987 (“Settlement Act”) allowed it to prohibit the Wampanoag Tribe of Gay Head (“Tribe”) from conducting gaming on settlement lands. This action arose after the Tribe planned to build a gaming facility on the Tribe’s trust lands. After removal of the case, the Town of Aquinnah (“Town”) and the Aquinnah/Gay Head Community Association (“Community Association”) intervened. The district court entered a preliminary injunction prohibiting the Tribe from continuing casino construction. The Court of Appeals reversed in part and remanded for entry of final judgment. On remand, the district court entered partial judgment for the Tribe. The Tribe subsequently appealed.

In part, the Settlement Act provided that settlement lands shall be subject to the laws, ordinances, and jurisdiction of the Commonwealth. Soon after, however, Congress enacted the Indian Gaming Regulatory Act (“IGRA”) to regulate gaming on Indian land. Here, the Tribe sought to partake in Class II gaming. The Commonwealth sued, arguing that the Tribe needed a gaming license from the Massachusetts Gaming Commission. Conversely, the Tribe claimed it did not need a license because IGRA impliedly repealed the Settlement Act provisions subjecting gaming activity to the laws of the Commonwealth. The Tribe also maintained that IGRA repealed the provision mandating compliance with permitting. The district court entered a final judgment for the Tribe on the gaming issue, but against the Tribe on the permitting issue, reasoning that the Tribe had not appealed the permitting issue and thus found the issue waived.

On this appeal, the Court evaluated whether a party that could have raised an issue in a first appeal, but failed to do so, may raise the issue on a successive appeal. The Tribe argued that IGRA undid the Tribe’s waiver of sovereign immunity with respect to suits arising out of gaming activities. The Court disagreed, noting that historically, a congressional enactment cannot override a tribe’s voluntary waiver of tribal sovereign immunity. Therefore, the Court found that the Tribe could not raise the issue of sovereign immunity in a district court, disregard it on appeal, and then seek to employ it again in a later appeal. Additionally, because the Court did not find the present case an “exceptional circumstance,” the Court declined to overlook the Tribe’s waiver of the permitting issue. Hence, the Court found that the Tribe waived the permitting issue and tribal sovereign immunity through its litigation conduct. Accordingly, the Court held that the district court’s ruling was not so erroneous as to preclude the application of law of the case doctrine.

Brackeen v. Haaland, 994 F.3d 249, 265 (5th Cir. 2021). In a 325-page decision, the Fifth Circuit Court of Appeals upheld the constitutionality of the Indian Child Welfare Act (“ICWA”). The Court found that certain ICWA provisions validly preempted contrary state law and did not commandeer states. However, the Court held that the provisions commanding state agency action were not valid preemption provisions and therefore not preempted by ICWA. The district court ruled that 25 U.S.C. §§ 1901–23 and §§ 1951–52 exceeded congressional powers by violating the anticommandeering doctrine and therefore did not preempt conflicting state law. Notwithstanding, because state law is naturally preempted to the extent of conflict with federal law, the Court found no precedent to support the district court’s limit on federal preemption. Thus, the Supremacy Clause requires state judges to follow ICWA to the extent that the rights set forth under ICWA conflict with state laws.

§ 1.6 Conclusion

Economic growth and development throughout Indian Country have spurred many businesses to engage in business dealings with tribes and tribal entities. Confusion may arise during these transactions because of the unique sovereign and jurisdictional characteristics attendant to business transactions in Indian Country. As a result, these transactions have prompted increased litigation in tribal and nontribal forums. Accordingly, counsel assisting in these transactions, or any subsequent litigation, should conduct certain due diligence with respect to the pertinent tribal organizational documents and governing laws that may collectively dictate and control the business relationship.

To maximize the client’s chances of a successful partnership with tribes and tribal entities, counsel should ensure that the transactional documents contain clear and unambiguous contractual provisions that address all rights, obligations, and remedies of the parties. Therefore, even if the deal fails, careful negotiation and drafting, and, in turn, thoughtful procedural and jurisdictional litigation practice, will allow the parties to more expeditiously litigate the merits of any dispute, without jurisdictional confusion. As business between tribes and nontribal parties continues to grow, ensuring that both sides of the transaction fully understand and respect the deal will lead to a long-lasting and beneficial business relationship for all.