§7.2 Indian Law & the Supreme Court
§ 7.2.1 The 2022–2023 Term
The U.S. Supreme Court hears an average of between two and three new Indian law cases every year. During the 2022–2023 term, the Supreme Court decided three Indian law cases.
Arizona v. Navajo Nation, 599 U.S. 555 (2023). The U.S. Supreme Court held that the 1868 peace treaty between the United States and the Navajo Tribe (the “Tribe”), which established the Navajo Reservation and reserved necessary water to accomplish the purpose of the Navajo Reservation, did not require the United States to take affirmative steps to secure water for the Tribe.
In Arizona v. Navajo Nation, the Tribe asserted a breach-of-trust claim against the United States, alleging the 1868 treaty imposed a duty on the United States to take affirmative steps to secure water for the Tribe. In rejecting the Tribe’s argument, the Supreme Court explained that to maintain such a claim, the Tribe needed to prove, among other things, that the text of the 1868 treaty imposed such a duty on the United States, as the Federal Government owes judicially enforceable duties to a tribe “‘only to the extent it expressly accepts those responsibilities.’” The Supreme Court reasoned that while the 1868 treaty did impose a number of specific duties on the United States, it did not contain language imposing a duty on the United States to take affirmative steps to secure water for the Tribe.
The Supreme Court clarified that the United States indeed maintains a general trust relationship with Indian tribes but explained that unless Congress created a conventional trust relationship with a tribe as to a particular trust asset, it would not “‘apply common-law trust principles’” to infer duties not found in the text of the 1868 treaty. In turn, the Supreme Court further explained that nothing in the 1868 treaty established a conventional trust relationship with respect to water.
Haaland v. Brackeen, 599 U.S. 255, 143 S. Ct. 1609 (2023). The U.S. Supreme Court upheld the constitutionality of the Indian Child Welfare Act (“ICWA” and/or “the Act”), a federal statute that aims to keep Indian children connected to Indian families.
This case arose from three separate child custody proceedings involving ICWA, which governs state court adoption and foster care proceedings when Indian children are involved. ICWA requires, among other things, the placement of Indian children according to the Act’s hierarchical preferences, unless state courts find good cause to depart from such preferences. Under these preferences, Indian families or institutions from any tribe outrank unrelated non-Indians or non-Indian institutions. And with involuntary proceedings, ICWA requires that the Indian child’s parent or custodian and tribe be given notice of any custody proceedings, as well as the right to intervene.
Petitioners here were a birth mother, foster and adoptive parents, and the State of Texas, filing suit in federal court against the United States and other federal parties. Petitioners argued ICWA was unconstitutional on multiple grounds, raising three general issues: (1) that Congress lacked the authority to enact ICWA, (2) anticommandeering, and (3) equal protection.
As to the first and second issues, the Supreme Court held that ICWA did not exceed Congress’ plenary authority to effectuate nor did ICWA violate “commandeering” concerns by requiring states to follow federal law. The majority’s opinion relied on a “long line of cases,” in which the Supreme Court had previously characterized Congress’ power to legislate with respect to the Indian tribes as plenary and exclusive. The majority further stated that the U.S. Constitution’s Indian Commerce and Treaty clauses authorized Congress to deal with matters relating to Indian affairs. The Supreme Court rejected Petitioners’ argument that ICWA violated the Tenth Amendment’s anticommandeering principle, where they asserted ICWA impermissibly mandated states to follow federal requirements as concerned active efforts, notice and expert testimony requirements, hierarchical placement preferences, and recordkeeping requirements. The majority relied on several cases backing its conclusion that because legislation like ICWA applied “evenhandedly” to state and private actors, such legislation did not, generally, implicate the Tenth Amendment. Related to the recordkeeping requirement specifically, the Supreme Court, relying on Printz v. United States, 521 U.S. 898 (1997), concluded that Congress could impose ancillary recordkeeping requirements related to state-court proceedings without violating the Tenth Amendment.
As to the third issue, the Supreme Court did not rule on the merits of Petitioners’ equal protection argument. The Supreme Court found that Petitioners lacked standing to raise such a claim because the lawsuit failed to involve state officials who actually implemented ICWA’s statutory requirements.
Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 599 U.S. 382, 143 S. Ct. 1689 (2023). The U.S. Supreme Court held that the U.S. Bankruptcy Code (the “Code”) unequivocally abrogated the sovereign immunity of all governments, including federally recognized Indian tribes.
Petitioner Lac du Flambeau Band of Lake Superior Chippewa Indians (the “Band”) is a federally recognized Tribe that wholly owned several business entities. Lendgreen, one of the Band’s businesses, extended respondent Brian Coughlin (“Coughlin”) a payday loan. But shortly after receiving the loan, Coughlin filed for Chapter 13 bankruptcy, which triggered an automatic stay under the Code against further collection efforts by Coughlin’s creditors. Still, Lendgreen allegedly continued to attempt to collect Coughlin’s debt. Coughlin subsequently filed a motion in Bankruptcy Court to enforce the stay and recover damages for emotional distress. The Band moved to dismiss, arguing the Bankruptcy Court lacked subject-matter jurisdiction over Coughlin’s enforcement proceeding because the Band and its subsidiaries enjoyed tribal sovereign immunity from suit.
The Bankruptcy Court dismissed Coughlin’s suit on tribal sovereignty grounds. The First Circuit reversed the judgment, holding that the Bankruptcy Code “stripp[ed] tribes of their immunity.”
The Supreme Court stated that it would not find an abrogation of sovereign immunity unless Congress had conveyed its intent to abrogate in “unequivocal terms.” Two provisions of the “the Code” were relevant to the suit. The first was 11 U.S.C. § 106(a), which stated: “Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmental unit to the extent set forth in this section.” The section also set forth a list of Code provisions to which abrogation applied and included a provision governing automatic stays. The second relevant provision, 11 U.S.C. § 101(27), defined “governmental unit” as used in the Code. The provision stated that a “governmental unit” meant, among other things, “a foreign state,” or “other foreign or domestic government[s].” The overarching question was whether the abrogation provision in § 106(a), taken with the definition of “governmental unit” in § 101(27), unambiguously abrogated the sovereign immunity of federally recognized tribes.
The Supreme Court found that several features of the provisions’ text and structure led to the conclusion that the Code “unequivocally” abrogated the sovereign immunity of any and every government that possessed the power to assert such an immunity. The Court stated that the definition of “governmental unit” exuded comprehensiveness by including a long list of governments along with their subdivisions and components. Additionally, the Court considered the inclusion of “foreign or domestic” to be a “catchall phrase.” The Court found that by including these terms, Congress unmistakably intended to cover all governments in § 101(27)’s definition, whatever their location, nature, or type. The Supreme Court also found it significant that the abrogation of sovereign immunity in § 106(a) plainly applied to all “governmental unit[s],” rather than excluding certain governments.
The Supreme Court further added that other aspects of the Code reinforced what § 106(a) and § 101(27) conveyed. For example, the Code called for an “orderly and centralized” debt resolution process, which the Supreme Court found swept broadly and generally applied to all creditors. The Supreme Court also found that courts may enforce the provisions against any kind of noncompliance creditor whether or not the creditor was a “governmental unit.” The Court also noted that the Code provided a number of limited exceptions so as to avoid impeding the functioning of governmental entities when they act as creditors. The Court stated that an exclusive reading of the provisions would cause some government entities to be immune from key enforcement provisions while others would face consequences for noncompliance. Based on the provisions contained in the Code, the Supreme Court found no indication that Congress meant to categorically exclude certain governments from these provisions’ enforcement mechanisms and exceptions, let alone in such an anomalous manner.
Concluding that all government creditors were subject to abrogation under the Code forced the Court to answer the question of whether federally recognized tribes qualified as governments. The Court stated that federally recognized tribes exercised uniquely governmental functions, and Congress, along with the Supreme Court, had repeatedly characterized federally recognized tribes as governments. Overall, the Court concluded that the Code “unequivocally abrogate[d] the sovereign immunity of all governments, categorically.” Anda since tribes “are indisputably governments,” the Supreme Court concluded that § 106(a) unmistakably abrogated their sovereign immunity, too.
The Band attempted to argue that because tribes were not mentioned in the provisions by name, Congress did not intend to abrogate tribal sovereign immunity. The Supreme Court, however, explained that Congress did not have to include a specific reference to federally recognized tribes in order to make its intention clear. The Band further argued that the “catchall phrase” could be read to preserve immunity and noted that Congress had historically treated various types of governments differently for purposes of bankruptcy law. Neither of these arguments persuaded the Supreme Court to reach a different conclusion.
Justice Thomas wrote a concurring opinion, stating that the Band lacked sovereign immunity regardless of the Code because Coughlin’s motion arose from the Band’s off-reservation commercial conduct. Justice Gorsuch wrote a dissenting opinion, stating that Congress did not “unequivocally express” its intent to abrogate sovereign immunity because the Code did not expressly mention federally recognized tribes.
§ 7.2.2 Preview of the 2023–2024 Term
As of January 6, 2024, the Supreme Court granted certiorari in one Indian law case for the 2023–2024 term, with three more petitions for certiorari pending. If any new cases are granted and decided, they will be included in next year’s volume.
§7.3 The Tribal Sovereign
§ 7.3.1 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 400 Indian courts and justice systems 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 and 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 Nation has its own bar exam that tests knowledge of Navajo tribal law as well as other requirements.
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 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 those most relevant.
Turpen v. Muckleshoot Tribal Ct., No. C22-0496-JCC, 2023 WL 4492250 (W.D. Wash. July 12, 2023). The court in Turpen held that a tribal court has jurisdiction over a marital dissolution between a tribal member and a non-member who consents to numerous tribal contacts. In May 2014, Katherine Arquette Turpen (“Ms. Turpen”), an enrolled member of the Muckleshoot Indian Tribe (the “Tribe”), married David William Turpen (“David William”). The couple was married in King County, which is outside the bounds of the Muckleshoot Indian Reservation (“Reservation”). David William was a non-member of the Tribe, but he did serve as a tribal employee from 2005 to 2018. Prior to the marriage, the couple lived together on the Reservation in a home leased to Ms. Turpen by the Muckleshoot Housing Authority. After marrying, the couple purchased a home outside the Reservation in Auburn, Washington. The couple received substantial financial assistance from the Tribe for the home purchase. On March 16, 2021, Ms. Turpen filed a petition for dissolution of marriage with David William in Muckleshoot Tribal Court (the “Tribal Court”). David William filed a response to the dissolution petition, challenging the Tribal Court’s jurisdiction over the matter.
The court determined that Montana v. United States’ first exception governed the dispute because David William, a non-member of the Tribe, entered into a consensual relationship with the Tribe or its members through commercial dealing, contracts, leases, or other arrangements. The court then examined David William’s contacts with the Tribe to determine whether the Tribal Court could exercise jurisdiction over the couple’s dissolution of marriage. Given that David William worked for the Tribe for over ten years, entered into a consensual relationship with Ms. Turpen, lived in a home on the Reservation that the Tribe leased to Ms. Turpen, and received financial assistance from the Tribe for the purchase of a home, the court found it was reasonable for David William to anticipate being subject to tribal jurisdiction over the dissolution of the marriage. Accordingly, the court concluded that the Tribal Court had subject matter jurisdiction to preside over the marital dissolution.
Lexington Ins. Co. v. Mueller, No. 5:22-CV-00015-JWH-KK, 2023 WL 2056041 (C.D. Cal. Feb. 3, 2023). The court in Lexington held that a tribal court has civil jurisdiction over disputes associated with an activity that it has regulatory jurisdiction over. The Cabazon Band of Cahuilla Indians (the “Tribe”) purchased multiple property insurance policies from Lexington Insurance Company (“Lexington”). The Tribe did not purchase the insurance policies from Lexington directly; instead, the Tribe purchased the policies through an agent of Lexington, Alliant Insurance Services, Inc. (“Alliant”). In the course of purchasing the insurance policies, the Tribe never dealt with Lexington employees, and no Lexington employees ever set foot on the Reservation to conduct Lexington company business. Alliant (and not Lexington) processed the Tribe’s submissions for insurance, collected premiums from the Tribe, maintained the Tribe’s underwriting file, and prepared quotes, cover notes, policy documentation, and evidence of insurance for the Tribe.
In 2020, the Tribe submitted an insurance claim to Alliant; shortly thereafter, Alliant transmitted the claim to Lexington. A Lexington claims adjuster investigated the claim and denied the Tribe coverage. In response, the Tribe sued Lexington in the Cabazon Reservation Court (the “Tribal Court”) for breach of contract and violation of the implied covenant of good faith and fair dealing. Lexington responded by challenging the Tribal Court’s jurisdiction over the dispute.
While addressing the jurisdictional issue, the court first determined that it need not conduct a Montana v. United States analysis because the Tribe’s “right to exclude” applied to the dispute. The court thereafter found that the Tribe had regulatory jurisdiction over Lexington because the Tribe’s right to exclude included the right to regulate Lexington’s insurance of tribal entities operating on tribal land. The court rooted this conclusion in the fact that Lexington had conducted activity on tribal land by providing insurance to the Tribe through its agent, Alliant. The court then found that because the Tribe had regulatory jurisdiction over Lexington’s insurance activity, it also possessed civil jurisdiction over disputes associated with that activity. Holding otherwise, the court noted, would allow parties to skirt tribal jurisdiction over activity occurring on tribal land through the use of an agent, and “degrade a tribe’s inherent authority to manage its own affairs.” Based upon these considerations, the court determined that the Tribal Court had jurisdiction over Lexington.
Mille Lacs Band of Ojibwe v. Cnty. of Mille Lacs, No. 17-CV-05155 (SRN/LIB), 2023 WL 146834 (D. Minn. Jan. 10, 2023). The court in Mille Lacs held that the Mille Lacs Band of Ojibwe (the “Band”) possessed the authority to investigate violations of state criminal law by non-members throughout the Band’s reservation land. In 2016, Joseph Walsh, the Mille Lacs County Attorney, issued an Opinion and Protocol (the “Opinion”), addressing the Band’s state law enforcement authority. The Opinion stated that the Band’s police officers could not exercise authority on non-tribal lands, investigate violations of state law on the Band’s reservation, or exercise criminal jurisdiction over non-Indians. Furthermore, the Opinion warned that if the Band’s police officers failed to follow the terms of the Opinion, they would be in violation of state law and subject to arrest by state authorities. The Band challenged the enforceability of these restrictions and filed suit against the County of Mille Lacs.
While addressing the geographic scope of the Band’s inherent law enforcement authority, the court noted that Montana v. United States’ second exception “recognize[d] tribes’ civil authority over the conduct of non-Indians on non-Indian fee lands within a reservation.” Based upon this exception, along with its application in Cooley v. United States, the court found that the Band’s inherent law enforcement authority extended to all lands within its reservation. This authority included the ability to investigate tribal members of suspected violations of federal or state law.
With respect to non-Indians, the court found that Cooley, which was grounded in the second Montana exception, reaffirmed the inherent tribal law enforcement authority to temporarily detain and conduct searches of suspected violators of state and federal law. The court explained that this authority, however, does not allow tribal law enforcement, including the Band’s police officers, to make arrests of such non-Indian suspects. In addition to this limitation, the court noted that the exercise of tribal law enforcement authority is subject to the Indian Civil Rights Act, which protects against unreasonable searches and seizures. Based upon these findings, the court ordered declaratory relief in favor of the Band, concluding that the Band had the authority to investigate suspected violations of state law by non-members on the Band’s reservation land.
Milne v. Hudson, 519 P.3d 511 (Okla. 2022). The court in Milne held that a state district court may issue a civil order that protects a state citizen from violence where both parties to the order are citizens of an Indian Nation and the violent acts occurred within the boundaries of an Indian Nation. Andrea Sue Milne (“Milne”) applied for a civil protection order against Howard Jeffries Hudson (“Hudson”) in the District Court of McIntosh County (the “District Court”). The District Court thereafter entered a civil protection order against Hudson, which Hudson objected to on jurisdictional grounds. Hudson argued the District Court had no jurisdiction to enter the order against him because McIntosh County resided within the boundaries of the Muscogee Reservation, Milne was a member of the Muscogee Nation, and Hudson was a member of the Cherokee Nation.
The court, considering Lewis v. Sac and Fox Tribe of Oklahoma Housing Authority, which applied the Montana v. United States test to the question of state jurisdiction over disputes between Indians, determined that to answer the question of whether state courts had jurisdiction where Indian interests are concerned, the court had to first consider whether Congress had explicitly withdrawn state court jurisdiction, or whether the interest infringed on tribal self-governance. After setting forth this framework, the court concluded that Congress had not vested exclusive jurisdiction in Tribal courts in this context. The court based this conclusion on the fact that 18 U.S.C § 2265(e), which authorizes Tribal courts to issue civil protection orders, does not confer exclusive jurisdiction. In the absence of such a restriction, the court determined that concurrent jurisdiction could be exercised.
After determining that Congress had not clearly provided tribal courts with the exclusive jurisdiction to issue civil protection orders, the court considered whether the State’s interest in civil protection orders infringed on tribal self-governance. While conducting its analysis, the court noted that the second Montana exception may permit a tribe to have exclusive civil jurisdiction where conduct threatens a tribe’s “political integrity, economic security, or the health and welfare of its citizens.” However, the court concluded that civil protection orders were different because they are individually tailored and narrowly designed with a single goal in mind—the protection of victims from abuse. Based upon the unique nature of civil protection orders, and the Muscogee Nation and State’s concurrent goal of providing each individual citizen with a swift path to safety, the court determined that the State’s interest in issuing a civil protection order did not impermissibly infringe on tribal self-governance. The court accordingly reaffirmed the District Court’s entrance of the civil protection order against Hudson.
§ 7.3.2 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.
Archambault v. United States, 641 F. Supp. 3d 636 (D.S.D. 2022). The court in Archambault held that a tribal member must first exhaust tribal court remedies before bringing a cause of action in federal court against tribal police officers. Jacob Archambault, a member of the Rosebud Sioux Tribe (the “Tribe”), was shot and killed during an encounter with two of the Tribe’s police officers on the Rosebud Indian Reservation (the “Reservation”). Jacob’s mother, Charlee Archambault, individually and as a personal representative of Jacob’s estate, filed a four-count complaint in federal court against the officers, individually and in their official capacities, alleging violations of Jacob’s constitutional rights under 42 U.S.C. § 1983 and Bivens v. Six Unknown Fed. Narcotics Agents (referred to as a “Bivens action”). The officers moved to dismiss the claims against them under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
The court first considered whether the claims against the officers were actually against the Tribe, although not named in the complaint, and therefore barred by sovereign immunity. In addressing this issue, the court explained that a suit against a governmental officer in his official capacity is the same as a suit against the entity of which the officer is an agent. Following this principle, the court concluded that each action alleged against the officers in their official capacities was the same as suing the Tribe and was accordingly barred by the doctrine of sovereign immunity. The court proceeded to discuss whether sovereign immunity also encompassed the claims against the officers in their individual capacities, as they acted on behalf of the Tribe, but determined that it would allow the Rosebud Sioux Tribal Court (the “Tribal Court”) to decide this issue in the first instance.
After determining whether sovereign immunity barred any claims asserted, the court considered whether Charlee, in her complaint, stated a cause of action under § 1983 or Bivens upon which relief could be granted. The court first addressed the various § 1983 claims alleged, explaining that, to state a cause of action under § 1983, one must allege that the defendant(s) acted under the “color of state law.” Because Tribes and their officers are generally not considered state actors, and Charlee did not allege any facts upon which the court could find that the officers acted under the color of state law, the court concluded that the § 1983 claims must be dismissed. The court then considered whether Charlee asserted a viable Bivens claim. The court extensively discussed whether a Bivens claim could be asserted, ultimately concluding that, because the claim so deeply touched the sovereign interests of the Tribe, the court had to conduct an analysis regarding whether the case should be stayed to allow the Tribal Court to first consider the issues.
In addressing the stay question, the court determined that the policy interests in “tribal self-government,” along with the tribal-specific facts of this case, warranted a stay of the current proceedings. The court, citing to Stanko v. Oglala Sioux Tribe, explained that under Eighth Circuit precedent, plaintiffs must exhaust their tribal court remedies before being able to bring an action in federal court. The court further noted that the Tribal Court should be the first court to consider the underlying facts and legal bases for the Bivens claim because of its potential impact on tribal sovereignty. Finally, the court determined that none of the typical exceptions to the tribal court exhaustion requirement were presented in this case. For these reasons, the court stayed the action pending Charlee’s exhaustion of remedies in the Tribal Court.
Pacino v. Oliver, No. 18-cv-06786-RS, 2023 WL 1928217 (N.D. Cal. Feb. 10, 2023). The court in Pacino held that an untimely appeal will not satisfy the requirement to exhaust tribal remedies, despite the inability to exhaust those same remedies in the future. Frank Pacino owed an interest in land on the Road Valley Indian Tribe’s (the “Tribe’s”) Covelo reservation. In 2017, Pacino discovered that the Oliver family (the “Defendants”) had taken up residence on his land and had installed a fence equipped with a locking gate. Pacino took several measures to remove the Defendants from his land; however, these options were unsuccessful. Eventually, Pacino filed an ejectment action in Tribal court, but the court dismissed the complaint, finding that it lacked subject matter jurisdiction. During the course of the Tribal court proceedings, the Defendants asserted a right to be on the land, which established federal court jurisdiction under the General Allotment Act. Instead of continuing in the Tribal court of appeals, Pacino filed an action against the Defendants in federal court.
The initial action within federal court was stayed, pending Pacino’s exhaustion of tribal court remedies. Pacino failed to timely appeal the Tribal court action and moved to lift the stay. The court therefore considered whether Pacino’s untimely appeal satisfied the exhaustion requirement. Ultimately, the court concluded that by failing to timely appeal the Tribal Court case, Pacino failed to exhaust his tribal court remedies, and would likely never be able to do so. Because tribal remedies could not be exhausted, the court found that the case against the Defendants must be dismissed. Holding otherwise, the court explained, would eviscerate the tribal court exhaustion requirement.
Phillips v. James, No. CIV-21-256-JFH-GLJ, 2023 WL 1785774 (E.D. Okla. Jan. 18, 2023). The court in Phillips found that comity concerns warranted dismissal of federal claims against tribal police officers. Melissa Phillips brought an action in federal court against several Choctaw Nation police officers and their supervisors (collectively, “Defendants”), each in their individual capacity, alleging various constitutional and state law violations in relation to Defendants’ handling of a protective order Phillips obtained against a neighbor. Defendants moved to dismiss the claims against them, arguing, among other things, that Phillips’ claims were barred by sovereign and qualified immunity.
The court first considered the issue of sovereign immunity. The court explained that in cases where a tribal employee is sued in an individual capacity, courts should look to whether the sovereign is the real party in interest to determine whether sovereign immunity bars the suit. The court further explained that to determine which party is the real party in interest, courts should not look to the characterization of the parties in a complaint but must determine whether the remedy sought is against the individual or the sovereign. The court found that the majority of the relief Phillips requested was equitable in nature and directed at the Choctaw Nation, not the individual Defendants. The court therefore concluded that the Choctaw Nation was the real party at interest and the equitable relief Phillips requested was barred by sovereign immunity.
In addition to equitable relief, Phillips sought monetary damages from Defendants. Unlike the equitable relief claims, the court concluded that the request for monetary damages was asserted in a manner that did not implicate the Choctaw Nation and was therefore not barred by sovereign immunity. Notwithstanding this fact, the court proceeded to explain that the basis for Phillips requested monetary relief was entirely unmoored from the federal claims she asserted. For this reason alone, the federal claims could not survive dismissal. The court also noted that, even if it did find that a valid federal claim existed, there were “comity concerns raised by the tribal exhaustion doctrine” that counseled against exercising federal jurisdiction in the case.
The court proceeded to conduct a tribal exhaustion analysis. As a part of this analysis, the court first considered whether the dispute at issue was a “reservation affair.” The court noted that Phillips was a member of a tribe (other than the Choctaw Nation), that the suit was against Choctaw Nation police officers, and that the dispute was over the Defendants’ handling of an order that originated within the Choctaw Nation’s court system. Having found a strong “tribal nexus,” the court concluded that this case was a “reservation affair,” which required it to abstain from exercising jurisdiction. The court explained that this conclusion was further supported by a brief analysis of the National Farmers Union Ins. v. Crow Tribe of Indians (“National Farmers”) factors.
Under the National Farmers comity analysis, the court determined that exercise of federal jurisdiction in the case would only serve to contravene the federal policy of supporting tribal self-government. The court further noted that none of the narrow exceptions to the tribal exhaustion rule were present in the case. Accordingly, the court determined that Phillips’ federal claims should be dismissed as a matter of comity.
§ 7.3.3 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.
Tsosie v. N.T.U.A. Wireless LLC, CV-23-00105-PHX-DGC, 2023 WL 4205127 (D. Ariz. Jun. 27, 2023). The Arizona District Court held in Tsosie that a tribally co-owned wireless provider was not entitled to sovereign immunity. Plaintiff Velena Tsosie brought suit against her employer, NTUA Wireless (“Wireless”), and her former supervisor, Walter Haase. Wireless provided internet, telephone, and data communication services in and around the Navajo Nation and was jointly owned by Commnet Newco (“Commnet”), a Delaware limited liability company, and the Navajo Tribal Utility Authority (“NTUA”). Tsosie’s claims arose from a work event, where she alleged that Haase had made suggestive comments and initiated unwelcomed physical contact. Tsosie further alleged that Wireless conducted an inadequate investigation, issued a retaliatory press release, and failed to sufficiently discipline Haase. Tsosie asserted claims for violations of Title VII of the Civil Rights Act of 1964, violations of the Arizona Civil Rights Act, discrimination, assault, battery, and intentional infliction of emotional distress. Wireless and Haase moved to dismiss the complaint on tribal immunity grounds, arguing that the company was an arm of the Navajo Nation.
The court explained that a tribe would be immune from a suit absent congressional authorization or clear waiver. The court further added that tribal sovereign immunity not only protects tribes themselves, but also extends to the arms of the tribe acting on behalf of the tribe. To determine whether Wireless was an “arm of the tribe,” the court implemented the Ninth Circuit’s five factor test: (1) the method of creation of the entity; (2) the purpose of the entity; (3) the structure, ownership, ownership, and management, including the tribe’s control over the entity; (4) the tribe’s intent to share sovereign immunity; and (5) the financial relationship between the tribe and the entity.
For the first factor, the court examined the fact that NTUA and Commnet formed Wireless as a corporate entity. NTUA held a 51% interest in the company and Commnet held 49%. While it was undisputed that NTUA enjoyed tribal immunity, the court questioned whether that immunity extended to Wireless. Wireless cited to the fact that the Speaker of the Navajo Nation Council approved of the Wireless operating agreement, and, because of this, argued that the Navajo Nation was involved in Wireless’s creation. However, the court concluded that the method of creation weighed against sovereign immunity because NTUA did not wholly own Wireless, and Wireless was not formed under the laws governing the Navajo Nation. The court also emphasized the fact that Wireless was the defendant in the case, not NTUA.
The court found that Wireless was formed for the purpose of providing data, internet, and phone services in and near the Navajo Nation. The Federal Trade Commission also designated Wireless as an “eligible communications carrier,” which allowed Wireless to provide affordable telecommunications services to low-income consumers and receive subsidies from the federal government. The court added that Wireless’ purpose helped the Navajo Nation become more self-sufficient. The court found that these facts weighed in favor of Wireless having sovereign immunity.
The court reasoned that the structure, ownership, and management of Wireless weighed slightly against immunity. Even though NTUA owned 51% of Wireless, Commnet still held the other 49%. The court stated that neither NTUA nor Commnet had the authority to unilaterally act for or bind Wireless. Additionally, Wireless was managed by a four-person board of directors. All directors had equal voting power and two of the directors had been appointed by NTUA while the other two had been appointed by Commnet. Because Commnet was a designated managing member, the court found that the corporate structure weighed against a finding of immunity.
While the defendants argued that NTUA intended to share its immunity with Wireless, the court found that the company’s operating agreement was silent on that issue. In fact, the Speaker of the Navajo Nation Council allowed NTUA to waive NTUA’s sovereign immunity to enforce the Wireless operating agreement. The court concluded that the Navajo Nation’s express waiver of immunity in the operating agreement and the fact that NTUA only partially owned Wireless implied that the Navajo Nation “did not intend to render Wireless immune.”
Finally, the court found that there was no indication that profits generated by Wireless benefitted the Navajo Nation. While the operating agreement provided that profits would be directly allocated between NTUA and Commnet, the agreement did not indicate that the company’s losses would reach the Navajo Nation. Additionally, the court found that neither the operating agreement nor the management agreement suggested that a judgment against Wireless would reach the Navajo Nation. The court therefore concluded that the financial relationship between the Navajo Nation and Wireless weighed against immunity. In all, the court found that three of the five factors weighed against immunity. The court accordingly held that Wireless was not an “arm” of the Navajo Nation but was acting as a mere business.
Lustre Oil Co. LLC v. Anadarko Minerals, Inc., 527 P.3d 586 (Mont. 2023). The Supreme Court of Montana declined to adopt a bright-line rule that would prevent tribal entities from enjoying sovereign immunity when those entities are incorporated under the laws of the state rather than under tribal law. Lustre Oil Company (“Lustre”) appealed a district court’s decision to grant a motion to dismiss for a suit brought against A&S Mineral Development Company (“A&S”) and an oil and gas well operator, Anadarko Minerals (“Anadarko”). The district court concluded that it did not have jurisdiction over A&S as the entity was an arm of the Assiniboine and Sioux Tribes (the “Tribes”). The Tribes formed A&S after experiencing an influx of private drilling and development of oil and gas wells, which resulted in disastrous environmental impacts to the reservation and compromised the health of the Tribal communities. After authorizing the formation of A&S through their Tribal Executive Board, the Tribes incorporated A&S under the laws of Delaware.
Lustre first asked the Supreme Court of Montana to adopt a bright-line rule preventing tribal entities from enjoying sovereign immunity when those entities are incorporated under the laws of the state rather than under tribal law. The court declined to adopt such a rule, concluding that it is important to “examin[e] the circumstances of each case rather than utilizing a single-inquiry test to analyze tribal sovereign immunity.” The court further explained that the nature of an entity’s activity, rather than whether they were incorporated under state or tribal law, should be the important consideration when determining immunity.
The court proceeded to cited to the Ninth Circuit’s five-factor test to determine whether an entity acted on behalf of a tribe: (1) the method of creation of the entity; (2) the purpose of the entity; (3) the structure, ownership, ownership, and management, including the tribe’s control over the entity; (4) the tribe’s intent to share sovereign immunity; and (5) the financial relationship between the tribe and the entity. Even though the court declined to adopt this test whole cloth, it did mention that these factors provided useful guidance for making its decision. The court thereafter reviewed the district court’s analysis of the factors, which determined that three of the give factors favored a finding of sovereign immunity. Despite that determination, the court found on appeal that incorporating under state law rather than tribal law weighed against a finding of immunity. The court therefore proceeded to consider the entire circumstance of the company’s creation.
Upon consideration of the purpose of A&S, the court concluded that it was clear that the company had been created to develop the Tribes’ oil and gases resources and assume responsibility for environmental cleanup efforts associated with the oil and gas development. The court further found that these were goals that funded the Tribes’ governmental services, while promoting cultural autonomy and self-governance. Lustre argued that the management and control of A&S weighed against immunity because the Tribes delegated most of the control to the general manager, who was not a member of the Tribes. The court found this argument unpersuasive, stating that control factor weighed in favor of immunity because the Tribal Executive Board had a right to assume control over A&S at any time.
Lustre also contended that the financial relationship between the Tribes and A&S did not support a finding of immunity because there was no proof of that there was a proportionate share of the company’s financial contributions to the Tribes’ overall budget. The Montana Supreme Court stated that courts need not probe so deeply into a tribe’s governmental affairs and concluded that the financial relationship factor also weighed in favor of immunity because A&S returned 100% of its profits to the Tribes.
A&S and Anadarko, on the other hand, argued that the district court incorrectly concluded that the Tribes did not intend to share their sovereign immunity with the company. In addressing this argument, the court looked to several company agreements and found that whenever the Tribes had the occasion to address the matter, they documented their intent to treat A&S as a separate entity not immune from suit in state courts.
The Tribes’ choice to incorporate A&S under Delaware law, along with the Tribes’ intent to keep A&S a separate and distinct entity for liability purposes, led the court to conclude that the district court erred in ruling that A&S was immune from suit as an “arm” of the Tribes. Accordingly, the court reversed and remanded the case for further proceedings.
Justice Jim Rice concurred, calling for clearer standards and more bright-line rules for determining tribal corporation immunity, while Justice Laurie McKinnon wrote a concurrence stating that the five-factor test revealed that A&S was an enterprise of the Tribes, but that the Tribes expressly waived A&S’s immunity.
Cayuga Nation ex. rel. Cayuga Nation Council v. Parker, No. 5:22-CV-00128 (BKS/ATB), 2023 WL 130852 (N.D.N.Y. Jan. 9, 2023). The United States District Court for the Northern District of New York declined to find that a tribe waived its sovereign immunity after taking over a premises that was subject to an existing commercial lease. The Cayuga Nation (the “Nation”) brought an action under the Racketeer Influenced and Corrupt Organizations (“RICO”) Act against numerous defendants, alleging that the defendants engaged in an unlawful scheme to “co-opt the Nation’s sovereign rights, erode its business and customer base, and steal its revenues” through the illegal sale of untaxed cigarettes, marijuana, and other merchandise on the reservation. After the defendants asserted several counterclaims, the Nation moved to dismiss the claims on the ground that they were barred by the doctrine of sovereign immunity. The defendants argued that the Nation waived its immunity when it initiated the action and that the counterclaims were permissible under the “immovable property” and “recoupment” exceptions to the sovereign immunity doctrine.
The court first established the rule that without congressional authorization or a waiver of sovereign immunity, it would dismiss any suit against a tribe. The court further added that a plaintiff tribe did not waive sovereign immunity by filing suit and sovereign immunity from suit extended to counterclaims against a plaintiff tribe. It was undisputed that there had been no congressional authorization for the counterclaims the defendants asserted, but a question existed as to whether immunity had been waived. The defendants argued that when the Nation purchased a property from them, the Nation took the land subject to a pre-existing commercial lease, which included a provision in which the Seneca-Cayuga Nation waived sovereign immunity. However, the court found that the provision at issue expressed a waiver of the Seneca-Cayuga Nation’s rights but did not contain anything that would allow a conclusion that the Nation similarly authorized a waiver of its sovereign immunity. Because the lease did not otherwise provide an expression of waiver, the court concluded that the Nation had not waived its sovereign immunity pursuant to the commercial lease.
The defendants attempted to argue that, even if waiver did not exist, the “immovable property” exception to sovereign immunity applied. This exception referred to the common law doctrine that curtailed legal actions contesting a sovereign’s rights or interests in real property located within another sovereign’s territory. However, the court found that the exception did not apply to the case because the property in question was located within the bounds of the Nation’s reservation.
Finally, the defendants argued that their counterclaims fell into the “recoupment” exception to sovereign immunity, which examines whether the claims fall into the same transaction or occurrence as the original suit. Although all the claims asserted occurred during the same time period as the RICO claims, the court found that most of the claims did not all arise out of the same transaction or occurrence as the original RICO claims. The claims that did fall within the same transaction or occurrence—those for conversation and trespass to chattels—remained eligible for recoupment. Besides those two claims, the court found that the Nation was protected by sovereign immunity. Accordingly, the court granted the Nation’s motion to dismiss as to all other claims.
California v. Azuma Corp., No. 2:23-CV-00743-KJM-DB, 2023 WL 5835794 (E.D. Cal. Sept. 8, 2023). The court in Azuma found that the Prevent All Cigarette Trafficking (“PACT”) Act did not prevent Ex parte Young actions against tribal officials. The State of California brought an action against Defendants Azuma Corporation, Phillip Del Rosa, Darren Rose, and Wendy Del Rosa (collectively, “Defendants”) for declaratory relief, injunctive relief, and civil damages and penalties for Defendants’ years of trafficking contraband cigarettes in the State in violation of the PACT Act. The individually named defendants were tribal officers of the Alturas Indian Rancheria (the “Rancheria”), a federally recognized Indian tribe, and played key roles in Azuma Corporation, a tribal corporation that sold cigarettes in California. Defendants argued that tribal sovereign immunity barred California’s claims. Defendants also argued that California cannot proceed with its claims because the tribal retailers, which were a part of the cigarette sales, must be joined to the action pursuant to the Federal Rules of Civil Procedure 19, but cannot be because of sovereign immunity.
The court first explained that even if sovereign immunity protected the Rancheria from suit, Ex parte Young provided a narrow exception for injunctive relief against individuals, including tribal officers, responsible for unlawful conduct. Defendants argued that the PACT Act prevented application of the Ex parte Young doctrine. The court disagreed, finding that the PACT act confirms, rather than denies, the existence of Ex parte Young actions. The court then explained that, because California sought to enjoin the individually named defendants from violating the PACT Act in their official capacities, the Ex parte Young doctrine applied. The court accordingly found that sovereign immunity did not bar California’s Ex parte Young action.
The court proceeded to consider whether the tribal retailers were necessary parties under Rule 19. The court first explained that the Defendants had the burden of establishing that the tribal retailers were in fact necessary parties. The court noted that Defendants had not shown how the court could not award complete relief without joining the tribal retailers, or how the tribal retailers had an interest in this litigation that would be impaired by California’s requested injunctive relief. The court also mentioned that granting injunctive relief in the absence of the tribal retailers would not lead to inconsistent judgments. Finally, the court determined that, even if the tribal retailers did have a legally protected interest in the litigation, Defendants had not addressed whether their interest would be adequately represented in the present action. For these reasons, the court concluded that Defendants had not satisfied their burden of showing that the tribal retailers were necessary parties under Rule 19.
After finding that Rule 19 did not bar California’s claims, the court conducted a preliminary injunction analysis. At the end of this analysis, the court granted California’s motion for a preliminary injunction as to Rose, but denied the motion as to Phillip and Wendy Del Rose, citing the State’s lack of evidence regarding the latter two defendants.
Victor v. Seminole Gaming, No. 23-61185-CIV, 2023 WL 4763791 (S.D. Fla. July 26, 2023). The United States District Court for the Southern District of Florida struck a complaint after noting that the Equal Employment Opportunity Commission (the “EEOC”) dismissed the same complaint on sovereign immunity grounds. Sekwanna Victor alleged claims of discrimination, harassment, retaliation, and hostile work environment against her former employer, Seminole Gaming. Victor had submitted a claim to the EEOC regarding her grievances, but it was dismissed on the ground that Seminole Gaming was a tribal entity. The court cited to the fact that Victor’s own complaint indicated that Seminole Gaming was federally recognized as an arm of the Seminole Tribe, thus granting it sovereign immunity. The court further added that the EEOC form dismissing Victor’s complaint categorized Seminole Gaming as a tribal entity, which was the basis for the complaint’s dismissal. The court concluded that to “transcend” Seminole Gaming’s sovereign immunity, Victor would have had to show in her complaint that the entity waived its immunity or that there existed a clear indication of abrogation of tribal sovereign immunity from Congress. The court held that Victor had shown neither.
Skull Valley Health Care, LLC v. Norstar Consultants LLC, No. 2:22-CV-00326, 2023 WL 4934292, (D. Utah Aug. 2, 2023). The court in Sky Valley Health Care held that two medical entities created under state law and converted into tribal entities can enjoy tribal sovereign immunity as arms of a tribe. Plaintiffs Skull Valley Health Care, LLC and Skull Valley Health Clinic, LLC (collectively, “Plaintiffs”) were each initially formed under Utah law and then converted into tribal entities of the Skull Valley Band of Goshute Indians (the “Band”). After this conversion, Plaintiffs were considered tribal entities under tribal law and registered as entities of the Band with the Utah Secretary of State. Defendant, Ashanti Moritz, was a former employee of Plaintiffs. Plaintiffs sued Defendant, alleging that Defendant took control of a Facebook page that was the intellectual property of Plaintiffs and used it in connection with Defendant’s own business. Defendant, in response, asserted a cross claim, alleging discrimination and wrongful termination. Plaintiffs moved to dismiss Defendant’s claim, arguing that Plaintiffs were entitled to the Band’s sovereign immunity as an “arm” of the Band.
The district court first explained that the threshold issue for analyzing sovereign immunity for an economic entity is whether the entity is organized under the laws of a tribe or under another sovereign (such as a state). According to Tenth Circuit precedent, if the organization is organized under the laws of another sovereign, then the organization cannot enjoy sovereign immunity. The court explained that this bright-line rule does have limits, such as when an organization is formed under state and tribal laws. The court determined that at the time of Defendant’s termination, Plaintiffs were organized under the laws of the Band and were therefore not precluded from enjoying sovereign immunity on these grounds.
The district court proceeded to explain that the Tenth Circuit has set forth six factors that are helpful in determining whether an entity qualifies as a subordinate economic entity or “arm of a tribe” entitled to share in a tribe’s immunity. These factors included: (1) the method of creation of the economic entity; (2) the entity’s purpose; (3) the entity’s structure, ownership, and management, including the amount of control the tribe has over the entity; (4) the tribe’s intent with respect to sharing its sovereign immunity; (5) the financial relationship between the tribe and the entity; and (6) whether the purposes of tribal sovereign immunity are severed by granting the entity immunity. The court found that all six of these factors weighed in favor of finding that Plaintiffs were an arm of the Band and entitled to share in the Band’s sovereign immunity. The court accordingly dismissed Defendants claim against Plaintiffs without prejudice.
Haney v. Mashpee Wampanoag Indian Tribal Council, Inc., 205 N.E.3d 370 (Mass. App. Ct. 2023). The Massachusetts Court of Appeals held that a business license did not waive tribal sovereign immunity. The Defendants, the Mashpee Wampanoag Indian Tribal Council, Inc. and Mashpee Wampanoag Tribe, operated a commercial shell fishing business off the shore of Cape Cod in Popponesset Bay. Their fishing racks and cages were regularly located on an Island nearby private land owned by the Plaintiff. The Defendants allegedly would leave piles of shells, trash, and other debris on the private land and the Plaintiff consequently filed an action alleging trespass, private nuisance, and public nuisance. The Plaintiff also requested a declaratory judgment defining the parties’ rights related to the defendants’ shellfish propagation license on the private lands. The superior court dismissed the complaint, finding that the Plaintiff’s claims were barred by tribal sovereign immunity.
The Plaintiff argued that the Defendants waived their tribal sovereign immunity by applying for the shellfish propagation license and accepting the grant of rights to use Massachusetts land and waters. However, the court did not find the license showed the Defendants “unequivocally expressed” a waiver of their immunity. The Plaintiff further argued that the Defendants waived their immunity by participating in previous lawsuits with the Plaintiff and other parties. This argument also failed, as the court found that the matters cited by the plaintiff did not arise out of the same transaction or raise the same legal issues as the present case, and therefore did not constitute a waiver of sovereign immunity. The Plaintiff also asserted the “immovable property” exception to sovereign immunity, but the court noted that the dispute at hand did not pertain to rights stemming from an ownership interest or an interest in property but rather involved the Defendants’ use of the property covered by the propagation license. Lastly, the Plaintiff argued that under natural resource laws, the grant of the license bound the Defendants to operate in a manner that did not impact the Plaintiff’s resources. The court rejected this argument, noting that the Plaintiff did not cite to any legal authority for the proposition that a private citizen is permitted to file a lawsuit to enforce compliance. For these reasons, the court of appeals affirmed the superior court’s dismissal of Plaintiff’s complaint.
Maverick Gaming LLC v. United States, 658 F.Supp.3d 966, No. 3:22-CV-05325-DGE, 2023 WL 2138477 (W.D. Wash. Feb. 21, 2023). The District Court of Washington determined that a federally recognized Indian tribe’s gaming compact created an interest sufficient to make the tribe a required party for purposes of the Federal Rules of Civil Procedure. Maverick Gaming LLC (“Maverick”) brought suit against the United States Department of the Interior and various responsible federal officials, along with various Washington state officials (collectively, “Defendants”), to “challenge Washington state’s tribal gaming monopoly.” Maverick’s suit was predicated on its desire to expand its gaming operations within the State of Washington; however, it was unable to because of Washington’s criminal prohibitions on most forms of Class III gaming.
The court explained, as background information, that the Indian Gaming Regulatory Act (the “IGRA”) established a classification system for different types of gaming. According to the court, Class III gaming included games like slot machines, keno, and blackjack—along with every game not included within Class I or II. The court further explained that the IGRA provided that Class III gaming was permitted on tribal lands if the tribes authorized such activities. To authorize such gaming activities, the court noted that a tribe must enter into a Tribal-State compact, which must be submitted and approved by the Secretary of the Interior.
The court proceeded to explain that Washington State has made most gaming activities a crime. However, in the 1990s, the State slowly agreed to gaming compacts with Washington’s federally recognized Indian tribes. The court further explained that in March 2022, the Washington State Legislature passed a bill permitting sports betting at tribal casinos and gaming facilities. Despite this bill, sports betting otherwise remained illegal throughout the State. Maverick accordingly sued Defendants, alleging that Defendants acted unlawfully when entering into Washington’s compact amendments for sports betting because these amendments violated the IGRA and the Fifth Amendment’s equal protection clause.
Maverick did not name any of Washington’s federally recognized Indian tribes in its suit against Defendants. The Shoalwater Bay Indian Tribe of the Shoalwater Bay Indian Reservation (the “Tribe”), after having its motion for limited intervention granted, moved to dismiss the action, arguing that Maverick failed to join a required party pursuant to Federal Rules of Civil Procedure 12(b)(7) and 19.
The court first concluded that the Tribe was a required party under Rule 19(a). The court reached this conclusion by finding that the Tribe had a legally protected interest in its gaming rights that could be impaired if the Tribe was not included as a party to the suit, and that none of the parties named within the suit would adequately represent the Tribe’s interests. The court proceeded to explain that because the Tribe had not waived its sovereign immunity, it could not be joined as a required party. After reaching this conclusion, the court proceeded to do a necessary party analysis pursuant to Rule 19(b).
Under a necessary party analysis, the court explained that it must consider: (1) the prejudice to any party or absent party; (2) whether relief can be shaped to lessen prejudice; (3) whether an adequate remedy, even if not complete, can be awarded without the absent party; and (4) whether there exists an alternative forum that can join the required party. The court found that the first three factors weighed in favor of dismissal and therefore concluded that the action could not proceed in equity or good conscience. The court accordingly dismissed Maverick’s claims without prejudice.
§ 7.3.4 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.
Stimson Lumber Co. v. Coeur d’Alene Tribe, 621 F. Supp.3d 1158 (D. Idaho 2022). The court in Stimson Lumber Co. found that a federally recognized Indian tribe’s act of engaging in corporate activities did not render the tribe a corporation or endow it with citizenship for diversity jurisdiction purposes. Plaintiff Stimson Lumber Company (“Stimson”) and Defendant Coeur d’Alene Tribe (the “Tribe”) executed a lease agreement whereby the Tribe allowed Stimson to operate a sawmill on the Tribe’s land. The lease agreement granted Stimson an option to purchase the mill at the end of the lease term for no extra cost and included several dispute resolution clauses, including a forum selection clause in which both parties submitted to the jurisdiction of the United States District Court for the District of Idaho. As the end of the lease neared, Stimson informed the Tribe that it desired to exercise the option to purchase the mill, but the Tribe responded that the option was no longer valid and instead offered to sell the mill to Stimson on terms unfavorable to Stimson. Stimson refused, and the Tribe demanded that Stimson vacate the property, after which Stimson sued the Tribe in district court claiming diversity jurisdiction and alleging breach of contract, unjust enrichment, and conversion. The Tribe then filed a motion to dismiss arguing that the district court did not have jurisdiction over the claim since diversity jurisdiction did not exist and because Stimson did not raise a federal question.
The court reaffirmed the principle that an unincorporated arm of a tribe is not a citizen of any state and that a tribe’s waiver of sovereign immunity does not by itself create state citizenship for diversity jurisdiction purposes. Rather, like a state or federal corporation, a tribal corporation is a citizen of the state where it has its principal place of business. The court emphasized that even though the Tribe may have been acting like a corporation, a tribe does not shed non-citizenship merely by embarking on a commercial enterprise. Therefore, if a tribe is unincorporated and its business operations are likewise unincorporated, then neither the tribe nor its business operations are a citizen for purposes of diversity jurisdiction.
The court therefore proceeded to consider whether the Tribe was incorporated. The Tribe argued that they were not incorporated, but instead were a federally recognized Indian tribe, as was indicated on the lease agreement and other documents included as evidence. Additionally, even though the Tribe filed its constitution and by-laws, the court explained that those were not corporate documents. The court also recognized that “federally recognized Indian tribe” was used in the relevant documents as a legal term of art meaning, which merely meant that the federal government acknowledged, as a matter of law, that a particular Indian group has tribal status. The court noted that tribal status is not equivalent to incorporation. Moreover, the court noted that Stimson had offered no substantive evidence that the Tribe was a corporation, which was required for the suit to continue.
According to the court, the fact that the Tribe was engaging in corporate activities in leasing the mill to Stimson—or even if the Tribe held itself out as a corporation—did not automatically render the Tribe a corporation or endow it citizenship. The court granted the Tribe’s motion to dismiss for lack of jurisdiction, holding that the Tribe was not a corporation and, therefore, not a citizen of any state for purposes of diversity jurisdiction.
LS3 Inc. v. Cherokee Fed. Sols., L.L.C., 20-CV-03555-PAB-MEH, 2023 WL 2390710 (D. Colo. Mar. 7, 2023). The court in LS3 Inc. found that a negative allegation of tribal citizenship was not enough to satisfy the requirements of diversity jurisdiction. Plaintiff, a Maryland corporation, claimed that the Defendants, businesses associated with the Cherokee nation, had solicited several of their employees to work for the Defendants. Plaintiff sued Defendant, asserting claims for breach of contract, intentional interreference with a contract, civil conspiracy, and misappropriation of trade secrets. The district court initially ordered the case be dismissed for lack of jurisdiction. After appealing to the Tenth Circuit, the Plaintiff’s remaining claims were for breach of contract, civil conspiracy, and intentional interference with a contract—none of which warranted subject matter or supplemental jurisdiction. The Plaintiff argued that the court nonetheless had diversity jurisdiction over the suit.
The Plaintiff alleged that diversity jurisdiction existed because the Defendants—Cherokee Federal Solutions, LLC; Cherokee Nation Strategic Programs, LLC; and Cherokee Services Group, LLC—were citizens of Colorado, Oklahoma, and Texas, and that they were all owned by the Cherokee Nation itself or a corporate parent (Cherokee Nation Businesses, LLC), which was not a citizen of Maryland. The Plaintiff raised the principle that a tribal corporate entity may be considered a citizen of the state of its principal place of business for diversity jurisdiction.
However, the court pointed out several flaws in the Plaintiff’s arguments, including that Cherokee Nation Businesses was not a member of two of the LLC defendants, and that the complaint only stated that Cherokee Nation Businesses “is not a citizen of Maryland.” According to the court, a negative allegation of citizenship is not sufficient to prove that diversity jurisdiction exists, and that the Plaintiff had failed to identify what the Cherokee Defendants’ citizenships were.
Unlike a corporation, which is a citizen of the state in which it is incorporated, the citizenship of an LLC is determined by the citizenship of all its members. If the plaintiff had shown that the Cherokee Nation—the sole member of several of the defendant LLCs—was incorporated in a state other than Maryland, diversity jurisdiction would have existed. However, the Plaintiff had not alleged that the Cherokee Nation was incorporated under the IRA or under its own tribal laws. The defendant had also failed to show that any of the corporate members of the other LLC defendants were corporations. Therefore, the court held that the Plaintiff’s complaint had failed to demonstrate that the court had diversity jurisdiction over the claims and ordered that the Plaintiff must show cause as to why the case should not be dismissed for lack of jurisdiction.
HCI Distrib., Inc. v. Hilgers, 8:18-CV-173, 2023 WL 3122201 (D. Neb. Apr. 27, 2023). The court in HCI Distribution Inc. found that a state’s interest in regulating the sale of tobacco products could not justify exercising authority over a tribe’s sale of such products to its own members. Plaintiffs were wholly owned subsidiaries of an economic development company—Ho-Chunk, Inc.—which was entirely controlled by the Winnebago Tribe of Nebraska (the “Tribe”), a federally recognized tribe. The Tribe was incorporated under Section 16 of the IRA, under which it created its own constitution and laws, including a Business Corporation Code. The Tribe founded Ho-Chunk under its Business Corporation Code, which subsequently created several wholly owned subsidiaries, including the Plaintiffs. The Plaintiffs imported and distributed tobacco products to retailers on the Winnebago reservation and on other reservations in Nebraska and elsewhere. Plaintiffs sued Defendants, Nebraska State officials, over the enforceability of Nebraska’s Tobacco regulations.
Pursuant to a 1998 Master Settlement Agreement between 46 states and several tobacco companies, Nebraska had promulgated statutes requiring tobacco manufacturers to either (1) participate in the settlement and make annual settlement payments to the state in perpetuity or (2) agree to make deposits into an escrow account based on the number of tobacco products they sold in the state. In order to sell tobacco products in Nebraska, non-participating manufacturers had to certify their compliance with the escrow statutes and post a bond of at least $100,000 to ensure collection in the event they failed to make proper escrow payments. The statute contemplated releasing escrow deposits for “cigarettes sold on an Indian tribe’s Indian country to its tribal members” if the tribe entered into an agreement with the state. Nebraska and the Tribe were unable to reach such an agreement because each party could not agree on the scope of the Tribe’s waiver of sovereign immunity. Specifically, the parties disagreed about whether Nebraska could enforce the escrow laws against the Plaintiffs because they were subsidiaries of the Tribe.
The court started its analysis with the premise that states may not tax reservation lands or reservation Indians, and only under exceptional circumstances may a state regulate on-reservation activities of tribal members. However, states may impose “minimal burdens” on tribally run, on-reservation businesses to enforce valid state laws. According to the court, Nebraska’s tobacco regulation would be invalid if it constituted a direct tax on the Tribe, if it was preempted by federal law, or if it unlawfully infringed on the Tribe’s right to make and be governed by its own laws.
The Plaintiffs argued that the escrow and bond requirements were a direct tax on the tribal business. The court, however, found that the payment requirements amounted to a penalty rather than a tax. The court distinguished taxes, an involuntary exaction intended to raise revenue, from penalties, which are involuntary exactions intended to control behavior. Under the Nebraska State statute, the escrow payments made by tobacco manufacturers would be remitted to the manufacturer after a certain point unless Nebraska proved that the manufacturer committed some wrong related to the “use, sale, distribution, manufacture, development, advertising, marketing, or health effects of” tobacco products. The court therefore determined that the escrow and bond requirements functioned as a penalty, rather than a tax, because the State received no revenue unless the manufacturer did something wrong.
The court next considered whether the regulation was preempted by federal law or unlawfully infringed on the Tribe’s right to make and be governed by its own laws. To conduct this analysis, the court applied the two-pronged approach from White Mountain Apache Tribe v. Bracker. On the first prong, the Plaintiffs argued that Nebraska’s tobacco regulations were preempted by the Indian Trader Statutes, which preempt state regulation of sales made in Indian country but are generally concerned with sales by non-members to tribal members. The court disagreed, finding that the Indian Trader Statutes did not prohibit state regulation of sales by tribal businesses to tribal members. The court further found that the federal government had not enacted a comprehensive and pervasive scheme regulating the sale of tobacco, and that the state regulations were non-discriminatory and applied to all sales of tobacco rather than just those the Plaintiffs made on their own reservation.
The court emphasized that the second prong of the Bracker analysis—whether the regulation unlawfully infringed on the Tribe’s right to make its own laws and be governed by them—required balancing the state, federal, and tribal interests at stake. The court noted that Nebraska has a strong interest in regulating tobacco sales to protect public health, and also an interest in protecting Indians and non-Indians from misconduct by tobacco manufacturers. In contrast, both the federal government and the Tribe had an interest in protecting tribal sovereignty and promoting tribal business and self-sufficiency. Moreover, the Tribe had an economic interest in raising revenue from the Plaintiffs’ business and an interest in selling products free from state regulation.
With respect to the Plaintiffs’ sale of products off the reservation, including on the land of other tribes, the court found that the State’s interest in enforcing the tobacco regulations outweighed the federal and tribal interests at stake, reasoning that the Tribe does not have the same level of interests or protection for activities that take place off its own reservation. However, the court found that the State did not demonstrate the “exceptional circumstances” required to regulate the Plaintiffs’ manufacture and sale of products on the Winnebago reservation. The court further found that the regulation constituted a direct burden on a tribal business operating on its reservation; the Plaintiffs’ were merely providing an exemption to certain state taxes for customers willing to travel to the reservation; the federal government had not authorized state regulation of tribal tobacco businesses; and any “off-reservation” effects of the Plaintiffs’ on-reservation activities were insufficient to justify the infringement. Additionally, the court noted that while the federal government had instituted policies around other areas of Tribal activity to preempt state regulation, such as for gaming and wildlife purposes, the federal government has done nothing to encourage or discourage tribal tobacco manufacturing.
The court granted the Defendant’s motion for summary judgment as it pertained to sales on the Omaha reservation, and granted the Plaintiffs’ motion for summary judgment as it pertained to sales on the Winnebago reservation. The court also permanently enjoined the Defendants from enforcing the escrow and bond requirements for sales on the Winnebago reservation.
