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Business Law Today

March 2024

Recent Developments in Tribal Court Litigation 2024

Edward John Bressler Hermes

Recent Developments in Tribal Court Litigation 2024

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§7.1 Tribal Litigation & the Third Sovereign

We have been writing this annual update of cases relevant to tribal litigation for many 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 citation to most relevant circuit and even district court cases in every volume. To target primarily those cases decided within the last year, this chapter focuses on cases decided between October 1, 2022 – October 1, 2023. The chapter begins with a Supreme Court overview and then is structured around sovereigns—Indian Tribes, the United States, and the fifty sister States.

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 United States’ president or a state’s governor) and a tribal council or senate (the legislative body). Tribal courts adjudicate most matters arising from their reservations 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.

§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.

§7.4 The Federal Sovereign

§ 7.4.1 Indian Country & Land into Trust

The Indian Reorganization Act (“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, the 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. The 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 more recent decision, Confederated Tribes of Grand Ronde Community of Oregon v. Jewell, the D.C. Circuit Court of Appeals upheld the 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 Bureau of Indian Affairs (“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.”

More recently, the BIA, to improve and streamline the tribal land acquisition application process, announced changes to land-into-trust regulations (at Part 151). Under the new rule, the BIA will now have to meet a 120-day deadline. Prior to the change, the average land acquisition application took an average of 985 days.

A brief discussion of this past year’s cases involving the taking of land into trust follow.

Chase v. Andeavor Logs., 2023 WL 5920379 (D.N.D. Aug. 8, 2023). After a series of interlocutory appeals, the North Dakota District Court held that individual tribal members (“Allottees”) who hold equitable interests in tribal lands that are held in trust by the United States could not bring a common law trespass claim against an oil pipeline manufacturer whose right of way had expired.

Broadly, dating back to 1953, various companies had operated an oil pipeline in North Dakota that crossed portions of the Fort Berthold Indian Reservation. At various times, these companies held rights of way for use of their pipelines across the reservation. In 2013, however, the right of way expired. Yet, the pipeline continued to operate.

In 2017, the Mandan, Hidatsa, and Arikara Nations negotiated a right of way with Andeavor Logistics (the current pipeline operator), but only as to the tribal trust lands. Several Allottees refused to grant Andeavor a right of way over their individually allotted portions of land.

The Allottees filed suit alleging continuing trespass and constructive trust. Andeavor filed a motion to dismiss. In the intervening procedural chaos, the motion to dismiss came before the court on a single ground—whether the Allotees could assert a federal common law claim for trespass.

In assessing whether the individual Allottees could maintain a federal common law claim, the court reasoned that the “undeniable key” was whether the Allottees could claim aboriginal title to the land—a required prerequisite. Aboriginal title, as opposed to equitable title obtained in trust, requires that the title predate limitations set out by the federal government because it would have preceded the formation of the United States.

By contrast, the court explained that allotted lands, especially allotments to individual Indians, was an attempt by the federal government to weaken tribal power and influence. Moreover, individual allotments are not, by definition, lands that were subject to aboriginal title. For example, the allotted lands may have been granted from the public domain.

Therefore, the court drew a critical distinction between allotted lands, which the Allottees in this case owned, as opposed to those lands with aboriginal title. The court reasoned that if the Allottees were given the same rights as individuals with aboriginal title, it would “cheapen the rich history of aboriginal lands and constitute a rejection of the Supreme Court’s favored treatment of aboriginal title for two centuries.” Moreover, any attempt by the Allottees to analogize to other federal common law claims were futile because those claims were viable in the context of aboriginal title, not allotments.

Accordingly, because the Allottees lacked aboriginal title, the court dismissed the Allottees’ trespass action for failure to state a claim. It further denied to affirmatively create a common law claim for trespass.

For the remaining claims (breach of contract, unjust enrichment, and constructive trust), the court also held these claims failed because either the Allottees failed to join the United States as a required party, or the claims depended on the federal trespass action.

Littlefield v. U.S. Dep’t of the Interior, No. 22-CV-10273-AK, 2023 WL 1878470 (D. Mass. Feb. 10, 2023), aff’d 2023 WL 7146029 (1st Cir. Oct. 31, 2023). Plaintiffs, residents of Taunton, Massachusetts, challenged a decision by the United States Secretary of the Interior (the “Secretary”) to take into trust 321 acres of land for the benefit of the Mashpee Wampanoag Tribe (the “Tribe”). The district court denied Plaintiffs’ challenges and held that the Secretary’s decision to take land into trust for the benefit of the Tribe was legal, and not arbitrary, capricious, or contrary to the law. Plaintiffs appealed. The First Circuit affirmed, albeit for different reasons than the district court.

The First Circuit held that the Supreme Court’s opinion in Carcieri v. Salazar, 555 U.S. 379 (2009), and its analysis of the Narragansett Tribe’s history was not controlling as to whether the Mashpee Tribe was “under Federal jurisdiction” in 1934. It reasoned that the Supreme Court had relied on the parties’ concessions that the Narragansett Tribe was not under federal jurisdiction in 1934, as opposed to any independent investigation. Therefore, that concession (and the subsequent analysis) was inapplicable to the Mashpee Tribe and therefore the Secretary did not err by refusing to adopt the analysis.

The court also rejected Plaintiffs’ argument that the definition of “Tribe” in Montoya v. United States, 180 U.S. 261 (1901), was codified by the IRA. Therefore, it held that the Secretary did not act arbitrarily or capriciously in refusing to apply this definition to the Mashpee Tribe.

On appeal, Plaintiffs conceded that the Solicitor of the Department of the Interior’s memorandum (“M-Opinion”) governed the meaning of “under Federal jurisdiction.” Plaintiffs, however, challenged the Secretary’s application of the factors here. The M-Opinion requires the Secretary first determine whether the federal government took an action, or a series of actions, that conferred jurisdiction on a tribe before 1934. If the answer is “yes,” then the Secretary proceeds to the second step in the analysis and determines whether this jurisdictional status remained intact in 1934.

First, Plaintiffs argued that the federal government took no affirmative actions to remove the Mashpee from western Massachusetts. The First Circuit rejected this argument because the federal government took “specific action” through the issuance of the Morse Report that indicated it considered the Mashpee to be within the jurisdiction of the United States. Moreover, the Morse Report was not the sole piece of evidence relied on by the Secretary in making her decision.

Second, the First Circuit held that the Secretary permissibly analyzed the Mashpee children’s attendance at the Carlisle School as probative evidence of the exercise of federal control. It reasoned that the Secretary could consider different ways in which this attendance might be probative, that parental consent is not a dispositive factor, and the M-Opinion, as well as the Secretary’s third written decision in 2021, instructed the Secretary to consider Bureau of Indian Affairs school attendance.

Third, Plaintiffs identified various reports by federal officials regarding the Mashpee Tribe and argued that because the federal government took no action based on the reports, the Secretary relied on them in error. The court disagreed. Although the reports did not result in any action by the federal government, the act of compiling the reports and making recommendations affected only the weight of the evidence, not its inclusion or exclusion from consideration.

Finally, Plaintiffs argued that the Secretary’s evidence, inter alia census records and various government reports, was not probative on the issue of whether the Tribe was under federal jurisdiction. On this point, the court declined to reweigh the evidence considering that the Plaintiffs offered no authority for their contention.

In sum, the court affirmed the district court’s conclusion that the Secretary did not act arbitrarily, capriciously, or contrary to law by taking the land into trust for the benefit of the Tribe.

State ex rel. Kobach v. U.S. Dep’t of Interior, No. 21-3097, 2023 WL 4307478 (10th Cir. July 3, 2023). In 1992, the Wyandotte Tribe (the “Tribe”) purchased a 10-acre parcel of land (hereinafter the “Park City Parcel”) just outside of Wichita, Kansas using money it received in a settlement from the Indian Claims Commission (“ICC”). In 2008, the Tribe applied for trust status intending to establish gaming operations on the land. In 2020, the Secretary of the Interior (the “Secretary”) approved the Tribe’s application. Kansas, however, opposed the Secretary’s decision to take the land into trust (and therefore the Tribe’s ability to operate a gaming facility) because it claimed that (1) the Tribe did not purchase the land with the appropriate funds and (2) there was no exception to the Indian Gaming Regulatory Act authorizing the Tribe to operate gaming operations on the land. The Tenth Circuit rejected both of the State’s arguments and held that the Secretary’s decision to take the Park City Parcel into trust for the benefit of the Tribe and authorization of gaming operations was not arbitrary or capricious, nor in contravention of the law.

The State first argued that the Tribe did not purchase the Park City Parcel using the appropriate funds, and, as a result, the Secretary’s decision to take the land into trust was arbitrary and capricious. The Secretary had parsed through competing accounting reports that traced the origins of the funds, as well as other Tribal land purchases, and concluded that the Park City Parcel was purchased with Section 105(b)(1) funds. The Tenth Circuit upheld the Secretary’s assessment because the Secretary had reviewed the relevant materials and had rationally explained why she relied on one report over the other.

As a legal matter, the 10th Circuit also rejected the State’s argument that if a Tribe uses Section 105(b)(1) funds as a principal, the investment income from those proceeds can no longer be used for the statutory purposes set out in Section 105(b)(1). In affirming the Secretary’s rationale, the court also rejected the State’s arguments that inter alia the Secretary disregarded department policy and that the decision was unsupported by substantial evidence. Therefore, the court held that the Secretary did not act arbitrarily and capriciously when it approved the Tribe’s application to take the Park City Parcel into trust.

The State also argued that the Secretary acted arbitrarily and capriciously by permitting the Tribe to conduct gaming operations on the Park City Parcel. Broadly, IGRA prohibits gaming on lands acquired and held in trust by the Secretary. Thus, the State argued that the funds used to purchase the parcel, which originated from an ICC settlement, did not meet IGRA’s settlement-of-a-land-claim exception to the general prohibition.

To resolve this dispute, the court examined the three requirements to meet IGRA’s settlement-of-a-land-claim exception under 25 U.S.C. § 2719: (1) the Secretary took the land into trust; (2) the land was acquired under a settlement of a land claim; and (3) the land was taken into trust as part of the settlement of the land claim. Here, the court held that all three requirements were met.

First, as discussed, the court concluded that the Secretary took the land into trust.

Second, the court held that the plain meaning of “settlement,” as used in the statute, encompassed the ICC settlement from which the Tribe received the original funds to purchase the Park City Parcel. In particular, the court rejected the State’s argument that the word “settlement” should only include “traditional settlement agreements” when Congress established the ICC to determine all tribal claims and applicable remedies.

Third, the court held that the Secretary took the land into trust “as part of” the settlement of land claims. The court reasoned that Congress, as opposed to the ICC settlement itself, authorized the Secretary to take the Park City Parcel into trust under PL 98-602. However, the court found that in acting through the authority vested in her by Congress, the Secretary acted “as part of” the ICC settlement because Congress would not have enacted PL 98-602 but for the ICC settlement. Although the Secretary did not undertake this same analysis, the court held that the Secretary’s interpretation (which was based on department regulations) would have produced the same outcome.

As a result, the Secretary did not act arbitrarily or capriciously by permitting the Tribe to conduct gaming operations.

Sault Ste. Marie Tribe of Chippewa Indians v. Haaland, No. 1:18-cv-02035, 2023 WL 2384443 (D.D.C. Mar. 6, 2023). The Sault Ste. Marie Tribe of Chippewa Indians (the “Tribe”) purchased a 71-acre parcel in Michigan’s lower peninsula (hereinafter the “Sibley Parcel”). The Tribe then sought to compel the Secretary of the Interior to take the Sibley Parcel into trust for the purpose of creating a casino. The Secretary denied the Tribe’s application because it reasoned that the Tribe had not adequately satisfied the requirement that the land be for “social welfare” or the “enhancement of tribal lands.” The Tribe appealed the decision to the District Court for the District of Columbia and the court affirmed.

As relevant here, the Tribe purchased the Sibley Parcel solely using investment income. In turn, investment income can only be used to satisfy one of five enumerated purposes under § 108(c) of the Michigan Indian Land Claims Settlement Act (hereinafter the “Michigan Act”). If the Sibley Parcel qualified under one of the five purposes, the Michigan Act requires the land “be held in trust by the Secretary for the benefit of the tribe.” Here, the Tribe sought to avail itself of reason four (social welfare) and reason five (enhancement of tribal lands).

The Tribe argued that developing a casino would constitute “social welfare” because it would create jobs as well as generate revenue—five percent of which would be used to finance both services for tribal elders and scholarships. The Secretary argued that the Tribe could not satisfy § 108(c)(4) by merely starting an economic enterprise, which may generate its own profits, which might then be spent on social welfare purposes—that is, the social welfare connection was too attenuated. By contrast, the Secretary suggested that health clinics or schools might qualify.

The court agreed with the Secretary that broad principles of job creation and increased revenue could not satisfy the Michigan Act’s requirements. The court started by defining “social welfare” more narrowly than the Tribe proposed. The court reasoned that both on its own and in context, social welfare could not encompass a for-profit casino. Instead, the court explained that social welfare was linked to direct social welfare contributions, such as providing organized care for the sick, poor, or elderly. The court also rejected the Tribe’s argument that the statute did not require a direct social welfare benefit, as to do so would contradict the statute’s plain meaning. Finally, the court reasoned that § 108(c) had to be read in conjunction with § 108(b), and § 108(b) already provided that the principal (as opposed to investment income) could be used for economic development. By contrast, the court reasoned that the omission of economic development in § 108(c) undermined the Tribe’s argument that the casino would constitute a social welfare endeavor.

Turning to requirement five, the Tribe argued that the development of a casino would enhance tribal lands because tribal housing is in high demand, and gaming revenue is the most viable way of providing housing to members of the Tribe. In addition, the Tribe argued that casino operations would fund necessary facility improvements in the upper peninsula, thus enhancing the Tribe’s land. At bottom, the court upheld the Secretary’s rejection of the Tribe’s proffer because the Tribe’s rationales were conclusory and unsupported. Although the Secretary gave the Tribe multiple opportunities to amend its submissions, the Tribe only offered declarations of its Chief Financial Officer and Director of the Tribal Housing Authority to support its contentions as opposed to definite plans, and the court declined to second-guess how the Secretary weighed that evidence. The court also concluded that the Secretary made rational decisions based on the administrative record.

As an alternative argument, the Tribe argued that the Secretary failed to adequately explain her decision. The court explained that this standard was typically difficult to meet and generally encompassed form language or one sentence decisions. Here, the court found the Secretary’s letter to the Tribe, which included inter alia examples of how the Tribe could satisfy § 108(c)’s provisions, satisfied 5 U.S.C. § 555(e)’s minimum procedural requirements.

Accordingly, the court upheld the Secretary’s rejection of the Tribe’s application as not contrary to law, arbitrary, or capricious.

§ 7.4.2 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 revisions to Section 81 in 2000, 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 as to 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 Bureau of Indian Affairs (“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 January 6, 2024, the BIA lists 92 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 several of the more relevant cases decided in the last year.

W. Flagler Assocs., Ltd. v. Haaland, No. 21-5265, 2023 WL 4279219 (D.C. Cir. June 30, 2023). The District of Columbia Circuit Court of Appeals held that the Secretary of the Interior’s (the “Secretary”) decision not to act (and thus approving a tribal-state compact by default) did not violate the Indian Gaming Regulatory Act (“IGRA”). Further, the court held that as a matter of law the tribal-state compact did not violate the federal Wire Act, or the Unlawful Internet Gambling Enforcement Act (“UIGEA”) and the Secretary’s approval of the compact did not violate the equal protection clause of the Fifth Amendment.

In 2021, the Seminole Tribe of Florida (the “Tribe”) and the State of Florida entered into a tribal-state compact (the “Compact”) under IGRA, which allowed the Tribe to offer online sports betting. The Compact deemed all bets placed through the Tribe’s sports book to occur where the sports book servers are located (the Tribe’s land), regardless of where the person placing the bet is located. When the Secretary failed to affirmatively approve or disapprove the Compact within 45 days of receiving it, the Compact became effective.

West Flagler Associates (“West Flagler”) operated casinos in Florida and filed suit, alleging the compact violated IGRA, the Wire Act, UIGEA, and the Fifth Amendment, specifically because the Compact purported to offer state-wide sports betting that would necessarily occur off-reservation. Because of these alleged violations, West Flagler believed the Secretary was required to disapprove the Compact. The Tribe moved to intervene for the limited purpose of filing a motion to dismiss based on its tribal sovereign immunity. The Tribe’s motion was denied, and the court granted summary judgment for West Flagler, holding that the Compact violated the “Indian lands” requirement of IGRA.

On appeal, the D.C. Circuit reversed, reasoning that an IGRA compact can only authorize a tribe to conduct gaming on its own lands, and as such, does not prohibit such compact from discussing other topics. Therefore, a compact could discuss topics which governed activities outside of Indian lands. The court found that the district court erred in “reading into the Compact a legal effect it does not (and cannot) have,” namely that the Compact cannot provide the authority to regulate any activity that occurs outside the borders of Indian land. The court held that the Compact complied with IGRA by authorizing betting that occurs on the Tribe’s land. As to the provision of the Compact discussing betting activities that would occur outside of Indian land, the court explained that issue was not within the scope of the litigation and instead was reserved for the Florida courts to decide.

The district court did not reach West Flagler’s claims that the Compact violated the Wire Act, UIGEA, and the Fifth Amendment. However, on appeal, the D.C. Circuit held that all three challenges were without merit as a matter of law. Lastly, because the court determined that the Tribe’s Compact would be kept intact regardless of whether the case was decided on the merits or on the Tribe’s motion to dismiss, the court affirmed the district court’s denial of the Tribe’s motion to intervene.

§ 7.4.3 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.

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. Two noteworthy cases from the last year are discussed below:

Dean S. Seneca v. Great Lakes Inter-Tribal Council, Inc., No. 22-2271, 2023 WL 4340699 (7th Cir. July 5, 2023). The Seventh Circuit Court of Appeals affirmed the dismissal of an employment discrimination claim brought against an employer non-profit consortium of Indian tribes, holding that the employer enjoyed tribal sovereign immunity from suit.

Plaintiff, Dean Seneca (“Seneca”), was employed as a director of epidemiology by the Great Lakes Inter-Tribal Council (the “Council”), a non-profit composite of its member Indian tribes, which are federally recognized and own and control it. Seneca alleged that the Council fired him because of his race, color, national origin, age, sex, gender identity, and sexual orientation in violation of federal law, including Title VII of the Civil Rights Act of 1964. The Council successfully moved to dismiss the suit in district court based on tribal sovereign immunity and its view that the federal statutes that Seneca invoked excluded claims against Indian tribes. The district court accepted the first argument and did not reach the second, reasoning that the Council, as a consortium of its members, enjoyed tribal sovereign immunity. Seneca unsuccessfully appealed.

The Seventh Circuit began its analysis from the premise that suit against Indian tribes are barred “absent a clear waiver by the tribe or congressional abrogation.”

On appeal, Seneca first urged the court to adopt the test in McNally CPA’s & Consultants, S.C. v. DJ Hosts, Inc., 692 N.W.2d 247, 251–52 (Wis. Ct. App. 2004), in which the court held that a for-profit corporation did not enjoy tribal sovereign immunity after a tribe bought all of its shares. Here, the Court rejected this argument because the McNally test was “narrow,” and the for-profit analogy failed to carry water when analogizing to a non-profit.

Second, Seneca argued that the Council waived its sovereign immunity by agreeing to abide by Title VI of the Civil Rights Act of 1964 when it accepted federal funds. The court disagreed. Even if the Tribe had waived immunity under Title VI, the court explained that Seneca brought his claims under Title VII, which was already a comprehensive regulatory scheme.

Third, Seneca argued that the Council’s job postings, which boasted compliance with “federal and state laws” waived sovereign immunity. Again, the Seventh Circuit disagreed, reasoning the job posting made no reference to sovereign immunity or its amenability to suit.

Finally, Seneca argued that unless the Council waived sovereign immunity, he had no recourse for his discrimination claim, in violation of his right to due process under the Fifth and Fourteenth Amendments. But the court reasoned that neither the Fifth Amendment nor the Fourteenth Amendment applied to Indian tribes. Accordingly, the Seventh Circuit affirmed the district court’s dismissal of the suit.

Meglitsch v. Southcentral Found., No. 3:20-CV-0190-HRH, 2022 WL 16949256 (D. Alaska Nov. 15, 2022), appeal dismissed, No. 22-36024, 2023 WL 3940561 (9th Cir. May 31, 2023). Plaintiff, Colin Graham Meglistch, was employed by defendant, Southcentral Foundation, a Tribal organization that provides federal healthcare programs for Alaska Natives and Native Americans. Southcentral Foundation is recognized as a Tribal organization under Title V of the Indian Self-Determination and Education Assistance Act (“ISDEAA”). Meglistch alleged that the Southcentral Foundation violated the Fair Labor Standards Act (“FLSA”) by failing to properly pay him overtime for the on-call hours he worked. In response, Southcentral Foundation argued that the court lacked subject matter jurisdiction over this dispute because the FLSA requirements did not apply to tribal entities. The court agreed, holding that FLSA does not apply to tribal entities and dismissed the case under Federal Rule of Civil Procedure 12(h)(3).

In analyzing whether the FLSA applied to Southcentral Foundation, the court noted that “the FLSA is a statute of general applicability” and statutes of general applicability typically apply to Indian tribes. There are, however, three exceptions to this principle. A federal statute of general applicability that is silent on the issue of applicability to Indian tribes will not apply to them if: (1) the law “touches exclusive rights of self-governance in purely intramural matters”; (2) the application of the law to the tribe would “abrogate rights guaranteed by Indian treaties”; or (3) there is proof “by legislative history or some other means that Congress intended [the law] not to apply to Indians on their reservation . . . .” This case involved the first exception.

The court stated that the self-governance exception applied to Southcentral Foundation for a few reasons. First, the court found it relevant that Southcentral Foundation received funding under the ISDEAA, which recognizes the right of Indian self-determination and tribal self-governance. Second, the court reasoned that Southcentral Foundation’s provision of health care services involved exclusive rights of self-governance because staffing responsibilities and pay rates are purely intramural activities, meaning that they relate exclusively to the Southcentral Foundation’s internal operations. The court also rejected Meglistch’s arguments that pay rates and staffing needs were not purely intramural matters because Southcentral Foundation sometimes provided healthcare services to general, non-Native populations because those populations are both small and generally have a “stake” in tribal self-governance. Meglistch also argued that he was entitled to notice that he was working outside of standard Alaska labor laws. The court rejected this argument, both because there was no federal requirement that he be provided notice and also because he was on notice due to his employee handbook outlining his compensation. Therefore, the court granted Southcentral Foundation’s motion to dismiss for lack of subject matter jurisdiction.

§ 7.4.4 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.

Bessios v. Pueblo of Pojoaque, No. CV 22-266 MV/JFR, 2022 WL 18936057 (D.N.M. Oct. 12, 2022), report and recommendation adopted 2023 WL 2157699 (Feb. 22, 2023). In November 2018, Plaintiff was terminated from a management role at a casino after conducting data assessments of the proprietary software and discovering “errors and unreconcilable discrepancies.” Plaintiff sued Buffalo Thunder Development Authority, Pueblo of Pojoaque, and Pojoaque Gaming Inc. (collectively “Tribal Defendants”), and SG Gaming Inc. and Scientific Games Corporation (collectively “Gaming Defendants”) for inter alia wrongful termination, retaliatory discharge, defamation, spoliation, tortious interference with contractual relations, and negligence.

Tribal Defendants removed the suit from state court to district court, claiming federal question and supplemental jurisdiction under 28 U.S.C. §§ 1331, 1441, and 1446. Gaming Defendants consented to Tribal Defendants’ removal. Plaintiff moved for remand, arguing that her complaint did not raise a federal question, and any reference to the Indian Gaming Regulatory Act (“IGRA”) or the tribal-state compact did not affect the state-law nature of her claims. The magistrate judge reasoned, which the district court adopted, that Plaintiff’s state-law claims incorporated federal questions of law under IGRA and the applicable tribal-state compact and thus had federal question subject matter jurisdiction.

Federal question jurisdiction permits district courts to hear suits “arising under the Constitution, laws or treaties of the United States.” 28 U.S.C. § 1331. Removal, in turn, is permissible when a federal question case has been filed in state court. 28 U.S.C. § 1441. The court explained that federal question jurisdiction does not arise for any question of federal law, but instead the issue must be a substantial issue of federal law. As a general rule, the court explained that state courts are not permitted to hear suits against Indian defendants without federal authorization when those disputes arise out of Indian country.

Here, the court found that federal question jurisdiction existed despite the state-law nature of Plaintiff’s claims. Plaintiff’s termination arose from accounting discrepancies that she uncovered that she claimed were violations of IGRA and the tribal-state compact that governed Class III gaming. Therefore, the court reasoned that when she filed her complaint, every count (15 in total) relied on IGRA and the Tribe’s sovereign immunity waiver under the tribal-state compact. In turn, in order to resolve the merits of Plaintiff’s claims, the court stated it would have to interpret provisions of IGRA and the tribal-state compact. Accordingly, the court adopted the magistrate judge’s recommendation to deny Plaintiff’s motion for remand.

Byrd v. Town of Mount Vernon, No. CV 22-00401-TFM-B, 2022 WL 17400704 (S.D. Ala. Oct. 26, 2022), report and recommendation adopted 2023 WL 361090 (Jan. 23, 2023). Plaintiff, who was pro se, received a municipal speeding violation by a Mount Vernon police officer. In turn, she filed a notice of removal to federal court alleging that the town of Mount Vernon could not charge her with speeding because she was a member of a recognized Indian tribe, and the ticket was issued in Indian territory. The court, by adopting the magistrate judge’s report and recommendation, remanded the case back to state court.

Although Plaintiff invoked federal question jurisdiction, the court reasoned that 28 U.S.C. § 1331 only applies to civil actions, and the speeding ticket at issue was a criminal offense. The court explained that Plaintiff’s criminal violation did not fall within any statute that would permit her criminal proceeding to be removed to federal court nor did she cite any civil rights law that would permit the case to be removed to federal court. Given that the federal could only acquire federal jurisdiction over a very narrow set of criminal cases, the court remanded the case to state court.

Chicken Ranch Rancheria of Me-Wuk Indians v. California, 65 F.4th 1145 (9th Cir. 2023). Plaintiffs, including Chicken Ranch Rancheria of Me-Wuk Indians, Blue Lake Rancheria, Chemehuevi Indian Tribe, Hopland Band of Pomo Indians, and Robinson Rancheria (the “Tribes”), filed suit against California, alleging that California violated the Indian Gaming Regulatory Act (“IGRA”) by exhibiting bad faith by failing to negotiate a tribal-state compact that would allow the Tribes to operate Class III gaming. On the merits, the Tribes prevailed and filed a motion for attorney’s fees. California opposed the award of attorney’s fees based on sovereign immunity. The Ninth Circuit agreed with California and declined to award attorneys’ fees to the Tribes.

Putting aside the issue of California’s sovereign immunity (which the court concluded that California had waived), the court reasoned that federal law governed attorney’s fees in cases where the court obtained jurisdiction under the federal question doctrine. Here, the court explained that the underlying merits lawsuit was brought under IGRA, a federal law. In turn, in analyzing IGRA’s language, the court noted that IGRA did not contain an attorneys’ fees provision.

The Tribes argued that an exception existed that would permit attorney’s fees in federal question cases, where “substantial and significant issues of state law” were present. To support this argument, the Tribes argued that the underlying lawsuit implicated state law.

The Ninth Circuit rejected this argument, concluding that the Tribes sued California on a federal IGRA claim, which was “purely [a] federal claim.” Therefore, the court held that there were no exceptions that would permit the imposition of an attorneys’ fee award. Accordingly, the Tribes’ motion for attorneys’ fees was denied.

Sauk-Suiattle Indian Tribe v. City of Seattle, 56 F.4th 1179 (9th Cir. 2022). In 1995, the Federal Energy Regulation Committee (“FERC”) issued the city of Seattle a license to operate a hydroelectric dam for thirty-years. In 2021, the Sauk-Suiattle Indian Tribe (the “Tribe”) sued Seattle alleging that the city operated the dam without the appropriate fish passage channel, which in turn violated inter alia the 1853 Act establishing the Washington Territory and the Supremacy Clause of the United States. Seattle removed the suit to federal court and the Tribe filed a motion to remand. The district court denied the Tribe’s motion to remand, holding that the complaint raised substantial federal questions.

Seattle then moved to dismiss the lawsuit for lack of subject matter jurisdiction. The district court granted the motion because the Tribe’s lawsuit essentially challenged an agency decision that was only reviewable by a circuit court under the Federal Power Act (“FPA”). The Ninth Circuit affirmed.

On the removal issue, the Ninth Circuit explained that federal removal is permitted in “any civil action brought in a state court of which the district courts of the United States have original jurisdiction.” To confer federal question jurisdiction under 28 U.S.C. § 1331, a plaintiff must demonstrate that their cause of action has federal issues that are: “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.”

The court concluded that the first two elements were met because the Tribe’s complaint raised federal issues concerning congressional acts and the Supremacy Clause. For the third element, the court determined that the congressional acts involved nationwide regulation. Therefore, this interest was substantial in nature. Finally, for the fourth element, the court concluded that this action was capable of being resolved on the federal level without interfering with the federal-state balance of power. Accordingly, the district court properly denied the Tribe’s motion to remand.

The court then turned to the district court’s dismissal for lack of subject matter jurisdiction. It held that the Tribe’s complaint was governed by the FPA, and the FPA fell within the exclusive jurisdiction of the federal court of appeals. Therefore, the court held that the district court properly dismissed the suit for lack of subject matter jurisdiction.

Finally, the court reasoned that while the general rule is that a dismissal for lack of subject matter jurisdiction should be remanded to state court, here, remand would be futile because exclusive jurisdiction for this suit lied with the court of appeals.

Queens, LLC v. Seneca-Cayuga Nation, No. 419CV00350WPJCDL, 2022 WL 7074271 (N.D. Okla. Oct. 12, 2022). Plaintiffs operated a series of lake-front businesses that it sold to the Seneca-Cayuga Nation (the “Nation”). Plaintiffs sued the Nation for breach of contract when the Nation failed to meet its payment obligations. The contract had a sovereign immunity waiver, and Defendants argued that a waiver of sovereign immunity had to be authorized by the tribe’s Business Committee before it became effective. The Nation argued that the meeting minutes did not indicate a reference to a waiver of sovereign immunity. Plaintiffs disagreed and provided affidavits from the Business Committee.

This case arose in federal court under a somewhat unconventional procedural posture. Plaintiffs filed in state court and won on summary judgment. However, the Oklahoma Court of Civil Appeals held that before it could render a decision, a federal court must determine that it does not have jurisdiction as a condition precedent to the Nation’s waiver of sovereign immunity. The unusual procedural posture forced Plaintiffs to file a lawsuit in federal court while also arguing that the federal court did not have subject matter jurisdiction. The district court agreed and dismissed the suit.

In any event, the court reasoned that before proceeding to the merits, it had to determine whether it had subject matter jurisdiction. At bottom, the court stated that this was a breach of contract action which did not invoke federal question jurisdiction because there was no federal or constitutional claim and did not implicate a treaty. Moreover, the court explained that a defense of sovereign immunity is insufficient to invoke federal question jurisdiction because federal question jurisdiction arises from the complaint. Additionally, just because a tribe is in some way involved in a lawsuit, this did not automatically confer federal question jurisdiction.

Turning to diversity jurisdiction, 28 U.S.C. § 1332 confers jurisdiction on the court when the parties are citizens of different states and the amount in controversy exceeds $75,000. Here, the court determined that an Indian tribe is not a citizen of any state. Therefore, diversity jurisdiction could not exist. Accordingly, the court dismissed the lawsuit for lack of subject matter jurisdiction and did not reach the issue of sovereign immunity.

§7.5 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.

Ute Mt. Ute Tribe v. Ariz. Dep’t of Revenue, 524 P.3d 271 (Ariz. Ct. App. 2023). The Ute Mountain Ute Tribe owned the Weeminuche Construction Authority (“WCA”) (collectively “Plaintiffs”) and challenged an Arizona Department of Revenue’s (“Department”) finding that the WCA owed transaction privilege taxes from three construction projects that WCA completed on the Navajo Nation and the Hopi reservation. Plaintiffs argued the WCA was exempt from transaction privilege taxes because they were operating pursuant to a contract with the Bureau of Indian Affairs (within a trust capacity).

The tax court dismissed Plaintiffs’ complaint with prejudice for failure to state a claim and denied their request to amend the complaint as futile and untimely. The Arizona Court of Appeals affirmed.

First, the court held that Arizona’s transaction privilege tax was not preempted by federal law. In particular, under the Supreme Court’s holding in Arizona Department of Revenue v. Blaze Construction Company, 526 U.S. 31 (1999), the tax court applied the proper legal standard to assess whether federal law preempts Arizona’s transaction privilege tax, which “set[] out a bright-line standard upholding state taxing authority over the proceeds derived from all federal contracts.” Here, the Navajo and Hopi tribes did not contract with WCA, and thus the federal government maintained its contractual responsibility. Thus, the bright-line standard applied, and the federal law did not preempt Arizona’s transaction privilege tax.

Similarly, the court rejected the Plaintiffs’ argument that, absent federal preemption, they were exempt from Arizona’s transaction privilege tax under ADOR’s guidance in TPR 95-11 or A.R.S. § 42-5122. Neither TPR 95-11 nor A.R.S. § 42-5122 provided an exemption.

Lastly, the court examined whether the tax court incorrectly denied the Plaintiffs’ request to amend their complaint. The plaintiffs did not submit proposed written amendments in tax court, which constrained the court’s review. Ultimately, the court held that any amendment would be futile because under TPR 95-11, the statute differentiated between contractor transactions with a tribe and contractor transactions with non-members (which included the federal government). Additionally, caselaw interpreting TPR 95-11 had held that the transaction privilege tax applied to proceeds stemming from federal contracts with non-tribal members to construct on-reservation structures for use by tribal members. Accordingly, the court affirmed the tax court’s dismissal of the complaint.

§7.6 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.