April 22, 2015 Practice Points

    Washington State Courts Can Have Civil Jurisdiction over Tribal Courts

    Washington’s supreme court ruled that its state courts have jurisdiction over a civil case arising out of a contract in which a tribal corporation waived its sovereign immunity

    by Paul R. Cressman Jr.

    In Outsource Services Management, LLC v. Nooksack Business Corporation, 181 Wn.2d 272, 333 P.3d 380 (August 21, 2014), Washington’s supreme court ruled that its state courts have jurisdiction over a civil case arising out of a contract in which a tribal corporation waived its sovereign immunity and consented to jurisdiction in the state’s courts.

    Nooksack Business Corporation (Nooksack), a tribal enterprise of the Nooksack Indian  tribe, signed a contract with Outsource Services Management LLC to finance the renovation and expansion of its casino. The contract contained the following clause related to sovereign immunity and jurisdiction:

    Limited Waiver of Sovereign Immunity; Waiver of Rights in Tribal Court. Subject to the limitations on recourse in Section 8.30, the Borrower hereby expressly grants to the Lender and all Persons entitled to benefit from any Loan Document an irrevocable limited waiver of its sovereign immunity from suit or legal process with respect to any Claim. In furtherance of this waiver, the Borrower hereby consents with respect to any Claim: (A) to arbitrate in accordance with the provisions of Section 8.27, and (B) to be sued in (i) the United States District Court for the Western District of Washington (and all federal courts to which decisions of the United States District Court for Western District of Washington may be appealed), (ii) any court of general jurisdiction in the State (including all courts of the State to which decisions of such courts may be appealed), and (iii) only if none of the foregoing courts shall have jurisdiction, or only to permit the compelling of arbitration in accordance with Section 8.27, or the enforcement of any judgment, decree or award of any foregoing court or any arbitration permitted by decree or award of any foregoing court or any arbitration permitted by Section 8.27, all tribal courts and dispute resolution processes of the  tribe. The Borrower hereby expressly and irrevocably waives any application of the exhaustion of tribal remedies or abstention doctrine and any other law, rule, regulation or interpretation that might otherwise require, as a matter of law or comity, that resolution of a Claim be heard first in a tribal court or any other dispute resolution process of the  tribe.

    (Emphasis in original.)

    Nooksack failed to make a payment due on the loan. Outsource and Nooksack executed three successive forbearance agreements, but after Nooksack failed to make required payments, Outsource sued Nooksack in Whatcom County Superior Court. Nooksack acknowledged that it waived sovereign immunity, but argued that the court did not have subject matter jurisdiction because it involved a contractual dispute with a tribal enterprise that occurred on tribal land.

    The trial court denied Nooksack’s motion to dismiss, ruling that it had subject matter jurisdiction, because Nooksack both waived sovereign immunity and consented to the jurisdiction of the Washington state courts. Nooksack appealed, and the court of appeals affirmed and issued a broader holding than the trial court, concluding that the waiver of sovereign immunity alone was sufficient to give the superior court subject matter jurisdiction in the case.

    On appeal, the state’s supreme court affirmed, holding that Washington state courts had jurisdiction where the trial corporation both waived its sovereign immunity and consented to jurisdiction in Washington state courts. The court specifically did not adopt the court of appeals’ reasoning that Nooksack’s waiver of sovereign immunity was enough, in and of itself, to confer subject matter jurisdiction on Washington state courts. This issue was not presented in the case, and the supreme court took no position on it.

    In rendering its opinion, the supreme court noted that Washington courts generally have jurisdiction over civil disputes in Indian country if either the state has assumed jurisdiction pursuant to federal Public Law 280, or asserting jurisdiction would not infringe on the rights of the tribe to make its own laws and to be ruled by them.

    The subject dispute did not fall within the scope of civil jurisdiction that Washington assumed pursuant to Public Law 280. The question was whether asserting jurisdiction would infringe on the rights of the  tribe. The court found that asserting jurisdiction would not infringe on the  tribe’s right to self-rule when its own tribal enterprise decided to consent to jurisdiction of Washington state courts for claims related to the contract.

    The court in fact stated that ignoring the  tribe’s decision to waive sovereign immunity and consent to state court jurisdiction would infringe on the  tribe’s right to make those decisions for itself.

    The court further noted that if it adopted Nooksack’s position, it would impose a significant limitation on the rights of other tribes and tribal enterprises in Washington who may want to be able to assure parties with whom they contract that the parties can seek a remedy in Washington state courts. Adopting Nooksack’s position would prohibit them from doing so.

    Where state court jurisdiction is limited solely to protect tribal sovereignty and a tribe’s right to self-rule, the limit does not apply when a tribal enterprise chooses to consent to such jurisdiction.

    Keywords:  tribe, waiver of sovereign immunity, consent to jurisdiction

    Paul R. Cressman Jr. is with Ahlers & Cressman PLLC, Seattle.

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