TRIBAL COURT LITIGATION

Transcription

1 CHAPTER 23 TRIBAL COURT LITIGATION Heidi McNeil Staudenmaier 1 Snell & Wilmer One Arizona Center 400 E. Van Buren Phoenix, AZ (602) hstaudenmaier@swlaw.com Gabriel S. Galanda 2 Williams Kastner & Gibbs PLLC Two Union Square 601 Union Street Suite 4100 Seattle WA (206) ggalanda@wkg.com 1 Heidi McNeil Staudenmaier is a Senior Partner with the law firm of Snell & Wilmer LLP in Phoenix, Arizona, where her practice emphasizes gaming, Indian law and business litigation. She is the Past President of the International Masters of Gaming Law and is Associate Editor of Gaming Law Review. She is a member of the Business Law Section's Executive Council and Chair of the Strategic Planning Committee. She also is Immediate Past Editor-in-Chief of Business Law Today, and a former Section Fellow. She chairs the Tribal Court Litigation Subcommittee and also the Publications Subcommittee. Ms. Staudenmaier wishes to acknowledge the excellent assistance on this chapter received from the following individuals who served as 2005 summer associates at Snell & Wilmer and are 2006 J.D. candidates: Andrew Harnisch (University of Southern California), Cory Braddock (Brigham Young University), Sean O Hara (University of Kansas), and Jeff Scudder (University of Iowa). 2 Gabriel S. Galanda is an attorney in Seattle with Williams, Kastner & Gibbs, PLLC. His practice focuses on the litigation of complex, multi-party commercial and Indian law matters, and consultation with tribes and non-tribal parties doing business in Indian Country. Mr. Galanda is a descendant of the Nomlaki and Concow Tribes, and an enrolled member of the Round Valley Indian Confederation in Northern California. He is a Business Law Section Ambassador, Vice Chair of the Tribal Court Litigation Subcommittee, and the Gaming Law Committee s Membership Subcommittee Chair.

2 CHAPTER 23 Contents 23.1 Introduction to Doing Business in Indian Country The Third Sovereign Tribal Corporations Tribal Courts Tribal Lands Tribal Labor & Employment Federal Laws of General Applicability Tribal Sovereign Immunity Waiver Diversity of Citizenship for Federal Courts Tribal Court Jurisdiction Tribal Exhaustion Doctrine Conclusion...18

3 3 Section 23.# CHAPTER 23 Tribal Court Litigation 23.1 Introduction to Doing Business in Indian Country. Indian tribes are not merely casino entrepreneurs or cigarette wholesalers. In conjunction with America's largest corporations, Indians are now engaged in real estate development, banking and finance, telecommunications, wholesale and retail trade, and tourism. By 2006, U.S. tribes have become an economic, legal and political force to be reckoned with. Consider these facts: Most of Fortune 500's top 20 companies now do business in Indian Country, including Wal-Mart, Exxon, G.M. and Ford (#1-4), Verizon, AT&T, Home Depot, Target and Bank of America. Tribal businesses, although generally not subject to state and federal taxation, have annually generated over $246 million in tax revenue for states and counties, and $4.1 billion for the Federal Government. As of 2004, tribal gaming was a $19 billion industry. Indian tribes occupy more than 55 million acres of land in 30 states. Both the cause and effect of the dramatic rise in Indian economic development is the increased interaction of tribes and non-tribal parties who seek business, employment, or recreation on Indian reservations. Consequently, Indian tribes and non-indians are executing billions of dollars in commercial transactions and frequently litigating those deals. Indian Country is beginning to look a lot like Corporate America. The body of tribal, state and federal law known as Indian law is the foundation for every transaction in Indian Country. Indian law now intersects virtually every arena of commercial practice tax, finance, merger and acquisition, antitrust, debt collection, real estate, environmental, land use, employment, and of course litigation. Because Indian law has become so prevalent in corporate lawyering, virtually every business lawyer or litigator needs to have some working knowledge of Indian law. Any lawyer representing a non-tribal party doing business or litigating in Indian Country must understand basic Indian law before brokering the deal or stepping foot in court. This Chapter seeks to provide that basic understanding.

4 4 Section 23.# 23.2 The Third Sovereign. Much like the Federal and state governments, tribal governments are elaborate entities, consisting of executive, legislative, and judicial branches. The office of the Tribal Chairperson, Governor, Chief or President (like that of the President or a governor) and the Tribal Council or Senate (a legislature) usually govern the Tribe under a tribal constitution and/or code of laws, and tribal courts adjudicate most matters arising under tribal law. Indian tribes are distinct, independent political communities, retaining their original natural rights in matters of local self-government, and thus state laws generally have no force in Indian Country. 3 While no longer possessed of the full attributes of sovereignty, tribes remain a separate people, with the power of regulating their internal and social relations. 4 Although Indians still essentially possess the right... to make their own laws and be ruled by them, 5 tribal sovereignty has been progressively eroded and thus state authority strengthened by a line of late-20 th century U.S. Supreme Court cases. At its core, Indian law embodies a state-tribal tug of war for police power, predominately concerning non-indian activities in Indian Country. The backdrop for the regulatory battle between state and tribal sovereigns is the U.S. Congress plenary and exclusive authority over Indian affairs, including relations between states and private parties and tribes. 6 Thus, when dealing or litigating in Indian Country, counsel need not only determine whether and to what extent state law governs the deal, but whether federal law preempts any applicable state law. Preemption doctrine asks whether a state s attempted regulation has been preempted by federal statutes or treaties. Although historically, the Supreme Court asked whether any assertion of state power would impinge upon the right of tribes to make their 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. 7 Since Congress does not often explicitly preempt state law, the Supreme Court typically engages in an interest balancing test to determine whether state law is preempted with regard to tribal relations. In essence, a state s interest in policing conduct that arises within its borders is weighed against combined federal and tribal interests in regulating affairs arising out of the reservation (which sits within those state boundaries). In New Mexico v. Mescalero Apache Tribe, the Court explained, state jurisdiction is pre-empted 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. 8 Thus, in Mescalero, for example, the Court held that New Mexico could not impose its own fishing and hunting regulations 3 Worcester v. Georgia, 31 U.S. 515, 559 (1832). 4 U.S. v. Kagama, 118 U.S. 375, (1886). 5 Williams v. Lee, 358 U.S. 217, 220 (1959). 6 See Oneida County, New York v Oneida American Indian Nation of New York, 470 U.S. 226, 234 & n 4 (1985); United States v Forty-Three Gallons of Whiskey, 93 US 188, 194 (1876). 7 See McClanahan v. Ariz. St. Tax Comm n, 411 U.S. 164 (1973) U.S. 324, 334 (1983).

5 Tribal Courts Litigation 5 on non-indians on the reservation because of strong federal interests in tribal selfsufficiency and economic development and a lack of state interests. 9 Although many preemption cases have resulted in decisions affirming Indian sovereignty, 10 an October 2005 High Court opinion, Wagnon v. Prairie Band Potawatomi Nation, appears to curtail the application of the interest-balancing test. 11 In Wagnon, the Prairie Band Potawatomi Nation sued the State of Kansas, to avoid a state fuel tax applied to gasoline distributors on preemption grounds. The Nation built a casino on its reservation, which increased the traffic on the reservation s roads. To accommodate this increase in traffic, the Nation built a gas station next to the casino. The Nation imposed its own tax on the gas revenues to fund maintenance of the reservation s roads because Kansas provides no financial assistance for these roadways. Kansas, however, argued that it s state fuel tax should apply to revenues from the gas station. The district court granted the State s motion for summary judgment. The Tenth Circuit Court of Appeals reversed, applying the interest-balancing test to rule that tribal and federal interests in promoting tribal economic development, tribal self-sufficiency, and strong tribal governments outweighed Kansas s interest in raising revenues by collecting taxes. The Supreme Court reversed the Tenth Circuit, holding that the motor fuel tax on non-tribal fuel distributors arose off the reservation, between non-indians and thus is valid and not an affront to tribal sovereignty. The Court further ruled that the interest-balancing test does not apply to a state tax that results from an off-reservation transaction imposed on non-tribal fuel distributors. Only time will tell how profoundly Wagnon will affect the federal Indian preemption doctrine. Distinct issues of state-tribal adjudicatory authority i.e., whether and to what extent tribes retain power to adjudicate reservation-based matters against non-indians, to the exclusion of state authority are fully discussed below in Section Tribal Corporations Frequently, an Indian tribe is organized pursuant to the Indian Reorganization Act of 1934 (IRA). 12 Under Section 16 of the IRA, a tribe will have adopted a constitution and bylaws that set forth the tribe's governmental framework and the authority that each facet of its government possesses. 13 A tribe may also incorporate under Section 17 to the IRA 14 by which the Secretary of Interior issues the tribe a federal charter. Through Section 17 incorporation, the tribe creates a separate legal entity to divide its governmental and business activities. The Section 17 corporation has articles of incorporation and 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. However, the IRA places certain limitations on incorporated tribes. Some transactions, e.g., the sale or lease 9 Id. at See, e.g., Okla. Tax Comm n v. Chickasaw Nation, 515 U.S. 450 (1995) (state preempted from taxing gasoline sold by tribe on the reservation); White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980) (state preempted from taxing and regulating logging on reservation). 11 Slip Op No (2005) U.S.C. 461 et seq U.S.C U.S.C. 477.

6 6 Section 23.# of tribal land or assignment of tribal income require the approval of the Secretary of the U.S. Department of Interior. Accordingly, counsel need determine whether and to what extent Secretarial authorization is necessary to validate the transaction, as further discussed below. Alternatively, an Indian corporation may have been organized under tribal or state law. If the entity was formed under tribal law, the tribe will have done so pursuant to its corporate code. Under federal common law, the corporation likely enjoys immunity from suit, as discussed below. It is less clear whether the sovereign immunity afforded a tribal corporation waived through state incorporation such that the entity may be sued in state court. 15 When negotiating a tribal business transaction, counsel should consult the tribal governmental and corporate information e.g., treaty or constitution, federal and/or corporate charters, tribal corporate code which taken together identify the entity with which you are dealing, the authority of the tribal contractor, and any applicable legal rights and remedies Tribal Courts Many tribes have created their own court system and promulgated extensive court rules and procedures. Despite federal restrictions on tribal adjudicatory power, courts like those of the Mashantucket Pequot Tribe in Connecticut and the Navajo Nation in the Southwest operate as courts of general jurisdiction, meaning they handle virtually any types of civil or criminal matter that arise in or out of Indian Country. While tribal courts are similar in structure to other courts in the U.S., the 150 Indian courts currently functioning throughout the country are unique in many significant ways. It cannot be overemphasized that every tribal court is different and distinct from the next. For example, the qualifications of tribal court judges vary widely depending on the court. Some tribal court judges are required to have law degrees, while others need not. Some tribes require that a judge be a member of the tribe, while others do not. As such, whether addressing a tribal court orally or in writing, counsel must tailor his or her message accordingly. Most tribal law and order codes contain procedural rules specific to the tribal court, as well as tribal statutes and regulations. Tribal procedural laws outline the tribal court s adjudicatory authority and may set forth limitations on tribal jurisdiction. Tribal laws also include traditional practices, including commercial customs, which are based on oral history but may not be codified. Increasingly, tribes are adopting commercial laws modeled after the Uniform Commercial Code. Tribal court judges usually adhere to precedent created by their own court. In some instances, tribal judges place great weight on the decisions from other tribal courts. Unfortunately, conducting research on prior tribal court decisions may be difficult. There is no official tribal court reporter that compiles all published decisions from the various Indian courts. While groups like the Tribal Court Clearinghouse and the National Tribal Justice Resource Center now publish decisions from participating tribal courts on their 15 See Bldg. Inspector & Zoning Officer of Aquinnah v. Wampanoag Aquinnah Shellfish Hatchery, 818 N.E.2d 1040, (Mass. 2004); Airvator v. Turtle Mountain Mfg. Co., 329 N.W.2d 596, 602 (N.D. 1983).

7 Tribal Courts Litigation 7 web sites, 16 many tribal courts have yet to maintain their opinions in any searchable format. In the absence of tribal statutory or common law on any given point, federal and state court opinions can often serve as persuasive authority to a tribal court, particularly in commercial litigation matters. Many state courts extend full faith and credit to tribal court orders. Similarly, federal courts generally grant comity to tribal judges rulings. 17 As detailed below in Section , contracting parties choices of venue and law are likely limited to state or tribal court and law. If the parties agree to the tribal court for dispute resolution and tribal laws as the governing law, counsel must assist the client with sufficient due diligence regarding tribal procedural and substantive laws. In addition to reviewing tribal government and corporate documentation, counsel must obtain and review applicable tribal council resolutions and ordinances, as well as pertinent tribal laws, codes, and regulations. Where parties are unable to agree on state or tribal court as the forum for resolving disputes, they may compromise by agreeing to arbitration. Still, the contract must contemplate where any arbitration award would be enforced. It has been held that an arbitration agreement that does not draw a distinction between tribal and state court systems allows the tribal court to assert jurisdiction over enforcement of arbitration awards Tribal Lands The Secretary of Interior must approve any contract or agreement that encumbers Indian lands for a period of seven or more years, unless she determines that approval is not required. 19 Federal regulations issued by the Secretary explain that encumber means to attach a claim, 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. 20 Under revisions to Section 81 enacted in 2000, the Secretary will not approve any such 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; or (3) include an express waiver of tribal immunity. 21 Leaseholds for Indian lands, which typically run 25 years in duration, also require Secretarial approval. 22 If the transaction implicates tribal lands, counsel should analyze whether the Secretary must approve the underlying contract or lease. Failure to secure Secretarial approval could render the agreement null and void. If the contract pertains to a tribal casino, the parties need also consider whether the contract needs to be submitted to the National Indian Gaming Commission ( NIGC ) for 16 See See, e.g., Venetie I.R.A. Council v. Alaska, 944 F.2d 548, 555 (9 th Cir. 1991). 18 Val/Del, Inc. v. Superior Ct. of Pima County, 145 Ariz. 558, 565 (1985) U.S.C. 81. For a list of contracts that are exempt from Secretarial approval, see 25 CFR CFR U.S.C U.S.C. 415.

8 8 Section 23.# approval pursuant to the Indian Gaming Regulatory Act. Any management agreement for a tribal casino requires NIGC approval to be deemed valid and enforceable. 23 Frequently, parties will submit their agreements to the NIGC seeking a determination that the agreement does not constitute a management agreement and, therefore, the NIGC declines to exert any approval jurisdiction. Such a declination letter is important to obtain to help ensure that the contract will be upheld if challenged in court Tribal Labor & Employment When Indian tribes act as commercial entities and hire employees, they are not subject to the same labor and employment laws with which non-tribal employers must comply. State labor laws and workers compensation statutes are inapplicable to tribal businesses, 24 and tribal employers may not be subject to certain federal labor and employment laws. Tribal employers are ordinarily exempt from anti-discrimination laws. Both Title VII of the Civil Rights Act of and the Americans with Disabilities Act 26 expressly exclude Indian tribes from their scope, 27 and state anti-discrimination laws usually do not apply to tribal employers. 28 In addition, tribal officials are immune from suit arising from alleged discriminatory behavior, so long as they act within the scope of the tribe s authority. 29 Despite Title VII s exemption of tribal employers, the Ninth Circuit has held that a tribe may be joined as a necessary party when the Equal Employment Opportunity Commission asserts a Title VII action against a non-tribal employer who, by virtue of a contract with the tribe, is obligated to adopt discriminatory hiring practices. 30 Though a U.S.C. 2711; First American Kickapoo Operations, LLC v. Multimedia Games, Inc., 2005 U.S. App. LEXIS (10th Cir. 2005) 24 See, e.g., Middletown Rancheria of Pomo Indians v. Workers Comp. Appeals Bd., 71 Cal. Rptr. 2d 105, (Cal. Ct. App. 1998) (holding that workers compensation board has no jurisdiction over tribe); Tibbets v. Leech Lake Reservation Bus. Comm n, 397 N.W.2d 883, 890 (Minn. 1986) (holding Minnesota workers compensation law inapplicable to tribal employer); see generally New Mexico v. Mescalero Apache Tribe, 462 U.S. 324, (1983) (discussing applicability of state laws to tribes) U.S.C. 2000e 2000e-17 (2000). 26 Id Id. 2000e(b)(1), 12111(5).. 28 See, e.g., ARIZ. REV. STAT (2005) (exempting tribes from Arizona s discrimination laws). Even if a state s anti-discrimination laws do not provide an express exemption, the doctrine of sovereign immunity will ordinarily operate to achieve the same effect. See Sanchez v. Santa Ana Golf Club, Inc., 104 P.3d 548, 554 (N.M. Ct. App. 2004) (affirming dismissal of employee s state law discrimination claim based on tribal employer s sovereign immunity); see also Aroostook Band of Micmacs v. Ryan, 404 F.3d 48, (1st Cir. 2005) (discussing probable inapplicability of state antidiscrimination laws to tribal employer). 29 See Hardin v. White Mountain Apache Tribe, 779 F.2d 476, 479 (9th Cir. 1985) (extending tribe s sovereign immunity to tribal officials acting in a representative capacity). 30 EEOC v. Peabody W. Coal Co., 400 F.3d 774, 778 (9th Cir. 2005); see also Dawavendewa v. Salt River Project Agric. Imp. & Power Dist., 276 F.3d 1150 (9th Cir. 2002) (holding tribe to be necessary party in Title VII suit against tribe s lessee, when lease required employer to adopt discriminatory hiring practices); Dawavendewa v. Salt River Project Agric. Imp. & Power Dist., 154 F.3d 1117, 1124 (9th Cir. 1998) (interpreting Indian preference exception of Title VII to only permit discrimination in favor of Indians living on or near a reservation, but not to permit discrimination against Indians belonging to other tribes).

9 Tribal Courts Litigation 9 tribe may be made a party to such an action, the EEOC cannot seek affirmative relief against the tribe under Title VII. 31 The circuits are 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), 32 the Employee Retirement Income Security Act (ERISA), 33 the Fair Labor Standards Act (FLSA), 34 the National Labor Relations Act (NLRA), 35 and the Age Discrimination in Employment Act (ADEA), 36 because doing so would encroach upon well-established principles of tribal sovereignty and tribal self-governance. 37 Conversely, the Second, Seventh and Ninth Circuits have applied OSHA and ERISA to tribes, and the Seventh Circuit leans toward application of FLSA to tribes, reasoning that such statutes of general applicability govern tribal employment activity because Indian tribes are not explicitly exempted from the laws. 38 Following this reasoning, the Department of Labor has stated that the Family and Medical Leave Act (FMLA) 39 applies to tribal employers. 40 Aggrieved employees may experience difficulty enforcing federal employment rights, however, due to the doctrine of sovereign immunity (fully discussed immediately below). Because Congress did not explicitly authorize suits against tribes in the language of the FMLA or the ADEA, the Second Circuit has held that tribal employers cannot be sued for money damages in federal court by employees under these statutes. 41 In 2004, the National Labor Relations Board reversed almost 30 years of its own precedent by holding that it has jurisdiction over tribal employers, and that NLRB processes are available to labor unions seeking to organize employees of tribal 31 Peabody, 400 F.3d at U.S.C (2000). 33 Id Id Id Id NLRB v. Pueblo of San Juan, 276 F.3d 1186, 1200 (10th Cir. 2002) (holding NLRA inapplicable to tribes); EEOC v. Fond du Lac Heavy Equip. & Const. Co., 986 F.2d 246, 248 (8th Cir. 1993) (refusing to apply ADEA to Indian employed by tribe); Donovan v. Navajo Forest Prods. Indus., 692 F.2d 709, 712 (10th Cir. 1982) (holding OSHA inapplicable to tribe in part because enforcement would dilute the principles of tribal sovereignty and self-government recognized in the treaty ). 38 See Reich v. Great Lakes Indian Fish and Wildlife Comm n, 4 F.3d 490 (7th Cir. 1993) (holding tribe s law enforcement officers exempt from FLSA, but noting that not all employees of tribes would be so exempt); Labor Indus. Pension Fund v. Warm Springs Forest Prods. Indus., 939 F.2d 683 (9th Cir. 1991) (applying ERISA); U.S. Dept. of Labor v. OSHA Rev. Comm n, 935 F.2d 182 (9th Cir. 1991) (applying OSHA); Smart v. State Farm Ins., 868 F.2d 929, 935 (7th Cir. 1989) (stating the argument that ERISA will interfere with the tribe's right of self-government is overbroad, and applying ERISA); Donovan v. Coeur d Alene Tribal Farm, 751 F.2d 1113 (9th Cir. 1985) (right of self-government is too broad to defeat applicability of OSHA); see also Reich v. Mashantucket Sand & Gravel, 95 F.3d 174 (2d Cir. 1996) (following Ninth and Seventh Circuits to apply OSHA) U.S.C (2000). 40 The Family and Medical Leave Act of 1993, 60 Fed. Reg (Jan. 6, 1995). 41 Chayoon v. Chao, 355 F.3d 141, (2d Cir. 2004); Garcia v. Akwesasne Hous. Auth., 268 F.3d 76, (2d Cir. 2001).

10 10 Section 23.# employers. 42 Applying the Ninth Circuit s approach, the NLRB now applies the provisions of the NLRA unless application of the law would touch[] exclusive rights of self-government in purely intramural matters, application of the law would abrogate treaty rights, or there is proof in the statutory language or legislative history that Congress did not intend the law to apply to Indian tribes. 43 Counsel need understand whether and to what extent the federal tribal labor and employment regime will affect the deal Federal Laws of General Applicability Questions about whether federal statutes of general applicability that do not affirmatively contemplate Indian tribes, govern tribal or reservation-based activities, extend beyond the labor and employment arena. Do federal franchise laws apply in Indian Country? How 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, 44 a non-indian contractor or employer is likely subject to such federal laws of general applicability when doing business in Indian Country. 45 Notwithstanding, any state counterpart to, e.g., federal franchise or copyright laws, would not likely apply to either party to a reservation-based deal. 46 Accordingly, counsel must carefully consider whether and to what extent pertinent federal statutes govern, or could be held to govern, the transaction Tribal Sovereign Immunity. Like other sovereign governmental entities, tribes enjoy federal common law sovereign immunity. 47 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. 48 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 42 Yukon Kuskokwim Health Corp., 341 NLRB No. 139 (2004); San Manuel Indian Bingo & Casino, 341 NLRB No. 138 (2004). 43 San Manuel Indian Bingo & Casino, 341 NLRB No. 138, at 5 (quoting Coeur d Alene, 751 F.2d at 1115). 44 Cf. Multimedia Games, Inc. v. WLGC Acquisition Corp., 214 F. Supp.2d 1131 (Dist. Ok. 2001) (federal Copyright Act of 1976 held inapplicable to tribes). 45 The U.S. Supreme Court s decision in Federal Power Commission v. Tuscarora Indian Nation, 362 U.S. 99, 116 (1960), which stated in dicta that a general statute in terms applying to all persons includes Indians and their property interests, has since been abrogated by numerous federal courts. See Multimedia, 214 F. Supp.2d at However, that principle the Tuscarora rule can still be read to suggest that federal general statutes apply to non-indians doing business with tribes. 46 See generally Felix S. Cohen, Cohen s Handbook of Federal Indian Law (1982 ed.), at 259 (state civil laws are generally not applicable to Indian affairs within the territory of an Indian tribe, absent the consent of Congress ). 47 See Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978). 48 Kiowa Tribe of Okla. v. Mfg. Technologies, 523 U.S. 751 (1998).

11 Tribal Courts Litigation 11 reservation. 49 Federal courts decline to distinguish between governmental and commercial activities. 50 Various courts have held that tribal immunity generally extends to tribal casinos 51 and businesses, 52 and as discussed above, to Section 17 and triballychartered corporations. 53 Tribal immunity also protects tribal officials and employees when acting in their official capacity and within the scope of their employment. 54 Tribal immunity generally shields tribes from suit for damages and requests for injunctive relief, 55 whether in tribal, state or federal court. 56 Tribes are also immune from subpoena enforcement to compel production of tribal witnesses or documents. 57 The doctrine of sovereign immunity usually extends to suits arising from a tribe s off-reservation commercial activities, including activities of a tribal entity such as a casino. 58 The case of Kiowa Tribe v. Manufacturing Technologies, Inc., 59 is instructive regarding the application of sovereign immunity for off-reservation tribal conduct. In Kiowa, the tribe s industrial development commission agreed to purchase certain stock from a non-tribal corporation whereby the chairman of the tribe s business committee signed a promissory note in the name of the tribe. The tribe defaulted and the corporation brought an action on the note in the Oklahoma state courts. The corporation claimed the note had been executed in Oklahoma City, off the tribe s reservation. The tribe maintained the note had been signed within the boundaries of its reservation. 60 The tribe moved to dismiss the claim based, for lack of jurisdiction under the doctrine of sovereign immunity. An Oklahoma state court denied the motion and entered judgment in favor of the corporation. The Oklahoma Court of Appeals affirmed, holding that tribes are subject to suit in state court for contractual breaches arising from offreservation commercial conduct. The Supreme Court of Oklahoma declined to review the 49 Id. at Basset v. Mashantucket Pequot Tribe, 204 F.3d 343, 357 (2nd Cir. 2000). 51 Gayle v. Little Six, 555 N.W.2d 284 (Minn. 1996); Doe v. Oneida Indian Nation of N.Y., 278 A.D.2d 564 (N.Y. App. Div. 2000). 52 Puyallup Tribe, Inc. v Dep t of Game of Wash., 433 U.S. 165 (1977) (recognizing tribal immunity for governmental fishing activities); Sanchez v. Santa Ana Golf Club, Inc., 104 P.3d 548 (N. M. Ct. App. 2004) (applying immunity to tribally owned golf course); DeFeo v. Ski Apache Resort, 904 P.2d 1065 (N. M. Ct. App. 1995) (extending tribal immunity to ski resort owned by tribe). 53 Corporations organized under Section 17 of the Indian Reorganization Act retain tribal immunity. Alternatively, some tribes have purposefully waived their sovereign immunity by incorporating business entities under state law. For a general discussion, see Dao Lee Bernardi-Boyle, State Corporations for Indian Reservations, 26 Am. Indian L. Rev. 41 (2001). 54 U.S. v. Oregon, 657 F.2d at 1013, n.8. Yet, courts have applied the Ex Parte Young doctrine to tribal officials, creating an exception to the general rule of immunity when an official acts outside of the government's authority. See generally Ex Parte Young, 209 U.S. 123 (1908). 55 Santa Clara Pueblo, 436 U.S. at Id.; U.S. v. Oregon, 657 F.2d at 1013 (9th Cir. 1981); Bellue v. Puyallup Tribe of Indians, No (Puyallup 1994); Colville Tribal Enterprise v. Orr, 5 CCAR 1 (Colville Confederated 1998). 57 See United States v. James, 980 F.2d 1314 (9th Cir. 1992); Bishop Paiute Tribe v. County of Inyo, 275 F.3d 893 (9th Cir. 2002); Catskill Dev., LLC v. Park Place Entm't Corp., 206 F.R.D. 78 (S.D.N.Y. 2002) 58 Village of Hotvela Traditional Elders v. Indian Health Srvs., 1 F. Supp.2d 1022, 1027 (D. Ariz. 1997) citing Santa Clara Pueblo, 436 U.S. at 58; Kiowa, 523 U.S. at ; World Touch Gaming, 117 F. Supp.2d at ; Doe v. Oneida Indian Nation, 717 N.Y.S.2d 417, 418 (App. Div. 2000) ( Tribes are immune from suits arising from their commercial activities, whether conducted on or off the reservation ), leave to appeal denied, 96 N.Y.S.2d 716 (2001) U.S. 751, (1998). 60 Id. at 754.

12 12 Section 23.# judgment. The U.S. Supreme Court reversed the state court and held that tribes enjoy immunity from suits on contracts, regardless of: (1) whether those contracts involve governmental or commercial activities; and (2) whether the contracts were consummated on or off a reservation. 61 As such, even if a deal with a tribal sovereign arises off the reservation, sovereign immunity could shield the tribe from liability absent a clear and unequivocal waiver of that immunity our next topic Waiver Tribes are immune from suit unless Congress has authorized the suit or the tribe has waived its immunity. 62 Any waiver of tribal sovereign immunity cannot be implied but must be unequivocally expressed. 63 In fact, tribes enjoy the benefit of a strong presumption against a waiver of sovereign immunity. 64 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 arbitrating clause in a standard form contract constitutes clear manifestation of intent to waive sovereign immunity. 65 There, 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 high Court believed the ADR language manifested the tribe s intent to waive immunity. C&L Enterprises case and other recent federal court decisions represent a trend towards eroding long-standing sovereign immunity principles, 66 but for the time being the doctrine remains alive and well. Thus, it is important to seek an appropriately tailored waiver of sovereign immunity in any contracts to allow the parties redress in the event of a breach. Absent an adequate waiver of sovereign immunity, the contract may not be enforceable against the tribal contracting party in any manner or in any court. 67 In this modern age of Indian commerce, many (perhaps most) tribes are amenable to clear limited waivers of immunity in agreements with non-indian parties. To further encourage commercial dealing, some tribes have created state-chartered corporations or subordinate entities, with the express understanding that the assets of such institutions are not immune from suit, levy, or execution. Other tribes have specifically waived immunity for tribal businesses incorporated under the IRA. Still, many tribes and tribal enterprises will not agree to a complete waiver of immunity by which tribal assets and other rights could be impacted. Instead, a limited waiver of sovereign immunity can usually be negotiated whereby the tribe or tribal enterprise permits recourse to only certain assets or other narrow circumstances permitting 61 Id. at Kiowa, 523 U.S. at Santa Clara Pueblo, 436 U.S. at 58 (internal quotation marks and citations omitted). 64 Demontiney v. United States ex rel. Bureau of Indian Affairs, 255 F.3d 801, 811 (9th Cir. 2001); Santa Ana Golf Club, Inc., 104 P.3d at 551 (ambiguity within an immunity waiver should be interpreted in favor of the tribe) U.S. 411 (2001). 66 Kiowa, 523 U.S. at 760 (while upholding tribal sovereign immunity, the U.S. Supreme Court questioned the wisdom of perpetuating the doctrine and urged Congress to take action to abrogate the concept). 67 Three Affiliated Tribes v. Wold Eng g, 476 U.S. 877, (1986).

13 Tribal Courts Litigation 13 remedies. For example, a tribal casino will usually limit its waiver solely to the casino revenue stream and not permit recourse to general tribal assets or businesses. Attorneys working with waivers of sovereign immunity need also pay close attention to issues of tribal organization to determine precisely which tribal agents have actual authority to properly waive tribal sovereign immunity or otherwise bind the tribal entity by contract. For example, waivers of immunity must come from the tribe s governing body and not from unapproved acts of tribal officials Diversity of Citizenship for Federal Courts Federal courts jurisdiction is limited to cases which involve a federal question 69 or claims that are brought involving diversity of citizenship. 70 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. 71 Moreover, several courts have 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. 72 As the potential judicial forums for commercial litigation arising out of Indian Country are likely restricted to state or tribal court, it may not make any sense to include federal court as the choice of venue. 68 Calvello v. Yankton Sioux Tribe, 584 N.W.2d 108 (S.D. 1998) (Chairman of tribal business committee did not have authority to waive immunity); see also Chance v. Coquille Indian Tribe, 327 Or. 318, 321 (1998) (tribal corporation president did not have authority to bind the corporation to a contract waiving tribal immunity); Sandlerin v. Seminole Tribe of Florida, 243 F.3d 1282 (11th Cir. 2001) (tribal chief did not have authority to waive the tribe s immunity through contract where the tribal code provided procedure for affecting a waiver) U.S.C ( Federal Question: The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. ) U.S.C ( Diversity of Citizenship; The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between (1) citizens of different states ). 71 See Peabody Coal Co. v. Navajo Nation, 373 F.3d 945 (9th Cir. 2004) (dismissed complaint against the Navajo Nation seeking enforcement of an arbitration agreement for lack of federal question jurisdiction). 72 See Akins v. Penobscot Nation, 130 F.3d 482 (1st Cir. 1997); Romanella v. Hayward, 114 F.3d 15 (2nd Cir. 1997); Oneida Indian Nation v. County of Oneida, 464 F.2d 916 (2nd Cir. 1972), rev d and remanded on other grounds, 414 U.S. 661 (1974); Standing Rock Sioux Indian Tribe v. Dorgan, 505 F.2d 1135 (8th Cir. 1974); Am. Vantage Cos. v. Table Mt. Rancheria, 292 F.3d 1091 (9th Cir. 2002); Gaines v. Ski Apache, 8 F.3d 726 (10th Cir. 1993); Tenney v. Iowa Tribe of Kan., 243 F. Supp. 2d 1196 (D. Kan. 2003); Victor v. Grand Casino-Coushatta, 2003 U.S. Dist. LEXIS (D. La. 2003); Worrall v. Mashantucket Pequot Gaming Enter., 131 F. Supp. 2d 328 (D. Conn. 2001); Barker-Hatch v. Viejas Group Baron Long Capitan Grande Band of Digueno Mission Indians of the Viejas Group Reservation, 83 F. Supp. 2d 1155 (D. Cal. 2000); Abdo v. Fort Randall Casino, 957 F. Supp (D.S.D. 1997); Calvello v. Yankton Sioux Tribe, 899 F. Supp. 431 (D.S.D. 1995); Weeder v Omaha Tribe of Neb., 864 F. Supp. 889 (N.D. Iowa 1994); Whiteco Metrocom Div. v. Yankton Sioux Tribe, 902 F. Supp. 199 (D.S.D. 1995); GNS, Inc. v. Winnebago Tribe, 866 F. Supp (D. Iowa 1994).

14 14 Section 23.# 23.5 Tribal Court Jurisdiction. Tribal court jurisdiction depends largely upon: (1) whether the defendant is Indian or non- Indian; 73 and (2) whether the events at issue occurred in Indian Country, 74 particularly tribal lands or non-indian lands within the boundaries of a tribal community. 75 These two highly complex issues should be the first area of inquiry for any jurisdictional question involving a business dispute arising on a reservation. A third threshold determination is whether federal law grants the state civil authority to adjudicate disputes arising out of Indian Country, particularly actions by or against non-indians. 76 Such authority exists in Alaska, California, Minnesota, Nebraska, Oregon, and Wisconsin. Generally speaking, tribal courts have jurisdiction over a civil suit by any party, Indian or non-indian, against an Indian defendant for a claim arising on the reservation. 77 A tribal court can only assert jurisdiction over a claim against a non-indian defendant, however, when such jurisdiction is necessary to protect tribal self-government or to control internal relations. 78 Essentially, an Indian court only has jurisdiction over non- Indian parties who enter consensual relationships with the tribe... through commercial dealing, contracts, leases, or other arrangements. 79 The Supreme Court has made clear that a private contract qualifies as a consensual relationship under the so-called Montana rule, thus affirming that tribal courts have jurisdiction over non-indian parties to tribal contracts. 80 Parties to tribal contracts should be able to avoid tribal court jurisdiction if the agreement relating to the dispute includes an 73 See Montana v. United States, 450 U.S. 544, 566 (1981) ( Indian tribes retain inherent sovereign power to exercise some forms of civil jurisdiction over non-indians on their reservations... (emphasis added). See also infra notes 3-15 and accompanying text. 74 Indian Country includes (1) all land within the limits of any Indian reservation, (2) dependent Indian communities within the borders of the United States, and (3) all Indian allotments, including rights-ofway. 28 U.S.C (2000). Although [that] definition by its terms relates only to... criminal jurisdiction... it also generally applies to questions of civil jurisdiction.... Alaska v. Native Vill. of Venetie Tribal Gov t, 522 U.S. 520, 527 (1998). 75 The ownership status of land... is only one factor to consider in determining whether [tribal courts have jurisdiction over nonmembers]. It may sometimes be a dispositive factor. Nevada v. Hicks, 533 U.S. 353, 360 (2001) (emphasis added). 76 See 28 U.S.C. 1360(a) (granting certain states jurisdiction over civil causes of action arising in Indian Country to the same extent that such State has jurisdiction over other causes of action ). 77 See Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 14 (1987) ( We have repeatedly recognized the Federal Government s longstanding policy of encouraging tribal self-government... This policy reflects the fact that Indian tribes retain attributes of sovereignty over both their members and their territory.... ) (quoting United States v. Mazurie, 419 U.S. 544, 557 (1975)). 78 Montana, 450 U.S. at Id. at Strate, 520 U.S. at 457; see also Atkinson Trading Co. v. Shirley, 532 U.S. 645, 656 (2001) (requiring that the law or regulation over which the tribal court seeks to exercise jurisdiction have a nexus to the consensual relationship itself).

15 Tribal Courts Litigation 15 express waiver and specific dispute resolution provisions permitting adjudication in another forum. 81 While tribal courts retain personal jurisdiction over non-indian parties to tribal contracts and subject matter jurisdiction over disputes concerning the agreement, a series of recent Supreme Court cases casts serious doubt as to whether tribal authority over non- Indian business activity occurring on the reservation remains necessary to protect tribal self-government or to control internal relations. 82 In Nevada v. Hicks, the Supreme Court held that tribes lack adjudicatory jurisdiction to hear federal civil rights claims arising from the activities of state officials on reservation land. 83 The Court went on to observe that it has never held that a tribal court had jurisdiction over a nonmember defendant, and noted that it had previously dodged the question of whether tribes may generally adjudicate claims against non-indians arising from on-reservation transactions. 84 The Court reasoned that the state has jurisdiction over a tribal member on Indian lands when state interests outside the reservation are implicated. 85 In Strate v. A-1 Contractors, the tribal court was found to have no jurisdiction over civil claims against non-members where the accident occurred on a public highway running through Indian reservation land. 86 The Supreme Court held that when an accident occurs on a public highway maintained by the State pursuant to a federally granted rightof-way over Indian reservation land, a civil action against allegedly negligent nonmembers falls within state or federal adjudicatory power. 87 The Court stated that tribal courts may not exercise jurisdiction to govern the conduct of nonmembers driving on the state s highway absent a statute or treaty granting the tribe such authorization or congressional direction enlarging tribal court jurisdiction. 88 Because tribal jurisdiction is extremely fact sensitive, counsel must exercise great care before initiating litigation or answering a complaint so as to not jeopardize your client s claim or defenses Tribal Exhaustion Doctrine Overview The doctrine of exhaustion of tribal remedies is a reflection of an ongoing tension between tribal and federal courts. If a tribal court has jurisdiction over a non-indian party to a civil 81 See Puyallup Tribe v. Dept. of Game, 433 U.S. 165, 172 (1977) (suggesting that a state court could exercise jurisdiction in situations where tribal courts would normally be empowered if the tribe had given an effective waiver of such jurisdiction). 82 Montana, 450 U.S. at Id. at Id. at Id. at U.S. 438 (1997). 87 Id at Id at 452.

16 16 Section 23.# proceeding, the party is usually required to exhaust all options in the tribal court prior to challenging tribal jurisdiction in federal district court. 89 Ultimately, the question of whether a tribal court has jurisdiction over a non-indian party is one of federal law and gives rise to federal question subject matter jurisdiction. 90 When sued in tribal court, non-indian parties can ultimately challenge tribal jurisdiction in federal court. 91 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. 92 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. 93 The doctrine assumes concurrent jurisdiction of sovereigns and that no federal statutes expressly direct exclusive federal jurisdiction, 94 or provide for state court jurisdiction. 95 Advocates for mandatory exhaustion of tribal remedies express the view that a case must first be addressed by tribal courts to serve the underlying federal Indian law policies of sovereignty and self-determination. 96 It is argued that this is the only manner in which tribal courts will develop the experience necessary to bring true selfgovernance to Native American people. 97 If the tribal court concludes it has jurisdiction, it will proceed to rule upon the merits of the case. 98 After exhausting any available appellate options, 99 the non-indian party can then file suit in federal court, whereby the question of tribal jurisdiction is reviewed on a de novo standard. 100 The federal court may look to the tribal court s jurisdictional determination for guidance; however, such determination is not binding nor 89 See Nat l Farmers Union Ins. Cos. v. Crow Tribe, 471 U.S. 845, 857 (1985) ( Until petitioners have exhausted the remedies available to them in the Tribal Court system it would be premature for a federal court to consider any relief. ). 90 Nat l Farmers Union, 471 U.S. at Iowa Mutual Ins. Co. v. LaPlante, 480 U.S. at 19 ( If the Tribal Appeals Court upholds the lower court s determination that the tribal courts have jurisdiction, petitioner may challenge that ruling in the District Court. ). 92 See Duncan Energy Co., Inc. v. Three Affiliated Tribes of the Fort Berthold Reservation, 27 F.3d 1249, 1300 (9 th Cir. 1993). 93 Nat l Farmers Union, 471 U.S. at See, e.g., Major Crimes Act, 18 U.S.C (1988 & Supp. 1994). 95 See William V. Vetter, The Four Decisions in Three Affiliated Tribes and Pre-Emption by Policy, 23 LAND & WATER L. REV. 43 (1988). 96 See Phillip Wm. Lear and Blake D. Miller, Exhaustion of Tribal Court Remedies: Rejecting Bright- Line Rules and Affirmative Action, 71 N.Dak. L. Rev. 277, 278 (1995). 97 Id. 98 Iowa Mutual Ins. Co. v. LaPlante, 480 U.S. 9, 16 (1987). 99 See Iowa Mutual Ins. Co. v. LaPlante, 480 U.S. at 17 ( At a minimum, exhaustion of tribal remedies means that tribal appellate courts must have the opportunity to review the determinations of the lower tribal courts. ). 100 See Nat l Farmers Union, 471 U.S. at 853 ( a federal court may determine under 1331 whether a tribal court has exceeded the lawful limits of its jurisdiction ); Ford Motor Co. v. Todecheene, 394 F.3d 1170, 1173 (9th Cir. 2005) ( Whether a tribal court properly exercised its jurisdiction is a question of law reviewed de novo. )

17 Tribal Courts Litigation 17 controlling. 101 If the federal court affirms the tribal court determination, the non-indian party may not re-litigate issues already determined on the merits by the tribal court. 102 National Farmers Case The key case framing the doctrine of tribal court exhaustion is National Farmers Union Insurance Companies v. Crow Tribe of Indians. There, the issues were: (1) whether plaintiff s complaint presented a federal question; and (2) whether remedies in tribal court need be exhausted prior to federal court review. 103 On the issue of federal question, the Supreme Court held that the question of when the tribe retains the power to compel a non-indian to submit to the civil jurisdiction of a tribal court is a federal question. On the second issue, it was held that the existence and extent of a tribal court s civil jurisdiction will require a careful examination of tribal sovereignty, the extent to which that sovereignty has been altered, divested, or diminished, as well as a detailed study of relevant statutes, policies of the executive branch tribal court as embodied in treaties and elsewhere, and administrative or judicial decisions. The Supreme Court also held that the analysis of the existence and extent of a tribal court s civil jurisdiction should be conducted first in tribal court. The Court explained the underlying policy as favoring a rule that will provide the forum, whose jurisdiction is being challenged, the first opportunity to evaluate the factual and legal bases for the challenge. The High Court further stated that an orderly administration of justice in the federal court would be served by allowing a full record to be developed in the tribal court before either the merits or any question concerning appropriate relief is addressed. As such, the federal court should stay its hand until after the tribal court has had a full opportunity to determine its own jurisdiction and to rectify any errors it may have made. 104 In summary, the issue of the scope of a tribal court s jurisdiction is a federal question and actions first brought in tribal court are not subject to jurisdictional challenges in federal court prior to exhaustion of tribal court remedies. 105 As a result, tribal court remedies generally must be exhausted before any dispute arising on tribal lands can be addressed by the federal court. The tribal court must first determine the scope of its own jurisdiction over such matters arising on the reservation and make a final ruling before any such action will be entertained by the federal courts. Exceptions to Exhaustion Doctrine There are several exceptions to the exhaustion doctrine. 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 101 Iowa Mutual, 480 U.S. at Id. ( Unless a federal court determines that the Tribal Court lacked jurisdiction... proper deference to the tribal court system precludes relitigation of issues raised... and resolved in the Tribal Courts. ) U.S. 845 (1985). 104 Id. at See also Iowa Mutual, 480 U.S. at 14.

18 18 Section 23.# adequate opportunity to challenge the court s jurisdiction. 106 Further, when it is plain that no federal grant provides for tribal governance of nonmembers conduct on land covered by Montana s main rule, exhaustion would serve no purpose other than delay. 107 Moreover, where the primary issue involves a federal question, exhaustion of tribal remedies may not be mandated. In Altheimer & Gray v. Sioux Manufacturing Corp., a federal court refused to mandate exhaustion of tribal remedies because the main issue in the case involved a federal question, i.e., the Secretary of Interior s requirement to approve certain contracts. 108 There, the court refused to apply National Farmers and Iowa Mutual to require exhaustion of tribal court remedies as a judicial condition precedent to federal courts taking cases arising on Indian reservations. The court distinguished National Farmers and Iowa Mutual on the grounds that there was no challenge to tribal court jurisdiction, there was no pending case in tribal court, and the dispute did not touch or concern a tribal ordinance or law Conclusion. The increasing rate of economic development in Indian Country through the success of gaming has prompted many businesses to explore and undertake more transactions with tribes and tribal entities and in turn litigation those deals in tribal and non-tribal forums. Because of the unique sovereign and jurisdictional characteristics attendant to business transactions with tribes and tribal enterprises, certain due diligence should be conducted with respect to the pertinent tribal organizational documents and governing laws, which may collectively dictate and control the business relationship. The most critical contract provision is an express and unequivocal waiver of sovereign immunity. Absent a waiver of sovereign immunity, the non-indian contracting party may not be able to enforce the contract against the tribe or tribal enterprise in any manner or in any forum, including tribal court or arbitration. The key to successful partnerships with tribes and tribal entities is to ensure that the transactional documents contain clear and unambiguous contractual provisions which address all rights, obligations and remedies of the parties. Ensuring that both sides of the transaction fully understand and respect the deal will hopefully lead to a long-lasting and beneficial business relationship for all parties, even if the deal fails, a well drafted contract will allow the parties to more expeditiously litigate the merits of their dispute, without jurisdictional confusion. 106 Nat l Farmers Union Ins. Cos. v. Crow Tribe, 471 U.S. 845, 857 n.21 (1985). 107 Strate, 480 U.S. at 459 n.14; Nevada v. Hicks, 533 U.S. 353, 369 (2001) F.2d 803 (7th Cir. 1993). 109 Id. at 814.