Northwest Business Litigation

Ninth Circuit extends tribal sovereign immunity to casino employees

The Ninth Circuit issued a fascinating Indian law ruling on Friday, November 15, in  a case named Cook v. AVI Casino Enterprises.  In Cook, plaintiff sued a Tribal casino enterprise organized as a Tribal corporation under Tribal law, and two casino employees in their official capacities, for personal injuries from a drunk driving incident involving another casino employee.  The Ninth Circuit panel held 2-1 that the court could exercise jurisdiction over the case under principles of Federal diversity jurisdiction, but held 3-0 that the court lacked subject matter jurisdiction because of Tribal sovereign immunity.

The case is interesting for three reasons.  First, this appears to be the first court of appeals decision to squarely hold that a Tribal corporation, incorporated under Tribal law, can be considered a citizen of the state where its principal place of business is located -- even though all business is conducted within Tribal lands in that state.  Second, the case is the first to hold that Tribal sovereign immunity extends to Tribal employees sued in their official capacity.  Previously, the rule of Tribal sovereign immunity extended only to Tribal officials acting in their official capacities.  Third, Judge Ronald M. Gould, who authored the panel opinion, filed a concurrence requesting that either the U.S. Supreme Court take the case or that Congress take some action to limit Tribal sovereign immunity in the "wholly commercial" Indian gaming context to avoid what Judge Gould saw as the unjust result in this case.

This decision is one of many recent opinions to express frustration with the use of tribal sovereign immunity to bar certain claims.  This might be the type of case that gets the U.S Supreme Court's or Congress's attention.  In the short term, however, this is a major victory for proponents of Tribal sovereign immunity, as the Ninth Circuit has now insulated official actions of Tribal employees under the doctrine.

U.S. Supreme Court limits tribal court jurisdicition

The U.S. Supreme Court yesterday issued an important 5-4 decision addressing the scope of tribal court jurisdiction.  At issue in Plains Commerce Bank v. Long Family Land and Title Co. was whether a tribal court could exercise jurisdiction over a non-Indian-owned bank for discrimination claims arising from the foreclosure and subsequent sale of fee land on a tribal reservation by the bank to non-Indian individuals. 

Writing for the majority, Chief Justice Roberts, in his first Indian law opinion, concluded that Indian tribes cannot "regulate the sale of non-Indian fee land."  The Court construed its prior cases on the subject narrowly as allowing only "tribal regulation of nonmember conduct inside the reservation that implicates the tribe's sovereign interests."  The Court also held that the non-Indian bank's mere conduct of business on the reservation did not mean that it had consented to either broad tribal regulation of its lending practices and land sales, or to the tribal court's jurisdiction.

The Court's opinion has narrowed the scope of tribal jurisdiction and appears to have insulated non-Indian businesses operating on non-Indian land within a reservation from certain real property and tort claims.  Before entering into any business dealings on reservation lands, it is in both an Indian tribe's and a business's best interests to understand the scope of tribal regulations affecting a commercial project, and to carefully draft the relevant transaction documents to address tribal court jurisdiction.

See our earlier post about the Plains Commerce Bank case here.

Article: "Tips and Strategies for Defending Indian Tribal Government IRS Audits"

Ater Wynne's Rob Roy Smith recently authored "Tips and Strategies for Defending Indian Tribal Government IRS Audits," published in the March 2008 issue of the Washington State Bar Association's Indian Law newsletter.  The article discusses the recent change in the mission of the Internal Revenue Services' division of Indian Tribal Governments from education to enforcement, resulting in a dramatic increase in audits.

Economic development compact could spur new investment in Indian Country

The Crow Tribe in Montana has become the first Indian tribe to enter into a so-called "Economic Development Compact" with a state to make it easier for banks to file secured loans within the Tribe's Reservation.   This, in turn, should lead to a greater flow of capital to the Crow community.

The Compact covers transactions in which personal property is used as collateral for loans, including bank loans for business startups, auto loan financing, and revolving lines of credit. Such transactions usually fall under state law.  Because Indians living on Indian reservations are generally not subject to state laws, banks often refuse to enter into such loans for fear of being unable to recover on the loan.  The Compact addresses this problem by allowing a bank to file its claim on collateral as a lien with the Montana Secretary of State's office.  The Compact enables the lien to be enforceable within the Tribe's Reservation.  The Compact was made possible by the Tribe's decision to adopt a Model Tribal Secured Transactions Act. 

Similar efforts could yield substantial benefits to Indian tribes, lending institutions, and businesses looking to relocate or enter into joint ventures with Indian tribes in the Pacific Northwest.  Businesses and lending institutions should look to encourage Indian tribes to adopt a version of the Uniform Commercial Code and seek out similar compacts with the states of Oregon and Washington.   

U.S. Supreme Court agrees to hear tribal jurisdiction dispute

For the first time since 2001, the U.S. Supreme Court this term will consider what types of disputes can be heard by Tribal courts.  Earlier this month, the Court agreed to review Plains Commerce Bank v. Long Family Land and Cattle Company, a decision by the Eighth Circuit Court of Appeals.  The Eighth Circuit held that the Cheyenne River Sioux Tribal Court has jurisdiction over a discrimination action by Tribal members against a non-Indian bank doing business on the reservation.  The question presented in the Surpreme Court is "Whether Indian tribal courts have subject matter jurisdiction to adjudicate civil tort claims as an 'other means' of regulating the conduct of a nonmember bank owning fee-land on a reservation that entered into a private commercial agreement with a member owned corporation." 

This case could have a dramatic effect on business relations within Indian Country, particularly if the Court takes the opportunity to address a question left unresolved by its last Tribal jurisdiction case, Nevada v. Hicks, in 2001:  When does an Indian tribe have adjudicatory jurisdiction over nonmember defendants?  The Court's ruling will impact both Indian tribes and those doing business in Indian Country by addressing the ability of non-Indian businesses to be sued under Tribal law in Tribal Court for matters arising out of transactions within Indian Country. 

Briefing is scheduled to begin in February, with oral argument in April.  Stay tuned!