Equal Employment Opportunity Commission v. Peabody Western Coal Co.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

EQUAL EMPLOYMENT OPPORTUNITY 

COMMISSION,

Plaintiff-Appellant, No. 06-17261

v.

 D.C. No.

CV-01-01050-MHM

PEABODY WESTERN COAL COMPANY;

NAVAJO NATION, Rule 19 OPINION

defendant,

Defendants-Appellees.



Appeal from the United States District Court

for the District of Arizona

Mary H. Murguia, District Judge, Presiding

Argued and Submitted

September 22, 2008—San Francisco, California

Filed June 23, 2010

Before: Procter Hug, Jr., Andrew J. Kleinfeld, and

William A. Fletcher, Circuit Judges.

Opinion by Judge William A. Fletcher

9199

EEOC v. PEABODY WESTERN COAL 9203

COUNSEL

Susan R. Oxford, EEOC APPELLATE SECTION, Washing-

ton, D.C., Katherine Kruse, EEOC, Phoenix, Arizona, for the

appellant.

Mary E. Bruno, John F. Lomax, Jr., Lawrence J. Rosenfeld,

GREENBERG TRAURIG LLP, Phoenix, Arizona, Louis

Denetsosie, NAVAJO NATION DEPARTMENT OF JUS-

TICE, Window Rock, Arizona, Lisa M. Enfield, Paul E. Frye,

FRYE LAW FIRM, Albuquerque, New Mexico, for the

appellees.

OPINION

W. FLETCHER, Circuit Judge:

The Equal Employment Opportunity Commission

(“EEOC”) appeals various rulings of the district court in its

suit against Peabody Western Coal Company (“Peabody”).

Peabody leases mines from the Navajo Nation (“the Nation”),

9204 EEOC v. PEABODY WESTERN COAL

and maintains a preference for employing Navajo workers at

these mines. EEOC alleges that in maintaining its employ-

ment preference Peabody discriminates against non-Navajo

Indians, including two members of the Hopi Nation and one

member of the Otoe tribe, in violation of Title VII, 42 U.S.C.

§ 2000e-2(a)(1). The district court first dismissed EEOC’s

suit in 2002. EEOC v. Peabody Coal Co. (“Peabody I”), 214

F.R.D. 549 (D. Ariz. 2002). We heard EEOC’s appeal from

that dismissal in EEOC v. Peabody Western Coal Co.

(“Peabody II”), 400 F.3d 774 (9th Cir. 2005). We reversed,

holding that it was feasible to join the Nation under Federal

Rule of Civil Procedure 19 and that the suit did not present

a nonjusticiable political question. On remand, the district

court granted summary judgment to Peabody. EEOC appeals.

In this appeal, we address questions arising out of the join-

der of two different parties. We first address the joinder of the

Nation. We hold that the amended complaint filed by EEOC

after our remand does not render it infeasible to join the

Nation. We next address the joinder of the Secretary of the

Interior (“the Secretary”). We hold that the Secretary is a

required party under Rule 19(a), and that joining him is not

feasible. We hold further that Peabody and the Nation may

not bring a third-party damages claim against the Secretary

under Federal Rule of Civil Procedure 14(a), and that EEOC’s

claim against Peabody for damages must therefore be dis-

missed under Rule 19(b). However, we hold that Peabody and

the Nation may bring a third-party claim against the Secretary

for prospective relief under Rule 14(a), and that EEOC’s

injunctive claim against Peabody should therefore be allowed

to proceed.

We vacate the remainder of the district court’s rulings and

remand for further proceedings consistent with this opinion.

EEOC v. PEABODY WESTERN COAL 9205

I. Background

A. Factual Background

Peabody mines coal at the Black Mesa Complex and

Kayenta Mine on the Navajo and Hopi reservations in north-

eastern Arizona. Peabody does so pursuant to leases with the

Navajo and Hopi tribes inherited from its predecessor-in-

interest, Sentry Royalty Company (“Sentry”). This case

involves two leases Sentry entered into with the Nation: a

1964 lease permitting it to mine on the Navajo reservation

(lease no. 8580) and a 1966 lease permitting it to mine on the

Navajo portion of land jointly used by the Navajo and Hopi

nations (lease no. 9910).

Both leases require that Peabody provide an employment

preference to Navajo job applicants. The 1964 lease provides

that Peabody “agrees to employ Navajo Indians when avail-

able in all positions for which, in the judgment of [Peabody],

they are qualified,” and that Peabody “shall make a special

effort to work Navajo Indians into skilled, technical and other

higher jobs in connection with [Peabody’s] operations under

this Lease.” The 1966 lease provides similarly, but also states

that Peabody may “at its option extend the benefits of this

Article [containing the Navajo employment preference] to

Hopi Indians.” We will refer to these provisions as “Navajo

employment preference provisions.” Many business leases on

the Navajo reservation contain similar employment prefer-

ences for Navajo job applicants.

As we noted in Peabody II, the Department of the Interior

(“DOI”) approved both mining leases, as well as subsequent

amendments and extensions, under the Indian Mineral Leas-

ing Act of 1938 (“IMLA”). Peabody II, 400 F.3d at 776; see

25 U.S.C. §§ 396a, 396e; see also United States v. Navajo

Nation (“Navajo Nation I”), 537 U.S. 488, 493 (2003)

(explaining that DOI’s approval is necessary before leases on

reservation land become effective). Former Secretary of the

9206 EEOC v. PEABODY WESTERN COAL

Interior Stewart Udall, who served as Secretary during the

period the leases were drafted and approved, stated in a decla-

ration submitted to the district court that DOI drafted the

leases and required the inclusion of the Navajo employment

preferences. This statement is undisputed. The leases provide

that, if their terms are violated, both the Nation and the Secre-

tary retain the power to cancel them after a notice and cure

period. Amendments to the leases must be approved by the

Secretary.

B. Procedural Background

This is the latest in a series of cases involving Navajo

employment preferences. See Dawavendewa v. Salt River

Project Agric. Improvement & Power Dist. (“Dawavendewa

II”), 276 F.3d 1150, 1163 (9th Cir. 2002); Dawavendewa v.

Salt River Agric. Improvement & Power Dist.

(“Dawavendewa I”), 154 F.3d 1117, 1124 (9th Cir. 1998). We

discussed the history of Navajo employment preferences in

detail in the first appeal in this case. See Peabody II, 400 F.3d

at 777.

EEOC filed this suit against Peabody in June 2001, alleging

that Peabody was unlawfully discriminating on the basis of

national origin by implementing the Navajo employment pref-

erences contained in the leases. EEOC’s complaint charged

that Peabody had refused to hire non-Navajo Indians includ-

ing two members of the Hopi and one now-deceased member

of the Otoe tribe, as well as unspecified other non-Navajo

Indians, for positions for which they were otherwise qualified.

EEOC alleged that such conduct violated Title VII, 42 U.S.C.

§ 2000e-2(a)(1), which prohibits employers from refusing to

hire applicants because of their national origin. EEOC’s posi-

tion throughout this litigation has been that the Indian prefer-

ence exception of Title VII, § 2000e-2(i), permits

discrimination in favor of Indians living on or near a particu-

lar tribe’s reservation, but does not permit discrimination

against Indians who live on or near that reservation but are

EEOC v. PEABODY WESTERN COAL 9207

members of another tribe. Peabody II, 400 F.3d at 777-78.

EEOC alleged further that Peabody had violated the record-

keeping requirements of § 2000e-8(c). EEOC requested three

forms of relief: (1) an injunction prohibiting Peabody from

continuing to discriminate on the basis of national origin and

requiring Peabody to provide equal employment opportunities

for non-Navajo Indians living on or near the Navajo reserva-

tion; (2) damages, including back pay with interest, compen-

satory damages, and punitive damages; and (3) an order

requiring Peabody to make and preserve records in compli-

ance with Title VII.

Peabody moved for summary judgment and for dismissal of

the action. Peabody argued, first, that Rule 19 required dis-

missal because the Nation was a necessary and indispensable

party to the action and, second, that the action presented a

nonjusticiable political question between EEOC and DOI

because DOI had approved the mining leases. The district

court agreed and granted Peabody’s motion to dismiss on both

grounds. Peabody I, 214 F.R.D. at 559-63. The district court

also dismissed EEOC’s recordkeeping claim, even though

Peabody had not sought dismissal of this claim. Id. at 563.

We reversed in Peabody II. First, we held that the Nation

was a necessary party under Rule 19, but that EEOC’s suit

need not be dismissed because joinder of the Nation was fea-

sible. Peabody II, 400 F.3d at 780-81. Because EEOC is an

agency of the United States, the Nation could not assert sover-

eign immunity as a defense to joinder. Although EEOC

lacked statutory authority to state a cause of action against the

Nation, joinder of the Nation for the purposes of res judicata

was still possible and would be effective in providing “com-

plete relief between the parties.” Id. at 781. Second, we held

that EEOC’s claim did not present a nonjusticiable political

question. Id. at 784-85. Third, we held that the district court

erred in dismissing EEOC’s recordkeeping claim. Id. at 785.

We remanded for further proceedings with the Nation joined

under Rule 19. Id. at 785.

9208 EEOC v. PEABODY WESTERN COAL

On remand, EEOC filed an amended complaint that

included the same claims and prayer for relief as its initial

complaint. The newly joined Nation moved to dismiss under

Rule 19, arguing, inter alia, that EEOC’s amended complaint

impermissibly seeks affirmative relief against the Nation, and

that the Secretary of the Interior is a necessary and indispens-

able party. Peabody filed its own motion to dismiss. Inter

alia, it agreed with the Nation’s argument that the Secretary

was a necessary and indispensable party. This was the first

time in this litigation that anyone had argued that the Secre-

tary was a necessary and indispensable party.

The district court converted the motions to dismiss into

motions for summary judgment. The district court granted

summary judgment against EEOC, holding, in the alternative,

that (1) EEOC was seeking affirmative relief against the

Nation in its amended complaint, and that the Nation there-

fore could not be joined under Rule 19; (2) the Secretary was

a necessary and indispensable party for whom joinder was not

feasible; and (3) the Rehabilitation Act of 1950, 25 U.S.C.

§ 631-638, authorized the tribe-specific preferences chal-

lenged by EEOC. The district court also granted the Nation’s

motions to strike two EEOC exhibits and to strike an EEOC

footnote reference. Finally, the court denied EEOC’s motion

to strike two forms upon which Peabody relied. EEOC timely

appealed all of the district court’s rulings.

We reach only holdings (1) and (2), as to which we reverse

the district court. We vacate the rest of the court’s decision

and remand for further proceedings.

II. Standard of Review

We review a district court’s decision on joinder for abuse

of discretion, and we review the legal conclusions underlying

that decision de novo. Peabody II, 400 F.3d at 778.

EEOC v. PEABODY WESTERN COAL 9209

III. Discussion

[1] This case continues to present somewhat complex com-

pulsory party joinder issues. As we explained in Peabody II,

Federal Rule of Civil Procedure 19 governs compulsory party

joinder in federal district courts. In its recently amended form,

Rule 19 provides, in relevant part:

(a) Persons Required to Be Joined if Feasible.

(1) Required Party.

A person who is subject to service of pro-

cess and whose joinder will not deprive the

court of subject-matter jurisdiction must be

joined as a party if:

(A) in that person’s absence, the court

cannot accord complete relief among

existing parties; or

(B) that person claims an interest relating

to the subject of the action and is so situ-

ated that disposing of the action in the

person’s absence may:

(i) as a practical matter impair or

impede the person’s ability to protect

the interest; or

(ii) leave an existing party subject to a

substantial risk of incurring double,

multiple, or otherwise inconsistent

obligations because of the interest.

(2) Joinder by Court Order.

If a person has not been joined as required,

the court must order that the person be

9210 EEOC v. PEABODY WESTERN COAL

made a party. A person who refuses to join

as a plaintiff may be made either a defen-

dant or, in a proper case, an involuntary

plaintiff.

...

(b) When Joinder Is Not Feasible.

If a person who is required to be joined if feasible

cannot be joined, the court must determine whether,

in equity and good conscience, the action should

proceed among the existing parties or should be dis-

missed. The factors for the court to consider include:

(1) the extent to which a judgment rendered

in the person’s absence might prejudice that

person or the existing parties;

(2) the extent to which any prejudice could

be lessened or avoided by:

(A) protective provisions in the judg-

ment;

(B) shaping the relief; or

(C) other measures;

(3) whether a judgment rendered in the per-

son’s absence would be adequate; and

(4) whether the plaintiff would have an ade-

quate remedy if the action were dismissed

for nonjoinder. . . .

Fed. R. Civ. P. 19. Although the wording of Rule 19 has

changed since the district court dismissed this case, its mean-

EEOC v. PEABODY WESTERN COAL 9211

ing remains the same.1 When dealing with the amended rule

in this opinion, we will use the new language.

[2] A Rule 19 motion poses “three successive inquiries.”

Peabody II, 400 F.3d at 779. “First, the court must determine

whether a nonparty should be joined under Rule 19(a).” Id.

That nonparty (or “absentee”) is now referred to as a “person

required to be joined if feasible.” If an absentee meets the

requirements of Rule 19(a), “the second stage is for the court

to determine whether it is feasible to order that the absentee

be joined.” Id. “Finally, if joinder is not feasible, the court

must determine at the third stage whether the case can pro-

ceed without the absentee” or whether the action must be dis-

missed. Id. A nonparty in whose absence an action must be

dismissed is one who “not only [has] an interest in the contro-

versy, but [has] an interest of such a nature that a final decree

cannot be made without either affecting that interest, or leav-

ing the controversy in such a condition that its final termina-

tion may be wholly inconsistent with equity and good

conscience.” Shields v. Barrow, 58 U.S. 130, 139 (1855).

1

As of December 1, 2007, Rule 19 no longer refers to “necessary” or

“indispensable” parties. Instead, it refers to “persons required to be joined

if feasible” and persons in whose absence, if they cannot be joined, the

action should not proceed.

The advisory committee notes indicate that the 2007 amendments to the

civil rules were merely stylistic. With respect to Rule 19, they state:

The language of Rule 19 has been amended as part of the gen-

eral restyling of the Civil Rules to make them more easily under-

stood and to make style and terminology consistent throughout

the rules. These changes are intended to be stylistic only.

Former Rule 19(b) described the conclusion that an action

should be dismissed for inability to join a Rule 19(a) party by

carrying forward traditional terminology: “the absent person

being thus regarded as indispensable.” “Indispensable” was used

only to express a conclusion reached by applying the tests of

Rule 19(b). It has been discarded as redundant.

Fed. R. Civ. P. 19 advisory committee’s note (2007).

9212 EEOC v. PEABODY WESTERN COAL

With these principles in mind, we consider the Rule 19

joinder of both the Navajo Nation and the Secretary of the

Interior.

A. Joinder of the Navajo Nation under Rule 19

[3] In Peabody II, we held that the Navajo Nation was a

necessary party for whom joinder was feasible. Peabody II,

400 F.3d at 778. It is undisputed that the Nation was a neces-

sary party, and is now, under the amended rule, a person

required to be joined if feasible. As we explained in Peabody

II, the Nation is a party to the leases whose employment pref-

erence is challenged in this lawsuit.

If the EEOC is victorious in this suit but the Nation

has not been joined, the Nation could possibly initi-

ate further action to enforce the employment prefer-

ence against Peabody, even though that preference

would have been held illegal in this litigation. Pea-

body would then be, like the defendant in Dawa-

vendewa II, 276 F.3d at 1156, “between the

proverbial rock and a hard place — comply with the

injunction prohibiting the hiring preference policy or

comply with the lease requiring it.” By similar logic,

we have elsewhere found that tribes are necessary

parties to actions that might have the result of

directly undermining authority they would otherwise

exercise.

Id. at 780. We held that it was feasible to join the Nation even

though under Title VII no affirmative relief was available to

EEOC against the Nation.

After our remand, EEOC amended its complaint to add the

Nation as a defendant. The district court held that EEOC

sought affirmative relief against the Nation in its amended

complaint even though we had specifically held in Peabody

II that such relief was not available. Under its reading of

EEOC v. PEABODY WESTERN COAL 9213

EEOC’s amended complaint, the district court dismissed

EEOC’s suit on the ground that the Nation could not, after all,

be joined. For the reasons that follow, we hold that the district

court should not have dismissed EEOC’s amended complaint

on this ground.

In Peabody II, Peabody made two arguments why joinder

of the Nation was not feasible. We disagreed with both of

them. First, Peabody argued that the Nation could not be

joined because of sovereign immunity. Id. at 780. We held

that the Nation’s sovereign immunity did not shield it from a

suit brought by EEOC and therefore did not bar its joinder. Id.

at 781. We explained, “Tribal sovereign immunity does not

‘act as a shield against the United States,’ even when Con-

gress has not specifically abrogated tribal immunity.” Id.

(quoting United States v. Yakima Tribal Ct., 806 F.2d 853,

861 (9th Cir. 1986)).

[4] Second, Peabody argued that because Title VII

exempts the Nation from the definition of employer, 42

U.S.C. § 2000e(b), EEOC could not state a claim against the

Nation. Peabody II, 400 F.3d at 781. Therefore, Peabody

argued, the Nation could not be joined in a suit brought by

EEOC. But “a plaintiff’s inability to state a direct cause of

action against an absentee does not prevent the absentee’s

joinder under Rule 19.” Id. An absentee can be joined under

Rule 19 in order to subject it, under principles of res judicata,

to the “minor and ancillary” effects of a judgment. Gen. Bldg.

Contractors Ass’n, Inc. v. Pennsylvania, 458 U.S. 375, 399

(1982). We wrote that

EEOC has no claim against the party it seeks to join

and is not seeking any affirmative relief directly

from that party. Joinder is necessary for the “sole

purpose” of effecting complete relief between the

parties . . . by ensuring that both Peabody and the

Nation are bound to any judgment upholding or

striking down the challenged lease provision.

9214 EEOC v. PEABODY WESTERN COAL

Peabody II, 400 F.3d at 783.

On remand, the district court concluded that EEOC’s

amended complaint sought affirmative relief against the

Nation. The district court found that “with the benefit of the

filing of the Amended Complaint and limited discovery, it is

apparent to this Court that the EEOC is not merely seeking

relief against Peabody Coal, but all parties acting in concert

with it, which includes the Navajo Nation.” In so holding, the

district court relied on the language in the amended complaint

seeking “a permanent injunction enjoining Peabody . . . and

all persons in active concert or participation with it, from

engaging in discrimination on the basis of national origin.”

The court found that

there can be no doubt that the Navajo Nation falls

within the scope of affirmative relief sought by the

EEOC. . . . Should the EEOC prevail in this suit and

obtain the broad relief sought, the Navajo Nation

would then be enjoined from implementing and

requiring such lease provisions in the future as it

would already be subject to injunctive relief from

this Court based upon the determination that such

provisions are contrary to Title VII. As such, there

can be little doubt that the EEOC seeks affirmative

relief not only against Peabody Coal but the Navajo

Nation as well.

The language added to the amended complaint pro-

vides, in its entirety:

Defendant Navajo Nation is a party to a lease agree-

ment with the Defendant employer, Peabody Coal

Company, and is therefore named as a party pursuant

to Rule 19(a) of the Federal Rules of Civil Proce-

dure, in that, in its absence, complete relief cannot be

accorded among those already parties, and it has an

interest in the subject of this action.

EEOC v. PEABODY WESTERN COAL 9215

This added language says nothing about any kind of relief

against the Nation.

The original complaint was before us when we decided

Peabody II. The language in the amended complaint upon

which the district court relied to conclude that EEOC was

seeking affirmative relief is word-for-word the same as in the

original complaint. It is, in its entirety:

Wherefore, the Commission respectfully requests

that this Court:

A. Grant a permanent injunction enjoining Pea-

body, its officers, successors, assigns, and all per-

sons in active concert or participation with it, from

engaging in discrimination on the basis of national

origin.

Some of this added language is standard boilerplate drawn

from Rule 65(d)(2)(C), describing the “persons bound” by

“every injunction” as including “other persons who are in

active concert or participation” with the party or parties

served with an injunction.

There are two possible readings of the amended complaint.

Under one reading, EEOC is not seeking any injunctive relief

against the Nation. The Nation is “bound” by the injunction

only in the sense that it is res judicata as to the Nation, not in

the sense that the injunction affirmatively requires the Nation

to do something. In our view, this is the better reading of the

boilerplate language in the complaint, given that the explicit

premise of our holding in Peabody II was that EEOC has no

cause of action against the Nation under Title VII and that, as

a necessary corollary, EEOC can obtain no injunctive relief

against the Nation. However, the district court did not adopt

this reading.

[5] Under the reading adopted by the district court, EEOC

sought injunctive relief against the Nation in its amended

9216 EEOC v. PEABODY WESTERN COAL

complaint. Even if this is the correct reading, the district court

nonetheless erred in dismissing EEOC’s suit. Because we had

held in Peabody II that joinder of the Nation was feasible

despite the unavailability of injunctive relief against it, the

proper response of the district court would have been simply

to deny EEOC’s request for injunctive relief. As we held in

Peabody II, joinder of the Nation is feasible, and dismissal

under Rule 19 is not required even though injunctive relief is

unavailable.

[6] The district court therefore erred in dismissing EEOC’s

complaint on the ground that it sought injunctive relief against

the Nation.

B. Joinder of the Secretary of the Interior under Rule 19

[7] On remand from Peabody II, Peabody and the newly

joined Nation argued under Rule 19 that the suit could not

proceed without joinder of the Secretary. Even though Pea-

body had been a defendant in the suit from the outset, this was

the first time it made this argument. Because the Nation had

just been joined, this was its first opportunity to make the

argument. We agree with Peabody and the Nation that the

Secretary is a person to be joined if feasible under Rule 19.

But we do not agree that the entirety of EEOC’s suit must be

dismissed.

[8] The central problem is that Peabody is caught in the

middle of a dispute not of its own making. EEOC contends

that the Navajo employment preference provision contained

in the leases violates Title VII. The Secretary required that

this provision be included in the leases. EEOC seeks damages

and an injunction against Peabody, which has complied with

the lease terms upon which the Secretary insisted.

If the district court were to hold that the Navajo employ-

ment preference provision violates Title VII and to award

damages against Peabody, it would be profoundly unfair if

EEOC v. PEABODY WESTERN COAL 9217

Peabody could not seek indemnification from the Secretary.

It would be similarly unfair if the district court were to grant

an injunction requiring Peabody to disregard the preference

provision, but leaving the Secretary free, despite the court’s

holding, to insist that Peabody comply with it.

The same is true, though to a lesser extent, for the Nation.

As we held in Peabody II, EEOC can obtain neither damages

nor injunctive relief against the Nation. But if the district

court holds that the employment preference provision violates

Title VII, the Nation will be bound to that result by res judi-

cata. If the Secretary is not made a party to the suit, he may

ignore the court’s judgment and place conflicting demands

upon the Nation who will be required by res judicata to honor

the judgment.

1. The Secretary as a Required Party under Rule 19(a)

A person is required to be joined if feasible under Rule

19(a)(1)(A) if, “in that person’s absence, the court cannot

accord complete relief among the existing parties” or under

Rule 19(a)(1)(B) if “that person claims an interest relating to

the subject of the action and is so situated that disposing of

the action in the person’s absence may: (i) as a practical mat-

ter impair or impede the person’s ability to protect the inter-

est; or (ii) leave an existing party subject to a substantial risk

of incurring double, multiple, or otherwise inconsistent obli-

gations because of the interest.” “There is no precise formula

for determining whether a particular nonparty should be

joined under Rule 19(a). . . . The determination is heavily

influenced by the facts and circumstances of each case.” N.

Alaska Envtl. Ctr. v. Hodel, 803 F.2d 466, 468 (9th Cir. 1986)

(quoting Bakia v. County of Los Angeles, 687 F.2d 299, 301

(9th Cir. 1982) (per curiam)) (alterations in original). The

Secretary meets the standards of both Rule 19(a)(1)(A) and

Rule 19(a)(1)(B).

[9] First, under Rule 19(a)(1)(A), in the absence of the

Secretary, the district court cannot accord complete relief

9218 EEOC v. PEABODY WESTERN COAL

among the existing parties. The record makes clear that the

Secretary insisted that the disputed employment preference

provision be included in the leases between Peabody and the

Nation, and that the Secretary is ultimately responsible for its

continued inclusion in the leases. If EEOC prevails in its

interpretation of Title VII, it may recover damages from Pea-

body based on Peabody’s compliance with the employment

preference provision. In that event, Peabody will be obliged

to pay damages for having engaged in conduct that was man-

dated by the Secretary. If the Secretary is not made a party,

Peabody will not be able to seek indemnification from the

Secretary.

Further, if EEOC prevails it may obtain an injunction

ordering Peabody to disregard the employment preference

provision. The Secretary has the power, if the lease terms are

violated, to cancel the leases after a notice and cure period,

and Peabody is unable to modify the terms of the leases with-

out the approval of the Secretary. If the Secretary is not made

a party, Peabody may be obliged by the court to disregard the

preference provision, while the Secretary would remain free

to insist that Peabody honor it, upon pain of losing the leases.

See, e.g., Associated Dry Goods Corp. v. Towers Fin. Corp.,

920 F.2d 1121, 1124 (2d Cir. 1990) (holding that landlord

was required party in suit brought by tenant against subtenant,

as subtenant would not be able to obtain complete relief in

counterclaims against tenant for increased electrical capacity

without approval of landlord); Wymbs v. Republican State

Executive Comm., 719 F.2d 1072, 1080 (11th Cir. 1983)

(holding that national political party committee was required

party in suit on the constitutionality of a local political party’s

delegate selection rule when the local rule was derived from

the national rule and the national party still had the ability to

determine which delegates would be seated).

[10] Second, under Rule 19(a)(1)(B), the Secretary has an

interest in the subject matter of this action. Resolving this

action in the Secretary’s absence may both impair the Secre-

EEOC v. PEABODY WESTERN COAL 9219

tary’s ability to protect that interest and leave Peabody and the

Nation subject to a substantial risk of incurring inconsistent

obligations. If the Secretary is not joined, he will be unable

to defend his interest in the legality of the lease provisions.

We have repeatedly held that “[n]o procedural principle is

more deeply imbedded in the common law than that, in an

action to set aside a lease or a contract, all parties who may

be affected by the determination of the action are indispens-

able.” Lomayaktewa v. Hathaway, 520 F.2d 1324, 1325 (9th

Cir. 1975); see also Dawavendewa II, 276 F.3d at 1156.

[11] Although Lomayaktewa and Dawavendewa II

involved parties who were signatories to a contract, which the

Secretary is not, the underlying principle applies here. The

Secretary mandated the provisions and continues to exercise

oversight over the leases. A public entity has an interest in a

lawsuit that could result in the invalidation or modification of

one of its ordinances, rules, regulations, or practices. See, e.g.,

Davis v. United States, 192 F.3d 951, 959 (10th Cir. 1999)

(holding that Seminole Nation of Oklahoma was necessary

party as a ruling on the merits would modify the Nation’s

ordinances); Ricci v. State Bd. of Law Exam’rs, 569 F.2d 782,

784 (3d Cir. 1978) (holding that Pennsylvania Supreme Court

was indispensable party to an action that would, if it suc-

ceeded, invalidate one of the Court’s rules of admission). The

Secretary thus has an interest in an action that would require

him to modify the terms of leases he approves for entities

conducting business on the Navajo reservation. The Secretary

therefore qualifies as a person to be joined under Rule

19(a)(1)(B)(i).

If the Secretary is not made a party and if EEOC prevails,

the Secretary may choose to cancel the leases or to modify

them to eliminate the Navajo employment preference. Alter-

natively, the Secretary may choose to continue the leases in

their current form, ignoring the judgment in the case to which

he has not been made a party. If the Secretary chooses to do

this, he will put both Peabody and the Nation “between the

9220 EEOC v. PEABODY WESTERN COAL

proverbial rock and a hard place,” Peabody II, 400 F.3d at

780 (quoting Dawavendewa II, 276 F.3d at 1156), forcing

them to choose between complying with the injunction or

risking cancellation of the leases for violating terms mandated

by the Secretary. The Secretary therefore qualifies as a person

to be joined under Rule 19(a)(1)(B)(ii).

EEOC argues that the Secretary is not a person required to

be joined under Rule 19(a), citing to the Navajo Nation line

of cases decided by the Supreme Court. In these cases, the

Court held that the DOI did not owe a fiduciary duty to the

Navajo Nation in managing, negotiating, or approving leases

under the statutes at issue in this litigation, and that the Nation

therefore could not state a cause of action against DOI for

breach of fiduciary duty. United States v. Navajo Nation

(“Navajo Nation II”), 129 S. Ct. 1547, 1558 (2009) (holding

that the Navajo-Hopi Rehabilitation Act of 1950 and Surface

Mining Control and Reclamation Act of 1977 do not provide

a cause of action to the Navajo Nation against the United

States for breach of trust in its approval of coal mining

leases); Navajo Nation I, 537 U.S. at 506 (holding the same

for the IMLA). These cases indicate the limits of DOI’s fidu-

ciary duty to the Nation with respect to the leases, but they

say nothing about whether DOI possesses a cognizable inter-

est in the outcome of litigation challenging lease terms man-

dated by the Secretary.

[12] We therefore hold that the Secretary is a person

required to be joined if feasible under Rule 19(a)(1)(A) and

Rule 19(a)(1)(B).

2. Feasibility of Joining the Secretary

Rule 19(a) contemplates that a required party be joined as

either a plaintiff or defendant. In the posture of this suit, the

Secretary would be joined as defendant rather than a plaintiff.

However, we conclude that EEOC cannot join the Secretary

as a defendant.

EEOC v. PEABODY WESTERN COAL 9221

[13] EEOC is prevented by 42 U.S.C. § 2000e-5(f)(1) from

filing suit against the Secretary on its own authority. Section

2000e-5(f)(1) provides that if EEOC is not able to obtain a

conciliation agreement with a governmental agency, it cannot

itself bring suit against that agency. Instead, § 2000e-5(f)(1)

provides that if EEOC is unable to obtain an agreement, it

“shall take no further action and shall refer the case to the

Attorney General who may bring a civil action against such

respondent in the appropriate United States district court.” We

were told at oral argument by EEOC’s attorney that EEOC

has no expectation that the Attorney General will file suit

against the Secretary. While there is no evidence in the record

of a formal referral to and refusal by the Attorney General, we

assume for purposes of our decision that the Attorney General

either has refused or will refuse to file suit against the Secre-

tary.

3. Dismissal “In Equity and Good Conscience”

[14] If a required party under Rule 19(a) cannot be joined

as a plaintiff or defendant, we look to the factors provided in

Rule 19(b) to determine whether, “in equity and good con-

science, the action should proceed among the existing parties

or should be dismissed.” Fed. R. Civ. P. 19(b). Rule 19(b)

provides four factors that we must consider in making this

determination: (1) the extent to which a judgment rendered in

the person’s absence might prejudice that person or the exist-

ing parties; (2) the extent to which any prejudice could be

lessened or avoided by shaping the judgment or the relief; (3)

whether a judgment rendered in the person’s absence would

be adequate; and (4) whether the plaintiff would have an ade-

quate remedy if the action were dismissed. Id. The heart of

this inquiry is the question of “equity and good conscience.”

See Provident Tradesmens Bank & Trust Co. v. Patterson,

390 U.S. 102, 125 (1968); Dawavendewa II, 276 F.3d at

1161. “The inquiry is a practical one and fact specific . . . and

is designed to avoid the harsh results of rigid application.”

9222 EEOC v. PEABODY WESTERN COAL

Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir.

1990) (internal citations omitted).

For the reasons that follow, we conclude that EEOC’s

claim for damages against Peabody must be dismissed under

Rule 19(b), but that its claim for an injunction against Pea-

body should be permitted to proceed.

a. EEOC’s Claim for Damages

[15] If EEOC’s suit against Peabody were allowed to pro-

ceed, the district court would almost certainly award damages

against Peabody if it concludes that the Navajo employment

preference provision violates Title VII. In that event, Peabody

would quite reasonably look to the Secretary for indemnifica-

tion, given that the preference provision was included in the

leases at the insistence of the Secretary. Rule 14(a) would per-

mit Peabody to file a third-party complaint against the Secre-

tary for indemnification. But because Peabody’s

indemnification suit would seek damages, it would be barred

by the government’s sovereign immunity unless that immu-

nity is waived by statute. We can find no waiver of sovereign

immunity to such a suit.

[16] The Tucker Act, 28 U.S.C. § 1346(a)(2), waives the

government’s sovereign immunity in damage suits based on

contract, as well as for some claims arising under the Consti-

tution and statutes of the United States. Under the Tucker Act,

a party’s claims must either rest upon a contract, “seek the

return of money paid by them to the Government,” or estab-

lish an entitlement to money damages under a federal statute

that “ ‘can fairly be interpreted as mandating compensation by

the Federal Government for the damage sustained.’ ” United

States v. Testan, 424 U.S. 392, 400 (1976) (quoting Eastport

S.S. Corp. v. United States, 372 F.2d 1002, 1009 (Ct. Cl.

1967)); see also Lake Mohave Boat Owners Ass’n v. Nat’l

Park Serv., 78 F.3d 1360, 1365 (9th Cir. 1995). The Federal

Tort Claims Act, 28 U.S.C. § 1346(b), waives the sovereign

EEOC v. PEABODY WESTERN COAL 9223

immunity of the United States for suits in tort. See FDIC v.

Meyer, 510 U.S. 471, 477 (1994). However, neither the

Tucker Act nor the Federal Tort Claims Act waives the gov-

ernment’s sovereign immunity in the circumstances of this

case.

[17] Title VII also waives the government’s sovereign

immunity to some extent. Based on that waiver, a federal

employee may sue the government for damages under Title

VII, provided that administrative remedies with EEOC have

been exhausted. 42 U.S.C. § 2000e-16(c); see Library of

Cong. v. Shaw, 478 U.S. 310, 319 (“Congress waived the

Government’s immunity under Title VII as a defendant,

affording federal employees a right of action against the Gov-

ernment for its discriminatory acts as an employer.”); cf. Fitz-

patrick v. Bitzer, 427 U.S. 445 (1976) (Title VII abrogates the

states’ sovereign immunity). But we can find nothing in Title

VII that waives the government’s sovereign immunity to a

damages suit brought by a private employer that has itself vio-

lated Title VII.

[18] Peabody’s only sin, if indeed it was a sin, was to com-

ply with an employment preference provision inserted in its

lease at the insistence of the Secretary. It would be profoundly

unfair for a court to award damages against Peabody while

allowing Peabody no redress against the government. We are

unable to see any way to mitigate this unfairness by, for

example, “protective provisions in the judgment; . . . shaping

relief; or . . . other measures.” Fed. R. Civ. P. 19(b)(2)(A-C).

We therefore conclude that “in equity and good conscience”

EEOC’s damages claim against Peabody must be dismissed

under Rule 19(b).

b. EEOC’s Claim for an Injunction

If EEOC’s suit is allowed to proceed and if the district

court were to hold that the Navajo employment preference

provision violates Title VII, the district court would almost

9224 EEOC v. PEABODY WESTERN COAL

certainly grant an injunction requiring Peabody to ignore the

provision in making its employment decisions. This injunc-

tion would not only require Peabody to take certain actions;

it would also operate as res judicata against the Nation. In the

event such an injunction were issued, Peabody and the Nation

would quite reasonably want to seek prospective relief pre-

venting the Secretary from enforcing the provision. Rule

14(a) would permit Peabody and the Nation to file a third-

party complaint seeking such relief against the Secretary.

Sovereign immunity does not bar prospective injunctive relief

against the Secretary. We conclude that the availability of

prospective relief through a third-party complaint under Rule

14(a) means that “in equity and good conscience” EEOC’s

suit against Peabody should be permitted to proceed.

i. Sovereign Immunity

[19] A claim to which sovereign immunity is not a defense

may be entertained even if another claim in the suit is dis-

missed because of sovereign immunity. See, e.g., United

States v. Georgia, 546 U.S. 151, 159 (2006) (finding sover-

eign immunity of state was not a bar to some of the plaintiffs’

claims and remanding to the district court to allow suit to pro-

ceed for any claims that were not shielded by sovereign

immunity). Therefore, the district court may entertain Pea-

body and the Nation’s third-party claim for prospective relief

if it is not barred by the United States’ sovereign immunity,

even if a Peabody claim for damages would have to be dis-

missed.

[20] Prospective relief requiring, or having the effect of

requiring, governmental officials to obey the law has long

been available. Sovereign immunity does not bar such relief.

The case often cited for this proposition is Ex parte Young,

209 U.S. 123 (1908), which permitted an injunction against

the Attorney General of Minnesota despite the Eleventh

Amendment. The Ex parte Young fiction remains the basis for

prospective relief against state officers. For example, in Veri-

EEOC v. PEABODY WESTERN COAL 9225

zon Maryland, Inc. v. Public Service Commission, 535 U.S.

635 (2002), the Supreme Court allowed injunctive and declar-

atory relief against individual state officials despite the Elev-

enth Amendment.

For a number of years, prospective relief against federal

officials was available under the fiction of Ex parte Young.

For example, in Larson v. Domestic & Foreign Commerce

Corp., 337 U.S. 682 (1949), the Supreme Court allowed pro-

spective relief against a federal official despite an asserted

defense of sovereign immunity. The Court wrote:

There may be, of course, suits for specific relief

against officers of the sovereign which are not suits

against the sovereign. If the officer purports to act as

an individual and not as an official, a suit directed

against that action is not a suit against the sovereign.

. . . [W]here the officer’s powers are limited by stat-

ute, his actions beyond those limitations are consid-

ered individual and not sovereign actions. The

officer is not doing the business which the sovereign

has empowered him to do or he is doing it in a way

which the sovereign has forbidden. His actions are

ultra vires his authority and therefore may be made

the object of specific relief.

Id. at 689. We explicitly followed the “legal fiction”

described in Larson in Washington v. Udall, 417 F.2d 1310,

1314 (9th Cir. 1969), and did so again in Rockbridge v. Lin-

coln, 449 F.2d 567, 572-73 (9th Cir. 1971).

However, since 1976 federal courts have looked to § 702 of

the Administrative Procedure Act (“APA”), 5 U.S.C. § 702,

to serve the purposes of the Ex parte Young fiction in suits

against federal officers. In Presbyterian Church (U.S.A.) v.

United States, 870 F.2d 518 (9th Cir. 1989), we explained that

after § 702 was amended in 1976, it replaced the Ex parte

9226 EEOC v. PEABODY WESTERN COAL

Young fiction as the doctrinal basis for a claim for prospective

relief. We wrote:

It is particularly significant that [in enacting § 702

of the APA] Congress referred disapprovingly to the

Ex parte Young fiction, which permitted a plaintiff to

name a government official as the defendant in equi-

table actions to redress government misconduct, on

the pretense that the suit was not actually against the

government. By invoking the Young fiction plaintiffs

could, even before Congress amended § 702 in 1976,

maintain an action for equitable relief against uncon-

stitutional government conduct, whether or not such

conduct constituted “agency action” in the APA

sense. See, e.g., Larson v. Domestic & Foreign Com-

merce Corp. . . . Congress’ plain intent in amending

§ 702 was to waive sovereign immunity for all such

suits, thereby eliminating the need to invoke the

Young fiction.

Id. at 525-26 (citations omitted) (emphasis added).

In Presbyterian Church we wrote, “On its face, the 1976

amendment [to § 702] is an unqualified waiver of sovereign

immunity in actions seeking nonmonetary relief against legal

wrongs for which governmental agencies are accountable.”

870 F.2d at 525. We explained that the waiver is not limited

to judicial review in suits challenging “agency action” as

defined in the APA, but instead covers “all actions seeking

relief from official misconduct except for money damages.”

Id. In Gallo Cattle Co. v. United States Department of Agri-

culture, 159 F.3d 1194 (9th Cir. 1998), we stated that “the

APA’s waiver of sovereign immunity contains several limita-

tions,” including the “final agency action” requirement that

we had considered irrelevant in Presbyterian Church. Id. at

1198. We held that, because the plaintiffs failed to challenge

“final agency action,” the waiver of sovereign immunity did

not apply. Id. In Gros Ventre Tribe v. United States, 469 F.3d

EEOC v. PEABODY WESTERN COAL 9227

801 (9th Cir. 2006), we discussed but declined to resolve the

tension between the two cases, observing that there is “no

way to distinguish The Presbyterian Church from Gallo Cat-

tle.” Id. at 809.

[21] We similarly need not resolve this tension here.

Unlike in Gallo Cattle, there is final agency action in this

case, because the Secretary has mandated the disputed lease

terms. “Agency action” under the APA is defined as “the

whole or a part of an agency rule, order, license, sanction,

relief, or the equivalent or denial thereof, or failure to act.” 5

U.S.C. § 551(13). “Persons” entitled to judicial review under

the APA include “an individual, partnership, corporation,

association, or public or private organization other than an

agency.” 5 U.S.C. § 701(b)(2) (providing that, for purposes of

provisions on judicial review, definition of “person” in 5

U.S.C. § 551 applies); id. § 551 (providing definition of “per-

son”). Both Peabody and the Navajo Nation come within this

definition of “person.” Peabody is a corporation, and the

Nation is a “public organization.” Id. Therefore, under § 702

of the APA, as would be the case under the Ex parte Young

fiction, either Peabody or the Nation may assert a claim

against the Secretary requesting injunctive or declaratory

relief. We therefore conclude that neither Peabody nor the

Nation is barred by sovereign immunity from bringing a third-

party complaint seeking prospective relief against the Secre-

tary under Rule 14(a).

ii. Third-party Complaints under Rule 14(a)

[22] If a required party under Rule 19(a) cannot be joined

as a plaintiff or defendant, the court must determine whether

under Rule 19(b) the action must be dismissed “in equity and

good conscience.” Among the factors to be considered in

making that determination is whether, under Rule

19(b)(2)(C), “measures” may be taken that would lessen or

avoid any prejudice. To the degree that Peabody and the

Nation may be prejudiced by the absence of the Secretary as

9228 EEOC v. PEABODY WESTERN COAL

a plaintiff or defendant, that prejudice may be eliminated by

a third-party complaint against the Secretary under Rule

14(a).

[23] The courts of appeals that have addressed the question

are unanimous in holding that if an absentee can be brought

into an action by impleader under Rule 14(a), a dismissal

under Rule 19(b) is inappropriate. In Pasco International

(London) Ltd. v. Stenograph Corp., 637 F.2d 496 (2d Cir.

1980), the Second Circuit repeatedly indicated that prejudice

to existing parties could be eliminated by impleader under

Rule 14(a). The court wrote, “Stenograph can always protect

itself from the possibility of inconsistent verdicts by implead-

ing Croxford under Rule 14[.] . . . [T]he existence of the Rule

14 provisions demonstrates that parties such as Croxford who

may be impleaded under Rule 14 are not indispensable parties

within Rule 19(b).” Id. at 503. It summarized, “[A]ll persons

subject to impleader by the defendant are not indispensable

parties. This is . . . merely an extension of the settled doctrine

that Rule 19(b) was not intended to require the joinder of per-

sons subject to impleader under Rule 14 such as potential

indemnitors.” Id. at 505 n.20. The other circuits that have

addressed the question have come to the same conclusion.

See, e.g., Boone v. General Motors Acceptance Corp., 682

F.2d 552, 553 (5th Cir. 1982) (defendants “could protect their

interests by joining the dealer as a third party should they care

to do so”); Challenge Homes, Inc. v. Greater Naples Care

Ctr., Inc., 669 F.2d 667, 671 (11th Cir. 1982) (defendant

“may protect itself against [prejudice] by impleading [the

absent person] under Rule 14”).

c. Summary

[24] We conclude that prospective relief in the form of an

injunction or declaratory judgment is available in a Rule 14(a)

impleader against the Secretary. Such prospective relief

against the Secretary is enough to protect Peabody and the

Nation, both with respect to EEOC’s request for injunctive

EEOC v. PEABODY WESTERN COAL 9229

relief against Peabody and with respect to any res judicata

effect against the Nation. Such relief would also protect the

Secretary because, once brought in as a third-party defendant,

he will be able to defend his position on the legality of the

leases. We therefore conclude, “in equity and good con-

science,” that EEOC’s claim against Peabody for injunctive

relief should be allowed to proceed.

C. Remaining Issues

EEOC has appealed the district court’s various other rul-

ings, including its holding that the Navajo employment pref-

erence does not violate Title VII. We vacate all of these

rulings to allow reconsideration once the Secretary has been

brought into the suit as a third-party defendant. This will

allow the court to consider the arguments of the Secretary on

the legality of the employment preferences before issuing a

final ruling. We note, further, that the presentation of the Sec-

retary’s views in the district court, and the district court’s con-

sidered ruling taking those views into account, will be useful

to us in the event of a further appeal.

Conclusion

We again hold that joinder of the Navajo Nation under Rule

19 is feasible. We hold that the Secretary of the Interior is a

party required to be joined if feasible under Rule 19(a), but

that joinder of the Secretary as a defendant is not feasible. We

hold that EEOC’s damages claim against Peabody must be

dismissed under Rule 19(b). Finally, we hold that EEOC’s

injunctive claim against Peabody should be allowed to pro-

ceed. We vacate the other rulings of the district court and

remand for further proceedings consistent with this opinion.

REVERSED in part and VACATED in part. Each party

to bear its own costs.