Duanna Knighton v. Cedarville Rancheria of Npi

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DUANNA KNIGHTON, No. 17-15515

Plaintiff-Appellant,

D.C. No.

v. 2:16-cv-02438-

WHO

CEDARVILLE RANCHERIA OF

NORTHERN PAIUTE INDIANS;

CEDARVILLE RANCHERIA TRIBAL ORDER AND

COURT; PATRICIA R. LENZI, in her OPINION

capacity as Chief Judge of the

Cedarville Rancheria Tribal Court,

Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of California

William Horsley Orrick, District Judge, Presiding

Argued and Submitted November 16, 2018

San Francisco, California

Filed April 24, 2019

Before: A. Wallace Tashima and Milan D. Smith, Jr.,

Circuit Judges, and Lawrence L. Piersol, * District Judge.

Opinion by Judge Piersol

*

The Honorable Lawrence L. Piersol, United States District Judge

for the District of South Dakota, sitting by designation.

2 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

SUMMARY **

Tribal Jurisdiction

The panel filed (1) an order granting a petition for panel

rehearing and withdrawing its opinion filed March 13, 2019;

and (2) a superseding opinion affirming the district court’s

dismissal of an action challenging a tribe’s subject matter

jurisdiction over tort claims brought by the tribe against a

nonmember employee.

The tort claims arose from conduct committed by the

nonmember on tribal lands during the scope of her

employment. At issue was whether the tribal court had

jurisdiction to adjudicate tribal claims against its

nonmember employee, where the tribe’s personnel policies

and procedures manual regulated the nonmember’s conduct

at issue and provided that the tribal council would address

violations by the nonmember during the course of her

employment, and the tribal court and tribal judicial code

were established and enacted after the nonmember left her

employment with the tribe.

The panel held that a tribe’s regulatory power over

nonmembers on tribal land derives both from the tribe’s

inherent sovereign power to exclude nonmembers from

tribal land and from the tribe’s inherent sovereign power to

protect self-government and control internal relations.

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 3

The panel held that the tribe had authority to regulate the

nonmember employee’s conduct at issue pursuant to its

sovereign exclusionary power. Alternatively, the tribe had

regulatory authority under both Montana exceptions, which

allow a tribe (1) to regulate the activities of nonmembers

who enter consensual relationships with the tribe or its

members and (2) to exercise civil authority over the conduct

of nonmembers on fee lands within its reservation when that

conduct threatens or directly affects the political integrity,

the economic security, or the health or welfare of the tribe.

The panel concluded that the tribe’s personnel manual

regulated the employee’s conduct, and the fact that the tribe

later sought to adjudicate its claims in tribal court did not

undermine the tribal court’s jurisdiction. Given the

existence of regulatory authority, the sovereign interests at

stake, and the congressional interest in promoting self-

government, the tribal court had jurisdiction over the tribe’s

tort claims.

COUNSEL

Patrick L. Deedon (argued), Maire & Deedon, Redding,

California, for Plaintiff-Appellant.

Jack Duran, Jr., Esq. (argued), Duran Law Office, Roseville,

California, for Defendants-Appellees.

4 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

ORDER

Plaintiff-Appellant’s petition for panel rehearing is

GRANTED. The opinion filed March 13, 2019, and

reported at 918 F.3d 660, is hereby withdrawn. A

superseding opinion will be filed concurrently with this

order.

OPINION

PIERSOL, Senior District Judge:

This case concerns the sources and scope of an Indian

tribe’s jurisdiction over tort claims brought by the tribe

against a nonmember employed by the tribe. The tort claims

arose from conduct committed by the nonmember on tribal

lands during the scope of her employment. The question

presented is whether the tribal court has jurisdiction to

adjudicate tribal claims against its nonmember employee,

where the tribe’s personnel policies and procedures manual

regulated the nonmember’s conduct at issue and provided

that the tribal council would address violations by the

nonmember during the course of her employment, and the

tribal court and tribal judicial code were established and

enacted after the nonmember left her employment with the

tribe.

We previously held that a tribe’s inherent sovereign

power to exclude nonmembers from tribal land is an

independent source of regulatory power over nonmember

conduct on tribal land. See Water Wheel Camp Recreational

Area, Inc. v. LaRance, 642 F.3d 802, 814 (9th Cir. 2011) (per

curiam) (stating that where the nonmember activity occurred

on tribal land, and when there are no competing state

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 5

interests at play, “the tribe’s status as landowner is enough

to support regulatory jurisdiction without considering

Montana [v. United States, 450 U.S. 544 (1981)]”). Today

we also observe that a tribe’s regulatory power over

nonmembers on tribal land does not solely derive from an

Indian tribe’s exclusionary power, but also derives

separately from its inherent sovereign power to protect self-

government and control internal relations. See Montana,

450 U.S. at 564 (stating that Indian tribes retain their

inherent sovereign power to protect tribal self-government

and to control internal relations); see also Merrion v.

Jicarilla Apache Tribe, 455 U.S. 130, 144–45 (1982)

(holding that the tribe’s authority to tax nonmember mining

and drilling on tribal land derived from its inherent power to

govern and pay for the costs of self-government and stating

that such regulations were also within the tribe’s inherent

power to condition the continued presence of nonmembers

on tribal land).

Accordingly, we now hold that under the circumstances

presented here, the tribe has authority to regulate the

nonmember employee’s conduct at issue pursuant to its

inherent power to exclude nonmembers from tribal lands.

We also hold, in the alternative, that the tribe has regulatory

authority over the nonmember employee’s conduct under

both Montana exceptions. Given the existence of regulatory

authority, the sovereign interests at stake, and the

congressional interest in promoting tribal self-government,

we conclude that the tribal court has jurisdiction over the

tribe’s claims in this case.

6 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

The facts as presented and analyzed here are based on

the allegations included in the original complaint filed in

tribal court, and not upon the conclusions of a fact finder.

A. The Cedarville Rancheria Tribe

The Cedarville Rancheria of Northern Paiute Indians

(“the Tribe”) is a federally recognized Indian tribe that has

approximately twelve voting members and operates a

17-acre Rancheria in Cedarville, California (“the

Rancheria”). The Rancheria is held in trust for the Tribe by

the United States government. During the latter part of

events at issue in this case, the Tribe’s administrative offices

were relocated from the Rancheria to land held in fee 1 by the

Tribe in Alturas, California.

The Tribe’s governing body is the Community Council,

which is composed of all qualified voters of the Rancheria

who are 18 years of age or older. Every three years, the

Community Council elects three of its members to serve on

the Executive Committee—the Tribal Chairperson, Vice

Chairperson, and Secretary. The Executive Committee

enforces the Community Council’s ordinances and other

enactments and represents the Tribe in negotiations with

tribal, federal, state, and local governments.

1

Pending with the Bureau of Indian Affairs is a petition by the Tribe

to place the property on which the Tribe’s administrative offices are now

located in trust with the United States government.

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 7

B. Knighton’s Employment with the Tribe

Duanna Knighton (“Knighton”) was employed by the

Tribe from July 1996 until she resigned in March 2013.

Knighton is not a member of the Tribe and had never resided

on or owned land within the Rancheria. At the time of her

resignation, Knighton’s position was that of Tribal

Administrator. As Tribal Administrator, she oversaw the

day-to-day management of the Rancheria, its personnel, and

many aspects of its finances.

During Knighton’s employment, the Tribe regulated its

employees pursuant to the Cedarville Rancheria Personnel

Policies and Procedures Manual (“the Personnel Manual”).

The Personnel Manual regulated employee conduct

including, but not limited to: misfeasance and malfeasance

in the performance of duty, incompetency in the

performance of job duties, theft, carelessness or negligence

with the monies or property of the Rancheria, inducement of

an employee to act in violation of Rancheria regulations, and

violation of personnel rules. Disciplinary actions for an

employee’s breach of rules and standards of conduct in the

course of employment specified in the Personnel Manual

included a verbal warning, written reprimand, suspension

without pay, demotion, and involuntary termination.

The Personnel Manual provided that where the Tribal

Administrator was the subject of disciplinary action, the

Community Council directly oversaw the disciplinary

process.

C. Knighton’s Employment with RISE

From 2009 until at least 2016, in addition to her position

as Tribal Administrator, Knighton was also serving as an

employee or officer of Resources for Student Education

8 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

(“RISE”), a California nonprofit, that provides education

services and programs to Indian children. RISE is not a

tribally created or licensed business entity, and it receives

the majority of its funding from state and federal grants and

private donations.

D. The Tribe’s Purchase of RISE Property

In mid-2009, Knighton, acting in her capacity as Tribal

Administrator, negotiated the Tribe’s purchase from RISE of

a building in Alturas, California, where the Tribe’s

administrative offices are now located. During this time,

Knighton was also an employee or agent of RISE.

Knighton initially recommended that the Tribe purchase

the building for $350,000, allegedly representing that such a

price was below market value even though she had not

received a professional appraisal of the property. The Tribe

later discovered that the $350,000 purchase price

recommended by Knighton was $200,000 above market

value. Knighton also represented to the Tribe that it could

pay off its building loan within five years after the purchase

and that RISE would pay rent to the Tribe for its occupancy

until the note on the building was paid off.

The Tribe asserts that at no time during the purchase

negotiations did Knighton disclose she had a conflict of

interest representing both RISE and the Tribe in the sale, that

RISE was close to insolvency, or that she had an agreement

with RISE to split the proceeds of the building sale. The

parties settled on a purchase price of $300,000. Within

twelve months of the sale, RISE moved its business

operations out of the building.

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 9

E. Knighton’s Resignation

Before Knighton resigned in March 2013 as Tribal

Administrator, she allegedly cashed out $29,925 in vacation

and sick pay in violation of the Tribe’s policies and

procedures. The Tribe issued a check in the amount of

$29,925, payable to RISE on Knighton’s behalf. The Tribal

Vice Chairman approved Knighton’s request to cash out

based on her representation that her request had been

approved by the Tribal Chairperson, when in fact, the Tribal

Chairperson had denied Knighton’s request.

When Knighton resigned in March 2013, she took with

her all files, including files belonging to the Tribe, room

furnishings, and a computer, representing to the Tribe that

the property removed belonged to RISE.

In late 2013, the Tribe wrote a letter to RISE demanding

the return of the $29,925 and any and all tribal property,

including the computer. Both RISE and Knighton refused

through their counsel to return the funds or any of the

property.

F. Creation of Constitution, Tribal Judicial Code,

and Tribal Court

In February 2011, while Knighton was still employed by

the Tribe, the Tribe’s voting membership adopted the

Constitution and Bylaws of the Cedarville Rancheria, which

was approved by the Regional Director of the Bureau of

Indian Affairs. Article II of the Tribe’s Constitution

provides that the “jurisdiction of [the Tribe] shall extend to

the land now within the confines of the [] Rancheria and to

such other lands as may thereafter be added thereto.”

10 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

In December 2013, nine months after Knighton’s

resignation, the Tribe enacted the Cedarville Rancheria

Judicial Code (“the Tribal Judicial Code”) and established

the Cedarville Rancheria Tribal Court, which consists of a

tribal court (“the Tribal Court”) and a tribal court of appeals

(“the Tribal Court of Appeals”). All judges must be lawyers

experienced in the practice of tribal and federal Indian law

and licensed to practice in the highest court of any state.

Judges cannot be the Tribal Administrator, Assistant Clerks,

or members of the Executive Committee. The Tribal

Judicial Code provides that the Tribal Court and Tribal Court

of Appeals have jurisdiction over all civil causes of action

that arise within the boundaries of the Rancheria. Pursuant

to the Tribal Judicial Code, the Tribal Court has the power

to issue orders and judgments and to award limited money

damages.

G. The Tribe’s Audit Findings

In early 2014, after Knighton resigned, the Tribe

conducted a forensic accounting of the Tribe’s financial

position. The Tribe alleges that the forensic accounting

came about after the former Tribal Chairperson shot and

killed four tribal members at an Executive Committee

meeting on February 20, 2014. The slain Tribal Chairman

was a vocal critic of Knighton’s performance. He was

among those killed by his sister. During this accounting, the

Tribe reviewed its annual audit reports dating back to 2005

and found that the reports detailed several material weakness

findings by the auditor. The auditor’s findings noted major

deficiencies in the accounting of the Tribe’s finances, which

Knighton oversaw, and noted that the Tribe had not adopted

a policy regarding the investment of tribal funds. The Tribe

also discovered that in 2008, an annual audit of the Tribe’s

finances showed that $3.07 million of the Tribe’s money had

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 11

been invested by Knighton in high-risk investments, which

had declined in value by more than $1.2 million by the end

of 2008. The Tribe also discovered that tribal funds

belonging to the Tribe’s children had been co-mingled with

funds invested on behalf of adults, resulting in improper

taxation.

The Tribe asserts that the annual audit reports, and the

material weakness findings and investment losses detailed

therein, had not been provided by Knighton to the Tribe and

were only discovered by the Tribe after Knighton’s

resignation.

II. Procedural Background

The Tribe filed a complaint in the Tribal Court against

Knighton, RISE, and Oppenheimer Funds, Inc. 2 The

complaint included claims for fraud and deceit, recovery of

unauthorized and excessive pension payments, breach of

fiduciary duty, aiding and abetting breach of fiduciary duty,

and unjust enrichment, common count-account stated, and

common count-money had and received. In support of its

claims, the Tribe alleged that Knighton improperly

manipulated the Tribe’s policies and procedures to provide

her salary and fringe benefits, including a pension in excess

of what would normally be paid to a Tribal Administrator for

a like-sized tribe. The Tribe also alleged that Knighton

invested its money in high-risk investments without the

appropriate authority, and attempted to enter financial

agreements without appropriate authorization or waivers of

tribal sovereign immunity.

2

RISE and Oppenheimer Funds, Inc. are no longer parties in this

lawsuit.

12 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

Knighton responded by filing a motion to dismiss,

claiming, in relevant part, that the Tribal Court lacked

subject matter jurisdiction under Montana v. United States.

The Tribal Court denied Knighton’s motion to dismiss,

finding that it had jurisdiction over the Tribe’s claims against

Knighton under both Montana exceptions because Knighton

entered into a consensual relationship with the Tribe, by

virtue of her employment with the Tribe, and because

Knighton’s conduct threatened or had a direct effect on the

political integrity, economic security, and health and welfare

of the Tribe. The Tribal Court’s decision was affirmed by

the Tribal Court of Appeals, but the case was remanded to

the Tribal Court to determine whether RISE was an

indispensable party to the suit, following a finding that the

issue had not been raised in the Tribal Court.

On remand, pursuant to a stipulation between the parties,

the Tribal Court stayed the case to allow Knighton to contest

in federal district court the Tribal Court’s jurisdiction over

the Tribe’s asserted claims. As a result of the stay, there is

no Tribal Court exhaustion issue in this case.

Knighton filed a lawsuit in federal district court seeking,

among other things, a declaratory judgment that the Tribal

Court lacks subject matter jurisdiction over the Tribe’s

claims against Knighton under both Montana exceptions,

and a permanent injunction against further proceedings in

the Tribal Court. The defendants moved to dismiss

Knighton’s complaint on the basis that the Tribal Court’s

jurisdiction over the Tribe’s claims was proper under both

Montana exceptions.

The district court ruled that the Tribal Court has subject

matter jurisdiction over the Tribe’s claims, and granted

defendants’ motion to dismiss. The district court declined to

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 13

apply Montana in its jurisdictional analysis based on its

finding that Knighton’s alleged conduct occurred either on

tribal land within the Rancheria’s borders or was closely

related to tribal land. The district court stated that under

Water Wheel, the Montana framework did not apply to

jurisdictional issues involving nonmember conduct on tribal

land. The district court concluded that the Tribe had

authority to regulate Knighton’s conduct because

“Knighton’s employment activities directly affected the

Tribe’s inherent powers to protect the welfare of its members

and preserve the integrity of its government” and because

“her conduct threatened the Tribe’s very economic

survival,” and held that the Tribal Court had jurisdiction to

adjudicate the Tribe’s claims.

Knighton appealed.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. The

question of tribal court jurisdiction is a question of federal

law, which we review de novo, with factual findings

reviewed for clear error. Smith v. Salish Kootenai Coll.,

434 F.3d 1127, 1130 (9th Cir. 2006) (en banc).

ANALYSIS

“To exercise its inherent civil authority over a defendant,

a tribal court must have both subject matter jurisdiction—

consisting of regulatory and adjudicative jurisdiction—and

personal jurisdiction.” Water Wheel, 642 F.3d at 809. At

issue in this case is whether the Tribal Court has subject

matter jurisdiction over the Tribe’s claims against Knighton.

14 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

I. Regulatory Jurisdiction

A. Legal Precedent and This Case

“The sovereignty that the Indian tribes retain is of a

unique and limited character. It exists only at the sufferance

of Congress and is subject to complete defeasance. But until

Congress acts, the tribes retain their existing sovereign

powers.” United States v. Wheeler, 435 U.S. 313, 323

(1978). “Indian tribes still possess those aspects of

sovereignty not withdrawn by treaty or statute, or by

implication as a necessary result of their dependent status.”

Id. In National Farmers Union Insurance Cos. v. Crow

Tribe of Indians, the Court recognized that “[t]he tribes also

retain some of the inherent powers of the self-governing

political communities that were formed long before

Europeans first settled in North America.” 471 U.S. 845,

851 (1985) (citing White Mountain Apache Tribe v. Bracker,

448 U.S. 136, 142 (1980); Santa Clara Pueblo v. Martinez,

436 U.S. 49 55–56 (1978)). The Court went on to say that

under 28 U.S.C. § 1331, a federal court may determine

“whether a tribal court has exceeded the lawful limits of its

jurisdiction.” Id. at 853. Thus, the outer boundaries of tribal

court jurisdiction are a matter of federal common law.

We have noted that the Court has long recognized that as

part of their residual sovereignty, tribes retain the inherent

power to exclude nonmembers from tribal lands. See Water

Wheel, 642 F.3d at 808; see also New Mexico v. Mescalero

Apache Tribe, 462 U.S. 324, 333 (1983) (“A tribe’s power

to exclude nonmembers entirely or to condition their

presence on [tribal land] is [] well established.”). “From a

tribe’s inherent sovereign powers flow lesser powers,

including the power to regulate [nonmembers] on tribal

land.” Water Wheel, 642 F.3d at 808–09 (citing South

Dakota v. Bourland, 508 U.S. 679, 689 (1993)).

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 15

The Court has made clear, however, “that once tribal

land is converted into fee simple [land], the tribe loses

plenary jurisdiction over it . . . . As a general rule, then ‘the

tribe has no authority itself, by way of tribal ordinance or

actions in the tribal courts, to regulate the use of fee land.’”

Plains Commerce Bank v. Long Family Land & Cattle Co.,

554 U.S. 316, 328–29 (2008) (quoting Brendale v.

Confederated Tribes & Bands of Yakima Indian Nation,

492 U.S. 408, 430 (1989) (plurality opinion)). In Montana

v. United States, the Court recognized two exceptions to this

general rule. First, “[a] tribe may regulate, through taxation,

licensing, or other means, the activities of nonmembers who

enter consensual relationships with the tribe or its members,

through commercial dealing, contracts, leases, or other

arrangements.” Montana, 450 U.S. at 565. Second, a tribe

may exercise civil authority over the conduct of

nonmembers on fee lands within its reservation when “that

conduct threatens or has some direct effect on the political

integrity, the economic security, or the health or welfare of

the tribe.” Id. at 566.

“Since deciding Montana, the Supreme Court has

applied those exceptions almost exclusively to questions of

jurisdiction arising on [non-tribal] land.” Water Wheel,

642 F.3d at 809. The exception is Nevada v. Hicks, 533 U.S.

353 (2001). Water Wheel, 642 F.3d at 809. In Hicks, the

Court addressed a tribal court’s jurisdiction over claims

against state officers arising from the execution of a search

warrant on tribal land for alleged violations of state poaching

laws—specifically, the killing of bighorn sheep off the

reservation. 533 U.S. at 356–57. Both the state court and

then the tribal court issued search warrants. Id. at 356. The

Court stated that although ownership status of the land “may

sometimes be a dispositive factor” in determining a tribe’s

authority to regulate nonmember activity on tribal land, the

16 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

tribe’s power to exclude nonmembers from tribal land was

“not alone enough to support” the tribe’s regulatory

jurisdiction over the state officers’ activities when the state

had a competing interest in executing a warrant for an off-

reservation crime. Id. at 360. The Court applied Montana

and concluded that “tribal authority to regulate state officers

in executing process related to the violation, off reservation,

of state laws is not essential to tribal self-government or

internal relations” while “[t]he State’s interest in execution

of process is considerable.” Id. at 364.

Although some jurisdictions have interpreted Hicks as

eliminating the right-to-exclude framework as an

independent source of regulatory power over nonmember

conduct on tribal land, we have declined to do so. In Water

Wheel, we observed that Hicks “expressly limited its holding

to ‘the question of tribal-court jurisdiction over state officers

enforcing state law.’” Water Wheel, 642 F.3d at 813

(quoting Hicks, 533 U.S. at 358 n.2). Indeed, the Hicks

Court specifically “le[ft] open the question of tribal-court

jurisdiction over nonmember defendants in general.” Hicks,

533 U.S. at 358 n.2. In Water Wheel, we held that a “tribe’s

status as landowner is enough to support regulatory

jurisdiction” except “when the specific concerns at issue [in

Hicks] exist.” 642 F.3d at 813. “Doing otherwise would

impermissibly broaden Montana’s scope beyond what any

precedent requires and restrain tribal sovereign authority

despite Congress’s clearly stated federal interest in

promoting tribal self-government.” Id. at 813.

In Hicks, the defendants were state officers enforcing a

state-court-issued search warrant, so there was a significant

state interest at stake. By contrast, the present case involves

a private, consensual employment relationship between

Knighton and the Tribe, which occurred primarily on tribal

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 17

land. There are no significant competing state interests, as

in Hicks. Accordingly, our Water Wheel precedent compels

the conclusion that the Tribe possesses regulatory

jurisdiction over its claims against Knighton.

Since Hicks’s limited holding, the Court in Plains

Commerce Bank held that a tribal court did not have

jurisdiction to adjudicate a discrimination claim concerning

a non-Indian defendant’s sale of fee land. Plains Commerce

Bank, 554 U.S. at 323, 340–41. The land in question was

sold as part of the 1908 Allotment Act and was owned by a

non-Indian party for at least 50 years. Id. at 331, 341. The

Court found that the discrimination law that the plaintiffs

were attempting to enforce operated as a restraint on

alienation and had the effect of regulating the substantive

terms on which the non-Indian bank was able to offer its fee

land for sale. Id. at 331. The Court stated that while

“Montana and its progeny permit tribal regulation of

nonmember conduct inside the reservation that implicates

the tribe’s sovereign interests,” that case “does not permit

Indian tribes to regulate the sale of non-Indian fee land,” as

neither of the Montana exceptions applies. Id. at 332. By

contrast, in the present case the nonmember defendant while

on tribal land allegedly used her position as Tribal

Administrator to violate the terms of her employment in a

wide variety of ways that were significantly detrimental to

the management and financial security of the Tribe.

B. Appellant’s Arguments

Knighton argues that treating ownership status of the

land as a dispositive factor in upholding a tribe’s power to

regulate nonmember conduct on tribal land (unless, as in

Hicks, there are significant state interests present) is contrary

to our prior rulings in McDonald v. Means, 309 F.3d 530

(9th Cir. 2002), and Smith v. Salish Kootenai College. We

18 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

disagree. In McDonald, we specifically recognized that a

tribe’s jurisdiction over civil claims against nonmembers

arising on tribal land is limited under Hicks only in cases

where significant state interests are present. See 309 F.3d

at 540. And in Window Rock Unified School District v.

Reeves, 861 F.3d 894, 902 n.9 (9th Cir. 2017), we concluded

that Smith did not limit a tribe’s jurisdiction over civil claims

against nonmembers bearing a direct connection to tribal

land. We concluded that Smith was distinguishable because

it involved a nonmember plaintiff, as opposed to a

nonmember defendant, who had entered into a consensual

relationship with the tribe by filing his action in tribal court.

Id.

Knighton’s argument that a tribe’s regulatory power over

nonmember conduct on tribal land is limited to conduct that

directly interferes with a tribe’s inherent powers to exclude

and manage its own lands is also unavailing. In Window

Rock, we concluded that the tribal court’s jurisdiction over

employment-related claims that did not involve access to

tribal land was plausible; accordingly, we held that the

nonmember defendants were required to exhaust their tribal

court remedies before proceeding in federal court. Id. at 896,

906. Moreover, limiting a tribe’s regulatory power over

nonmember conduct to that which directly interferes with a

tribe’s inherent powers to exclude and manage its own lands,

as Knighton suggests, would restrict tribal sovereignty

absent explicit authorization from Congress—an approach

we specifically rejected in Water Wheel. See 642 F.3d at 812

(stating that the tribe’s right to exclude nonmembers from

tribal land includes the power to regulate them “unless

Congress has said otherwise, or unless the Supreme Court

has recognized that such power conflicts with federal

interests promoting tribal self government”).

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 19

Knighton also argues that under the facts of this case,

Water Wheel’s right-to-exclude framework is inapplicable

because some of her alleged misconduct occurred off tribal

land, after the tribal administrative offices were relocated to

fee land owned by the Tribe. Although the Tribe’s

complaint does not allege precisely where the conduct at

issue occurred, most of the claims alleged against Knighton

involve conduct that took place on tribal land, before the

Tribe’s administrative offices were moved in mid-2009 to

the RISE building in Alturas, California. Moreover, the facts

of this case are unique in that any claims that may have

arisen outside tribal land are based on alleged misconduct

and misrepresentations made by Knighton on tribal land.

See Smith, 434 F.3d at 1135 (stating that jurisdictional

inquiry is not limited to deciding precisely when and where

the claim arose, but whether it bears some direct connection

to tribal lands). For example, the $29,925 overpayment for

unused vacation and sick leave that the Tribe seeks to

recover stems from misrepresentations that Knighton

allegedly made throughout the course of her employment,

before the Tribe’s administrative offices relocated. In

addition, the relocation of the Tribe’s administrative offices

from tribal land to the RISE building on tribal fee land was

allegedly due to misrepresentations by Knighton.

Knighton further argues that even if the Tribe had the

power to regulate her conduct on tribal land during the

course of her employment under Water Wheel’s right-to-

exclude framework, the Tribe’s authority is limited to the

regulations that were in place during her employment—

which is to say, those provided for in the Personnel Manual.

Knighton contends that the Tribe is attempting to impose

new regulations on her through tort law after she left her

employment with the Tribe.

20 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

A tribe’s power to exclude nonmembers from tribal lands

permits a tribe to condition a nonmember’s entry or

continued presence on tribal land, see Merrion, 455 U.S. at

144–45, but this inherent power does not permit the Tribe to

impose new regulations upon Knighton’s conduct

retroactively when she is no longer present on tribal land.

However, we agree with the district court that Knighton’s

alleged conduct violated the Tribe’s regulations that were in

place at the time of her employment. The Personnel Manual

regulated employee conduct including, but not limited to,

misfeasance or malfeasance in the performance of duty,

incompetency in the performance of job duties, theft,

carelessness or negligence with the monies or property of the

Rancheria, inducement of an employee to act in violation of

Rancheria regulations, and violation of personnel rules—all

conduct that forms the basis of the Tribe’s claims against

Knighton.

C. Sources of Authority

In Water Wheel, we concluded that a tribe’s inherent

sovereign power to exclude nonmembers from tribal land

provides an independent basis upon which a tribe may

regulate the conduct of nonmembers on tribal land. But, a

tribe’s power to exclude is not the only source of its

regulatory authority over nonmembers on tribal land. See

Brendale, 492 U.S. at 425 (“An Indian tribe’s [] power to

exclude nonmembers of the tribe from its lands is not the

only source of Indian regulatory authority.”). “[T]ribes have

inherent sovereignty independent of that authority arising

from their power to exclude.” Id. (citing Merrion, 455 U.S.

at 141); see also Babbitt Ford, Inc. v. Navajo Indian Tribe,

710 F.2d 587, 592 (9th Cir. 1983) (“The power to exercise

tribal civil authority over [nonmembers] derives not only

from the tribe’s inherent powers necessary to self-

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 21

government and territorial management, but also from the

power to exclude nonmembers from tribal land.” (citing

Merrion, 455 U.S. at 141–44)).

In addition to the power to exclude, we have the

Montana Court’s acknowledgment that Indian tribes retain

their inherent sovereign power to protect tribal self-

government and to control internal relations. 450 U.S.

at 564. “[I]n accordance with that right tribes ‘may regulate

nonmember behavior that implicates [these sovereign

interests].’” Attorney’s Process & Investigation Servs., Inc.

v. Sac & Fox Tribe of Miss. in Iowa, 609 F.3d 927, 936

(8th Cir. 2010) (quoting Plains Commerce Bank, 554 U.S. at

335).

Subsequent to Montana, in Merrion, the Court affirmed

that Indian tribes have inherent sovereign power to regulate

nonmember conduct on tribal land independent of that

authority arising from their power to exclude. Merrion,

455 U.S. at 144. The Court in Merrion concluded that a

tribe’s power to tax nonmember mining and drilling on tribal

land derived from its inherent “power to govern and to pay

for the costs of self-government,” and concluded that such

regulatory authority was also within the tribe’s inherent

power to condition the continued presence of nonmembers

on tribal land. Id. at 144–45. These varied sources of tribal

regulatory power over nonmember conduct on the

reservation were affirmed by the Court in Plains Commerce

Bank. 554 U.S. at 337 (“[T]he regulation must stem from

the tribe’s inherent sovereign authority to set conditions on

entry, preserve tribal self-government, or control internal

relations.”).

While the district court believed that our caselaw

prohibited the application of the Montana framework to

tribal jurisdictional issues involving nonmember conduct on

22 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

tribal land, it also recognized that a tribe’s regulatory power

over nonmembers on tribal land does not solely derive from

its power to set conditions on entry or continued presence.

Accordingly, it concluded that the Tribe had regulatory

jurisdiction over Knighton’s conduct because “Knighton’s

employment activities directly affected the Tribe’s inherent

powers to protect the welfare of its members and preserve

the integrity of its government,” and because “her conduct

threatened the Tribe’s very economic survival.”

We now clarify Water Wheel and our subsequent cases

involving tribal jurisdictional issues on tribal land do not

exclude Montana as a source of tribal regulatory authority

over nonmember conduct on tribal land. Rather, our caselaw

states that an Indian tribe has power to regulate nonmember

conduct on tribal land incident to its sovereign power to

exclude nonmembers from tribal land, regardless of whether

either of the Montana exceptions is satisfied. See Water

Wheel, 642 F.3d at 814 (“[T]he tribe’s status as landowner is

enough to support regulatory jurisdiction without

considering Montana.” (emphasis added)); Grand Canyon

Skywalk Dev., LLC v. ‘Sa’ Nyu Wa Inc., 715 F.3d 1196, 1204

(9th Cir. 2013) (“[A] tribe’s inherent authority over tribal

land may provide for regulatory authority over

[nonmembers] on that land without the need to consider

Montana.” (emphasis added)); Window Rock, 861 F.3d at

902 (“[I]n civil cases involving nonmember conduct on

tribal land, we have held that tribal courts have jurisdiction

unless a treaty or federal statute provides otherwise—

regardless of whether the Montana exceptions would be

satisfied.” (emphasis added)). Certainly, as our caselaw has

discussed at length, without evidence of a contrary intent by

Congress, a tribe’s power to regulate nonmember conduct on

tribal land flows from its inherent power to exclude and is

circumscribed only to the limited extent that the

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 23

circumstances in Hicks—significant state interests—are

present. See Water Wheel, 642 F.3d at 813; Grand Canyon,

715 F.3d at 1205; Window Rock, 861 F.3d at 902. However,

the Court has made clear that a tribe also has sovereign

authority to regulate nonmember conduct on tribal lands

independent of its authority to exclude if that conduct

intrudes on a tribe’s inherent sovereign power to preserve

self-government or control internal relations. The Montana

exceptions are “rooted” in the tribes’ inherent power to

regulate nonmember behavior that implicates these

sovereign interests. Attorney’s Process, 609 F.3d at 936

(citing Plains Commerce Bank, 554 U.S. at 335).

Accordingly, although we conclude that the Tribe had

authority to regulate Knighton’s conduct on tribal land

pursuant to its sovereign exclusionary powers, a separate

question remains as to whether the Tribe also had regulatory

authority over Knighton’s conduct pursuant to Montana.

i. First Montana Exception

Montana’s consensual relationship exception recognizes

that tribes have jurisdiction to regulate consensual relations

“through taxation, licensing, or other means.” 450 U.S.

at 565. Courts have recognized that tort law, under which

the Tribe’s claims against Knighton arise, constitutes a form

of regulation. See Attorney’s Process, 609 F.3d at 938

(stating that if a tribe retains the power under Montana to

regulate nonmember conduct, it does not make any

difference whether it does so through precisely tailored

regulations or through tort claims). However, Montana’s

consensual relationship exception requires that “the

regulation imposed by the Indian tribe have a nexus to the

consensual relationship itself.” Atkinson Trading Co. v.

Shirley, 532 U.S. 645, 656 (2001). “A nonmember’s

24 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

consensual relationship in one area thus does not trigger

tribal civil authority in another.” Id.

Examining the facts of this case, we conclude that the

Tribe has regulatory authority over Knighton’s conduct in

this case under Montana’s consensual relationship

exception. The conduct that the Tribe seeks to regulate

through tort law arises directly out of the consensual

employment relationship between the Tribe and Knighton.

Moreover, given the circumstances, Knighton should have

reasonably anticipated that her conduct might “trigger” tribal

authority. Water Wheel, 642 F.3d at 818 (quoting Plains

Commerce Bank, 554 U.S. at 338). Knighton is no stranger

to the Tribe’s governance and laws. She had been an

employee of the Tribe for approximately sixteen years and,

as Tribal Administrator, was responsible for the overall

supervision and management of tribal operations and

carrying out tribal projects consistent with the Tribal

Constitution. The Tribal Constitution, adopted

approximately two years before Knighton resigned as Tribal

Administrator, specifically provided that the “jurisdiction of

[the Tribe] shall extend to land now within the confines of

the [Rancheria] and to such other lands as may thereafter be

added thereto.” We conclude that given these

circumstances, Knighton should reasonably have anticipated

that her conduct on tribal land would fall within the Tribe’s

regulatory jurisdiction.

ii. Second Montana Exception

In determining whether Knighton’s conduct threatens or

has some direct effect on the political integrity, the economic

security, or the health or welfare of the tribe—the second

Montana exception, 450 U.S. at 566—we find instructive the

Eighth Circuit’s decision in Attorney’s Process. In that case,

API, a nonmember corporation, was hired by a tribal

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 25

government leader who refused to step down from

leadership after he lost in a special tribal election. 609 F.3d

at 932. Under their contract, API agreed to perform services

relating to “the investigation of a takeover by dissidents at

the Tribe’s facility located on the Tribe’s reservation lands.”

Id. As the newly elected tribal council occupied the casino

and tribal government offices, approximately thirty API

agents forced their way into both buildings, which were

located on tribal land. Id. The agents were armed with

batons, at least one carried a firearm, and they seized

confidential information from both facilities related to the

tribe’s gaming operations and finances. Id. In addition to

the wrongfully seized confidential information, the agents

caused approximately $7,000 in property damage and

committed various intentional torts against tribal members.

Id. The tribe filed suit in tribal court for trespass to tribal

land and chattels, misappropriation of trade secrets, and

other claims. Id.

API argued that tort claims do not in the ordinary course

threaten the political integrity, economic security, or the

health or welfare of the tribe and thus the tribal court had no

jurisdiction over the tribe’s claims under Montana’s second

exception. Id. at 937. Relying on Plains Commerce Bank,

the court in Attorney’s Process stated that courts “should not

simply consider the abstract elements of the tribal claim at

issue, but must focus on the specific nonmember conduct

alleged, taking a functional view of the regulatory effect of

the claim on the nonmember.” Id. at 938. The court

concluded that API’s raid on the casino and government

offices, leading to the claims for trespass to land, trespass to

chattels, and misappropriation of tribal trade secrets,

“menace[d] the ‘political integrity, the economic security,

[and] the health [and] welfare’ of the Tribe to such a degree

that it ‘imperil[ed] the subsistence’ of the tribal community”

26 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

and that the tribe therefore retained the inherent power under

the second Montana exception to regulate that conduct. Id.

at 939 (alterations in original) (quoting Plains Commerce

Bank, 554 U.S. at 341).

While Knighton’s conduct constitutes a different type of

violation, it was of long duration and had a great impact upon

the Tribe, and so we conclude that the alleged harm to the

Tribe caused by her conduct “‘imperil[ed] the subsistence’

of the tribal community.” Evans v. Shoshone-Bannock Land

Use Policy Comm’n, 736 F.3d 1298, 1306 (9th Cir. 2013)

(quoting Plains Commerce Bank, 554 U.S. at 341). Among

the tribe’s many claims are allegations that Knighton

invested the Tribe’s money without appropriate authority,

concealed investment documents and audit reports from the

Tribe, and attempted to enter financial agreements without

the appropriate authorization or waiver of tribal sovereign

immunity. The Tribe also alleges that Knighton made

unreasonably risky investments that led to investment losses

in excess of $1.2 million, excess transaction fees, and state

and federal tax exposure, and that she breached her fiduciary

duty and deceived the Tribe, causing it to pay $300,000,

$150,000 above market value, for the RISE building

purchase. Finally, the Tribe alleges that when she resigned

her employment with the Tribe, Knighton took all files,

including files belonging to the Tribe, room furnishings, and

a computer, representing to the Tribe that the property

removed belonged to RISE. We conclude that this conduct

threatened the Tribe’s very subsistence and that the Tribe

therefore retains the inherent power under the second

Montana exception to regulate this conduct.

II. Adjudicatory Jurisdiction

Knighton also contends that the Tribe is seeking to

exercise greater adjudicative authority over her than it was

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 27

capable of at the time of her employment. She argues that

the adjudicatory authority of the Tribe is limited to the

disciplinary procedures provided for in the Personnel

Manual. At the time of her employment, the disciplinary

actions detailed in the Personnel Manual for an employee’s

breach of rules and standards of conduct in the course of

employment included a verbal warning, written reprimand,

suspension without pay, demotion, and involuntary

termination. The Personnel Manual provided that when the

Tribal Administrator was the subject of disciplinary action,

the Community Council directly oversaw the disciplinary

and grievance procedures.

We hold that the Tribe has the power to regulate

Knighton’s conduct incident to its sovereign powers to

exclude nonmembers from tribal land, and also, in the

alternative, under both Montana exceptions. “[W]here tribes

possess authority to regulate the activities of nonmembers,

‘[c]ivil jurisdiction over [disputes arising out of] such

activities presumptively lies in the tribal courts.’” Strate v.

A-1 Contractors, 520 U.S. 438, 453 (1997) (second and third

alterations in original) (quoting Iowa Mut. Ins. Co. v.

LaPlante, 480 U.S. 9, 18 (1987)). However, a tribe’s

adjudicative authority over nonmembers may not exceed its

regulatory authority. Id.

We conclude that under the facts of this case, the Tribe’s

adjudicatory authority does not exceed the regulatory

authority it had over Knighton’s conduct during her

employment under Water Wheel’s right-to-exclude

framework. As discussed above, the Personnel Manual

regulated the conduct that forms the basis of the Tribe’s

claims against Knighton and conferred jurisdiction over her

conduct as Tribal Administrator on the Community Council.

The fact that the Tribe now seeks to adjudicate these claims

28 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI

in the Tribal Court does not undermine its jurisdiction over

the Tribe’s claims.

Likewise, examining the Tribe’s adjudicative authority

over Knighton’s conduct under Montana, we return to the

illuminating Eighth Circuit opinion in Attorney’s Process.

Similar to this case, in Attorney’s Process, the tribal court

system was established after the tort claims against API

arose. 609 F.3d at 933. API argued that the tribe lacked

jurisdiction over its claims because there were no written

regulations in place at the time which prohibited the tortious

conduct that API was alleged to have committed. Id. at 938.

The court stated that “[i]f the Tribe retains the power under

Montana to regulate such conduct, we fail to see how it

makes any difference whether it does so through precisely

tailored regulations or through tort claims such as those at

issue [in the case].” Id. The court concluded that because

API’s intervention onto tribal land threatened the “‘political

integrity, the economic security, [and] the health [and]

welfare’ of the Tribe,” the tribe had the authority to regulate

and adjudicate such conduct under Montana, as well as

incident to its sovereign right to exclude nonmembers from

tribal land. Id. at 940 (alterations in original) (quoting

Montana, 450 U.S. at 566).

As the court in Attorney’s Process recognized, our task

is to outline the boundaries of the inherent sovereign power

retained by the Indian tribes. “Those boundaries are

established by federal law, a source of law external to the

tribes.” Id. at 938 (citing Nat’l Farmers Union, 471 U.S.

at 852). In contrast, “positive tribal law,” the court stated,

“is internal to the tribes.” Id. “It is a manifestation of tribal

power, and as such it does not contribute to the external

limitations which concern us here. Once it is determined that

KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 29

certain conduct is within the scope of a tribe’s power as a

matter of federal law, our inquiry is at an end.” Id.

In the present case, the Tribe’s authority to regulate

Knighton’s conduct derived not only from its sovereign

power to exclude nonmembers from tribal lands, but also

from its inherent sovereign power to regulate consensual

relations with nonmembers “through taxation, licensing, or

other means,” and to protect the “political integrity, the

economic security, [and] the health [and] welfare” of the

Tribe. Montana, 450 U.S. at 565–66.

Once the authority to regulate nonmember conduct

exists, whether from Water Wheel or from Montana, then the

observation from the court in Attorney’s Process persuades

us that it makes no difference whether the Tribe adjudicates

Knighton’s conduct through the Personnel Manual or

through tort law.

CONCLUSION

There is no general rule as to the extent of a tribe’s

adjudicative jurisdiction over non-Indians on tribal land, but

“it is clear that the general rule announced in Strate, and

confirmed in Hicks and Plains Commerce Bank, that

adjudicative jurisdiction is confined by the bounds of a

tribe’s regulatory jurisdiction” applies. Water Wheel,

642 F.3d at 814. Given the existence of regulatory authority,

the sovereign interests at stake, and the congressional

interest in promoting tribal self-government, we conclude

that the Tribal Court has jurisdiction over the Tribe’s claims

in this case.

AFFIRMED.