Petition for Writ of Certiorari — Wyandotte Tribe v. Oklahoma ex rel. Oklahoma Tax Commission

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

WYANDOTTE TRIBE OF OKLAHOMA, Petitioner,

v.

STATE OF OKLAHOMA ex rel.

OKLAHOMA TAX COMMISSION, Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

GLENN M. FELDMAN

O'Connor, Cavanagh,

Anderson, Westover,

Killingsworth & Beshears

1 East Camelback Road, #1100

Phoenix, Arizona 85012

(602) 263-2452

Attorneys for Petitioner

QUESTIONS PRESENTED

I. Whether the Oklahoma Tax Commission’s cause of

action to enforce a state tax in state court against. the

Wyandotte Tribe for on-reservation activitics is so "completely

preempted" by federal law as to be deemed to arise under

federal law for purposes of removal to federal court under 28

U.S.C. § 1441(a).

Zz Whether the Oklahoma Tax Commussion’s right to

relich against’ the Wyandotte Tribe requires resolution of

substantial questions of federal law, so as to make the claim one

which arises under federal law for jurisdictional purposes

-

TABLE OF CONTENTS

gs SS

TABLE OF AUTHORITIES ...... ee Iv

ee eee ee

ey ne 5 ek ee et he 2

CONSTITUTIONAL AND STATUTORY

OS SS 2

I 3

: NATURE OF THE CONTROVERSY .... 3

bs eee eames LOW ews j

REASONS FOR GRANTING THE WRIT 7

I. THE COURT SHOULD CONSIDER THE

COMPLETE PREEMPTION DOCTRINE

AS IT RELATES TO STATE

TAXATION OF INDIAN TRIBES .. |... S

IT. THE COURT OF APPEALS IGNORED

BASIC PRINCIPLES OF FEDERAL

INDIAN LAW AND MANY DECISIONS

OF THIS COURT IN HOLDING THAT

THE TAX COMMISSION'S RIGHT

TO TAX THE WYANDOTTE TRIBE:

AROSE UNDER STATE LAW ....... 10

ITI. THE COURT OF APPEALS IGNORED

THREE ISSUES OF FEDERAL LAW

NECESSARY TO RESOLVE THE TAX

COMMISSION’S CAUSE OF ACTION .. 16

CONCLUSION

iv

TABLE OF AUTHORITIES

Cases : Page

Avco Corp. v. Aero Lodge,

PE ae NS oe ok x oes oe a cn oe eee bw 3)

Bryan v. Itasca County,

oO a) ae a 18

California v. Cabazon Band of Mission Indians,

ok kh ee a eee ee aw 12-16, 18

Caterpillar, Inc. v. Williams,

me SI, CAD gg ice ae eee. 4.8.9. 10

County of Oneida v. Oneida Indian Tribe,

WP Sip OP CUED. 5 ee ee tee ee lO, 11, 14

Federated Department Stores, Inc. v. Moitie,

co SE) A aR a a 4

I

Franchise Tax Board v. Construction Laborers Vacation Trust.

Me ey | 5 ei oe 1S, 1%

The Kansas Indians,

> wee 757, te Lite G67 (1867)... ww. ek ee 12

McClanahan vy. Antzona State Tax Comm'n.

Re a ae) 4,13

Merrell Dow Pharmaceuticals v. Thompson,

MOUS CS. ti#i#(#N¥ # ( ...... 17

Mescalero Apache Tribe v. Jones,

Ue Ne ee aps kee wp ne nS

Metropolitan Life Insurance Co. \. Taylor,

co eB: ee ere Y

Moe v. Confederated Salish & Kootenai Tribes,

425 U.S. 465 Ui eee ee ke 4

Montana \. Blackfeet Tribe

471 U.S. 759 (URS ee ass de> ia, 42

National Farmers Union v. Crow Tribe,

471 U.S. S43 CURR ee ee 12

New Mexico v. Mescalero Apache Tribe,

462 U.S. 324 (ESR ee ess 18

Oklahoma Tax Commission v. Citizen Band Potawatomi

Indian Tribe of Oklahoma,

498 U.S. _, 112 Sa ea ee ew a... 1S

Oklahoma Tax Commission v. Graham,

489 U.S. 838 (19SF) . oe ee 3, 5-8, 10, 15-18

Oneida Indian Nation v. County of Oneida,

414 U.S. 661 (1974). oe eee ee ee es 10, 11, 14

Seneca-Cayuga Tribe v. State ex rel. Thompson,

874 F.2d 707 (10th Ge gee. -. 46

State, ex rel. May v. Seneca-Cayuga Tribe of Oklahoma,

711 P.2d 77 (Obie. Ge eee a 16

Three Affiliated Tribes v. Wold Engineering,

476 U.S. 877 (9860) eee, Is

Washington v. Confederated Tribes of the Colville Reservation,

447 US. 134 (PSR ae eee ee 11

White Mountain Apache Tribe v. Bracker,

448 U.S. 136 (1900 ee 14

VI

Williams v. Lee,

ge Pe, es 1]

Worcester v. Georgia,

re aes S05 CORD) Ww... eee 11

Statutes:

ee | OE Se |) Se re 16

28 U.S.C. § 1441 Repent e kb VOM. 8b & ea 8 -4-0-n adle-¥'vs te Ae

28 U.S.C. § 1254 (1) )

No.

IN THI

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

WYANDOTTE TRIBE OF OKLAHOMA, Petitioner.

STATE OF OKLAHOMA ex rel.

OKLAHOMA TAX COMMISSION, Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

The Petitioner, Wyandotte Tribe of Oklahoma, respectiully

prays that a Writ of Certiorart be issued to review the decision

and judgment of the United States Court of Appeals tor the

Tenth Circuit ente-ed in this proceeding on November 26, 1990.

OPINIONS BELOW

The decision and judgment of the Tenth Circuit Court of

Appeals, which is reported at 919 F.2d 1449, is reprinted: in

Appendix A. The March 11, 1991, Order of the Court ot

Appeals denying the Wyandotte Tribe’s petition for rehearing

2

is unreported and is reprinted in Appendix B.' The Order of

the U. S. District Court for the Northern District of Oklahoma,

from which appeal was taken to the Tenth Circuit, is also

unreported and is reprinted in Appendix D.

JURISDICTION

The judgment of the Court of Appeals was entered on

November 26, 1990. The Court of Appeals denied the

Wyandotte Tribe's petition for rehearing by Order entered

March 11, 1991. The jurisdiction of this Court is invoked under

28 U.S.C. $1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Article I, Sec. 8, Cl. 3 of the United States Constitution

provides, in pertinent part:

The Congress shall have power . . . to

regulate commerce. . . with the Indian

Tribes.

Title 28, United States Code, §§ 1441(a)(b) and (c) are

reprinted in Appendix E.

' The Tribe’s petition for rehearing was technically filed

out of time. The petition was accompanied by an affidavit of

the Tribe’s counsel stating, under oath and as an officer of the

court, that although the opinion of the Court of Appeals had

been entered on November 26, 1990, he had not received a

copy of the decision until December 17, 1990. The petition for

rehearing was filed four days later, on December 21, 1991, and

was treated as timely filed by the Court of Appeals. A copy of

counsel's affidavit is reprinted in Appendix C.

STATEMENT OF THE CASE

1. NATURE OF THE CONTROVERSY

This case, which involves the scope of federal

removal jurisdiction under 28 U.S.C. §1441(a), is a natural

extension of Oklahoma Tax Commission v. Graham, 489 U.S.

838 (1989). In Graham, the Court held that the federally-

based delense of triba. sovereign immunity from suit does not

convert a suit otherwise arising under state law into one which

arises under federal law for purposes of removal to federal

court. After discussing the “well-pleaded complaint rule" and

the scope of the federal removal statute, the Court held that

the possible existence of a tribal sovereign immunity defense

did not convert Oklahoma tax claims into federal questions, and

then summarily concluded, with no analysis or discussion, “and

there was no independent basis for original federal question

jurisdiction to support removal." Graham, 489 U.S. at 841

(emphasis added).

This case asks the Court to recognize the

independent basis for federal question jurisdiction that it did

not find in Graham. In fact, that jurisdiction is provided by a

well-recognized exception to the well-pleaded complaint ruie:

the complete preemption doctrine. That doctrine, frequently

discussed by the Court but not addressed in Graham, holds that

certain subject areas have been so completely preempted by

federal law that any cause of action raising such a claim, even

if artfully drafted to incorporate only state law theories, is

necessarily federal in character and may, therefore, be removed

to federal court... The Supreme Court has already held that

* In discussing the concept of artful pleading, the Court

has applied what it characterized as a "settled principle.” to hold

that a plaintiff may not “use artful pleading to close off

defendant's right to a federal forum... [and that] occasionally

the removal court will seek to determine whether the real

nature of the claim is federal, regardless of plaintiff's

4

cases involving title to Indian lands are completely preempted

so as to “arise under" federal law. Caterpillar, Inc. v. Williams,

482 U.S. 386, 393, n.& (1987). This case asks the Court to

determine whether state efforts to tax Indian tribes tor on-

reservation activities have likewise been completely preempted

by federal law for jurisdictional purposes.

- PROCEEDINGS BELOW

This action was originally filed by the Oklahoma

Tax Commission (the "Commission") in the District Court otf

Ottawa County, Oklahoma on December 30, 1986. — The

petition sought to enjoin the Wyandotte Tribe of Oklahoma,

(the "Tribe"), from operating a tribal convenience store on its

reservation unless it collected state sales taxes on all sales made

at the store, including sales made to Wyandotte tribal members.

On that same date, the state court entered on ex parte

temporary restraining order against the Tribe, requiring it,

among other things, to collect state taxes on sales made to

members of the Wyandotte Tribe.’

Shortly thereafter, the Tribe removed the state

court action to the United States District Court tor the

Northern District of Oklahoma. The Tax Conimission moved

to remand the case to state court. The District Judge denied

characterization.” Federated Department Stores, Inc. \. Motte,

452 U.S. 394, 397, n.2 (1981) (citation omitted). Plaintills

cannot “avoid removal jurisdiction by ‘artful[ly]) casting their

‘essentially federal law claims’ as state law claims.” /d.

’ To the extent the state court order compelled the Tribe

to collect state sales taxes from its own members. that order

violated well-established federal Indian law principles holding

that states cannot tax tribal members on their own reservation.

Moe v. Confederated Salish & Kootenat Tribes, 425 US. 463.

481-82 (1976); McClanahan v. Arizona State Tax Commission,

411 U.S. 164 (1973).

5

that motion, expressly finding that the Tribe had not argued,

and he was not holding, that removal was based upon the

existence of a tribal sovereign immunit; defense. Instead, the

District Judge premised his finding of federal question

jurisdiction on the doctrine enunciated in Franchise Tax Board

v. Construction Laborers Vacation Trust, 463 U.S.1, 13 (1983),

holding that the Tax Commission’s right to tax the Wyandotte

Tribe required resolution of substantial questions of federal law

in dispute between the parties.*

Following other procedural matters not relevant

here, the District Court decided the parties’ cross motions for

summary judgment. That judgment, which provided both

partics some relief, was cross-appealed to the Tenth Circuit

Court of Appeals.” The Tenth Circuit, after deciding other

issues, remanded the Tax Commission's action against the Tribe

to the District Court to determine whether it was barred by

tribal sovereign immunity from unconsented suit.

Once back before the District Court. the Tribe

filed a motion to dismiss, based on tribal sovercign immunity.

At the same time, the Commission once again moved to

remand the case to state court, this ime on the strength of

Oklahoma Tax Commission v. Graham, 489 U.S. $38 (1989).

which had been recently decided by this Court.

After bricling and oral argument, the District

4

In Franchise Tax Board, the Court stated: "Even though

state law creates appellants’ causes of action, its case might still

“arise under” the laws of the United States if a well-pleaded

complaint established that its right to relief under state law

requires resolution of a substantial question of federal law in

dispute between the parties.” 463 U.S. at 13.

The Tax Commission appealed several aspects of the

judgment but did not appeal from the District Court's denial of

its Motion to remand the case to state court.

6

Court denied the Tax Commission’s motion to remand and

granted the Tribe’s motion to dismiss. See Appendix D.

Although finding some superficial similarity between this case

and Graham, the District Court reiterated its previous holding

that the basis for finding federal question jurisdiction supporting

removal in this case was not the same as the basis reyected in

Graham. Appendix D at D-2. ("The Tribe has maintained

consistently throughout this lawsuit that... the sovereign

immunity defense is not the basis for removal in this case. . . .

The Tribe relied on the authority of Franchise Tax Board in its

previous opposition to remand. [Citation omitted]. This Court

also relied on that authority"). The District Court also went on

to specifically identify the three federal questions that tt

believed would have to be addressed in order to resolve the

Commission’s lawsuit secking to tax the Tribe. These questions

involved matters of constitutional, statutory and treaty

interpretation. Appendix D at D-3, n.3. The Tax Commission

appealed from that ruling.

On appeal, the Tenth Circuit reversed, vacating the

judgment of dismissal and remanding the Tax Commission's

action back to the state court. See Appendix A. The Court ol

Appeals, relying on Graham's analysis of the well-pleaded

complaint rule, held that the Commission’s cause of action did

not present a federal question. Although it recognized the

existence of a “complete preemption” exception, the Tenth

Circuit found that state taxation of an Indian tribe did not fall

within its scope. In addition, the Court of Appeals stated that

the Tribe had failed to identify any issue of federal law other

than tribal sovereign immunity necessary to resolve the

Commission's lawsuit, as required by Franchise Tax Board.

The Tribe filed a petition for rehearing, which was

denied by the Court of Appeals on March 11, 1991. This

petition followed.

:

REASONS FOR GRANTING THE WRIT

The Court’s per curiam decision in Graham was correct,

but incomplete. The Court was undoubtedly correct in holding

that the existence of an anticipated tribal sovereign immunity

defense would not convert a suit actually arising under state law

Into one arising under federal law for purposes of federal

removal jurisdicuon. The Graham analysis was incomplete,

however, because it summarily concluded that there was "no

independent basis" for finding federal question jurisdiction, 489

U.S. at 841, without considering the issue presented here:

whether the aflempted state taxation of an Indian tribe is so

“completely preempted" by federal law as to necessarily raise a

federal question.

That omission has now been compounded by the Tenth

Circuit's decision in this case, which found that state taxation of

Indian tribes has not been completely preempted by federal law,

and which affirmatively held that the State of Oklahoma's right

to tax the Wyandotte Tribe “arises under state law.” Appendix

A at A-4. That holding is contrary to long-settled principles of

federal Indian law, as repeatedly stated by this Court.

The effect of these two rulings is to improperly subject

the Wyandotte Tribe--and potentially every other tribe in the

United States--to adjudication of its most fundamental rights in

State courts. This is— plainly inconsistent with the well-

established principle that Indian tribes are wards of, and

subordinate to, the federal government, not the | states.

Moreover, this Court has repeatedly noted that subjecting

Indian tribes to state jurisdiction threatens the very existence of

those tribal governments. This ts contrary to current tederal

Indian policy, which seeks to promote and strengthen tribal sell-

government. In order to avoid a perpetuation of this problem,

review of this case by the Court is necessary.

I. THE COURT SHOULD CONSIDER THE

COMPLETE PREEMPTION DOCTRINE AS IT

RELATES TO STATE TAXATION OF INDIAN

TRIBES.

In Graham, the Court analyzed the well-pleaded complaint

rule in these terms:

The presence or absence of federal question

jurisdiction is) governed by the “well-pleaded

complaint” rule. "[W]hether a case is one arising

under [federal law] in the sense of the jurisdictional

Statute, 2... must be determined from what

necessarily appears in the plaintiff's statement of his

own claim in the bill or declaration, unaided by

anything alleged in anticipation or avoidance of

detenses which it is thought the defendant may

interpose.” [Citations omitted].

489 US. at 840-41. In reliance on Caterpillar, Inc. v. Williams,

482 U.S 386 (1987), the Court then held that the existence of

a tribal sovereign immunity defense did -not convert state law

tax claims asserted against the Chickasaw Nation into federal

questions in order to permit removal of that case to federal

court under 28 U.S.C. § 1441(a). Although that holding alone

would have resolved the narrow issue presented in Grafiam, the

Court went on to state, without analysis or discussion, “and

there was no independent basis tor original federal question

jurisdiction to support removal.” 489 U.S. at 841.

The issue not considered by the Court in Gra/iam--but

squarely presented here--is whether the state taxation of Indian

tribes has been so completely preempted by federal law that

any cause of action raising that issue is necessarily federal in

character for jurisdictional purposes.

The “complete preemption" doctrine is a long-recognized

9

exception to the well-pleaded complaint rule. In fact, it was

discussed in Caterpillar, the very case the Court relicd on in

deciding Graham. In Caterpillar, the Court stated:

There does exist, however, an "independent corollary”

to the well-pleaded complaint rule [citation omitted]

known as the "complete pre-emption" doctrine. On

occasion, the Court has concluded that the pre-

emptive force of a statute is so “extraordinary” that

it "converts an ordinary state common-law complaint

into one stating a federal claim for purposes of the

well-pleaded complaint rule.” [Citation omitted].

Once an area of state law has been completely pre-

empted, any claim purportedly based on that preempted

state law ts considered, from its inception, a federal

claim, and therefore arises under federal law. See

Franchise Tax Board, supra, at 24, 77 Lo bed 2d 420.

103 S Ct. 2841 ("[E]f a federal cause of action

completely pre-empts a state cause Of action any

complaint that comes within the scope of the tederal

cause of action necessarily ‘arises under’ tederal law’).

482 U.S. at 393 (emphasis added) (footnote omitted): see also

Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 63-64

(1987) ("Congress may so completely preempt a particular arca

that any civil complaint raising this select group of claims ts

necessarily federal in character"); Avco Corp. v. Aeru Lodge, 390

U.S. 557. 558-59 (1968)(Labor Management Relations Act

completely preempts state law cause of action for violation of

collective bargaining agreement).

The analysis of the complete preemption doctrine trom

Caterpillar, as quoted above, is significant here tor two reasons.

First, the Court in Caterpillar cited and quoted trom Franchise

Tax Board, the same case relied upon by the Wyandotte Tribe

and the District Court as providing the basis tor removal

jurisdiction in this case. See Appendix D at D-2.) Equally as

important, Caterpillar expressly recognized that some aspects ot

the relationship between states and Indian tribes tell within the

10

complete preemption doctrine. Specifically, the Court cited

Oneida Indian Nation v. County of Oneida, 414 U.S. 661 (1974)

as an example of complete preemption. Oneida was a suit

brought in federal court by an Indian tribe secking possession

of tribal lands. The court of appeals dismissed the action,

holding that the claim did not present a federal question under

the well-pleaded complaint rule. The Supreme Court reversed,

holding that the question of Indian land rights "was exclusively

the province of federal law," 414 U.S. at 670, and "is thus

completely preempted and arises under federal law." Caterpillar,

482 US. at 393, n.8. Significantly, Oneida was also cited as an

example of complete preemption in Franchise Tax Board, 463

U.S. at 23, n.25.

In Graham, this Court failed to consider whether state

taxation of Indian tribes has been completely preempted for

jurisdictional purposes. As discussed below, the Court. of

Appeals considered the question in this case, but reached the

wrong conclusion. That error--which will improperly relegate

many Indian tax cases to state court adjudication--should be

reviewed by this Court.

Il. THE COURT OF APPEALS IGNORED

BASIC PRINCIPLES OF FEDERAL

INDIAN LAW AND MANY DECISIONS

OF THIS COURT IN HOLDING THAT

THE TAX COMMISSION'S RIGHT TO

TAX THE WYANDOTTE TRIBE AROSE

UNDER STATE LAW.

Among the most basic tenets of federal Indian law is the

well-established rule that Indian affairs are governed by federal, ”

not state, law. This general principle derives from the

Constitution, which provides at Article I, Section & Cl. 3 that

"The Congress shall have power... to regulate commerce. . .

with the Indian tribes."

This principle has been recognized by the Supreme Court

on many occasions. In Oneida Indian Nation v. County of

Oneida, 414 U.S. 661, 671 (1974), the Court relied upon the

doctrine, first expressed by Chict Justice Marshall, that relations

with the Indian tribes "according to the settled principles of our

constitution, are committed exclusively to the government of the

Union" (quoting Worcester v. Georgia, 31 U.S. (6 Pet.) S15, S561

(1832)). Several years later, when that case came back belore

the Court, it reiterated: "With the adoption of the Constitution,

Indian relations became the exclusive province of federal law."

County of Oneida v. Oneida Indian Tribe, 470 U.S. 226, 234

(1985S). In a similar vein, the Court has also noted that “tribal

sovereignty is dependent on, and subordinate to, only the

Federal Government, not the States.” Washington —¥.

Confederated Tribes of the Colville Reservation, 447 U.S. 134.

154 (1980). More generally, the Court has also recognized that

"Congress has... acted consistently upon the assumption that

the States have no power to regulate the affairs of Indians on

a reservation.” Willlams v. Lee, 358 U.S. 217, 220 (1959).

The primacy of federal law, and the inapplicability of state

law, is even more pronounced with respect to taxation of Indian

tribes. Once again, this Court has repeatedly recognized that

fact. In Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1973),

the Court discussed what it characterized as “the special areca”

of state taxation of Indians and staicd that

absent cession of jurisdiction or other federal statutes

permitting it, there has been no satisfactory authority

for taxing Indian reservation lands or income trom

activitics carricd on within the boundarics of the

Reservation.

Id. at 148. In Montana v. Blackfeet Tribe, 471 U.S. 759 (1985)

the Court again recognized that the right to tax Indian tribes is

derived solely from tederal law:

The Constitution vests the Federal Government with

exclusive authority over relations with Indian tribes.

[Citations omitted]. As a corollary of this authority

... Indian tribes and individuals generally are exempt

12

from state taxation within their own territory.

Id. at 764. The Court in Blackfeet Tribe also quoted from

several older Indian tax cases, including The Kansas Indians, 5

Wall 737, 18 L.Ed. 667 (1867) (Indian tribe is "separated from

the jurisdiction of [the State] and to be governed exclusively by

the government of the Union"), and then noted that "this Court

has never wavered from the views expressed in these cases." 471

U.S. at 404-65. Finally, in National Farmers Union v. Crow

Tribe, 471 U.S. 845, $52, (1985), the Court further noted that

in “all” cases involving tribal exemption from state taxation, "the

governing rule of decision has been provided by federal law."

Perhaps the clearest statement by this Court that the

taxation of Indian tribes has been completely preempted by

federal law can be found in California v. Cabazon Band of

Mission Indians, 480 U.S. 202 (1987). In that case, the Court

held that certain tribal gambling activities were not subjcct to

State jurisdiction. In reaching this conclusion, the Court

declined to establish a broad, inflexible rule that would preclude

State jurisdiction over tribes and tribal members under any

circumstances, in the absence of congressional authorization.

480 U.S. at 214-15. However, the Court qualified that refusal

by expressly noting that in "the special area of state taxation of

Indian tribes and tribal members, we have adopted a per se rule.”

Id. at 215, n.17 (emphasis added). Because of its critical

importance to the issue raised in this petition, footnote 17 trom

the Cabazon decision is set forth here in its entirety:

In the special area of state taxation of Indian

tribes and tribal members, we have adopted a per se

rule. In Montana v. Blackfeet Tribe 471 U.S. 759

(1985), we held that Montana could not tax the

Tribe's royalty interests in oil and gas leases issued to

non-Indian lessees under the Indian Mineral Leasing

Act of 1938. We stated: "In keeping with its plenary

authority over Indian affairs, Congress can authorize

the imposition of state taxes on Indian tribes and

individual Indians. It has not done so often, and the

13

Court consistently has held that it will find the

Indians’ exemption from state taxes lifted only when

Congress has made its intention to do so

unmistakably clear." /d., at 765. We have repeatedly

addressed the issuc of state taxation of tribes and

tribal members and the state, federal, and tribal

Interests which it implicates. We have recognized

that the federal tradition of Indian immunity from

State taxation Is very strong and that the state interest

in taxation is correspondingly weak. Accordingly, it

is unnecessary to rebalance these interests in every

case. In Mescalero Apache Tribe v. Jones, 41) US.

145, 148 (1973), we distinguished state taxation trom

other assertions of | state jurisdiction. We

acknowledged that we had made repeated statements

"to the effect that, even on reservations state laws

may be applicd unless such application would

interfere with reservation self-government or would

impair a right granted or reserved by federal law

I:ven so, in the special area of state taxation,

absent cession of jurisdiction or other federal statutes

permitting it, there has been no satisfactory authority

for taxing Indian reservation lands or Indian income

from activities carried on within the boundaries of the

reservation, and McClanahan v. Artzona State Tas

Comm'n, [411 US. 1604 (1973)]. lays to rest any

doubt in this respect by holding that such taxation ts

not permissible absent congressional consent.” /hid.

(emphasis added).

Cabazon, 480 U.S. at 215, n.17.

As this analysis makes clear, then, this Court has

repeatedly held that the "special area” of state taxation of

Indian tribes has been completely preempted by federal law,

and that there is a per se rule under which states have no

authority to tax tribes in the absence of express congressional

14

authorization.®

The teaching of these cases is that from the adoption of

the Constitution, states have had no inherent power to tax

Indian tribes on their reservations. As a result, the State of

Oklahoma has no lawful right to tax the Wyandotte Tribe for

on-reservation activities unless that authority has been conferred

by federal law. In this case, therefore, as in Oneida, the rights

asserted by the Tax Commission "do not depend on... any

. Statutes of the State, but upon "federal law only.

In light of these well-established principles, the holding of

the Tenth Circuit Court of Anpeals in this case ts plainly wrong,

and warrants review by this Court. In its decision, the appellate

court held that the Okiahoma Tax Commission’s right to tax the

Wyandotte Tribe "arises under state law." Appendix A at A-4.

In fact, under federal law as discussed in Cabazon, the Tax

Commission has no right whatsoever under state law to assert

a state tax against an Indian tribe. To the extent that the state

asserts any right to tax the Tribe, that right must be derived

from federal law.

In attempting to justify its erroneous holding, the Tenth

Circuit then merely ignored footnote 17 in Cabazon. — As

support for its conclusion that Indian taxation has not been

completely preempted by federal law, the Court of Appeals

® The effect of this per se rule against state taxation is

significant. In areas other than taxation, where there is no

automatic preclusion, the Court must balance the respective

federal, state and tribal interests involved in cach case to

determine whether a particular assertion of state jurisdiction Is

preempted under federal law. See White Mountain Apache Tribe

v. Bracker, 448 U.S. 136, 144-45 (1980). With respect to state

efforts to tax an Indian tribe, however, the Court in Cabazon

expressly found such efforts to be per se preempted as a matter

of federal law, and therefore “it is unnecessary to rebalance

these interests in every case."

15

stated:

The Supreme Court has recognized that its cases

"have not established an inflexible per se rule

precluding state jurisdiction over tribes and tribal

members in the absence of congressional consent."

California v. Cabazon Band of Mission Indians, 480

U.S. 202, 214-15 (1987) (footnote omitted).

Appendix A at A-4. Yet, it is precisely the footnote omitted

by the Tenth Circuit, and quoted above, that sets forth the very

per se rule in the "special area" of state taxation that the Court

of Appeals failed to apply. As @ result, the ruling of the

appellate court is clearly erroneous.

Finally, the basic question raised here--whether issucs

involving the taxation of Indian tribes should be litigated in

federal or state courts--has not been rendered moot by the

Court's recent decision in Oklahoma Tax Commission v. Citizen

Band Potawatomi Indian Tribe of Oklahoma, 498 U.S.

112 L.Ed. 2d 1112 (1991). In that case, the Court held that

tribal sovereign immunity barred the Tax Commission trom suing

the tribe directly in order to collect state taxes from. on-

reservation activitics. However, the Court also made clear that

a number of Issues concerning the extent of possible judicial

remedies available to the state were yet to be determined. For

example, the Court suggested that suits against individual tribal

agents or officers might be permissible. /d. at 1123. Since the

Potawatomi decision was rendered, the Tax Commission has

already advanced this theory in two pending Indian tax cases in

Oklahoma state courts. If other states follow suit, this raises

the possibility of conflicting state and Federal court decisions as

to the proper scope of tribal sovereign immunity from state tax

suits. That result would clearly undermine the traditional notion

of a single body of federal Indian law governing Indian affairs

16

throughout the United States.’

The purpose behind the complete preemption doctrine is

to promote federal adjudication of uniquely federal issues. The

taxation of Indian tribes is just such an issue. The decision of

the Court of Appeals in this case will generate inconsistent

state court rulings in an area that has traditionally been

governed by federal law. To avoid this result, the Court should

grant review in this case.

Ill. THE COURT OF APPEALS IGNORED

THREE SUBSTANTIAL ISSUES OF

FEDERAL LAW NECESSARY TO

RESOLVE THE TAX COMMISSION'S

CAUSE OF ACTION.

Finally, in addition to ignoring footnote 17 in Cabazon,

the Court of Appeals also ignored the express holding of the

District Court in its analysis of Franchise Tax Board. As

discussed above, that case held that "a case may still arise under

the laws of the United States if a right to relief under state law

requires resolution of a substantial question of federal law in

7

This possibility is very real. The Oklahoma Supreme

Court has held that the extent of tribal sovereign immunity from

suit available to Oklahoma tribes in state court is determined

by balancing the respective federal, state and tribal interests

involved in cach case. State ex rel. May v. Seneca-Cayuga Tribe

of Oklahoma, 711 P.2d 77, 83-84, 89-92 (Okla. 1985) (tribal

sovereign immunity does not bar suit by state secking to

prohibit tribal bingo games). The Tenth Circuit Court of

Appeals, in enjoining further state court proceedings in that

case, found that Oklahoma’s method of analysis "has never been

applied by a federal court to sovereign immunity questions.”

Seneca-Cayuga Tribe v. State ex rel. Thompson, 874 F.2d 707.

715, n.7 (10th Cir. 1989). Thus, the scope of tribal sovercign

immunity in Oklahoma could vary dramatically depending on

whether the issue was being litigated in f- eral or state court.

17

dispute between the parties.” 463 U.S. at 13.* In discussing this

aspect of federal jurisdiction, the Court of Appeals stated:

The Tribe does not, however, indicate any other issuc

of federal law that must be resolved to decide the

dispute between the parties other than the issue of

sovereign immunity. We believe that the Court's

decision in Graham forecloses any argument that the

sovereign immunity of the Tribe is a sufficient

question of federal law to allow removal of the case

to federal court.

Appendix A at A-S. Indeed, Graham docs foreclose such an

argument. However, neither the Wyandotte Tribe nor the

District Court even relied upon the existence of tribal sovereign

immunity as the basis for removal in this case. Appendix D at

D-2. To the contrary, the District Judge himself cxpressly

stated the three specific issues of federal law that he believed

required resolution in order to decide the Tax Commission's suit

seeking to tax the Tribe, and which supported removal

jurisdiction. /d. at D-3, n.3. Those three issues--the scope of

the Indian Commerce Clause, the effect of a 1795 treaty

between the United States and the Wyandotte Tribe; and the

tax exemption provided Indian tribes under the Buck Act, 4

U.S.C. $104 et seq.--are separate and distinct from any argument

based upon the Wyandotte Tribe’s federal common law

immunity from unconsented suit. The Tenth Circuit's failure to

recognize this fact also warrants review by this Court.

* The Court affirmed the continued vitality of this principle

of federal question jurisdiction in Merrell Dow Pharmaceuticals

v. Thompson, 478 U.S. 804, 808-09 and n.5 (1986).

18

CONCLUSION

The Supreme Court has repeatedly recognized that current

federal Indian policy supports the twin goals of tribal self-

government and strengthened reservation economies. See, e.g.

Cabazon, 480 U.S. at 216-17 and ns. 19 and 20; New Mexico v.

Mescalero Apache Tribe, 462 U.S. 324, 335 and n.17 (1983).

The Court has also recognized on many occasions that tribal

sovereignty and self-government are seriously threatened when

subjected to state jurisdiction. Cabazon, 480 U.S. at 208 ("a

grant to States of general civil regulatory power over Indian

reservations would result in the destruction of tribal institutions

and values"); Three Affiliated Tribes v. Wold Engineering, 476

U.S. 877, 891 (1986) (state court jurisdiction over Indian tribe

"invites a potentially severe impairment of the authority of the

tribal government, its courts and its laws"), Bryan v. ltasca

County, 426 U.S. 373, 388 (1976) (subjecting tribes to state

taxing authority would "result in the undermining or destruction

of... tribal governments").

If the most fundamental rights of American Indian tribes

are to be subjected to state court adjudication, that decision

should ‘be reached only after the most rigorous legal analysis

possible. That analysis has not yet been done with respect to

the issues presented here. The Court in Graham did not

consider the complete preemption doctrine as it applics to state

taxation of Indian tribes. The Tenth Circuit considered it, but

ignored the most important analytical principles. This case

19

presents the opportunity for the Court to fully address this far-

reaching Indian law issue. Accordingly, this petition for a writ

of certiorari should be granted.

Dated this 10th day of May, 1991.

Respectfully submitted,

GLENN M. FELDMAN

O'Connor, Cavanagh, Anderson

Westover, Killingsworth & Beshears

One East Camelback Road., #1100

Phoenix, Arizona 85012-1656

Attorneys for Petitioner

APPENDIX A

PUBLISH

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

STATE OF OKLAHOMA, )

ex rel. OKLAHOMA TAX )

COMMISSION, ) No. 90-5100

)

Plaintiff-Appellant, )

)

V. )

)

WYANDOTTE TRIBE OF )

OKLAHOMA, a Federally _ )

Chartered Corporation, )

Defendant-Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OKLAHOMA

(D.C. No. 87-C-9-E)

Submitted on the briefs:

Joe Mark Elkouri, General Counsel, and David Allen Miley,

Assistant General Counsel, Oklahoma Tax Commission,

Oklahoma City, Oklahoma, for Plaintiff-Appellant.

Glenn M. Feldman of O'Connor, Cavanagh, Anderson,

Westover, Killingsworth & Beshears, Phoenix, Arizona, tor

Defendant-Appellee.

Before McKAY, MOORE, and BRORBY, Circuit Judges.

McKAY, Circuit Judge.

After examining the briefs and appellate record, this panel

has determined unanimously that oral argument would not

materially assist the determination of this appeal. See Fed. R.

App. P. 34(a); 10th Cir. R. 34.1.9. The case is therefore

ordered submitted without oral argument.

The Oklahoma Tax Commission appeals here the district

court’s denial of the Commission’s motion to remand this action

to collect state taxes against the Wyandotte Tribe of Oklahoma

to state court for lack of federal jurisdiction. In the alternative,

it appeals the district court’s dismissal of the case based on the

court’s finding that the Tribe is immune from suit. Because we

find that the district court did not have jurisdiction over the

suit, we need not reach the immunity issuc.

The Commission originally filed suit in the District Court

of Ottawa County to enjoin the Tribe from operating a

convenience store until it had collected and paid all applicable

state taxes. The Tribe then filed suit in the United States

District Court for the Northern District of Oklahoma to enjoin

the Commission from enforcing state tax laws against the store.

The store is owned by the Tribe and located on tribal property.

The action in state court was removed to federal court, and the

cases were consolidated for trial.

At the district court, the Tribe filed a motion to dismiss

the action it had filed in federal court, so that the only

remaining case would be the action the Commission originally

filed in state court. The Commission did not oppose the Tribe's

motion. The Commission instead moved to remand the state

action back to state court. The district court denied both

motions and reached the merits of the case. On appeal, this

court held that the Tribe’s action in federal court should be

dismissed pursuant to its own motion. The Commission's action

was then remanded to the district court for a determination of

whether the Tribe is immune from suit under the doctrine of

sovereign immunity.

On remand, the Commission once again moved the district

court to remand the case back to state court. The Tribe

submitted a motion to dismiss based on sovereign immunity.

The district court denied the Commission’s motion to remand

and dismissed the case based on the Tribe's defense of

sovercign immunity. The Commission then brought this appeal.

Unless expressly authorized by Act of Congress, an action

brought in state court may not be removed to federal court

unless the action may have been brought there originally. See

28 U.S.C. § 1441 (1988); Caterpillar, Inc. v. Williams, 482 U.S.

386, 392 (1987). Under the "well-pleaded complaint" rule,

federal jurisdiction exists only when the plaintiffs well-pleaded

complaint raises issues of federal law. Franchise Tax Board vy.

Construction Laborers Vacation Trust, 463 U.S. 1, 9-12 (1983).

Appellees claim federal jurisdiction here under 28 U.S.C. § 1331

(1988). We review questions of law de novo. Morgan v. City

of Rollins, 792 F.2d 975, 978 (10th Cir. 1986).

Citing the Supreme Court’s recent decision in Oklahoma

Tax Comm'n v. Graham, 489 U.S. 838 (1989), the Commission

argues that the action was improperly removed to federal court

because there is no federal question that appears on the face of

its complaint. In Graham, the Court held that a delense of

tribal immunity “to the claims asserted does not convert a suil

otherwise arising under state law into one which, in the

A-4

statutory sense, arises under federal law." Graham, 489 U.S. at

The Court therefore concluded that the state law tax

claims against the tribe did not present a federal question.

Though acknowledging Graham, the Tribe’s response is two-

fold. Initially, the Tribe argues that federal law has so

completely preempted this area of the law that appellant's

complaint is federal in character, thereby vesting federal courts

with jurisdiction over the Commission’s complaint. Second, the

Tribe contends that the suit requires the resolution of a

substantial question of federal law to establish a right to relict

under state law. We address, in turn, cach of the Tribe's

arguments.

A.

A well-established exception to the well-pleaded complaint

rule is the complete preemption doctrine. It is premised on the

proposition that "Congress may so completely pre-cmpt a

particular area that any civil complaint raising this select group

of claims is necessarily federal in character." Metropoliuan Life

Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). The Tribe claims

that Indian taxation is such a creature of federal law. Citing

Oneida Indian Nation v. County of Oneida, 414 U.S. 661 (1974),

the Tribe argues that relations with Indian tribes, “according to

the principles of our constitution, are committed exclusively to

the government of the union.” /d. at 671 (quoting Worcester

v. Georgia, 6 Pet. 515, 561 (1832)).

The dispute in Oneida, however, centered around title to

certain property. In determining that the suit could be removed

to federal court, the Court stated: "Nor in sustaining the

jurisdiction of the District Court do we disturb the well-pleaded

complaint rule .... Here, the right to possession itself is

claimed to arise under federal law in the first instance." /d. at

676. The Commission’s claim of right to tax the Tribe here,

however, arises under state law. The Supreme Court has

recognized that its cases "have not established an inflexible per

A-5

se rule precluding state jurisdiction over tribes and _ tribal

members in the absence of congressional consent." California

v. Cabazon Band of Mission Indians, 480 U.S. 202, 214-15

(1987) (footnote omitted). We are therefore faced with a

situation "where the underlying right or obligation arises under

state law and federal law is merely alleged as a barrier to its

effectuation.”. Oneida, 414 U.S. at 675. Under Graham, this

barrier does not convert this to a case arising under federal law.

B.

We turn next to the Tribe's claim that the Commission's

complaint runs afoul of what it terms the artful pleading

exception to the well-pleaded complaint rule. The Supreme

Court, in Franchise Tax Board v. Construction Laborers Vacation

Trust, 463 U.S. 1, 13 (1983), stated that "a case may still arise

under the laws of the United States if a right to relief under

State law requires resolution of a substantial question of federal

law in dispute between the parties." The Tribe argues that the

question of whether the Commission may properly plead a cause

of action to tax the Tribe requires analysis- of a substantial

question of federal law.

The Tribe does not, however, indicate any other issue of

federal law that must be resolved to decide the dispute between

the parties other than the issue of sovereign immunity. We

believe that the Court's decision in Graham ftorecloses any

argument that the sovereign immunity of the Tribe is a

sufficient question of federal law to allow removal of the case

to federal court. We therefore are bound by the Graham

decision.

ITT.

The decision of the district court denying the Commission's

motion to remand the case back to the district court is

therefore REVERSED. The issue of whether the Tribe is

A-6

immune from suit should not have been addressed and,

accordingly, we VACATE the judgment of tie district court

dismissing the action. We remand the cause to the district

court with directions to remand the action to the District Court

of Ottowa County for further proceedings.

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

STATE OF OKLAHOMA, )

ex rel. OKLAHOMA TAX _)

COMMISSION, ) No. 90-5100

)

Plaintiff-Appellant, )

)

v. )

: )

WYANDOTTE TRIBE OF )

OKLAHOMA, a Fedcrally _ )

Chartered Corporation, )

)

Defendant-Appellee. )

ORDER

Filed March 11, 199]

Before HOLLOWAY, Chicl Judge, McKAY, LOGAN,

SEYMOUR, MOORE, ANDERSON, TACHA, BALDOCK,

BRORBY, and EBEL, Circuit Judges

This matter comes on for consideration of appellec’s

untimely petition for rehearing and suggestion for rehearing cn

banc in the captioned cause.

Upon consideration whereof, the petition shall be

considered timely filed on December 21, 1990, and is denied by

the panel that rendered the decision sought to be reheard.

| eceees

B-2

In accordance with Rule 35(b), Federal Rules of Appellate

Procedure, the suggestion for rehearing en banc was transmitted

to al! of the judges of the court who are in regular active

service. No member of the panel and no judge in regular active

service on the court having requested that the court be polled

on rehearing en banc, Rule 35, Federal Rules of Appellate

Procedure, the suggesticu for rehearing en banc is denied.

Entered for the Court

_/S/

ROBERT L. HOECKER, Clerk

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

STATE OF OKLAHOMA, )

ex rel. OKLAHOMA TAX _ )

COMMISSION, NO. 90-5100

—

Plaintiff-Appellant,

VS.

WYANDOTTE TRIBE OF

OKLAHOMA,

Defendant-

Appellee.

me eee eee eee Se”

AFFIDAVIT OF GLENN M. FELDMAN

STATE Or ARIZONA _ )

) SS.

County of Maricopa )

Glenn M. Feldman, being duly sworn upon his oath, states

as follows:

l. I am the attorney of record for the Wyandotte

Tribe of Oklahoma, the defendant-appellce in this matter.

ra I am admitted to practice law in the State of

Arizona and the District of Columbia. I am a member of the

bar of the Tenth Circuit Court of Appeals and, therefore, | am

an officer of this Court.

3. I make this affidavit in order to explain why the

Wyandotte Tribe’s Petition for Rehearing and Suggestion for En

C-2

Banc Consideration has been filed more than 14 days alter the

entry of judgment in this matter.

4. I never received a copy of the judgment in this

case from the Clerk’s office, although the judgment was

apparently filed with the Clerk on November 26, 1990.

x The first indication I had that this case had been

decided occurred on Monday, December 17, 1990. On that

date, I received in the mail, from David Miley. the attorney for

the Oklahoma Tax Commission, a Bill of Costs that Mr. Miley

had filed in the District Court secking costs with respect to this

appeal. A copy of that Bill of Costs is attached hereto.

6. This Bill of Costs plainly indicated that Mr. Miley

believed that he had prevailed on this appeal, although | had

never received any opinion or judgment from the Court.

7. I immediately called the Office of the Clerk and

explained the situation. After some checking. | was then

advised that a judgment had been entered on November 26,

1990. 1 told the Clerk’s assistant with whom I was speaking

that | had never received a copy. She contirmed my mailing

address, which was correct. (In fact, | had received a letter

from the Court in mid-November advising me that this matter

would be decided without oral argument). I asked her if she

could fax a copy of the judgment to me. She said that she

could not, but that she would mail another copy to me.

s. I then immediately called Mr. Miley. He advised

me that a decision had been rendered, dated November 26,

1990, and that he had a copy. After bricfly discussing the

Courts’ holding, I asked him to fax a copy to me. He did so,

and I received a copy of the judgment, for the first time, at

approximately 2:30 p.m. on Monday, December 17, 1990.

9. Prior to that time, I was not aware of the existence

of the Court's judgment in this case, nor had I received oF seen

a copy.

C-3

10. Based upon these facts, I would respectfully request

that the Court consider the Wyandotte Tribe’s Petition for

Rehearing and Suggestion for En Banc Consideration, even

though it is being filed more than 14 days after the Court's

judgment was entered.

Dated this 20th day of December, 1990.

JSS/

Glenn M. Feldman

O'CONNOR, CAVANAGH,

ANDERSON, WESTOVER,

KILLINGSWORTH & BESHEARS

One East Camelback, #1100

Phoenix, Arizona 85012-1656

Attorneys for Wyandotte Tribe:

of Oklahoma

SUBSCRIBED AND SWORN TO betore me this

20th, day of December, 1990.

is

Notary Public

My Commission Expires:

April 9, 1993

APPENDIX D

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OKLAHOMA

STATE OF OKLAHOMA, )

ex rel, OKLAHOMA TAX)

COMMISSION, ) No. 87 C- 9-E

) 87-C-63-E

Plaintiff, ) Consolidated

)

Vv. )

)

WYANDOTTE TRIBE OF )

OKLAHOMA, )

Detendant.

ORDER

This matier is before the court on the mandate of the

United States Court of Appeals for the Tenth circuit remanding

to this court the issue of sovercign immunity.” The Tribe moves

to dismiss the State’s lawsuit on the grounds of sovercign

immunity. The State moves to remand the case on the

authority of Oklahoma Tax Commission v. Graham, US.

, 109 S.Ct. 1519 (1989).

The State asks the court to revisit the issue of removal in

this case. This court previously denied the State’s motion to

Order and Judgment of April 5. 1989.) The Tenth

Circuit reversed this court’s order denying the motion of the

Wyandotte Tribe of Oklahoma (Tribe) to voluntarily dismiss its

suit for declaratory and injunctive relict. This reversal dismisses

the Tribe’s lawsuit and consequently the issue of sovereign

immunity must be addressed.

D-2

remand.” The State presented the same argument it now urges,

that its action against the Tribe has been removed on the basis

of a tribal immunity defense which presents a federal question

only when Congress expressly provides and, Congress has not

expressly provided for federal court adjudication of tribal

IimmMunitics,

The Tribe has maintained consistently throughout this

lawsuit that although the above is truc, the sovereign immunity

defense is not the basis for removal in this case. The Tribe

asserts that this court has original jurisdiction because the right

to relief under state law--to tax Indian sales of cigaretics on

Indian Jand--requires resolution of a substantial question of

federal law in dispute between the partics. The Tribe argues

that a federal court has original jurisdiction to determine

whether Congress has provided for state taxation of Indians in

these circumstances. The Tribe relics primarily upon branchise

Tax Board v. Laborers Vacation Trust, 464 US. 1, 1038 S.Ct.

2841 (1983) for the proposition that a case may sull arise under

the laws of the United States if a right to relic! under state law

requires resolution of a substantial question of federal law in

dispute between the parties. The Tribe relied of the authority

Of Franchise Tax Board in its previous opposition to remand

463 US. at, 103 S.Ct. at 2848. This court also relied on

that authority:

As the Court stated in Franchise Tax

Board with regard to the principics

for determining when a federal

question is presented in a removal

action, ‘simply to state these principles

is not to apply them to the case at

hand. Although the State’s petition

would at first blush appear to rely

“Order of March 31, 1987 in Case No. 87-C-63-E,

consolidated with this case pursuant to the Order of the same

date.

D-3

purely on state law, ultimately the

State must prove that it has the power

to tax the Wyandottes in order to be

able to recover on its claims.

Although the Wyandottes certainly

argue federal law in defense, the right

to relicf of the State under state law

requires resolution of a substantial

question of federal law in dispute

between the partics because the State

must, as an clement of its claim, prove

that it has the power to apply its laws

to the Wyandottes. Therelore the

court concludes that a federal

question Is presented by the State's

petition, and the motion to remand

should be denied.

(Order of March 31, 1987, at p. 3)’

Although the court did not specilically so state, it

believed that the federal questions implicated by the case

included at least the following: (1) the Constitution, Article 1,

§8 which gives the federal government, not the states, the

power to regulate commerce with the Indian tribes see,

Washington v. Confederated Tribes, 447 U.S. 134, i00 S.Ct. 2009

(1980) (the power to tax affects the regulation of commerce

with the tribes); (2) treaty rights, including the Treaty with the

Wyandotte, et. al., of 1795, specifically Article VII which states

that Indians may not be imposed on their trade. and (3) section.

109 of the Buck Act, 4 U.S.C. §104 ct. seq... which exempts

Indians trom state sales or use taxes, see, Warren Trading Post

Co. v. Arizona State Tax Comm'n, 85 S.Ct. 1242, 1245-1246, 380

U.S. 685, 690-691 (1965) (The Buck Act, in which Congress

permits states to levy sales or use taxes within certain federal

areas, docs not apply to Indian reservations.”)

D-4

Oklahoma Tax Commission v. Graham appears to overrule

this court’s earlier reasoning that the taxation issue presents a

basis for removal. The Court did not refer to Franchise Tax

Board but, did state:

In Caterpillar, [Caterpillar, Inc. v.

Williams, 482 U.S. 386 (1987)| we

ruled that application of the well-

pleaded complaint rule defeated

federal question jurisdiction, and

therefore removability, in a case in

which employees sucd on personal

State law employment contracts. We

refused to characterize these state law

claims as arising under federal law

even though an interpretation of the

collective bargaining agreement might

ultimately provide the employer a

complete defense to the individual

claims, and even though employee

claims on the collective bargaining

agreement would have been thie

subject of original federal jurisdiction.

Caterpillar, supra, at 396-398. The

State law tax claims in the present

case must be analyzed in the same

manner. Tribal immunity may provide

a federal defense to Oklahoma's

claims. See Puyallup Tribe, Inc. \.

Washington Game Dept., 433 U.S. 165

(1977). But it has long been settled

that the existence of a federal

immunity to the claims asserted does

not convert a suit Otherwise arising

under state law into one which, in the

Statutory sense, arises under federal

law. Gully v. First National Bank, 299

U.S. 109 (1936). The — possible

existence of a tribal immunity detense,

D-5

then, did not convert Oklahoma tax

claims into federal questions, and

there was no independent basis for

original federal jurisdiction to support

removal.

U.S. at , 109 S.Ct. at 1521. Therein lies the basis

upon which the State reurges its motion to remand.

Despite the authority of Graham, this court must address

the case in its current procedural context. Graham was decided

before the Tenth Circuit issued its mandate directing this court

to address the sovercign immunity issuc and, this court must

assume that it is to comply with these directions despite

Graham. Further, if sovereign immunity operates as a complete

defense to the State’s action, then neither this court nor the

State court has jurisdiction to hear this suit and remand would

be futile. Neither a federal nor a state court has jurisdiction

Over a Suit against a tribe absent either “an clfective waiver or

consent" by the tribe, Puyallup Tribe, Inc. v. Washington Game

Department, 433 U.S. 165, 172, 97 S.Ct. 2616, 2621 (1977), oF

an ‘unequivocal expression of contrary legislative intent” to

waive sovercign immunity. Santa Clara Pueblo v. Martinez, 436

U.S. 49, 59, 98 S. Ct. 1670, 1677 (1978). While tribal sovercign

immunity is not absolute, waivers of sovercign immunity are

strictly construed. Seneca-Cayuga Tribe of Oklahoma \. State.

874 F.2d 709, 715 (10th Cir. 1989). It is, therclore, appropriate

to address the sovercign immunity tssuc.

The court previously has held that the convenience store

over which the state seeks to impose Cigarette Excise Laxes Is

Indian Country within the meaning of 18 U.S.C. §115SI(a).

Because the convenience store is located in Indian Country, the

Tribe possesses sovercign powers with respect to the land and

the store. The Cuizen Band Potawatomi Indian Tribe of

Oklahoma v. The Oklahoma Tax Commission, 888 F.2d 1303,

1306 (10th Cir. 1989). The State does not contend that the

Tribe has in any way given its consent to suit against it, nor

does it argue that Congress has abrogated the Tribe's sovercign

D-6

immunity.“ Neither this court nor the state courts have

jurisdiction to hear the State’s suit in the face of the Tribe's

sovercign immunity. This case must, therefore, be dismissed.

IY IS THEREFORE ORDERED that this action is

dismissed. '

ORDERED this __ 9th day of April, 1990.

a

JAMES O. ELLISON

UNITED STATES DISTRIC

JUDGE

4

In The Ctitzen Band Potawatomt, the Venth Circuit also

noted that Oklahoma has no authority to tax the transactions ol

a convenience store located in Indian Country unicss Oklahoma

has received an independent jurisdictional grant of authority

from Congress, citing to Bryan v. Itasca County, 426 US. 373.

376-377, 98 S.Ct. 2101, 2105-2106 (1976); Moe 1. ¢ onfederated

Salish and Kootenai Tribes, 425 U.S. 463, 475-476. 96 SCL. 1634.

1645-1646 (1976); McClanahan +. Anzona Tax Comm'n. 41)

US. 164, 175-177, 93 S.Ct. 1257. 1265-1267 (1973). United

States v. Barquin, 799 F.2d 619, 621 (10th Cir. 1986). $88 F.2d

1306-1307,

APPENDIX E

Tithe 28, United States Code, §§ 1441(a)(b) and (ce).

$1441. Actions removable gencrally.

(a) Except as otherwise expressly provided by Act of

Congress, any civil action brought in a State court of which the

district courts of the United States have original jurisdiction,

may be removed by the defendant or the defendants, to the

district court Of the United States for the district and division

embracing the place where such action is pending. — bor

purposes of removal under this chapter, the citizenship) of

defendants sued under fictitious names shall be disregarded.

(b) Any civil action of which the district courts have

original jurisdiction founded on a claim or right arising under

the Constitution, treaties or laws of the United States shall be

removable without regard to the citizenship or residence of thc

parties. Any other such action shall be removable only i none

of the partics ino interest: properly joined and served as

defendants is a citizen of the State in which such action is

brought.

(¢) The court to which such civil action is removed is not

preciuded trom hearing and determining any claim in such civil

acuion because the State court from which such civil action ts

removed did not have jurisdiction over that claim.

(As amended Oct. 21, 1976, Pub... 94-583, 8 6, 90 Stat. 289%.

June 19, 1986, Pub... 99-336, § 3(a), 100 Stat. 637. Nov. 19.

1988, Pub.L. 100-702, Tithe X, § 1016(a), 102 Stat. 4669, Dec.

1, 1990, Pub.L. 101-6050, Tithe TIT, § 312, 104 Stat. S11

i

=

= >