Amicus Curiae Brief — Kiowa Tribe of Okla. v. Manufacturing Technologies, Inc.

in the : °

Supreme Court of the United States

October Term, 1996

>

On Writ Of Certiorari To The

Oklahoma Court Of Appeals

>

BRIEF OF AMICUS CURIAE STATES OI

SOUTH DAKOTA, ALASKA, CALIFORNIA

CONNECTICUT, FLORIDA, HAWAIL, LOUISIANA

MASSACHUSETTS, MICHIGAN, MONTANA, NEW

HAMPSHIRE, NEW YORK, UTAH, VERMONT AND

WISCONSIN IN SUPPORT OF RESPONDENT

»

Bruce M. Bore.tHo

A*torney General

©. te of Alaska

Danie E. LUNGREN

Attorney General

State of California

RicHarp BLUMENIHAI

Attorney General

State of Connecticut

Rosert A. ButTrerworTH

Attorney General

State of Florida

Marcery S. BRONSTER

Attorney General

State of Hawaii

RicHarp P. levous

Attorney General

State of Louisiana

Scott HARSHBARGER

Attorney General

State of Massachusetts

FRANK J. Keviey

Attorney General

State of Michigan

JoserH P. Mazurek

Attorney General

State of Montana

Prue T. MCLAUGHLIN

Attorney General

State of New Hampshire

Dennis C. Vacco

Attorney General

State of New York

Jan GRAHAM

Attorney General

State of Utah

Wittam H. Sorretr.

Attorney General

State of Vermont

James E. Doyis

Attorney General

State of Wisconsin

TABLE OF CONTENTS

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EE a eee ek becckcscdacecccces

INTEREST OF AMICI STATES..........

SUMMARY OF ARGUMENT.......................

EE I OT POET TE ah Ode oe -

I.

NEITHER PETITIONER NOR THE UNITED

STATES HAS DEMONSTRATED THAT THE

TRIBES POSSESSED SOVEREIGN IMMUNITY

BEYOND INDIAN COUNTRY AS A MATTER

ee

PRECEDENT OF THIS COURT INDICATES

THAT THE STATES MAY ENTERTAIN SUITS

AGAINST INDIAN TRIBES ENGAGED IN

COMMERCIAL ACTIVITIES OFF THE RESER-

Oe ARE GRU eR els Guus de'ne 0 ébdecvcasccces:

POLICY REASONS MILITATE AGAINST THE

RECOGNITION OF OFF-RESERVATION SOV-

EREIGN IMMUNITY WITH REGARD TO

TRIBAL COMMERCIAL ENTERPRISES........

tnd Deke neeascehabeoncecenceccess

1]

TABLE OF AUTHORITIES

Page

Cases Crrep:

Berizzi Brothers Co. v. S.S. Pesaro, 27i °J.S. 562

GOUT + vacccnceeconncennseceheeuen>. ¢.dennaaueN 6

Brendale v. Confederated Tribes & Bands of Yakima

Indian Nation, 492 U.S. 408 (1989)..............4.. 10

Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1 (1831) ..... M

Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163

GREED ccc cccsccvccenecocesascessncesstendeqneesoes 10

Es Parte Porm, S86 UD. SOO CaP c occ cccccccccccccces 7

Fort Belknap Indian Comm’y v. Mazurek, 43 F.3d 428

(9th Cir. 1994), cert. denied, 116 S.Ct. 49 (1995) .... 14

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

nseeekeenesebdedascoaseetentoneanaan 11, 12, 13, 14, 15

Nevada v. Hall, 440 U.S. 410 (1979).............. 4,5,8

Oklahoma Tax Commission v. Chickasaw Nation, 115

BE Bee GG ccvccnccudcanubeuscanhvatapnaentes 12

Oklahoma Tax Commission v. Potawatomi Tribe, 498

Ss Wee GED oc Lccuccvcdesnnbemieassnss 12, 13, 18

Rice v. Rehner, 463 U.S. 713 (1983) .................. 14

Schooner Exchange v. McFadden, 11 U.S. (7 Cranch)

Bi Gens cache ccducwsddhecesd cadena 5, 6

Shaw v. Gibson-Zahniser Oil Corp., 276 U.S. 575

SE» dcdnckeon vbeohstbessaknndneeseamicae 15

Strate v. A-1 Contractors, 117 S.Ct. 1404 (1997)....... 14

United States v. Wheeler, 435 U.S. 313 (1978)......... 10

White Mountain Apache Tribe v. Bracker, 448 U.S.

GD QHD oc cc cece cccccssaccnceneteieaavebbanendens 12

TABLE OF AUTHORITIES - Continued

Page

StaTuTORY REFERENCES:

ee Ss Se EE ddcneddpivetecdubéeccessesectes 8

ee es Op N66 cnedadwedhdsecotstnandcucdes 7

OrHER AUTHORITIES:

Fm Ge, BRR. SE Fee CIDR. 2 oc cccecsvcccvccvceesses 15

Andreas F. Lowenfeld, Claims Against Foreign

States - A Proposal for Reform of United States

Law, 44 N.Y.U. L. Rev. 901 (1969)................ 6, 7

Bradley A. Furber, Two Promises, Two Propositions:

The Wheeler-Howard Act as a Reconciliation of the

Indian Law Civil War, 14 U. Puget Sound L. Rev.

ee I din doh idecd Cdncndsccaueeecwind enetseace 15

Carroll, Cashing in on Gaming Revenue, Tribes Use

Cash From Casinos and Bingo Halls to Build Ecou.-

omy, XII American Indian Report 16 (Aug. 1997) .... 16

Carroll, National Gambling Impact Study Commis-

sion, What Hand Will They Deal Tribes? X11 Amer-

ican Indian Report 12 (Aug. 1997) ................ 16

Comment, Tribal Sovereign Immunity: Searching for

Sensible Limits, 88 Colum. L. Rev. 173 (1988) ...... 19

H.R. Rep. No. 1804, 73d Cong., 2d Sess. 6 (1934) .... 15

S. Hrg. 104-694 (Sept. 24, 1996), pp. 88-130.......... 19

U.S. Department of the Interior, Bureau of Indian

RE, Gb Gd TE, Be Bein cc cc ccseccccccvccccccess 2

INTRODUCTION

The States of South Dakota, Alaska, California, Con-

necticut, Florida, Hawaii, Louisiana, Massachusetts,

Michigan, Montana, New Hampshire, New York, Utah,

Vermont and Wisconsin, respectfully submit a brief

amicus curiae in support of Respondent pursuant to

Supreme Court Rule 37.

°

INTEREST OF AMICI STATES

This case differs substantially from other Indian law

cases in which the interest of the States arises from the

presence of Indian country. In this case, the interest of the

Amici States lies in ensuring equal treatment of commer-

cial business enterprises conducted by tribes when those

enterprises move beyond Indian country and in ensuring

that tribes may be held directly accountable for compli-

ance with generally applicable, nondiscriminatory state

laws with respect to such activities. The States thus have

a strong interest in allowing their courts jurisdiction over

Indian commercial enterprises when those commercial

enterprises move beyond reservation boundaries, just as

the state has an interest in assuring that other commercial

enterprises which commit civil wrongs are subject to the

civil jurisdiction of the state courts. They also have a

strong interest in being able to enforce their and their

local governmental subdivisions’ laws against tribes,

which otherwise apply to tribal non-Indian country trans-

actions or activities, without either the need to resort to

official capacity suits where prospective relief is at issue

or to face the potential practical inability to obtain retro-

active relief.

Petitioner has forthrightly argued that, if its claim is

sustained here, an Indian tribe with a reservation in one

state has sovereign immunity “Anywhere In The United

States.” See Brief for Petitioner at 26. According to the

Bureau of Indian Affairs, there are “more than 550 feder-

ally recognized Tribes in the United States, including 223

village groups in Alaska.” U.S. Department of the Inte-

rior, Bureau of Indian Affairs, On the Web, p. 3. Each of

these tribes, under the theory offered by Petitioner and

the United States, has unfettered sovereign immunity to

operate commercially in each of the fifty states and could,

under their theory, commit torts, breach contracts, and

violate state law generally without recourse for the States

as against the offending tribe itself. This result is unac-

ceptable practically and unjustified doctrinally.

°

SUMMARY OF ARGUMENT

The Petitioner and the United States seek here to

have this Court expand the doctrine of tribal sovereign

immunity to off-reservation commercial transactions of

tribes. The demand is without legal basis. Neither the

tribe nor the United States cites any basis in the common

law of the States or in international law to support this

expansion of tribal sovereign immunity. Indeed, States

are not immune from suit in sister states even when

conducting governmental business, and a foreign state

does not possess immunity from suit regarding its com-

mercial transactions within the United States by virtue of

federal law.

The claim of the Petitioner and the United States is,

moreover, directly contrary to this Court's precedent

which holds that off-reservation commercial enterprises

of a tribe are not immune from state taxation.

The United States and the Petitioner also downplay

the significance of this litigation. In fact, the legal claim

made here is that each of the 320 federally recognized

tribes may conduct commercial enterprises in each of the

fifty states without fear of incurring a civil liability. The

claim effectively extends not only to contractual relations

but also to tort actions and violations of state law gener-

ally. As a result, the Petitioner and the United States

invite this Court to endorse the establishment of tiny

enclaves of immunity from state law created by each of

the 320 tribes in each of the fifty states.

The States submit that public policy considerations

strongly argue against the proposed unprincipled exten-

sion of tribal sovereign immunity to off-reservation com-

mercial transactions.

°

ARGUMENT

I.

NEITHER PETITIONER NOR THE UNITED STATES

HAS DEMONSTRATED THAT THE TRIBES POS-

SESSED SOVEREIGN IMMUNITY BEYOND INDIAN

COUNTRY AS A MATTER OF COMMON LAW,

The argument of Petitioner and the United States

before this Court is simply that because the tribes have

always had sovereign immunity off-reservation and

because Congress has not seen fit to divest the tribes of

that attribute, it must still exist. The fundamental flaw in

their argument, however, is that neither common law nor

Congress has ever recognized such immunity in favor of

Indian tribes. This conclusion flows ineluctably from Nev-

ada v. Hall, 440 U.S. 410, 414 (1979), where the Court

explained that the doctrine of sovereign immunity “is an

amalgam of two quite different concepts, one applicable

to suits in the sovereign’s own courts and the other to

suits in the courts of another sovereign.” The doctrine of

sovereign immunity, the Court explained, protected the

“immunity of a truly independent sovereign from suit in

its own courts.” Id. That concept had its origins in the

feudal system in which each petty lord was subject to suit

in the courts of a higher lord; since there was no lord

higher than the king, the king was necessarily immune

from suit.' Here, however, the issue is whether Petitioner,

or tribes in general, has sovereign immunity from suits in

the courts of another sovereign with respect to conduct

admittedly subject to the latter’s regulation.

A. There Is No Substantial Basis in International Law

to Recognize Sovereign Immunity for Off-Reserva-

tion Commercial Transactions.

In seeking to discover the basis for the tribal and

federal claim to sovereign immunity for off-reservation

commercial transactions, we first turn to transactions of

foreign nations in federal courts. In so doing, we recog-

nize that Petitioner and the United States correctly deny

1 The idea that “the King could do no wrong” also

supported the immunity of the king in his own courts. Hall, 440

U.S. at 415.

that the tribes can be classified as “foreign nations.”

Nonetheless, because they have failed to reveal the

source of their theory with regard to the origin of off-

reservation immunity, this Court's treatment of sovereign

immunity claims by foreign nations provides a useful

backdrop in answering the question presented.

This Court noted in Hall, 440 U.S. at 416, that the idea

that a sovereign could not be sued in its own courts did

not provide “support for a claim of immunity in another

sovereign’s courts.” (Emphasis added.) The source of sov-

ereign immunity in the courts of another sovereign must

be found “either in an agreement, express or implied,

between the two sovereigns, or in the voluntary decision

of the second to respect the dignity of the first as a matter

of comity.” Id.

In Schooner Exchange v. McFadden, 11 U.S. (7 Cranch)

116, 145-146 (1813), this Court found that the United

States had, in fact, agreed as a matter of comity not to

subject a foreign sovereign’s warship to the jurisdiction of

the federal courts. This Court also noted that the person

of a sovereign would be immune from arrest or detention

within a foreign territory, id. at 137, as would the foreign

ministers of that country or the troops of a foreign sover-

eign passing through the country with the permission of

the host sovereign. Id. at 138-139. The Court noted, how-

ever, that there might well be a distinction with regard to

a “prince” who conducts commerce in a foreign country

indicating the possibility that such a prince might well be

subject to the jurisdiction of the United States courts.

Without indicating any opinion on this question,

it may safely be affirmed, that there is a mani-

fest distinction between the private property of

the person who happens to be a prince, and that

military force which supports the sovereign

power, and maintains the dignity and the inde-

pendence of a nation. A prince, by acquiring

private property in a foreign country, may possi-

bly be considered as subjecting that property to

the territorial jurisdiction; he may be considered

as so far laying down the prince, and assuming

the character of a private individual; but this he

cannot be presumed to do with respect to any

portion of that armed force which upholds his

crown, and the nation he is entrusted to govern.

Id.

Despite the implications of this passage from the

Schooner Exchange, this Court a century later in Berizzi

Brothers Co. v. S.S. Pesaro, 271 U.S. 562, 574 (1926), found

that because the government of Italy owned a commercial

vessel, the vessel was immune from suit in the United

States courts. As described by Professor Lowenfeld, the

case

rested entirely on the Supreme Court’s under-

standing of international law and precedent,

without any reference to considerations of for-

eign policy or the desires of the United States

Government. Indeed, in the Pesaro case itself,

the State Department argued that immunity

should not be granted to a commercial vessel in

a claim arising out of a commercial transaction,

but the Justice Department disagreed and

declined to submit the State Department's opin-

ion to the Court.

Andreas F. Lowenfeld, Claims Against Foreign States - A

Proposal for Reform of United States Law, 44 N.Y.U. L. Rev.

901, 904 (1969). Two decades later, the Court affirmed the

Pesaro holding without reference to international law

solely on the basis that the State Department's

' certificate and request “must be accepted by the

courts as a conclusive determination by the

political arm of the government that the contin-

ued retention of the vessel interferes with the

proper conduct of our foreign relations.”

Id. at 905 (discussing Ex Parte Peru, 318 U.S. 578 (1943)).

In 1952, matters took a new turn. The State Depart-

ment concluded that foreign sovereigns should not be

immune from suit “in cases involving what it called

‘private’ or ‘non-public’ acts as contrasted with ‘sover-

eign acts.’” Id. at 906. Essentially, the new approach,

captured in the “Tate Letter” of May 19, 1952, responded

to the

widespread and increasing practice on the part

of governments of engaging in commercial

activities. ...

44 N.Y.U. L. Rev. at 906 (quoting letter of Jack B. Tate of

May 19, 1952). The practice then became for the State

Department to advise the courts on whether to grant

sovereign immunity based upon whether the transaction

was a sovereign or public act or a private act. Therefore,

from 1952 through 1976, the official policy of the State

Department was that commercial transactions entered

into by foreign powers were generally not entitled to

sovereign immunity.

In 1976, the Foreign Sovereign Immunities Act of

1976 was enacted. The Act provides generally for actions

against a foreign state based upon a commercial activity

carried on in the United States by the foreign state. 28

U.S.C. § 1605(a)(2). Sovereign immunity would not be

recognized in such situations. It also provided for the

waiver of a foreign state’s imraunity “by implication.” Id.

at § 1605(a)(1).

The history of a foreign sovereign’s immunity from

commercial transactions in United States courts thus is

not consistent. It begins with an implication that such

commercial transactions might subject the sovereign to

the jurisdiction of United States courts, an implication

repudiated a century later and then given new life by the

State Department and finally Congress. The law of the

United States is now clearly that foreign sovereigns are

subject to jurisdiction for their commercial activities

within the United States. The foregoing discussion

reveals why Petitioner and the United States have ada-

mantly declared that Indian tribes are not “foreign

nations” for the purpose of sovereign immunity. See Brief

for Petitioner at 26; Brief for the United States as Amicus

Curiae Supporting Petitioner at 8. Quite clearly, this body

of law does not support recognition by this Court of off-

reservation sovereign immunity for commercial transac-

tions.

B. Indian Tribes Cannot Claim Sovereign Immunity as

“States.”

Both Petitioner and the United States deny that tribes

should be treated as “states” for the purpose of sovereign

immunity law. See Brief for Petitioner at 24-25, 30; Brief

for the United States at 8. They are forced to this position

by Nevada v. Hall. In Hall, this Court found that whether

California recognized the sovereign immunity of Nevada

with regard to a tort committed by a Nevada employee

within California depended upon whether California

desired to recognize that sovereign immunity as a matter

of “comity.” See 440 U.S. at 418, 425-427. The Court

rejected the argument that California was bound by the

Constitution to grant sovereign immunity to Nevada. It

also sent a warning that the right of self-government

might be implicated by an opposite conclusion. This

Court noted:

In this Nation each sovereign governs only with

the consent of the governed. The people of Nev-

ada have consented to a system in which their

State is subject only to limited liability in tort.

But the people of California, who have no voice

in Nevada’s decision, have adopted a different

system. Each of these decisions is equally enti-

tled to our respect.

Id. at 426. Plainly, treatment of Petitioner as a State in

view of this Court’s jurisprudence would result in affir-

mance of the judgment below.

C. There Is No Basis in American Law to Require

States to Grant Sovereign Immunity to Tribes for

Their Off-Reservation Commercial Activities.

It would be anomalous to recognize sovereign immu-

nity for off-reservation commercial activities in view of

the treatment of foreign nations and States by this Court

and by Congress. The tribes certainly do not possess

more “sovereignty” than do foreign nations. See Cherokee

Nation v. Georgia, 30 U.S. (5 Pet.) 1, 18 (1831) (the Framers

did not have tribes “in view” when extending federal

10

court jurisdiction to controversies between States or citi-

zens thereof and foreign states, citizens or subjects). The

States’ position is protected by the very text of the Consti-

tution itself, together with the Tenth Amendment. Cf.

Brendale v. Confederated Tribes & Bands of Yakima Indian

Nation, 492 U.S. 408, 429 (1989) (plurality op.) (tribal

inherent authority is less expansive than local govern-

ment police powers); Cotton Petroleum Corp. v. New Mex-

ico, 490 U.S. 163, 191-193 (1989) (tribes are not States).?

Tribal power, on the other hand, is subject to complete

defeasance by the United States. United States v. Wheeler,

435 U.S. 313, 323 (1978). Petitioner and the United States

have failed to explain satisfactorily why tribes should

have the benefit of the application of principles derived

from feudal law in such a way as to confer tribes with a

special benefit largely without precedent in the treatment

of that feudal law by American courts.

? The unique status of the United States and States under

the Constitution is also relevant to the issue, not presented here,

whether they are immune from unconsented suit in tribal court.

Both federal and state governments have so argued successfully

in lower federal courts. See United States v. Yakima Tribal Court,

806 F.2d 853, 860-61 (9th Cir. 1986); Montana v. Gilham, 932 F.

Supp. 1215 (D. Mont. 1996), appeal docketed, No. 96-35766 (July

18, 1996). As to States, finding such jurisdiction runs counter to

their immunity from suit under the Eleventh Amendment in the

courts of the tribes’ immediate sovereign and would effectively

expose them to the unreviewable authority of an

extraconstitutional entity — authority that, for example, could be

used to regulate States in a manner not permissible even to the

federal government by virtue of the Tenth Amendment.

a ae

11

PRECEDENT OF THIS COURT INDICATES THAT THE

STATES MAY ENTERTAIN SUITS AGAINST INDIAN

TRIBES ENGAGED IN COMMERCIAL ACTIVITIES

OFF THE RESERVATION.

The essence of Petitioner and the federal govern-

ment’s argument, as demonstrated above, is not based on

any historical analysis of the law of sovereign immunity

as it relates particularly to commercial enterprises of

Indian tribes or other entities. Instead, their theory pro-

ceeds upon the assumption that “the Constitution

granted the United States the sole power to regulate rela-

tions with the Tribes... . ” Brief for the United States at

12 (emphasis added); see also Brief for Petitioner at 30.

The United States thus contends that the States may

not, consistent with the Constitution, exercise any juris-

diction over a private off-reservation individual's rela-

tionship with an Indian tribe. This Court has explicitly

rejected this assumption. In Mescalero Apache Tribe v. Jones,

411 U.S. 145, 147-148 (1973), this Court held:

At the outset, we reject - as did the state court -

the broad assertion that the Federal Government

has exclusive jurisdiction over the Tribe for all

purposes and that the State is therefore prohib-

ited from enforcing its revenue laws against any

tribal enterprise “[w]Jhether the enterprise is

located on or off tribal land.”

The Court added that the states did have jurisdiction over

tribal activities occurring off reservation, absent “express

federal law to the contrary.” Id. at 148. The Court stated:

But tribal activities conducted outside the

reservation present different considerations.

12

authority over Indians is yet more extensive

over activities . . . not on any reservation.” Orga-

nized Village of Kake [v. Egan, 369 U.S. 60, 75

(1962)]. Absent express federal law to the con-

trary, Indians going beyond reservation bound-

aries have generally been held subject to

nondiscriminatory state law otherwise applica-

ble to all citizens of the State.

Id. at 148-149. The Court accordingly rejected the argu-

ment that the commerce clause, see id. at 159, 161 (Dou-

glas, J., dissenting), prohibited New Mexico from taxing a

commercial enterprise, there a ski resort, operated by a

tribe on off-reservation land leased from the federal gov-

ernment.

Mescalero Apache Tribe thus establishes that the States

in fact do have jurisdiction over commercial enterprises

of tribes off the reservation, and this Court has consis-

tently adhered to that decision. See, e.g., Oklahoma Tax

Commission v. Chickasaw Nation, 115 S.Ct. 2214, 2223 (1995)

(principle that Indians and tribes are generally immune

from state taxation “does not operate outside Indian

country”); White Mountain Apache Tribe v. Bracker, 448 U.S.

136, 144 n.11 (1980). The United States, to be sure, admits

that Mescalero Apache Tribe recognizes the authority of the

state to tax commercial activities of tribes operating out-

side of Indian country. However, it argues that, although

the States may have the right to “demand compliance

with state law,” Brief for the United States at 12, Peti-

tioner’s sovereign immunity nonetheless protects it from

a suit to compel compliance with such law. The Govern-

ment surprisingly relies upon Oklahoma Tax Commission v.

Potawatomi Tribe, 498 U.S. 505 (1991), for this proposition.

anna me

13

In Potawatomi Tribe, Oklahoma argued that a tribe

should not be able to invoke sovereign immunity to pre-

vent the collection of cigarette taxes because the cigarette

sales did not occur on a “reservation.” Potawatomi Tribe,

498 U.S. at 511. The Court's opinion extensively reviewed

the question of sovereign immunity of the tribes. Id. at

508-510. The Court, in finding tribal immunity from lia-

bility for uncollected taxes, nevertheless did not simply

state that sovereign immunity operated regardless of the

transaction’s locus. Instead, the Court quoted Mescalero

Apache Tribe to the effect that state laws could be applied

to a ski resort outside a reservation’s boundaries oper-

ated by the tribe and that “ ‘absent express federal law to

the contrary, Indians going beyond reservation bound-

aries have generally held subject to nondiscriminatory

state law unless otherwise applicable to all citizens of the

state.’ ” Id. at 511 (quoting Mescalero Apache Tribe, 411 U.S.

at 148-149). Mescalero Apache Tribe was deemed to be not

applicable not because sovereign immunity shielded the tribe

with regard to its off-reservation conduct but because the trust

land in question had been “ ‘validly set apart’ and thus quali-

fies as a reservation for tribal immunity purposes.”

Potawatomi Tribe, 498 U.S. at 511. Potawatomi Tribe says

nothing about the suability of tribes for off-reservation

activities where, unlike within their reservations, they are

amenable to the full range of state regulatory and, by

necessary inference, state adjudicatory jurisdiction absent

contrary federal statutory or treaty provisions.

Petitioner and the United States’ position, logically

extended, consequently requires this Court to conclude

that, while a State may regulate off-reservation conduct

of tribes, it may not enforce that regulation directly

14

against them. That position makes no legal sense in view

of the fact that authority to regulate a party’s activity

necessarily carries with it the right to compel prospective

compliance or to seek a remedy, perhaps monetary in

nature, for past violations unless the right to regulate is

to be reduced to a meaningless abstraction. See Rice v.

Rehner, 463 U.S. 713, 732 (1983); Fort Belknap Indian

Comm'y v. Mazurek, 43 F.3d 428, 433-434 (9th Cir. 1994),

cert. denied, 116 S.Ct. 49 (1995). Cf. Strate v. A-1 Contrac-

tors, 117 S.Ct. 1404, 1413 (1997). Petitioner and the United

States’ effort at separating the notion of tribal sovereign

immunity from that of a State’s authority to regulate the

underlying conduct cannot be credited without creating

an anomalous distinction between the power to regulate

and the power to enforce that regulation.

One further argument must be addressed. Petitioner

argues that sovereign immunity ought to be recognized in

this case in furtherance of the “unique trust respon-

sibility” of the United States to tribes. Brief for Petitioner

at 27. A similar argument was made and rejected in

Mescalero Apache Tribe. There it was argued that the

Indian Reorganization Act required an off-reservation

tribal business on federal land to be treated as a “federal

instrumentality.” This Court recognized that a tribe “tak-

ing advantage of the Act might generate substantial reve-

nues for the education and the social and economic

welfare of its people.” 411 U.S. at 151 (footnote omitted).

This did not convert the tribe to an arm of the federal

government, however, for the intent and purpose of the

Reorganization Act was “’ to rehabilitate the Indian's eco-

nomic life and to give him a chance to develop the

15

initiative destroyed by a century of oppression and pater-

nalism.’” Id. at 152 (quoting H.R. Rep. No. 1804, 73d

Cong., 2d Sess. 6 (1934)). Further, the Court found that

the aim of the Indian Reorganization Act was “to disen-

tangle the tribes from the official bureaucracy.” Mescalero

Apache Tribe, 411 U.S. at 153. By determining that the

tribe’s off-reservation commercial enterprises would not

be treated as arms of the federal government, this Court

embraced the concept that the Indian Reorganization Act

should be interpreted to disentangle the Indian tribes

from federal law when acting off-reservation, to remove

the vestiges of paternalism in such cases, and to enable

Indians to “enter the white world on a footing of equal

competition.” Id. at 152 (quoting 78 Cong. Rec. 11,732

(1934)); see also Shaw v. Gibson-Zahniser Oil Corp., 276 US.

575, 578-581 (1928), quoted in Mescalero Apache Tribe, 411

U.S. at 153-155; see generally Bradley A. Furber, Two Prom-

ises, Two Propositions: The Wheeler-Howard Act as a Recon-

ciliation of the Indian Law Civil War, 14 U. Puget Sound L.

Rev. 211, 240-52 (1991) (reviewing legislative history of

Indian Reorganization Act). In short, federal policy

announced in the Indian Reorganization Act does not

support off-reservation sovereign immunity for tribal

commercial enterprises but supports the competition of

such tribes in the greater commercial world, on a basis of

equal competition.*

* The argument has been made that Congress addressed the

problem when it allowed tribes to create corporations under

§ 477 which could be sued. Mescalero Apache Tribe answers this

argument, stating that “the question of tax immunity cannot be

made to turn on the particular form in which the Tribe chooses

to conduct its business.” 411 U.S. at 157 n.13.

16

POLICY REASONS MILITATE AGAINST THE REC-

OGNITION OF OFF-RESERVATION SOVEREIGN

IMMUNITY WITH REGARD TO TRIBAL COMMER-

CIAL ENTERPRISES.

Petitioner and the United States argue, as we under-

stand it, that it is good public policy for this Court to

explicitly embrace the legal theory that each of the 320

Indian tribes in the United States may conduct commer-

cial enterprises off reservation without fear of incurring a

civil liability in the courts of any of the fifty states.

Some of the description of the enormity of what

Petitioner and the United States suggest is in order. First,

there are over 320 recognized Indian tribes. As of Decem-

ber 1996, 184 tribes were operating between 275 and 280

bingo halls or casinos. Carroll, National Gambling Impact

Study Commission, What Hand Will They Deal Tribes? XII

American Indian Report 12, 13 (Aug. 1997). Some of these

operations generate very substantial income for the

tribes. The tribes, appropriately so, now seek to invest

their funds in other enterprises. A recent article describes

the Sault Ste. Marie Tribe as making a “respectable profit

from their casinos, which posted about $267 million in

gross revenues in 1995.” Carroll, Cashing in on Gaming

Revenue, Tribes Use Cash From Casinos and Bingo Halls to

Build Economy, X11 American Indian Report 16 (Aug.

1997). The article reports that the Sault Ste. Marie con-

ducted “seventeen non-gaming businesses” in 1995. Id.

4 Perhaps each of the 200 plus Alaskan villages also should

be added to this total, although neither Petitioner nor the

United States discloses its position on that point.

17

Among these businesses were a construction company, a

professional cleaning service, a “successful development

company,” a chain of hotels, and a joint venture involving

the production of driveshafts. Id. at 17. (The article does

not directly discuss the “reservation” or “Indian country”

status of the lands on which these enterprises are located.

Some of the lands appear to have such status while

others, e.g., a hotel in Grand Rapids, do not.)

The question therefore becomes whether, in the

investment of significant sums in various enterprises, the

off-reservation commercial enterprises should then be

subject to sovereign immunity. A tribe, of course, is not

confined to commercial enterprises in its home state or

area. Indeed, the business climate of another section of

the country may well make it advisable to invest far from

the reservation. The business options open to each one of

the 320 tribes, perhaps in combination with other finan-

cial interests, are virtually limitless. Petitioner and the

United States accordingly now ask this Court to issue an

invitation to each of the federal tribes to establish com-

mercial enterprises throughout the United States, even in

states in which no “Indian country” now or has ever

existed, and to sanction in advance tribal immunity from

lawsuit for their activities.

Petitioner and the United States argue that a com-

mercial enterprise dealing with a tribe can protect itself

through careful commercial practices. See, e.g., Brief for

the United States at 27. And the latter suggests that a

person or entity

may simply refuse to deal with the sovereign

that will not consent to suit, if it deems the

likely gain not worth the risk or inconvenience

18

(as it might, for example, if the sovereign had

developed a reputation for failing to honor its

obligations).

Id. This position ignores two important considerations.

First, many of those dealing with Indian tribes in each of

the fifty states will not possess the sophistication to rec-

ognize that an Indian tribe, or a tribal enterprise partak-

ing of a tribe’s immunity, is situated differently from

other persons with whom they deal in the ordinary

course of business. Second, the immunity endorsed by

the United States is not limited to consensual commercial

transactions; it encompasses any form of legal claim,

whether by a private party in the form of tort action for

negligence or a governmental entity seeking compliance

with, and monetary relief for violation of, state law.

In sum, accepting Petitioner and the United States’

view of tribal immunity means that tiny enclaves of

immunity from state law against tribes qua tribes may be

set up in each of the States by each of the 320 tribes. Each

of these enterprises will be able to assert immunity from

actions for breach of contract or for personal injury for

damages. Each will be similarly immune for actions

against their commercial enterprises with regard to

wrongful termination of employment, labor disputes, and

state discrimination suits.5 The policy consequences of

5 This Court suggested in Potawatomi Tribe, 498 U.S. at 514,

the applicability of remedial principles developed under Ex

parte Young, 209 U.S. 123 (1908), with respect to tribal officers

even as to on-reservation transactions. It also left open the

possibility that retroactive relief might be available against

them. Potawatomi Tribe, 498 U.S. at 514. Lower federal courts

have applied the Young rationale to sustain awards of

prospective relief in various contexts where federal law

19

Petitioner and the United States’ position are therefore

quite significant. See generally Comment, Tribal Sovereign

Immunity: Searching for Sensible Limits, 88 Colum. L. Rev.

173 (1988); submission of Lawrence Long, Chief Deputy

Attorney General, State of South Dakota, S. Hrg. 104-694

(Sept. 24, 1996), pp. 88-130. Coupled with the unprin-

cipled nature of the proposed extension of tribal sover-

eign immunity to off-reservation conduct otherwise

subject to state regulation, these considerations counsel

strongly in favor of affirming the judgment below.

°

limitations on tribal authority were arguably exceeded. See, ¢.g.,

Arizona Pub. Serv. Co. v. Aspaas, 77 F.3d 1128, 1133-34 (9th Cir.

1995); Tamiami Partners, Ltd. v. Miccosukee Tribe, 63 F.3d 1030,

1050-51 (Sth Cir. 1995); Northern States Power Co. v. Prairie Island

Mdewakanton Sioux Indian Comm'y, 991 F.2d 458, 460 (8th Cir.

1993). Whether retroactive relief is available in such a situation -

at least where the relief is effectively against the involved tribe -

appears undecided. Moreover, exploration in federal court of

Potawatomi Tribe's implications with respect to retroactive relief

in the context of a simple breach of contract claim such as that

here, garden variety tortious conduct, or mere violation of state

law has been made difficult because of the ordinary need to

establish jurisdiction under 28 U.S.C. § 1331. See, e.g.,

Montgomery v. Flanareau Santee Sioux Tribe, 905 F. Supp. 740, 746

(D.S.D. 1995) (no federal question jurisdiction where alleged

breach of fiduciary duty arose under tribal, not federal, law);

Whiteco Metrocom Div. v. Yankton Sioux Tribe, 902 F. Supp. 199,

202 (D.S.D. 1995) (breach of contract claim provided insufficient

jurisdictional basis). The upshot is that the availability of Young-

based prospective relief against tribal officers may be severely

limited and, even if retroactive relief is assumed to be capable of

being awarded against an officer or employee in his personal

capacity, such relief may well prove unavailing as a practical

matter because of the absence of either indemnification from a

tribe or insurance.

20

CONCLUSION

For the foregoing reasons, the Court should affirm

the judgment below

Respectfully submitted,

Mark W. BaRNeTT

Attorney General

State of South Dakota

JOHN Patrick GUHIN

Deputy Attorney General

500 East Capitol Avenue

Pierre, South Dakota 57501-5070

Telephone: (605) 773-3215

Counsel of Record