# Opposition Brief — Montana v. Crow Tribe

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1998
- **Citation:** 523 U.S. 696

## Text

5) Supreme Court, U.S. }

FILED
JUL 14 1997
No. 96-1829
CLERK

In The —

Supreme Court of the United States
October Term, 1996
+

STATE OF MONTANA, ET AL.,
Petitioners,

CROW TRIBE OF INDIANS,
and UNITED STATES OF AMERICA,

Respondents.

+

On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Ninth Circuit

S

BRIEF FOR THE CROW TRIBE IN OPPOSITION
¢

Mayet Russevy Rosert S. PetcyGer*

Crow Tribal Attorney FREDERICKS, PELCYGER, HESTER

Crow Tribal Legal & Wuire, LLC
Department 1881 9th Street, Suite 216

303 N. Broadway, Suite 616 Boulder, Colorado 80302
Billings, Montana 59101 Telephone: (303) 443-1683

Telephone: (406) 259-8611 Counsel for Respondent

Crow Tribe of Indians
July 1997 *Attorney of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831

i
QUESTION PRESENTED

Whether the State of Montana and Big Horn County
should be required to pay the Crow Tribe, or the United
States on its behalf, the 30% taxes they illegally imposed
and collected on coal produced from deposits beneficially
owned by the Tribe and paid to the State and County by
the Tribe’s lessee where the taxes were found to appropri-
ate the Tribe’s mineral wealth to deprive the Tribe of
revenues it otherwise would have received, to impose
substantial burdens on the Tribe, to violate the Indian
Mineral Leasing Act of 1938, 25 U.S.C. §§ 396a-396g, and
to interfere with the Tribe’s sovereignty.

ii
PARTIES

All of the parties are listed in the caption of the
petition.

iii

TABLE OF CONTENTS

Page
I ns coca ccccscccccsccccees i
EEE EPL TT TTT TTT TTT TTT Tee ii
CE iii
EEE occ ccccccscccccccccescce iv
GREGG cob Gvecccccccccccccccccce 1
ETERS GRGRUR GCSES cedecccccccsscceces 2
FEDERAL STATUTE INVOLVED................... 2
STATEMENT OF THE CASE....................... 3
A. Factual Background ...................000005 3
CCE eee eeewescccccesccetccceeees 10
ECU R GG ROSE GSC6cdcccccccecccccccccce: 11
D. Proceedings Below (in Crow IV) ............. 12
eee eset econ esceseeccessccecces 14

I. THIS CASE IS FACTUALLY UNIQUE AND
LEGALLY PEDESTRIAN .................... 14

Il. CALIFORNIA HAS NO BEARING ON THIS
iii Meee ies hd bn 6eecbCeccacceces ce 19

A. California Did Not Involve The Equitable
Powers Of Federal Courts To Remedy
Violations Of Federal Law.............. 19

B. The Fact That The Tribe Did Not Pay The
Illegal Taxes Does Not Foreclose The Dis-

gorgement Remedy .................065. 22
Ill. THERE IS NO CONFLICT WITH THE TENTH

CIRCUIT’S DECISION IN UTE INDIAN
TRIBE V. STATE TAX COMMISSION ........ 26

iv

TABLE OF AUTHORITIES

Page

Cases
Albemarle Paper Co. v. Moody, 422 U.S. 405

GIF nev eccccccccccecsddscseebecosacesseoosees 17, 18
Alsco-Harvard Fraud Litigation, 523 F.Supp. 790

GEA. GEGED. ccc cccvcccvcncdtiasadataseccvcvescssi 23
Arizona v. California, 60 U.S. 605 (1983) ............ 16
Bell v. Hood, 327 U.S. 678 (1946) ...............545. 17
Board of Commissioners of Jackson County v.

United States, 308 U.S. 343 (1939)................. 18
Board of 1: Comm'rs v. Bloomington, 97

DER, Bee Gee SOUND coccccccscccccssccccsesceces 12, 25
City of Norfolk v. Norfolk County, 91 S.E. 820 (Va.

Bie budoccccccccesensecccce cocsccequcedeweness 12, 24
Commonwealth Edison Co. v. Montana, 453 U.S.

GRP Gc ce vncvccecccccccscsudceusasecnegeseceson: 9
Cotton Petroleum Corp. v. New Mexico, 490 U.S.

SED Gk ec cto ccctsciécoscansdcatekainunsas passim

Crow Tribe v. Montana, 650 F.2d 1104 (9th Cir.
1981), amended, 665 F.2d 1390 (9th Cir. 1982),
cert. denied, 459 U.S. 916 (“Crow I”) ......... passim

Crow Tribe v. Montana, 819 F.2d 895 (9th Cir.
1987), summarily affirmed, 484 U.S. 997 (1988)
CCaaee Bp. « ccccccccscccvceccsccscceccscccces passim

Crow Tribe v. Montana, 969 F.2d 848 (9th Cir.
fee fog ey ose a passim

Crow Tribe v. Montana, 92 F.3d 826, amended, 98
F.3d 1194 (9th Cir. 1996) (“Crow IV”)......... passim

Franklin v. Gwinnett County Public Schools, 503
CE. GD GEG cccceccccucvsccvcccccescuamas 17, 21, 22

Vv

TABLE OF AUTHORITIES - Continued

Page
Hoopa Valley Tribe v. Nevins, 881 F.2d 657 (9th
Cir. 1989), cert. denied, 494 U.S. 1055 (1990)...... 26
Humboldt County v. Lander County, 56 P.228
ih «1. dali ene heen dheckacanencdsll 12, 24
Idaho v. Coeur d’Alene Tribe of Idaho, ___ U.S.
__ No. 94-1474 (decided June 23, 1997).......... 16
Kendall v. United States ex rel. Stokes, 37 U.S. (12
I a eee ne ie os wan an « 17
Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803) .... 17
McClanahan v. Arizona Tax Comm’‘n, 411 U.S. 164
iid aihis el ocean chet detednedenennacens 16
McKesson Corp. v. Division of Alcoholic Bever-
ages, and T YT €'°8§& were 26
Mescalero Apache Tribe v. Jones, 411 U.S. 145
tia tits ohh toured he eakannditcovesenes ¢ cee 16
Midwest Aviation, Inc. v. General Electric Credit
Corp., 907 F.2d 732 (7th Cir. 1990)................ 23
Mitchell v. De Mario Jewelry, 361 U.S. 288 (1960) .... 17
Moe v. Salish & Kootenai Tribes, 425 U.S. 463
> cudwuebimibeduunetith denen abeenatascen 16, 20, 27
Montana v. Blackfeet Tribe, 471 U.S. 759 (1985)...... 16
New Mexico v. Mescalero Apache Tribe, 462 U.S.
SR tincik nis Mien sheeted eh aenewyne 16
Ramah Navajo School Board v. Bureau of Reve-
i rn cndcetcecnereudsedewerse ot 16
Schaeffer v. Miller, 41 Mont. 417, 109 P. 970 (1910) .... 23

vi

TABLE OF AUTHORITIES - Continued
Page

Seminole Tribe of Florida v. Florida, __. U.S. __|
BOS GOR, SHES GS dvccdéccnwesdsevctiWeccesices 16

Snepp v. United States, 444 U.S. 507 (1980) (per
CTR « ccc cesncécéstncntccncéededeses 18, 23, 24, 25

Swann v. Charlotte-Mecklenburg Bd. of Educa-
Gem, 468 UG. 2 CIDE). oc ccdvccccsccecccccccece 17, 18

United States v. California, 507 U.S. 746 (1993).. passim
United States v. City of Spokane, 918 F.2d 84 (9th

Cir. 1990), cert. denied, 501 U.S. 1250 (1991)...... 26
United States v. Minnesota, 270 U.S. 181 (1926) ..... 20
United States v. Rickert, 188 U.S. 432 (1903)......... 20

Ute Indian Tribe v. State Tax Comm’n, 574 F.2d
1007 (10th Cir. 1978), cert. denied, 439 U.S. 965

GRIPE cece cccccccasccecccscesessecoessoeses 26, 27, 28
Valley County v. Thomas, 109 Mont. 345, 97 P.2d

SED CIBGED . c cccccccccecccccesescccsscseccececes 11, 24
Washington v. Fishing Vessel Ass’n, 443 U.S. 658

CRITE cccccccedccececescocesevessvescoeceosvececes 18
White Mountain Apache Tribe v. Bracker, 448 U.S.

BBS CR cc cccccdepsccsccccccscccetcescesccsocnce 16
Wyandotte Transportation v. United States, 389

CE, BES GIG o vc cc dcccccccvscvccteceseveseoss 18, 21

STATUTES AND RULES

25 U.S.C. §§ 396a et seq. (“Indian Mineral Leasing
BOP. cocnnbetsactvcsecsconcedbaeniadecdsendl 2, 3, 20

vii

TABLE OF AUTHORITIES - Continued

Page
Mont. Code Ann. § 15-23-701 to 704................. 3
Mont. Code Ann. § 15-35-101 to 111............... 3, 5
Montana Constitution, Article IX, § 5................ y
OrHER AUTHORITIES
Dan B. Dobbs, Dobbs Law of Remedies, § 2.4(7) at
i atcpesesuhbadasnnabucsdece ceases 17

OPINIONS BELOW

The opinion of the Ninth Circuit Court of Appeals
that is the subject of this appeal is reported at 92 F.3d 826
and 98 F.3d 1194 (1996) (“Crow IV”) and is reproduced in
the Appendix to the Petition (Pet. App.) commencing at 1.
Prior decisions in this matter by the Ninth Circuit are
reported at 650 F.2d 1104 (1981), amended, 665 F.2d 1390
(1982) (“Crow I”), cert denied, 459 U.S. 916 (1982), repro-
duced in the Pet. App. commencing at 167 and 169; at 819
F.2d 895 (1987) (“Crow II”), reproduced in the Pet. App.
commencing at 88; and at 969 F.2d 848 (1992) (“Crow III”),
reproduced in the Pet. App. commencing at 58. This
Court’s prior summary affirmance of the Court of
Appeals’ 1987 decision in Crow II is reported at 484 U.S.
997 (1988), reproduced in the Pet. App. at 87.

The opinion of the District Court in Crow IV is unre-
ported and is reproduced in the Pet. App. commencing at
17. The prior reported opinion of the District Court,
which was the subject of review by the Court of Appeals
in Crow I, appears at 469 F.Supp. 154 (D. Mont. 1979), and
is reproduced in the Pet. App. commencing at 197. The
District Court’s prior reported opinion reviewed in Crow
II appears at 657 F.Supp. 573 (D. Mont. 1985), and is
reproduced in the Pet. App. commencing at 110. An unre-
ported opinion of the District Court reviewed by the
Court of Appeals in Crow III is reproduced in the Pet.
App. commencing at 67.

JURISDICTION

The judgment of the Court of Appeals was entered
on August 6, 1996. The petition for rehearing of the State
of Montana and the other petitioners (Montana) was
denied on February 21, 1997. Pet. App. 228. The petition
for a writ of certiorari was docketed on May 16, 1997.
This Court has jurisdiction pursuant to 28 U.S.C.
§ 1254(1).

S

FEDERAL STATUTE INVOLVED

In Crow II, the Court of Appeals for the Ninth Circuit
held that Montana’s severance and gross proceeds taxes
on coal produced from the Tribe’s coal deposits imper-
missibly infringed on the Crow Tribe’s sovereignty and
interfered with the policy of promoting tribal self-govern-
ment and economic development underlying the Indian
Mineral Leasing Act of 1938, 25 U.S.C. §§ 396a-396g, were
not narrowly tailored to achieve Montana’s legitimate
interest, and therefore were preempted by federal law.
819 F.2d 895, Pet. App. 88. See Crow IV, 92 F.3d at 828, Pet.
App. 6 (summarizing the holding of Crow II). This Court

summarily affirmed without opinion. 484 U.S. 997 (1988), .

Pet. App. 87.1 The issue presented in the petition,

1 In Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163, 186
& n.17 (1989), this Court distinguished Montana’s “unique” and
“extraordinarily high” coal taxes which imposed a “substantial
burden” on the Crow Tribe from the state oil and gas taxes there
at issue, upheld the validity of those state oil and gas taxes as
applied to tribal minerals, and declined to reexamine its
summary affirmance in Crow II.

whether Montana and Big Horn County should be
allowed to keep the taxes they illegally collected on the
Tribe’s coal from the Tribe’s lessee at the Tribe’s expense,
arises from that holding.

The provisions of the Indian Mineral Leasing Act of
1938, 25 U.S.C. §§ 396a-396g, are reproduced in the
Appendix to the Crow Tribe’s Conditional Cross-Petition.

¢

STATEMENT OF THE CASE
A. Factual Background

In 1972, the Crow Tribe (Tribe) and Westmoreland
Resources (Westmoreland) entered into a coal lease pur-
suant to the Indian Mineral Leasing Act of 1938, 25 U.S.
§§ 396a et seq. In 1974, the Tribe and Westmoreland suc-
cessfully renegotiated the terms of their lease. The lease
and the amended lease were approved by the Department
of the Interior. Production at the Westmoreland mine,
which is located in an area known as the “ceded strip”
located north of the exterior surface boundaries of the
Crow Reservation, commenced in 1974. Pet. App. 30.

In April 1975, Montana enacted statutes imposing
severance and gross proceeds taxes on coal produced
within the State. There were no exceptions for coal owned
by Indian tribes. Mont. Code Ann. §§ 15-35-101 to 111,
15-23-701 to 704. The severance tax rate charged on Crow
coal produced during the 1975-1982 period at issue in the
instant case was. 30% of the value of the contract sales
price of the coal. Pet. App. 25. The rate of the gross
proceeds tax is equivalent to the number of mills levied

for general property tax by the county in which the
production occurred. The amount of the gross proceeds
tax on Crow coal varied somewhat from year to year but
was generally in the range of approximately 5% of the
contract sales price. Pet. App. 25-26. The effective rate of
the combined severance and gross proceeds tax exceeded
32% of the coal’s contract sales price taking account of
allowable deductions and adjustments. Crow II, 819 F.2d
at 899 n.2, Pet. App. 98; Cotton Petroleum, 490 U.S. at 186
n.17.

Tribal representatives appeared before the Montana
legislature and strongly opposed the imposition of the
proposed severance and gross proceeds taxes on Crow
coal on the grounds that:

(1) they are so out of line with taxes imposed
by other neighboring states that Crow coal will
no longer be competitive and therefore our coal
development program will suffer, and (2) . . . the
taxes bear no relation to the responsibilities and
burdens which coal development has imposed
on the State of Montana .. . [and 3]. . . this level
of taxation is so high that [it] becomes an
unauthorized state interference with federally
secured Indian property.

ER 1.2 The Tribe proposed a compromise to the legislature
under which producers would receive a credit against
state taxes for coal taxes paid to Indian tribes. The Senate
Taxation Committee rejected the Tribe’s proposal, com-
menting that “there would have to be court decreed

2 “ER” refers to the Tribe’s excerpts of record filed with the
Court of Appeals for the Ninth Circuit in Crow IV.

settlements regarding Indian coal revenues.” ER 5. See
Crow IV, 92 F.3d at 829, Pet. App. 9; Pet. App. 23.

In enacting the coal taxes, the Montana legislature
found that strip-mined coal is in sufficient demand that:

[A]t least one-third of the price it commands at
the mine may go to the economic rents of roy-
alties and production taxes. . . .

Mont. Code Ann. § 15-35-101(1)(e). In Crow I, 650 F.2d at
1113, Pet. App. 185, the Court of Appeals quoted this
legislative finding and stated: “[b]y setting the severance
tax rate at 30 percent of value, Montana made plain its
intention to appropriate : ost of the economic rent.”3 See
also, Crow II, 819 F.2d at 902, Pet. App. 104-05; Crow IV, 92
F.3d at 829, Pet. App. 10 (“we had . . . found [in Crow I]
the coal taxes were intentionally and illegitimately levied
to appropriate most of the economic rent from Tribal
ee he

The Tribe enacted its own 25% severance tax in early
1976. The tribal tax was approved by the Interior Depart-
ment as applied to the coal within the exterior surface
boundaries of the Reservation but not as to the Tribe’s
coal within the ceded strip. Interior’s decision not to
approve the tribal tax as applied to tribal coal located in
the ceded strip was based on its belief at that time that
that coal could not be taxed under the Tribal Constitution
because it was not part of the Crow Reservation. Pet.

3“ ‘Economic rent’ is the amount of revenue that can be
extracted from an activity, here in the form of royalties and
taxes, without significantly discouraging production.” Crow I,
650 F.2d at 1113 n.12, Pet. App. 185.

App. 19, 31; Crow I, 650 F.2d at 1107-08 & 1115 n.19, Pet.
App. 172, 192; Crow II, 819 F.2d at 897, Pet. App. 93.

It was subsequently determined in Crow II that the
Tribe’s minerals within the ceded strip are part of the
Crow Reservation. 819 F.2d at 896-98, Pet. App. 91-95.
The United States has acknowledged, and the District
Court found, that the government was mistaken in not
approving the Tribe’s tax as applied to its ceded strip
coal. Ninth Circuit Brief for the United States at 19-21;
Ninth Circuit Reply Brief for the United States at 6; Pet.
App. 36, 69, 78. There is no claim or evidence that Mon-
tana or Big Horn County relied to their detriment on
either Interior’s disapproval of the Tribe’s 1976 tax as
applied to the tribal coal mined by Westmoreland or the
Tribe’s subsequent, unsuccessful efforts to amend its
Constitution.

Westmoreland began paying the gross proceeds tax
to Big Horn County in 1975 and the severance tax to
Montana in 1976. Westmoreland paid $46.8 million to the
State between 1975 and 1983 and $11.4 million to the
County between 1976 and 1986. Pet. App. 23-27. The taxes
were not paid under protest and Westmoreland did not
initiate any proceeding to recover refunds. Westmoreland
later entered into an agreement waiving any claim to a
refund. Pet. App. 22, 37. No taxes were paid to the Tribe
during these periods. Pet. App. 31, 35. Montana and Big
Horn County received almost four times more money in
severance and gross proceeds taxes from Westmoreland
than the Tribe received in royalties under its 1974
amended lease. Crow I, 650 F.2d at 1107, Pet. App. 172.

The Tribe initiated discussions with Westmoreland in
1976 seeking payments in addition to the royalties
required under the 1974 amended lease. Westmoreland’s
position was that “any additional payment to the Tribe
would have to be in lieu of, rather than in addition to, the
State tax.” ER 12. See Crow IV, 92 F.3d at 830, Pet. App. 12
(“Westmoreland was willing to pay coal taxes to the Tribe
as early as 1976... . ”). Westmoreland did not make any
additional payments to the Tribe until after the Court of
Appeals’ decision in Crow II. Pet. App. 35.

Montana and Big Horn County derived significant
revenues from the Westmoreland mine from sources other
than the illegal severance and gross proceeds taxes on
Crow coal including property, income and resource
indemnity taxes which have not been contested by the
Tribe or the United States. Uncontroverted evidence
showed that these sources generated far more income for
Montana and Big Horn County than those entities
expended for services related to the Westmoreland mine.
Crow IV, 92 F.3d at 829-30, Pet. App. 11.4

* The expert witness for the Tribe and the United States
testified that from 1976 to 1986 Montana and Big Horn County
received approximately $29 million in revenues from the
Westmoreland mine from sources other than their invalid
severance and gross proceeds taxes while the governmental
costs associated with the mine during the same period were no
more than $5 million. ER 121, 124, 130-33, 137, 228b-228e.

Montana’s description of the services provided by the State
and the County to Crow tribal members (Pet. 8-9) is inaccurate
and misleading. The petitioners neglect to point out that the
District Court found that those “services would have been
rendered even in the absence of Westmoreland’s . . . mine and
were not related to the mine.” Pet. App. 38. They also fail to

In 1982, following the decision in Crow I, the Tribe
and Westmoreland reached agreement on a tax amend-
ment to their 1974 lease which was approved by the
Interior Department. Westmoreland agreed to pay the
Tribe taxes equal to Montana’s severance and gross pro-
ceeds taxes and the Tribe agreed to give Westmoreland a
credit for severance and gross proceeds taxes paid to
Montana and Big Horn County. In January 1983, the
District Court issued a preliminary injunction against
collection of the state severance tax and granted a motion
allowing Westmoreland to deposit its severance tax pay-
ments into an escrow account managed by the Court. The
same relief was granted as to the gross proceeds tax in
November 1987, following the decision in Crow II. Pet.
App. 31-32, 35.

Approximately $24 million was deposited into the
Court’s escrow account between 1983 and 1987. In 1989,
after this Court’s summary affirmance in Crow II, the
District Court issued a final judgment distributing the
funds held in escrow, including accrued interest, to the
United States in trust for the Tribe. Crow IV, 92 F.3d at
828, Pet. App. 7; Pet. App. 35; ER 91a. There was no
appeal from that judgment. Since 1988, Westmoreland has
paid all severance and gross proceeds taxes on Crow coal

mention the substantial number of jobs in Montana and Big
Horn County and the significant tax and other revenues
attributable to the Tribe and to the Crow Indian Reservation. See
Plaintiffs’ Ex. 351 at 31-32; V Tr. 840-48 (1994). For these and
other reasons the District Court did not consider State and
County services provided to Crow tribal members in its
balancing of equitable factors bearing on whether the State and
County were unjustly enriched. Pet. App. 38, 44-54.

to the Tribe pursuant to the 1982 amendment to the 1974
lease. Pet. App. 36. The issue in the instant case concerns
the disposition of the severance taxes ($46.8 million) and
the gross proceeds taxes ($11.4 million) illegally imposed
on the Tribe’s coal and collected by the State and County
from Westmoreland.

Neither Montana nor Big Horn County placed the
contested tax payments in escrow until ordered by the
District Court. Crow IV, 92 F.3d at 829 n.3; Pet. App. 9.
Significant portions of all of the coal severance revenues
received by Montana were, however, deposited into the
Constitutional Trust Fund established under Article IX,
Section 5, of the Montana Constitution. 25% of coal sever-
ance tax revenues were allocated to the Fund between
1977 and 1979; since 1980 the Fund has received 50% of
those revenues. The principal of the Fund can be spent
only with the approval of */s of the Montana legislature.
Crow I, 650 F.2d at 1108, Pet. App. 173; Pet. App. 25. As of
June 30, 1993, the value of the Fund was $512 million. Pet.
App. 25.

Montana’s coal severance tax has generated “enor-
mous revenues,” principally paid by out-of-state utility
customers. Cotton Petroleum, 490 U.S. at 186 n.17 (citing
Commonwealth Edison Co. v. Montana, 453 U.S. 609, 641-42
(1981) (Blackmun, J. dissenting)). From 1975 through
1993, Montana received more than $1.1 billion in coal
severance taxes. As of the end of 1993, the value of those
revenues (with interest based on the rate of return earned
by Montana’s Constitutional Trust Fund) exceeded $3.8
billion of which $263 million, less than 7%, represented
the value (with interest based on the same rate of return)

10

of the severance taxes Montana collected on Crow coal.
ER 122-23, 125, 228m-228n.

B. Crow Il

The holding in Crow II, that Montana’s severance and
gross proceeds taxes as applied to Crow coal interfered
with the purposes underlying the Indian Mineral Leasing
Act and infringed on the Tribe’s sovereignty, was based
on the following findings, among others: (i) by enacting
its coal taxes in 1975 and applying those taxes to coal
beneficially owned by the Tribe, Montana intended to,
and did in fact, appropriate most of the economic rent
attributable to strip-mined coal and thereby appropriated
the Tribe’s mineral wealth to itself and deprived the Tribe
of royalties and taxes the Tribe otherwise would have
earned, Crow I, 650 F.2d at 1113-14, Pet. App. 185-87; Crow
II, 819 F.2d at 902, 902-03, Pet. App. 104-05, 107; Crow IV,
92 F.3d at 830, Pet. App. 11-12; (ii) Montana’s taxes
“forced the coal producers to charge higher prices, reduc-
ing the demand for their Montana coal and resulting in
fewer sales for the producers and fewer royalties for the
Tribe,” Crow II, 819 F.2d at 899, Pet. App. 97; (iii) Mon-
tana’s coal taxes reduced tribal revenues by impairing the
marketability of the Tribe’s coal, Crow II, 819 F.2d at 903,
Pet. App. 109; (iv) “[t]he tax revenue from coal produc-
tion could generate funds for tribal services and provide
employment for tribal members. . . . By taking revenue
that would otherwise go towards supporting the Tribe
and its programs .. . the state tax threatens Congress’
overriding objective of encouraging tribal self-govern-
ment and economic development,” Crow II, 819 F.2d at

11

902-03, Pet. App. 107 (citation omitted); and (v) “Mon-
tana’s coal taxes . . . interfere with tribal economic devel-
opment and autonomy,” Crow II, 819 F.2d at 903, Pet.
App. 108. See also, Crow III, 969 F.2d at 848-49, Pet. App.
59-60 (reiterating several of the Crow II findings); Cotton
Petroleum, 490 U.S. at 186 n.17 (distinguishing Montana’s
“unique,” “unusually large,” and “extraordinarily high”
coal taxes, which “imposed a substantial burden on the
Tribe” and “had a negative effect on the marketability of
coal produced in Montana,” from New Mexico's oil and
gas taxes there at issue).

Cc. Crow Ill

Crow III concerned the claim of the United States and
the Tribe to the severance and gross proceeds taxes ille-
gally imposed and collected by Montana and Big Horn
County from Westmoreland before the disputed money
was paid into the District Court’s escrow account.5 The
District Court denied the motion of Montana and Big
Horn County to dismiss those claims. Pet. App. 67-86.
Citing the Montana Supreme Court's decision in Valley
County v. Thomas, 97 P.2d 345 (1939), as well as cases from

5 This claim had not been asserted by the Tribe, and the
United States had not yet intervened, when Crow | was decided.
Consequently, the issue concerning the Tribe’s right to recovery
of these taxes was not presented to the Court of Appeals in Crow
I. Under these circumstances, the Ninth Circuit’s observation in
Crow I (650 F.2d at 1113 n.13, Pet. App. 186 (emphasis added))
that the Tribe “is apparently not entitled to any refund if the tax
statutes are declared invalid,” was rightly accorded no weight
in that Court’s subsequent decisions. See Pet. 6 n.3.

12

other jurisdictions,* the District Court held that “an
action for restitution may be maintained by one govern-
mental entity against another even though the plaintiff is
not the source of the funds.” Pet. App. 80.

The Ninth Circuit initially accepted an interlocutory
appeal to determine whether the United States and the
Tribe could state a claim to funds collected from the
Tribe’s lessee. Crow III, 969 F.2d at 848, Pet. App. 59.
Following full briefing and oral argument, the Ninth
Circuit dismissed the appeal as improvidently granted
because that issue had already been decided in favor of
the Tribe and the United States in Crow II. Ibid.

D. Proceedings Below (in Crow IV)

After the Ninth Circuit’s decision in Crow III and a
trial, the District Court issued its decision in November
1994. Its analysis was predicated on its conclusion that “it
is a question of fact . . . whether a remedy in restitution
arises at all in this case.” Pet. App. 46-47. It recognized
that Montana’s illegal coal taxes had significant adverse
impacts on the Tribe and had contravened Congress’
overriding objective of encouraging self-government and
economic development. Pet. App. 27-29, 45 and 50. In the
District Court’s view, however, these factors favoring the
Tribe were outweighed by others. Pet. App. 31-37, 45-54.
Finding that it would not be unjust for Montana and Big
Horn County to retain the taxes they illegally imposed

© Humboldt County v. Lander County, 56 P.228 (Nev. 1899);
City of Norfolk v. Norfolk County, 91 S.E. 820 (Va. 1917); and Board
of Highway Comm'rs v. Bloomington, 97 N.E. 280 (Ill. 1912).

13

and collected on Crow coal, the District Court ruled that
the Tribe and the United States were not entitled to any

recovery. Pet. App. 52, 54.

In its conclusions of law, the District Court reiterated
its previous Crow III ruling that the Tribe and the United
States were not automatically barred from recovering
taxes paid by the Tribe’s lessee. Nevertheless, the District
Court found that “the lack of privity” between the Tribe
and Montana “has its place in determining restitution
damages.” Pet. App. 48-50. It did not address Montana’s
argument that this Court’s subsequent decision in United
States v. California, 507 U.S. 746 (1993), undermined the
vitality of the Ninth Circuit’s decision in Crow III.

The Ninth Circuit reversed. It stated that the District
Court:

[F]ailed to give appropriate weight to the law of
this case as established in the three prior
appeals. In the process of weighing the equities
in favor of and against restitution, the district
court in effect reconsidered questions of law
already decided by this Court in the prior
appeals. Nearly every factor relied upon by the
district court to determine that the Tribe was not
entitled to relief is either contradicted or made
irrelevant by our earlier holdings.

Crow IV, 92 F.3d at 828, Pet. App. 8.

With regard to the privity issue, the Ninth Circuit
held that the District Court had erred and ignored the
law of the case by denying relief based in part on the fact
that the taxes were paid by the Tribe's lessee. Crow IV, 92

14

F.3d at 828-29, Pet. App. at 8-9. It found that Westmore-
land had agreed to pay the tribal tax in the 1982 amend-
ment to the coal lease and that Westmoreland “was
willing to pay coal taxes to the Tribe as early as 1976.”
Consequently, “there was no reason for the [district]
court to distinguish between the taxes collected before
and after 1982.” Crow IV, 92 F.3d at 830, Pet. App. 11-12.
The Ninth Circuit also rejected Montana’s reliance on
California because California “involved an entirely differ-
ent factual situation.” Crow IV, 92 F.3d at 828-29 n.2, Pet.
App. 8-9; 93 F.3d at 1194-95, Pet. App. 16.

The case was remanded to the District Court “for
entry of an order directing the State and County to dis-
gorge the improperly collected taxes.” The District Court
also was instructed to consider the request of the Tribe
and the United States for prejudgment interest. Crow IV,
92 F.3d at 830, Pet. App. 12.

S

ARGUMENT

I. THIS CASE IS FACTUALLY UNIQUE AND
LEGALLY PEDESTRIAN.

It is established that Montana and Big Horn County
violated the federal rights and interfered with the feder-
ally protected sovereignty of the Tribe and thwarted Con-
gress’ overriding objectives by illegally imposing and
collecting more than $58 million in taxes on the Tribe's
coal. The State and County are seeking to retain the
money they unlawfully obtained at the Tribe’s expense in
violation of federal law. They do not question the obvious
but fundamental point that the relief granted by the

15

Ninth Circuit in Crow IV, disgorgement of the illegally
collected taxes, would effectuate the purpose of the laws
that were broken and partially make good the wrong
done to the Tribe. Conversely, the denial of the restitu-
tionary relief sought by the Tribe and the United States
would leave the Tribe without a remedy for the wrongs
inflicted by Montana from 1976 through 1983 and by Big
Horn County from 1975 through 1986 and would allow
them to profit from their own wrongdoing.

After the decision in Crow I, the District Court
ordered that the challenged severance taxes be paid into a
court supervised escrow account. Those funds with the
interest they earned were awarded to the United States in
trust for the Tribe following this Court's summary affir-
mance in Crow II. See Crow IV, 92 F.3d at 828, Pet. App. 7;
Pet. App. 35. Montana neither contested nor appealed
that final judgment. Since then, Westmoreland has paid
all severance and gross proceeds taxes on Crow coal to
the United States in trust for the Tribe pursuant to the
1982 amendment to the 1974 Crow/Westmoreland lease.
As held in Crow III, there is no justification for treating
the funds now at issue differently.

The petition does not raise an issue of broad applica-
tion or importance. This case is fact specific and the legal
issue presented is not likely to recur. As this Court recog-
nized in Cotton Petroleum, 490 U.S. at 186 & n.17, the taxes
here at issue are “unique.” They were held invalid in part
because they are so “extraordinarily high.” Petitioners
have not pointed to taxes of any other jurisdiction which
impose comparable burdens on Indian tribes or tribal
property. Another unusual aspect of the instant case is
that Westmoreland did not seek refunis of the taxes it

16

paid to the State and County and later waived any claim
to that money.

Due to the extraordinary nature of the taxes at issue and
to their devastating impact on the mineral wealth held by the
United States in trust for the Tribe, the United States inter-
vened in support of the Tribe’s claims.? The government's
participation as a co-plaintiff precludes Montana from sai-
sing Eleventh Amendment defenses. Arizona v. California, 460
U.S. 605, 614 (1983). Cf. Seminole Tribe of Florida v. Florida, ___
U.S. __, 116 S.Ct. 1114 (1996); Idaho v. Coeur d'Alene Tribe
of Idaho, __ U.S. ___ (No. 94-1474, decided June 23, 1997),
in which suits by tribes against states and state officials
were held barred by the Eleventh Amendment. The
absence of any Eleventh Amendment issues due to the
presence of the United States underscores the uniqueness
of this case and further diminishes the likelihood that the
issue this Court is being asked to consider will arise in
future actions.®

7 The large amount of money at stake reflects the “enormous
revenues” generated by Montana’s “extraordinarily high” coal taxes
and the extent to which the collection of those taxes unjustly
enriched the State and County and deprived the Tribe of revenues it
otherwise would have received. See supra at 9-10.

® During the past 25 years, the United States has
participated as a party in few, if any, cases challenging the
validity of state taxes as applied to Indians, Indian tribes and
their property or activities. See, e.g., Cotton Petroleum Corp. v.
New Mexico, 490 U.S. 163 (1989); Montana v. Blackfeet Tribe, 471
U.S. 759 (1985); New Mexico v. Mescalero Apache Tribe, 462 U.S.
324 (1983); Ramah Navajo School Board v. Bureau of Revenue, 458
U.S. 832 (1982); White Mountain Apache Tribe v. Bracker, 448 U.S.
136 (1980); Moe v. Salish & Kootenai Tribes, 425 U.S. 463 (1976);
McClanahan v. Arizona Tax Comm'n, 411 U.S. 164 (1973); and
Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1973).

17

From a legal standpoint, there is nothing unusual or
remarkable about the relief granted by the court below.
The Ninth Circuit simply did what federal courts have
been doing “[fjrom the earliest years of the Republic,”
exercising their inherent equitable powers to remedy the
invasion of federally secured rights. Franklin v. Gwinnett
County Public Schools, 503 U.S. 60, 66-67 (1992) (” ‘where
legal rights have been invaded, and a federal statute
provides for a general right to sue for such invasion,
federal courts may use any available remedy to make
good the wrong done’ ”), citing, inter alia, Marbury v.
Madison, 5 U.S. (1 Cranch) 137, 163 (1803); and Kendall v.
United States ex rel. Stokes, 37 U.S. (12 Pet.) 524, 624 (1838),
and quoting Bell v. Hood, 327 U.S. 678, 684 (1946). As
stated in Swann v. Charlotte-Mecklenburg Bd. of Education,
402 U.S. 1, 15 (1971), “[o]nce a right and violation have
been shown, the scope of a district court’s equitable
powers to remedy past wrongs is broad, for breadth and
flexibility are inherent in equitable remedies.”9 It is also

%In fashioning appropriate relief, the primary
consideration is carrying out the purposes of the statute that
was violated. Albemarle Paper Co. v. Moody, 422 U.S. 405, 417
(1975) (the determination of appropriate relief “must be
measured against the purposes which inform [the statute]”);
Mitchell v. De Mario Jewelry, 361 U.S. 288, 292 & 296 (1960) (the
“statutory purposes leave little room for the exercise of
discretion not to order reimbursement”). Equitable relief
required to remedy the invasion of federally secured rights and
to effectuate the statutory purpose may be denied only if based
on an estoppel or on the plaintiff’s closely related illegal
conduct. Albemarle, 422 U.S. at 417-25; Dan B. Dobbs, Dobbs Law
of Remedies, § 2.4(7) at 119 (2d.Ed. 1993). Contrary to the district
court’s decision below, federal courts do not have broad or
unfettered discretion to exercise their equitable powers in an ad

18

well established that “the federal courts [are not]
restricted to the remedies available in state courts in
enforcing . . . federal rights” and that the relief available
in federal court for the violation of federal rights may not
be “unduly circumscribed by state law.” Board of Commis-
sioners of Jackson County v. United States, 308 U.S. 343,
350-51 (1939). Accord, Washington v. Fishing Vessel Ass'n,
443 U.S. 658, 695 (1979).

The Ninth Circuit’s disgorgement remedy in the
instant case is just like the equitable relief granted to
correct violations of constitutional rights, as exemplified
in Swann, the equitable remedies fashioned to give effect
to Indian treaty fishing rights, as in Fishing Vessel Ass’n,
443 U.S. at 692-96, the constructive trust ordered to carry
out the national security policy of the United States
embodied in a federal employment contract, as in Snepp v.
United States, 444 U.S. 507, 514-16 (1980) (per curiam), and
the declaratory and monetary relief required to effectuate
the statutory purpose of preventing obstructions to com-
merce on navigable waterways, as in Wyandotte Transpor-
tation v. United States, 389 U.S. 191, 201-05 (1967). In these
cases and many others, federal courts have exercised
their inherent equitable powers to correct the wrongs
inflicted on plaintiffs due to invasions of their federally
secured rights. This case is no different.

hoc manner “which varies like the Chancellor’s foot.” Albemarle,
422 U.S. at 417.

19

II. CALIFORNIA HAS NO BEARING ON THIS CASE.

Montana’s principal argument is that the decision
below conflicts with the holding in United States v. Califor-
nia. As the Ninth Circuit said, “California involved an
entirely different factual situation.” Crow IV, 98 F.3d at
1195, Pet. App. 16.

California does not preclude the Tribe’s recovery for
each of the following reasons: (i) the instant case is gov-
erned by the principle that, when federally secured rights
are invaded, federal courts will grant appropriate relief to
effectuate the federal purposes and make good the wrong
done, whereas the government's claim in California was
predicated exclusively on state law; (ii) there is no
requirement that the relief awarded by federal courts to
remedy violations of federal law must fit precisely within
the confines of established common law causes of action;
(iii) all of the essential elements of the common law
assumpsit action for money had and received are satis-
fied; (iv) California does not hold that only taxpayers may
seek recovery of illegally collected taxes; and (v) none of
the factors which made it equitable for the state to be
allowed to keep the taxes it collected from the federal
government’s contractor is present here.

A. California Did Not Involve The Equitable
Powers Of Federal Courts To Remedy Viola-
tions Of Federal Law.

In California, the United States attempted to federal-
ize a cause of action predicated on state law in order to
circumvent state filing requirements which otherwise

20

barred the claim.’ This Court held that under these
circumstances the United States could not use “the exis-
tence of an obligation to indemnify [its contractor] to
create a federal cause of action for money had and
received to recover state taxes paid by [its contractor]... .”
507 U.S. at 754. The federal action was “inap-
propriate . . . because the Government is in no better
position than as a subrogee of its [private] contractor.”
507 U.S. at 752.1!

Here, in stark contrast, the underlying claims of the
Tribe and the United States are predicated on federal law,
the violation of the Tribe’s rights under the Indian Min-
eral Leasing Act, 25 U.S.C. §§ 396a-396g, and interference
with the Tribe’s sovereignty. Montana directly violated
the Tribe's rights under federal law whereas in California
the government stood in the shoes of its subrogee, the
taxpayer, whose claims were predicated exclusively on

10 The government’s claim was “posited upon the
interpretation of a state-created exemption from a state[-]
created sales tax.” The United States sued in its proprietary
capacity and stood in the shoes of its contractor; there was no
sovereign interest of the United States. There were no
allegations that the state taxes were preempted by federal law or
violated the Constitution. 507 U.S. at 748-51.

11 This Court also noted that different rules apply to the
United States depending on whether it is acting in its
proprietary capacity, as in California, or as a sovereign. 507 U.S.
at 757-58. Where, as here, the United States sues as trustee on
behalf of Indian beneficiaries, it is exercising its sovereign
authority. Moe v. Salish & Kootenai Tribes, 425 U.S. 463, 473-75 &
n.13 (1976); United States v. Minnesota, 270 U.S. 181, 194-95
(1926); United States v. Rickert, 188 U.S. 432, 444-45 (1903).

21

state law.'2 The remedy issue in this case therefore is
governed by the principle, recently reaffirmed in Franklin,
that where federally secured rights are invaded, federal
courts will grant relief necessary to effectuate the con-
gressional purpose and to make good the wrong done.!5

Moreover, Montana’s reliance on California is predi-
cated on a fundamentally flawed, albeit unspoken, major
premise. Its argument mistakenly assumes that when a
violation of federal law is established, the relief federal
courts may grant is limited to traditional common law
remedies. That is not the law. In Wyandotte, for example,
this Court upheld the right of the United States to impose

12 The United States and the Tribe are not claiming by,
through or under Westmoreland. The Tribe’s action and
standing are based on the violation of its federally secured
rights, not on a voluntary indemnification agreement. The Tribe,
not Westmoreland, is the intended beneficiary of the federal
laws promoting Indian mineral development and recognizing
and protecting tribal sovereignty.

13 Westmoreland makes no claim to the illegally collected
taxes, so there is no contest between the Tribe and
Westmoreland regarding the disposition of those funds. If such
a claim were presented, the guiding principle would be to
award the funds in the manner that best effectuated the purpose
of the federal laws Montana violated. See supra at 17 n.9.
Westmoreland’s position from the outset was that it was willing
to pay either a tribal or state tax but not both, Crow IV, 92 F.3d at
830, Pet. App. 11-12; Tribe’s ER 12-13, so it is difficult to
understand how a court of equity could justify granting
Westmoreland immunity from both state and tribal taxes. In any
event, whatever Westmoreland did or did not do, or would have
or would not have done, does not have any bearing on whether
Montana should be allowed to keep the money it obtained in
violation of the Tribe's federally secured rights and at the Tribe's

expense.

22

liability on shipowners under the Rivers and Harbors Act
of 1895 for the negligent sinking of their vessels because
that remedy was necessary to fulfill the statutory pur-
pose. This Court specifically declined to decide whether
the United States would have been entitled to that relief
in the absence of the statute. 389 U.S. at 196 n.5. See also
the discussion supra at 17-18. Montana has not cited a
single case, and the Tribe is not aware of any, in which
equitable relief for the violation of a federal law was
denied on the ground that not all the prerequisites for a
common law cause of action were satisfied.

The instant case involves a cognizable cause of action
brought pursuant to federal laws. Violations of these laws
have been established. Consequently, the issue of appro-
priate relief is controlled by Franklin and the long line of
decisions on which it relies, not California.

B. The Fact That The Tribe Did Not Pay The Ille-
gal Taxes Does Not Foreclose The Disgorge-
ment Remedy.

Assuming arguendo that the claim of the Tribe and
the United States is predicated on assumpsit and con-
structive trust causes of action (as opposed to equitable
relief to remedy violations of federal law), all of the
required elements of those actions are satisfied.
Assumpsit, an action for money had and received, like
the imposition of a constructive trust,'* requires proof of

4 Both assumpsit and constructive trust actions are
predicated on a claim of unjust enrichment. The difference is
that a successful assumpsit action results in a judgment

23

three elements: (i) a wrongful act; (ii) specific property
acquired by the wrongdoer which is traceable to the
wrongful behavior; and (iii) a reason why the party hold-
ing the property should not be allowed in good con-
science to keep it. Alsco-Harvard Fraud Litigation, 523
F.Supp. 790, 806-07 (D.D.C. 1981) (and cases therein
cited). See also, Schaeffer v. Miller, 41 Mont. 417, 423, 109 P.
970, 973 (1910); Pet. App. 43, 70-71. If these elements are
present, the law implies the existence of a contract to turn
over the wrongfully acquired property to its rightful
owner. See, Midwest Aviation, Inc. v. General Electric Credit
Corp., 907 F.2d 732, 736-37, 743-44 (7th Cir. 1990)
(“[q]uasi-contractual duties arise only in situations of
unjust enrichment, situations where ‘one person has
received money or its equivalent under such circum-
stances that in equity and good conscience he ought not
to retain it and which ex cequo et bono belongs to another’ ”).

This Court’s decision in Snepp illustrates the use of
the constructive trust remedy to correct a violation of
federal law. Snepp involved the publication of a book by a
former CIA agent contrary to the covenant in his employ-
ment agreement not to publish any material relating to
the CIA without the agency’s prior approval. The wrong-
ful act was the agent’s publication of a book about the
CIA without approval. The property acquired by the
agent traceable to his wrongful behavior was the money
derived from the sale of the book. The reasons the agent
was not allowed to keep that money were that the book

imposing personal liability whereas a constructive trust
operates against specific property. Pet. 13 & n.4; Pet. App. 43,
70-71.

24

was written in violation of the agent’s employment cove-
nant and that it was equitable to require him to disgorge
the benefits of his faithlessness. 444 U.S. at 515. In addi-
tion, this Court noted that the constructive trust remedy
conformed the relief to the dimensions of the wrong and
that that relief was the most equitable and effective
means of fulfilling the purpose of the covenant, protect-
ing intelligence that could affect the Nation's security
interests. 444 U.S. at 514-16.

The instant case is on all fours with Snepp. Here, the
wrongful acts are the imposition and collection of the
invalid state coal taxes in violation of federal law. The
wrongfully acquired property is the $58 million in illegally
collected coal tax revenues. The reasons why Montana
should not be allowed to keep that money and why it
should be paid over to the Tribe are that it was acquired in
violation of the Tribe’s rights under federal law and that
disgorgement would effectuate the purpose of those laws
and at least partially make good the wrongs done to the
Tribe.

Nothing more is required. In its December 1990 deci-
sion denying Montana’s motion for summary judgment,
the District Court carefully considered and squarely
rejected Montana’s argument that restitutionary relief is
precluded because the taxes were paid to Montana and Big
Horn County by Westmoreland, not by the Tribe. Relying
on case law from Montana’ as well as other jurisdic-
tions,’ the District Court correctly concluded that the

15 Valley County v. Thomas, 109 Mont. 345, 97 P.2d 345 (1939).

16 Humboldt Co. v. Lander Co., 56 P. 228 (Nev. 1899); City of
Norfolk v. Norfolk County, 91 S.E. 820, 822-24 (Va. 1917); and

25

claim of the Tribe and the United States to the illegally
collected taxes turns on the issue of unjust enrichment, not
the identity of the taxpayer. Pet. App. 79-81. Here, as in
Snepp, the relationship between the wrongdoers and their
victims that is necessary to obtain appropriate equitable
relief is founded on the violations of the victims’s federally
secured rights. That is precisely what the Ninth Circuit
held in Crow II.

California does not stand for the proposition that only
taxpayers may recover taxes illegally imposed and col-
lected by governmental entities. This Court pointed out
that the federal government's contractor had challenged
the state’s taxes, had its day in court, settled its claim and
gone home. 507 U.S. at 752. The federal government's
claim was derived from its contractor and both the gov-
ernment and its contractor had a full and fair opportunity
to challenge the validity of California’s taxes under state
law. 507 U.S. at 750, 756-57. The failure of the federal
government to comply with state filing requirements
barred its claim for a tax refund. 507 U.S. at 756-57. Since
an adequate remedy was available which the federal gov-
ernment had failed to utilize, it was not unjust for Cali-
fornia to keep the money it collected from the contractor,
just as it would be able to retain taxes received from any
other taxpayer who failed to follow procedures required
to obtain a refund. When the federal government “chal-
lenge[s] a state tax on state-law grounds,” it should not
be treated any differently than other taxpayers “simply
because it is the Government.” 507 U.S. at 759-60.

Board of Highway Comm'rs v. Bloomington, 97 N.E. 280, 283-85 (Ill.
1912).

26

This case is completely different. The Tribe’s claim is
predicated on the unlawful appropriation and conversion
of its mineral wealth and the violation of its federally
secured rights, not on state law or a voluntary indemni-
fication agreement. The Tribe is not claiming by, through
or under Westmoreland. See supra at 21 n.12. There is no
contention that the Tribe’s rights have lapsed or that its
claim is barred. Nor is there an attempt to circumvent a
stale state claim by substituting a federal cause of action.
Granting the relief sought by the Tribe and the United
States would not result in unfair treatment vis-a-vis other
taxpayers.'’” In short, none of the factors which made it
equitable for California to be allowed to keep the taxes it
collected from the federal government's contractor is pre-
sent here.

Ill. THERE IS NO CONFLICT WITH THE TENTH
CIRCUIT’S DECISION IN UTE INDIAN TRIBE V.
STATE TAX COMMISSION.

The decision below does not conflict with Ute Indian
Tribe v. State Tax Comm'n, 574 F.2d 1007 (10th Cir. 1978),

17 See, e.g., McKesson Corp. v. Division of Alcoholic Beverages,
and Tobacco, 496 U.S. 18, 48 (1990) (states have no legitimate
interest in being able to retain taxes imposed and collected in
violation of federal law); United States v. City of Spokane, 918 F.2d
84, 89 (9th Cir. 1990), cert. denied, 501 U.S. 1250 (1991)
(municipality required to disgorge the taxes it illegally collected
from the Red Cross because “the only logical relief, aside from

further taxation, is to order the improperly taken
monies refunded”); Hoopa Valley Tribe v. Nevins, 881 F.2d 657 (9th
Cir. 1989), cert. denied, 494 U.S. 1055 (1990) (Indian tribe entitled
to recover illegal taxes collected by California from private
timber companies in violation of federal Indian law).

27

cert. denied, 439 U.S. 965 (1978). Ute was an action by an
Indian tribe to invalidate Utah’s taxes on sales of per-
sonal property by a tribal enterprise located within a
reservation. Following this Court’s decision in Moe v.
Salish & Kootenai Tribes, 425 U.S. 463 (1976), the Tenth
Circuit held that the state tax was valid as applied to
sales to non-Indians but invalid as applied to sales to
Indians. The Tribe’s claim for return of the invalid taxes
paid by the buyers of the goods, collected by the tribal
enterprise and turned over to the state was summarily
rejected on the ground that only the buyers could seek
recovery or refund of the taxes. 574 F.2d at 1009. Ute has
not been followed or cited in any subsequent decision for
the proposition that non-taxpayers may not seek to
recover illegally collected taxes.

There are at least four critical distinctions between
the instant case and Ute. First, in the instant case, unlike
Ute, the state’s “extraordinarily high” taxes operated
against the Tribe’s own property and significantly dimin-
ished its value. See supra at 5 and 10-11. In Ute, by
contrast, no tribal property was involved and the state’s
taxes operated only against the individual buyers. Sec-
ond, in the instant case the Ninth Circuit expressly found,
based on substantial evidence, that Montana’s taxes took
revenue that would otherwise go to the Tribe. See supra at
5, 7, 10-11, and 13-14. There was no such claim or finding
in Ute. Third, the tribe in Ute did nothing more than
collect the state’s taxes whereas Montana’s taxes imposed
substantial burdens on the Tribe and had a negative effect
on the Tribe’s ability to market its coal. Cotton Petroleum,
490 U.S. at 186 n.17; Crow II, 819 F.2d at 899, Pet. App.
97-98. Fourth, here, unlike Ute, the rights of the Tribe

under a federal statute were violated and the remedy
fashioned by the Ninth Circuit is necessary to effectuate
the purpose of that statute during the periods the taxes
were collected illegally by Montana and Big Horn
County.

In short, the Ute Court held that the tribe was not the
injured party so far as the recovery of invalid sales taxes
on personal property was concerned. The taxes involved
here are totally different. The findings of Crow I, II, Ill
and IV clearly establish that the Tribe was the rightful
recipient of the taxes illegally imposed on the Tribe's
trust assets and collected from Westmoreland.

For all of these reasons, the outcomes in Ute and
Crow IV are compatible. The Tribe certainly is a proper
party to seek recovery of the coal taxes which unjustly
enriched Montana and Big Horn County.

S

CONCLUSION

With full awareness of the risks, Montana and Big
Horn County deliberately and wrongfully appropriated
the Tribe’s mineral wealth and obtained enormous bene-
fits for themselves in violation of federal law. The Ninth
Circuit fashioned an appropriate remedy to correct those
wrongs. Its decision does not conflict with the decision of
this or any other court. It is supported by and is consis-
tent with the long line of cases affirming the broad equi-
table power of federal courts to fashion appropriate
remedies to correct invasions of federally secured rights.
The facts of this case are unique and are not likely to

29

recur. There is no issue that warrants review by this
Court.

For the foregoing reasons, the petition for a writ of
certiorari should be denied.

Respectfully submitted,

Rosert S. PeccyGer

FREDERICKS, PELCYGER,
Hester & Wuire, L.L.C.

1881 9th St., Ste. 216

Boulder, CO 80302

(303) 443-1683

Attorney for Respondent
Crow Tribe of Indians

July 1997

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0075%3A03. Public record. Not legal advice.