Opposition Brief — Winnebago Tribe v. Department of Revenue

In The

Supreme Court of the Unité

October Term, 1987

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THE WINNEBAGO TRIBE OF NEBRASKA,

a federally reeognized Indian Tribe,

Petitioner,

¥;

DEPARTMENT OF REVENUE

OF THE STATE OF IOWA,

(Iowa Department of Revenue)

and

INVESTMENT FINANCE MANAGEMENT CO., INC.,

Respondents.

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On Writ of Certiorari to the United States

Court of Appeals for the Eighth Circuit

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RESPONDENT IOWA DEPARTMENT

OF REVENUE

BRIEF IN OPPOSITION

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Tuomas J. MILLER

Attorney General of Iowa

Harry M. Gricrer

Special Assistant Attorney General

Counsel of Record

Tomas M. DonaHvuE

Assistant Attorney General

Hoover State Office Building

Des Moines, Iowa 50319

Telephone: (515) 281-5846

Counsel for Respondent,

lowa Department of Revenue

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or call collect (402) 342-2831

QUESTION PRESENTED

1. Whether the Federal District Court had original

jurisdiction to remove a garnishment action from the Iowa

State District Court between the lowa Department of Rev-

enue, Investment Finance Management Co., Inc., a Florida

corporation and the Winnebago Tribe of Nebraska, an In-

tervenor?

PARTIES TO THE PROCEEDING

The caption contains the names of all parties to the

action that participated in the United States Court of

Appeals for the Eighth Circuit.'. The original litigation

was a garnishment action between the lowa Department

of Revenue and Investment Finance Management Co., Inc.,

a Florida corporation. The Winnebago Tribe of Nebraska

entered the litigation as an Intervenor claiming that it

owned a bank account that was in the name of Investment

Finance Management Co., Ine.

'The Sloan State Bank, 322 Evans, Sloan, lowa, was a party

to the District Court action as garnishee and holder of bank

accounts in the name of Investitient Finance Management Co.,

Inc. which are the subject of this action. The Sloan State Bank

has not participated in this case and apparently claims no in-

terest in the money held in the Investment Finance Manage-

ment bank accounts.

ili

TABLE OF CONTENTS

Page

Og SI ys) A | | ee i

ees aoe Fe CARE 1

REASONS FOR DENYING THE WRIT:

I. The United States Court of Appeals decision in

this case is correct and does not conflict with

prior decisions of this Court 20

Il. There is no substantial federal question properly

raised in the context of this case.

CONCLUSION

bo

iv

TABLE OF AUTHORITIES

Cases Crrep:

Avco Corp. v. Aero Lodge 1. A. M. & A. W., 3

U.S. 557 (1968)

California v. Cabazon Band of Mission Indians,

— US. —, 107 S.Ct. 1083 (1987)

Caterpillar, Inc. v. Williams, 482 U.S. —, —, 107

S.Ct. 2425, 2429 (1987)

Gully v. First National Bank, 299 U.S. 109, 142-

113

McClanahan v. Arizona

411 U.S. 164 (1975)

Montana v. Blackfeet Tribe of Indians, 471 U.S.

799 (1985)

Oklahoma Tax Commission v.

—, 108 S.Ct. 481 (1987)

Oklahoma ex rel. Oklahoma Tax Commission v.

Graham, 822 F.2d 951 (10th Cir. 1987)

State Tax Commission,

=e.

Graham,

Sratutes Crrep:

28 U.S.C. § 1331 (1982)

(

C. §1441(b) (1982) ...

.§1441(e) (West Supp. 1987)

§ 1862 (1982) nnn eee Eon

Pages

2, 3, 4, 6

a.

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nea 1

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STATEMENT OF THE CASE

The Iowa Department of Revenue (Department)

brought a garnishment action against Investment Finance

Management Co., Inc. (I'M), a Florida corporation, for

unpaid Lowa sales tax. TFM had failed to protest an Lowa

sales tax assessment of $245,437.58. The Department of

Revenue action sought to garnish $53,177.90 deposited to

IIl’'M’s aeeount in the Sloan State Bank of Sloan, Iowa.

The notice of garnishment and interrogatories were filed

in the Towa Distriet Court for Woodbury County on Feb-

ruary 9, 1986. The notice of garnishment and interroga-

tories named ITF M as the defendant and the Sloan State

junk as the defendant garnishee. A further Notice to

Defendant of Garnishment dated February 13, 1986, also

named [FM as the defendant and the Sloan State Bank

as defendant garnishee (State Add. A).

The Winnebago Tribe of Nebraska (Tribe) inter-

vened as the claimed owner of the Sloan State Bank funds

and removed the action to the United States District

Court for the Northern District of Iowa under 28 U.S.C.

§ 1441(b) (1982) with claimed original question jurisdic-

tion predicated upon 28 U.S.C. §§ 1331 and 1562 (1982).

The Tribe simultaneously filed a Motion to Dismiss

in the federal court. The District Court, the Honorable

Donald KE. O’Brien, Chief Judge, sustained the Tribe’s

Motion to Dismiss based on a finding that the federal court

lacked derivative jurisdiction and the state court lacked

original jurisdiction. App. 5.

On appeal, the United States Court of Appeals for

the HKighth Cireuit reversed. The Eighth Cireuit held

that there was no basis for removal from state court be-

eause the only basis claimed for removal! is a federal ques-

tion and because the only federal question that may be

involved is an exclusive federal question. The Court of

Appeals held that federal question jurisdiction does not

exist merely because an Indian tribe is a party or because

the action involves Indian property or contracts. App. 4.

REASONS WHY THE PETITION SHOULD

BE DENIED

I. The United States Court of Appeals decision in

this case is correct and does not conflict with

prior decisions of this Court.

The decision below should not be reviewed because

the case merely involves a state court gariishment action

and ownership of a bank account. Simply stated the

issue is whether Investment Finance Management Co.,

Inc. (IF M) owned a bank account held in its name

at the Sloan State Bank, Sloan, lowa. The Winnebago

Tribe of Nebraska (Tribe) claims it is the owner of the

$53,177.90 held in the IFM account at the Sloan State

Bank. The decision of the Eighth Cireuit correctly re-

manded the Iowa Department of Revenue’s garnishment

action back to the state court to determine the ownership

of IF M's Sloan State Bank account.

Under the “well-pleaded complaint rule,” federal jur-

isdiction exists to support removal only when a federal

question is presented on the face of the complaint. Cater-

pillar, Inc. v. Williams, 482 U.S. —, —, 107 S.Ct. 2425,

2429 (1987), decided June 9, 1987, clearly reaffirmed that

principle.

The presence or absence of federal-question jur-

isdiction is governed by the “well-pleaded complaint

rule,” which provides that federal jurisdiction exists

only when a federal question is presented on the face

of the plaintiff's properly pleaded complaint. See

Gully v. First National Bank, 299 U.S. 109, 112-113,

of S.Ct. 96, 97-98, 81 L.Ed. 70 (1936). The rule makes

the plaintiff the master of the claim; he or she may

avoid federal jurisdiction by exclusive reliance on

state law.

482 U.S. at —, 107 S.Ct. at 2429.

The “complaint” which precipitated the present liti-

gation was merely a “Notice to Defendant of Garnish-

ment.” (Respondent’s Appendix p. 1) Clearly the com-

plaint (Notice to Defendant of Garnishment) shows that

this case was based exclusively on state statutes. The

complaint did not rely in any manner on federal law,

treaties or the United States Constitution. The Winne-

bago Tribe of Nebraska was not even named as a party.

Federal law formed no element of the Department’s state

court action. No authority exists under which the state

could have brought its garnishment action in federal

court. The garnishment notice did not state a federal

cause of action. Therefore under Caterpillar, Inc. v. Wil-

liams, supra, the instant case was not subject to removal.

That the decision below is clearly correct is also

shown by the Court’s recent decision in Oklahoma Tax

Commission v. Graham, — U.S. —, 108 S.Ct. 481 (1987).

This Court there vacated a decision which had dismissed

a removed case brought against an Indian Tribe on the

ground of exclusive federal jurisdiction, Oklahoma ex rel.

Oklahoma Tax Commission v. Graham, 822 F.2d 951 (10th

Cir. 1987), and remanded the ease for reconsideration in

light of Caterpillar, Inc. v. Williams.

The Tribe claims that the decision below is imeon-

sistent with prior deeisions of this Court. The Tribe al

leges that the decision is inconsistent with the exelusive

federal question jurisdiction (or complete pre-emption)

doctrine discussed by this Court in Arco Corp. v. Aero

Lodge 1. A. M. & A. W., 390 U.S. 557 (1968). The facts

in that ease are so different from the instant case that

there is no conflict regarding exclusive federal question

jurisdiction. In Avco Corp., this Court held that an ae

tion arising under § 301 of the Labor Management Rela

tions Act of 1947 is controlled by federal substantive law

even if it is brought in a state court. In the instant case,

the Iowa Department of Revenue merely initiated a gar-

nishment action against Investment Finance Management

Co., Inc. (a Florida corporation), in an lowa district

court.

The Tribe’s argument ignores the well-pleaded com-

plaint rule of Caterpillar, Inc. v. Williams. The petition

also erroneously assumes that this case is in fact a case

within the exclusive jurisdiction of federal courts. Pet.

p. & The Court of Appeals instead held that the state

court would be required to dismiss the action only if it

determined either that the Tribe owned the account or

that the suit was really an attempt to tax the Tribe.

App. 4.

The Tribe’s attempt to establish the existence of a

significant question eoneerning removal of exelusive fed-

eral question eases also fails beeause Congress has sub-

sequently addressed the topie in 28 U.S.C. « 1441(e) (West

Supp. TOST).' That statute applies to eases filed after

June 18, 1986, and was not applied to this ease filed before

that date

The Tribe’s eontention tha the decision below con-

fliet with t} (‘ourt’s dee Ons in Montana v. Blackfeet

Tribe of lund ms, 471 [ .S. 799 ( LOSD). California ”. Caha-

~On Rand ol Wiss on Indians. lS. 107 2 4 1083

{ LOS; , Fl (| \/ ('/ mmahan . Arizona State T aa Commission,

Hl U.S. 164 (1973), is erroneous. The above quoted cases

are clearly not relevant to the present proceeding. As can

be secon from the face of the Departme nt’s Notice of Gar-

nishment and Interrogatories (State Add. A), the Winne-

bago Tribe of Nebraska was not even named as a defen-

dant to the Department’s garnishment action.

The decision of the Court of Appeals was fully cor-

reet and indeed dictated by recent decisions of this Court.

Therefore no need exists for this Court to reexamine the

removal issue.

II. There is no substantial federal question raised

in the context of this case.

The presence or absence of federal-question jurisdic-

tion is governed by the ‘‘well-pleaded complaint rule,”’

That section states:

The court to which such civil action is removed

is not precluded from hearing and determining any

claim in such civil action because the State court from

which such civil action is removed did not have juris-

diction over that claim

which provides that federal jurisdiction exists only when

a federal question is presented on the face of the plain-

tiff’s properly pleaded complaint. Caterpillar Inc. v.

Williams, 482 U.S. —, —, 107 S.Ct. 2425, 2429 (1987). An

examination of the Department’s Notices to Defendant of

Garnishment, Add. A, clearly shows that no federal ques-

tion has been presented to the Court. Gully v. First Na-

tional Bank, 299 U.S. 109, 112-113 (1936). As a result, the

decision of the United States Court of Appeals for the

Eighth Circuit does not raise a substantial federal ques-

tion.

CONCLUSION

For these reasons, the petition for a writ of certiorari

should be denied.

Respectfully submitted,

Tuomas J. MILLer

Attorney General of Iowa

Harry M. Gricer

Special Assistant Attorney General

Counsel of Record

Tuomas M. Donanur

Assistant Attorney General

Hoover State Office Building

Des Moines, lowa 50319

Telephone: (515) 281-5846

Counsel for Respondent,

Lowa Department of Revenue

DEPARTMENT OF REVENUE,

VS.

INVESTMENT FINANCE

MANAGEMENT CO., INC.,

and

SLOAN STATE BANK,

App. 1

IN THE DISTRICT COURT OF THE

STATE OF IOWA IN AND FOR

WOODBURY COUNTY, LOWA

Plaintiff,

NOTICE TO

DEFENDANT

OF

GARNISHMENT

Defendant,

NO. 93851-C

Nm me a ee ee ee ee

Garnishee.

TO THE ABOVE NAMED DEFENDANT /nvest-

ment Finance Management Co., Ine.

You are hereby notified that by virtue of a Dis-

tress Warrant issued by the Department of Revenue

of the State of Lowa, which demands of you the sum

of $243,437.38, the Sheriff of Woodbury County did

on the 20th day of January 1986, garnish Sloan State

Bank, supposed debtor of Defendant, and took its

answer.

You are now notified that unless you appear, con-

test and defend against said garnishment proceedings

in the District Court of the State of Iowa, in and for

Woodbury County, lowa, in the city of Sioux City,

lowa, at the Woodbury County Courthouse, within

-ten (10) days from and after the completed service

of this notice upon you, a judgment may be rendered

condemning $53,177.90 in the hands of the Sloan State

App. 2

Bank belonging to you, as shown by the answer of said

defendant garnishee, and the same will be dealt with

according to law for the use of the plaintiff herein.

Witness my hand this 13 day of February, 1986.

JOHN WATERS