Petition for Writ of Certiorari — Lobo Gaming, Inc. v. Pit River Tribe of California

reme Court, U.S.

err es

(‘) 02 g65nov12 202

In the

Supreme Court of the Anited States

LOBO GAMING, INC.,

Petitioner,

PIT RIVER TRIBE OF CALIFORNIA,

and PIT RIVER GAMING COMMISSION,

Respondents.

On PETITION FOR A Writ OF CERTIORARI TO THE

Court OF APPEAL OF CALIFORNIA

THIRD APPELLATE DISTRICT

PETITION FOR WRIT OF CERTIORARI

John Fredericks II

Counsel of Record

FREDERICKS,PELCYGER &

HESTER, LLC

1075 South Boulder Road

Suite 305

Louisville, CO 80027

Tel: (303) 673-9600

Fax: (303) 673-9155

Attorneys for Petitioner

Cuery & Tay.or ¢ (202) 393-4141 6 HTTev/Usscin©To.coM

i

QUESTIONS PRESENTED

1. Should courts resolve issues of tribal sovereign

immunity by applying uniform principles of federal law?

2. Under federal law, does the governing body of an

Indian tribe have the authority to waive the tribe’s

sovereign immunity in cases where the governing body

is expressly authorized to enter into contracts on the

tribe’s behalf?

3. Is the Pit River Indian Tribe barred from

asserting sovereign immunity from a suit on a contract

when the contract was duly authorized and executed by

the Tribal Council and the contract itself contains a

waiver of the Tribe’s immunity from suit?

ii

RULE 29.6 STATEMENT

Pursuant to Supreme Court Rule 29.6, Petitioner

states that it has no corporate parents and no publicly

held company owns 10% or more of Petitioner’s stock.

lll

TABLE OF CONTENTS

QUESTION PRESENTED .......::sesesesssesesssessessenenenenenenenensnesesssesnnes i

2. csivpmeyesneneaipenitunetimsnmnpivsces i

TABLE OF CONTENTS .cssscscessseee sileshiaisiediniieanssiinamanininnitinnies iii

TABLE OF AUTHORITIESG........::cssssssssessseceeseessesnesnsseseeseeeensnees iv

OPINIONS BELOW........::.ssccesssccsssssesssesesseeesseeneeessnnesesnesesnsennness l

JURISDICTION........0sseesesseees Se SSE Sa oaleetcangnbanaenioboehe 1

RELEVANT PROVISIONS INVOLVED .......-.:seecesesesenerseeeseenenseeenens l

STATEMENT OF THE CASE.........:++s+s+eeeeese0* ssevsonsessvenesnencncsnenoss 2

REASONS FOR GRANTING THE WRIT ........:sssssseseesseeeeseeeenseens 6

CONCLUSION. ..cscccccsesscccosssceccssssccessssesesesecessssssessnsescerseeessneenns 23

APPENDIX

COURT OF APPEAL OPINION (5/7/2002) .....:.ssssseeeeeseesees la

SUPERIOR COURT ORDER (1/26/2001).........:sceseeeseseees 15a

SUPREME COURT ORDER (8/14/2002).......cs:sseseeeeeees 17a

DISTRICT COURT ORDER (3/15/00) ......:sccsceeeeessereeeeeees 15a

TABLE OF AUTHORITIES

CASES

ACE FLYING SERVICE, INC. V. COLORADO DEPT. OF

AGRICULTURE, 314 P.2D 278, 280 (COLO. 1957)............ 18

AQUAMAR V. DEL MONTE FRESH PRODUCE, 179 F.3D 1279,

1294 N. 36 (LITH CIR. 1999) ...........cccccorsssecserees kee 10

ARCHITECTURAL WOODS, INC. V. WASHINGTON, 598 P.2D

SITE, SE CA, FO visite 18

ART. VII §3.4 OF THE TRIBAL CONSTITUTION...........00cseeeeeeeees 5

C & L ENTERPRISES, INC. V. CITIZEN BAND POTOWATOMI

TRIBE OF OKLAHOMA, 532 U.S. 411 (2001)............. 7, 9, 22

DADE COUNTY V. AMERICAN RE-INSURANCE Co., 467 So.2D

4146 (PtA. DEBT. GT. BPP.. TED) sccevcccenserecscsccssncsnneasee 17, 18

EVANS V. McKay, 869 F.2D 1341, 1345 (9TH Cir. 1989).... 11

FDIC v. HULSEY, 22 F.3D 1472, 1487 (10TH Cir. 1994).... 12

FEDERAL SUGAR REFINING Co. V. UNITED STATE SUGAR

EQUALIZATION BD., 268 F. 575, 587 (S.D.N.Y. 1920),

AFF'D, 517 F.2D 508 (8TH CIR. 1975)...........ccccessssrereeeeees 15

FREDERICK V. U.S., 386 F.2D 481, 488 (5TH Cir. 1967)..... 12

HAMILTON V. NAKAI, 453 F.2D 152, 158-59 (9TH Cir. 1971)

RLSM NIN OY eet set. RAR Sy MSP TE IE 11

IN RE INNES, 184 F.3D 1275 (10TH Cir. 1999), CERT. DENIED,

ON Aap BONDE CPM D wseniveosnscusspsiniinisanlcineeacvinationnaiialiuaete 13, 14

IN RE MAGNOLIA VENTURE CAPITAL CorP., 218 B.R. 843,

Re Ce, i SEE vchecectshnisinteibpatsia asian ebipaanes 14

JICARILLA APACHE TRIBE V. ANDRUS, 687 F.2D 1324, 1344

Bg AR REE RRP arte Diba Sot ok ener eee 11, 12

KIOWA TRIBE V. MANUFACTURING TECHNOLOGIES, INC., 523

Ccde SAP Ra Fie. PURER E RMNIUED cisions uioanstecpechsausiaidsaineoncebeaninns 22

MATTEI V. HOPPER, 51 CAL. 2D 119, 122, 330 P.2pD 625, 626

BRE RNa eRe EE ERAN Sect 15

MuRRAY V. CITY OF CHARLESTON, 96 U.S. 432, 445 (1878) 20

NAMEKAGON DEV. Co., INC. v. BOIS FORTE RESERVATION

HOUSING AUTHORITY, 395 F.SuPP. 23, 27-28 (D. MN.

BS ivsecnsssiiinaneeielctedcticicslehetenieicbscnuntsbaptlipdbhnisanaantcauecaaecinte 13, 15

Vv

NATIONAL STATE BANK OF NEWARK V. U.S., 357 F.2D 704,

706 (CT. CL. 1966) ....--ssssseserssersesrssesrnsssnnsnnsssnsnscnnessensettts 13

OSAGE TRIBAL COUNCIL V. UNITED STATES DEPARTMENT OF

LABOR, 187 F.3D 1174, 1181 (1OTH CIR. 1999) ...-.-+-+++++ 13

Pan-AM TOBACCO CorpP. V. DEPT. OF CORRECTIONS, 471

SO.2D 4, 5 (FLA. 1984)......-ssssssesssensessssssssnnsessessessnssenensntss 1&2

PARKER V. STATE BOARD OF REGENTS, 724 So.2D 163, 169

(FLA. CT. APP. 1998).........0eeeee es leuiniisinananele 18

PORTER V. U.S., 496 F.2D 583, 587 (Cr. CL. 1974), CERT.

DENIED, 420 U.S. 1004 (1975) ...sessscsecsssesessescensnensrsssenens 13

RAMEY CONSTR. Co. Vv. APACHE TRIBE OF MESCALERO

RESERVATION, 673 F.2D 315, 319-320 (10TH CiR. 1982) 11

SANTA CLARA PUEBLO V. MARTINEZ, 436 U.S. 49, 58 (1977)

: 17

os a asin Sensenecamanedensupeneneesennnrennnnbebrenestn ss rr

SEKAQUAPTEWA V. MACDONALD, 619 F.2D 801, 808 (9TH

Cir. 1980), CERT. DENIED, 449 U.S. 1010 (1980) ... 11, 12

SMITH V. HOPLAND BAND OF POMO INDIANS, 95 CAL. APP.

4TH 1, 115 CAL. RPTR. 2D 455 (CAL. CT. APP. 2002)’

1 a acacia nlenieeniainnnnanennpesenanstnnse™ PASSIM

SMITH V. STATE, 222 S.E.2D 412, 423 (N.C. 1976)......- 18, 19

SOUTHWEST FOREST INDUSTRIES V. Hupa (HooPA) TIMBER

Corp., 151 CAL. APP. 3D 239 (CAL. CT. APP. 1984)....... 15

SuR PUEBLO, 181 F.3D 676, 680 (STH CIR. 1999)....-.--0-0++ 17

THREE AFFILIATED TRIBES OF F'T. BERTHOLD RESERVATION

v. WOLD ENGINEERING, 476 U.S. 877, 890 (1986)......... 17

TURNER V. MARTIRE, 82 CAL. APP. ATH 1042, 1048 (CAL. CT.

APP. 2000) .....sssssssesesscssecessrenssescnsenenensnsnsensacecs aE ne 17

UNITED STATES V. UNITED STATES FIDELITY & GUARANTY

Co., 309 U.S. 506, 514 (1940) ...ssessseersessssessssnssnssenssenssen® 11

WIECKING V. ALLIED MEDICAL SUPPLY CorpP., 391 S.E.2D

25GB, 261 (VA. 1990).....--sessessessesesessensssssnsenssnssessesseess 18, 21

WYANDOTTE NATION V. Crry oF Kansas City, 200 F. SUPP.

QD 1279, 1285 (D. KAN. 2002) ...-..-ssssessesseseenressesseees 11, 12

STATUTES

DE ULS.C. $1B0B.......c-ccrervccssssececssererernessscnrasorscsserersenacrerersess 21

OB U.S.C, $1254 (L)ococccessssssesssccsccesessssseescensnnnnsseneeennnnnnssens 1

CAL, CIV. CODE § SEG secnessrvcsirecssconsvesntiittiineabsiliinenionteveenssens 15

* t en

l

OPINIONS AND ORDERS BELOW

In May 2000, Petitioner Lobo Gaming, Inc. sued

Respondents, the Pit River Indian Tribe and the Pit

River Gaming Commission (“Tribe”), in the Shasta

County Superior Court of California claiming breach of

contract and unjust enrichment. The Superior Court

granted the Tribe’s Motion to Quash Service of

Summons and Complaint on the ground that the Tribe

enjoyed sovereign immunity that had not been waived in

accordance with tribal law, even though there was a

waiver of immunity in the Petitioner’s contract with the

Tribe. Appendix, pp. 15a-16a. The California Court of

Appeals, Third Appellate District, affirmed in Lobo

Gaming, Inc. v. Pit River Tribe of California et al., No.

C037661, 2002 Cal. App. Unpub. LEXIS 894 (Cal. Ct. App.

May 7, 2002). Appendix, pp. la-14a.

JURISDICTION

On August 14, 2002, the California Supreme Court

entered its order denying discretionary review of the

court of appeals’ decision. Appendix, p. 17a. —_‘ This

petition for review is timely filed pursuant to Sup. Ct. R.

13.1. The jurisdiction of this Court is invoked pursuant

to 28 U.S.C. §1254(1).

STATUTORY AND CONSTITUTIONAL

PROVISIONS INVOLVED

1. Article VII §1 of the Pit River Tribal Constitution

provides as follows:

Section 1. Tribal Council. The Tribal

Council shall have the following powers:

a. To negotiate, consult and contract

with Federal, State and_ Tribal

governments, private enterprises,

individuals and other organizations.

* * *

2

e. To plan and manage all economic

affairs and enterprises of the Tribe.

*k * *

q. To sue on behalf of the Tribe.

* * *

t. To exercise all powers vested in it

by existing law, Tribal traditions and

applicable Federal and State law, and such

further powers as may be in the future be

granted to the Tribal Council by members

of the Tribe, the United States or the State

of California.

2. Article VII § 3 of the Pit River Tribal Constitution

provides as follows:

Section 3. Reserved Powers.

a. To waive the sovereign immunity of

the Tribe to unconsented suit; however, no

waiver of sovereign immunity shall be

made except by a majority of the

registered voters voting thereon at a

meeting duly called, noticed and convened

for that express purpose.

STATEMENT OF THE CASE

This Petition seeks review of important issues of

federal law concerning the parameters of tribal

sovereign immunity in cases where Indian tribes

contract with private businesses. The issues are

particularly important in light of the dramatic rise in

Indian gaming throughout the United States. This rise

has resulted in a simultaneous increase in business

3

transactions between Indian tribes and the private

sector, from large financial institutions to small vendors.

The need for uniform law in dealing with the crucial

issue of sovereign immunity is important to both private

business and the tribes themselves, in order to create a

climate of certainty and uniformity and thereby foster

economic development where little has previously

existed. Such uniform law already exists in the large

body of federal case law on sovereign immunity. The

Court’s resolution of the federal questions presented in

this Petition will create a bright line rule to the benefit

of future tribal-private sector relations.

In 1996, the Tribe entered into a loan and

equipment Lease Agreement (“Agreement”) with

Petitioner. Under the Agreement, Petitioner loaned the

Tribe $800,000 to construct a Class III gaming facility in

Burney, California. Petitioner also leased to the Tribe

and installed 108 gaming machines in the casino. The

Agreement was negotiated, authorized and executed by

the Pit River Tribal Council, the Tribe’s governing body.

The Tribal Council was authorized to negotiate and

execute the Agreement pursuant to_ Article VII §1.a of

the Tribal Constitution. The Tribal Council held itself

out to Petitioner as having the authority to execute the

agreement and be bound by all of its provisions,

including the waiver of immunity contained in the

Agreement.

By its terms, the Agreement authorized Petitioner

to enforce its rights under the Agreement in a court of

competent jurisdiction. As part of the inducement to

Petitioner to provide the loan and gaming machines, the

Tribe expressly agreed to:

Allow Lessor [Petitioner], for the sole

purpose of enforcement of its rights in this

agreement, to bring [an] action in a court

of competent jurisdiction if Lessor deems

4

it necessary to secure its interest. Lessor’s

remedies will be limited to recovery of its

equipment and repayment of the loan

referred to above. Tribe agrees to abide

by the decision of such court in this

matter. Any judgment shall be satisfied

only from casino profits and not from any

other Tribal assets whatsoever.

The Agreement also recited that it “shall be binding

upon and inure to the benefit of the parties and their

respective assigns.” -

Pursuant to the Agreement, Petitioner provided

the loan funds and the casino was subsequently

constructed and opened in May 1996. Since then, the

Tribe has derived a substantial amount of revenue from

the gaming machines at the casino. After the casino

opened, the Tribe began making lease payments on the

machines. However, with the exception of $83,000 in

interest payments, the Tribe made no payments on the

loan. The Tribe also stopped making lease payments in

January 2000, but continued to use and benefit from

Petitioner’s machines. Since the opening of the casino

in May 1996, Petitioner received a total of $1,671,894 in

payments from the Tribe, mostly lease payments based

on a percentage of revenue from the machines. To date,

Petitioner’s costs in connection with the Agreement

exceed $2 million. :

In May 2000, Petitioner sued the Tribe in the

Shasta County Superior Court, claiming breach of

contract and unjust enrichment. The Superior Court

granted the Tribe’s Motion to Quash Service of

Summons and Complaint on the ground that Petitioner’s

action was barred by the Tribe’s sovereign immunity

and that the Tribal Council — although it had the

authority to enter into the contract — did not have the

authority to waive the Tribe’s immunity from a suit on

5

the contract. Appendix, pp. 15a-16a. To support its

ruling, the Superior Court relied on Article VII §3.a of

the Tribal Constitution, which provides as follows:

Section 3. Reserved Powers.

a. To waive the sovereign

immunity of the Tribe to unconsented suit;

however, no waiver of sovereign immunity

shall be made except by a majority of the

registered voters voting thereon at a

meeting duly called, noticed and convened

for that express purpose.

Petitioner appealed the trial court’s decision to

the court of appeals in February 2001. After the

appellate briefs were filed, the decision in Smith v.

Hopland. Band of Pomo Indians, 95 Cal. App. 4" 1, 115

Cal. Rptr. 2d 455 (Cal. Ct. App. 2002) was issued.

Petitioner filed a supplemental case law letter on the

Smith decision on January 29, 2002. In addition, at oral

argument, Petitioner referred extensively to Smith and

its analysis of the applicability of uniform federal law

and the authority of the Tribal Council to waive

sovereign immunity. Appendix, p. 9a n. 1. The

California Court of Appeals affirmed the trial court’s

decision, holding that, under tribal law, the Tribal

Council lacked the authority to waive the Tribe's

sovereign immunity. Appendix, p. 2a. While

acknowledging that the Tribal Council had the authority

to.enter into contracts with private businesses, the court

of appeals held that this did not include the authority to

waive the Tribe’s sovereign immunity from suit on the

contract. The court reasoned that under Article VII § 3.a

of the Tribal Constitution, only the general membership

had the power to waive the Tribe’s sovereign immunity.

Appendix, p. 13a. The court of appeals rejected

Petitioner’s argument that the Tribal Council’s authority

6

to contract included, as a necessary incident thereof, the

authority to waive sovereign immunity for suits on the

contract. Jd. The court of appeals also rejected

Petitioner's argument that the use of the phrase

“unconsented suit” in Article VII §3.a of the Tribal

Constitution was a tacit recognition of the Tribal

Council’s authority to consent to a waiver as part of its

power to contract.- Appendix, pp. 12a-l13a. Relying

exclusively on tribal law to determine the Tribal

Council’s authority, the court of appeals implicitly

rejected the Petitioner’s argument, based on Smith, that

the issue of tribal sovereign immunity should be decided

by applying uniform federal law.

In June 2002, Petitioner sought review before the

Supreme Court of California. In its Petition for Review,

Petitioner raised the same three federal questions

presented in the present Petition. On August 14, 2002,

the California Supreme Court entered its order denying

discretionary review of the court of appeals’ decision.

Appendix, p. 17a.

ARGUMENT

The Rules of the United States Supreme Court

provide for discretionary review for “compelling

reasons.” Sup. Ct. R. 10. The “character of the reasons

the Court considers” include situations in which :

(b) a state court of last resort has decided

an important federal question in a way

that conflicts with the decision of another

state court of last resort or of a United

States court of appeals; [and]

(c) a state court . . . has decided an

important question of federal law that has

not been, but should be, settled by this

Court, or has decided an important federal

question in a way that conflicts with

relevant decisions of this Court.

7

Id. The above situations, however, are “neither

controlling nor fully measurje] the Court’s discretion.”

Id.

In the present case, the appellate court decision

below conflicts with prior decisions of this Court and

other federal courts which have resolved questions of

federal sovereign immunity according to uniform

principles of federal law. The appellate court decision

below also diverges from a prior California appellate

decision, Smith v. Hopland Band of Pomo Indians, 95

Cal. App. 4" 1, 115 Cal. Rptr. 2d 455 (Cal Ct. App. 2002),

which properly applied federal law in determining

whether a tribe’s sovereign immunity had _ been

authoritatively waived. The specific question of

whether a tribal governing body has the power to waive

tribal sovereign immunity when that body is authorized

to execute contracts on the Tribe’s behalf is an

important federal question that has not been but should

be settled by this Court. All of the above present

compelling reasons for this Court’s review.

I. THE COURT BELOW DECIDED AN

IMPORTANT QUESTION OF FEDERAL LAW

THAT HAS NOT BEEN, BUT SHOULD BE,

RESOLVED BY THIS COURT, AND IT DID

SO IN A MANNER CONFLICTING WITH

THE DECISIONS OF THIS COURT AND

OTHER FEDERAL COURTS.

The California court of appeals’ decision Smith v.

Hopland Band of Pomo Indians, 95 Cal. App. 4" 1, 115

Cal. Rptr. 2d 455 (Cal. Ct. App. 2002), addressed a tribal

council’s authority to waive sovereign immunity in a

case where the contract was authorized by the Tribe’s

governing body. In doing so, Smith applied uniform

principles of federal law, relying on this Court’s recent

decision in C & L Enterprises, Inc. v. Citizen Band

Potowatomi Tribe of Oklahoma, 532 U.S. 411 (2001).

8

The Smith court then held that there was a valid

contractual waiver despite the Tribe’s claim that the

waiver was ineffective under tribal law. The decision to

apply uniform federal law in Smith is consistent with

the fact that federal courts have long resolved general

questions of tribal sovereign immunity according to

principles of federal, not tribal law.

The issue in Smith was whether an arbitration

clause contained in an architect agreement between

Smith and the Tribe effectuated a valid waiver of the

Tribe’s immunity from suit on the contract. The court

held that, by agreeing to the arbitration clause and to

enforcement of an arbitral award “in any court having

jurisdiction thereof,” the Tribe waived its immunity.

Smith, 95 Cal. App. 4" at 8, citing C&L Enterprises, Inc.

As is the case here, the Tribal Council in Smith had

authorized the agreement as well as the Chairman’s

signature on the agreement. Significantly, the court in

Smith rejected the Tribe’s argument that the waiver was

invalid because it did not comply with the Tribe’s

sovereign immunity ordinance, which required a

separate ordinance or resolution explicitly waiving

sovereign immunity. The court began its analysis by

stating that the Tribe’s argument:

stands or falls with the proposition that

we must apply its tribal sovereign

immunity ordinance to find the otherwise

binding contract with Smith ineffective to

waive sovereign immunity, because the

explicit waiver was made by contract,

instead of pursuant to a tribal ordinance

or resolution. We decline to do so for

several reasons.

Smith, 95 Cal. App. 4" at 9.

9

The second of the several reasons given by the

Smith court is particularly important in terms of the -

case at bar:

[W]e question the premise that the issue i

whether the Tribe has waived its sovereign

immunity by entering into this contract

should be determined by reference to a

tribal law. Although there are, no doubt,

some substantive differences between

tribal sovereign immunity and the law

applicable to waiver of immunity by

foreign sovereigns, the court in C & L

Enterprises, supra, 532 U.S. 411, 121 S.Ct.

1589-1595, fn. 3 observed that reference to

uniform federal law governing the waiver

of immunities by foreign sovereigns is

appropriate in deciding whether a

particular act constitutes a waiver of tribal

immunity. Therefore, in reaching its

conclusion that the Potawatomi Tribe had

waived its sovereign immunity by entering

into a contract with the arbitration and

choice of law clause, the Court observed

that, “ ‘[uJnder the law of the United States

... an agreement to arbitrate is a' waiver of

immunity ..... Restatement (Third) of the

Foreign Relations Law of the United States

§ 456(2)(b)(ii)(1987).” Cd. at p. 1595, fn.

3.) We conclude that, where, as here, the

person negotiating and_ signing the

contract is authorized to do so, and the

Tri ouncil roves the contract, the

question whether that act constitutes a

waiver _is one of federal law. Under

feder. law, “[wlhen a person _ has

authority to sign an agreement on behalf

of a state, it is assumed that the authority

10

extends to a waiver of immunity contained

in the agreement.” (Rest.3d Foreign

Relations Law of the United States (1987)

§ 456, com. B.) As we have explained,

although the Tribe couches its argument in

terms of whether Sigala [the Chairperson]

had actual authority to agree to the

contract terms, the declarations establish

that, she did have this authority, and

moreover, that the Tribal Council, fully

aware of its terms, approved of the

contract by resolution.

Smith, 95 Cal. App. 4" at 10 (emphasis added)(footnote

omitted).

Thus, the Smith court made two significant

rulings. One, that the question of whether tribal

immunity has been waived by contract is a question of

federal, not tribal law, and two, that under federal law

- when a person is authorized to sign an agreement on

behalf of the tribe, it is assumed that the authority

extends to the waiver contained in the agreement. Id.

The Smith court also indicated that uniform federal law

should be applied to the question of the Council’s or

Chairman’s authority to enter into an agreement. Smith,

95 Cal. App. 4" at 10, n.9, citing Aquamar v. Del Monte

Fresh Produce, 179 F.3d 1279, 1294 n. 36 (11" Cir. 1999).

In contrast to Smith, the court below held that

the waiver of immunity contained in Petitioner’s

agreement with the Tribe was invalid because the Tribal

Council lacked the authority to waive sovereign

immunity, even though the Council had_ the

constitutional authority to negotiate and execute the

contract. In making this determination, the court

looked exclusively at tribal law, 7.e., Article VII § 3.a of

the Tribal Constitution. Had the court applied the same

uniform principles of federal law relied on in Smith, it

11

would have reached a different result. This Court should

grant review to resolve the inconsistency between

Smith and the case at bar, and determine both whether

the issue of the Tribe’s waiver of its immunity by

contract should be resolved by the application of

uniform federal law and whether the waiver was valid

under federal iaw.

Substantial federal case law establishes that

tribal sovereign immunity is “coextensive with the

sovereign immunity of the federal government.” Evans

v. McKay, 869 F.2d 1341, 1345 (9" Cir. 1989); Wyandotte

Nation v. City of Kansas City, 200 F. Supp. 2d 1279,

1285 (D. Kan. 2002); Ramey Constr. Co. v. Apache Tribe

of Mescalero Reservation, 673 F.2d 315, 319-320 (10" Cir.

1982) citing various cases including United States v.

United States Fidelity & Guaranty Co., 309 U.S. 506,

514 (1940); Jicarilla Apache Tribe v. Andrus, 687 F.2d

1324, 1344 (10" Cir. 1982); Sekaquaptewa v. MacDonald,

619 F.2d 801, 808 (9" Cir. 1980), cert. denied, 449 U.S.

1010 (1980); Hamilton v. Nakai, 453 F.2d 152, 158-59 (9"

Cir. 1971). The term “coextensive” is defined as “having

the same limits, boundaries, or scope.” AMERICAN

HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE, 4" Ed.

(2000). It therefore makes sense to resolve issues of

tribal sovereign immunity by application of uniform

federal law rather than looking to the peculiarities of

each tribe’s local laws, which in many cases are difficult

to find.

Because tribal sovereign immunity is coextensive

with the immunity of the United States, federal courts

have ruled that tribal sovereign immunity is subject to

the same _ general limitations. For example, in

Wyandotte supra, the federal district court faced the

issue of whether the Tribe, by filing a quiet title action,

had waived its sovereign immunity as to counterclaims

for quiet title and equitable recoupment. The court

concluded that, “[b]ecause tribal sovereign immunity is

12

generally coextensive with that of the United States,

tribes may waive sovereign immunity as to claims

brought in recoupment against actions brought by the

tribe,” Id. at 1285, quoting Jicarilla Apache Tribe v.

Andrus, 687 F.2d 1324, 1344-45 (10" Cir. 1982). The

Wyandotte court applied uniform principles of federal

law to reach this conclusion. Jd. at 1285, citing

Jicarilla, 687 F.2d at 1344; Frederick v. U.S., 386 F.2d

481, 488 (5" Cir. 1967); FDIC v. Hulsey, 22 F.3d 1472,

1487 (10" Cir. 1994).

By contrast, the court below relied exclusively on

the limitations contained in tribal law to find that the

contractual waiver of immunity was invalid. Following

the lower court’s reasoning, Article VII § 3.a of the Pit

River Tribal Constitution- would prohibit a counterclaim

of the type recognized in Wyandotte, supra. In other

words, the peculiarities in tribal law would trump the

federal limitations on tribal sovereign immunity

recognized in Wyandotte and cases like it. Under Article

VII § 1.q of the Tribal Constitution, the Pit River Tribal

Council has the express constitutional power to sue on

behalf of the Tribe. Following Wyandotte and the cases

cited therein, a suit by the Pit River Tribal Council on

behalf of the Tribe would automatically waive the

Tribe’s immunity with respect to a defendant’s

recoupment counterclaims without the necessity of a

tribal. General Membership vote under the reserved

powers clause of Article VII § 3.a. The lower court’s

decision conflicts with Wyandotte and cases like it that

recognize federal law limits on tribal sovereign

immunity.

Federal law principles also establish that if an

agency or instrumentality of the United States, acting

within the scope of its authority, enters into a contract

and thereby binds the United States as principal, the

federal government is considered to have waived its

sovereign immunity from suit on the contract. See e.g.,

13

Porter v. U.S., 496 F.2d 583, 587 (Ct. Cl. 1974), cert.

denied, 420 U.S. 1004 (1975), citing National State Bank

of Newark v. U.S., 357 F.2d 704, 706 (Ct. Cl. 1966).

Federal courts have also found that the power of a

tribe’s governing body to waive sovereign immunity may

be inherent within another enumerated power bestowed

upon the governing body, such as the power to contract.

See e.g., Namekagon Dev. Co., Inc. v. Bois Forte

Reservation Housing Authority, 395 F.Supp. 23, 27-28

(D. Mn. 1974)(finding that the Tribal Council’s power to

waive a tribal corporation’s sovereign immunity was

inherent in its power to-establish the corporation, and

rejecting the argument that the power to waive

sovereign immunity was reserved to the Tribal

membership), affd, 517 F.2d 508 (8" Cir. 1975). The

Court should grant certiorari to resolve the conflict

between the lower court’s analysis and the foregoing

cases, and determine whether the foregoing principles

should be applied in the context of this case, where the

Tribal Council agreed to waive the Tribe’s immunity in a

contract that the Council was authorized to execute.

The decision below in this case is also

inconsistent with federal law principles governing the

waiver of a state’s Eleventh Amendment immunity.’ For

example, in Jn re Innes, 184 F.3d 1275 (10" Cir. 1999),

cert. denied, 529 U.S. 1037 (2000), the Tenth Circuit

reviewed Kansas enabling legislation which authorized a

state university to contract with third parties. At issue

was the validity of an immunity waiver contained in a

Although tribal sovereign immunity may not be precisely

congruent with that of states, similar principles have been applied

to both. See e.g., Osage Tribal Council v. United States

Department of Labor, 187 F.3d 1174, 1181 (10" Cir. 1999)(while

explicitly conceding differences between state and tribal immunity,

court “takes . . . cue from the decisions addressing waivers of

Eleventh Amendment state sovereign immunity” in ruling on issue

of whether tribal immunity was waived), cert. denied, 530 U.S. 1229

(2000).

14

contract entered into by the university. The court

rejected the argument that the university lacked the

authority to waive the State’s immunity:

Nothing in th itself

ntering into a contr. iving j

an ultra vires act. idee the contrary is

true — this legislation explicitly gives KSU,

as a state education institution, expansive

unlimited authority to contract with the

DOE so that KSU may participate in

student financial assistance programs.

Further, unlike in -other Kansas statutes,

there is no provision in [the statute]

disclaiming a waiver or _ prohibiting

consent to waive .... Accordingly, we

hold that [the enabling statute] conferred

upon KSU the power to waive Eleventh

Amendment immunity.

In re Innes, 184 F.2d at 1284 (emphasis added); accord,

In re Magnolia Venture Capital Corp., 218 B.R. 843,

849-50 (S.D. Miss. 1997).

The question of whether an Indian tribe’s

legislative body, in this case the Pit River Tribal Council,

has the authority to waive tribal sovereign immunity in

cases where it has the authority to contract, has never

been addressed by this Court. There are, nevertheless,

analogous federal Indian law cases which support the

proposition that a tribal council’s authority to enter into

contracts includes the authorization to waive sovereign

immunity. Specifically, one federal court has ruled that

“it is repugnant to the American theory of sovereignty

that an instrument of the sovereign shall have all the

advantages of a trading corporation, and the ability to

sue, and yet- be itself immune from suit, and able to

contract with others, or to injure others, confident that

no redress may be had against it as a matter of right.”

15

Namekagon Development Co., Inc., supra, 395 F. Supp.

at 29, citing Federal Sugar Refining Co. v. United State

Sugar Equalization Bd., 268 F. 575, 587 (S.D.N.Y. 1920),

affd, 517 F.2d 508 (8" Cir. 1975); accord, Southwest

Forest Industries v. Hupa (Hoopa) Timber Corp., 151

Cal. App. 3d 239 (Cal. Ct. App. 1984).’ /

The reasoning above should apply-to the facts of

this case: nothing in the Pit River Tribal Constitution

makes the Tribal Council’s entering a contract waiving

immunity an ultra vires act and the Tribal Constitution

gives the Tribal Council express authority “to contract

with Federal, State and Tribal governments, private

enterprises, individuals and other organizations.”

Article VII § l.a. In order for this authority to be

meaningful, the power of the Tribal Council to contract

must necessarily include the power to agree to binding

and enforceable remedies, including a limited waiver of

sovereign immunity to allow the other party to obtain

relief for breach of contract. Otherwise, there is no

mutuality of obligation, and the Tribal Council’s

authority to contract becomes illusory. See e.g., Mattei

v. Hopper, 51 Cal. 2d 119, 122, 330 P.2d 625, 626

(1958)(“Without . . . mutuality of obligation, [an]

agreement lacks consideration and no enforceable

contract has been created. ... [ojr, if one of the

promises leaves a party free to perform or to withdraw

from the agreement at his own unrestricted pleasure,

the promise is deemed illusory and it provides no

consideration.”) In order to be meaningful, and under

the. general presumption that contracts are “fair and

regular,” (see Cal. Civ. Code § 3545), the Tribal Council’s

express power to enter into contracts would necessarily

require not only an intent that valid contracts be entered

* Southwest Forest Industries is an unpublished case that is not

citable as precedent in California courts. The court addressed the

issue of tribal sovereign immunity in a context analogous to the

present case and consistent with Petitioner's position.

16

into, but that the contract is one that can be enforced so

as to create mutuality of obligation and give the other

party the benefit of its bargain. In other words, if the

Tribal Council has the constitutional authority to enter

into contracts and manage the economic affairs of the

Tribe, then it must necessarily include, as a matter of

law, the authority to agree to enforceable remedies

contained within the contract in order to allow the other

party meaningful redress in the event of its breach.

The appellate court’s failure to recognize and

apply uniform federal law principles impermissibly

extends the scope of an Indian tribe’s sovereign

immunity past that of the United States. This Court

should grant the Petition to consider the important

question of whether to adopt a uniform federal rule that,

where a tribe’s governing body is authorized to enter

into contracts, that authority includes the authority to

waive the tribe’s sovereign immunity.

Il. THIS COURT SHOULD GRANT THE

PETITION TO DETERMINE THAT, AS A

MATTER OF FEDERAL LAW, A TRIBAL

GOVERNING BODY THAT IS EXPRESSLY

AUTHORIZED TO EXECUTE A CONTRACT,

ALSO HAS THE POWER TO WAIVE THE

TRIBE’S SOVEREIGN IMMUNITY IN THE

CONTRACT.

This Court has never previously addressed the

specific question of whether a tribal governing body —

such as the Pit River Tribal Council — has the power to

waive tribal sovereign immunity when that body is

authorized to execute contracts on the tribe’s behalf.

The question is an important federal question and needs

a uniform answer. This Court should adopt a bright line

rule requiring the application of uniform federal law

principles to resolve issues of tribal sovereign immunity.

This Court should also adopt a bright line rule that, as a

17

matter of federal jaw, when a tribal governing body has

the express authority to execute a contract, it also has

the power to waive the tribe’s sovereign immunity from

a Suit on that contract.

This Court has recognized that. the doctrine of

tribal sovereign immunity is grounded in the common

law. See e.g., Three Affiliated Tribes of Ft. Berthold .

Reservation v. Wold Engineering, 476 U.S. 877, 890

(1986) (“The common law _ sovereign immunity

possessed by the Tribe is a necessary corollary to Indian

sovereignty and self-governance.”); Sania Clara Pueblo

v. Martinez, 436 U.S. 49, 58 (1977)(court describes tribal

immunity as “the common-law immunity from suit

traditionally enjoyed by sovereign powers”); see also,

Turner v. Martire, 82 Cal. App. 4" 1042, 1048 (Cal. Ct.

App. 2000)(“ Tribal immunity emanates from the

common law”); TTEA v. Isleta del Sur Pueblo, 181 F.3d

676, 680 (5" Cir. 1999)(court outlines parameters of the

“federal common law doctrine of tribal sovereign

immunity.”) A rule requiring a tribal governing body to

be bound by its waiver of immunity in a contract that it

is authorized to execute would be firmly grounded in the

common law requirements for fairness, mutuality of

obligation in contracting, and due process.

In contexts analogous to the present case, courts

have repeatedly emphasized such requirements. For

example, in Dade County v. American Re-Insurance

Co., 467 So.2d 414 (Fla. Dist. Ct. App. 1985), the court

rejected an argument similar to one adopted by the

court of appeals in this case, holding that where the

county was authorized by law to enter into an indemnity

insurance contract, it could not assert sovereign

immunity in an action brought under the contract. In

equating a legislative body’s power to contract with the

power to waive the government’s sovereign immunity

from suit on the contract, the court reasoned:

18

Under basic hornbook law, in order to be

valid, a contract must be mutually

enforceable. In accord with this principle,

the [Florida] Supreme Court has recently

held that sovereign immunity is not a valid

defense to a breach of contract action

brought against the state where the state

has legal authority to enter the contract.

Accordingly, the defense of sovereign

immunity will not protect [Dade County]

from American’s counterclaim for Dade’s

breach of the insurance contract.

Dade, 467 So.2d at 418, citing Pan-Am Tobacco Corp. v.

Dept. of Corrections, 471 So.2d 4, 5 (Fla. 1984); accord,

Parker v. State Board of Regents, 724 So.2d 163, 169

(Fla. Ct. App. 1998).

Other state courts are in agreement. See e.g.,

Wiecking v. Allied Medical Supply Corp., 391 S.E.2d

258, 261 (Va. 1990)(“the doctrine of sovereign immunity

has no application in actions based upon valid contracts

entered into by duly authorized agents of the

government”); Architectural Woods, Inc. v. Washington,

598 P.2d 1372, 1875 (Wash. 1979)(by the act of entering

into a contract which the government is authorized to

make, the government cannot thereafter assert

sovereign immunity as a defense to an action for its

breach); Smith v. State, 222 S.E.2d 412, 423 (N.C.

1976)(because employee's suit was predicated upon a

contract fully authorized by the legislature, the State

consented to be sued for breach of the contract); Ace

Flying Service, Inc. v. Colorado Dept. of Agriculture,

314 P.2d 278, 280 (Colo. 1957)(when a state enters into

authorized contractual relations, it cannot later claim

sovereign immunity in a suit for its breach).

19

In Smith v. State, supra, the court looked

explicitly to the following common law requirements for

equity, fairness and due process:

To deny the party who has performed his

obligation under a contract the right to sue

the state when it defaults is to take his

property without compensation and thus

to deny him due process; . . . To hold that

the state may arbitrarily avoid its

obligation under a contract after having

induced the other party to change his

position or to expend time and money in

the performance of his obligations, or in _

preparing to perform them, would be

judicial sanction of the highest type of

governmental tyranny; . . . To attribute to

the General Assembly the intent to retain

to the state the right . . . to breach its

obligation at the expense of its citizens

imputes to that body "bad faith and

shoddiness" foreign to a democratic

government; ....A citizen's petition to

the legislature for relief from the state's

breach of contract is an unsatisfactory and

frequently a totally inadequate remedy for

an injured party; and... The courts are a

proper forum in which claims against the

state may be presented and decided upon

known principles.

Smith v. State, 222 S.E.2d at 423.

In this case, the appellate court’s interpretation

of the Pit River Tribal Constitution failed to give the

Tribal Council authority to agree to appropriate and

enforceable remedies when it contracts and is therefore

contrary to these common law requirements for

fairness, mutuality of obligation in contracting, and due

20

process of law. This Court spoke decisively to the issue

in Murray v. City of Charleston, 96 U.S. 432, 445 (1878):

The truth is, States and cities, when they

borrow money and contract to repay it

with interest, are not acting § as

sovereignties. They come down to the

level of ordinary individuals. Their

contracts have the same meaning as that

of similar contracts between private

persons. Hence, instead of there being in

the undertaking of a State or city to pay, a

reservation of a _ sovereign right to

withhold payment, the contract should be

regarded as an assurance that such a right

will not be exercised. A promise to pay,

with a reserved right to deny or change the

effect of the promise, is an absurdity.

(emphasis added). .

This common law reasoning was subsequently

summarized by the Supreme Court of Virginia in a

concise analysis of the various cases addressing the

issue: :

{[W]hen the state contracts for goods ‘or

services, receives the benefit of the

contract, and then refuses to honor its

obligations, the contractor’s property is

subjected to an unconstitutional taking

without just compensation; a denial of

liability under such circumstances also

violates state and federal due-process

guarantees; to hold that the state may

enter into a valid contract and yet retain

the power to avoid its obligation would

entail an obvious contradiction; neither

the state nor the contractor can be bound,

21

yet not bound, by a single contract, the

courts will not attribute to the legislature

any intention to permit the government to

exercise bad faith and shoddy dealing, and

relegating the injured party to an appeal

for justice to the legislature in the form of

a private bill for relief is to offer a doubtful

remedy,

The reasoning of the foregoing cases is

virtually undisputed among the authorities

_which have considered the immunity

question, and we find it persuasive.

Wiecking, supra, 391 S.E.2d at 260 (citations and

quotations omitted).°

Of course, Petitioner recognizes the principle

enunciated by this Court, that, as _ sovereign

governmental entities, Indian tribes enjoy sovereign

immunity from suits on contracts except where

Congress has authorized the suit or the tribe has clearly

waived its immunity, whether the contracts involve

governmental or commercial activities, and whether the

contracts were made on or off a reservation. This

principle was made clear in Kiowa Tribe v.

* Like all federally recognized Indian tribes, the Pit River Tribe is

bound by the Indian Civil Rights Act, 25 U.S.C. § 1302, including the

provisions therein prohibiting the Tribe from taking a person's

property without just compensation and depriving a person of

property without due process of law. The Tribe’s obligations under

the Indian Civil Rights Act are incorporated in Article IV of the

Tribal Constitution. The argument that the Tribal Council, though

admittedly possessing the authority to enter into contracts, has no

authority to authorize remedies for its breach in the form of a

contractual waiver of immunity, is contrary to the Act’s takings

clause and due process clause, 25 U.S.C. §1302(5) and (8), as the

court recognized in Wiecking.

22

Manufacturing Technologies, Inc., 523 U.S. 751, 754,

760 (1998). However, Petitioner has never argued below

— and does not argue now — that a tribe waives sovereign

immunity merely by entering a contract. The contract at

issue in Kiowa did not contain a waiver of tribal

sovereign immunity. By contrast, the Agreement in this

case contains a clear contractual waiver of the Tribe’s

immunity.’ See Statement of the Case supra. Thus, the

question presented to this Court is a narrower one than

the one presented in Kiowa: Does the Tribal Council’s

authority to enter into contracts inherently include the

authority to waive sovereign immunity from a suit on

the contract? If the answer to that question is yes, then

the waiver of immunity contained in Petitioner’s

contract with the Tribe is valid. The reasoning of the

cases cited above is applicable to the facts of this case

because the cases support one basic principle: a

governing body’s constitutional power to contract must

necessarily include the power to waive its immunity

from a suit on the contract. While the Smith court and

other courts have recognized this principle, the court

below in the case at bar did not.

' This Court set forth the requisite standard for waivers of tribal

sovereign immunity in C&L Enterprises, Inc., 532 U.S. at 418 (“to

relinquish its immunity, a tribe's waiver must be ‘clear’”’).

23

CONCLUSION

WHEREFORE, for all of the foregoing reasons,

Petitioner, Lobo Gaming, Inc., requests that this Court

GRANT its Petition for a Writ of Certiorari.

Respectfully submitted this 12" day of November,

2002.

John Fredericks III

Fredericks, Pelcyger & Hester, LLC

1075 South Boulder Road, Suite 305

Louisville, CO 80027

TEL: (303) 673-9600

FAX: (303) 673-9155

COUNSEL FOR PETITIONER

la

C037661

COURT OF APPEAL OF CALIFORNIA, THIRD

APPELLATE DISTRICT

LOBO GAMING, INC., Plaintiff and Appellant,

Vv.

PIT RIVER TRIBE OF CALIFORNIA et al.,

Defendants and Respondents.

May 7, 2002, Filed

NOTICE:

[*1] NOT TO BE PUBLISHED CALIFORNIA RULES

OF COURT, RULE 977(a), PROHIBITS COURTS AND

PARTIES FROM CITING OR RELYING ON OPINIONS

NOT CERTIFIED FOR PUBLICATION OR ORDERED

PUBLISHED, EXCEPT AS SPECIFIED BY RULE 977(B).

_ THIS OPINION HAS NOT BEEN CERTIFIED FOR

PUBLICATION OR ORDERED PUBLISHED FOR

PURPOSES OF RULE 977.

JUDGES:

RAYE, J. We concur: DAVIS, Acting P.J., MORRISON, J.

OPINIONBY:

RAYE

OPINION:

Indian tribes enjoy sovereign immunity "from suits

on contracts, whether those contracts’ involve

governmental or commercial activities and whether they

2a

were made on or off a reservation." ( Kiowa Tribe v.

Manufacturing Tech. (1998) 523 U.S. 751, 760 [140 L.

Ed. 2d 981, 988, 118 S. Ct. 1700] (Kiowa).) In this

appeal challenging the contours and implications of

sovereign immunity, plaintiff Lobo Gaming, Inc.

contends the Pit River Tribe of California (Tribe)

contractually waived its immunity. We disagree. The

Constitution of the Pit River Tribe (Tribal Constitution)

and state and federal precedent support the Tribe's

notion that the Pit River Tribal Council (Tribal Council)

did not have the authority to waive immunity without

the consent of the tribal [*2] membership and such

authority is not implicit in the Tribal Council's power to

contract. We, therefore, affirm the order granting the

Tribe's motion to quash the service of summons.

FACTS

Pursuant to an equipment lease agreement executed

in March 1996, the Tribal Council borrowed funds from

Lobo Gaming to construct two casinos on its reservation

in Shasta County and to lease gaming machines and

furnishings. The Tribe is governed by the Tribal

Constitution. Article VII, section 1 confers on the Tribal

Council the power to "negotiate, consult and contract

with Federal, State and Tribal governments, private

enterprises, individuals and other organizations." (Tribal

Constitution, Art. VII, § 1.)

The Tribal Constitution expressly reserves to the

Tribe the power to waive sovereign immunity. Article

VII, section 3, entitled "Reserved Powers," states in

pertinent part: "To waive the sovereign immunity of the

Tribe to unconsented suit; however, no waiver of

sovereign immunity shall be made except by a majority

of the registered voters voting thereon at a meeting duly

called, noticed and convened for that express purpose."

————

3a

Nevertheless, the equipment lease purports to waive

the [*3] Tribe's sovereign immunity. It states that the

Tribe will "allow Lessor, for the sole purpose of

enforcement of its rights in this agreement, to bring

action in a court of competent jurisdiction if Lessor

deems it necessary to secure its interest. Lessor's

remedies will be limited to recovery of its equipment

and repayment of the loan referred to above. Tribe

agrees to abide by the decision of such court in this

matter. Any judgment shall be satisfied only from casino

profits and not from any other Tribal assets

whatsoever." The Tribal Council approved the

agreement, but the tribal membership did not. It is

undisputed that the registered voters of the Tribe never

voted on, and never approved, the agreement, nor did

they vote on or approve any proposal for the Tribe to

waive its sovereign immunity.

Disagreements developed between the parties over

the terms of their agreement. On May 8, 2000, Lobo

Gaming sued in Shasta County Superior Court. The

Tribe, which had previously filed a federal action

challenging the validity of the agreement under section

81 of title 25 of the United States Code, removed the

case to federal district court. The district court

subsequently granted summary [*4] judgment in favor

of Lobo Gaming on the Tribe's federal action and

remanded the present case to Shasta County Superior

Court without addressing the issues raised therein. On

remand, the Tribe moved to quash service of summons

on grounds of sovereign immunity. The trial court

granted the motion and this appeal followed.

DISCUSSION

No one disputes that the Tribe enjoys sovereign

immunity. We need not, therefore, reiterate the basic

principles of sovereign immunity, other than to

4a

emphasize there are far- reaching implications of the

doctrine for those who choose to do business with

Indian tribes. (Kiowa, supra, 523 U.S. at p. 754-7565;

Santa Clara Pueblo v. Martinez (1978) 436 U.S. 49, 58

[56 L. Ed. 2d 106, 115, 98 S. Ct. 1670]; Puyallup Tribe

v. Washington Game Department (1977) 433 U.S. 165,

172-173 [53 L. Ed. 2d 667, 674, 97 S. Ct. 2616]

(Puyallup); Oklahoma Tax Com. v. Potawatomi Tribe

(1991) 498 U.S. 505, 509-510 [112 L. Ed. 2d 1112,

1119-1120, 111 S. Ct. 905] (Oklahoma Tax Com.).) In

bringing the motion to quash service, the Tribe contends

the trial court lacks subject matter jurisdiction because

[*5] of the Tribe's sovereign immunity. Lobo Gaming

insists the Tribe contractually waived its immunity. To

relinquish its immunity, a tribe's waiver must be "clear."

(C & L Enterprises v. Citizen Band (2001) 532 U.S.

411, 418 [149 L. Ed. 2d 623, 631, 121 S. Ct. 1589] (C

& L Enterprises).)

Both sides seem to agree that to be "clear," a

relinquishment must be express. But while the Tribe

claims the Tribal Council has no "express" constitutional

authority to waive immunity, Lobo Gaming insists the

authority to waive immunity is part of its "express"

power to contract. The authority to contract, Lobo

Gaming argues, is a nullity without the authority to

provide enforceable remedies. In the battle over what is

express and what is implied, we must construe the

language of the Tribal Constitution and resist the

seductive temptation to consider either the equities or

the expectations of the parties. We reject any

implication by the Tribe that we, as a state court, cannot

interpret a tribal Constitution. (See, e.g., Hydrothermal

Energy Corp. v. Fort Bidwell Indian Community

Council (1985) 170 Cal. App. 3d 489, 216 Cal. Rptr.

59 (Hydrothermal).)

5a

The [*6] Tribe provides a plethora of cases

involving the application of sovereign immunity to

contractual disputes. We find two cases particularly

compelling because of the factual similarities. In World

Touch Gaming v. Massena Management, LLC

(N.D.N.Y. 2000) 117 F. Supp. 2d 271 (World Touch

Gaming), the tribe delegated authority to operate its

casino to a management company pursuant to a

management agreement. The agreement gave the

management company the authority to "construct,

manage, administer, operate, maintain and improve the

gaming facilities ... [and] such other activities as are

reasonably related thereto." ( Id. at p. 273, fn. 2.) The

senior vice president of the management company

signed the lease and sales agreements as the managing

agent of the casino. The sales agreement provided:

"Notwithstanding the aforementioned Tribal Sovereignty

the Tribe agrees to submit to the jurisdiction of the state

and federal courts for the sole and limited purpose of

enforcement of the obligations under this contract ...." (

Id. at p. 273.)

World Touch Gaming, like Lobo Gaming, asserted

that the explicit language in the agreement waived [*7]

the tribe's sovereign immunity insofar as the breach of

contract claim was concerned. The court disagreed.

"According to the unequivocal language of the Tribe's

Constitution and Civil Judicial Code, only the Tribal

Council can waive the Tribe's sovereign immunity, and

such waiver must be express. The Tribal Council did not

authorize [the senior vice president] to waive sovereign

immunity, nor did the Tribal Council expressly waive

the Tribe's sovereign immunity. [Citation.] Thus, the

Tribe's sovereign immunity was not waived, and it is

immune from suit." (World Touch Gaming, supra, 117 F.

Supp. 2d at p. 275.) The court rejected World Touch's

contention that the provision in the management

agreement giving exclusive control over the day-to-day

6a

operations of the casino was an authorization to waive

the tribe's sovereign immunity.

Danka Funding Co. v. Sky City Casino (1999) 329

N.J. Super. 357, 747 A.2d 837 (Danka Funding) also

involves a casino on an Indian reservation. Danka

Funding entered into two lease agreements with the

Pueblo of Acoma, a federally recognized Indian tribe.

The lease form contained a so-called "forum selection

clause," whereby the [*8] tribe consented to the

jurisdiction of “any local, state or federal court" and the

application of the law of the state in which the lease

processing center is located. (Jd. at p. 840.) The

comptroller of the casino signed the agreements on

behalf of the tribe. The tribe, as here, contended that the

comptroller did not have authority under tribal law to

waive immunity. (/d. at p. 841.)

In Danka Funding, supra, 747 A.2d 837, the tribe's

laws protected its sovereign immunity to the maximum

extent possible and explicitly stated what procedures

had to be followed in order to waive immunity. (/d. at

pp. 841-842.) Unlike the Tribal Council here, the Acoma

Pueblo Tribal Council "has the power ta waive the

sovereign immunity of the Pueblo of ACOMA or by

resolution, to authorize the Governor or his designate to

waive the sovereign immunity of the Pueblo of ACOMA

as limited in the resolution." (/bid.) But the coniptroller,

not the council, purportedly waived the tribe's immunity

by executing the lease form containing the forum

selection clause. Such a waiver, according to the

appellate court, was ineffective.

The court concluded: "The requirement that the [*9]

waiver be ‘clear’ ana ‘unequivocally expressed' is not

something that may be flexibly applied or even

disregarded based on the parties or the specific facts

involved. Ute Distribution Corp. v. Ute Indian Tribe,

149 F.3d 1260, 1267 (10th Cir. 1998). In the absence

7a

of a clearly expressed waiver by either the tribe or

Congress, the Supreme Court has refused to find a

waiver of tribal immunity based on policy concerns,

perceived inequities arising from the assertion of

immunity, or the unique context of a case.' Ute

Distribution Corp., 149 F.3d at 1267." (Danka

Funding, supra, 747 A.2d at p. 841.)

Hence, in both World Touch Gaming and Danka

Funding, the business enterprises were unable to

pursue their breach of contract claims against the tribes.

The courts did not have subject matter jurisdiction

because those who purported to waive the tribes’

immunity were without authority under the

Constitutions and laws of the tribes. In each case, the

court warned the sophisticated defendants of the

implications of their carelessness. In World Touch

Gaming, the court concluded: "Moreover, as a

sophisticated distributor of gaming equipment [*10]

that frequently deals with Indian gaming enterprises,

World Touch should have beer. careful to assure that

either the Management Company had the express

authority of the Tribe to waive sovereign immunity, or

that the Tribe itself expressly waived sovereign

immunity with respect to the Sales and Lease

Agreements. [Fn. omitted.] World Touch is not a novice

in matters relating to Indian gaming enterprises and

Indian sovereign immunity, and cannot now rely upon

naivete to expand the reading of the Management

Agreement to encompass authority to waive sovereign

immunity." (Worid Touch Gaming, supra, 117 F. Supp.

2d at pp. 275-276.)

In Danka Funding, the court echoed the same

admonishment: "Danka Business Services knew it was

dealing with an Indian tribe and is charged with

knowledge that the tribe possessed sovereign immunity.

The tribe, through its laws, describes how one may

—

8a

obtain a legally enforceable waiver of that immunity.

Neither Danka Business Services nor Danka Funding

took advantage of those provisions." (Danka Funding,

supra, 747 A.2d at p. 842.)

A steady stream of Supreme Court cases on the

sanctity of an Indian tribe's sovereign immunity,

supplemented [*11] by cases such as these in which

sovereign immunity is not waived when the means and

procedures contravene the tribes' own laws, supports

the Tribe's assertion that it had not legally waived its

immunity. Lobo Gaming's plea for equitable relief is

unavailing. It, too, is a gaming company, presumably

sophisticated, and charged with the knowledge that the

Tribe possesses sovereign immunity.

But Lobo Gaming insists that a more recent Supreme

Court case, C & L Enterprises, supra, 532 U.S. 411,

provides a more favorable standard for the resolution of

business disputes with Indian tribes. While C & L

Enterprises certainly upheld the validity of a tribe's

agreement to arbitrate, and hence bodes well for

alternative dispute resolution mechanisms if properly

authorized and executed, it has no bearing on a case

such as this, where the purported waiver contravened

the Tribe's Constitution. There was no contention that

the form contract, which was proposed by the tribe

itself, was not authorized, nor was there any suggestion

or hint that whoever approved and executed the

agreement did so improperly. Quite simply, the

dispositive question raised in this case, whether the

power to contract [*12] includes the power to waive

immunity, was not at issue in C & L Enterprises, and

the holding, therefore, bears no relevance to the case at

hand. nl

Oe eT eS re eT en ee Te

7 4

9a

nl Similarly, Smith v. Hopland Band of Pomo

Indians (2002) 95 Cal.App.4th 1 (Smith), cited at

oral argument by counsel for Lobo Gaming as a

case expanding the holding of C & L Enterprises,

is also inapposite. In Smith, the court held

sovereign immunity was waived by execution of a

contract containing an arbitration clause that

expressly provided for judicial enforcement. The

contract had been approved by the Hopland tribal

council. However, the Hopland tribal council,

unlike the Tribal Council here, had authority to

waive the tribe's sovereign immunity. The case

_does not support the broad proposition asserted

by Lobo Gaming that the power to contract

includes the power to waive sovereign immunity.

The Tribe relies on applicable California case law as

well. In Hydrothermal, supra, 170 Cal. App. 3d 489,

{*13] the Court of Appeal reversed the confirmation of

an arbitration award against the Fort Bidwell Indian

Community Council because the tribe had not waived its

sovereign immunity. The chairperson of the tribal

council, who was also the chief executive officer,

purportedly waived immunity by accepting the

jurisdiction of an arbitrator. As in World Touch Gaming

and Danka Funding, the court found the waiver had not

been authorized by tribal law. Ignoring the equities

involved, the court concluded the state lacked subject

matter jurisdiction.

Lobo Gaming contends that these cases do not apply.

According to Lobo Gaming, in World Touch Gaming,

Danka Funding, and Hydrothermal, a mere official of

each tribe attempted to waive immunity, but in each

case that official had no authority to execute a waiver

on behalf of the tribe. In this case, Lobo Gaming argues,

the Tribal Council, not an official, executed a contract,

10a

an act it was expressly empowered to perform under

tribal law. Since the Tribal Council has_ the

constitutional authority to enter contracts and to

manage the economic affairs of the Tribe, unlike the

officials in these cases, it had the authority to agree to

enforceable [*14] remedies contained within the

contract. We disagree.

The significance of World Touch Gaming, Danka

Funding, and Hydrothermal was not who waived tribal

immunity, but whether the waiver was authorized by

tribal law. In each case, the court found the waiver had

not been executed by those with the constitutional

power to act on behalf of the tribe. The same is true

here. The language used to reserve the power to waive

sovereign immunity to the tribal membership is clear

and unequivocal. The Tribal Council was _ not

constitutionally authorized to waive immunity. Hence,

World Touch Gaming, Danka Funding, and

Hydrothermal are precisely on point. A waiver, no

matter how clearly and unequivocally expressed, is

ineffective if it transgresses tribal law.

Lobo Gaming resorts to hyperbole, insisting that a

failure to find the power to waive immunity implicit in

the power to contract will dampen, if not destroy,

business opportunities on Indian reservations. No one,

according to Lobo Gaming, will contract with a tribe

without enforceable remedies. With such _ dire

consequences looming, Lobo Gaming maintains that the

only reasonable interpretation of the Tribal Constitution

[*15] is to conclude that the power to contract means

the power to waive sovereign immunity. And that power

resides with the Tribal Council.

We, of course, are not the chamber of commerce.

Our role is not to supplant the Tribe's assessment of its

business risks and opportunities with our own. Our role

is more humble and straightforward. We must construe

lla

the express language of the Tribal Constitution with the

aid of state and federal law protecting the sovereignty of

federally recognized Indian tribes.

Nor are we persuaded that the Tribal Council's

inability to waive immunity renders its power to

contract a nullity. In Oklahoma Tax Com., supra, 498

U.S. 505, the Supreme Court held that the tribe's

sovereign immunity precluded the State of Oklahoma

from collecting cigarette sales tax from tribal members

who purchased their cigarettes in a tribal store on land

held in trust by the federal government for the tribe. The

court rejected the state's argument, similar to the

argument advanced by Lobo Gaming, that they had the

right to collect from nonmembers without any remedy.

Rather, the court stated, Oklahoma had a variety of

alternative remedies, and if those failed, it [*16] could

pursue appropriate legislation from Congress. ( Id. at p.

514.)

The Tribe suggests that Lobo Gaming also has

alternative remedies, even if they are not as desirable as

litigation. The Tribe suggests that the general

membership's retained power to waive sovereign

immunity does not preclude the Tribal Council from

contractually agreeing to other remedies that do not

involve an immunity waiver, such as authorizing

prospective injunctive relief against tribal officials,

escrowing tribal collateral, nonbinding arbitration, or

mediation. Again, we need not assess the relative value

of the remedies. The question posed is whether the

inability to sue in the absence of a waiver of immunity

by the tribal membership renders our interpretation of

the Tribal Constitution absurd or unreasonable. We

conclude it does not. While the possibility of other

remedies, like the court alluded to in Oklahoma Tax

Com., supra, 498 U.S. 505, does mean the power to

contract is not a nullity without the power to sue, we are

l2a

more persuaded by the clarity of the express language

used in the Tribal Constitution to reserve the power to

waive immunity to the tribal membership. Given the

{*17] strong tradition in state and federal law to honor

a tribe's prescription of how immunity must be waived,

we find that the Tribal Constitution's clear reservation

of the power to waive trumps any collateral restriction

on the power to contract. n2

n2 The parties exchange factual allegations on

the merits of the underlying dispute. These

allegations are irrelevant to the legal issue

presented.

Undeterred by the formidable law against it, Lobo

Gaming turns our attention to a single word, convinced

that a sole adjective is the key to harmonizing the Tribal

Constitution, rendering the waiver effective, and

conferring jurisdiction on the courts of California. The

adjective is "unconsented"; the context is the Tribe's

reservation of the right to waive sovereign immunity to

"unconsented suit."

Lobo Gaming argues that the phrase "unconsented

suit" in article VII, section 3 of the Tribal Constitution

recognizes that the power of the Tribal Council to enter

into contracts pursuant to article VII, section [*18] 1

includes the authority to provide for enforceable

remedies in the event of a breach of contract. In other

words, "unconsented suit" is a lawsuit not consented to

by the Tribal Council by contract pursuant to its power

under article VII, section 1. Lobo Gaming insists that we

must construe each and every term used in the Tribal

Constitution, and by interpreting "unconsented" to mean

those suits in which the Tribal Council has not

he AES ae AN ND

ae ie EE

‘

13a

contractually agreed to waive immunity, section 1 and

section 3 can be harmonized.

The Tribe's response is twofold. First, "unconsented"

routinely modifies "suit" to underscore the self-evident

notion that immunity is only pertinent where the

sovereign does not consent to being sued. Second, and

more importantly according to the Tribe, reliance on

this lone adjective does not overcome the absence of

any express language in the Tribal Constitution vesting

the Tribal Council with the power to waive immunity. In

order for "unconsented suit" to mean "unless the Tribal

Council contractually agreed to be sued," there would

have to be language somewhere in the _ Tribal

Constitution vesting the Tribal Council with the power

to waive the Tribe's sovereign immunity. [*19] We

agree with the Tribe.

The Tribal Constitution expressly reserves the power

to waive immunity to the tribal membership. Although

the Tribal Constitution confers a long list of powers on

the Tribal Council, nowhere does it give the Tribal

Council the authority to waive sovereign immunity. To

suggest, as Lobo Gaming does, that the power to waive

sovereign immunity is "a part of" the power to contract

is to conjure a power out of thin air.

And hence, Lobo Gaming's argument comes full

circle. Waivers of sovereign immunity cannot be

implied, nor can the power to waive immunity. We

cannot accept Lobo Gaming's far- fetched notion that

under the guise of harmonizing every term the express

reservation of the power to waive immunity to the tribal

membership gives way to an implied power to waive

immunity to the Tribal Council.

Finally, and briefly, we reject Lobo Gaming's

contention that if all contractual remedies fail, it is

entitled to an equitable estoppel. Sovereign immunity is

l4a

a question of jurisdiction, not equity. (Puyallup, supra,

433 U.S. at pp. 172-173.) "Sovereign immunity is not a

discretionary doctrine that may be applied as a remedy

depending upon the equities of [*20] a given situation."

( Chemehuevi Ind. Tribe v. Cal. St. Bd. of Equal. (9th

Cir. 1985) 757 F.2d 1047, 1052-1053, fn. 6, revd. in

part on other grounds (1985) 474 U.S. 9.) Thus, tribal

immunity may not be defeated even where its assertion

may "unfairly deprive contracting parties of the benefit

of their bargains." ( Amer. Indian Agr. Credit v. Stand.

Rock Sioux Tribe (8th Cir. 1985) 780 F.2d 1374,

1379.)

DISPOSITION

The order is affirmed.

RAYE, J.

We concur:

DAVIS, Acting P.J.

MORRISON, J.

15a

140106

SUPERIOR COURT OF THE

STATE OF CALIFORNIA

SHASTA COUNTY

LOBO GAMING, INC., a New Mexico Corporation,

Plaintiff,

Vv.

PIT RIVER TRIBE OF CALIFORNIA, a federally

recognized Indian Tribe and PIT RIVER GAMING

COMMISSION, an agency of the Pit River Tribe,

Defendants

January 26, 2001, Filed

_ This matter came on regularly for hearing on the

motion of specially appearing defendants to quash

service of summons for lack of jurisdiction pursuant to

Code of Civil Procedure section 418.10(a)(1). After

consideration of the briefs and all other matters

presented to the Court, the Court orders as follows:

It is hereby ordered that all requests for judicial

notice are granted, except plaintiff's request as to the

unpublished decision, which is denied.

It is further ordered that specially appearing

defendants are entitled to sovereign immunity in matters

of commerce including contracting .Defendant Tribe’s

Constitution, Art. Sec 1, confers on the Tribal council

power to contract, but Art VII, Sec. 3a reserves to the

Tribe power “...to waive sovereign immunity of the

Tribe to unconsented suite.” Plaintiff has failed to

establish that the tribe waived its immunity, and has

l6a

therefore failed to establish this Court has jurisdiction

over the defendants. The motion to quash is GRANTED.

17a

S107517

IN THE SUPREME COURT OF CALIFORNIA,

En banc

LOBO GAMING, INC.,

Plaintiff and Appellant,

Vv.

PIT RIVER TRIBE OF CALIFORNIA et al.,

Defendants and Respondents.

August 14, 2002, Filed

Petition for review denied.