Appendix — Attorney's Process & Investigation Services, Inc. v. Sac & Fox Tribe of the Mississippi in Iowa

Supreme Court, U.S.

FILED

4 (2) 10-613 Nov 4- 2010

eee 0-10 OFFICE OF THE CLERK.

IN THE

Supreme Court of the United States

ATTORNEY'S PROCESS AND INVESTIGATION

SERVICES, INC.,

Petitioner,

SAC AND FOx TRIBE OF THE MISSISSIPPI IN IOWA,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Eighth Circuit

PETITION APPENDIX

RICHARD S. FRY DAVID B. SALMONS

MARK L. ZAIGER Counsel of Record

DIANE H. KUTZKO BRYAN M. KILLIAN

SHUTTLEWORTH & INGER- BINGHAM MCCUTCHEN, LLP

SOLL PLC 2020 K Street, N.W.

115 Third Street SE Washington, D.C. 20006

Cedar Rapids, IA 52401 (202) 373-6000

(319) 365-9461 david.salmons@bingham.com

Counsel for Petitioner

I ceeeereneeenmeeenemmenetimneenedienannenmemeeenneienenmmemnnnntiateatmmenemeenmnteemmmnnnnaemaninemenenineeemnmmmamenmnenaae

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D.C. 20002

TABLE OF CONTENTS

Page

Kighth Circuit Opinion... la

District Court Opinion....... | . 35a

Tribal Court of Appeals Opinion 63a

NIGC Notice of Violation..... 99a

NIGC Temporary Clesure Order.... : 104a

NIGC Permanent Closure Order 110a

BIA Recognition Decisions .. 142a

Tribe’s Tribal Court Complaint 149a

API’s June 2003 Agreement.. L59a

la

United States Court of Appeals Eighth Circuit

ATTORNEY’S PROCESS AND INVESTIGATION

SERVICES, INC., Plaintiff-Appellant,

Vv.

SAC & FOX TRIBE OF the MISSISSIPPI IN IOWA,

Defendant-Appellee.

No. 09-2605.

Submitted: April 13, 2010.

Filed: July 7, 2010.

Before WOLLMAN, MURPHY, and SHEPHERD,

Circuit Judges.

MURPHY, Circuit Judge.

After Attorney’s Process and Investigation Ser-

vices, Inc. (API), a Wisconsin corporation which pro-

vides security and consulting services to casino op-

erators, was sued in tribal court by the Sac and Fox

Tribe of the Mississippi in lowa (the Tribe), API

brought this action seeking a declaratory judgment

that the tribal court lacked jurisdiction and an order

compelling arbitration. The Tribe’s lawsuit in tribal

court alleged that API committed torts while seizing

control of tribal facilities on the Sac and Fox reserva-

tion under a contract signed by Alex Walker, Jr., the

former Chairman of the Tribal Council.

The district court required API first to exhaust

its remedies in tribal court in accord with Nat7

Farmers Union Ins. Cos. v. Crow Tribe of Indians,

471 U.S. 845, 105 S. Ct. 2447, 85 L.Ed.2d 818 (1985).

After API returned to federal court, the district court

concluded that the tribal courts did have jurisdiction

over the Tribe’s claims under federal law, that the

validity of the API contract was a question of tribal

“>,

ish

law, and that it should accordingly defer to the tribal

court finding that Walker had not had authority to

bind the Tribe. The district court therefore denied

API’s motion for summary judgment and granted the

Tribe’s motion to dismiss. API appeals.

In the course of considering the issues before us

we first examine the factual background of the liti-

gation before proceeding to address the initial fed-

eral law question of whether the tribal courts have

jurisdiction over the Tribe’s lawsuit against API. We

then turn to API’s claim that it is entitled to arbitra-

tion under its contract with Walker. Finally, we

summarize our conclusions and judgment. We affirm

in part and reverse in part.

I.

The Sac and Fox Tribe of the Mississippi in Iowa

is a federally recognized Indian tribe which owns

and operates the Meskwaki Bingo Casino Hotel. The

casino operation is located in Tama, lowa on the

Tribe’s trust lands, known as the Meskwaki Settle-

ment. The Tribe’s governing body is a seven member

council. The tribal economy depends on the casino,

which the Tribe has operated for approximately fif-

teen years, and which generates millions of dollars

in annual revenue. !

1 According to the Meskwaki Casino’s website, it is the larg-

est full service casino in the Midwest. See www.meskwaki.com.

At the time of the events which led to this litigation, the casino

reportedly employed some 1,300 people and generated several

million dollars in gross revenue per week. Mark Siebert, Casino

May Reopen in 8 Weeks; The Long-Running Power Struggle on

the Meskwaki Settlement Could Be Resolved by the End of No-

vember, Des Moines Register, Oct. 1, 2003, at 1B.

3a

During the spring and summer of 2003, two

groups were competing for control of the tribal gov-

ernment, the Tribe’s finances, and the casino.? One

group was led by Walker, who had been Chairman of

the Tribal Council before the other group organized

in opposition. Members of the Tribe who were dissat-

isfied with Walker’s leadership challenged his le-

gitimacy in September 2002 by submitting petitions

demanding his recall and also that of the rest of his

council. According to the tribal constitution a special!

election is to be called upon receipt of such petitions,

but the Walker Council did not call an election. That

left the petitioning tribal members without further

legal recourse since there was not yet a tribal court.

The opposition to the Walker Council was led by

the hereditary chief of the Tribe, Charles Old Bear.

Invoking retained traditional power to form a new

tribal government, Chief Old Bear appointed seven

new council members. A majority of tribal members

signed a declaration supporting Old Bear’s actions,

and at a general meeting of the tribal membership

he administered oaths of office to the new council.

Thereafter at another general meeting of the Tribe, a

majority agreed that the members of the Walker fac-

tion were not “persons of honor, law abiding, and of

good character” as the tribal constitution requires of

office holders. The Bear Council and its supporters

then proceeded to occupy the casino and the tribal

See generally Sac & Fox Tribe of the Mississippi in Iowa,

Election Bd. v. BIA, 439 F.3d 832 (8th Cir. 2006); Jn re: Sac &

Fox Tribe of the Mississippi in Iowa/Meskwaki Casino Litig.,

340 F.3d 749 (8th Cir. 2003). Our description of the factual

background draws on those decisions as well the record in this

case.

la

government offices at the Tribe’s community center

A special election was held on May 22, 2003, at

which the Bear Council received a large majority of

the votes.

The Walker Council refused to step down, how-

ever, and a standoff ensued. Since the Bureau of In-

dian Affairs (BIA) did not act immediately on the re

sults of the May special election, its prior recognition

of the Walker Council as the governing body re-

mained in place and the casino was closed by the

National Indian Gaming Commission (NIGC). The

Walker group then turned to litigation in an attempt

to oust the Bear Council from the casino and the

tribal government, but the federal courts declined to

intervene because federal “jurisdiction does not exist

to resolve an intratriba!l leadership dispute.” Mesk

waki Casino Litig., 340 t'.3d at 766.

The month after the Bear Council won the tribal

election on May 22, 2003, Walker brought API into

the picture. Putatively acting as council chairman,

he executed a contract with API in June 2003. Under

their contract API agreed to “perform services dl-

rectly relating to the investigation of a takeover by

dissidents at the ‘Tribe’s facility located on the

Tribe’s reservation lands,” including “[i]nvestigation

of individuals involved in the unlawful acts against

the Tribal Government.” The agreement further in-

dicated that API was to undertake various projects

related to security, such as “[|djeveloping a security

plan for the re-opening of the Tribe’s Gaming Facil-

ity.” The signatories agreed to arbitrate all disputes

arising out of the contract.

API took the actions that eventually led to this

litigation on October 1, 2003. Near dawn on that

day, as the Bear Council and its supporters contin-

ued their occupation of the casino and tmbal gov

ernment offices, a group of approximately 30 API]

agents forced their way into the buildings. The two

facilities are located on tribal trust land about 2.5

miles apart and are connected by a tribal road. Some

of the API personnel were armed with batons, and at

least one carried a firearm. They seized sensitive

confidential information from both facilities related

to the Tribe’s gaming operations and finances. The

record does not disclose what other services API may

have performed under the June 2003 contract

The Walker Council never regained control of thi

tribal government or the casino after API's forceful

intervention. In special elections held in the fall of

2003 the Bear Council prevailed again, and in No

vember it was recognized by the BIA as the duly

elected tribal government. Based on the BIA’s action,

the NIGC lifted its closure order for the casino in

December 2003, and the Tribe reopened the casino

The Tribe brought its tort action against API in

the tnbal trial court in August 2005, alleging that in

the course of its raid on tribal facilities API had

caused some $7,000 in property damage, wrongfully

seized confidential information related to the Tribe’:

gaming operations and finances, and committed in

tentional torts against tribal members, including a

saults, batteries, and wrongful imprisonments

Based on these allegations the Tribe’s complaint

made claims for trespass to tribal land and chattel

and misappropriation of tribal trade secrets. It al

The Tribe’s complaint did not seek relief for tort again

,

t alleged generally that

any sper ific individual tribal member }

uch torts had been committed

made a claim for conversion of $1,022,171.26 in

tribal funds paid to API under its contract with

Walker. For these acts the Tribe sought compensa

tory and punitive damages. API moved to dismiss,

arguing that the tribal courts lacked subject matter

jurisdiction and that it had a valid contract requiring

arbitration

Shortly thereafter API filed this action in the fed

eral district court seeking a declaration that the

tribal court lacked subject matter jurisdiction and an

order compelling arbitration under the contract

signed by Walker. API moved for a preliminary in

junction against further proceedings in the tribal

court. The district court denied that motion and

stayed the action pending API’s exhaustion of reme

dies in the tribal courts. See Nat'l Farmers Union,

471 U.S. at 857, 105 S. Ct. 2447 (holding that federal

court should not consider a challenge to tribal court

jurisdiction until remedies are exhausted in tribal

courts). The parties then directed their attention to

proceedings in the tribal trial court

The Tribal Court of the Sac and Fox Tribe wa

established by the Tribal Council in 2004. It consist

of a trial court and a court of appeals. The court or-

ganization, rules of procedure, and related provisions

are contained in Title 5 of the Tribal Code. The

Tribal Court currently has one Chief Justice of the

Court of Appeals and three trial court judges, one of

whom serves as chief judge. None of the judges is a

member of the Sac and Fox Tribe. All are enrolled

members of other tribe

See Tmbal Court of the Sac & Fox Tribe of the Mississipp

in lowa, at http://www.meskwakicourt.org/personnel. htm

Ta

After concluding that it had subject matter and

personal jurisdiction, the tribal trial court denied

API’s motion to dismiss. It also determined that as a

matter of tribal law Alex Walker, Jr. and his council

had been removed from office before June 2003.

Walker therefore had been without authority to bind

the Tribe to the contract he entered into with API.

See Sac and Fox Tribe of the Mississippi in Iowa v.

Attorney’s Process and Investigation Servs., Inc., No.

API-CV-DAMAGES-2005-01, at 10-12 (Sac and Fox

Tribe of the Mississippi in lowa Tribal Court Mar.

26, 2008). For that reason the arbitration agreement

could not be enforced.

The tribal court of appeals affirmed, holding that

“the Hereditary Chiefs actions of April 14, 2003 at

the General Council and the Special Election on May

22, 2003 were sufficient to effect a change in Tribal

leadership” and that Walker’s agreement with API

was therefore invalid. Sac and Fox Tribe of the Mis-

sissippi tn Iowa v. Attorney's Process and Investiga-

tion Serus., Inc., No. API-CV-APP-2008-02-124, at 13

(Appellate Court of the Sac and Fox Tribe of the

Mississippi in lowa Dec. 23, 2008) (Tribal Court of

Appeals Decision). It also concluded that the tribal

courts had jurisdiction over the Tribe’s tort claims

under Montana v. United States, 450 U.S. 544, 566,

101 S. Ct. 1245, 67 L.Ed.2d 493 (1981), since a “tribe

may ... retain inherent power to exercise civil au-

thority over the conduct of non-Indians ... within its

reservation when that conduct threatens or has

some direct effect on the political integrity, the eco-

nomic security, or the health or welfare of the tribe.”

See Tribal Court of Appeals Decision at 16.

With its remedies in tribal court thus exhausted,

API returned to the district court which reopened

Sa

the federal case. API moved for summary judgment,

seeking a declaration that the tribal courts lacked

subject matter jurisdiction and that it was entitled to

arbitration under the contract signed by Walker. The

Tribe moved to dismiss, arguing that API’s suit was

barred by its sovereign immunity and that its claims

lacked merit in any event.

The district court denied API’s motion for sum-

mary judgment and granted the Tribe’s motion to

dismiss. Concluding that “API’s conduct had a ‘direct

effect’ on both the political integrity and the eco-

nomic security of the Tribe,” the district court de-

termined that the tribal courts had properly exer-

cised jurisdiction under Montana. It also concluded

that whether Walker had the authority to bind the

Tribe at the time he entered into the June 2003

agreement with API was a matter of tribal law. Con-

sequently it deferred to the tribal courts’ determina-

tion that Walker had not possessed that authority so

the contract did not bind the Tribe. Because the

Tribe never agreed to arbitrate any disputes with

API, it had not waived its sovereign immunity and

the arbitration agreement could not be enforced.

API timely appealed to this court. On appeal it

raises the same two arguments it made in the dis-

trict court. First, API maintains that the tribal

courts have no subject matter jurisdiction over the

Tribe’s claims and that the district court erred in its

application of Montana v. United States. Second, API

contends that federal law rather than tribal law gov-

erns the validity of the Walker contract so the dis-

trict court should not have deferred to the tribal

court determination that the contract was not bind-

ing on the Tribe. API asserts that the contract binds

Sa

the Tribe and that API is therefore entitled to an or-

der compelling arbitration of the Tribe’s claims.

We review de novo the district court’s grant of a

motion to dismiss. Braden v. Wal-Mart Stores, Inc.,

588 F.3d 585, 591 (8th Cir. 2009). The extent of

tribal court subject matter jurisdiction over claims

against nonmembers of the Tribe is a question of

federal law which we review de novo. Nord v. Kelly,

520 F.3d 848, 852 (8th Cir. 2008). In deciding the ju-

risdictional issue we review findings of fact by the

tribal courts for clear error and defer to their inter-

pretation of tribal law. Prescott v. Little Six, Inc., 387

F.3d 753, 756-57 (8th Cir. 2004).

IT.

Whether a tribal court has authority to adjudi-

cate claims against a nonmember is a federal ques-

tion within the jurisdiction of the federal courts.

Plains Commerce Bank v. Long Family Land & Cat-

tle Co., ---U.S. ----, ----, 128 S. Ct. 2709, 2716, 171

L.Ed.2d 457 (2008). Where, as here, tribal jurisdic-

tion is not specifically authorized by federal statute

or treaty, a tribe’s adjudicatory authority must stem

from its “retained or inherent sovereignty.” Atkinson

Trading Co. v. Shirley, 532 U.S. 645, 649-50, 121

S. Ct. 1825, 149 L.Ed.2d 889 (2001). The limits of

that retained power as it relates to tribal civil juris-

diction have been established primarily through ju-

dicial decisions. See Felix Cohen, Cohen’s Handbook

of Federal Indian Law § 7.01 (5th ed.2005) (hereinaf-

ter Cohen)

The scope of tribal civil authority over nonmem-

bers remained “ill-defined” as recently as 2001. Ne-

vada v. Hicks, 533 U.S. 353, 376, 121 S. Ct. 2304,

150 L.Ed.2d 398 (2001) (Souter, J., concurring). The

10a

controlling principles are broad and abstract and

must be carefully applied to the myriad disparate

factual scenarios they govern. Determining the con-

tours of tribal civil jurisdiction and the boundaries of

tribal sovereignty requires consideration of the his-

torical scope of tribal sovereignty and the evolving

place of the tribes within the American constitu-

tional order, careful study of precedent, and ulti-

mately a “proper balancing” of the conflicting inter-

ests of the tribes and nonmembers. /d. at 374 (opin-

ion of the Court).

A.

For much of our nation’s history, the Indian

tribes were regarded as “distinct, independent politi-

cal communities, retaining their original natural

rights, as the undisputed possessors of the soil, from

time immemorial.” Worcester v. Georgia, 31 U.S. (6

Pet.) 515, 559, 8 L.Ed. 483 (1832). As such, they have

been understood to “possess| | attributes of sover-

eignty over both their members and their territory.”

United States v. Mazurie, 419 U.S. 544, 557, 95

S. Ct. 710, 42 L.Ed.2d 706 (1975). Precisely which

attributes of sovereignty the tribes retain, however,

has been developing over time.

In some of its earliest decisions the Supreme

Court recognized that the tribes had been divested of

the sovereign power to carry on relations with for-

eign states by the colonization of the American con-

tinent and the tribes’ relationship with the federal

government. See Worcester, 31 U.S. (6 Pet.) at 559;

Johnson v. McIntosh, 21 U.S. (8 Wheat.) 543, 573-74,

5 L.Ed. 681 (1823). The tribes were long understood

to exercise plenary power within their respective ter-

ritories, however, subject only to the “supreme legis-

lative authority of the United States.” Talton v.

lla

Mayes, 163 U.S. 376, 384, 16S. Ct. 986, 41 L.Ed. 196

(1896); see Worcester, 31 U.S. at 557-61, 6 Pet. 515;

Williams v. Lee, 358 U.S. 217, 223, 79 S. Ct. 269, 3

L.Ed.2d 251 (1959). Thus, “[a]t one time [Indian

tribes] exercised virtually unlimited power over their

own members as well as those who were permitted

to join their communities.” Nat? Farmers Union, 471

U.S. at 851, 105 S. Ct. 2447.

Express policies of the political branches later

diminished the broad scope of tribal sovereignty, see

Montana, 450 U.S. at 563, 101 S. Ct. 1245, and judi-

cial decisions have divested tribes of certain aspects

of sovereign power which appeared inconsistent with

their status as “domestic dependent nations.” Chero-

kee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17, 8 L.Ed.

25 (1831). In other words the tribes’ “incorporation

within the territory of the United States, and their

acceptance of its protection, necessarily divested

them of some aspects of the sovereignty which they

had previously exercised.” United States v. Wheeler,

435 U.S. 313, 323, 98 S. Ct. 1079, 55 L.Ed.2d 303

(1978).

Among the most significant areas of “implicit di-

vestiture of sovereignty ... are those involving the

relations between an [ndian tribe and nonmembers

of the tribe.” Jd. at 326, 98 S. Ct. 1079. As the Su-

preme Court has recently observed, the “sovereignty

that the Indian tribes retain is of a unique and lim-

ited character.’ It centers on the land held by the

tribe and on tribal members within the reservation.”

Plains Commerce Bank, 128 S. Ct. at 2718 (quoting

Wheeler, 435 U.S. at 323, 98 S. Ct. 1079). Although

there are exceptions, tribes generally no longer “pos-

sess authority over non-Indians who come within

their borders.” Jd.

The federal principles which govern tribal civil

jurisdiction over nonmembers were set out in Mon-

tana v. United States, and that decision remains the

“pathmarking case’ on the subject.” Hicks, 533 U.S.

at 358, 121 S. Ct. 2304 (quoting Strate v. A-1 Con-

tractors, 520 U.S. 438, 445, 117 S.Ct. 1404, 137

L.Ed.2d 661 (1997)). In Montana, the Supreme Court

concluded that the Crow Tribe lacked the power to

prohibit hunting and fishing by nonmembers on non

Indian fee land within the reservation because “ex-

ercise of tribal power beyond what is necessary to

protect tribal self-government or to control internal

relations is inconsistent with the dependent status of

the tribes.” 450 U.S. at 564, 101 S. Ct. 1245. As a

general matter, the Court held, “the inherent sover-

eign powers of an Indian tribe do not extend to the

activities of nonmembers of the tribe.” Jd. at 565, 101

S. Ct. 1245. Accordingly, “efforts by a tribe to regu-

late nonmembers, especially on non-Indian fee land,

are ‘presumptively invalid.” Plains Commerce Bank,

128 S. Ct. at 2720 (quoting Atkinson, 532 U.S. at

659, 121 S. Ct. 1825).

As the Supreme Court has explained, however,

“Indian tribes retain inherent sovereign power to ex-

ercise some forms of civil jurisdiction over non-

Indians on their reservations, even on non-Indian fee

lands.” Montana, 450 U.S. at 565, 101 S. Ct. 1245.

The Court has recognized two categories of non-

member conduct which may be regulated by tribes,

commonly termed the “Montana exceptions.” First, a

“tribe may regulate, through taxation, licensing, or

other means, the activities of nonmembers who enter

consensual relationships with the tribe or its mem-

bers, through commercial dealing, contracts, leases,

or other arrangements.” Jd. Second, a “tribe may also

retain inherent power to exercise civil authority over

l3a

the conduct of non-Indians ... within its reservation

when that conduct threatens or has some direct ef-

fect on the political integrity, the economic security,

or the health or welfare of the tribe.” Jd. at 566.

The Montana exceptions are rooted in the tribes’

inherent power to protect certain sovereign interests.

See Plains Commerce Bank, 128 S. Ct. at 2723. Para-

mount among those interests is the right of Indian

tribes to “make their own laws and be governed by

chem,” Hicks, 533 U.S. at 361, 121 S. Ct. 2304, and

in accordance with that right tribes “may regulate

nonmember behavior that implicates tribal govern-

ance and internal relations.” Plains Commerce Bank,

128 S. Ct. at 2723. Ultimately then, “|t]ribal self-

government’ is at the heart of tribal jurisdiction.”

Smith v. Salish Kootenai Coll., 434 F.3d 1127, 1133

(9th Cir. 2006) (en banc) (quoting Montana, 450 U.S.

at 564, 101 S. Ct. 1245), cert. denied, 547 U.S. 1209,

126 S. Ct. 2893, 165 L.Ed.2d 922 (2006).

Although the issue in the Montana case was

about tribal regulatory authority over nonmember

fee land within the reservation, Montana, 450 U.S.

at 547, 101 S. Ct. 1245, Montana’s analytic frame-

work now sets the outer limits of tribal civil jurisdic-

tion-both regulatory and adjudicatory-over nonmem-

ber activities on tribal and nonmember land. The

Supreme Court held in Strate v. A-I Contractors that

“{a]js to nonmembers ... a tribe’s adjudicative juris-

diction does not exceed its legislative jurisdiction.”

Strate, 520 U.S. at 453, 117 S. Ct. 1404.5 Tribal court

5 Although in Hicks the Supreme Court reserved the ques-

tion “whether a trbe’s adjudicative jurisdiction over nonmem-

ber defendants equals its legislative jurisdiction,” 533 U.S. at

358, 121 S. Ct. 2304 (emphasis in original), it has indicated

(footnote continued on next page)

l4a

jurisdiction thus “turns upon whether the actions at

issue in the litigation are regulable by the tribe.”

Hicks, 533 U.S. at 367 n. 8, 121 S. Ct. 2304. The

Court has also indicated that “Montana applies to

both Indian and non-Indian land.” 7d. at 360, 121

S. Ct. 2304; see also id. at 387, 121 S.Ct. 2304

(O’Connor, J., concurring in part) (“Today, the Court

finally resolves that Montana v. United States gov-

erns a tribe’s civil jurisdiction over nonmembers re-

gardless of land ownership.”) (citation omitted);

MacArthur v. San Juan County, 497 F.3d 1057,

1069-70 (10th Cir. 2007).

Because “efforts by a tribe to regulate nonmem-

bers ... are presumptively invalid,” the Tribe bears

the burden of showing that its assertion of jurisdic-

tion falls within one of the Montana exceptions.

Plains Commerce Bank, 1285S. Ct. at 2720 (quotation

marks omitted). Those exceptions are narrow ones

and “cannot be construed in a manner that would

‘swallow the rule.” Jd. (quoting Atkinson Trading

Co., 532 U.S. at 655, 121 S. Ct. 1825).

B.

‘

The district court determined that the tribal

courts could exercise jurisdiction over the Tribe’s

claims under the second Montana exception. That

exception provides that tribal courts have authority

over nonmember conduct which “threatens or has

that “where tribes possess authority to regulate the activities of

nonmembers, ‘civil jurisdiction over disputes arising out of such

activities presumptively lies in the tribal courts,” Strate, 520

U.S. at 453, 117 S. Ct. 1404 (quoting Jowa Mut. Ins. Co. v. LaP-

lante, 480 U.S. 9, 18, 107 S. Ct. 971, 94 L.Ed.2d 10 (1987)) (al-

terations omitted).

15a

some direct effect on the political integrity, the eco-

nomic security, or the health or welfare of the tribe.”

Montana, 450 U.S. at 566, 101 S. Ct. 1245. In par-

ticular, the district court concluded that by attempt-

ing to seize control of the casino and government of-

fices during an intratribal governance dispute, API

directly affected both the political integrity and the

economic security of the Tribe.

API disputes that the second Montana exception

provides the tribal courts with jurisdiction. It main-

tains that the district court erred in its application of

Montana by overestimating the effect of its conduct

on the Tribe’s sovereign interests and by considering

acts that were irrelevant to the analysis. The Tribe

supports the district court’s reasoning, maintaining

that API’s conduct at its facilities interfered with its

right to self government and threatened its economic

well being.

The starting point for the jurisdictional analysis

is to examine the specific conduct the Tribe’s legal

claims would seek to regulate. The Montana excep-

tions focus on “the activities of nonmembers’ or ‘the

conduct of non-Indians.” Plains Commerce Bank,

128 S. Ct. at 2720 (quoting Montana, 450 U.S. at

565-66, 101 S. Ct. 1245) (emphasis in original). Each

claim must be analyzed individually in terms of the

Montana principles to determine whether the tribal

court has subject matter jurisdiction over it. See

Hicks, 533 U.S. at 367 n. 8, 121 S. Ct. 2304 (limita-

tions on tribal jurisdiction “pertain[ ] to subject-

matter, rather than merely personal, jurisdiction”);

Plains Commerce Bank, 128 S. Ct. at 2724-25 n. 2:

cf. Myers v. Richland County, 429 F.3d 740, 747-48

(8th Cir. 2005) (examining federal court subject mat-

ter jurisdiction claim by claim).

16a

In analyzing the jurisdictional issue we rely on

the record developed in the tribal] courts and the al-

legations in the Tribe’s complaint. Questions of sub-

ject matter jurisdiction often require resolution of

factual issues before the court may proceed, see, e.g.,

Osborn v. United States, 918 F.2d 724, 724.30 (8th

Cir. 1990), and that is particularly true of *nquiries

into tribal jurisdiction. It is therefore both necessary

and appropriate for the parties and the tribal court

to ensure that “a full record [is] developed in the

Tribal Court.” Nat’l Farmers Union, 471 U.S. at 856,

105 S. Ct. 2447. Here, the parties were afforded dis-

covery in the tribal trial court. API has not contested

any of the materia! allegations made by the Tribe,

and we therefore take them as true for present pur-

poses.

The parties disagree about which particular facts

are relevant to the Montana analysis. API contends

that the court should consider only the elements of

the tribal regulation or cause of action at issue in

evaluating its conduct. Because the tort claims

might not in the ordinary course “imperil the subsis-

tence’ of the tribal community,” API maintains the

tribal courts have no jurisdiction. Plains Commerce

Bank, 128 S. Ct. at 2726 (quoting Montana, 450 U.S.

at 566, 101 S. Ct. 1245). The Tribe contends that in

deciding the question of jurisdiction the court must

focus on what actually occurred at the tribal facili-

tiles.

API’s theory of tribal jurisdiction suffers from

several flaws. The most significant is that it has no

grounding in precedent. In support of its theory API

does rely on Plains Commerce Bank, but its reading

of that case does not withstand scrutiny. At issue in

Plains Commerce Bank was a discrimination claim

17a

based on traditional tribal law. /d. at 2725. Rather

than focusing on the elements of that tribal claim,

the Supreme Court was concerned with the practical

regulatory effect the claim would have on the non-

member conduct at issue. It concluded that in effect

the plaintiffs’ claim “operate[d] as a restraint on

alienation” of the non-Indian defendant's land. /d., at

2721. Plains Commerce Bank thus demonstrates

that courts applying Montana should not simply

consider the abstract elements of the tribal claim at

issue, but must focus on the specific nonmember

conduct alleged, taking a functional view of the regu-

latory effect of the claim on the nonmember.

This approach is illustrated in decisions of other

courts. For example, in Elliott v. White Mountain

Apache Tribal Court, 566 F.3d 842, 849 (9th Cir.

2009), the Ninth Circuit considered the extent of the

alleged damage before deciding that a tribe had col-

orable jurisdiction to enforce regulations prohibiting

trespass and requiring a permit to make a fire on

tribal land. The court noted that “the regulations at

issue are intended to secure the tribe's political and

economic well-being, particularly in hght of the re-

sult of the alleged violations of those regulations in

this very case: the destruction of millions of dollars

of the tribe’s natural resources.” Jd. at 850. The

court's decision thus did not rest solely on the cate-

gorical elements in the tribal regulations, but on “the

circumstances of this case.” Id.

API’s theory also suffers from a conceptual flaw.

In maintaining that tribal adjudicatory jurisdiction

turns on the elements of the regulation or cause of

action the Tribe seeks to enforce, API assumes that

the limits on tribal jurisdiction are a function of posi-

tive tribal law. That assumption misapprehends the

la

source of Indian trmbes’ civil authority, as well as the

nature of an appropriate inquiry under Montana.

The Montana exceptions recognize that the In.

dian tribes “retain inherent sovereign power,” Mon-

tana, 450 U.S. at 565, 101 S. Ct. 1245, and our task

in applying the exceptions is to outline the bounda-

ries of that retained power. Those boundaries are es-

tablished by federal law, a source of law externa] to

the tribes. See, e.g., Natl Farmers Union, 471 U.S. at

852, 105 S. Ct. 2447. Positive tribal law, in contrast,

is internal to the tribes. It is a manifestation of tribal!

power, and as such it does not contribute to the ex

ternal limitations which concern us here. Once it is

determined that certain conduct is within the scope

of a tribe’s power as a matter of federal law, our in-

quiry Is at an end.

This point is illustrated by API’s implicit conces

sion that the Tribe might have jurisdiction in this

case if only it had written regulations which specifi-

cally prohibited “hijacking the casino, interfering

with elections, and deposing |the Tribe’s] governing

council.” See API Opening Br. at 22. We need not

pause to consider how foreseeable such conduct

would have been because the absence of such regula

tions 1s irrelevant in the factual context of this case.

If the Tribe retains the power under Montana to

regulate such conduct, we fail to see how it makes

any difference whether it does so through precisely

tailored regulations or through tort claims such as

those at issue here.

We conclude that the allegations relevant to our

jurisdictional inquiry are not limited to those that

track the elements of the Tribe’s claims. The context

is also significant, and other aspects of the conduct

the claims seek to regulate are pertinent to the ex

tent they demonstrate encroachment upon the tribal!

sovereign interests recognized by Montana and it

progeny. We turn then to the Tribe’s allegation

The Tribe's claims arise from two related, but ul

timately distinct, courses of conduct which occurred

subsequent to the election of the Bear Council and

API’s agreement with Walker. First, the Tribe al

leges that between the time the contract was signed

in June and the end of September 2003, API took

possession of over $1 million in tmbal funds without

the authorization of the Tribe’s duly elected govern

ing body. The Tribe’s conversion claim arises from

this transaction (or set of transactions). Second, the

Tribe’s complaint describes API's raid on the casino

and the government offices, leading to the claims for

trespass to land, trespass to chattels, and conversion

of tribal trace secrets

We consider the latter claims first. According to

the Tribe’s allegations, on October 1, 2003 API

armed agents entered onto tribal trust land without

permission of the elected governing body, stormed

buildings vital to the Tribe’s economy and its self

government, committed violent torts against tribal!

members, forcibly seized sensitive information ri

lated to the Tribe’s finances and gaming operation

and damaged tribal property. The conduct set out in

these allegations “menace][d] the ‘political integrity

the economic security, [and] the health |and] welfare

of the Tribe to such a degree that it ‘imperilfed] the

subsistence’ of the tribal community.” Plains Com

merce Bank, 128 5S. Ct. at 2726 (quoting Montana

450 U.S. at 566, 101 S. Ct. 1245). The Tribe there

fore retains the inherent power under the second

Montana exception to regulate this conduct

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Walker Council to power despite the majority’s rejec-

tion of its leadership in the May election. This was a

direct attack on the heart of tribal sovereignty, the

right of Indians “to protect tribal self-government.”

Montana, 450 U.S. at 564, 101 S. Ct. 1245.’

Finally, there remains “the critical importance of

land status” to questions of tribal jurisdiction under

Montana. Plains Commerce Bank, 1288. Ct. at 2725.

Here, the Tribe does not seek to assert jurisdiction

over non Indian fee land. The facilities API raided

are on tribal trust land. The Tribe’s trespass and

trade secret claims thus seek to regulate API’s entry

and conduct upon tribal land, and they accordingly

“stem from the tribe’s ‘landowner’s right to occupy

and exclude.” Elliott, 566 F.3d at 850 (quoting

Hicks, 533 U.S. at 359, 121 S. Ct. 2304). A “tribe’s

‘traditional and undisputed power to exclude per-

sons’ from tribal land ... gives it the power to set

conditions on entry to that land.” Plains Commerce

Bank, 128 S. Ct. at 2723 (quoting Duro v. Reina, 495

U.S. 676, 696, 110 S.Ct. 2053, 109 L.Ed.2d 693

(1990)). Tribal civil authority is at its zenith when

the tribe seeks to enforce regulations stemming from

its traditional powers as a landowner. See Hicks, 533

U.S. at 370, 121 S. Ct. 2304 (“[T]ribal ownership is a

factor in the Montana analysis, and a factor signifi-

cant enough that it may sometimes be dispositive.”)

(ellipsis and quotation marks omitted); Strate, 520

* No jurisdictional significance has been established by the

fact that the BIA and NIGC still recognized the Walker Council

at the time of the raid. As discussed in Part III.B, infra, these

federal agencies are without power to interfere in an intratribal

governance dispute. Their recognition could not give API li-

cense to do what the agencies themselves could not.

224

U.S. at 454, 1178S. Ct. 1404; Elliott, 566 F.3d at 849-

50. Adjudication of the trespass and trade secret

claims is accordingly well within the Tribe’s retained

power under Montana.

We conclude that because API’s forceful interven-

tion on October 1, 2003 threatened the “political in-

tegrity, the economic security, [and] the health [and]

welfare” of the Tribe, Montana, 450 U.S. at 566, 101

S. Ct. 1245, as well as its rights as a landowner, the

tribal courts may exercise jurisdiction over the

claims that arise out of that conduct. See Plains

Commerce Bank, 128 S. Ct. at 2724, 2726 (tribes re-

tain “inherent sovereign authority to set conditions

on entry, preserve self-government, [and] control in-

ternal relations’). The Tribe’s claims for trespass to

tribal land and chattels and conversion of tribal

trade secrets grow out of this sovereign authority.

The Tribe’s claim for conversion of tribal funds is

materially different from the other alleged torts,

however. The conversion claim does not appear to

arise directly out of what occurred during the Octo-

ber 1 raid. It arises from the payment of tribal funds

to API under its contract with Walker. According to

the tribal trial court's factual findings, all of the

money the Tribe now seeks to recover had been paid

to API by September 30, the day before the raid oc-

curred. The district court may have overlooked that

fact since it focused its discussion entirely on API's

conduct on October 1. It 1s of course possible that

API was paid in advance for planning and executirg

the raid, but that has not been alleged.

In order to establish jurisdiction over the conver-

sion claim under the second Montara exception, the

Tribe must show that the conduct it seeks to regu-

late occurred within the Meskwaki Settlement, for ‘

»

23a

Moniana and its progeny permit tribal regulation of

nonmember conduct inside the reservation.” Plains

Commerce Bank, 128 S. Ct. at 2721 (secend empha-

sis added). The conduct the conversion claim seeks to

regulate most directly is API’s unauthorized receipt

and retention of tribal funds. See, e.g., Restatement

(Second) of Torts §§ 222A, 229; cf. United States v.

Janis, 556 F.3d 894, 898 (8th Cir. 2009) (defendant’s

“receipt and retention” of tribal funds transferred in

violation of tribal policy was “conversion” under 18

U.S.C. § 1163). The Tribe makes no allegation that

the receipt or retention of the funds occurred within

the Meskwaki Settlement, however, so we cannot

conclude that the conduct most directly regulated by

the conversion claim occurred on tribal land.

Nor has the Tribe adequately delineated an indi-

rect relationship between the conversion claim as a

whole and API’s conduct on tribal land, for it re-

mains unclear what portion of the allegedly con-

verted funds may relate to the October 1 raid, as op-

posed to other services API might have performed

under the contract with Walker. The tribal appellate

court stated that the “Walker Council paid API these

funds in exchange for API’s performance of some of

the actions” of October 1, Tribal Court of Appeals

Decision at 16, but the record does not illuminate the

issue any further. The tribal trial court’s only rele-

vant factual finding was that API _ received

$1,022,171.26 in tribal funds between June 30, 2003

and September 30, 2003. Because we cannot deter-

mine what services these funds paid for, we cannot

examine what conduct by API the conversion claim

seeks to regulate.

That some of the funds likely relate to the Octo

ber 1 raid is not enough to sustain jurisdiction over

24a

the claim as a whole, for “when it comes to tribal

regulatory authority, it is not ‘in for a penny, in for a

Pound.” Plains Commerce Bank, 128 S. Ct. at 2724

(quoting Atkinson, 532 U.S. at 656, 121 S. Ct. 1825).

We conclude that the Tribe has failed to carry its

burden of establishing adjudicatory jurisdiction over

the conversion claim under the second Montana ex-

ception.

The question remains, however, whether the first

Montana exception could provide tribal court juris-

diction over the conversion claim. That exception

recognizes tribal power to regulate nonmembers

when they “enter consensual relationships with the

tribe or its members.” Montana, 450 U.S. at 565, 101

S. Ct. 1245. The tribal appellate court concluded that

the first exception did not apply because the Tribe's

claims “are premised on lack of consent and turn on

the Tribe’s claim that there was no valid Contract”

between it and API. Tribal Court of Appeals Decision

at 16 (emphasis in original). Although the district

court expressed agreement with that proposition, it

did not analyze or ultimately decide whether the

first Montana exception applies to any of the Tribe’s

claims. The Tribe now urges that the first exception

establishes jurisdiction over all of its claims. API

disagrees.

Whether the contract between API and Walker

was binding on the Tribe is an issue separate from

the question of whether the contract could establish

tribal court jurisdiction over the Tribe’s claims, for

the consensual reiationship contemplated by the

first Montana exception may be with the Tribe itself

“or its members.” Montana, 450 U.S. at 565, 101

S. Ct. 1245. Even if the contract did not bind the

Tribe, the operative question for jurisdictional pur-

poses is whether the conversion claim has a suffi-

cient nexus to the consensual relationship between

Walker and API. Atkinson, 532 U.S. at 656, 121

©. Ct. 1825; see Nord, 520 F.3d at 856. We decline to

aaswer that question without the benefit of analysis

by the district court. We therefore conclude that a

remand is necessary so that the district court may

consider the applicability of the first Montana excep-

tion to the Tribe’s conversion claim.

ITT.

API contends that regardless of whether the

tribal courts have subject matter jurisdiction under

Montana, its contract with Walker binds the Tribe

and requires arbitration of the claims brought

against it. After concluding as a matter of tribal law

that the Bear Council had been legally installed to

lead the Tribe in the May 2003 election, the tribal

courts determined that Walker had no authority to

bind the Tribe to the contract he subsequently en-

tered into in June. The district court deferred to that

determination of tribal law and therefore agreed

that the arbitration clause in the contract was not

enforceable against the Tribe. Because the duly

elected tribal authority had not agreed to the arbi-

tration provision, the district court concluded that

the Tribe’s sovereign immunity barred API’s claim

for enforcement of the arbitration clause. API con-

tinues to maintain that the arbitration clause 1s

binding, particularly since some federal agencies

continued to recognize Walker as the tribal chair-

man at the time he entered into the contract with it.

A.

The parties disagree about the scope of our re-

view of API’s arbitration claim. API maintains that

26a

we must review de novo all matters of federal law

decided by the tribal court including the arbitration

issue. The Tribe argues however that our review is

limited to determining whether the tribal courts had

jurisdiction over the issue. If they did, the Tribe con-

tends, we should accord preclusive effect to their de-

termination that the contract was invalid.

The Supreme Court’s guidance in this area has

been limited. It held in Jowa Mutual Insurance Co. v.

LaPlante that “[u]nless a federal court determines

that the Tribal Court lacked jurisdiction, ... proper

deference to the tribal court system precludes reliti-

gation of issues raised by the [underlying] claim and

resolved in the Tribal Courts.” 480 U.S. at 19, 107

S. Ct. 971. That decision has been understood as es-

tablishing “the rule that federal courts may not read-

judicate questions-whether of federal, state or tribal

law-already resolved in tribal court absent a finding

that the tribal court lacked jurisdiction or that its

judgment be denied comity for some other valid rea-

son.” AT&T Corp. v. Coeur d'Alene ‘%'ribe, 295 F.3d

899, 904 (9th Cir. 2002).8 The Ninth Circuit thus re-

views de novo a tribal court’s resolution of those

matters of federal law which are relevant to the

tribal court’s jurisdiction, but gives preclusive effect

to tribal judgments on other issues under a comity

8 See aiso Timothy W. Joranko, Exhaustion of Tribal Reme-.

dies in the Lower Courts. After Naticval Farmers Union and

Iowa Mutual: Toward a Consistent Treatment of Tribal Courts

by the Federal Judicial System, 78 Minn. L.Rev. 259, 295

(1993) (* Iowa Mutual makes clear that the parties may not

relitigate their federal claims beyond the jurisdictional chal-

lenge, unless and until the federal court determines that the

tribal court lacked jurisdiction over the dispute.”).

analysis. See id. at 903-64; Wilson v. Marchington,

127 F.3d 805, 810 (9th Cir. 1997).

We stated in dictum in Prescott v. Little Six, Inc.

that “when the tribal court applies federal law [its]

determinations are accorded no deference and are

reviewed by the district court de novo,” citing Dun-

can Energy Co. v. Th 2e Affiliated Tribes of the Ft.

Berthold Reservation, 27 F.3d 1294, 1300 (8th Cir.

1994). Prescott, 387 F.3d at 757. In Duncan the court

mentioned the de novo standard only in the course of

discussing tribal court jurisdictional determinations,

however, and it relied on FMC v. Shoshone-Bannock

Tribes, 905 F.2d 1311, 1313 (9th Cir. 1990). See Dun-

can, 27 F.3d at 1300. The Ninth Circuit has subse-

quently explained that FMC did not require a de

novo standard for all federal issues, but “merely es-

tablished a de novo standard of review for legal

questions relevant to a tribal court’s decision regard-

ing tribal jurisdiction.” Coeur d'Alene Tribe, 295 F.3d

at 904 (emphasis in original).

Even if our precedent provides uncertain guid-

ance on the standard for review of tribal court deci-

sions of federal law issues, we need not linger over

the question here. The district court determined that

9 A de novo standard of review for all questions of federal law

decided Ly tribal courts would also appear to take inadequate

account of the fact that “the tribes remain quasi-sovereign na-

tions which ... are in many ways foreign to the constitutional

institutions of the Federal and State Governments.” Santa

Clara Pueblo v. Martinez, 436 U.S. 49, 71, 98 S. Ct. 1670, 56

L.Ed.2d 106 (1978); see also Duncan, 27 F.3d at 1302 (Loken,

J., concurring) (“I do not agree that ... we conduct some sort of

direct review of the tribal court... . I know of no statute giving

the district and circuit courts jurisdiction to review tribal court

decisions.”).

28a

the question of whether Walker had authority to

bind the Tribe to the June 2003 agreement with API

is purely a matter of tribal law. If that conclusion

was correct, we need not decide in this case whether

de novo review applies to tribal court decisions of

nonjurisdictional issues of federal law. The rule is

clear that federal courts do not conduct de novo re-

view over tribal court rulings under tribal law. Pres-

cott, 387 F.3d at 756; City of Timber Lake v. Chey-

enne River Sioux Tribe, 10 F.3d 554, 559 (8th Cir.

1993), cert. denied, 512 U.S. 1236, 114 8S. Ct. 2741,

129 L.Ed.2d 861 (1994).

B.

API argues that the district court should not have

deferred to the tribal courts’ conclusion about the va-

lidity of the contract because that issue is governed

by federal law, not tribal law. API contends that

Walker had authority under federal law to take any

action necessary to operate the casino, including con-

tracting with API on behalf of the Tribe, because the

BIA and NIGC still recognized the Walker Council

as the Tribe’s governing body through the summer of

2003. API's reliance on federal agency recognition of

the Walker Council is misplaced.

Of special significance is the long established

principle that “[tjribal election disputes, lke tribal

elections, are key facets of internal tribal governance

and are governed by tribal constitutions, statutes, or

regulations.” Cohen § 4.06[1][b]fi]. We have reaf-

firmed this rule in relation to the very governance

dispute underlying this case. See Meskwaki Casino

Litig., 340 F.3d at 763-64. Because tribal governance

disputes are controlled by tribal law, they fall within

the exclusive jurisdiction of tribal institutions, see

id., and the BIA’s recognition of a member or faction

29a

is not binding on a tribe, Goodface v. Grassrope, 708

F.2d 335, 339 (8th Cir. 1983).

While the BIA may at times be obliged to recog-

nize one side in a dispute as part of “its responsibil-

ity for carrying on government relations with the

Tribe,” such recognition is made only on “an interim

basis.” Id. Once the dispute is resolved through in-

ternal tribal mechanisms, the BIA must recognize

the tribal leadership embraced by the tribe itself. Ja

see also Wheeler v. U.S. Dep't of the Interior, Bureau

of Indian Affairs, 811 F.2d 549, 552-53 (10th Cir.

1987); Cohen § 4.06[1][b] [ii]. The BIA recognizes the

force of these principles. See Wanatee v. Acting Min-

neapvolis Area Director, BIA, 31 1.B.1.A. 93, 95 (Inte-

rior Bd. of Indian Appeals July 30, 1997).

It is plain, then, that whether Walker was prop-

erly removed from office and whether he had general

authority to act on behalf of the Tribe in a govern-

mental capacity are pure questions of tribal law, be-

yond the purview of the federal agencies and the

federal courts. API concedes this proposition as it

must. It argues, however, that federal law empow-

ered Walker in a more limited and specific manner.

API contends that NIGC’s notice of violation and or-

der closing the casino authorized Walker to take self

help remedies in retaking control, pointing in par-

ticular to a statement in the notice of violation that

the Bear Council’s occupation of the casino “leaves

the federally recognized government unable to re-

gain control without the use of force.”!° More

10 Notice of Violation, No. NOV-03-02, at 2 (NIGC Apr. 30,

2003), available at http://www.nige.gov/Reading Room/En

forcement_Actions.aspx

30a

broadly, API contends that because Indian gaming is

a federally regulated activity, the federal agencies’

recognition of Walker empowered him to act on be-

half of the Tribe for purposes of operating the casino,

and thus to enter into the contract with API despite

having been replaced by the election of the Bear

Council.

As for the first contention, the NIGC actions had

neither the purpose nor the legal consequences API

ascribes to them. The notice of violation and closure

order disclose no intent to empower Walker to em-

ploy force by outsiders to retake the casino. To say

that the Bear Council was not authorized at that

point to operate the casino was not to say that

Walker could do whatever he thought necessary to

reopen it. The point of the NIGC reference about the

potential for the use of force was that the situation

at the casino posed a threat to public safety, thus

violating federal gaming law and regulations. AP]

seeks to justify its raid on the Tribe’s facilities on

tribal trust land by seizing on a few words of the

NIGC order isolated from their context. The NIGC

did not authorize the use of force in its notice, and

certainly not by private actors employed by one fac-

tion in an intratribal dispute.

Moreover, the NIGC lacked the power to author-

ize Walker to hire API with tribal funds to conduct

its raid. As the notice of violation itself makes clear,

the “NIGC defers to the Secretary of the Interior,”

acting through the BIA, in determining “which fac-

tion should be recognized as the tribal government.”

Notice of Violation at 1 (citing 25 U.S.C.

§ 2703(5)(A)). Any recognition of Walker at this point

had no special force. NIGC simply deferred the issue

to the BIA, which acknowledges that it lacks the

3la

power to determine tribal leadership. It must none

theless still conduct government to government rela

tions on an interim basis during a tribal leadership

dispute. See Wanatee, 31 I.B.I.A. at 95.

API's more general argument is that federal law

governs the validity of the contract between API and

Walker because its subject matter was operation of a

federally regulated casino. This argument is fore

closed by our precedent. We have held under circum

stances similar to those here, that whether a former

tribal leader has authority to bind his tribe to a ca

sino management contract is a matter of tribal law.

In Bruce H. Lien Co. v. Three Affiliated Tribes, 93

F.3d 1412 (8th Cir. 1996), the tribes had entered into

a casino management contract with the Lien Com

pany. Jd. at 1414. The tribal leader who had exe

cuted the agreement subsequently lost his bid for re

election, and the new leadership claimed he had not

been authorized to bind the tribe, /d. at 1415-16. We

reversed the district court’s determination that the

NIGC had “exclusive initial jurisdiction to determine

the validity of the contract.” Jd. at 1416. We con

cluded to the contrary that “the legal validity of the

management contract [was] beyond the authority of

the NIGC,” and that jurisdiction to determine its va

lidity lay in the tribal court. /d. at 1417. Further,

“the issue of the contract’s validity [did] not raise a

federal question per se.” Jd. at 1421.

Prescott v. Little Six, Inc. resolved a parallel

choice of law problem in a similar manner. In Pres

cott, former employees of Little Six (a tribal corpora

tion organized under tribal law to run the tribe’s ca

sino), sued to recover payments under draft em

ployee benefit plans created by the company. 387

F.3d at 754. Little Six claimed that the benefit plan:

had not been created in accordance with tribal cor

porate law and were therefore not binding. Jd. The

district court concluded that because the benefit

plans were governed by ERISA, their validity was a

question of federal law. Jd. at 757. We reversed, rec-

ognizing that “the initial, and dispositive, issue

was whether a valid and enforceable benefits ar

rangement existed.” /d. That issue was “a matter

governed by tribal law” and we therefore deferred to

the tribal court’s determination that the draft plans

were invalid. /d. at 757-58.

The present case is on all fours with Bruce H

Lien and Prescott. API recognizes that Walker’s au

thority to act on behalf of the Tribe in general is a

matter of tribal law. Our decisions in Bruce H. Lien

and Prescott repudiate any notion that federal regu

lation of gaming could create some special sphere of

federal law by which Walker could be empowered to

bind the Tribe after it had elected new leaders

API also argues that even if Walker was without

authority to bind the Tribe to the agreement as a

whole, he had independent federal authority to

waive the Tribe's sovereign immunity because tribal

sovereign immunity is a creature of federal law. This

is essentially the same argument API offers with re

spect to the contract as a whole, and we reject it for

the same reasons, The fact that federal !aw provides

for tribal sovereign immunity did not cloak Walker

with authority to waive the Tribe’s immunity, just a:

federal regulation of gaming did not federalize the

Tribe's internal governance disputes as they related

to casino management. Walker simply lacked au

thority to act on behalf of the Tribe in any capacity,

and this “calls into question all provisions’ in the

contract, “including provision: relat ing to arbitration

API advance a number of! poli Y pased argu

ments in support of its position. It contends for ex

ample that the inability of third parties to rely o1

federal agency recognition of a particular tribal gov

ernment could interfere with the provision of ser

vices to Indian tribes. Such contentions are irrel:

vant, for the ultimate flaw in API's argument is that

it points to no federal statute, tre ity, or regulation

manifesting congressional intent to authorize the

encroachment upon tribal sovereignty that API pr

It is Convre not the federal judiciary-which e1

oys “plenary and exclusive power over the Indian

tribes, United States v. Lara, 541 U.S. 193, 200, 124

S. Ct. 1628, 158 L.Ed.2d 420 (2004): see William

58 U.S. at 223, 79 S. Ct. 269; Lone Wolf v. Hitch

ock, 187 U.S. 553, 565, 23 S. Ct. 216, 47 L.Ed. 299

(1903), and thus “a proper respect both for triba

vereignty itself and for the plenary authority of

(Congre in this area cautions that we tread lghtl\

in the absence of clear indications of legislative in

tent. Santa Clara Pueblo, 436 U.S. at 60. 98 S. Ct

1670. There is no indication that Congr ha

granted the BIA or NIGC the authority API claim

for them, or that it intended the Indian Gamuin

Regulatory Act to displace the right of tribal men

ney] Lo elect the leader who will act in their be

half. Absent clear evidence of legislative intent

will not infer that Congré ha drastica

tailed tribal sovereignty

he district court prope) eferred to t 1

irts determination that the June 2O0¢ igreem('

} ray A yikeey / \ P| i ' ; yi hs

Prescott, 387 F.3d at 758. Because the Tribe did not

enter into any agreement with API, it has not

waived its sovereign immunity, and it is therefore

immune from suit on the contract. See Kiowa Tribe

of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 760, 118

S. Ct. 1700, 140 L.Ed.2d 981 (1998). Accordingly, the

district court did not err in dismissing API's claim

for enforcement of the arbitration avreement

IV

or the foregoing reasons, we affirm the judg

ment of the district court insotar as it held that the

courts of the Sac and Fox Tribe may exercise adjudi

catory jurisdiction over the Trnbe’s claims against

API for trespass to land, trespass to chattels, and

conversion of tmbal trade secrets. We also affirm the

judgment of the district court dismissing API's claim

for an order compelling arbitration

We reverse and vacate only that portion of the

judgment whicn concluded that the Tribal Court ha

jurisdiction under the second Montana exception

over the Tribe’s claim for conversion of tribal funds,

and we remand to the district court the question of

whether tribal court jurisdiction exists over that

claim under the first Montana exception

30a

United States District Court,

N.D. lowa, Cedar Rapids Division.

ATTORNEY’S PROCESS AND INVESTIGATION

SERVICES, INC., Plaintiff,

V.

SAC & FOX TRIBE OF THE MISSISSIPPI IN

IOWA, Defendant.

No. 05-CV-168-LRR.o

June 18, 2009.

LINDA R. READE, Chief Judge.

I. INTRODUCTION

The matters before the court are the “Motion to

Dismiss” (docket no. 48), filed by Defendant Sac &

Fox Tribe of the Mississippi in Iowa (“Tribe”), and

the “Motion for Partial Summary Judgment on Ju-

risdictional Grounds” (docket no. 63) (“Summary

Judgment Motion”), filed by Plaintiff Attorney’s

Process and Investigation Services, Inc. (“APT”).

36a

Il. RELEVANT PROCEDURAL BACKGROUND

A. Intra-Tribal Governmental Dispute!

In 2002, Alex Walker, Jr. was the leader of the

seven-member elected council that governs the

Tribe. On September 26, 2002, some Tribe members

became dissatisfied with this “Walker Council” and

submitted recall petitions for its members.

On October 10, 2002, the Walker Council pur-

ported to accept the recall petitions. However, the

Walker Council never set recall elections. On March

4, 2003, the Walker Council rejected the recall peti-

tions.

Also on March 4, 2003, the Tribe’s Hereditary

Chief Old Bear appointed an interim tribal council.

The “Bear Council” consisted of Hereditary Chief Old

Bear and six other Tribe members.

On March 26, 2003, Hereditary Chief Old Bear

administered oaths of office to the Bear Council.2 On

1 The court’s recitation of the facts is drawn from the record

before the court and the Tribal Court’s record. See Jowa Mut.

Ins. Co. v. LaPlante, 480 U.S. 9, 21, 107 S. Ct. 971, 94 L.Ed.2d

10 (1987) (“[T]he orderly administration of justice in the fed-

eral court will be served by allowing a full record to be devel-

oped in the tribal court before either the merits or any question

concerning appropriate relief is addressed.”) (quoting Nat7

Farmers Union Ins. Cos. v. Crow Tribe, 471 U.S. 845, 856, 105

S. Ct. 2447, 85 L.Ed.2d 818 (1985)). The court also notes the

parties do not dispute the material facts at issue in this case-

only their legal implication. See Brief in Support of Summary

Judgment Motion (docket no. 63-5), at 3 (discussing Tribal

Court of Appeals’s factual findings).

2 On April 8, 2003, the Walker Council filed a declaratory

judgment suit in this court against the Bear Council. The

Walker Council asked this court to determine which council

(footnote continued on next page)

37a

April 14, 2003, some members of the Tribe signed a

declaration of support for Hereditary Chief Old

Bear’s actions. These same Tribe members also

agreed that none of the members of the Walker

Council were qualified to serve on the Tribe’s coun-

cil.

On May 22, 2003, the Tribe held a special election

to resolve the intra-tribal dispute. The Tribe elected

all seven members of the Bear Council. In the fall of

2003,3 the Tribe held another election and confirmed

the Bear Council in its entirety.

B. Tribal Court Complaint

Qn August 3, 2005, the Bear Council filed a tort

action on behalf of the Tribe in the Court of the Sac

& Fox Tribe of the Mississippi in Iowa (“Tribal

Court”). See Sac & Fox Tribe of the Miss. in Iowa v.

API, xo. API-CV-Damages-2005-01 (Court of the Sac

& Fox Tribe of the Mississippi in Iowa). The Tribe

alleged trespass to land, trespass to chattel, theft of

tribal funds and misappropriation of trade secrets.

On September 23, 2005, API filed a motion in the

Tribal Court. API asked the ‘Tribal Court to dismiss

the Tribe’s complaint, claiming the Tribal Court

lacked subject matter jurisdiction over API.

C. Federal District Court Complaint

On October 21, 2005, API filed a Complaint

(docket no. 2) in this court. The Complaint alleges

was authorized to govern the Tribe. The court dismissed the

suit for lack of subject matter jurisdiction. Sac & Fox Tribe of

the Miss. in Iowa v. Bear, 258 F.Supp.2d 938 (N.D.Iowa 2003)

(Reade, C.J.), affd, 439 F.3d 832 (8th Cir. 2006).

3. The date of the fail 2003 election is unclear from the record.

38a

the Tribe, acting under the leadership of the Bear

Council, breacked a contract and asks the court to

bar the Tribe’s lawsuit in the Tribal Court. Addi-

tionally, API asks the court to compel arbitration.

On November 15, 2005, the court entered an Or-

der (docket no. 24). The court stayed the instant ac-

tion pending exhaustion of remedies in the Tribal

Court.

D. Tribal Court Considers Jurisdiction Issue

On March 26, 2008, the Tribal Court entered an

order (“Tribal Court Order’) (docket no. 48-5, Ex. 7)

in which it denied API’s motion to dismiss. The

Tribal Court concluded it could exercise civil juris

diction over API.

On December 23, 2008, the Appellate Court of the

Sac & Fox Tribe of the Mississippi in Iowa (“Tribal

Court of Appeals”) affirmed the Tribal Court. Tribal

Court of Appeals Order (docket no. 48-5, Ex. 8).

On January 20, 2009, the Tribal Court stayed its

proceedings pending this court’s resolution of issues

related to the Tribal Court’s exercise of civil jurisdic-

tion over API.

EK. API Appeals Tribal Court Decision to Fed-

eral District Court

On January 2, 2009, API filed a Motion to Reopen

(docket no. 37) in the instant action. On January 7,

2009, the court granted the Motion to Reopen

(docket no. 41) and lifted its stay.

On January 27, 2009, the Tribe filed an Answer

(docket no. 49) in which it denies the substance of

the Complaint and alleges that the court lacks sub-

ject matter jurisdiction over this action. That same

date, the Tribe filed its Motion to Dismiss.

39a

On March 1, 2009, API filed the Summary Judg-

ment Motion. The Summary Judgment Motion also

contains a resistance to the Motion to Dismiss. On

March 11, 2009, the Tribe filed a Reply (docket no.

69) in support of its Motion to Dismiss. On Apri 2,

2009, the Tribe filed a Resistance (docket no. 74) to

the Summary Judgment Motion. On April 13, 2009,

API filed a Reply (docket no. 77-2) in support of its

Summary Judgment Motion. On May 8, 2009, the

Tribe filed a corrected version of its Resistance to the

Summary Judgment Motion (docket no. 86).

API requests oral argument on the Motion to Dis-

miss and the Summary Judgment Motion (together,

“Motions”). The court finds oral argument is not nec-

essary. The Motions are fully submitted and ready

for decision.

lil. RELEVANT FACTUAL BACKGROUND

A. Parties

API is a security services corporation with its

principal place of business in Wisconsin. The Tribe is

a federally recognized Indian Tribe whose members

live on the Meskwaki Settlement (“Settlement”) in

Tama County, lowa. The Tribe owns the Mes waki

Bingo: Casino: Hotel (“Casino”) under a state-tribal

compact with the State of Iowa. See In re Sac & Fox

Tribe of the Miss. of lowa/Meskweki Casino Litig.,

340 F.3d 749, 751 (8th Cir. 2008).

B. Casino

The Casino is the Tribe’s “economic engine” and

is located on the Settlement. Tribal Court of Appeals

Order at 16. The National Indian Gaming Commis-

sion (“NIGC”) regulates the Casino.

40a

C. Dispute

From September 2002 through the fall of 2008,

the Tribe was embroiled in the intra-tribal govern-

mental dispute discussed above. The Bear Council

ultimately prevailed over the Walker Council. The

Bear Council has retained control of the Tribe’s gov-

ernment and the Casino during the pendency of the

instant action.

D. Agreement

In June of 2003, after the Bear Council had been

elected in the May 2003 elections, the Walker Coun-

cil continued to try to do business on behalf of the

Tribe. On June 16, 2003, the Walker Council pur-

ported to enter into an agreement with API on behalf

of the Tribe (“Agreement”) (docket no. 2-2, Ex. A).

The Agreement purported to engage API on behalf of

the Tribe for “investigation, security and law en-

forcement consulting services/.]” Agreement at 1.

More specifically, the Agreement stated API would

“perform services directly relating to the investiga-

tion of a takeover by dissidents at the [Casino] ” in-

vestigate “individuals involved in the unlawful © cts

oy t the Tribal Government” and “[i]nvestigate

alr_jations of unlawful acts and tribal policy viola-

tions of the dissident group involving Tribal funds[ ]

and gaming operations.” Jd. at 1-2.

The Agreement contained an arbitration clause.

The arbitration clause states, in relevant part:

i. The parties shall make efforts to settle through

dialogue and negotiation any disputes that may

arise out of this Agreement. However, should

such efforts fail after thirty (80) days, the dispute

shall be submitted to arbitration, which shall be

conducted in Des Moines, lowa, in accordance

4la

with the Commercial Arbitration Rules of the

American Arbitration Association. The arbitra-

tion shall be heard before one arbitrator chosen

by consensus of the parties. If the parties cannot

mutually agree on an arbitrator, the arbitrator

shall be chosen in accordance with the Rules of

the American Arbitration Association. The deci-

sion of the arbitrator shall be final and binding

upon the parties.

ll. [ ... ] Judgment on the award of the arbitrator

may be entered by the Federal District Court for

the Northern District of Iowa under the Federal

Arbitration Act or [an] lowa state court pursuant

to lowa law. For this purpose, the Tribe and API

hereby irrevocably consent to the jurisdiction

over their persons of such courts for such pur-

pose, including to enter judgment on an arbitra-

tion award, and waive any defense based on im-

proper venue, inconvenient venue, or lack of per-

sonal jurisdiction.

ui. The failure of any party to submit voluntarily

to arbitration shall be deemed to be a breach of

this Agreement. Provided, that if either party has

a good faith position that a dispute does not arise

under this Agreement, that party may file an ac-

tion in the Federal District Court for the North-

ern District of Iowa, or the lowa state courts, to

determine whether the dispute is the proper sub-

ject of arbitration under this Agreement.

Id. at 5.

At the time API executed the Agreement, it was

under the impression that the Walker Council was

the Tribe’s true governing body. However, API was

incorrect. On March 26, 2008, the Tribal Court held

42a

the Walker Council had no authority to enter into

the Agreement on behalf of the Tribe because the

Bear Council had exclusive governing power over the

Tribe at the time the Agreement was executed. The

Tribal Court held that, consequently, the Agreement

was invalid and unenforceable against the Tribe.

This decision was affirmed by the Tribal Court of

Appeals.

E. Bear Council’s Communications with Fed-

eral Agencies

Hereditary Chief Old Bear and others communi-

cated with various federal agencies regarding the

newly installed Bear Council. However, these federal

agencies refused to recognize the Bear Council for

purposes of gaming activities and other federal mat-

ters until after the second election in the fall of 2003.

Kor instance, on March 17, 20U3, Hereditary Chief

Old Bear received a letter from the United States

Department of the Interior Bureau of Indian Affairs

(“BIA”) in which the BIA stated it could not involve

itself in the dispute over whether the Walker Coun-

cil or Bear Council was the Tribe’s true governing

council. In this letter, the BIA also indicated that it

recognized the Walker Council as the Tribe’s govern-

ing body. On April 1, 2003, Hereditary Chief Old

Bear received a letter from the United States De-

partment of the Interior Office of the Secretary

(“Secretary”) in which the Secretary stated it contin-

ued to recognize the Walker Council as the Tribe’s

official leadership. On May 9, 2003, Hereditary Chief

Old Bear received a letter from the BIA stating it

continued to recognize the Walker Council as the

governing Tribal avthority. On May 23, 2003, He-

reditary Chief Old 'ear received a letter from the

Secretary stating that, because the May 22, 2003

43a

election had not been held in accordance with tribal

law, the Department would not recognize the results

of that election.

F. API Raids the Casino

On October 1, 2003, API raided the Casino pur-

suant to the Agreement with the Walker Council and

without authority from the Bear Council. At the time

of the raid, the Bear Council had governing control

over the Casino. Approximately thirty individuals

associated with API stormed the Casino. Many were

armed with batons. At least one individual affiliated

with API had a firearm. The Tribe alleges API seized

tribal property, assaulted and falsely imprisoned

Tribe members and employees, intentionally dam-

aged Tribal property and misappropriated the

Tribe’s trade secrets. Additionally, API took contro}

of the Tribe’s gaming information, including the

Tribe’s financial records, surveillance, ongoing gam-

ing investigations, personne] files and legal files.

IV. ANALYSIS

A. Parties’ Arguments

In the Complaint, API asks the court for a de-

claratory judgment that the Tribal Court may not

exercise civil jurisdiction over API. API alleges the

Tribe breached the Agreement and seeks damages

for the breach.

In its Motion to Dismiss, the Tribe argues the

court must dismiss the instant action because (1) the

court lacks subject matter jurisdiction over the dis-

pute; (2) sovereign immunity bars the Tribe from be-

ing sued in the instant action; and (3) API has failed

to state a claim upon which relief can be granted.

The Tribe also argues the Tribal Court has civil ju-

44a

risdiction over API with respect to the Tribe’s tort

claims.

In its Motion for Summary Judgment, API argues

(1) the court has subject matter jurisdiction over the

Complaint; (2) the Walker Counci! waived the

Tribe’s sovereign immunity in the Agreement pursu-

ant to the arbitration clause; and (3) the Tribal

Court has no civil jurisdiction over API. The court

examines each of these arguments below.

B. Subject Matter Jurisdiction and Sovereign

Immunity

The Tribe argues the court must dismiss the in-

stant action for lack of subject matter jurisdiction

because it “has not waived its sovereign immunity

from this suit.” Brief in Support of Motion to Dismiss

(docket no. 48-2), at 8. The Tribe conflates subject

matter jurisdiction and sovereign immunity. As the

Fighth Circuit Court of Appeals noted,

[S]overeign immunity is jurisdictional in nature.

Sovereign immunity, however, is not of the same

character as subject matter jurisdiction. First of

all, tribal sovereign immunity may be waived in

certain circumstances and is subject to the ple-

nary power of Congress. Lack of subject matter

jurisdiction, on the other hand, may not be

waived. Second, sovereign immunity operates es-

sentially as a party’s possible defense to a cause

of action. In contrast, subject matter jurisdiction

is primary and an absolute stricture on the court.

Finally, a waiver of sovereign immunity cannot

extend a court’s subject matter jurisdiction.

We find, therefore, that sovereign immunity is a

jurisdictional consideration separate from subject

matter jurisdiction|[.]

45a

In re Prairie Island Dakota Sioux, 21 F.3d 302, 304-

05 (8th Cir. 1994) (internal citations omitted); see

also Ninigret Dev. Corp. v. Narragansett Indian We.

tuomuck Hous., 207 F.3d 21, 28 (1st Cir. 2000)

(“[A]lthough tribal sovereign immunity is jurisdic-

tional in nature, consideration of that issue always

must await resolution of the antecedent issue of fed-

eral subject-matter jurisdiction.”). Accordingly, the

court first considers whether it has subject matter

jurisdiction over the instant action and then pro-

ceeds to determine whether sovereign immunity ap

plies.

C. Subject Matter Jurisdiction

The party seeking to establish the court’s subject

matter jurisdiction, API, bears the burden of proving

it. Osborn uv. United States, 918 F.2d 724, 730 (8th

Cir. 1990). API alleges the court has subject matter

jurisdiction over the Tribe under Count I, the re-

quest to bar the Tribal Court’s exercise of civil juris-

diction over API, pursuant to 28 U.S.C. § 1331. API

alleges the court has supplemental jurisdiction over

Count II, its breach of contract claim, pursuant to 28

U.S.C. § 1367(a).4

1. Count I: request for declaratory judgment

The court has federal question subject matter ju-

risdiction over Count I, API’s request for a declara-

tory judgment concerning the Tribal Court’s exercise

4 The Complaint contains a typographical error. In its juris-

dictional statement, API alleges the court derives supplemental

jurisdiction over the breach of contract claim pursuant to “28

U.S.C. § [}1365(a).” Complaint at 4 7. Section 1365(a) governs a

court’s jurisdiction over actions brought by the United States

Senate, not supplemental jurisdiction.

46a

of civil jurisdiction over API. Count I requires the

court to decide whether the Tribal Court may exer-

cise civil jurisdiction over API, a non-Indian. “The

question of whether an Indian tribe has the power to

compel a non-Indian to submit to the civil jurisdic-

tion of a tribal court is a federal question under 28

U.S.C. § 1331.” DeMent v. Oglala Sioux Tribal Court,

874 F.2d 510, 513 (8th Cir. 1989) (citing Nat? Farm-

ers Union, 471 U.S. at 852).

2. Count II: breach of contract

As in other cases, to exercise supplemental juris-

diction over a claim against an Indian tribe, “the

‘claims within the action’ must ‘derive from a com-

mon nucleus of operative fact.” Auto-Owners Ins. Co.

v. Tribal Court of Spirit Lake Indian Reservation,

495 F.3d 1017, 1024 (8th Cir. 2007) (quoting Myers

v. Richland County, 429 F.3d 740, 745 (8th Cir.

2005)); see also Wisconsin v. Ho-Chunk Nation, 512

F.3d 921, 936 (7th Cir. 2008) (exercising supplemen-

tal jurisdiction over plaintiffs state law contract

claim against a tribe in Indian Gaming Regulatory

Act case). “A plaintiff's claims derive from a common

nucleus of operative fact if the ‘claims are such that

[the plaintiff} would ordinarily be expected to try

them all in one judicial proceeding.” OnePoint Solu-

tions, LLC v. Borchert, 486 F.3d 342, 350 (8th Cir.

2007) (quoting United Mine Workers of Am. v. Gibbs,

383 U.S. 715, 725, 86 S. Ct. 1130, 16 L.Ed.2d 218

(1966)).

The torts forming the basis of the Tribe’s claims

against API are all rooted in the Agreement, because

API raided the Casino pursuant to its terms. The

court is satisfied that API's claims arise from a

common nucleus of operative fact. Therefore, the

t/a

court shall exercise supplemental jurisdiction over

Count Il

D. Sovereign Immunity

Next, the court turns to consider whether sover

eign immunity bars the court’s exercise of jurisdic

tion in this case. “While federal jurisdiction exists |

... ], [a tribe]’s sovereign immunity [may] still bar| |

claims from being brought against it unless [its] im

munity has been waived by the tribe or unequive

cally abrogated by Congress.” Ho-Chunk Nation, 512

F.3d at 936 (internal quotation marks omitted). “It is

well settled ‘that Indian tribes possess the same

common-law immunity from suit treditionally en

joyed by sovereign powers.” Mo. River Servs., Inc. '

Omaha Tribe of Neb., 267 F.3d 848, 852 (8th Cir

2001) (quoting Val-U Constr. Co. v. Rosebud Sioux

Tribe, 146 F.3d 573, 576 (8th Cir. 1998)). “[A] tribe

may waive its immunity, but ‘a tribe’s waiver must

be “clear.”” Id. (quoting C & L Enters., Inc. v. Citizen

Band Potawatomi Indian Tribe of Okla., 532 U.S

411, 418, 121 5. Ct. 1589, 149 L.Ed.2d 623 (2001)). A

tribe may waive its immunity in an arbitration

agreement. /d

The Tribe argues sovereign immunity bars the

court from adjudicating both Count | and Count II

The court examines the application of the doctrine of

sovereign immunity as to each count separately

1. Count I: request for declaratory judgment

The Tribe argues that sovereign immunity bars

Count I, that is, API’s request for a declaratory judg

ment concerning the propriety of the Tribal Court’:

exercise of civil jurisdiction over API

-

48a

Although there do nui appear to be any cases dis-

cussing whether sovereign immunity bars a federal

district court from considering this issue, controlling

precedent clearly presumes that sovereign immunity

does not bar a district court from reviewing a tribal

court’s decision to exercise civil jurisdiction over a

non-member. See, e.g., Bruce H. Lien, 93 F.3d at

1421 (‘7F[T)he tribal courts themselves are given the

first opportunity to address their [civil] jurisdiction

and explain the basis (or lack thereof) to the parties.

As a jurisdictional inquiry, appeal of this issue may

be had in the federal district court.”) (internal cita-

tions omitted) (emphasis added); Duncan Energy, 27

F.3d at 1300 (8th Cir. 1994) (“Once tribal court

remedies have been exhausted, altjribal [cJourt’s de-

termination of tribal [civil] jurisdiction may be re-

viewed in the federal district court.”) (citing /Jowa

Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 19, 107 5S, Ct.

971, 94 L.Ed.2d 10 (1987)). The court also notes that,

if sovereign immunity barred this claim, then no

federal district court could consider this issue. The

wealth of federal case law concerning tribal court

civil jurisdiction over non-members demonstrates

that sovereign immunity does not bar a district court

from considering this matter.

To be sure, principles of sovereign immunity pre-

vent a federal district court from considering this

question before a tribal court has considered it, In

November of 2005, this court stayed the instant ac-

tion because the parties had not exhausted Tribal!

Court remedies concerning the Tribal Court's exer-

cise of civil jurisdiction over API. API v. Sac & Fox

Tribe of the Miss. in lowa, 401 F.Supp.2d 952, 958

(N.D. Iowa 2005) (Reade, C.J.). In doing so, the court

recognized that “the examination of tribal sover-

eignty and jurisdiction should be conducted in the

49a

first instance by the tribal court itselff.]" Duncan

Energy Co. v. Three Affiliated Tribes of Fort Berthold

Reservation, 27 F.3d 1294, 1299 (8th Cir. 1994): see

also LaPlante, 480 U.S. at 16 (applying exhaustion

rule to diversity cases and holding a federal court

should “stay its hand in order to give the tribal court

a full opportunity to determine its own jurisdiction”

(anternal quotation marks omitted)).

As discussed above, the parties have exhausted

Tribal Court remedies on the civil jurisdiction issue.

The Tribal Court found that its exercise of civil ju-

risdiction over API was proper. The Tribal Court of

Appeals affirmed that decision. Because the civil ju

risdiction question has been fully exhausted in the

Tribal Court system, sovereign immunity does not

bar the court’s consideration of this issue.

In conclusion, the court finds that sovereign im

munity does not bar Count I

2. Count Il: breach of contract

Next, the court turns to consider whether sover

eign immunity bars Count II, API’s breach of con-

tract claim. API argues the Walker Council waived

the Tribe’s sovereign immunity as to Count II when

the Walker Council entered into the Agreement con

taining the arbitration clause on behalf of the Tribe.

Absent waiver by a tribe or action by Congress,

“It]Imbes enjoy immunity from suits on contracts,

whether those contracts involve povernmental or

commercial activities and whether they were made

on or off a reservation.” Kiowa Tribe of Okla. v. Mfg.

Tech., Inc., 523 U.S. 751, 760, 118 S. Ct. 1700, 140

L.id.2d 981 (1998). A tribe’s consent to arbitration

may operate as a waiver of its sovereign immunity.

C&L Enters., 532 U.S. at 423.

’

5Oa

The validity of the Agreement turns on whether

the Walker Council was the governing body of the

Tribe at the time the Agreement was executed. As

the court previously noted, the question over the

Tnbe’s true governing body is an intra-tribal dispute

and not subject to the court’s jurisdiction. APT, 401

IK Supp.2d at 961 (citing Longie v. Spurit Lake Tribe,

400 F.3d 586, 589 (8th Cir .2005) (explaining that

federal courts should refrain from exercising juris

diction pursuant to 28 U.S.C. § 1331 when the case

involves an intra-tribal dispute)); In re Sac & Fox

Tribe, 340 F.3d at 766 (affirming this court’s decision

that it lacked subject matter jurisdiction to resolve

an intra-tribal Jeadership dispute).

The Tribal Court determined the Walker Council

was not the governing body at the time the Agree-

ment was executed and that the Agreement was

therefore not binding. Accordingly, the court defers

to the Tribal Court’s finding that the Agreement. is

not valid and finds any waiver of sovereign immu-

nity in the Agreement. to be ultra vires. See Prescott

v. Little Six, Ine., 387 F.3d 753, 756-57 (8th Cir.

2004) (“|Wle defer to the tribal courts’ interpretation

of tribal law.”).

API argues the Tribal Court’s determination that

the Agreement is invalid has no bearing on the

Walker Council’s ability to waive the Tribe’s sover-

eign immunity. The court disagrees. The Kighth Cir-

cult Court of Appeals has held a challenge to the va-

lidity of a contract with a tribe “calls into question

all provisions contained therein (including provisions

relating to arbitration, sovereign immunity, and fed-

eral district court jurisdiction).” Bruce H. Lien Co.,

93 F.3d at 1417. If the Walker Council was not au-

thorized to enter into the Agreement, then it follows

5la

that it was not authorized to waive the Tribe's sover

elgn immunity pursuant to the arbitration clause

contained in the Agreement. /d.; see also 42 C.dS.

Indians § 22 (Online ed. 2008) (“A tribal official can-

not waive the tribe’s immunity unless authorized to

do so by tribal law.”). The Tribal Court held the

Walker Council was not the Tribe’s governing body

at the time the Walker Council purported to enter

into the Apreement and waive the Tribe’s sovereign

immunity through the arbitration clause. API pre

sents no other evidence that the Tribe waived its

sovereign immunity. Accordingly, the court finds the

Tribe did not waive its sovereign immunity to be

sued for breach of the Agreement in this court. As a

result, the Tribe’s sovereign immunity bars API from

bringing its breach of contract claim in this court.

This holding is limited in scope to Count II, the

breach of contract claim. As set forth above, sover-

eign immunity does not bar the court from consider-

ing Count I, the request for a declaratory judgment

concerning the Tribal Court’s exercise of civil juris

diction over API.

Because sovereign immunity bars the court’s consideration

of API's breach of contract claim, it need not address the Tribe's

alternative argument that API’s breach of contract claim fails

to state a claim upon which rehef can be granted.

6 API argues a provision in the Code of Federal Regulations,

25 C.FLR. § 83.2 (2009), supports its argument that the Tribe

waived its sovereign immunity in the Agreement. Section 83.2

states that when the BIA acknowledyes a tribe’s existence, the

recognized tribe “is entitled to the immunities and privileges

available to other federally acknowledged Indian tribes by vir

tue of their government-to-povernment relationship with the

United States as well as the responsibilities, powers, limita-

tions and obligations of such tribes.” 25 C.FLR. § 83.2. API in

(footnote continued on next page)

mS),

OLA

In the court's view, API misapprehends the pur

pose of § 83.2, which 1s “to establish a departmental

procedure and policy for acknowledging that certain

American Indian groups exist as tribes.” See 25

C.F.R. § 83.2. This regulation does not give an inva-

lid tribal council the power to waive a tribe’s sover

eign immunity simply because it 1s recognized as a

tribe’s governing body by the BIA. Moreover, as with

other sovereign nations, sovereign immunity mnheres

to a tribe as a nation-not to a coalition of tribe mem

bers purporting to act as a tribe’s governing author

ity. See Ninigret Dev., 207 F.3d at 29 (noting a tribe's

“sovereign immunity predates the birth of the Re

public” and “rests on the status of Indian tribes as

autonomous political entities, retaining their orign

nal natural rights with regard to self-governance’)

(internal quotation marks omitted).

EK. Tribal Court’s Jurisdiction Over API

Next, the court turns to consider whether the

Tribal Court may exercise civil jurisdiction over AP]

with respect to the Tribe's tort. claims in hght of the

fact that APL is a non-Indian third party. Generally,

a tribe may not exercise civil jurisdiction over non

Indian third parties. See Montana v. United States,

450 U.S. 544, 565, 101 S. Ct. 1245, 67 L.Ed.2d 493

(1981). There are two exceptions to this general rule.

Kirst, “[a] tribe may regulate, through taxation, h

censing, or other means, the activities of nonmem

sists the BIA’s acknowledgment that the Walker Council was

the Tmbe’s governing council at the time the Avreement was

executed “vested the Walker Council with power over the

Tribe’s federal sovereign immunity.” Brief in Support of Motion

for Summary Judgment (docket no. 63), at 19. API cites no au

thority for this interpretation of § 83.2

58a

bers who enter consensual relationships with the

tribe or its members, through commercial dealing,

contracts, leases, or other arrangements.” Jd. See-

ond, a tribe has civil jurisdiction over non-Indians

when a non-Indian engages in conduct on tribal land

that “threatens or has some direct effect on the po-

litical integrity, the economic security, or the health

and welfare of the trmbe.” /d. at 566. “These excep-

tions are limited ones, and cannot be construed in a

manner that would swallow the rule or severely

shrink it[.]” Plains Commerce Bank v. Long Family

Land & Cattle Co., --- U.S. ----, ----, 128 S. Ct. 2709,

2720, 171 L.Ed.2d 457 (2008) (internal citations and

quotation marks omitted). A tribal court must first

examine whether it has civil jurisdiction over a non-

Indian, and, after the tribal court completes its ex-

amination, a district court has federal question ju

risdiction to review whether a tribal court has ex

ceeded the lawful limits of its jurisdiction. Nat

Farmers, 471 U.S. at 856.7

7 The Tribal Court of Appeals drew an unusual distinction

between tortious nonmember conduct on fee land and tortious

nonmember conduct on trust land; namely, that Montana ap-

plies only to tribal fee lands, not tribal trust. lands. The ‘Tribal

Court of Appeals concluded that, because the Casino is on trust

land rather than fee land, Montana should not apply, and, con

sequently, the “Tnbe retain[ed] presumptive civil jurisdiction”

over API. Tribal Court of Appeals Order at 16 (emphasis in

original). API challenges this conclusion. After concluding Mon

tana did not apply, however, the Tribal Court of Appeals ap

plied the traditional Montana analysis and concluded in the

alternative that, even if Montana applied, the Tribal Court had

jurisdiction over APT under Montana. As set forth below, the

court agrees with the Tribal Court of Appeals’s alternate con-

clusion. Accordingly, the court need not consider whether Mon-

(footnote continued on next page)

o4a

1. Protective prong

The Tribe (Bear) argues the Tribal Court has civil

jurisdiction over API under the protective prong of

the Montana exception: “A tribe may [| ... ] retain in

herent power to exercise civil authority over the con

duct of non-Indians on fee lands within its reserva

tion when that conduct threatens or has some direct

effect on the political integrity, the economic secu

rity, or the health or welfare of the tribe.” Montana,

450 U.S. at 566. “The conduct must do more than in

jure the tribe, it must ‘imperil the subsistence’ of the

tribal community.” Plains Commerce, 128 S. Ct. at

2727 (quoting Montana, 450 U.S. at 566). “]T]he ele-

vated threshold for application of [this] Montana ex-

ception suggests that tribal power must be necessary

to avert catastrophic consequences.” 7d. (quoting F.

Cohen, Handbook of Federal Indian Law § 4.02[3]|[c]

at 232, n. 220 (2005 ed.)). Federal courts recognize

that “it can be argued that torts committed by or

against Indians on Indian land always threaten or

have some direct. effect on the political integrity, the

economic security, or the health or welfare of the

tribe.” Philip Morris USA, Inc. v. King Mtn. Tobacco

Co., Inc., 552 F.3d 1098, 1109 (9th Cir. 2009) (nter-

nal quotation marks omitted). Accordingly, a federal

district court should bear in mind that the “general-

ized threat that torts by or against its members pose

for any society[ |] is not what the [protective] Mon-

tana exception is intended to capture.” Jd. (citing At-

kinson Trading Co., Inc. v. Shirley, 532 U.S. 645, 657

n. 12, 121 8S. Ct. 1825, 149 L.Ed.2d 889 (2001) (‘Mon

tana ‘s second exception can be misperceived. The

tana applies to Tribal land held in trust because the Trnbal

Court’s civil jurisdiction over API is proper in any event.

55a

exception is only triggered by nonmember conduct

that threatens the Indian tribe; it does not broadly

permit the exercise of civil authority wherever it

might be considered necessary to self-government.”)

(emphasis in original)). Instead, Montana ‘s protec-

tive exception “envisions situations where the con

duct of the nonmember poses a direct threat to tribal

sovereignty.” Id. (citing Atkinson, 532 U.S. at 657 n

12).

The court agrees with the Tribe’s assessment that

“[a] case more suitable for application of the ‘protec-

tive’ prong can scarcely be imagined.” See Tribe’s Re-

sistance Brief (docket no. 86-3), at 17. APs conduct

had a “direct effect” on both the political integrity

and the economic security of the Tribe. Montana, 450

U.S. at 566. And, API’s conduct did more than injure

the Tmbe-it “imperil[ed]” its subsistence. Plains

Commerce, 128 S.Ct. 2727. The court examines

API's impact on the Tribe’s political integrity and

economic security, 1n turn.

i. Political integrity

APIs conduct imperiled the Tribe’s political in-

tegrity. In essence, API invaded the Tribe’s land to

quell an intra-tribal governmental dispute. API ar

gues this intra-tribal dispute was merely incidental

to the raid. API contends that, if the court finds the

raid imperiled the Tribe’s political integrity, any ac-

tion taken by a non-member on tribal land during an

intra-tribal governmental dispute would justify a

court’s invocation of the second Montana exception.

The court disagrees. API’s actions were made and

intended to be a direct challenge to the Bear Council.

API raided the Casine on behalf of the Walker Coun-

cil, which was not th» Tribe’s true governing author-

ity. API conducted the raid pursuant to the Agree

56a

ment, and the Agreement’s terms indicate the ser

vices API was expected to provide related directly to

the Tribe’s governmental affairs. See Agreement at 4]

1.2.A (stating API “shall perform services directly re

lating to the investigation of a takeover by dissidents

at the [Casino] located on the ‘Tribe’s reservation

lands” and “[liJnvestigat{e] [ ... | individuals involved

in the unlawful acts against the Tribal Govern

ment”). In other words, API was hired to assist in

the resolution of an intra-tribal governmental dis

pute, which strikes at the heart of the second Mon

tana exception. The fact API believed it was operat:

ing with the consent of the Tribe’s governing author

ity, that is, the ousted Walker Council, has no effect

on the application of this exception. In truth and in

fact, API raided the Casino specifically to weaken

one side of an intra-tribal governmental dispute,

which happened to be the Bear Council, the ‘Tribe's

true governing body. This is an act with potentially

catastrophic consequences to the Tribe's govern

ment. The court concludes this merits the applica

tion of the protective prong of the Montana exception

and that the Tribal Court’s exercise of civil jurisdic

tion over API was proper.

ii. Economic security

APIs conduct also imperiled the Tribe’s economic

security. The center of API’s activity was the raid of

the Casino, which is the Tribe’s economic hub. As the

Tribal Court of Appeals noted, the Casino “is the

Tribe’s economic engine, and is where some of the

‘Tribe’s most sensitive documents are kept. It was

precisely these things over which API sought control,

on behalf of the Walker Council.” ‘Tribal Appeals

Court Order at 16. The Tribe’s economic viability

turns on the Casino's operations, and API sought to

er,

Jia

wrest control of the Casino out of the hands of the

Tribe’s true governing body, the Bear Council, and

into the hands of the Walker Council. The fact API

believed it was operating pursuant to the Tribe’s au

thority does not change the fact that API forcefully

and intentionally compromised the Tribe’s economic

center. The court finds API's raid of the Casino had

potentially catastrophic consequences to the Tribe’s

continuing economic security.

API argues the Casino was not operating at the

time the raid occurred, thereby diminishing the eco-

nomic instability the raid created. Even so, the raid

of the Casino had potentially catastrophic conse-

quences to the ‘Tribe. API sought to transfer control

of the Casino to Tribe members who were without

authority to manage and operate the Casino. API

also misappropriated Casino trade secrets. These

and other acts had a potentially devastating impact

on the continuing viability of the Casino, whether or

not it was operating at the time of the raid.

ili. Cases applying protective prong

The cases in which courts have applied the sec-

ond Montana exception are aligned with the instant

action.

In Babbitt Ford, Inc. v. Navajo Indian Tribe, the

Ninth Circuit Court of Appeals held the protective

prong of Montana’s jurisdictional exception applied

to an automobile company’s repossession of a vehicle

on tribal land. 710 F.2d 587, 593 (9th Cir. 1983). The

Babbitt court reasoned this conduct had a direct ef-

fect on the tribe’s health and welfare because

“Irjepossession of an automobile has the potential to

leave a tribfe] member stranded miles from his or

her nearest neighbor” and “repossession without the

58a

consent of the tribe member also may escalate into

violence, particularly if others join the affray.” Jd.

In Fry v. Colville Tribal Court of the Confederated

Tribes of the Colville Reservation, a district court ap

plied the second Montana exception due to a stipu-

lated judgment designating jurisdiction in the tribal

court because “the nonmember defendant put the po-

litical integrity of the tribe and the tribal court at

issue in any failure to abide by the terms of the

judgment.” No. CV-07-0178-EFS, 2007 WL 2405002,

*3 (E.D. Wash. Aug.17, 2007). The judgment at issue

provided for the disposition of a significant amount

of real and personal property within tribal bounda

ries. Id.

In Elliot v. White Mountain Apache Tribal Court,

a district court held the second Montana exception

likely applied because a non-member’s conduct

caused a fire that burnt a great deal of timber on the

tribe’s land. No. CIV 05-4240-PCT-MHM, 2006 WL

3533147, *5 (D. Ariz. Dec.6, 2006). The court held

this impacted the tribe’s ability to use its own land.

Id. The court reasoned the non-member’s conduct

“threaten[ed] the economic security of the tribe

based upon the interference of the use of the tribe’s

land and timber and the overall welfare of the tribe

as such resources are material to the tribe’s stabil-

ity.” Id.

In Cheromiah v. United States, a district court

applied the second Montana exception in a case 1n-

volving a medical malpractice claim against a medi-

cal services provider. 5& F. Supp. 2d 1295, 1305

(D.N.M.1999). The hospital “provide[d] the only

western medical care most [...] Tribe members re-

ceive[d].” Jd. The court held “[mJalpractice by the

major medical provider to the Tribe has a significant

59a

impact on ‘the right of reservation Indians to make

their own laws and be ruled by them’ as it may jeop-

ardize their very ability to survive as a people.” /d.

(quoting Strate v. A-1 Contractors, 520 U.S. 438, 458,

1178. Ct. 1404, 137 L.Ed.2d 661 (1997)).

In summary, the court finds that the second Mon

tana exception applies and that the Tribal Court's

exercise of civil jurisdiction over API was proper

2. Consent prong

The Tribe also argues the Tribal Court has civil

jurisdiction over API under the consent prong of the

Montana analysis. Because the court has already

found the Tribal Court’s exercise of civil jurisdiction

over API was proper under the protective prong of

the Montana exceptions, the court need not address

this issue. The court notes, however, that both the

Tribal Court and Tribal Court of Appeals declined to

apply this Montana exception. This court would do

the same. See, e.g., Montana, 450 U.S. at 565 (“A

tribe may regulate, through taxation, licensing, or

other means, the activities of nonmembers who enter

consensual relationships with the tribe or its mem-

bers, through commercial dealing, contracts, leases,

or other arrangements.”).

3. Miscellaneous arguments

API argues that two other factors bar the Tribal

Court from exercising civil jurisdiction over API: (1)

25 C.F.R. § 83.2 and (2) the arbitration clause. The

court addresses these arguments, in turn.

i. Section 83.2

API argues that the question of whether the

Walker Council had authority to enter into the

Agreement and choose arbitration for dispute resolu

60a

tion is a matter of federal law, not tribal law. API

claims the question of who “the ‘true’ governing

council of a tribe for tribal issues is simply irrelevant

to the federal issue of who can waive the tribe’s sov-

ereign immunity and agree to resolve disputes in a

non-tribal forum.” API Summary Judgment Motion

Br. at 17 (emphases in original). In support of this

argument, API cites 25 C.F.R. § 83.2, the regulation

discussed above that gives rise to federal recognition

of Indian tribes. API contends that, because the BIA

and NIGC recognized the Walker Council as the gov-

erning body of the Tribe under § 83.2, this recogni-

tion attributed federal powers to the Walker Council,

including the federal power to waive sovereign i1m-

munity through an arbitration clause.

For the same reasons discussed above, the court

finds § 83.2 is inapplicable. As the Tribal Court of

Appeals held, “[t]Jhe BIA recognition process exists

for the benefit of the federal-tribal relationship, not

to give disappointed third parties an authority

higher than the tribe as to tribal law.” Tribal Court

of Appeals Order at 9. The Tribal Court found the

Walker Council was without authority to enter into

the Agreement. The Walker Council was therefore

without the authority to bind the Tribe to the arbi-

tration clause in the Agreement. The court will not

apply § 83.2 to void the Tribal Court’s finding on the

Tribe’s intra-tribal governmental dispute or its effect

on the Agreement.

API argues that, if the court does not interpret

and apply § 83.2 in the manner it suggests, “[a]ny

private business doing business with a tribe during

an intra-tribal leadership dispute would run the risk

of its [a]greement being voided by subsequent events

beyond its control when a new tmbal council came

bla

into power.” API Summary Judgment Br. at 22. The

court recognizes this risk; however, this 1s a risk API

chose to take. As the Tribal Court of Appeals noted,

a “chilling effect” on a nonmember’s negotiation with

a tribe may be “inevitable” given the possibility of

intra-tribal disputes. Tribal Court of Appeals Order

at 10. However, “businesses that choose to work with

an affirmatively ousted tribal council are taking a

substantial risk. They ought not be heard [to] com

plain when the gamble fails.” /d. (emphasis in origi-

nal). The court concludes the unique set of facts giv

ing rise to the Tribal Court’s civil jurisdiction is un

usual and appropriate for Montana’s rarely applied

protective exception

ii. Arbitration clause

API’s argument that the arbitration clause in thi

Agreement bars the Tribal Court from exercising

civil jurisdiction is a non-starter. As the court noted

in its earlier decision

Before the arbitration clause in the Agreement

can be enforced, a court must determine whether

the Agreement is valid. If (the Walker Council]

had authority to enter into the Agreement and it

was validly formed, then, the court agrees that

the arbitration clause should be enforced. If,

however, on the other hand, [the Walker Council]

was without authority to enter into the Agree

ment on behalf of the Tmbe and the Agreement i:

found to be an invalid and unenforceable con

tract, the provisions of the contract, including the

arbitration clause, cannot be enforced.

Attorneys Process, 401 F. Supp. 2d at 961. The

Tribal Court found the Agreement is void. The arbi

tration clause contained in the Agreement is there

fore unenforceable. /d.; see also Bruce H. Lien Co., 9

F.3d 1417 (noting a challenge to the validity of a con

tract with a tmbe also challenges the validity of an

arbitration agreement in the contract). The arbitra

tion clause cannot operate to bar the Tribal Court

from exercising civil jurisdiction over API becauss

,

he Bear Council never agreed t

In ummary. the court conclud the riba

Court exercise of civil jurisdiction over API 1

pI pe!

V. CONCLUSION

In heght f the foregoing. IT IS ORDERED

THAT:

(1) ‘The Moti m tw Dism) docket no |

GRANTED:

(2) The Summary Judgment Motion (docket

63) is DENIED; and

(3) The Complaint (docket no. 2) is DISMISSED.

The Clerk of Court is DIRECTED to close tl!

(a te

‘TIS SO ORDERED

63a

APPELLATE COURT OF THE

SAC & FOX TRIBE OF THE MISSISSIPPI IN

IOWA

sac and Fox Tribe of the Mississippi in Towa,

Plaintiff,

Attorney's Process and Investigation Services, Inc

Defendant

Case No. API-CV-APP-2008-02-124

MEMORANDUM AND ORDER

I. Background

This appeal arises from a dispute regarding the

validity of a contract drat the embattled former Sa

& Fox Tribe of the Mississippi in lowa’s (the

“Tribe’s’) Tribal Council, the “Walker Council,” al

legedly entered on behalf of the Tribe with a non

member security services company, Defendant At

torneys Process and Investigation Service, In¢

(“API”). The Tribe filed a complaint in Tribal Court,

making a variety of tort claims against API, basing

its argument in part on the fact that the contract

was invalid because the Walker Council bad no au

therity to enter it. The Tribe argued that by the

time the Walker Council purported to enter the con

tract, the tribal membership had ousted the Walker

Council, and API was aware of the ouster. The Tribe

therefore made various tort claims and sought reim

bursement for all money paid under the contract

API moved to dismiss, mainly arguing that the

Tribal Court lacked subject matter jurisdiction over

64a

it, and that the contract was valid, requiring arbitra

tion of any disputes. On March 26, 2008, the Tribal

Court. held that it had subject matter jurisdiction

over API and that the contract was, indeed, invalid,

and API appealed (the “Tribal Court Order”). The

material facts and procedural posture are as follows.

A. Walker Council’s refusal in act on

recall petitions.

As of September 2002, the popularly-elected,

seven-member Tribal Council included Alexander

Walker, Jr., Frank Wallace, Jr., Aaron Walker, Lyle

Walker, Vern Jefferson, Talbert Davenport, Sr., and

Calvin Johnson, Sr. See Tribal Court Order at 3 4 2.

On September 26, 2002, the Walker Council received

recall petitions for all seven members, which com

plied with constitutional requirements for validity,

in that they contained signatures of more than thirty

percent of eligible voters. Jd. at 3 4/4 1-2, citing Art

XII § 1 of the Const. and Bylaws of the Tribe (“Tribal

Coast.”) (authorizing recall petitions). The petitions

stated on their face that they were based on “the

right as provided by Article XII, Section 1, of the

Constitution and By Laws.” Tribe’s App’x at Tab |

(recall petitions for all seven members). On October

10, 2002. the Walker Council ostensibly accepted the

petitions, but never acted on them and failed to set

recall elections. See Tribal Court Order at 3 4] 3, 494

3-4. Almost five months later, on March 4, 2003, the

Walker Council rejected the petitions, which it had

no authority to do.! Jd. at3 94,494

While the Walker Council later claimed that there were

defects in two of the petition signatures, it did not make this

assertion until May 2002 see Tribal Court Order at 9 9 18. 10

(footnote continued on next page)

65a

B. Response of Hereditary Chief Old Bear

and Tribal membership.

Also on March 4, the Hereditary Chief Charles

Old Bear took action to appoint an entirely different

interim Tribal Council, including Homer Bear, Jr.,

Wayne Pushetonequa, Harvey Davenport, Jr., Ray

Young Bear, Keith Davenport, Deron Ward, and

frank Blackcloud (known as the “Bear Council’)? Id.

at 4 45. On March 26, 2003, at a General Meeting

of the Tribal membership, Hereditary Chief Old

Bear administered the required oaths of office. Jd. at

4 9 7, 5 § 7; see also API App’x at Tab 6, Ix. U-10

(Tribal Council Mtg. Minutes, 3/26/03).

On April 14, 2003, at another General Meeting, a

majority of the eligible voters signed a declaration of

support for Hereditary Chief Old Bear’s actions. See

Tribal Court Order at 5 4] 8; see also Tribe’s App’x at

Tab 6 (Tribal members’ declaration of support); API

App’x at Tab 6, U-15-17 (Gen’l) Mtg. Minutes,

4/14/03). At the top of the sheets was language de-

tailing the purpose of the meeting as follows

44 18-19. Given the de mintmus nature of this defense, the

Tribal Court gave it no weight and this finding did not affect its

conclusions of law. /d. We agree with that assessment

While the Tnbal Court made no findings of fact based upon

a March 8, 2003 letter Chief Bear wrote to “Meskwaki Tribal

Members,” the letter is part of the record and memorializes the

Walker Council's refusal to act on the petitions, the Bureau of

Indian Affairs’s (“BIA's”) deferral to the Tribe to resolve the

leadership dispute internally, the unavailability of a Tmbal

Court at that time to address the dispute, and Hereditary Chief

Old Bear’s actions after reviewing “the Tmbe’s traditional

ways.” See Tribe's App’x at Tab 5. It also appears to bear the

signatures of the members of the new Bear Council. /d

66a

To determine if all members of the

Tribal Council must be recognized as

persons of honor, law abiding, and of

good character. The voting members of

the ‘Tribe shall be the sole judge of

these qualifications.

The [Tribal] Constitution requires in

ARTICLE IV, Sec. 2 that all members of

the Tribal Council must be recognized

as such. We the undersigned voting

members of the Tribe have attempted to

use other provisions of our Constitution

to officially make these decisions about

the qualifications of the elected Tribal

Council. We have been disallowed by

the elected Tribal Council the use of the

constitutional recall procedure

Because the elected Tribal Council ha

denied the use of the Constitution to

the members of the Tribe, we the voting

members of the Tribe, are compelled LO

carry out our constitutional duty to de

termine if all members of the elected

Tribal Council can be recognized a

persons of honor, law abiding, and of

good character

‘T'ribe’s App’x at Tab 6. The sheets went on to state

that where a Tribal Council member was not “a per

son of honor, law abiding, and of good character, hi

position shall terminate immediately upon the final

vote tally.” Jd. The voters who signed this declara

tion represented a majority of the eligible voters,

“overwhelmingly” determining that none of the

67a

seven members of the Walker Council met this stan-

dard. See Tribal Court Order at 5 ¥ 8.

On May 22, 2003, the Tribe also conducted a spe-

cial election to fill the seven Tribal Council Member

positions, and all seven members of the Bear Council

were elected, again by overwhelming majorities. /d.

at 5 § 9,64 9. And although the Tribal Court did

not make findings on this point, the record appears

to show that the Tribe thereafter held an election in

the fall of 2003, and the Bear Council was again con-

firmed in its entirety. See, e.g., Tribe’s Suppl. Hrg.

Br. at 2 (8/25/06) (noting Bureau of Indian Affairs

(“BIA”) recognized results of fail 2003 election).

c. Walker Council's refusal to step down,

entry of API Contract, and APIs al-

leged torts.

At no time before the fall 2003 elections did the

Walker Council stop purporting to conduct business

on behalf of the Tribe. It continued to hold itself out

as the official Tribal Council. On June 16, 2003, af-

ter most of the events described above had occurred

and there were significant questions as to whether

the Walker council had any legitimate authority, the

Walker Council purported to enter into a contract on

behalf of the Tribe with API (the “Contract”). See

Tribal Court Order at 6 4 11. The purpose of the

API Contract was to “determine whether tribal funds

have been misappropriated by those individuals who

have illegally seized control of tribal buildings and

assets,” and API was to “investigate the possible

conversion of tribal funds and any related illegal ac

tivity against the Tribe.” Jd. at 6 {| 10; see also API

App’x at Tab 6, Ex. B (API Contract, 6/16/03). The

Contract contained an arbitration clause that re-

quired any dispute under the Contract to be submit

68a

ted to arbitration in leu of Tribal Court or other

court, and that any arbitration award would be en-

forced in Iowa state or federal court. See Tribal

Court Order at 6 4 13, 7 4 13, 8 4 13.

Between June 30, 2003 and September 30, 2003,

the Tribal Court found (and API did not dispute)

that $1,022,171.26 was transferred from the Tribe to

API. /d. at 6 § 12. The Court’s basis for this num-

ber was the affidavit of the Comptroller of the Tribe,

Ram K. Dhanwada. Jd. This figure represents more

than $11,000 per day for this period of time. The af-

fidavit further included Mr. Dhanwada’s claim that

the transfer “was not authorized by the Tribe.”8 Jd

Despite the Tribe’s demand that API return the

money, claiming it was never authorized by the ac

tual Tribal Council, the Bear Council, it has never

been returned. The Tribe claimed that “the former

tribal leaders who contracted with API [the Walker

Council] were without authority to bind the Tribe,

and that API was sufficiently on notice of the leader

ship dispute existing and prior to and at the time the

Contract was executed, to have actual knowledge

that the former tribal] leaders were without authority

to bind the Tribe.” Tribal Court Order at 1. This

formed the basis of the Tribe’s conversion claim

against API. 7d.

Moreover, the Tribe alleged in its Complaint that

API committed various other torts against the Tribe,

largely associated with events of October 1, 2003.

See Tribal Comp. at 2-6. The Trbe claimed on that

Both parties earlier had stipulated this statement of opin

ion be stricken from the affidavit. See API ate API App’x at

Tab 4(Hrg. T. (7/27/06) at 8 Ins. 13-25, 9 Ins. 1-16)

69a

date that API trespassed in the Tribe’s Community

Center and Casino, which is on trust land within the

Tribe’s reservation (the “Settlement,” in and around

Tama, lowa), and seized Tribal property. Jd. The

Tribe claimed that API “broke in” with “approxi-

mately 30 enforcers,” some of whom “were armed

with batons and one or more was armed with a fire-

arm,” and who “committed unlawful assaults and

batteries and false imprisonments against tribal

members and employees,” amongst other allegations.

Id. at 5 ¥ 32. While there, the Tribe also claimed

API intentionally damaged and destroyed Tribal

property. Jd. at 2 4]§| 7-10.

The Trnbe further alleged that API “obtained and

exercised control over all or nearly all tribal gaming

information and tribal gaming commission informa

tion, including but not lmited to detailed compiled

tribal gaming financial information, information re

yarding the extent and scope of tribal security and

surveillance coverage, information regarding ongo-

ing gaming commission investigations, all personne!

files, all legal files, and devices used to insure the

integrity of the Casino’s operation....” Jd. at 2 4 11, 3

{| 11. This confidential property contained detailed,

sensitive information regarding every aspect of the

gaming operation to which access was restricted,

was stored in secured areas, was subject to various

tribal gaming laws and regulations, included valu

able trade secrets, was protected from disclosure by

confidentiality agreements and policies, and which

would damage the Tribe if disclosed. Jd. at 3 4 13

16, 4 44} 17-19. The Tribe alleged that API received

access to it “only by criminally breaking into and en-

tering the secured areas of the Casino and by the

threat to use armed force and by the use of other

force.” Jd. at 3 4 15. The Tribe claimed it suffered

70a

property damages, and that it would suffer other se

rious damages through any disclosure of this infor

mation. See, e.g., 2 4 10, 4 419.

D. Federal agency position that

Walker Council retained leadership

until at least until fall 2003 elec-

tions.

Before and after the Bear Council was installed

in the spring of 2003, Hereditary Chief Old Bear and

others communicated with various federal agencies

regarding the new Bear Council. See, e.g., Tribal

Court Order at 8 94 13-14, 9 44] 14, 16-17. But these

agencies refused to recognize the Bear Council for

purposes of gaming activities and other federal gov

ernment matters until the fall 2003 elections. Jd. at

8 13 (noting on April 30, 2003 that the National In

dian Gaming Commission (“NIGC”) sent notice of

violation based on continued recognition of Walker

Council on); 9 4 14 (March 14, 2003 letter from Mid

west Regional Director of the BIA refusing to recog

nize Bear Council); 9 4 16 (May 23, 2003 letter from

Secretary of the Intenor in response to request to

certify special election stating that it “was not called

and held in accordance with tribal law and, there

fore, we will not recognize the results of it”); 9 4147

(August 28, 2003 letter from BIA stating 1t continued

to recognize Walker Council). While the record does

not expressly state this, the Secretary of the Intenor

(and, correspondingly, all other federal agencies)

continued to recognize the Walker Council, and ap

parently refused to recognize the Bear Council, for at

7la

least six months after the Hereditary Chief took ac

tion.4

E. Tribal Court case.

In August 2005, the Tribe filed a complaint seek-

ing damages from AP] relating to its tort claims, in-

cluding for conversion of Tribal funds and the Octo

ber 1, 2003 trespass and misappropriation of trade

secrets. See Tribal Court Order at 1.

In September 2005, API moved to dismiss under

Tribal Court Rule C-7(b) (and later submitted an

“Application to Conduct Limited Discovery” under

Rule C-15). This was based in part on its argument

that the Tribal Court’s lacked subject matter juris

diction over API as a nonmember. /d. at 2. In the

alternative, API argued that the Contract was valid

and, therefore, its arbitration clause was binding

upon the Tribe, and no Tribal Court remedy was

avallable. Id

The parties conducted limited discovery, as API

had requested. Jd. at 2-3. This included exchange of

documents and at least one deposition, and the par

ties submitted supplemental briefing and appeared

at a hearing on July 27, 2006. See API's App’x at

Tab 4 (Hrg. T., 7/27/06)

‘ See, &.Z., Tribe's Supp! lirg Br. at 2 (8/25/06) (noting BIA

recognized results of fall 2003 election). The NIGC ultimately

ordered the Tribal Casino closed because it did not yew the

Bear Council as authorized to operate it. See API App’x Tab 6,

Ex. D (NIGC Notice of Violation, 4/30/03); see also In re: Sac &

Fox Tribe of the Mississippi in lowa/Meskwaki Casino Litig.,

340 F.3d 749, 753-55 (8th Cir. 2003) (discussing casino closure

and NIGC action due to non-federally-recognized Bear Council

operating it in place of Walker Council)

7).

iZa

On March 23, 2008, the Trbal Court denied

API’s motion.® See Tribal Court Order at 12 4 1. It

held that it had subject matter jurisdiction under

Section 5-4101, and personal jurisdiction over API

under Section 5-4102 (2)-(8). Tribal Court Order at

10 4 1. It held that the Walker Council violated its

constitutional duty to hold elections once it received

the recall petitions. /d. at 10-11 4 2, citing Tribal

Const. Art. XII, § 1. When the Walker Council abro

gated its duty, the Tribal members “were justified in

approving the exercise of the retained powers of the

Hereditary Chief and Clan Representatives to estab

lish a Tribal Council where all members are recog

nized as persons of honor, law abiding, and of good

character.” 7d. at 11 4 3. The Tnbal Court also

stated that the May 22, 2003 Special Election was “a

mandate” on behalf of the Bear Council, and against

the Walker Council. 7d. at 11 § 4. The Tribal Court

further held that the BILA’s continued recognition of

the Walker Council after the Special Election was

not determinative of the Walker Council’s actual fit

ness, and that “|t]he voting members of the Tribe

shall be the sole judge of these qualifications.” Jd. at

11 4 15. Therefore, the Trmbal Court concluded that

The two-and-a-half-year delay in reaching final decisio!

ccurred in part because API, in the fall of 2005, simultane

ously filed in federal court in the Nerthern District of lowa in

in attempt to force arbitration under the API Contract. See

Attorney's Process and Investigation Servs. Inc. v. Sac and Fox

Tribe of the Mississippi in lowa, 401 F. Supp. 2d 952 (N.D. lowa

2005). The Northern District of Iowa held that API had to first

exhaust remedies in Tribal Court, stayed any further proceed

ings, and also noted that the Tmbe might have sovereign im

munity from API's claims. Jd. at 957-63. Additionally, both

parties filed a high volume of briefs in the Tribal Court leading

up to the Tribal Court Order

the Walker Council had no authority to bind the

Tribe to the API Contract in June 2003, and the dis

pute resolution provisions therein did not apply. Jd.

at 11 4 7, 12 4 8. API appealed.®

IT. Legal Discussion

A, Basis for appeal

While this Court has already granted leave for

this interim appeal, we reserved the question of the

legal basis for it. See Order Granting Appeal and

Setting Briefing Schedule (May 28, 2008). The Court

hears this matter as a discretionary appeal under

Tribal Code Section 5-4401(b)(1), as it deals with an

“order not otherwise appealable involving a control

ling question of law or substantial difference of opin

ion, and immediate appeal may materially advance

termination of proceeding.” The controlling ques

tions of law here involve defining the Tribe’s subject

matter and personal jurisdiction over non-member

companies that conduct themselves on the Settle

ment. This issue 1s at the heart of this case, and ha:

repercussions both for the tort claims that remain to

be heard by the Tribal Court, as well as for any fu

ture case involving the Tribe and a nonmember com

pany. Additionally, we rely on our broad authority

to hear the appeal of “any other order not otherwise

appealable” under Section 5-4401(b)(2)

Since the time this appeal was filed, API has also counter

claimed for breach of contract against the Tribe in Tribal Court

seeking additional payments under the Contract. Despite th

counterclaim, API has also briefed here its claim that th

[ribal Court is “not an adequate forum for the entire contri

versy” based on the claim that the Tribal Court cannot hear

counterclaims against the Tmbe. See API Br. at 1

(4a

It is not an appeal of mght under Section 5

4401(a), as API has urged, because there has been no

“prevention of judgment from which appeal might

otherwise be taken.” See API Br. at 7-8, citing § 5

401(a)(3). API's primary argument was that it has

been deprived of its defense that the Tribe had au

thorized payment to API because the Tribal Court

had unduly relied on a stricken portion of an affida

vit the Trnbe had offered. See API Br. at 8; Tribal!

Court Order at 6 4 12 (citing Dhanwada Aff.). API

argued that “in finding that the Alex Walker Council!

had no authority to sign the June 16, 2003 Agree

ment, the trial court has essentially deprived API of

its defense that it was acting with authority and fur

ther potentially has prevented API from obtaining a

judgment in its favor on the merits.” API's Br. at 8

15-16

This 1s a misconstruction of appellate procedur

and a misreading of the Tribal Court Order. First

as a matter of law, if a defense has been excluded, a

defendant may nevertheless appeal its exclusion at

the conclusion of trial—we are empowered LO review

any and all of the Triba) Court's conclusions of Jaw

de novo. See Tribal R. App. P. A-7. We can then ri

mand for additional proceedings on that defense, 1f 11

was improperly excluded. See § 5-4403(b) (allowing

remand). There is no basis to claim that an inter

locutory appeal is necessary here. Second, while the

cited portion of the Dhanwada affidavit was, indeed

tricken, the Tribal Court did not rely upon the afh

davit to support its ultimate decision that the under

lying Contract was invalid. Indeed, the Tribal Court

did not even cite the Dhanwada Affidavit for tne

truth of fact that Tribe didn’t authorize payment

The Tribal Court simply recounted some of the

tricken content, committing, at most harmlé er

ror. See Tribal Court Order at 6 4] 12; see also API

Appx at Tab 4 (Hrg. T. (7/27/06) at 8 Ins. 13-25, 9

Ins. 1-16). In any case, the Trnbal Court’s citation to

the affidavit in no way affects the proper timing o1

availability of appeal

B. Scope of appeal.

In addition to the question of whether this should

be heard as an appeal of right under Section 5

4401(a), we distill the arguments API has submitted

on appeal to the following four: (a) that the API Con

tract 1s binding on the Tribe because the Walker

Council had actual authority to sign it in June 2003

requiring binding arbitration to settle any dispute

thereunder; (b) that the BIA and other federal!

agency's recognition of the Walker Council is conclu

ive: (c) that the Tribal Court lack: subject matte!

jurisdiction over API as a nonmember for purposes of

the Tribe’s tort claims under the two grounds for

such jurisdiction articulated in Montana v. Unite

States, 450 U.S. 544, (1981); and (d) that even if th:

Walker Council did not have actual authority to en

ter the API Contract, it had ‘apparent authorit'

ind the Contract hould therefore be entorceabl«

igainst the Tribes

\Pl ha allée ‘ ths , ;

nat tl matter nould first properly be ibmitted t

‘ribal Court and that it } ubiect to the d tring fF tothe) ;

exhaustion. as the Northern Distmnct of lowa als properly he

ac Attorney Proce and Investigation Ser iru 101 |}

up} a at Yo/-t API ha 11S ’ erted that |

Court should “deter to the federal court u rder to permit

API's main claim and counterclaim both to be heard. But tl

not a proper articulation of the underlying issues of tort ver

ontract law here is no legal basis for API to claim that |

1 i ( untered ij} crnat Line rion

(hief and ‘Tmbal member

constitu

I'he I'ribe er

ken by the Heredit:

hip before lune

nal

to bind the Tnbe

l6. 2008 “lawtullv and

ym the Walker Council the power:

to contract (b) that the BIA’s de

termination that the Walker Council was the official

is not determinative: (c) that the ‘Tribal!

APl under Montana: and

iUctnoritv CAT

removed fr

council

Court has jurisdiction over

ot ipparent

d) that the doctrine

pply avalin ; the ‘| ribs Seg Tribes + ft | » 24

oF Standard of review

We review fi acing tf fact for « ir er! y¢

‘ribal R. App. P. A-7 (empowering Tribal rt

\ppe ils to review ‘Tribal Court factual finding

mci Nn | law Pe ¢ } Fed R > }? Ala

indaarad) { ted fate

Vatitona

| 145.6 IYHO) (eitaty nitteda)

f CPW de ? 0 the l'y } ( rt lé ’ |

udin re irding Dyer ! tf ’ 1 per

i t} i] i | (j Tt ’ |

Vj ert RY ey ‘ } f

Tila

D. Tribal law and BIA recognition.

The threshold question here is one of Tribal law.

Whether or not the API Contract is valid depends

upon whether the Walker Council had authority to

enter it, which in turn depends upon whether the

Tribe, according to its laws, properly removed the

Walker Council. It is well-established that such an

intratribal dispute is exclusively within the tribe’s

own purview to decide.

As a general matter, “[c]ivil jurisdiction over

tribal-related activities presumptively hes in tribal

courts unless a specific treaty provision or federal

statute affirmatively limits the jurisdiction.” Sac and

Fox Tribe of the Mississippi in Iowa v. Bear, 258 F.

Supp. 2d 938, 942 (N.D. Iowa 2003), citing Jowa Mu-

tual Ins. Co. v. LaPlante, 480 U.S. 9, 18 (1987); see

also Duncan Energy v. Three Affiliated Tribes, 27

F.3d 1294, 1299 (8th Cir. 1994) (discussing federal

limits of tribal jurisdiction over nonmembers under

Montana); Goodface v. Grassrope, 708 F.2d 335, 338

(8th Cir. 1983) (expressing “doubt” regarding

whether there would be federal jurisdiction over

purely intratribal leadership dispute); Shortbull v.

Looking Elk, 677 F.2d 645, 650 (8th Cir. 1982) (ac-

tions for relief based on “tribal deprivations of

rights” generally must be resolved through tribal fo-

rums). If a tribe has not taken affirmative action to

9 For federal decisions recognizing this principle, see Santa

Clara Pueblo v, Martinez, 436 U.S. 49, 55 (1978) (federal courts

lack jurisdiction to decide where tribes have “the power of regu-

lating their internal social relations,” to make their own “sub-

stantive law in internal matters,” and to enforce those laws).

See also Kiowa Tribe of Okla. v. Mfg. Technologies, 523 U.S.

751, 763 (1998) (reaffirming Martinez).

78a

surrender its sovereign control over internal affairs,

and if Congress has not exercised its plenary power

to reduce such tribal authority, the tribe possesses

exclusive and inherent authority over such issues as

intratribal leadership disputes. See Nero v. Cherokee

Natton, 892 F.2d 1457, 1463 (10th Cir. 1989) (no fed-

eral jurisdiction over tribal leadership dispute);

Wheeler v. Swimmer, 835 F.2d 259, 262 (10th Cir.

1987) (same, stating “(t]he right to conduct an elec-

tion without federal interference is essential to the

exercise of the right to self-government.”); Wheeler v.

U.S. Dept. of Int., 811 F.2d 549, 552 (10th Cir. 1987)

(stating “when a tribal forum exists for resolving a

tribal election dispute, the Department must respect

the tribe’s right to self-government and, thus, has no

authority to interfere ...”); Boe v. Ft. Belknap Indtan

Cmty., 642 F.2d 276, 278-80 (9th Cir. 1981) (tribal

election disputes raise no federal question).

That the BIA did not recognize the Bear Council

does not affect our analysis of Tribal law. The BIA is

not entitled to determine which of rival councils is

the official tribal council for purpose of nonfederal,

day-to-day tribal affairs. The Eighth Circuit consid-

ered a similar intratribal dispute in Goodface, laying

out the distinction between BIA recognition of a

tribal council, and the intratribal selection of a tribal

council. 708 F.2d at 338-39. There, one of two com-

peting tribal councils of the Lower Brule Sioux Tribe

(the “1982 council”) brought suit in federal district

court based upon the BIA’s refusal to recognize it in-

stead oi the earlier “1980 council” after an interim

election. Jd. at 337. The BIA thereafter declared

that the election dispute “was an intratribal matter

which must be resolved by the Tribe.” Jd. In the in-

terim, though, it decided not to offer official recogni-

tion to either council, but to deal with both as neces-

79a

sary to maintain “basic” tribal services. /d. Thereaf-

ter, the district court, interpreting the tribal consti-

tution and bylaws, determined that the 1982 council

was entitled to recognition and entered injunctive

relief to that effect. Id.

The Eighth Circuit reversed, stating that it was

only because the BIA was involved that it had juris-

diction of any part of the dispute. Jd. at 338. It held

that the BIA abused its discretion in refusing to rec-

ognize one council, creating a gap in services. Id. It

held “faJlthough it was necessary to remedy the

situation by ordering the BIA to recognize one gov-

erning body, the district court overstepped the

boundaries of its jurisdiction in interpreting the

tribal constitution and bylaws and addressing the

merits of the election dispute.” Jd. at 339. The

Eighth Circuit vacated that portion of the district

court’s order recognizing the 1982 council, ordered

the BIA to recognize the 1982 council as an interim

solution only for federal funding purposes, and di-

rected the rival tribal councils to “seek a tribal rem-

edy, for as previously noted, substantial doubt exists

that federal courts can intervene under any circum-

stances to determine the rights of the contestants in

a tribal election dispute.” /d.; see also Wheeler, 811

F.2d at 552; Sac and Fox Tribe of the Mississippt in

Iowa, 258 F. Supp. 2d at 942 (holding no basis for

federal court jurisdiction over intratribal leadership

dispute); Tarbell v. U.S. Dept. of Int., 307 F. Supp.

2d 409, 422-26 (N.D.N.Y. 2004) (discussing BIA rec-

ognition process and tribal leadership dispute);

In discussing Goodface, API argues _ that

“(rjecognition by the BIA legitimizes a particular

Council in its commercial dealings,” which is true, in

some respects. API Br. at 22. But it is not the case,

80a

as API then concludes, that the BIA establishes

whether nonmembers can conduct business with the

Tribe. /d. at 23. The federal government owes no

duty to private companies that contract with Indian

tribes; rather, it owes a broad trust responsibility to

federally-recognized Indian tribes. See, e.g., Exec.

Order No. 13336, American Indian and Alaska Na-

tive Ed., 40 Weekly Comp. Pres. Doc. 713 (Apr. 30,

2004) (confirming the government-to-government re-

lationship and trust responsibility); see also Chero-

kee Nation v. Georgia, 30 U.S. 1, 17 (1831) (discuss-

ing “ward-guardian” relationship between tribes and

U.S. and defining Indian tribes as “domestic depend-

ent nations”); Worcester v. Georgia, 31 U.S. 515

(1832) (laying foundations of trust doctrine).

This is the reason for the federal tribal recogni-

tion process—to enable the federal government to

carry out its trust responsibility to provide services

to tribes by defining what constitutes a tribe. See,

e.g., H.R. Rep. No. 103-781, 103rd Conf, 2d Sess., 2

(1994) (defining recognition as “a formal political act,

[which] permanently establishes a government-to-

government relationship between the United States

and the recognized tribe as a ‘domestic dependent

nation, and imposes on the government a fiduciary

trust relationship to the tribe and its members.”) (ci-

tations omitted). Recognition “imposes upon the

Secretary of the Interior specific obligations to pro-

vide a panoply of benefits and services to the tribe

and its members.” /d. at 3 (citations omitted). This

“unequivocal federal recognition of tribal status is a

prerequisite to receiving the services provided by the

Department of the Interior’s Bureau of Indian Af-

fairs (BIA), and establishes tribal status for all fed-

eral purposes.” /d. (emphasis added). In sum, while

federal recognition typically provides some certainty

Sla

for a private business in determining whether to

contract with an Indian tribe, it is not an insurance

policy. The BIA recognition process exists for the

benefit of the federal-triba] relationship, not to give

disappointed third parties an authority higher than

the tribe as to tribal law.

The potential for chaos because of a tribal leader-

ship dispute is plain. The Tribe suffered serious fi-

nancial losses during this time, including the loss of

the majority of its operating expenses due to the clo-

sure of its casino, which arose from the complica-

tions of this leadership conflict and the lack of fed-

eral recognition for the Bear Council. This type of

damage is lasting and it is difficult to mend all rela-

tionships that suffer during such times. A chilling

effect on those willing to contract with the Tribe may

be inevitable, even if such an event is rare. Never-

theless, businesses that choose to work with an af-

firmatively ousted tribal council are taking a sub-

stantial risk. They ought not be heard to complain

when the gamble fails. Neither a private security

company utilizing force, nor the BIA, can prop up a

tribal government that may have lost its legitimacy

to govern. That legitimacy question is a tribal one.

BIA recognition does not “select” the tribal council,

and is not conclusive for purposes of private dealings

with a Tribe. Indeed, API has not even asserted that

it relied on the BIA’s recognition in deciding to work

with the Walker Council. The BIA’s failure to ex-

tend federal recognition to the Bear Council has no

bearing on our analysis of the underlying dispute.

E. Application of Tribal law.

We uphold the Tribal Court’s determination that

the Walker Council violated Article XII Section I of

the Tribal Constitution in refusing to hold recall

82a

elections upon receipt and acceptance of recall peti-

tions. The Tribal Constitution plainly required the

Walker Council to act upon the petitions, and the

Walker Council did not. We also uphold the Tribal

Court’s ruling that Hereditary Cmef Old Bear and

the Tribal membership were entitled to take all the

actions they did thereafter in order to remove the

Walker Council and install the Bear Council.

As a threshold matter, we feel that this is close to

a political question, which would remove from us the

power to second guess another “branch” of Tribal

government. It is an inherent, sovereign right of a

tribe to determine how it will choose its leaders:

“Indian tribes are ‘distinct, independent political

communities, retaining their original natural rights’

in matters of local self-government.” Martinez 436

U.S. at 55, citing Worcester, 31 U.S. at 559. Even the

adoption of a tribal constitution does not have the

effect of diminishing a tribe’s Inherent sovereign

powers (although it hmits the tribe’s institutional

structure while it is in effect). See Merrion v. Jt-

caritlla Apache Tribe, 455 U.S. 130, 148 n. 14 (1982)

(“[Nleither the Tribe’s Constitution nor the Federal]

Constitution is the font of any sovereign power of the

Indian tribes.”) Therefore, it is somewhat presump-

tuous for a tribal court, five years after the fact and

before the court was even formed, to determine

whether a tribe has validly elected its past leaders.

Even if we determined that the Tribe did so improp-

erly at the time, it would be moot—there has, in the

meantime, been a federally-recognized election. The

only purpose for our evaluation at this time 1s in or-

der to resolve this dispute.

It is true that the Tribal Court is now the adjudi-

cative body of the Tribe, with the power to uphold

83a

and interpret the Tribe’s Constitution. See, e.g., § 5-

2102 (“Except as otherwise provided by the laws of

the Tribe, the Tribal Court shall exercise all judicial

and dispute resolution powers of the Tribe, subject

only to the limitations provided in the laws of the

Tribe.”); see also §§ 5-4101 (defining broad Tribal

Court subject matter jurisdiction), 5-4302 (defining

applicable law for Tribal Court to apply). But at the

time this dispute arose, there was no arguable inter-

preter of any Tribal law besides the Tribal Council,

the Tribal membership, or the Hereditary Chief (and

Clan Leaders). Given the patently unconstitutional

behavior of the Walker Council in rejecting the recall

petitions, it is not for us to say that the Tribal mem-

bership and Hereditary Chief Old Bear acted im-

properly in deciding to strip the Walker Council of

authority and appoint a new council on April 14,

2003. See Tribal Court Order at 11 && 3-4. The

Tribal Court appropriately held that the public vote,

and majority support, for this action on May 22,

2003 was sufficient to make the Bear Council the of-

ficial Tribal Council. 7d.

Furthermore, we also find sufficient legal support

in Tribal law for the actions of the Hereditary Chief

and the Tribal membership. The combination of re-

tained traditional powers and the Tribal member-

ship’s reasonable exercise of its constitutional ability

to determine fitness were sufficient to remove the

Walker Council and seat the Bear Council in its

place.

a. Retained powers of Heredi-

tary Chief.

First, the question is whether the Hereditary

Chief retained the power to remove the Walker

Council and appoint the Bear Council. API argues

84a

that the 1937 Constitution stripped the Hereditary

Chief of the ability to take such actions, and that to

“vest” the Hereditary Chief with the power to ap-

point a Tribal Council would require actual amend-

ment to the Constitution itself. See API Br. at 18-19,

citing Art. X, Section 4 (stating “|a]ny rights and

powers heretofore vested in the [Tribe] but not ex-

pressly referred to in this Constitution, shall not be

abridged by this article, but may be exercised by the

people of the Tribe, through the adoption of appro

priate by-laws and constitutional amendments’).

API also argues that the Tribe’s actions were a con

tradiction of “clear provisions” of the Tribal Consti-

tution regarding elections. It urges us to look to

Cheyenne-Arapaho precedent that requires that

tribal “customs (and their perimeters) be both docu-

mented and subjected to the normal roles of the ad-

versary system....” API Br. at 19, citing Hoffman v.

Cheyenne-Arapaho Election Bd., 7 Okla. Trib. 126,

2000 WL 33976522 (Cheyenne Arapaho 2000).

One of the cornerstones of Sac & Fox Tribal law

remains traditional Tribal practices, and there is no

requirement that they be written down. Section 5

4302(a) provides that the Tribal Court shall follow

the common law, including the customs and tradi-

tions, of the Tribe. And although the Tribal Court

did not cite it as the basis for decision, Section 1-

2101(a) of the Tribal Code provides:

Except as superseded by the Constitu-

tion and By-laws of the Tribe or this

Code, the custom and traditions of the

Tribe are hereby declared to be the

common law of the Tribe and shall be

the law applicable within the Settle

ment and shall be the rule of decision in

85a

all agencies, departments, commissions,

and tribunals of the Tribe.

Moreover, “the common law of the Tribe shall

supplement this Code and this Code shall be inter-

preted whenever possible as supplementing and not

displacing the common law of the Tribe.” § 1-2101(c).

According to the Code, Section 1-2101 was adopted

by Trbal Council Resolution on February 22, 2002,

more than a year before the Hereditary Chief's ac-

tions. Contrary to API’s assertions, the Tribe has

passed “appropriate by-laws” to incorporate any and

all traditional Tribal law, to the extent that it

needed to in order to comply with the Tribal Consti-

tution.

Additionally, since it was formed in 2005, the

Tribal Court has been authorized to determine, me-

morialize, and then apply traditional Tribal law in

its decisions. For example, while the Tribal Court

has the option of determining Tribal custom through

a community panel authorized as in Section 5-2501,

it is not mandatory.

The record in this case does not include much de-

tail regarding the specific basis in Tribal tradition

for Hereditary Chief Old Bear’s actions to strip the

Walker Council of authority and appoint a new one.

But the Tribal Court determined that the Hereditary

Chief did, indeed, retain this power. The Tribal

Court held that the actions of the Hereditary Chief

and of the Tribal membership were a justified “exer-

cise of the retained powers ... to establish a Tribal

Council where all members are recognized as per-

sons of honor, law abiding, and of good character.”

Tribal Court Order at 11 & 3. We believe that the

Tribal Court made a sufficient inquiry into this mat-

ter of traditional law, and because the Tribal mem-

86a

bership also ratified Hereditary Chief Old Bear’s sec-

tions, we agree.

Most important here is the fact that the great

majority of the Tribe publicly ratified Chief Old

Bear’s actions, and affirmatively agreed more than

once to the choice of each of the Bear Councilmem-

bers. It is an extraordinary concept that such action

would not be sufficient to effect a change in tribal

leadership. The Tribe literally had no other mecha-

nism to remove the Walker Council in a timely fash-

ion. The BIA cannot assist in these internal mat-

ters, and no federal or state court forum is available.

Nor should it be. Given that the Tribal Court did not

yet exist, there was no other forum to resolve this

dispute, save for under traditional Tribal principles

and by popular mandate. As in any democratic form

of government, it is the people who must choose the

legitimate Tribal government. When the Walker

Council ignored the lawful recall procedures and

frustrated the will of the people, the constitutional

road map could not function properly. A government

that does not follow the law cannot then hide behind

it. It was appropriate for the Tribal membership to

resort to the traditional Tribal practice when formal

procedures broke down.

b. Tribal membership’s author-

ity under Tribal Constitution.

Second, we affirm that the Tribal membership

does, indeed, retain empower to determine the fit-

ness of members of the Tribal Council under the

plain language of the Tribal Constitution. See Tribal

Const., Art. [V ‘2. This provision is included in the

portion of the Tribal Constitution entitled “Article

IV—Composition and Qualifications of Governing

87a

Body,” while separate sections deal with elections

and recalls. See Tribal Const., Arts. V, XII. But

there is no express limitation upon the Tribal mem-

bership implementing this provision, in conjunction

with the Hereditary Chief's legitimate exercise of

traditional Tribal law, in order to effect the removal

of a Tribal council. In light of the Walker Council’s

unconstitutional refusal to set a new election, the

Hereditary Chief and Tribal membership took a law

ful route to remove the Walker Council.

API would retroactively strip the Tribe of any re-

course to remove a Tribal Council the Tribe no

longer wanted, forcing it to wait until the fall 2003

elections and federal recognition. But no one could

predict that the BIA would refuse to extend recogni-

tion to the Bear Council until that late date. The re

cord does not show that the BIA clearly explained its

refusal, nor that the fall 2003 elections were con-

ducted under different circumstances than the May

2003 election. This result would be both absurd and

unintended. Any of the actions taken by Chief Old

Bear, at least once ratified by the Tribal member

ship, were sufficient to make the Bear Council the

official Tribal Council for the purpose of the Tribe's

dealings at least with private third parties, if not

federal agencies. Therefore, the Tribal Court prop-

erly held that the Hereditary Chief's actions of April

14, 2003 at the General Council and the Special

Election on May 22, 2003 were sufficient to effect a

change in Tribal leadership. We need not consider

any of the later actions the parties discuss. Because

the Walker Council was without actual authority to

enter the API Contract in June 2003, it is invalid

and nonbinding on the Tribe.

Sa

‘

KF. Jurisdiction over API.

The Tribe’s ability to actually recover from API

on its underlying claims, which have yet to be de

cided by the Tribal Court, depends upon whether the

Tribal Court has jurisdiction over API,!°

a. Personal jurisdiction over

API.

The Tribal Court properly determined that it had

personal jurisdiction over API under Tribal Code

Sections 5-4102(2)-(8), and API has not challenged

that determination. Except as limited by other fed-

eral or Tribal law, the Tribal Court has broad per

sonal jurisdiction over persons, including nonmem-

bers, who conduct business or take other actions

within the Settlement. API unquestionably “con

ducted business” within the settlement, “used” prop

erty within the Settlement, and is alleged to have

“committed a tortious act” within the Settlement,

amongst other grounds. §§ 5-4102(2)-(8)

10 We do note, though, that certain of the tort claims could

likely stand against API even if the API Contract were valid, to

the extent that the claims are not dependent upon the Con

tract. If the Contract were valid, we acknowledge that it could

possibly require binding arbitration. See C & L Ents. v. Citizen

Band Potawatomi Indian Tribe of Okla., 532 U.S. 411, 418-19

2001) (recognizing comprehensive arbitration scheme in con

tract between tribe and company was a consent to arbitration

and a waiver of tribal sovereign immunity). But where the dis

pute centers on whether the Contract was ever authorized by

one of the ostensible parties, there can be no requirement that

the dispute be submitted to arbitration

Ya

b. Subject matter jurisdiction

under Montana.

More detailed analysis is required on the topic of

the Tribal Court’s subject matter jurisdiction over

API in connection with the Tribe’s tort claims, the

only affirmative claims in the case at the time it was

appealed.

The Tribal Code provides the Tribal Court can

hear tort claims involving the Tribe and anyone else

Except as limited by federal or other Tribal law, the

Tribal Court has original jurisdiction over “all civil

causes of action and over all controversies between

any persons.” § 5-4101. This was the basis for the

Tribal Court’s determination that it had subject mat

ter jurisdiction.

The question, then, is whether there is any limit

in federal law. As a general matter, in addition to

their authority to determine their own leadership,

tribes retain the inherent power to make both crimi

nal and civil laws, and the inherent power to admin

ister justice. See, e.g., Jowa Mut. Ins., 480 U.S. at

14-15 (1987) (“[t]rmbai courts play a vital role in

tribal self-government and the Federal] Government

has consistently encouraged their development.”) (c1

tations omitted). Tribes have presumed authority

over both their members and their territory, which

traditionally included some authority over nonmem

bers conducting themselves in Indian country. See

id.; see also United States v. Mazurie, 419 U.S. 544,

557 (1975). Tribes also have the power to exclude

persons from tribal territory (including trust and

other Indian lands). See, e.g., Worcester, 31 U.S. at

561. And “civil jurisdiction over the activities of non-

Indians on reservation lands presumptively lies in

tribal courts, unless affirmatively limited by a spe

cific treaty provision or federal statute Attorney .

Process and Investigation Servs., 401 F. Supp. 2d at

958, citing Bruce H. Lien Co. v. Three Affiliated

Tribes, 93 F.3d 1412 (8th Cir. 1996), citing Jowa

Mut. Ins. Co., 480 U.S. at 16

These powers remain intact until and unless pre

empted by federal authority; “[b]ecause the Tribe r

tains all inherent attributes of sovereignty that hav

not been divested by the Federal Government, the

proper inference from silence ... is that the sovereign

power ... remains intact.” Merrion, 455 U.S. at 14&

n.14; see also Martinez, 436 U.S. at 60 (“[A] proper

respect both for tribal sovereignty itself and for the

plenary authority of Congress in this area caution

that we tread lightly in the absence of clear indica

tions of legislative intent’)

Federal law does impose certain limits on tribal!

civil adjudicatory jurisdiction, relating to nonmem

bers. See Montana, 450 U.S. at 565: see also Plain

Commerce Bank v. Long Family Land and Cattle

Co., Inc., 28 Sect. 2709 (2008): Strate v. A-] Contra

tors, 520 U.S. 438, 446 (1997). The Supreme Court

has stated that “a tribes inherent power does not

reach beyond what is necessary to protect tribal self

government or to contro] internal relations.” Mon

tana, 450 U.S. at 564: see also Nevada vu. Hicks. 533

U.S. 353, 361 (2001) (“Trnbal assertion of regulatory

authority over nonmembers must be connected to

that mght of the Indians to make their own laws and

be governed by them.”)

The Montana case addresses the general rule of

that there is no tribal jurisdiction over the activiti

of nonmembers, and also identifies the two excep

’

tions. The first Montana, exception is where there 1

a “consensual relationship” between a tribe and a

Gla

nonmember, including “commercia] dealing, con

tracts, leases, or other arrangements.” Montana, 450

U.S. at 565. This does not apply to the Tribe’s tort

claims--as API correctly points out, these are prem-

ised on lack of consent and turn on the Tribe’s claim

that there was no valid Contract. See API Br. at 12.

But the second Montana exception does poten-

tially apply to tort claims a tribe asserts against a

nonmember.

A tmbe may also retain inherent power

to exercise civil authority over the con-

duct of non-Indians on fee lands within

its reservation when that conduct

threatens or has some direct effect on

the political integrity, the economic se-

curity, or the health or welfare of the

tribe.

Montana, 450 U.S at 565-66.

It is easier by far to find federal cases refining to

apply this second exception, than those allowing it.

To invoke it, the Supreme Court has stated that the

tribal impact must be “demonstrably serious and

must imperil the political integrity, the economic se-

curity, or the health and welfare of the Tribe.”

Brendale v. Confederated Tribes & Bands of the

Yakima Indian Nation, 492 U.S. 408, 431 (1989)

(emphasis added). Most recently, the Supreme

Court in Plains Commerce Bank confirmed that

“(t]he second exception authorizes the tribe to exer-

cise civil jurisdiction when non-Indians’ conduct

menaces the political integrity, the economic secu-

rity, or the health or welfare of the tribe.” 128 S. Ct.

at 2726 (emphasis added). The Supreme Court went

so far as to quote a commentator who suggested that

92a

“th[e] elevated threshold for application of the sec-

ond Montana exception suggests that tribal power

must be necessary to avert catastrophic conse

quences.” Id., citing F. Cohen, Cohen’s Handbook on

Federal Ind. Law, § 4.02(3)[c], at 232, n.220 (empha-

sis added). And the Eighth Circuit recently refused

to apply the second Montana exception where only

“the personal health and welfare of a few individual

members” were involved. Nord v. Kelly, 520 F.3d

848, 856-57 (8th Cir. 2008) (declining to apply second

exception where injured plaintiff was tribal member

suing based on accident on state highway running

through Red Lake Reservation). What these cases

do is demarcate the outer limits of the second Mon-

tana exception in order to justify an exercise of tribal

jurisdiction under the second exception, a nonmem-

ber’s conduct must in some way severely threaten

the entire tribe’s political integrity, economic secu

rity, or health and welfare.

Tribal powers are at their zenith of inherent sov

ereign authority over Indian trust lands within their

reservations. Correspondingly, this provides the

strongest basis upon which to articulate tribal juris

diction over nonmembers. A key issue under the

Montana analysis remains where the conduct took

place. Montana by its terms applied only to conduct

by nonmembers on fee land, and did not speak to

nonmember conduct on trust land. 450 U.S. at 565-

66. Since then, Strate and other cases have ex-

tended the Montana analysis to other land types

within reservations, but we are not aware of any

precedent where a federal court has done so for trust

land. See, e.g., Strate, 520 U.S. at 453 (equating a

state right-of-way with non-Indian owned fee land

for purposes of Montana analysis); Hicks, 533 U.S. at

360 (refusing to extend tribal adjudicatory jurisdic-

93a

tion over nonmembers conducting themselves on fee

land owned by an individual Indian and within a

reservation); Plains Commerce Bank, 128 S. Ct. at

2726 (tribe could not assert regulatory jurisdiction

over sale of fee land within reservation by one non-

member bank to nonmember purchaser).

The Supreme Court has recently confirmed that

“(t]he status of the land ‘is relevant insofar as it

bears on the application of Montana’s exceptions’ ...

.’ Plains Commerce Bank, 128 8S. Ct. at 2720, citing

Hicks, 533 U.S. at 376 (reservation land status is

“one factor to consider” in determining whether an

exercise of tribal authority over nonmembers was

“necessary to protect tribal self-government or to

control internal relations”) (internal citation omit-

ted). In the Plains Commerce opinion, the Supreme

Court repeatedly reiterated that one of the lynchpins

of the decision, in which the Court found no tribal

jurisdiction, was that the land in question was fee

land. 1288S. Ct. at 2726 (highlighting that Montana

analysis applies to non-Indian fee land) (emphasis

added); td. at 2722, citing Hicks, 533 U.S. at 360

(stating that with only the exception of Brendale,

492 U.S. at 408, the Court has “never upheld under

Montana the extension of tribal civil authority over

nonmembers on non-Indian land.”) (emphasis in

original); id. at 2723 (“[cJertain forms of nonmember

behavior, even on non-Indian fee land, may suffi-

ciently affect the tribe as to justify tribal oversight.”)

(emphasis added). Moreover, the tribe in Plains

Commerce Bank could not show that there was any

“conduct” on the reservation fee land that affected

the tribe whatsoever, only the fact of the sale itself,

which the tribe had attempted to regulate. Jd. at

2723-24.

Y4a

We hold that one key fact of this case is that the

issue presents nonmember conduct on trust land.

We do not believe that Montana applies to such con-

duct at all, and neither the Supreme Court nor any

of the federal circuit courts has held to the contrary.

Under its inherent sovereign powers to legislate, to

make laws governing conduct, and to exclude those

who enter the Settlement, and under the Tribal Con-

stitution and Bylaws, the Tribe retains presumptive

civil jurisdiction over nonmembers committing torts

on tribal trust land.

To the extent that a Montana exception is neces

sary to recognize tribal court jurisdiction, 1t does ap-

ply, this is the rare case that squarely falls within

the second Montana exception, even under the most

limited reading of tribal jurisdiction. This case is

based upon allegedly egregious torts that nonmem-

ber API committed against the entire Tribe by con-

verting Tribal funds and by storming the Trib

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