Northwest Indian Law & Business Advisor : Northwest Indian & Tribal Lawyer & Attorney : Williams Kastner Law Firm : Tacoma, Seattle, Portland

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On December 8, Secretary of the Interior Ken Salazar and Elouise Cobell jointly announced that the United States and Cobell plaintiffs had entered into a settlement agreement to conclude the decades-old Cobell litigation. The case was filed in 1996 on behalf of a class of Indian plaintiffs who had Individual Indian Money (IIM) accounts managed by the Department of the Interior. The plaintiffs sought remedies against the United States resulting from breaches in the management of IIM accounts. Among other things, the Cobell plaintiffs sought an accounting of the trust corpus to determine its value.

The settlement requires the creation of: (1) an Accounting/Trust Administration Fund with an infusion of $1.4 billion to settle individual Indian claims; (2) a Trust Land Consolidation Fund with an infusion of $2 billion; (3) a Secretarial Commission on Trust Reform paid for by money in the Trust Land Consolidation Fund; and (4) a mechanism for unused funds in the settlement to be set aside for Indian education scholarships. The settlement does not require the federal government to admit fault and it resolves all individual Indians’ IIM-related claims that have or could have accrued as of the date of the settlement.

Importantly, the settlement is contingent upon Congress enacting legislation to approve the settlement, including the appropriation and payment of federal funds under 31 U.S.C. § 1304. The timeline allotted in the settlement agreement for Congress to do so is extremely ambitious since it anticipates congressional authorization by December 31, 2009. While Congress debates the highly controversial health care reform legislation, Senator Reid and Speaker Pelosi will be hard pressed to schedule time for authorization of a multi-billion dollar settlement before recessing at the end of the year.

Of significance, there is no language in the settlement or the legislation that appears to resolve the tribal trust mismanagement cases, including the one-hundred plus cases filed by tribal governments in addition to the Cobell litigation, which are pending before various federal courts. The tribes’ cases, according to former Attorney General Alberto Gonzales in 2005, could result in liability to the United States in excess of $100 billion.

Tribes and individual Indian allottees must carefully scrutinize the $2 billion set aside for land consolidation pursuant to the Indian Land Consolidation Act. The consolidation would seek to consolidate all 128,000 individual Indian allotments into an Indian-owner-managed trust that could include tribal governments as owners in common with individual Indians. The Secretary would be authorized to use fair market value to consolidate the estimated 3.6 million fractionated Indian land interests, into what the federal government appears to believe would be a more efficient and beneficial owner-managed trust.

The proposed Secretarial Commission on Trust Reform is not fully detailed in the settlement or the proposed authorizing legislation. There are reports that this Commission would somehow “sunset” the Office of Special Trustee (OST), but there is not operative language that would make this a reality. Unless the role and the authority of the Commission are detailed in the legislation, there is always the possibility that the Commission will be just another bureaucratic creation with no mission other than to amorphously serve as “trust reformer.” At a minimum, it seems appropriate that when discussing trust reform, the legislative initiative should follow a tribal-driven set of recommendations, similar to that undertaken in the 109th Congress with S.1439.

The three-week timeline for Congressional approval of the Cobell settlement is extremely ambitious, but should nonetheless cause tribal governments and Indian allottees to think twice before supporting or rejecting it outright. Indian Country must demand that key issues related to any consolidation of Indian land interests or reformation of the federal/tribal trust relationship be completely explained, before Congress does anything, whether by December 31 or afterwards.
 

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Connecticut State Attorney General Richard Blumenthal has waged a war against the doctrine of tribal sovereign immunity, and he has chosen politically convenient drunk driving dramshop liability case against the Mohegan Tribe as his battle ground. He has filed an amicus curiae brief with a Connecticut state appeals court, arguing that tribal governments do not stand immune from liquor-related liability claims. If possible, tribes must avoid giving politicians like Blumenthal or money-driven plaintiffs’ lawyers such a chance to attack tribal immunity, especially on facts that make groups like Mothers Against Drunk Driving (MADD), well, mad.

Plaintiffs’ lawyers increasingly argue that a federal statute, 18 U.S.C. 1161, somehow operates to waive sovereign immunity – a common law doctrine that exists in order to protect tribal treasuries from litigation attack so tribal governments can use, e.g., net gaming revenues to provide essential governmental services as required by federal law. Section 1161 authorizes states to control the sale and distribution of alcoholic beverages within their borders, including Indian Country thanks to the Supreme Court in Rice v. Rehner, 463 U.S. 713 (1983). Given the natural provision of alcohol in tribal governmental casinos, as in Las Vegas or other non-tribal gaming establishments, many tribal-state gaming compacts recognize Rice’s holding that states can regulate liquor sales in Indian casinos. But no compacts that I am aware of expressly and unequivocally waive tribal sovereign immunity from third-party dramshop lawsuits.

State appellate courts in Arizona, Washington and Texas have all rejected arguments that Section 1161 and/or gaming compacts somehow operate to waive tribal immunity from citizen dramshop claims. Only the Oklahoma Supreme Court has ruled otherwise. But that is because Oklahoma state courts are the most anti-Indian judiciary any where; as there is undying political and judicial will to vitiate tribal immunity in Oklahoma, the courts there routinely find ways to do so. See Tribes & Insurance Defense Lawyers Should Avoid Asserting Sovereign Immunity.

Nevertheless, tribal governments within all states must be more vigilant in disallowing private plaintiffs, state politicians, citizen groups and state and federal court judges any opportunity to abrogate sovereign immunity. In the dramshop context, here are a few preventative measures tribes and tribal casinos should implement:

 Ensure all tribal employees who serve or oversee the service of liquor are fully state and tribally trained to prevent problems associated with patrons’ misuse of alcohol.
 Maintain video surveillance of the activities within tribal casinos relating to the sale and consumption of alcohol.
 Offer free shuttle or cab rides home to patrons who appear under the influence of alcohol when they attempt to leave a tribal establishment.
 Pass tribal tort claims ordinances that will set forth the time, place and manner by which the tribe might administratively consider and resolve alcohol-related liability claims.
 Maintain liability insurance to help insulate the tribal treasury from attack; such policies should include, among other things, clear defense and indemnity rights and tribal choice of defense counsel. See Tribal Insurance Policies: Buyers Beware.
 When sued, consider alternatives to asserting sovereign immunity, such as settling claims with merit before active litigation; consenting to a court’s jurisdiction up to available liability insurance policy limits; or defending the matter on the merits, possibly with a view towards obtaining summary judgment dismissal of a plaintiff’s claims.

With regard to the assertion of tribal sovereign immunity – whether in dramshop or other tort actions – tribes must “know when to say when.”
 

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Yesterday, the Ninth Circuit Court of Appeals, in a decision authored by Judge William Canby, Jr., ruled that tribal police officers have limited authority to stop and detain non-Indians travelling on state roads within Indian reservations. But in doing so, the court erected an almost insurmountable roadblock for the plaintiff, Terrence Bressi.

Bressi was stopped by Tohono O’odham tribal police officers in 2002 at a roadblock on State Route 86. Bressi refused to provide his driver’s license or other identification to the officers. He was handcuffed and taken to the side of the road, where he was detained by the officers for four hours. The tribal officers issued Bressi two citations for violating state law before letting him drive away. Bressi sued the officers in federal court, alleging various causes of action for violation of his civil rights.

The court, in Bressi v. Ford, concluded “that a roadblock on a public right-of-way within tribal territory, established on tribal authority, is permissible only to the extent that the suspicionless stop of non-Indians is limited to the amount of time, and the nature of inquiry, that can establish whether or not they are Indians. When obvious violations, such as alcohol impairment, are found, detention on tribal authority for delivery to state officers is authorized. But inquiry going beyond Indian or non-Indian status, or including searches for evidence of crime, are not authorized on purely tribal authority in the case of non-Indians.” Importantly, the decision does not prohibit tribal roadblocks involving non-Indians.

The Ninth Circuit further ruled that tribal officers who are certified to enforce state laws are subject to federal constitutional restrictions on search and seizure. The court “recognize[d] that one result of our ruling is that tribal officers who are authorized to enforce state as well as tribal law, and proceed to exercise both powers in the operation of a roadblock, will be held to [federal] constitutional standards in establishing roadblocks.”

While the court reversed the dismissal of, and remanded, Bressi’s constitutional claim pertaining to the officers’ operation of the road block, it affirmed the trial court’s dismissal of all of his other claims, including those civil rights claims relating to his arrest and detention: “the Officers were entitled to qualified immunity; reasonable officers would not have believed that the subsequent arrest violated Bressi’s constitutional rights.” The court also left untouched the district court’s ruling that to the extent the officers acted under color of tribal law, they also enjoyed tribal sovereign immunity.
 

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Under Medicare’s newly effective reporting rules, self-insured entities—including tribal entities—must start tracking and reporting all judgments, settlements, awards or other payments to Medicare beneficiaries for personal injuries. Or else.

Tribal self-insured entities will likely need to track such payments made after July 1, 2009, or January 1, 2010. The July 1st date applies where the entity has assumed ongoing responsibility for the injured Medicare beneficiary’s medical services, which commonly occurs with no-fault insurance and workers’ compensation. The January 1st date applies to single-claim payments, which are most common with liability insurance. Tribal self-insureds will likely need to report this information to the federal government, starting in the Spring 2010.

These newly effective reporting obligations are designed to protect Medicare’s right of reimbursement for medical expenses that the program paid on behalf of a Medicare beneficiary when someone else should be responsible for those expenses. Medicare beneficiaries include persons 65 years of age and older; some disabled people under 65 years of age; and people with end-stage renal disease (permanent kidney failure treated through dialysis or a transplant). It is conceivable that tribal self-insureds would make payments to, for example, casino patrons or tribal employees who are 65 years of age or older, disabled, and possibly even suffer from end-stage renal disease given the prevalence of kidney failure in Indian Country.

The federal government has had a Medicare right of reimbursement, including the option to pursue double damages in some cases, since 1980 but has rarely enforced it. The new reporting obligations are an indication that this is all about to change, as the U.S. scrambles to keep the fledgling federal Medicare program afloat.

Tribes with self-insured liability plans, no-fault plans, or workers’ compensation plans need to quickly familiarize themselves with these new reporting requirements. In addition to potential liability for double damages, the penalty for failing to report is significant: $1,000 for each day of noncompliance for each payment that was not reported, but should have been.

What’s more, tribal self-insurance programs or corporate entities are not only likely subject to the new federal Medicare laws—and thus double damages and $1,000-per-day penalties—under the Tuscarora and Donovan line of federal court cases, but they do not enjoy sovereign immunity from reimbursement or other lawsuits by the federal government.
 

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Three decisions by the Oklahoma Supreme Court this summer are troubling but not just because they each allow casino patrons to sue tribal governments or casinos in state court. The trilogy of losing Indian cases are equally, if not more, troubling because they each appear to have been catapulted into state appellate courts by ill-conceived assertions of tribal sovereign immunity.

The Oklahoma Supreme Court started by handing down its opinion in Cossey v. Cherokee Nation Enterprises, LLC, 2009 OK 6 (mandate issued June 11, 2009), holding that the state district court is a court of competent jurisdiction as that phrase is used in the Cherokee Nation’s tribal gaming compact. Then, on June 30, 2009, in separate opinions in Griffith v. Choctaw Casino of Pocola, Oklahoma, 2009 OK 51, and in the related case of Dye v. Choctaw Casino of Pocola, Oklahoma, 2009 OK 52, the Court ruled that Oklahoma district courts are courts of competent jurisdiction as that phrase is used in Oklahoma’s statutory model tribal gaming compact and therefore the state courts may exercise jurisdiction over the tort claims against the Choctaw Nation and its casino in Pocola, Oklahoma.

In short, none of the three cases should have reached the Oklahoma Supreme Court. None of the three cases should have involved a tribal assertion of sovereign immunity.

Consider the facts of Griffith: Plaintiff “went to the casino on February 11, 2005. According to Griffith, as she and other patrons approached an entrance to the casino, she heard a casino guard directing patrons to the north entrance. As Griffith followed the others toward the north entrance, she stepped into a flowerbed and fell on her face and head.” 2009 OK 51. It is hard to imagine a more frivolous claim than, “I stepped into a flowerbed and fell on my face and head.”

Given what appears to be a very defensible claim, and the renown anti-Indian sentiment of the Oklahoma Supreme Court, Choctaw’s insurance defense lawyers should not have moved to dismiss Griffith’s claim on sovereign immunity grounds. If a nominal settlement with Griffith was not possible, defense counsel should have litigated the matter on the merits. Perhaps her tort claim was procedurally or substantively invalid. More likely, Griffith could not likely prove a prima facie case of negligence against the casino. Based on the silly nature of her claim, the casino’s defense team could have (and can still) likely beaten Griffith on summary judgment or at trial. Invoking tribal immunity in Oklahoma was risky and unnecessary.

There is extensive discussion in Griffith of the Choctaw Casino’s liability insurance, which is mandated by the model Oklahoma tribal gaming compact. That general insurance policy, by design, should cover the casino’s defense costs associated with defeating Griffith on summary judgment or at trial. That policy should also indemnify the casino in the event Griffith can somehow prove it was the casino’s fault that she fell on her face and head in the flowerbed.

The same goes for Cossey and Dye. Tribal sovereign immunity should not have been asserted in those cases either. Instead, alternative defense and/or settlement strategies, which would not have placed Oklahoma tribal immunity in harm’s way, should have been pursued.

Unfortunately, these cases may have been lost before the plaintiffs even filed suit. Consider just two of many morals to this story: First, the Choctaw Casino should have acted on Griffith and Dye’s administrative tort claims rather than “fail[ing] to act” and causing them to be “deemed denied.” 2009 OK 51. Not only is it best practices to process and in turn affirmatively accept or deny such claims, but heightened care must be given to even the most frivolous of tort claims filed by non-Indians. If not, bad case law like Cossey, Griffith and Dye will inevitably be made.

Second, a quick Google search of the three law firms involved in the trilogy reveals that they are all insurance defense lawyers who do not possess Indian law expertise. What business do they have defending the Cherokee Nation and Choctaw Casino? Those lawyers were likely hired by Cherokee and Choctaw’s liability insurer(s), not the tribes, because their hourly rates are much cheaper than that of defense counsel who specialize in representing and defending tribal interests. As the old adage goes, you get what you pay for. Here, the tribal defendant-insureds appear to have gotten a short-sighted defense strategy.

But that didn’t need to be the case. I would bet money that both Cherokee and Choctaw liability policies do not allow them, as tribal government-insureds, which pay six-figure annual insurance premiums, to select tribal defense counsel of the tribes’ choice. Both tribes should have negotiated into their insurance policies the right to select defense counsel: any of the highly skilled tribal defense counsel on Oklahoma who understand the significant legal, political and social implications of even the silliest of tort claims against tribes or Indian casinos in this day and age. Those Indian lawyers would certainly pause before asserting sovereign immunity, especially before a hostile Oklahoma state judiciary. Those Indian lawyers would likely recommend that the tribal defendants pursue a strategy of settlement, or defense on the merits, instead of jeopardizing the immunity defense for all tribes in and beyond Oklahoma.

Tribes, it’s time to take a much harder look at those two-inch thick liability insurance policies to ensure tribal sovereign rights are not being breached or jeopardized. Insurance defense counsel, it’s no longer time to recklessly assert tribal immunity to attack otherwise defensible claims.

See also “Waiving Goodbye to Tribal Sovereign Immunity.” and “Are We in Good Hands?” in Indian Country Today, Parts 1, 2 and 3.

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Division One of Washington’s Court of Appeals held Monday that sovereign immunity did not shield a tribe from a quiet title suit. Relying primarily on an implication of Anderson & Middleton Lumber Co. v. Quinault Indian Nation, 130 Wn.2d 862, 929 P.2d 379 (1996), the court upheld jurisdiction over the Stillaguamish Tribe in Smale v. Noretep reasoning that sovereign immunity is not bar to a state court’s exercise of jurisdiction over in rem proceedings.

The Smales filed an action to quiet title to property they claimed they had
acquired through adverse possession and named Noretep, the original non-Indian owners, as defendants. After the suit was filed, Noretep deeded the disputed property to the Stillaguamish Tribe. The Smales then named the Tribe as a defendant in their quiet title suit. The Tribe asserted its sovereign immunity and moved unsuccessfully to dismiss based on a lack of subject matter jurisdiction.

The court held that the Smales’ suit did not aim to deprive the Tribe of its land, because if the land had been adversely possessed, it had never actually become the Tribe’s land in the first instance. The Tribe had only taken what title Noretep had passed. More problematically, relying on the Anderson Court’s conflation of subject-matter and in-rem jurisdiction, Division One upheld the lower court’s assertion of jurisdiction. Relying on a statement from the Washington Supreme Court’s decision in Anderson that “sovereign immunity is of no consequence in this case because the trial court’s assertion of jurisdiction is not over the entity in personam, but over the property or the ‘res’ in rem,” 130 Wn.2d at 873, Division One appears to have been examining the matter in the personal, rather than subject-matter jurisdiction context. See Smale, FN 4 (“The action of the court is binding, even in the absence of any personal jurisdiction.”) Whether sovereign immunity bars a claim against a federally recognized Indian tribe is a question of subject matter jurisdiction over the claim. Wright v. Colville Tribal Enter. Corp., 159 Wn.2d 108, 111 (2006), cert. dismissed 550 U.S. 931 (2007).

Undoubtedly, future litigants will attempt to style their suits against tribes and tribal governments as actions in rem to avoid the full force of sovereign immunity (which is otherwise re-confirmed in Smale). But as one district court recently held, plaintiffs “cannot circumvent Tribal sovereign immunity by characterizing the suit as in rem, when it is, in actuality, a suit to take the tribe’s property. New York Oneida Indian Nation of New York v. Madison County, 401 F. Supp. 2d 219, 229 (N.D.N.Y. 2005). Even though tribes’ immunity from suit is a question of subject matter jurisdiction, tribes and their lawyers must closely examine whether there is real in-rem exposure in lawsuit. If Anderson did not explicitly undermine sovereign immunity before, the Smale court’s decision ensures that it does now.