This column is part one of a two-part series.
As regular visitors to this site and other Indian country media outlets no doubt have seen in recent weeks, Native nation leaders, tribal attorneys, and federal Indian law practitioners alike are gravely concerned about a case currently pending before the Supreme Court: State of Michigan v. Bay Mills Indian Community.
The case involves the Bay Mills Indian Community, a federally recognized tribe located not far from the U.S.-Canadian border in northern Michigan. In November 2010, Bay Mills opened a gaming facility about 125
miles south of its reservation on a small parcel of property it had recently purchased. Situated along an interstate highway, the facility was located just 35 miles from a casino owned and operated by the Little Traverse Bay Bands of Odawa Indians (LTBBO). Bay Mills’ decision to open the gaming facility caught both LTBBO and the State of Michigan by surprise, as Bay Mills Indian Community decision-makers had not followed the usual formal process of putting the off-reservation land into trust before opening the facility.
In response, in December 2010 the State of Michigan and LTBBO jointly filed an injunction in federal court seeking to prevent the Bay Mills Indian Community gaming facility from operating. In response, Bay Mills Indian Community offered a complex legal defense rooted in the argument that because it had used funds from the Michigan Indian Land Claims Settlement Act to buy the property, it could open a gaming facility on the land without first placing it into trust. At about the same time, the National Indian Gaming Commission (NIGC) – the federal agency charged with resolving disputes involving Indian gaming – claimed that it did not have jurisdiction to decide the legality of the Bay Mills Indian casino since the facility was not technically located on “Indian lands.” The NIGC’s decision basically ensured that the dispute would have to be resolved by the parties themselves or, alternatively, by the federal court system.
A federal district court issued an injunction ordering the closure of the facility in March 2011, prompting an appeal by the Bay Mills Indian Community, which argued, among other things, that it could not be sued by the State of Michigan and LTBBO because it had not waived its sovereign immunity. After listening to Bay Mills’ Indian Community argument on the sovereign immunity question, the U.S. Court of Appeals for the Sixth Circuit reversed the district court’s decision, ruling that there was no jurisdiction because the Indian Gaming Regulatory Act (IGRA) did not abrogate tribal sovereign immunity in this case because Bay Mills’ casino was not alleged to be on “Indian lands.” The only question remaining before the Court was whether any U.S. Congressional statutes provided legal grounds for the case to proceed. After analyzing the law, the Court concluded that no such statute existed and that the case should be dismissed. In October 2012, the State of Michigan requested that the U.S. Supreme Court review the case, and several weeks ago the Court granted that request.
So what is the legal doctrine of tribal sovereign immunity, and why is the Court’s decision to hear the Bay Mills case causing so much trepidation across Indian Country about the doctrine’s immediate viability and long-term prospects? Generally speaking, sovereign immunity is the legal principle that governments cannot be sued without their consent. In the case of federally recognized Indian tribes, sovereign immunity means that Indian tribal governments and any businesses owned by Indian tribal governments cannot be sued unless (a) they are sued by the federal government, (b) they unequivocally agree to be sued, or (c) Congress has explicitly stated in a statute that Indian tribes can be sued in a specific context.
Over the past few decades, a growing number of tribes have deftly used tribal sovereign immunity to protect and exercise their sovereignty and advance their political and economic interests, especially in relation to ever-encroaching state governments. The critical importance of sovereign immunity is perhaps easier to grasp when one understands it as a tribe’s right to define the forum for lawsuits against the tribe, the procedures for lawsuits against the tribe, and any limits on the type or scope of lawsuits against the tribe. Properly used, it can provide numerous benefits for tribes, including: the ability to cap damages on contract, tort, and other types of lawsuits; the ability to limit remedies to non-monetary relief in certain types of lawsuits; the ability to have lawsuits against the tribe heard only in tribal courts; the ability to choose a different type of dispute resolution (e.g. arbitration or mediation) for certain types of lawsuits; the ability to protect tribal assets from suits through the limitation of damages; the ability to waive immunity in a limited fashion to foster commercial and physical infrastructure development; and the ability to use immunity as leverage in negotiations with state and local governments on multiple fronts, notably gaming and taxation.
The Bay Mills Indian Community case places the doctrine of tribal sovereign immunity directly in the crosshairs of a U.S. Supreme Court that has time and again proven to be unfriendly towards tribes and tribal sovereignty and has demonstrated a strong desire to eat away at the doctrine should the right case come along (Bay Mills appears to fit the bill). For example, in the last three Supreme Court cases dealing with tribal sovereign immunity, several justices have openly disparaged the doctrine, questioning its relevance and utility. Opponents of tribal sovereignty in general — and the tribal sovereign immunity doctrine in particular — smell blood in the water, evidenced by the fact that attorneys general from 16 other states have filed briefs in support of the State of Michigan.
Given the facts and legal arguments in the Bay Mills case and the Supreme Court’s seeming eagerness to hack away at tribal sovereign immunity, it comes as no surprise that a growing number of tribes and national Native American advocacy organizations are working feverishly to find a last-minute solution to keep the Court from hearing the case. Some held out hope that the Bay Mills Indian Community – perhaps recognizing the far-reaching impacts that a detrimental ruling could have on all tribes – would change its tune at this late stage and in limited fashion waive its immunity in the case, thus removing the question from the Court’s consideration. However, Bay Mills recently reaffirmed its commitment to having its day in court. Others – notably the National Congress of American Indians and the Native American Rights Fund – have implored the NIGC to reconsider its previous decision and assert jurisdiction over the Bay Mills Indian Community casino, thus rescuing the case from a ruling by the Supreme Court. All signs are that this is extremely unlikely.
Barring any eleventh-hour, unforeseen developments, the Supreme Court will hear the Bay Mills case on December 2nd, with a ruling expected in April 2014. There appears to be broad consensus among federal Indian law scholars that the case likely will be a loser for tribal sovereign immunity. The only question remaining is how big of one.
Thoughtful people may disagree on whether the Bay Mills Indian Community was wise to bring this case before the Court. Our purpose here is not to resolve that issue; it is to urge those who have been closely following the case to recast their focus from will or should the Court hear the case to what will happen once it does and what tribes can do to prepare.
Based on conversations with several well-known Indian law scholars, there are any number of possible outcomes in the case, but judging from the track record of the Court’s nine sitting justices, four potential outcomes seem most likely. Below, and in the second part of this two-part series, we detail each of these potential outcomes and discuss the repercussions each outcome would have for tribes. We then identify some steps that tribes can take to help prepare themselves for the new legal and governance reality they may well face, one in which tribal sovereign immunity may look very different — or possibly may not even exist.
POTENTIAL OUTCOME #1: The Supreme Court finds that the Sixth Circuit Court was essentially correct and affirms the decision without expanding or contracting the sovereign immunity doctrine as it currently stands. This would represent a victory for the Bay Mills Indian Community, and would spare tribes any immediate legal harm.
What It Will Mean for Tribes: If this occurs, the doctrine gets a temporary reprieve until the next case dealing with tribal sovereign immunity works its way up to the Supreme Court (there are others already in the federal court pipeline).
What Tribes Should Consider Doing: This ruling would not require tribes to fundamentally alter their governance or business practices, but tribes would be well served to begin preparing for a future where sovereign immunity looks very different (see below).
POTENTIAL OUTCOME #2: The Supreme Court interprets the Indian Gaming Regulatory Act (IGRA) as explicitly abrogating sovereign immunity in the Bay Mills case and similar cases.
In this scenario, the Supreme Court would rule that the Sixth Circuit Court improperly analyzed the case: either it used the wrong test to determine if Congress abrogated tribal sovereign immunity in the case, or the Sixth Circuit used the right test, but came up with the wrong result. Given past Supreme Court precedents, it is possible that the Court will decide that a different test applies for determining whether tribal sovereign immunity has been abrogated when dealing with commercial activities and/or off-reservation activities.
What It Will Mean for Tribes: If the Supreme Court goes down this road, it’s a good bet that it would indicate that off-reservation, commercial activities do not enjoy sovereign immunity to the same extent that on-reservation, governmental activities do. This statutory interpretation should not fundamentally change whether a tribe can voluntarily waive its immunity; however, the new standard could put the tribes at greater risk in their off-reservation commercial dealings.
A far greater concern is that such a ruling essentially would eviscerate the Supreme Court’s prior Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe of Oklahoma (1991) decision, which has served as a catalyst for the proliferation of tax compacts between tribes and states over the past decade or so – compacts from which tribes have derived significant economic benefits. Gone would be the “even playing field” between tribes and states, as tribes would no longer be able to use sovereign immunity as a tool of leverage in any type of compact or revenue-sharing negotiations. In addition, with tribal sovereign immunity now out of the picture, one could expect local non-Indian tax assessors to devise crafty approaches to tax Indian gaming, with the resulting litigation facing an outcome that is uncertain for tribes.
What Tribes Should Consider Doing: On the first front, tribes would need to fundamentally alter their off-reservation commercial activities to protect their tribal assets. They should assume that such activities, and any assets associated with such activities, will be subject to lawsuits so long as there is a statutory provision that could be interpreted as abrogating the immunity of the tribe. In response, they should consider structuring their off-reservation commercial activities in a manner that protects their tribal assets. They could do this by voluntarily waiving their immunity and providing remedies for both contract and tort actions related to off-reservation commercial activities (some tribes have already done so with positive results). For example, tribes could enact waivers of sovereign immunity for contract purposes and limit the scope of the remedy to the amount of the contract (i.e. expectancy damages) while excluding other types of remedies (e.g. consequential damages). In the area of torts (e.g. “slip and fall” cases), tribes could develop their own tort claims acts that limit the scope of liability by limiting the total amount paid out in any suit, for example to $250,000 or to whatever their tribal insurance policies will cover. In all circumstances, it would behoove tribes to alter their insurance policies to reflect the changes in liability that such a ruling would cause.
On the second front, barring the passage of Congressional legislation (highly unlikely), tribes would have few if any options to “re-level” the unbalanced playing field that this outcome would create.
In the second part of this two-part series, we discuss two other potential outcomes of the case, and offer Native nations some concluding food for thought about the relationship between tribal sovereign immunity and their efforts to govern well.
Note: The Native Nations Institute for Leadership, Management and Policy (NNI) was founded by the Morris K. Udall and Stewart L. Udall Foundation and The University of Arizona in 2001.
Ryan Seelau is a Senior Researcher with the Native Nations Institute for Leadership, Management, and Policy at the University of Arizona. Ian Record, Ph.D. is Manager, Educational Resources and Director, Rebuilding Native Nations course series for the NNI.