The Ninth Circuit Court of Appeals recently upheld a lower court decision that the Puyallup Tribe did not waive its sovereign immunity when it entered a contract with the State of Washington that included a mediation provision. The key distinction supporting the non-waiver of sovereign immunity was that the contract did not include other terms clearly indicating a waiver of sovereign immunity by the Tribe. A copy of the decision is available here. See also Miller v. Wright, 2012 U.S. App. LEXIS 23295 (9th Cir. 2012).

Miller v. Wright.

In Miller, the Puyallup Tribe entered into a cigarette tax contract (the “CTC”) with the State of Washington. Under the CTC, the Tribe agreed to collect a $30.00 fee on all cartons of cigarettes sold by the Tribe or any tribally chartered business and to purchase cigarettes for resale only from Washington wholesalers, tribal manufacturers, or approved out-of-state wholesalers. In turn, the State agreed that it would return the fees collected to the Tribe if the fees were used for essential government services, such as health services, law enforcement, and emergency services. The CTC also provided that responsibility for enforcing the $30.00 fee would be shared by both the State and the Tribe, and that any dispute would be submitted to mediation.

A man named Miller and a woman named Lanphere, both non-Indians and non-residents of the Puyallup reservation, purchased cartons of cigarettes at a tribally chartered business operating on reservation land. Miller and Lanphere objected to the fee and filed suit. They sought a refund and an injunction against future collection of the fee. After pursuing their action in the state courts of Washington and the Puyallup tribal court system, Miller and Lanphere filed an action in federal court, which also dismissed the case. The customers then appealed to the Ninth Circuit Court of Appeals, which affirmed the dismissal.

Tribal Sovereign Immunity Protects Indian Tribes in Many Cases.

In affirming the district court, the Ninth Circuit relied on the legal principle that “[t]ribal sovereign immunity protest Indian tribes from suit absent express authorization from Congress of clear waiver by the tribe.” Cook v. AVI Casino Enterprises, Inc., 548 F.3d 718, 725 (9th Cir. 2008). The Cook case also states that this rule extends to tribal commercial activities and to corporations chartered under tribal law. The court then analyzed the CTC between the State and the Tribe and concluded, first, that the provisions of the CTC were common used in cigarette tax agreement and, second, that none of the terms supported a clear waiver by the Tribe of its sovereign immunity.

Citing a U.S. Supreme Court decision, the Ninth Circuit clarified that “an arbitration clause [in an agreement with a Tribe] may establish a clear waiver of sovereign immunity.” C & L Enterprises, Inc. v. Citizens Band of Potawatomi Indian Tribe of Okla., 532 U.S. 411, 418-19 (2001) (emphasis added). In C & L Enterprises, however, the tribe that the contract would be governed Oklahoma law and that the Oklahoma Uniform Arbitration Act applies. C & L Enterprises contrasts with Demontiney v. U.S., 255 F.3d 801 (9th Cir. 2001). In Demontiney, the contract with the Indian tribe covered only “such mundane issues as indemnity, default remedies, interest rates, and [applicable] federal laws.” The contract even stated that the tribe retained its sovereign immunity, gave the tribal court exclusive jurisdiction, and established that tribal law governed the contract.

Based on the contrast between the C & L Enterprises and Demontiney cases, the Ninth Circuit in Miller v. Wright concluded that the CTC between the Puyallup Tribe and the State was “more akin” to Demontiney. In other words, the mere inclusion of a mediation provision was not enough to establish “a clear and explicit waiver of immunity” by the Tribe. In addition, the CTC did not include any of the other provisions found in the C & L Enterprises case that established state jurisdiction over the contract’s arbitration provisions. Thus, the Puyallup Tribe did not waive its sovereign immunity when it entered the CTC with the State of Washington.

Sovereign immunity can be a difficult and complicated area of Indian. If you would like further information regarding tribal sovereign immunity, or other Indian law matters, please visit the website for the Law Office of James D. Griffith, P.L.L.C. and use one of the contact options provided.


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