Will Inherent Tribal Court Authority Over Non-Members Survive Dollar General?

Patrick Sullivan
April 26, 2017
State, county and city governments are responding to the opiate crisis by suing the national manufacturers and distributors of these dangerous drugs. For the first time, an Indian tribe has sued prescription drug wholesalers and retailers in tribal court for damages related to addiction. On April 20, 2017, the Cherokee Nation filed a complaint in the District Court of the Cherokee Nation against the drug wholesalers and retailers that operate on the Cherokee reservation in Oklahoma. The lawsuit names national pharmaceutical distributors including McKesson, Wal-Mart, Walgreens and CVS and again raises the question of tribal court tort jurisdiction over non-Indians conducting business on Indian reservations.

That issue was recently addressed by an equally divided United States Supreme Court in Dollar General Corporation v. Mississippi Band of Choctaw Indians. The stalemate decision let stand a Fifth Circuit ruling upholding a tribal court’s jurisdiction over a national retailer. Now, the same issue is once again very much in play in Cherokee Nation of Oklahoma v. McKesson Corp. et al. With a full panel, Neil Gorsuch will be the tiebreaker if this dispute reaches the Court.

In Dollar General, John Doe, a 13 year old tribal member alleged that he was sexually harassed and assaulted by Dale Townsend, an employee of Dollar General. Doe was working in an unpaid internship at the national discount retailer.   The store in question was on trust land within the reservation of the Mississippi Band of Choctaw Indians. Doe sued Townsend and Dollar General in the Choctaw Tribal Court for money damages for his subsequent trauma and depression and alleged that Dollar General, through its negligent hiring of Townsend, was vicariously liable for his injuries.
Dollar General and Townsend moved for dismissal for lack of subject-matter jurisdiction in the Choctaw Tribal Court, which denied the motion. The Choctaw Supreme Court affirmed, holding that the Tribal Court held jurisdiction over both defendants.
Dollar General and Townsend immediately filed for an injunction against Doe, the Choctaw Tribal Court and the tribal judge in federal district court. The federal court held that the Choctaw Tribal Court properly exercised jurisdiction over Dollar General due to its consensual relationship with the Tribe, but that Townsend had not entered any consensual relationship sufficient to maintain tribal court jurisdiction, and enjoined the Tribal Court from proceeding against him. Dollar General appealed to the United States Court of Appeals for the Fifth Circuit, which affirmed.
The Fifth Circuit reasoned that the Tribe properly held jurisdiction over Dollar General under the Montana v. United States analysis because the retailer had entered into a consensual relationship with the Tribe when it leased and began conducting business on the tribal land.
In Montana, the Supreme Court determined that in general, Indian tribal authority over nonmembers “can only extend to land on which the Tribe exercises ‘absolute and undisturbed use and occupation’ and cannot apply to subsequently alienated lands held in fee by non-Indians.” Accordingly, Tribes may not regulate non-member activities on non-Indian land within the reservation, with two exceptions. Montana’s exceptions allow tribal regulation only over (1) “nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements,” or (2) nonmember conduct that “threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe.”
Interestingly, the Fifth Circuit applied the Montana test even though the Dollar General store was on trust land, over which many argue the Tribe has an inherent sovereignty which creates tribal jurisdiction over the activities of non-members present on that land. Remarkably, although the Tribe had made the argument in the Choctaw courts, it conceded the argument in its federal briefing.
In tribal court, the Tribe’s attorneys had initially asserted the Tribe’s jurisdiction over non-members on the basis of its inherent sovereignty over its trust land, and argued that Dollar General’s position that Montana‘s rule applied was “based on a complete and fundamental misinterpretation of the rules regarding the exercise of tribal jurisdiction over non-Indians” established in Montana. The Tribe argued that the general rule of Montana – the presumption against authority over non-members on non-Indian fee land – could never apply on the Mississippi Choctaw reservation because there is no such non-Indian land within the reservation boundaries.
But the Tribe’s own highest court disagreed. The Choctaw Supreme Court stated in its 2008 opinion,

Originally, Montana analysis was only required when non-Indian activities took place on fee land within the Reservation. Subsequent cases expanded the territorial reach of Montana, which culminated in [Nevada v.] Hicks’ requirement that Montana analysis was always required, regardless of where the non-Indian activity took place.

Although this was not a novel argument, it was a surprising concession from a tribal supreme court, particularly from a tribe that enjoyed tribal control over its entire reservation and in a case involving such a repugnant defendant.
Even while accepting its outcome, the Choctaw Supreme Court complained about the United States Supreme Court’s approach, writing,

Needless to say, this developing jurisprudence has neither constitutional nor statutory roots, but rather is the product of generally (unarticulated) judicial common law decisionmaking. This common law approach appears to be guided not by the normal (federal) understanding that the primary role of common law decisionmaking is to fill gaps in the relevant substantive law, but rather to vindicate a conscious judicial policy to significantly insulate the non-Indians from civil accountability in Tribal courts.

The Choctaw Supreme Court’s reluctant concession demonstrates the fundamental dilemma of tribal courts in the United States. These courts must balance the Tribe’s imperative to maintain sovereignty and independence with the need to conform to federal law in order to survive likely challenges  in the federal court system.
While the Choctaw Supreme Court applied the Montana rule to the case, it determined that Dollar General’s activities met both Montana exceptions because it had (1) entered a consensual lease and (2) threatened the Tribe’s “health and welfare” by negligently allowing a terrible crime to occur.
After the Choctaw Supreme Court’s decision that Montana applied throughout the reservation, the Tribal parties’ briefing in federal court conceded the argument (which would have been difficult to make after the Tribe’s own highest court rejected it).   Reciting the language from the Choctaw Supreme Court almost verbatim, the Tribe’s federal appeal brief stated that Montana’s general rule against jurisdiction over nonmembers “now also applies to non-Indian conduct occurring on reservation trust land. Both the Choctaw Supreme Court and the District Court below have so ruled.”
In fact, the federal district court did not rule on that issue, but simply noted that the Tribe had conceded the argument. And, notwithstanding the opinion of the Choctaw Supreme Court, the question of the application of Montana on trust land was not, and is not, settled law.  As an example, the Tribe’s concession was very much at odds with the subsequent opinion of the Ninth Circuit’s in Water Wheel v. LaRance, which upheld tribal court jurisdiction over a non-member’s lease dispute due to the tribe’s inherent authority to exclude non-Indians from tribal land.
Water Wheel directly addressed the danger of avoiding inherent authority out of convenience, noting,

The [federal district] court reasoned that it did not need to reach the question regarding the tribe’s inherent authority given its decision that Montana’s first exception provided a basis for jurisdiction. Apparently, the court failed to recognize that in applying Montana unnecessarily, it improperly expanded limitations on tribal sovereignty that, with only one narrow exception, have been applied exclusively to non-Indian land.

The Tribal attorneys even cited to Water Wheel in their appeals briefing, but didn’t avail themselves of the unmistakeable holding in that case that Montana did not apply to trust land. In so doing, they tied one hand behind their backs and risked dulling the blade of one of Indian country’s sharpest weapons.
Without either party raising inherent sovereignty, the Fifth Circuit did not consider it and proceeded to determine that Dollar General’s business activities on the Choctaw reservation established a consensual relationship. The court noted that the lease provided for the application of tribal law and dispute resolution in tribal court.
Dollar General filed a petition for certiorari. The nine-member Supreme Court granted the petition on June 15, 2015, and heard oral arguments on December 7, 2015. On February 13, 2016, Justice Antonin Scalia suddenly died.
The now eight-member Supreme Court issued a per curiam order on June 23, 2016, affirming with no opinion. The four-four split means that Scalia’s vote would have decided the issue. But, in his absence, the stalemate led to a tenuous affirmation of the Fifth Circuit’s determination that the Tribal Court had jurisdiction over Dollar General.
Regarding the Cherokee Nation’s opiate lawsuit, that tribe is not bound by the Choctaw Supreme Court’s decision, and the Cherokee Nation specifically raised its treaty-based inherent authority to exercise jurisdiction over non-members in its complaint. Because that issue was never raised by the parties in the federal Dollar General litigation, the Tribe is not barred from raising it.  But in the wake of Dollar General the Tribe will bear a heavy burden of resurrecting the argument.
For good measure, the Cherokee complaint also invoked Montana’s two exceptions, arguing that each of the defendant engaged in “consensual commercial dealings” with the Nation and its citizens and that the resulting opiate crisis harmed the “health and welfare” of Cherokee Nation citizens.
When the defendant drug distributors inevitably seek to avoid tribal court by filing for a federal injunction, all these arguments will be in play, laying the foundation for a likely appeal to the Tenth Circuit. If a federal case reaches the Supreme Court, it is foreseeable that Gorsuch will cast the deciding vote. Indian country has found Judge Gorsuch to be fair but inscrutable, but he has not directly ruled on a similar issue. Even if not in this case, Justice Gorsuch’s position on the matter will likely become the law of the land for Indian country.
The author thanks the attorneys who reviewed this article for their good feedback which is reflected herein.