Asserting a Tribal Sovereign Immunity Defense, Even Where the Tribe has Contractually Waived its Immunity

by Winthrop & Weinstine, P.A.
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The doctrine of sovereign immunity acts as a powerful protection for any sovereign entity.  By prohibiting the courts from adjudicating whether or not the sovereign party breached a contract, committed a tort, or otherwise wrongfully acted, this doctrine protects the public from devastating financial judgments—but does so at the expense of the private plaintiff.  Although this result is undoubtedly unfair to the private party (even, it may be argued, a private party without a meritorious claim) the policy behind sovereign immunity ensures that the risk of wrongful acts by the government and its officials will not be borne by the people whom the government serves.  This policy goal is particularly important for Native American governments, who may only have a few thousand members.

Sophisticated private parties wishing to enter into a contract with a tribe understand that they must obtain a waiver of the tribe’s sovereign immunity in order to be able to seek legal redress in the event the tribe breaches the contract or commits some other wrongful act.  Similarly, tribes understand that sophisticated private parties will generally require the tribe to unequivocally waive, at least to a limited extent, its immunity from suit as a condition of providing the tribe needed goods or services.

Courts, however, require strict and formal adherence with procedural requirements in order to effectively waive sovereign immunity.  E.g., Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978); Allen v. Gold Country Casino, 464 F.3d 1044, 1047 (9th Cir. 2006).  For example, a waiver cannot be implied into a contract, even where the party argues it “obviously” would not have entered the contract without a waiver.  E.g., Sac & Fox Nation v. Hanson, 47 F.3d 1061, 1063–64 (10th Cir. 1995); C&B Invs. v. Winnebago Health Dept., 542 N.W.2d 168, 170 (Wis. Ct. App. 1995); but see C & L Enters., Inc. v. Citizen Band of Potawatomi Indian Tribe, 532 U.S. 411, 418–19 (2001) (noting that typical arbitration clauses act as an express waiver of sovereign immunity).

Even where a contract purports to expressly waive a tribal sovereign’s immunity, it must be remembered that the power to waive that immunity typically rests with the legislature alone.  Tribal officials, no matter how well-intentioned, simply lack the authority to waive the tribe’s immunity, and if the parties enter into a contract containing an immunity waiver that was not authorized by the legislature, the waiver will be held ineffective.  See generally Ho-Chunk Nation v. Money Ctrs. of Am., Order (Granting Motion to Dismiss Defendants’ Counterclaim), CV 10-54 (HCN Tr. Ct. Sept. 6, 2013).

Consider the example where the tribe’s business department wishes to engage a gaming vendor to assist in its casino operations.  The vendor travels to the tribal government to make a presentation relating to its goods or services.  Finding value in those goods or services, the executive branch enters into a contract with the vendor, either under its own authority or pursuant to a delegation of such authority by the legislature.  The vendor insists on a limited waiver of sovereign immunity in the contract, which the executive branch agrees to, and the parties execute the contract.  The legislature never specifically authorizes the waiver.  A year later, a dispute arises and the parties bring suit against each other for breach of contract.

Savvy counsel for the tribe can still assert a sovereign immunity defense, despite a clear and unequivocal waiver in the contract, because the legislature never actually authorized it.  As an added bonus to the tribe, it can successfully move to dismiss the private party’s complaint long after the time to bring a motion to dismiss has expired, because the defense of sovereign immunity calls into question the subject matter jurisdiction of the court. (The tribe will naturally wish to raise its sovereign immunity defense as early in the proceedings as possible, but if the tribe is already well into suit, it may still raise this defense.)

This result may seem particularly unfair to the private party, even more so than in a typical sovereign immunity case, because the private party thought to ask for—and actually received—a waiver in the contract.  Courts recognize, however, that it would be intolerable for government officials, however well-intentioned, to be permitted to subject the sovereign to judgment in the courts any time they saw fit to do so.  Members of the executive branch simply lack the authority to toss aside this important public shield, and courts insist that parties seeking a waiver look to the legislature.  Private parties failing to obtain a legislative waiver do so at their own peril.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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