Ninth Circuit Affirms Tribal Court Jurisdiction Over Claims Against Nonmember Former Employee

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HIGHLIGHTS:

  • In a decision favorable to tribal sovereignty, the U.S. Court of Appeals for the Ninth Circuit affirmed that the tribal court of the Cedarville Rancheria of Northern Paiute Indians (the Tribe) had jurisdiction over claims brought by the Tribe against a nonmember former employee of the Tribe.
  • The Ninth Circuit held that the tribal court had jurisdiction over the nonmember former employee pursuant to the Tribe's sovereign powers of exclusion, as well as under the framework for tribal civil regulatory jurisdiction over nonmembers as set forth in the 1981 case of Montana v. United States.

In Knighton v. Cedarville Rancheria of Northern Paiute Indians, et al., No. 17-15515, 2019 WL 1145150 (9th Cir., March 13, 2019), the U.S. Court of Appeals for the Ninth Circuit issued a decision favorable to tribal sovereignty in affirming that the tribal court of the Cedarville Rancheria of Northern Paiute Indians (the Tribe) had jurisdiction over tort claims brought by the Tribe against a nonmember former employee of the Tribe.

The Ninth Circuit held that the tribal court had jurisdiction over the nonmember former employee pursuant to the Tribe's sovereign powers of exclusion. The Ninth Circuit also found the tribal court had jurisdiction, separate and apart from its exclusionary powers, under the framework for tribal civil regulatory jurisdiction over nonmembers as set forth in Montana v. United States, 450 U.S. 544 (1981).

Background and Procedural History

In Knighton, the Tribe brought a lawsuit in tribal court against a nonmember former employee, Duanna Knighton, and two entity defendants related to alleged acts by the former employee while she served as the tribal administrator. The claims arose from allegations that the former employee 1) improperly manipulated policies to provide the former employee's salary, fringe benefits and pensions, 2) improperly invested tribal funds leading to a loss of more than $1 million for the Tribe, 3) provided misinformation to the Tribe that led to the Tribe's purchase of real estate for substantially more than market value, and 4) attempted to enter into financial agreements without authorization or tribal sovereign immunity waivers. The claims were based on conduct regulated via the Tribe's personnel manual, which applied to the tribal administrator.

Knighton filed a motion to dismiss the lawsuit in tribal court, asserting that the tribal court lacked subject matter jurisdiction. The tribal court found that the Tribe had subject matter jurisdiction under the so-called "Montana exceptions" (i.e., tribes may regulate activities of nonmembers who enter consensual relationships with a tribe or its members, and tribes may exercise civil authority over conduct of nonmembers that affect the political integrity, economic security, and health or welfare of the tribe. The tribal court found that the former employee entered into a consensual relationship with the Tribe through her employment with the Tribe, and also that the former employee's alleged conduct threatened or had a direct effect on the political integrity, economic security, and health and welfare of the Tribe.

The Tribe's court of appeals affirmed as to jurisdiction, but remanded on an unrelated issue as to another entity defendant. Thereafter, the parties stipulated to stay the lawsuit because the former employee sought to challenge the tribal court's jurisdiction in federal court. The former employee filed a lawsuit in federal court seeking, inter alia, declaratory relief that the tribal court lacked jurisdiction, and an injunction against further proceedings in the tribal court. The Tribe filed a motion to dismiss, which the district court granted, finding that the tribal court had jurisdiction over the Tribe's claims. The former employee appealed to the Ninth Circuit.

The Ninth Circuit's Holding

The Ninth Circuit held that the tribal court has jurisdiction over the Tribe's claims under 1) the Tribe's sovereign power to exclude nonmembers from tribal land, and 2) the framework for tribal civil regulatory jurisdiction over nonmembers under both of the Montana exceptions.

The Court explained that under its precedent, "a tribe's inherent sovereign power to exclude nonmembers from tribal land provides an independent basis upon which a tribe may regulate the conduct of nonmembers on tribal land." Knighton, 2019 WL 1145150, at *7 (citation omitted).

The Court expressly clarified, however, that its prior precedent does "not exclude Montana as a source of tribal regulatory authority over nonmember conduct on tribal land." The Court ultimately concluded that "the Tribe's authority to regulate [the former employee's] conduct derived not only from its sovereign power to exclude nonmembers from tribal lands, but also from its inherent sovereign power [under the Montana exceptions, i.e.,] to regular consensual relations with nonmembers ... and to protect the political integrity, the economic security, [and] the health [and] welfare" of the Tribe. Id. at *7, 11 (emphasis added).

As to the first Montana exception, the Court explained that "the conduct that the Tribe seeks to regulate through tort law arises directly out of the consensual employment relationship between the Tribe and [the former employee]" and that she "should have reasonably anticipated that her conduct might 'trigger' tribal authority." Id. at *9. The Court found it particularly convincing that she had been an employee for approximately 16 years, and that the Tribe adopted a tribal constitution during her employment, which provided that the "jurisdiction of [the Tribe] shall extend to land now within the confines of the [Rancheria] and to such other lands as may thereafter be added thereto." Id.

As to the second Montana exception, the Court reasoned that the former employee's alleged conduct was "of long duration and had a great impact on the Tribe" and that the "alleged harm to the Tribe caused by her conduct 'imperil[ed] the subsistence' of the tribal community. [citations omitted]". Id. The Court found that the alleged conduct "threatened the Tribe's very subsistence and that the Tribe therefore retains the inherent power under the second Montana exception to regulate that conduct." Id. at 10.

Takeaways

Knighton highlights tribes' sovereign exclusionary power as a source for regulating nonmember conduct on tribal land, and it also clarifies that Montana provides a separate source for such regulation. Knighton also highlights the importance of labor and employment law in Indian Country, given that the employment relationship between the former employee and the Tribe supported tribal court jurisdiction under the first Montana exception. Knighton is a welcome decision for tribes that seek to use their own tribal courts to redress harm caused by current or former employees. Going forward, tribes may benefit from an internal review of existing structures to explore whether any changes might maximize the benefit of the Knighton decision.

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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