In the case at issue, the plaintiff has argued that the Tribal Corporation is a separate legal entity, not a corporate fiction. Plaintiff concludes that he should be permitted to sue that corporation without regard to any sovereign immunity of the Tribe.
The Supreme Court stated in Kiowa Tribe v. Mfg. Techs., Inc., 523 U.S. 751 (1998) that sovereign immunity extends to a tribe’s business activities, as well as its governmental functions. 523 U.S. at 757-60. The Court has recognized the importance of gaming in promoting the self-determination of Indian tribes. California v. Cabazon Band of Mission Indians, 480 U.S. 202, 218-19 (1987)(“[T]ribal games at present provide the sole source of revenues for the operation of the tribal governments and the provision of tribal services. They are also the major sources of employment on the reservations. Self-determination and economic development are not within reach if the Tribes cannot raise revenues and provide employment for their members.”) Congress also has recognized the importance of gaming enterprises to tribal self-governance. The Indian Gaming Regulatory Act, which governs all Indian gaming, requires that revenues from gaming be used only “(i) to fund tribal government operations or programs; (ii) to provide for the general welfare of the Indian tribe and its members; (iii) to promote tribal economic development; (iv) to donate to charitable organizations; or (v) to help fund operations of local government agencies.” 25 U.S.C. § 2710(b)(2)(B).
The Tribal Corporation here was created under a Tribal ordinance, not pursuant to any state or federal law. It is wholly owned and managed by the Tribe, through its Tribal Council. The articles of incorporation specifically state that “[t]his corporation shall be owned by the [Tribe],” and that “[t]he members of the [Tribal Council], on behalf of and for the benefit of the [Tribe], shall perform the customary functions of shareholders of the corporation.” Clerk’s Record. Furthermore, the articles specifically provide that “all capital surplus of the corporation, whether in cash or property, shall be deposited in the general fund of the [Tribe].” Id. The bylaws of the Tribal Corporation also confirm that it is a subordinate business enterprise by stating that the corporation “shall be owned by the [Tribe]” and that the Tribal Council shall perform the customary functions of shareholders for the benefit of the Tribe. Clerk’s Record. Additionally, the bylaws include a section entitled “Sovereign Immunity” and provide that the Tribal Corporation can only waive its sovereign immunity in a contract or written obligation, and that “[t]he corporation retains its sovereign immunity to the extent not expressly waived within said instrument, contract or other written obligation.” Clerk’s Record.
Hence, the purpose here for which the Tribal Corporation is organized is for gaming. While gaming is a commercial activity, Kiowa teaches that tribal activities are not deprived of sovereign immunity because they are commercial. Cabazon and the Indian Gaming Regulatory Act further illustrate that gaming activities are related to the tribe’s governmental functions of providing tribal services, employment, and self-determination. The corporation thus functions as an arm of the Tribe by which it carries out part of its tribal functions and it is appropriate that tribal sovereign immunity extend to the corporation.
Recognizing that the Tribe’s sovereign immunity extends to its wholly owned and controlled corporation through which it generates the revenue for essential tribal services furthers the federal policy to promote tribal autonomy. As recognized by Cabazon and the Indian Gaming Regulatory Act, gaming enterprises promote tribal economic development and self-sufficiency.
It is significant that the corporation is controlled by the Tribe. It was created under tribal law and is wholly owned and managed by the Tribe through its Tribal Council. A majority of it directors are required to be Tribal members. The economic benefits of the corporation are required to inure to the Tribe. The degree of control of the corporation by the Tribe is consistent with treating the corporation and the Tribe as having an identity of interests.
By its reliance on another of its decisions, the Ninth Circuit likewise underscored the significance that the Tribal Corporation is formed under Tribal law, governed by the Tribal Council for the benefit of the Tribe, and that the revenue is deposited into the Tribal treasury.
With the Tribe owning and operating the Casino, there is no question that these economic and other advantages inure to the benefit of the Tribe. Immunity of the Casino directly protects the sovereign Tribe’s treasury, which is one of the historic purposes of sovereign immunity in general. . . . In light of the purposes for which the Tribe founded this Casino and the Tribe’s ownership and control of its operations, there can be little doubt that the Casino functions as an arm of the Tribe. It accordingly enjoys the Tribe’s immunity from suit.
Allen v. Gold Country Casino, 464 F.3d 1044, 1047 (9th Cir. 2006), cert. denied, 549 U.S. 1231 (2008). See Native American Distributing v. Seneca-Cayuga Tobacco Co., 546 F.3d 1288, 1292.(10th Cir. 2008)(“immunity extends to subdivisions of a tribe, and even bias suits arising from a tribe’s commercial activities”); Ninigret Dev. Corp. v. Narragansett Indian Wetuomuck Hous. Auth., 207 F.3d 21, 29 (1st Cir. 2000) (stating that tribal housing authority “as an arm of the Tribe, enjoys the full extent of the Tribe’s sovereign immunity”). See also Filer v. Tohono O’Odham Nation Gaming Enterprise, 212 Ariz. 167, 169, 129 P.3d 78, 80 (Ct. App. 2006); Trudgeon v. Fantasy Springs Casino, 71 Cal. App. 4th 632, 638-42, 84 Cal. Rptr. 2d 65, 69-71 (1999); Gavle v. Little Six, Inc., 555 N.W.2d 284, 294-96 (Minn. 1996); Ransom v. St. Regis Mohwak Education & Community Fund, 86 N.Y.2d 553, 559, 635 N.Y.S.2d 116, 119, 658 N.E.2d 989, 992 (1995); Wright v. Colville Tribal Enterprise Corp., 159 Wash. 2d 108, 112-13, 147 P.3d 1275, 1279 (2006).
As acknowledged by the Ninth Circuit in this case, the “arm of the Tribe” concept is similar to the “arm of the state” concept discussed in Regents of the University of California v. Doe, 519 U.S. 425 (1997), which decided whether a state instrumentality could invoke the state’s sovereign immunity. In Regents, the plaintiff sought to sue the state university, through its regents, for an alleged violation of a contract to employ him. The university maintained that pursuant to the Eleventh Amendment, it was immune from such suit in federal court. This Court agreed.
It has long been settled that the reference to actions “against one of the United States” encompasses not only actions in which a State is actually named as the defendant, but also certain actions against state agents and state instrumentalities. . . . Thus, “when the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants.”
Id. at 429 (citations omitted).
“When deciding whether a state instrumentality may invoke the State’s immunity, our cases have inquired into the relationship between the State and the entity in question.” Id. The relationship between the Tribe and the Tribal Corporation has been stated above. The corporation is not a mere business. It was created under tribal law and is wholly owned and managed by the Tribe through its Tribal Council. The corporation is a device (an arm of the tribe) through which the Tribe carries out part of its tribal functions. The economic benefits of the corporation are required to inure to the Tribe. Plaintiff’s damages suit against the Tribal Corporation “is in essence one for the recovery of money from the [Tribe], [so] the [Tribe] is the real, substantial party in interest and is entitled to invoke its sovereign immunity.” Id. See Hagen v. Sisseton-Wahpeton Community College, 205 F.3d 1040, 1043 (8th Cir. 2000)(“here the College serves as an arm of the tribe and not as a mere business and is thus entitled to tribal sovereign immunity”); Duke v. Absentee Shawnee Tribe Housing Authority, 199 F.3d 1123, 1125-26 (10th Cir. 1999)(housing authority was “an enterprise designed to further the economic interests of the Absentee Shawnee tribe,” so exempt from the asserted federal law”); Pink v. Modoc Indian Health Project, Inc., 157 F.3d 1185, 1188 (9th Cir. 1998)(health corporation created and controlled by tribe “served as an arm of the sovereign tribes, acting as more than a mere business,” so entitled to tribal immunity); Dillon v. Yankton Sioux Tribe Housing Authority, 144 F.3d 581, 583 (8th Cir. 1998)(“we must treat the Authority as a tribal agency rather than a separate corporate entity created by the tribe”); EEOC v. Fond du Lac Heavy Equipment & Construction Co., 986 F.2d 246, 248 (8th Cir. 1993)(age discrimination law inapplicable to construction company chartered and wholly owned by tribe).
In Allen v. Gold Country Casino, 464 F.3d 1044, 1046 (9th Cir. 2006), the Ninth Circuit stated: “The question is not whether the activity may be characterized as a business, which is irrelevant under Kiowa, but whether the entity acts as an arm of the tribe so that its activities are properly deemed to be those of the tribe.” As the Ninth Circuit pointed out in its decision in this case, Plaintiff did not even discuss the Allen case in his brief and provided no adequate response for that omission at oral argument. Plaintiff includes no discussion of Regents or Allen in his Petition here, either, nor any argument as to why the Tribal Corporation. should not qualify as an arm of the Tribe and why his suit should not be treated as in essence one against the Tribe.
As stated above, the Ninth Circuit correctly concluded that Plaintiff’s suit is one essentially against the Tribe. Accordingly, the Tribal corporation was entitled to invoke the Tribe’s sovereign immunity.
Daryl Manhart is one of the attorneys at Burch & Cracchiolo, P.A. representing the Fort Mojave Indian Tribe on this issue. The foregoing is an extract from one of the draft responses opposing related, twin petitions for certiorari in Cook v. Avi Casino. Certiorari was denied (cases 08-929 and 08-930) on May 4, 2009.