Wilbur v. Locke

• Decision Date: 09 September 2005
• Docket Number: No. 03-35911.,03-35911.
• Parties: Marvin WILBUR, Jr., Trustee of the Salish Trust dba Trading Post at March Point; Marvin Wilbur, Sr.; Joan Wilbur, Plaintiffs-Appellants, v. Gary LOCKE, Governor of the State of Washington; Frederick Kiga, Director, Revenue Department of the State of Washington; Gary O'Neil, Assistant Director, Revenue Department of the State of Washington; Revenue Department of the State of Washington; State of Washington, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

423 F.3d 1101

Marvin WILBUR, Jr., Trustee of the Salish Trust dba Trading Post at March Point; Marvin Wilbur, Sr.; Joan Wilbur, Plaintiffs-Appellants, v. Gary LOCKE, Governor of the State of Washington; Frederick Kiga, Director, Revenue Department of the State of Washington; Gary O'Neil, Assistant Director, Revenue Department of the State of Washington; Revenue Department of the State of Washington; State of Washington, Defendants-Appellees.

No. 03-35911.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 6, 2005.

Filed September 9, 2005.

COPYRIGHT MATERIAL OMITTED

James E. Lobsenz, Carney Badley Spellman, P.S., Seattle, WA, for the plaintiffs-appellants.

Christine O. Gregoire, Attorney General, and David M. Hankins, Assistant Attorney General, Olympia, WA, for the defendants-appellees.

Appeal from the United States District Court for the Western District of Washington; Robert S. Lasnik, District Judge, Presiding. D.C. No. CV-03-00873-RSL.

Before: WALLACE, SILVERMAN, and PAEZ, Circuit Judges.

WALLACE, Senior Circuit Judge:

The plaintiffs sought relief from an anticipated contract between the State of Washington and the Swinomish Indian Tribe (Tribe) regarding taxation of cigarette sales by Indian retailers. The district court held that the Tax Injunction Act (TIA), 28 U.S.C. § 1341, barred the action and dismissed it. The district court had jurisdiction over this timely appeal pursuant to 28 U.S.C. §§ 1331 and 2201, and we have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm, but on grounds different from the district court.

I.

Washington law authorizes the Governor "to enter into contracts concerning the sale of cigarettes" with certain Indian tribes. Wash. Rev.Code § 43.06.450. Such contracts must "provide for a tribal cigarette tax in lieu of all state cigarette taxes and state and local sales and use taxes on sales of cigarettes in Indian country by Indian retailers," but the tribe may "allow an exemption for sales to tribal members." Id. § 43.06.455(3). The contracts must also "provide that the tribal cigarette tax rate be one hundred percent of the state cigarette and state and local sales and use taxes within three years of enacting the tribal tax." Id. § 43.06.460. Tax revenue retained by a tribe must be used for certain statutorily defined "essential government services." Id. § 43.06.455(8), (14)(a). Thus, cigarette tax contracts must provide that the state will not impose any tax, and must require a tribe to collect taxes effectively equal to the previously imposed state taxes, and use the revenue for essential government services. In addition, cigarette tax contracts must include a number of provisions regulating Indian retailers' activities, such as provisions requiring tax stamps, governing the purchase of cigarettes by retailers, and ensuring compliance. Id. § 43.06.455(4), (5), (7).

Marvin Wilbur, Jr., Marvin Wilbur, Sr., and Joan Wilbur are enrolled members of the Tribe and the operators of a retail store located on trust land within the Swinomish Indian Reservation. In April 2003, the Wilburs filed an action against various Washington officials and the Department of Revenue (State) alleging that the State and the Tribe were negotiating a cigarette tax contract. They alleged that the statutes governing cigarette tax contracts and the proposed agreement violated the Indian Commerce Clause, U.S. Const. art. I, § 8, cl. 3, the Sherman Antitrust Act, 15 U.S.C. §§ 7-276, the Treaty of Point Elliot, 12 Stat. 927 (Jan. 22, 1855), and a host of other constitutional and statutory provisions. The Tribe was not named as a defendant.

The complaint requested, among other relief, a declaratory judgment that Wash. Rev.Code §§ 43.06.450, 43.06.455, and 43.06.460 are "void, unlawful and unenforceable as applied to cigarettes transported, distributed, received or sold by Plaintiffs' retail businesses located within the exterior boundaries of the Swinomish reservation"; an injunction "preventing the Defendants from enforcing any provision of the statutes or contracting in any way with the Swinomish Tribe or any person or entity regarding a cigarette tax on any cigarettes to be received or sold by Indian-owned retail businesses within the exterior boundaries of the Swinomish Reservation"; and a "declaration that any agreement or contract entered into by the Swinomish Tribe with Defendants is invalid when attempted to be imposed or any way applied to Plaintiffs."

The State filed a motion to dismiss the Wilburs' complaint, arguing that the Wilburs lacked standing, that the TIA and the Eleventh Amendment barred the Wilburs' action, that the Tribe was an indispensable party, and that the complaint failed to state a claim for which relief could be granted. While that motion was pending, the State and the Tribe executed a cigarette tax contract (Compact). However, because the parties did not inform the district court of this fact, the court was under the impression that the Compact was still awaiting approval by the Governor when it granted the State's motion to dismiss. Based largely on this misunderstanding, the court concluded that the Tribe was not a necessary party. The court asserted that the Wilburs "likely" lacked standing, but based its decision on the proposition that the TIA deprived it of subject matter jurisdiction over the Wilburs' suit. Therefore the district court dismissed the action without discussing the State's other arguments.

II.

The State urges us to affirm the district court's ruling that the TIA bars this action, or to affirm on one of the other grounds that it argued in the district court or on the additional ground that the case is now moot. See Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir.2004) ("We may affirm the district court's dismissal on any ground supported by the record"). Because we now know facts, undisclosed to the district court, bringing into question whether the Tribe is an indispensable party pursuant to Rule 19, we first determine whether we may proceed directly to the Rule 19 issue or whether we must first address jurisdictional issues.

The Supreme Court has "adhered to the requirement that a court address questions pertaining to its or a lower court's jurisdiction before proceeding to the merits." Tenet v. Doe, ___,U.S. ___, ___ n. 4, 125 S.Ct. 1230, 1235 n. 4, 161 L.Ed.2d 82 (2005), citing Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94-95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). However,

[w]hile Steel Co. reasoned that subject-matter jurisdiction necessarily precedes a ruling on the merits, the same principle does not dictate a sequencing of jurisdictional issues. "[A] court that dismisses on . . . non-merits grounds such as . . . personal jurisdiction, before finding subject-matter jurisdiction, makes no assumption of law-declaring power that violates the separation of powers principles underlying Mansfield [C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 4 S.Ct. 510, 28 L.Ed. 462 (1884)] and Steel Company." It is hardly novel for a federal court to choose among threshold grounds for denying audience to a case on the merits. Thus, as the Court observed in Steel Co., district courts do not overstep Article III limits when they decline jurisdiction of state-law claims on discretionary grounds without determining whether those claims fall within their pendent jurisdiction, or abstain under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669, without deciding whether the parties present a case or controversy.

Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584-85, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (citations omitted); see also Kowalski v. Tesmer, ___ U.S. ___, ___ & n. 2, 125 S.Ct. 564, 567 & n. 2, 160 L.Ed.2d 519 (2004) (assuming existence of Article III standing and addressing "alternative threshold question" whether prudential requirements of standing were satisfied).

The difficulty here is that it is unclear whether a Rule 19 issue is the sort of "threshold" question to which a court may directly proceed without first addressing other "threshold" questions. We are unaware of any case discussing how Rule 19 fits within the Steel Co./Ruhrgas scheme, and the parties have not briefed the issue. Moreover, it is not always easy to determine whether a particular issue is the type of "threshold" matter which, if decided adversely to the plaintiff, obviates the need to address other threshold questions. Compare Dominguez-Cota v. Cooper Tire & Rubber Co., 396 F.3d 650, 652-54 (5th Cir.2005) (holding that "district court erred in dismissing the case on forum non conveniens grounds without first determining whether it had subject matter jurisdiction") with Monegasque De Reassurances S.A.M. v. Nak Naftogaz of Ukraine, 311 F.3d 488, 497-98 (2d Cir.2002) (holding that court could pass over question of statutory subject matter jurisdiction and "go[ ] directly to[a] forum non conveniens issue"); compare also Calderon v. Ashmus, 523 U.S. 740, 745 & n. 2, 118 S.Ct. 1694, 140 L.Ed.2d 970 (1998) (stating that court "must first address" whether action presented Article III case or controversy before addressing Eleventh Amendment issue) and Cox v. City of Dallas, 256 F.3d 281, 303-04 (5th Cir.2001) (stating that Article III standing "must be examined before the Eleventh Amendment") with Snoeck v. Brussa, 153 F.3d 984, 988 (9th Cir.1998) ("Because the Eleventh Amendment bar conclusively ends this dispute we need not address the related issue of [Article III] standing which the district court found plaintiffs lacked") and Pederson v. La. State Univ., 213 F.3d 858, 866 (5th Cir.2000) (addressing issues of Article III standing and state sovereign immunity "in no particular order").

Although there is no clear precedent, we conclude that jurisdictional issues should be decided before reaching the Rule 19 issue. This is so because questions of subject matter jurisdiction, "i.e., the courts' statutory or constitutional power to...