Native American Distrib. v. Seneca-Cayuga Tobacco

• Decision Date: 17 November 2008
• Docket Number: No. 07-5104.,07-5104.
• Parties: NATIVE AMERICAN DISTRIBUTING, a division of Flat Creek Cattle Co., Inc., a Missouri corporation; John Dilliner, an individual, Plaintiffs-Appellants, v. SENECA-CAYUGA TOBACCO COMPANY, an enterprise of the Seneca-Cayuga Tribe of Oklahoma; Leroy Howard, an individual; Floyd Lockamy, an individual; Richard Wood, and individual, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

546 F.3d 1288

NATIVE AMERICAN DISTRIBUTING, a division of Flat Creek Cattle Co., Inc., a Missouri corporation; John Dilliner, an individual, Plaintiffs-Appellants, v. SENECA-CAYUGA TOBACCO COMPANY, an enterprise of the Seneca-Cayuga Tribe of Oklahoma; Leroy Howard, an individual; Floyd Lockamy, an individual; Richard Wood, and individual, Defendants-Appellees.

No. 07-5104.

United States Court of Appeals, Tenth Circuit.

November 17, 2008.

Jonathan C. Neff, Jonathan Neff, P.C., Tulsa, OK, for Plaintiffs-Appellants.

Daniel D. Doyle, Spencer, Fane, Britt & Browne, St. Louis, MO, (James W. Tilly, The Tilly Law Firm, Tulsa, OK, on the brief) for Defendant-Appellee, Seneca-Cayuga Tobacco Company.

Scott B. Wood, Wood, Puhl & Wood, P.L.L.C., Tulsa, OK, for Defendants-Appellees, Leroy Howard, Floyd Lockamy and Richard Wood.

Before BRISCOE and GORSUCH, Circuit Judges, and PARKER, District Judge.^*

BRISCOE, Circuit Judge.

Plaintiffs Native American Distributing and John Dilliner filed suit in federal court against the Seneca-Cayuga Tobacco Company ("SCTC"), which is an enterprise of the Seneca-Cayuga Indian Tribe, and three individuals who had been officers of SCTC (the "Individual Defendants"). SCTC and the Individual Defendants moved to dismiss pursuant to Rule 12(b)(1), Fed.R.Civ.P., arguing that the doctrine of tribal sovereign immunity shielded them from suit. The district court granted the defendants' motions and dismissed all claims with prejudice, and the plaintiffs now appeal. Our jurisdiction arises under 28 U.S.C. § 1291. We affirm the district court's dismissal of plaintiffs' claims.

I

The Seneca-Cayuga Tribe of Oklahoma is a federally-recognized Indian tribe located primarily in and around northeastern Oklahoma. See Indian Entities Recognized & Eligible To Receive Services From the United States Bureau of Indian Affairs, 67 Fed.Reg. 46328, 46331 (July 12, 2002). Section 3 of the Oklahoma Indian Welfare Act of 1936, 25 U.S.C. § 503, grants the membership of the Seneca-Cayuga Tribe the right to organize and act through two entities: a governmental entity organized under a constitution and a corporate entity organized under a corporate charter. Though not bound to do so, the membership of the Seneca-Cayuga Tribe has exercised its powers under Section 3 and has enacted both a constitution and a corporate charter.

The tribal constitution and bylaws were ratified on May 15, 1937, creating an organized government for the membership of the Seneca-Cayuga Tribe. Among other things, the tribal constitution created a "Business Committee" with the "power to transact business or otherwise speak or act on behalf of the Seneca-Cayuga Tribe in all matters on which the Tribe is empowered to act." Tribal Const. art. VI, ROA at 49. Shortly thereafter, on June 26, 1937, the Seneca-Cayuga Tribe adopted its corporate charter. Under the charter, the "membership, the officers, and the management of the incorporated Tribe"—including the Business Committee—are identical to those set forth in the tribal constitution. Corp. Charter § 2, ROA at 84. Noteworthy is section 3(b) of the Corporate Charter, which contains a clause granting the corporate entity the power "[t]o sue and be sued; to complain and defend in any court." Id. § 3(b), ROA at 84.

On July 6, 1999, the Business Committee, purporting to exercise its powers under Article VI of the tribal constitution, adopted a resolution "creat[ing] an operating division of the [Seneca-Cayuga] Tribe, a Tribal enterprise to engage in (a) the manufacture, sale, and distribution of tobacco products; and (b) any other lawful commercial activity; and declar[ing] such Tribal enterprise and its activities as essential governmental functions of the Seneca-Cayuga Tribe." Resolution # 03-070699, ROA at 55, 56. The tobacco company established by this resolution became SCTC.

SCTC engaged Native American Distributing ("NAD") to serve as a distributor of its products in 2001. At the time NAD and SCTC entered into their contract, John Dilliner, a member of the Seneca-Cayuga Tribe and a shareholder and officer of NAD, reportedly asked SCTC officials whether it was necessary to secure a waiver of tribal sovereign immunity. In response, SCTC officials told him that no waiver was necessary because SCTC was subject to the "sue and be sued" clause in the Corporate Charter. NAD served as an SCTC distributor for about four years, until relations between the two companies soured.

NAD and Dilliner filed suit in United States District Court on July 27, 2005. The complaint named as defendants SCTC and Individual Defendants Leroy Howard, a former Chief of the Seneca-Cayuga Tribe; Floyd Lockamy, the General Manager of SCTC; and Richard Wood, the Plant Manager of SCTC. The complaint alleged that SCTC, under the direction of the Individual Defendants, repeatedly breached agreements between NAD and SCTC. The complaint further alleged that the Individual Defendants engaged in market manipulation and other illegal competitive practices while acting as officers of SCTC. As grounds for the court's jurisdiction over SCTC, the complaint cited the "sue and be sued" clause in the Corporate Charter.

The defendants moved to dismiss, asserting that they were entitled to the Seneca-Cayuga Tribe's sovereign immunity from suit. They argued that the "sue and be sued" clause did not operate as a waiver of immunity, and that even if it did, this waiver applied only to the tribe's corporate entity (the "Tribal Corporation") and not its governmental entity (the "Tribe"). While the plaintiffs maintained that SCTC was a division of the Tribal Corporation, the defendants contended that SCTC was an enterprise of the Tribe and was thus not subject to the "sue and be sued" clause. The Individual Defendants further claimed that, as officers of SCTC acting in their representative capacities, they were also entitled to the Tribe's immunity.

Voluminous briefing of these issues ensued. During the volley of briefs, a number of exhibits were submitted to the court, including copies of the tribal constitution, Corporate Charter, and other relevant tribal documents, as well as sworn and unsworn affidavits from various parties to SCTC's dealings. The plaintiffs requested limited discovery on the jurisdictional issues, but given the evidence already before it and the scope of the requested discovery, the district court denied this request.

The district court then granted the defendants' motions and dismissed all claims with prejudice. In addressing SCTC's entitlement to tribal immunity, the court considered the "crucial question" to be "whether SCTC, in its dealings with Plaintiffs, functioned as an enterprise of the Tribe or of the Tribal Corporation." Order, ROA at 385. It reasoned that "[i]f SCTC is an enterprise of the Tribe (as a governmental entity), immunity has not been waived. If SCTC is an enterprise of the Tribal Corporation, immunity has been waived by virtue of the Sue and Be Sued Clause in the Corporate Charter." Id. After examining the evidence before it, the court found that SCTC was a division of the Tribe rather than the Tribal Corporation. The court rejected the plaintiffs' argument that because SCTC officials told Dilliner that no waiver of immunity was necessary, the doctrine of equitable estoppel barred the defendants from asserting tribal immunity, and also rejected other arguments that the doctrine of tribal immunity should not be applied because of the unique context of this case. Id. at 387-94.

The court further concluded that the Individual Defendants were also protected by the Tribe's immunity. It noted that "all allegations against the Individual Defendants relate to decisions made and actions taken by them as the `principal managers' of SCTC, an immune tribal enterprise," and as such, the Individual Defendants had a "`colorable claim of authority' from the Tribe" that extended the Tribe's immunity to them. Id. at 396. The court also rejected the plaintiffs' arguments "that the Individual Defendants acted outside the scope of authority because the Complaint alleges wrongful actions," id. at 395, and that Lockamy and Wood were "not entitled to sovereign immunity because they were merely employees of SCTC and were not `tribal officials,'" id. at 397.

II

Two issues are presented for our resolution on appeal: (1) whether the district court correctly concluded that SCTC was entitled to tribal immunity; and (2) whether the court correctly concluded that the Individual Defendants were also entitled to the protection of tribal immunity.¹

SCTC's Immunity from Suit

Indian tribes are "domestic dependent nations" with sovereignty over their members and territories. E.F.W. v. St. Stephen's Indian High Sch., 264 F.3d 1297, 1304 (10th Cir.2001). As sovereign powers, federally-recognized Indian tribes possess immunity from suit in federal court. Berrey v. Asarco Inc., 439 F.3d 636, 643 (10th Cir.2006); see also 25 C.F.R. § 83.2 (describing effect of federal recognition for tribes). Tribal immunity extends to subdivisions of a tribe, and even bars suits arising from a tribe's commercial activities. See Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 759, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998) ("Tribes enjoy immunity from suits on contracts, whether those contracts involve governmental or commercial activities and whether they were made on or off a reservation."); see also Allen v. Gold Country Casino, 464 F.3d 1044, 1047 (9th Cir.2006) (holding that a casino that "function[ed] as an arm of the Tribe" enjoyed tribal immunity), cert. denied, ___ U.S. ___, 127 S.Ct. 1307, 167 L.Ed.2d 119 (2007); Ramey Constr. Co. v. Apache Tribe of the Mescalero Reservation, 673 F.2d 315, 320 (10th Cir.1982) (holding that an inn which was "a sub-entity of the Tribe rather than a separate corporate entity" enjoyed tribal immunity). While the Supreme Court has expressed misgivings about recognizing tribal immunity in the commercial...