686 F.3d 1144 (10th Cir. 2012), 10-6157, Somerlott v. Cherokee Nation Distributors, Inc.

Docket Nº:10-6157.
Citation:686 F.3d 1144
Opinion Judge:MURPHY, Circuit Judge.
Party Name:Tina Marie SOMERLOTT, Plaintiff-Appellant, v. CHEROKEE NATION DISTRIBUTORS, INC., an Oklahoma corporation; CND, L.L.C., an Oklahoma limited liability company, Defendants-Appellees.
Attorney:Jane W. Muir and Paula J. Phillips, Lawton, OK, for Plaintiff-Appellant. Graydon Dean Luthey, Jr., GableGotwals, Tulsa, OK, for Defendants-Appellees.
Judge Panel:Before MURPHY, BRORBY, and GORSUCH, Circuit Judges. GORSUCH, J., concurring.
Case Date:July 27, 2012
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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686 F.3d 1144 (10th Cir. 2012)

Tina Marie SOMERLOTT, Plaintiff-Appellant,


CHEROKEE NATION DISTRIBUTORS, INC., an Oklahoma corporation; CND, L.L.C., an Oklahoma limited liability company, Defendants-Appellees.

No. 10-6157.

United States Court of Appeals, Tenth Circuit.

July 27, 2012

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[Copyrighted Material Omitted]

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Jane W. Muir and Paula J. Phillips, Lawton, OK, for Plaintiff-Appellant.

Graydon Dean Luthey, Jr., GableGotwals, Tulsa, OK, for Defendants-Appellees.

Before MURPHY, BRORBY, and GORSUCH, Circuit Judges.

MURPHY, Circuit Judge.


Tina Marie Somerlott appeals from the district court's dismissal of her claims against CND, LLC (" CND" ) for lack of subject-matter jurisdiction. See Fed.R.Civ.P. 12(b)(1). Somerlott brought federal employment discrimination claims against CND, alleging violations of Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act. After allowing discovery by both parties, the district court concluded CND was immune from suit under the doctrine of tribal sovereign immunity and, therefore, dismissed Somerlott's complaint in its entirety. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, this court affirms.


Somerlott worked as a chiropractic technician at a clinic which was part of the Reynolds Army Community Hospital in Fort Sill, Oklahoma. At the time of her termination in January of 2007, her employer was CND, which provided staffing pursuant to a Department of Defense contract to provide chiropractic care at the Army Hospital. CND is a limited liability corporation organized under the laws of the state of Oklahoma, wholly owned by Cherokee Nation Businesses, Inc. (" CNB" ). CNB is a tribal corporation wholly owned and regulated by the Cherokee Nation (the " Nation" ). The Nation is a federally recognized Indian Tribe. Indian Entities Recognized and Eligible To Receive Services From the United States Bureau of Indian Affairs, 75 Fed.Reg. 60810, 60810 (Oct. 1, 2010). CND was originally formed as Cherokee Nation Distributors, Inc. (" CNDI" ), a wholly owned subsidiary of Cherokee Nation Industries.1 It was formed as an Oklahoma corporation. At the time of CNDI's creation, the Nation did not have laws permitting the formation of limited liability companies.2 On April 29, 2004, CNDI was converted to an Oklahoma limited liability company and

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renamed CND, LLC. CND became a wholly-owned subsidiary of CNB on February 1, 2008, pursuant to the Nation's Jobs Growth Act of 2005.

Somerlott brought suit against CND on April 23, 2008, alleging employment discrimination under Title VII of the Civil Rights Act, 42 U.S.C. § 2000e-2, and the Age Discrimination in Employment Act, 29 U.S.C. § 623. CND moved to dismiss, arguing it was protected from suit under the doctrine of tribal sovereign immunity and that it was not an " employer" under Title VII, see 42 U.S.C. § 2000e(b)(1) (excluding Indian tribes from definition of " employer" ). The district court deferred ruling on the motion, granting limited discovery on the issue of whether CND is shielded by the Nation's sovereign immunity. During the pendency of this discovery period, Somerlott amended her complaint and CND filed a new motion to dismiss arguing not only that it was protected by tribal sovereign immunity and the tribal exemption to Title VII, but also that it was exempt from the ADEA. See EEOC v. Cherokee Nation, 871 F.2d 937, 939 (10th Cir.1989). Somerlott filed her response to CND's motion to dismiss on October 16, 2009.

Somerlott's response to CND's motion focused primarily on the statutory exemption issue. She argued: " The Indian Tribe's relationship to CND is so attenuated that CND cannot be entitled to the Tribe's exemption from the strictures of Title VII and the ADEA." She attempted to distinguish EEOC v. Cherokee Nation by arguing CND's activities were not intramural and did not implicate the Nation's treaty-protected rights to self-governance. After discussing several cases concerning the applicability of the ADEA to tribes and tribal entity, Somerlott stated: " A review of the relevant case law where a tribe or arm of a tribe is given exemption has as a common element intramural disputes or matters affecting a tribe's self-governance." Because the activities giving rise to her claim— the operation of a chiropractic clinic serving non-Indian clients— are not normally considered governmental functions, Somerlott argued, neither the Title VII exemption nor the ADEA exemption should apply to CND.

In analyzing CND's motion to dismiss, the district court undertook to determine whether CND constituted a " subordinate economic entity" of the Nation entitled to share in the Nation's sovereign immunity. Noting that, " [a]lthough the subordinate economic entity analysis has been widely adopted, its implementation is rarely uniform," the district court considered a variety of factors used by other courts to determine whether the relationship between a tribe's economic entities and the tribe itself is sufficiently close for immunity to apply. The court concluded CND met " most, if not all" of the criteria used by courts to determine whether a tribal commercial enterprise is a subordinate economic entity of a tribe. The court also rejected Somerlott's argument that CND's activities were too attenuated from the Nation's interest in self-governance. See Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. at 757-58, 118 S.Ct. 1700 (1998). Accordingly, the court granted CND's motion to dismiss.

On appeal, Somerlott identifies three issues for review. First, she states: " The district court erred in extending tribal sovereign immunity to the defendant corporations, which have a tribal stakeholder, without regard to whether their activities were sufficiently connected with the self-governance of the tribe to warrant such immunity." Second, she argues: " The court erred in finding that CND/CNDI are exempt from the ADEA, where Congressional enactment of the [Small Business

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Act] serves as evidence of legislative intent to include them." Finally, she argues: " The court erred in entering judgment before CND/CNDI provided required responses to plaintiff's outstanding discovery." Approximately ten days before Somerlott served her Opening Brief, this court decided Breakthrough Management Group, Inc. v. Chukchansi Gold Casino & Resort, 629 F.3d 1173, 1187 (10th Cir.2010) [hereinafter " BMG " ]. CND's Response Brief relied almost exclusively on BMG for the proposition that it was a subordinate economic entity of the Nation entitled to share in its immunity. CND also (correctly) noted the district court made no finding as to whether it was entitled to the ADEA exemption, and responded to Somerlott's argument concerning the district court's handling of the jurisdictional discovery in the case.

This court ordered the parties to submit supplemental briefs addressing whether CND's organization as a separate legal entity under Oklahoma's Limited Liability Company Act precluded it from sharing in the Nation's immunity. The parties were also ordered to discuss whether the argument that such organization precluded CND from sharing in the Nation's immunity was properly before this court in light of the prior briefing to the district court and to this court.


A. Standard of Review

Ordinarily, determining whether CND shares the Nation's sovereign immunity from suit involves a mixed question of law and fact. BMG, 629 F.3d at 1181-82. Therefore, the district court's factual findings are reviewed for clear error and its legal conclusions are reviewed de novo. Id. at 1182. " A finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Rio Grande Silvery Minnow (Hybognathus amarus) v. Bureau of Reclamation, 599 F.3d 1165, 1175 (10th Cir.2010) (quotations omitted). However, when an argument was not raised before the district court but is instead advanced for the first time on appeal, the court will only reverse if the appellant shows the district court's decision amounted to plain error. Richison v. Ernest Group, Inc., 634 F.3d 1123, 1128 (10th Cir.2011).

B. Sovereign Immunity

It is well-established that " Indian tribes are distinct, independent political communities, retaining their original natural rights in matters of local self-government. Although no longer possessed of the full attributes of sovereignty, they remain a separate people, with the power of regulating their internal and social relations." Santa Clara Pueblo v. Martinez, 436 U.S. 49, 55, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978) (citations and quotations omitted). As sovereign powers, Indian tribes are immune from suit absent congressional abrogation or clear waiver by the tribe. Kiowa Tribe, 523 U.S. at 753, 118 S.Ct. 1700. " Tribal immunity extends to subdivisions of a tribe, and even bars suits arising from a tribe's commercial activities." Native Am. Distrib. v. Seneca-Cayuga Tobacco Co., 546 F.3d 1288, 1292 (10th Cir.2008) (citing Kiowa Tribe, 523 U.S. at 759, 118 S.Ct. 1700). The applicability of tribal sovereign immunity does not depend on whether the activities giving rise to the litigation occurred on or off tribal land. Kiowa Tribe, 523 U.S. at 754, 118 S.Ct. 1700. Nor does it depend on whether the tribe is directly responsible for the financial liabilities of its sub-entities. BMG, 629 F.3d at 1181.

In BMG, this court sought to determine whether a tribally owned casino and development

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authority were protected from suit by the tribe's sovereign immunity. 629 F.3d at 1176-77. Plaintiff BMG was a Colorado corporation providing online business management training and consulting services. 629 F.3d at 1177. Defendant Chukchansi Gold Casino and Resort was...

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