Confederated Tribes v. Alcohol & Tobacco Tax

• Decision Date: 13 December 2016
• Docket Number: No. 14-35165,14-35165
• Parties: Confederated Tribes and Bands of the Yakama Indian Nation, Plaintiff–Appellant, v. Alcohol and Tobacco Tax and Trade Bureau ; John J. Manfreda, in his official capacity as Administrator of the Alcohol and Tobacco Tax and Trade Bureau ; United States Department of the Treasury; Timothy Geithner, in his official capacity as Secretary of the United States Department of the Treasury; United States of America, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

843 F.3d 810

Confederated Tribes and Bands of the Yakama Indian Nation, Plaintiff–Appellant,

v.Alcohol and Tobacco Tax and Trade Bureau ; John J. Manfreda, in his official capacity as Administrator of the Alcohol and Tobacco Tax and Trade Bureau ; United States Department of the Treasury; Timothy Geithner, in his official capacity as Secretary of the United States Department of the Treasury; United States of America, Defendants–Appellees.

No. 14-35165

United States Court of Appeals, Ninth Circuit.

Argued and Submitted August 30, 2016 Seattle, Washington

Filed December 13, 2016

Randolph Henry Barnhouse (argued) and Justin J. Solimon, Johnson Barnhouse & Keegan LLP, Albuquerque, New Mexico, for Plaintiff–Appellant.

Patrick J. Urda (argued), Teresa E. McLaughlin, and Gilbert S. Rothenberg, Attorneys; Tamara W. Ashford, Acting Assistant Attorney General; Tax Division, Department of Justice, Washington, D.C.; for Defendants–Appellants.

Before: Alfred T. Goodwin, Mary M. Schroeder, and M. Margaret McKeown, Circuit Judges.

OPINION

GOODWIN, Circuit Judge:

Confederated Tribes and Bands of the Yakama Indian Nation ("the Yakama Nation" or "the tribe") appeals the district court's summary judgment in the Yakama Nation's action seeking to bar defendant federal agencies and officials from imposing the federal excise tax on tobacco products manufactured by King Mountain Tobacco Co. ("King Mountain"). The Yakama Nation alleges that King Mountain is entitled to exemptions from the excise tax under the General Allotment Act, 25 U.S.C. § 331 et seq. , and the Treaty with the Yakama, 12 Stat. 951 (1855). Defendants, in turn, contend that the Anti–Injunction Act and the tax exception to the Declaratory Judgment Act bar the Yakama Nation's claims seeking injunctive and declaratory relief.

We hold that the Anti–Injunction Act deprived the district court of jurisdiction to hear the Yakama Nation's claims. We therefore vacate the judgment and remand with instructions to dismiss.

FACTUAL AND PROCEDURAL BACKGROUND

The Yakama Nation, King Mountain, and Delbert Wheeler, Sr., brought suit for injunctive and declaratory relief barring the imposition of the federal tobacco excise tax on King Mountain. The tobacco excise tax applies to "cigarettes, manufactured or imported into the United States," 26 U.S.C. § 5701(b), and "roll-your-own tobacco, manufactured in or imported into the United States," id. § 5701(g). "[A]ny person who manufactures" cigarettes or roll-your-own tobacco, id. § 5702(d), is liable for the tax, see id. § 5703(a).

The Yakama Nation is a federally recognized Indian Tribe. King Mountain, a corporation organized, existing, and operating under the laws of the Yakama Nation, manufactures cigarettes and "roll-your-own" tobacco. Wheeler, an enrolled member of the Yakama Nation, owns King Mountain. The tribe alleged that some of the tobacco used by King Mountain is grown on Yakama Nation trust land consistent with Yakama Nation historical practices, and the trust land-grown tobacco is then blended with other tobacco to produce King Mountain products.

The federal agencies moved to dismiss, contending that the claims were barred by the Anti–Injunction Act and the tax exception to the Declaratory Judgment Act. The district court granted the motion to dismiss as to King Mountain and Wheeler but denied it as to the Yakama Nation, concluding that the Yakama Nation's claims fell within the exception to the Anti–Injunction Act set out in South Carolina v. Regan , 465 U.S. 367, 373–81, 104 S.Ct. 1107, 79 L.Ed.2d 372 (1984). The district court subsequently granted summary judgment in favor of the federal agencies, concluding that King Mountain was not exempt from the excise tax under the General Allotment Act or the Treaty with the Yakama. The Yakama Nation timely appealed.

DISCUSSION

On de novo review, Munoz v. Mabus , 630 F.3d 856, 860 (9th Cir. 2010), we hold that the Anti–Injunction Act deprived the district court of jurisdiction over the Yakama Nation's claims.¹

The Anti–Injunction Act ("the Act") provides that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." 26 U.S.C. § 7421(a). The Act's principal purpose is to protect "the Government's need to assess and collect taxes as expeditiously as possible with a minimum of preenforcement judicial interference, ‘and to require that the legal right to the disputed sums be determined in a suit for refund.’ " Bob Jones Univ. , 416 U.S. at 736, 94 S.Ct. 2038 (citation omitted). Unless a suit otherwise barred by the Act "falls within one of the statutory or judicially created exceptions to the Act, the district court lacks subject matter jurisdiction and must dismiss the complaint." Jensen v. Internal Revenue Serv. , 835 F.2d 196, 198 (9th Cir. 1987).

The relief sought in this case—declaratory and injunctive relief prohibiting the imposition of the tobacco excise tax on King Mountain—would restrain the assessment and collection of that tax and thus "falls squarely within the literal scope of the Act." Bob Jones Univ. , 416 U.S. at 732, 94 S.Ct. 2038. The Yakama Nation nonetheless asserts that the claims are not barred, contending, first, that the Yakama Nation is not a "person" for purposes of the Act and second, that the claims qualify for the narrow exception set out in Regan , 465 U.S. 367, 104 S.Ct. 1107, 79 L.Ed.2d 372. We reject both contentions.

First, the Yakama Nation is a "person" subject to the Act's jurisdictional prohibition. This question is a matter of statutory construction, turning primarily on congressional intent as demonstrated by "[t]he words chosen by Congress ... [and] their plain meaning." Griffin v. Oceanic Contractors, Inc. , 458 U.S. 564, 570, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982). "In ascertaining the plain meaning of [a] statute, [we] must look to the particular statutory language at issue, as well as the language and design of the statute as a whole." K Mart Corp. v. Cartier, Inc. , 486 U.S. 281, 291, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988).

The Act itself does not define "person," but it is part of the Internal Revenue Code, whose general definitional provision states as follows: "The term ‘person’ shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." 26 U.S.C. § 7701(a)(1). Where a definition is introduced with the verb "includes," "[t]his word choice is significant because it makes clear that the examples enumerated in the text are intended to be illustrative, not exhaustive." Christopher v. SmithKline Beecham Corp. , 567 U.S. 142, 132 S.Ct. 2156, 2170, 183 L.Ed.2d 153 (2012). The Internal Revenue Code itself tells us that "[t]he terms ‘includes' and ‘including’ when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined." 26 U.S.C. § 7701(c). Because the list of entities contained in § 7701(a)(1) thus is merely illustrative, it is not determinative of whether an Indian tribe constitutes a "person" under the Act.

"When a word is not defined by statute, we normally construe it in accord with its ordinary or natural meaning." Smith v. United States , 508 U.S. 223, 228, 113 S.Ct. 2050, 124 L.Ed.2d 138 (1993). Webster's defines "person" to include, inter alia , "a human being, a body of persons, or a corporation, partnership, or other legal entity that is recognized by law as the subject of rights and duties." Webster's Third New International Dictionary 1686 (1971). Black's similarly defines "person" to include, inter alia , "[a]n entity (such as a corporation) that is recognized by law as having the rights and duties of human beings." Black's Law Dictionary 1178 (9th ed. 2004). These broad definitions are consistent with the non-exhaustive list set out in § 7701(a)(1), which includes as illustrative various entities recognized by law as having rights and duties. Accordingly, relying on the ordinary meaning of the word, the term "person" in § 7701(a)(1) covers entities that are recognized by law as the subject of rights and duties, including Indian tribes. Accord Chickasaw Nation v. United States , 208 F.3d 871, 878–80 (10th Cir. 2000) (relying on the ordinary meaning of the word to hold that an Indian tribe was a "person" for purposes of § 7701(a)(1) and therefore was subject to federal wagering and occupational excise taxes).

Interpreting "person" to cover Indian tribes has another virtue: it is consistent with courts' treatment of other sovereign entities as "persons" for various provisions of the Internal Revenue Code. For example, the Tenth Circuit has construed "person" in § 7701(a)(1) to cover the United States and individual states. See Estate of Wycoff v. Comm'r , 506 F.2d 1144, 1151 (10th Cir. 1974). More broadly, the Supreme Court has held that states and other sovereign entities are "persons" for other Code provisions with similar definitions of "person." See Sims v. United States , 359 U.S. 108, 112, 79 S.Ct. 641, 3 L.Ed.2d 667 (1959) (holding that the term "person" included a state or other sovereign where the special definition of "person" in 26 U.S.C. § 6632 spoke only of corporations and partnerships, and the employees or officers thereof); Ohio v. Helvering , 292 U.S. 360, 370, 54 S.Ct. 725, 78 L.Ed. 1307 (1934) (holding that a state was "embraced within the meaning of the word ‘person’ " where the word "person" was defined as "meaning and including a partnership, association, company, or corporation, as well as a natural person"), overruled on other grounds by Garcia v. San Antonio Met. Transit Auth. , 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985). And in Regan , the Court did not question that South Carolina, acting as sovereign, was a "person" under the statute at issue here, the Anti–Injunction Act.

The same reasoning that extends the Act's reach...