Pan American Co. v. Sycuan Band of Mission Indians

• Decision Date: 20 November 1989
• Docket Number: No. 87-6738,87-6738
• Citation: 884 F.2d 416
• Parties: PAN AMERICAN COMPANY, Plaintiff-Appellant, v. SYCUAN BAND OF MISSION INDIANS, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 416

884 F.2d 416

PAN AMERICAN COMPANY, Plaintiff-Appellant, v. SYCUAN BAND OF MISSION INDIANS, Defendant-Appellee.

No. 87-6738.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 8, 1989.

Decided Aug. 28, 1989.

As Amended Nov. 20, 1989.

Jon H. Epsten, Robert O. Lesher, Lesher & Borodkin, Tucson, Ariz., for plaintiff-appellant.

George Forman, Alexander & Karshmer, Berkeley, Cal., for defendant-appellee.

Appeal from the United States District Court for the Southern District of California.

Before FARRIS, FERGUSON and BEEZER, Circuit Judges.

FERGUSON, Circuit Judge:

Plaintiff-Appellant Pan American Company (Pan Am) filed suit in district court challenging the validity of an amended bingo ordinance enacted by the Sycuan Band of Mission Indians (Band) which imposed licensure and work permit requirements on Pan Am's ongoing bingo operations. We affirm the district court's dismissal of Pan Am's complaint for jurisdictional defects based on failure to prove that the Band had waived tribal sovereign immunity.

I.

The Sycuan Band of Mission Indians, a federally recognized Indian tribe, occupies a reservation in San Diego County. In November 1985, the Band and Pan Am entered into a federally-approved Management Agreement ("Bingo Agreement") authorizing Pan Am to operate bingo games on the reservation. Under the terms of this Bingo Agreement, Pan Am agreed to construct and finance a Bingo facility on the Band's land, and then manage, operate, and maintain the Band's Tribal Bingo Enterprise ("Bingo Enterprise") exclusively for fifteen years. As compensation for its operation of the Bingo Enterprise, Pan Am received a percentage of the net operating profits from the bingo games. The Bingo Agreement also contained an arbitration clause for resolving disputes between the parties.

For a little more than a year, both the Band and Pan Am enjoyed the fruits of the Bingo Enterprise. For the Band, it provided needed revenue for tribal government operations and services, as well as creating employment opportunities for members of the reservation community. Pan Am, for its part, also received substantial financial benefits from its operation of the Bingo Enterprise. Relations between the Band and Pan Am became strained, however, in April 1987 when the Band's Tribal Council enacted an "Amended Ordinance Licensing and Permitting the Management of the Tribal Bingo Enterprise and Its Employees on the Sycuan Indian Reservation" (Amended Bingo Ordinance or Ordinance). Seeking to raise revenue for the support of tribal governmental services and protect the integrity of the Tribal Bingo Enterprise, the Amended Bingo Ordinance imposed licensure and work permit requirements on bingo game operators. For Pan Am, application and license fees under the Ordinance amounted to $80,000.

Pan Am deemed the Band's enactment of the Amended Bingo Ordinance to be a breach of the Bingo Agreement and commenced a two-prong attack on the Band's enforcement of the Ordinance. In addition to filing a demand for arbitration pursuant to the Bingo Agreement's arbitration clause, Pan Am also filed a breach of contract action in the district court. ¹

After an arbitrator dismissed Pan Am's claims as nonarbitrable in late August 1987, Pan Am filed an amended complaint in the district court seeking declaratory, injunctive, and monetary relief for the Band's enforcement of the Amended Bingo Ordinance which allegedly breached the Bingo Agreement and deprived Pan Am of statutorily protected rights under 25 U.S.C. Secs. 81 and 1302. Rather than answering Pan Am's complaint, the Band filed a motion to dismiss for lack of personal and subject matter jurisdiction and failure to state a claim. See F.R.Civ.P. 12(b)(1), (2), and (6). The Band based its 12(b)(1) and (2) motion to dismiss for lack of jurisdiction on the ground that the Band, as a sovereign tribal entity, enjoyed immunity from suit which it had not waived. In the alternative, the Band asserted that Pan Am's complaint should be dismissed pursuant to F.R.Civ.P. 12(b)(6) for failure to state a claim since the Ordinance was a valid exercise of the Band's sovereign authority, the enactment of which could not have constituted a breach of the Bingo Agreement.

By two-page order dated December 2, 1987, the district court dismissed Pan Am's breach of contract claim for lack of jurisdiction "because defendant Band has not expressly waived its sovereign immunity to unconsented suit." The court also ruled, as an alternative ground for dismissal, that Pan Am had failed to state a claim for breach of contract because the Band's Amended Bingo Ordinance was a valid exercise of its sovereign authority "and thus ... [could not be] a breach of contract for which plaintiff [Pan Am] is entitled to damages or declaratory or injunctive relief." Finally, the court dismissed Pan Am's statutory causes of action for failure to state legally sufficient claims.

II.

We review de novo an order granting motions to dismiss. Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d 1392, 1396 (9th Cir.1986) (Rule 12(b)(1) dismissal for lack of subject matter jurisdiction); Mack v. South Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir.1986); Fort Vancouver Plywood Co. v. United States, 747 F.2d 547, 552 (9th Cir.1984) (Rule 12(b)(6) dismissal for failure to state a claim); A.K. Management Co. v. San Manuel Band of Mission Indians, 789 F.2d 785, 787 (9th Cir.1986) (same).

III.

Indian tribes have long been recognized as possessing common-law immunities from suit co-extensive with those enjoyed by other sovereign powers including the United States as a means of protecting tribal political autonomy and recognizing their tribal sovereignty which substantially predates our Constitution. See, e.g., Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 1677, 56 L.Ed.2d 106 (1978); United States v. Wheeler, 435 U.S. 313, 322-23, 98 S.Ct. 1079, 1085-86, 55 L.Ed.2d 303 (1978); United States v. Mazurie, 419 U.S. 544, 557, 95 S.Ct. 710, 717, 42 L.Ed.2d 706 (1975); United States v. United States Fidelity & Guaranty Co., 309 U.S. 506, 512, 60 S.Ct. 653, 656, 84 L.Ed. 894 (1940); Kennerly v. United States, 721 F.2d 1252, 1258 (9th Cir.1983); Rehner v. Rice, 678 F.2d 1340, 1351 (9th Cir.1982) (en banc), rev'd on other grounds, 463 U.S. 713, 103 S.Ct. 3291, 77 L.Ed.2d 961 (1983); see also F. Cohen, Handbook of Federal Indian Law 324 (2d ed. 1982). Absent congressional or tribal consent to suit, state and federal courts have no jurisdiction over Indian tribes; only consent gives the courts the jurisdictional authority to adjudicate claims raised by or against tribal defendants. Santa Clara Pueblo, 436 U.S. at 58-59, 98 S.Ct. at 1677; Puyallup Tribe, Inc. v. Department of Game, 433 U.S. 165, 173, 97 S.Ct. 2616, 2621, 53 L.Ed.2d 667 (1977) (Puyallup III ); Snow v. Quinault Indian Nation, 709 F.2d 1319, 1321 (9th Cir.1983), cert. denied, 467 U.S. 1214, 104 S.Ct. 2655, 81 L.Ed.2d 362 (1984); United States v. Oregon, 657 F.2d 1009, 1013 (9th Cir.1981); California ex rel. California Dep't of Fish and Game v. Quechan Tribe of Indians, 595 F.2d 1153, 1155 (9th Cir.1979).

Thus, since the issue of tribal sovereign immunity is jurisdictional in nature, Puyallup III, 433 U.S. at 173, 97 S.Ct. at 2621; USF & G, 309 U.S. at 512, 60 S.Ct. at 656; Chemehuevi Indian Tribe v. California State Bd. of Equalization, 757 F.2d 1047, 1051 (9th Cir.), rev'd in part on other grounds, 474 U.S. 9, 106 S.Ct. 289, 88 L.Ed.2d 9 (1985); Big Spring v. United States Bureau of Indian Affairs, 767 F.2d 614, 617 (9th Cir.1985), cert. denied, 476 U.S. 1181, 106 S.Ct. 2914, 91 L.Ed.2d 543 (1986), we must first determine whether the Band has effectively waived tribal immunity--thus making it amenable to suit in federal court--irrespective of the merits of Pan Am's tort and contractual claims.

Pan Am's waiver claim rests entirely on the Bingo Agreement's arbitration clause. Whether or to what extent this arbitration clause constituted a waiver of the Band's tribal sovereign immunity turns on the terms of that clause. Santa Clara Pueblo commands that waiver may only be found if the clause unequivocally and expressly indicates the Band's consent to waive its sovereign immunity. 436 U.S. at 59, 98 S.Ct. at 1677; see also Wichita and Affiliated Tribes of Oklahoma v. Hodel, 788 F.2d 765, 773 (D.C.Cir.1986); American Indian Agricultural Credit Consortium, Inc. v. Standing Rock Sioux Tribe, 780 F.2d 1374, 1377-78 (8th Cir.1985); Snow, 709 F.2d at 1321. The arbitration clause contained in Section VIII of the Bingo Agreement provides that [i]n the event a dispute arises between its parties ... either party may seek arbitration of said dispute and both parties do hereby subject themselves to the jurisdiction of the American Arbitration Association and do agree to be bound by and comply with its rules and regulations as promulgated from time to time.

Pan Am reads this clause as an explicit waiver of the Band's sovereign immunity since "a submission to arbitration is a submission to judicial jurisdiction ... as a matter of definition." Such a reading of the arbitration clause runs counter to not only the strong presumption against tribal waivers of immunity, but also generally accepted principles governing the interpretation of contractual arbitration provisions.

The Bingo Agreement's arbitration clause simply does not contain that unequivocal expression of tribal consent to suit necessary to effect a waiver of the Band's sovereign immunity. Absent an affirmative textual waiver in the terms of a contractual agreement or tribal constitution, federal courts have consistently declined to find tribal consent to federal jurisdiction. Compare San Manuel Band, 789 F.2d at 786 (tribal bingo agreement expressly "waive[d] sovereign immunity" for actions brought to enforce or interpret contract) and Merrion v. Jicarilla Apache Tribe, 617 F.2d 537, 540 (10th...