Burlington Northern & Santa Fe Ry. Co. v. Vaughn

• Citation: 509 F.3d 1085
• Decision Date: 07 December 2007
• Docket Number: No. 05-16755.,05-16755.
• Parties: BURLINGTON NORTHERN & SANTA FE RAILWAY COMPANY, Plaintiff-Appellee, v. Charles VAUGHN, Chairman of the Hualapai Indian Tribe, a federally recognized Indian Tribe; Wanda Easter, Finance Director of the Hualapai Indian Tribe, a federally recognized Indian Tribe, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

509 F.3d 1085

BURLINGTON NORTHERN & SANTA FE RAILWAY COMPANY, Plaintiff-Appellee, v. Charles VAUGHN, Chairman of the Hualapai Indian Tribe, a federally recognized Indian Tribe; Wanda Easter, Finance Director of the Hualapai Indian Tribe, a federally recognized Indian Tribe, Defendants-Appellants.

No. 05-16755.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 16, 2007.

Filed December 7, 2007.

Susan M. Williams (argued), Sarah S. Works, Williams & Works, P.A., Corrales, NM, for the appellants.

Charles G. Cole (argued), Alice E. Loughran, Amber B. Blaha, Steptoe & Johnson LLP, Washington, DC; Paul J. Mooney, Jim L. Wright, Fennemore Craig, P.C., Phoenix, AZ, for the appellee.

Appeal from the United States District Court for the District of Arizona; Earl H. Carroll, District Judge, Presiding. D.C. No. CV-04-02227-EHC.

Before: ARTHUR L. ALARCÓN, DAVID R. THOMPSON, and RICHARD C. TALLMAN, Circuit Judges.

TALLMAN, Circuit Judge:

The Burlington Northern & Santa Fe Railway Company (BNSF) brought suit against two officials of the Hualapai Indian Tribe, Charles Vaughn and Wanda Easter (the tribal officials), seeking declaratory and injunctive relief against their efforts to enforce or collect the Hualapai Tribe's possessory interest tax against BNSF for use of the railroad's right-of-way through the reservation. The tribal officials filed a motion to dismiss, which the district court denied. The tribal officials bring this appeal.

We address the novel jurisdictional question whether, under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), denial of a tribal sovereign immunity claim is appealable on an interlocutory basis as a collateral order. We hold that it is and proceed to review the district court's ruling on the merits. We affirm the district court's ruling that tribal sovereign immunity does not bar suit against Easter, who is allegedly responsible for enforcing the tax at issue in this suit, but reverse with regard to Vaughn, the Tribe's Chairman, who has no alleged enforcement responsibilities to actually collect the tax. The tribal officials also appeal the district court's denial of their exhaustion of tribal remedies claim. However, they do not assert an adequate basis to permit us to exercise jurisdiction over that claim now, and we dismiss the remainder of this interlocutory appeal.

I

Viewed in the light most favorable to BNSF, as required on a motion to dismiss, see Hydrick v. Hunter, 500 F.3d 978, 985 (9th Cir.2007), the record reveals the following facts. BNSF¹ operates its railroad on a congressionally granted right-of-way through Arizona that crosses the Hualapai Indian Reservation. BNSF owns title to the right-of-way, free of all claims by the Tribe.

In 1989, the Hualapai Tribal Council enacted a tax by ordinance which imposes a 7% tax on the value of certain "possessory interests" within the Reservation. At oral argument, counsel for the Tribe asserted the tax was intended to be in the nature of a use tax to reimburse the Tribe for the cost of attending railway accidents or blockages since the mainline hosts upward of eighty trains daily that pass at one point through the heart of the tribal administrative center. In 1991, BNSF brought suit challenging the Tribe's authority to apply the tax to the railroad's right-of-way. The parties settled and BNSF agreed to pay a lump sum to the Tribe in lieu of any taxes, interest, and penalties that might otherwise have been assessed against it during tax years 1990 through 2001.

On July 24, 2002, after the settlement agreement had expired, Wanda Easter, the Tribe's finance director, sent tax registration forms to BNSF. BNSF notified the Tribe that it disputed the Tribe's jurisdiction to tax BNSF's operation of the right-of-way. The parties attempted to resolve their disagreement, but were unsuccessful.

BNSF subsequently filed a complaint in the United States District Court for the District of Arizona seeking declaratory and injunctive relief against the Tribe's efforts to enforce or collect the tax. The tribal officials responded with a motion to dismiss, claiming that: 1) the suit is barred by tribal sovereign immunity, 2) BNSF failed to exhaust tribal remedies, and 3) the tax does not violate federal law. The district court denied the motion, holding that: 1) tribal sovereign immunity did not bar BNSF's claims against the tribal officials, 2) BNSF was not required to exhaust tribal remedies because the tribal court "plainly" lacked jurisdiction, and 3) BNSF's allegation that the tax is unenforceable against it was sufficient to state a claim for relief. The tribal officials appealed.

II

A

Our jurisdiction is circumscribed by 28 U.S.C. § 1291, which provides: "The courts of appeals ... shall have jurisdiction of appeals from all final decisions of the district courts of the United States ...." A district court's denial of a motion to dismiss is not a final decision within the meaning of 28 U.S.C. § 1291. Credit Suisse v. U.S. Dist. Court for the Cent. Dist. of Cal., 130 F.3d 1342, 1345-46 (9th Cir.1997). Nonetheless, the Supreme Court has recognized an exception to the final judgment rule for that "small class [of orders] which finally determine claims of right separable from, and collateral to, rights asserted in the action." Cohen, 337 U.S. at 546, 69 S.Ct. 1221.

We have not previously decided whether a district court's order denying a motion to dismiss on tribal sovereign immunity grounds is a collateral order which may be reviewed on an interlocutory basis. The Tribe persuasively argues that by analogy to qualified immunity appeals under civil rights claims, the rule should be the same when an adverse decision is rendered denying tribal sovereign immunity as a complete defense to proceeding with the litigation. See Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985). We agree.

As commonly expressed, the collateral order doctrine established in Cohen permits interlocutory review of an order that "conclusively determine[s] the disputed question, resolve[s] an important issue completely separate from the merits of the action, and [is] effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978). All three factors are met in this case.

The district court's order "conclusively determine[d] the disputed question," that is, whether the tribal officials are immune from suit, because "there will be nothing in the subsequent course of the proceedings in the district court that can alter the court's conclusion that the defendant[s are] not immune." See Mitchell, 472 U.S. at 527, 105 S.Ct. 2806.

The district court's order is also "effectively unreviewable on appeal from a final judgment." See Coopers & Lybrand, 437 U.S. at 468, 98 S.Ct. 2454. Tribal sovereign immunity is rooted in federal common law and "is a necessary corollary to Indian sovereignty and self-governance." Three Affiliated Tribes of the Ft. Berthold Reservation v. Wold Eng'g, 476 U.S. 877, 890, 106 S.Ct. 2305, 90 L.Ed.2d 881 (1986). Indian tribes, and tribal officials acting within the scope of their authority, are immune from lawsuits or court process in the absence of congressional abrogation or tribal waiver. Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 754, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998); United States v. Yakima Tribal Court, 806 F.2d 853, 861 (9th Cir.1986). As with absolute, qualified, and Eleventh Amendment immunity, tribal sovereign immunity "is an immunity from suit rather than a mere defense to liability; and ... it is effectively lost if a case is erroneously permitted to go to trial." See P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 143-44, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993) (quoting Mitchell, 472 U.S. at 526, 105 S.Ct. 2806); Osage Tribal Council v. U.S. Dep't of Labor, 187 F.3d 1174, 1179-80 (10th Cir.1999); Tamiami Partners, Ltd. v. Miccosukee Tribe of Indians of Fla., 63 F.3d 1030, 1050 (11th Cir.1995) ("Tribal sovereign immunity would be rendered meaningless if a suit against a tribe asserting its immunity were allowed to proceed to trial.").

Finally, the district court's order "resolve[d] an important issue completely separate from the merits of the action." See Coopers & Lybrand, 437 U.S. at 468, 98 S.Ct. 2454. Courts have generally found that claims of immunity are separate from the merits of the underlying action. See, e.g., Mitchell, 472 U.S. at 527-28, 105 S.Ct. 2806; P.R. Aqueduct & Sewer Auth., 506 U.S. at 145, 113 S.Ct. 684; Compania Mexicana De Aviacion, S.A. v. U.S. Dist. Court for Cent. Dist. of Cal., 859 F.2d 1354, 1358 (9th Cir.1988); Osage Tribal Council, 187 F.3d at 1180 (holding that whether the Safe Drinking Water Act abrogated the tribe's immunity is "distinct from the underlying merits" of whether the tribe violated the plaintiff's whistle blower rights under the Act). Likewise, the issue in this case, whether the tribal officials are subject to suit under the doctrine of Ex Parte Young, is separate from the underlying merits of BNSF's claim that the tax ordinance cannot be enforced against its right-of-way through the Reservation. See Verizon Md., Inc. v. Pub. Serv. Comm'n of Md., 535 U.S. 635, 645-46, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002) (holding that "the inquiry into whether suit lies under Ex Parte Young does not include an analysis of the merits of the claim").

BNSF argues that interlocutory review is inappropriate because the district court did not resolve an "important issue" completely separate from the merits of the action, but rather applied settled precedent to determine that, under the doctrine of Ex Parte Young, the tribal officials are not immune from suit. BNSF cites Nixon v. Fitzgerald, 457 U.S. 731, 102 S.Ct. 2690 73 L.Ed.2d 349 (1982), and In re Kemble, 776 F.2d 802 (9th Cir.1985), for the proposition...