Cayuga Nation v. Parker
| Docket Number | 5:22-cv-00128 (BKS/ATB) |
| Decision Date | 12 August 2022 |
| Parties | CAYUGA NATION, by and through its lawful governing body, the CAYUGA NATION COUNCIL, Plaintiff, v. DUSTIN PARKER, NORA WEBER, JOSE VERDUGO, JR., ANDREW HERNANDEZ, PAUL MEYER, IROQUOIS ENERGY GROUP, INC., JUSTICE FOR NATIVE FIRST PEOPLE, LLC, C.B. BROOKS LLC, and JOHN DOES 1-10, Defendants. |
| Court | U.S. District Court — Northern District of New York |
For Plaintiff: David G. Burch, Jr., Michael E. Nicholson Gabriel M. Nugent Barclay Damon LLP
For Defendants Dustin Parker, Nora Weber, and Andrew Hernandez Daniel Hurteau, Nixon Peabody LLP
For Defendants Paul Meyer, Justice for Native First People, LLC and C.B. Brooks LLC: David H. Tennant, Law Office of David Tennant PLLC
Plaintiff Cayuga Nation, through its governing body, the Cayuga Nation Council, brings this action under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968. (Dkt. No. 1). The Cayuga Nation generally alleges that Defendants Dustin Parker, Nora Weber, Jose Verdugo, Jr., Andrew Hernandez, Paul Meyer, Iroquois Energy Group, Inc., Justice for Native First People, LLC, C.B. Brooks LLC, and John Does 1-10, are engaged in an unlawful scheme to co-opt the Nation's sovereign rights, erode its business and customer base, and steal its revenues “through the illegal sale of untaxed and unstamped cigarettes and marijuana, and various other merchandise” on the reservation. (Id. ¶ 2). Defendants are alleged to have committed a pattern of racketeering activities under § 1961(1), including trafficking in contraband cigarettes (18 U.S.C. §§ 2341-2346), money laundering (18 U.S.C. § 1956), engaging in monetary transactions in property derived from specified unlawful activity (18 U.S.C. § 1957), and distributing or possessing a controlled substance (21 U.S.C. § 841). The Complaint asserts: a substantive RICO violation, 18 U.S.C. § 1962(c) (Count I); investment of racketeering income, 18 U.S.C. § 1962(a) (Count II); and RICO conspiracy, 18 U.S.C. § 1962(d) (Count III). Presently before the Court are the Cayuga Nation's motion for a preliminary injunction under Federal Rule of Civil Procedure 65 “enjoining Defendants from opening or operating any business from the property located at 7153 State Route 90N in Montezuma, New York,” (Dkt. No. 2), and Defendants motions to dismiss under Rule 12(b)(6) are granted in part and denied in part.
The Cayuga Nation is a federally recognized sovereign Indian Nation governed by the Cayuga Nation Council. (Dkt. No. 1, ¶ 11). In the Treaty of Canandaigua of 1794, 7 Stat. 44, “the United States recognized a federal reservation for the Cayuga Nation comprising 64,015 acres-located within what today are Seneca and Cayuga Counties in upstate central New York.” (Id. ¶ 25). As a sovereign Indian nation, the Cayuga Nation is entitled to conduct “certain economic activity on its own reservation free from state tax and regulatory laws, even in transactions with non-Indians.” (Id. ¶ 35). The Cayuga Nation's activities include, as relevant here, manufacturing Cayuga brand cigarettes, sale of cigarettes “wholesale” from a warehouse in Seneca Falls “to retail stores and various businesses located within the Cayuga Nation's border,” and operation of “convenience stores on tribal land,” (Dkt. No. 30-1, ¶ 9; Dkt. No. 30-2, ¶¶ 2-3), where the Cayuga Nation sells Cayuga and other “native-brand cigarettes,” as well as premiumbrand cigarettes, (Dkt. No. 30-2, ¶¶ 4-6), to “enrolled Cayuga members and to non-Indians,” (Dkt. No. 37-1, ¶ 8).
The Cayuga Nation maintains that to the extent it sells the Cayuga and other “native-brand cigarettes” “unstamped or untaxed,” “it does so in compliance with the law and under the unique privilege afforded to it as an Indian nation.” (Dkt. No. 37, at 7 n.2). It is undisputed, however, that while premium brand cigarettes sold to members of an Indian Nation for their own personal use are tax-exempt, New York's excise tax scheme requires that all premium brand cigarettes, even those sold on the Cayuga Nation reservation, have tax stamps.[4]
Regarding the sale of unstamped and untaxed Cayuga brand and other Native brand cigarettes, counsel for the Cayuga Nation explained at oral argument that because the Cayuga Nation is a sovereign Nation, only the Nation can sell Cayuga brand or other Native brand cigarettes. Counsel further explained that there are nations in New York that license individual members to sell Native brand cigarettes on reservation land, but that Defendant Dustin Parker has received no license from Cayuga Nation.
The license to which counsel for the Cayuga Nation referred, is provided for in the Cayuga Nation's Amended and Restated Business License and Regulation Ordinance (the “Ordinance”). The Ordinance prohibits the operation of “any type of business on Nation land without a business license issued by the Nation pursuant to this Ordinance.” (Dkt. No. 47-1, at 12). As relevant here, the Ordinance further provides that “[n]o license shall issue to, or be held by, any person who . . . is engaging, or seeks to engage, in any business that, directly or indirectly, competes in whole or in part with any business conducted by the Nation or an entity or enterprise owned or controlled by the Nation.” (Id. at 13).
B.J. Radford, the Chief Financial Officer (“CFO”) of the Cayuga Nation, states that “because of the sovereign rights the Nation properly may exercise on its own reservation, which is recognized under both federal and state law,” the Nation generates “significant revenues from cigarette sales.” (Dkt. No. 37-1, ¶ 15). CFO Radford further states that:
(Id. ¶¶ 1, 11-12). CFO Radford states that “cigarette sales help fund the Cayuga Nation's police department-which protects Nation members, Nation properties, and non-Indian customers who come to the reservation for gaming, purchases of cigarettes and other goods, and other activities-and the Nation's tribal court, as well as other essential governmental programs.” (Id. ¶ 13). Even though the Cayuga Nation is not required to pay property taxes, it supports local communities through donations. (Id. ¶ 14). For example, “on September 17, 2020, the Nation made a $200,000 donation to the Union Springs Fire Department to support the purchase of 28 state-of-the art, self-contained breathing apparatuses to be used by firefighters.” (Id.).
In May 2021, Defendant Paul Meyer,[5] the sole member of Justice for Native First People, LLC, signed a four-year commercial lease agreement on behalf of the LLC for a commercial property, owned by the Seneca-Cayuga Nation of Oklahoma but within the boundaries of the Cayuga Nation reservation, located at 126 E. Bayard Street in Seneca Falls, New York.[6] (Dkt. No. 30-3, ¶¶ 2-3; Dkt. No. 1, ¶ 37). Meyer states that “[i]n anticipation of subletting the property,” which had previously been used as a convenience store and gasoline station, he “invested $80,000 to recommission the gas pumps” and updated the property. (Dkt. No. 30-3, ¶ 4). In June 2021, Defendant Dustin Parker, “an enrolled member of the Cayuga Nation,” approached Meyer and “expressed interest in subletting the space . . . to operate a smoke shop and gas station.” (Dkt. No. 31-1, ¶ 5; Dkt. No. 30-3, ¶ 6). In August 2021, Meyer and Parker agreed to a “four-year sublease . . . to run concurrently with” the underlying lease. (Dkt. No. 303, ¶ 8; Dkt. No. 30-1, ¶ 12).[7] In September 2021, Parker registered “Pipekeepers” as a business with Seneca County, “filed for a business license with the Town of Seneca,” and obtained an inspection of the “business and property” by the Town of Seneca Enforcement Officer. (Dkt. No. 30-1, ¶ 13-15). However, Parker did not obtain a business license as required by the Cayuga Nation Ordinance. (Dkt. No. 47-1, at 28).
“On September 4, 2021, Pipekeepers began operations as a small retail convenience store.” (Dkt. No. 30-1, ¶ 16). Parker “noted on [Pipekeepers] signage that the store owner . . . was a member of the Cayuga Nation,” (id. ¶¶ 17-18), and photographs in the record show a large sign outside the store that says: “Cayuga Nation Bayard Street Store,” (Dkt. No. 1-1, at 5). Parker managed and operated the business and his wife, Nora Weber, assisted “with the day-today operations and maintain[ed] the stores [sic] financial books.” (Dkt. No. 30-1, ¶ 20). Parker purchased his “inventory from other neighboring Nations.” (Id. ¶ 32).
David Miller, a private investigator retained by the Cayuga Nation Police Department, visited the Seneca Falls Pipekeepers store in November 2021, and provided a declaration...
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