Chemehuevi Indian Tribe v. Cal. State Bd., C-77-2838 RFP.

• Decision Date: 12 December 1979
• Docket Number: No. C-77-2838 RFP.,C-77-2838 RFP.
• Citation: 492 F. Supp. 55
• Court: U.S. District Court — Northern District of California
• Parties: The CHEMEHUEVI INDIAN TRIBE, Plaintiff, v. CALIFORNIA STATE BOARD OF EQUALIZATION: George M. Reilly; Iris Sankey; William M. Bennett; Richard Nevins; and Kenneth Cory, Individually and in their official capacities as members of the California State Board of Equalization; Bank of America N. T. & S. A., a national banking association; and David Cordier, Individually and in his official capacity as employee of the California State Board of Equalization, Defendants.

492 F. Supp. 55

The CHEMEHUEVI INDIAN TRIBE, Plaintiff, v. CALIFORNIA STATE BOARD OF EQUALIZATION: George M. Reilly; Iris Sankey; William M. Bennett; Richard Nevins; and Kenneth Cory, Individually and in their official capacities as members of the California State Board of Equalization; Bank of America N. T. & S. A., a national banking association; and David Cordier, Individually and in his official capacity as employee of the California State Board of Equalization, Defendants.

No. C-77-2838 RFP.

United States District Court, N. D. California.

December 12, 1979.

Stephen V. Quesenberry, Lester J. Marston, George Forman, California Indian Legal Services, Escondido, Cal., for plaintiff.

George Deukmejian, Atty. Gen. of Cal., Gary L. Larson, Deputy Atty. Gen., San Francisco, Cal., for defendants.

MEMORANDUM AND ORDER

PECKHAM, Chief Judge.

BACKGROUND

The Chemehuevi Indian Tribe ("Tribe") commenced this action by filing a complaint for declaratory and injunctive relief on December 15, 1977. The California State Board of Equalization ("Board") had previously determined that the Tribe owed the state amounts totaling $11,702.95 for taxes that it allegedly should have collected from non-Indian purchasers of cigarettes on the reservation, including interest and penalties on the taxes owed. The Board then issued a "withhold notice" asking that the Bank of America withhold from the Tribe's funds twice the amount of the claimed delinquency. It also recorded liens against all tribal property and assets located in San Bernardino and Los Angeles Counties, including property held in trust for the Tribe by the United States, and had a warrant issued to the Sheriff of Los Angeles County directing him to seize and sell such tribal assets as may be necessary to satisfy the claimed liens. After the Tribe filed its complaint, the Board filed a counterclaim for the amount of taxes allegedly owing from the Tribe.

The court granted a preliminary injunction on January 19, 1978 prohibiting the Board from collecting any taxes, past or future, from the Tribe and ordering the Tribe to pay into an escrow account the approximate tax that would be collected from non-Indians if the California Cigarette Tax Law were to be applied. Following a trial on stipulated facts, the court vacated the submission by order dated July 9, 1979 to await the Supreme Court's decision in Confederated Tribes of Colville v. Washington. The court simultaneously modified the preliminary injunction to relieve the Tribe of the obligation to make further deposits into the escrow account pending the outcome of this litigation. At that time the Tribe had deposited $19,174.17 into the escrow account.

On October 5, 1979, the Tribe filed a motion to reconsider and amend the court's order of July 9, asking either that judgment be entered in favor of the Tribe on the ground that it is not a "person" within the meaning of the California Cigarette Tax Law and that the law is therefore inapplicable to its cigarette sales, or, in the alternative, that the Board's counterclaim be dismissed and the funds in the escrow account be released to the Tribe on the ground that the Tribe, as a sovereign, is immune from unconsented suit. This motion was submitted to the court after oral argument on November 5, 1979.

In support of the first ground for reconsideration, the Tribe cited the recent Supreme Court case of Wilson v. Omaha Indian Tribe, 442 U.S. 653, 99 S.Ct. 2529, 61 L.Ed.2d 153 (1979). In that case the Court construed the meaning of the term "white person" as used in a federal statute placing the burden of proof on the white person in all trials about the right of property in which an Indian is a party on one side and a white person on the other. Although the Court observed that as a matter of common usage the term "person" does not include sovereigns, and that such a construction should particularly be disfavored where the statute imposes a burden on those classified as persons, the opinion makes clear that the proper interpretation is ultimately a question of legislative intent. The Supreme Court's interpretation of the term "person" in the federal statute before it in Wilson is thus clearly not dispositive in divining the intent of the California legislature in enacting its cigarette tax law.

The Tribe cites the recent decision of the Ninth Circuit in People v. Quechan Tribe of Indians, 595 F.2d 1153 (1979) in support of its second ground for reconsideration. In that case the State of California as plaintiff sought declaratory relief against an Indian tribe. The Ninth Circuit held that the tribe enjoyed sovereign immunity from unconsented suit absent a waiver of that immunity by Congress, noting that the courts have no choice but to recognize sovereign immunity. Plaintiff argues that since it would be immune from suit in a declaratory judgment action, then a fortiori it is immune from this counterclaim seeking money damages, since one of the underlying rationales for tribal sovereign immunity is to protect tribal monetary resources from depletion.

The Tribe's claim of sovereign immunity has considerable merit. The state's counterclaim must therefore be dismissed, and the court's order of July 9 modified to release to the Tribe the funds held in the escrow account.¹

ANALYSIS

The sovereign status of the Tribe has ramifications that potentially reach almost every issue presented in this lawsuit. The decision of the Supreme Court in the Colville case might make it unnecessary for this court to decide whether the state is precluded on grounds of intergovernmental immunity or tribal preemption from taxing the Tribe's sales of cigarettes on the reservation. However, the Supreme Court is not presented with the procedural issues of sovereign immunity that the Tribe raises in this motion since the retailers in Colville are individual Indians licensed as dealers by the tribes rather than the tribes themselves. The Colville decision is therefore unlikely to shed any light on these issues.

The sovereign immunity of the Tribe has two procedural aspects that require dismissal of the counterclaim and modification of the court's order. First, it limits the court's jurisdiction over the counterclaim. Second, it limits the remedy the court might award even if it should hold in favor of the state in the Tribe's declaratory judgment action. Although as a practical matter these two limitations are obviously interdependent, for analytical purposes it is useful to consider them separately.

I. Sovereign Immunity From Suit

It has long been recognized that Indian tribes enjoy sovereign immunity from unconsented suit,² subject to the plenary control of Congress. United States v. United States Fidelity & Guaranty Co., 309 U.S. 506, 60 S.Ct. 653, 84 L.Ed. 894 (1940); Puyallup Tribe, Inc. v. Department of Game, 433 U.S. 165, 97 S.Ct. 2616, 53 L.Ed.2d 667 (1977). An Indian tribe does not consent to suit on a counterclaim merely by filing an action as a plaintiff. United States v. United States Fidelity & Guaranty Co., supra. The Board does not allege that the Tribe has consented to be sued, but rather argues that rule 13(a) of the Federal Rules of Civil Procedure³ constitutes a congressional waiver of tribal sovereign immunity for compulsory counterclaims. This argument has no merit.

The standard articulated by the Supreme Court for finding a Congressional waiver of tribal sovereign immunity is that there be an "unequivocal expression of . . legislative intent." Santa Clara Pueblo v. Martinez, 436 U.S. 49, 59, 98 S.Ct. 1670, 1677, 56 L.Ed.2d 106 (1978). Statutory exceptions to tribal sovereign immunity will not be implied, and express exceptions will be strictly construed. Thus in Santa Clara Pueblo v. Martinez, supra, the Supreme Court found that the Indian Civil Rights Act, which provides in part that "no Indian tribe in exercising powers of self-government shall ... deny to any person within its jurisdiction the equal protection of its laws," 25 U.S.C. § 1302(8), does not authorize the bringing of civil actions for declaratory or injunctive relief against an Indian tribe to enforce its substantive provisions. The only express remedial provision of the Act made "the privilege of the writ of habeas corpus ... available to any person, in a court of the United States, to test the legality of his detention by order of an Indian tribe." 25 U.S.C. § 1303. The Court observed that "since the respondent in a habeas corpus action is the individual custodian of the prisoner, citations omitted, the provisions of section 1303 can hardly be read as a general waiver of the tribe's sovereign immunity." 436 U.S. at 59, 98 S.Ct. at 1677. Subsequent decisions of the Ninth Circuit have shown a similar reluctance to find a Congressional waiver of tribal sovereign immunity absent express language. See, e. g., California v. Quechan Tribe of Indians, 595 F.2d 1153 (9th Cir. 1979) (statute authorizing declaratory relief not a waiver of sovereign immunity by Congress); Sekaquaptewa v. MacDonald, 591 F.2d 1289 (9th Cir. 1979) (statute authorizing lawsuit between Hopi and Navajo tribes to settle dispute over lands did not lift bar of sovereign immunity to allow individuals whose rights would be adjudicated in the lawsuit to intervene).

Judged by this standard, rule 13(a) cannot be construed as a Congressional waiver of tribal sovereign immunity for compulsory counterclaims. First, the statutory authority under which the Supreme Court may prescribe the Federal Rules of Civil Procedure expressly states that "such rules shall not abridge, enlarge or modify any substantive right." 28 U.S.C.A. § 2072 (West Supp.1979). Thus a waiver of tribal sovereign immunity would be beyond the scope of the statutory authority for promulgating the Federal Rules.

Second, even if it were possible to effectuate a Congressional waiver of sovereign immunity via the Federal Rules of Civil Procedure, rule 13 cannot be construed to do so....