Coeur D'Alene Tribe v. Hammond

• Decision Date: 23 August 2002
• Docket Number: No. 02-CIV-185S-BLW.,02-CIV-185S-BLW.
• Citation: 224 F.Supp.2d 1264
• Parties: COEUR D'ALENE TRIBE, Plaintiff, v. Duwayne D. HAMMOND, Jr.; Coleen Grant; Larry Watson; Severina Sam Haws, Defendants. Nez Perce Tribe, Plaintiff, v. Duwayne D. Hammond, Jr.; Coleen Grant; Larry Watson; Severina Sam Haws, Defendants. Shoshone Bannock, Plaintiff, v. Duwayne D. Hammond, Jr.; Coleen Grant; Larry Watson; Severina Sam Haws, Defendants.
• Court: U.S. District Court — District of Idaho

224 F.Supp.2d 1264

COEUR D'ALENE TRIBE, Plaintiff, v. Duwayne D. HAMMOND, Jr.; Coleen Grant; Larry Watson; Severina Sam Haws, Defendants.

Nez Perce Tribe, Plaintiff, v. Duwayne D. Hammond, Jr.; Coleen Grant; Larry Watson; Severina Sam Haws, Defendants.

Shoshone Bannock, Plaintiff, v. Duwayne D. Hammond, Jr.; Coleen Grant; Larry Watson; Severina Sam Haws, Defendants.

No. 02-CIV-185S-BLW.

United States District Court, D. Idaho.

August 23, 2002.

Rob Roy Smith, Nez Perce Tribe, Lapwai, ID, Raymond C Givens, Brian J Cleary, Givens Funke & Work, Coeur d'Alene, ID, for Coeur D'Alene Tribe of Idaho, plaintiff.

Carl E Olsson, Dep Pros Atty, Clay R Smith, Office of Attorney General, State Tax Commission, Boise, ID, for Duwayne D Hammond, Jr, Coleen Grant, Larry Watson, Severina Sam Haws, defendants.

William F Bacon, Shoshone-Bannock Tribes Trial, Attorneys Office, Fort Hall, ID, for Shoshone-Bannock Tribes, intervenor.

AMENDED ORDER GRANTING PLAINTIFFS' MOTIONS FOR SUMMARY JUDGMENT AND A PERMANENT INJUNCTION AND DENYING DEFENDANTS' MOTIONS TO DISMISS AND FOR SUMMARY JUDGMENT

CARTER, District Judge.

Before the Court is Plaintiff Coeur D'Alene Tribe's motions for partial summary judgment and preliminary and permanent injunctions, Plaintiff Nez Perce Tribe's motions for summary judgment and permanent injunctions, and Defendants motions to dismiss and for summary judgment. After reviewing the moving opposing, and replying papers, after oral argument on June 28, 2002, and for the reasons set forth below, the Court GRANTS Plaintiffs' motions and DENIES Defendants' motions.

I. BACKGROUND

Plaintiffs in these consolidated cases are Indian Tribes, each with a governing body recognized by the Secretary of the Interior. The tribes are authorized to impose taxes on property within the tribes' jurisdiction. As part of their governmental and entrepreneurial activities, the tribes own various retail gasoline stations on tribal reservations located within the state of Idaho. Additionally, there are at least two gas stations owned by tribal members on the Coeur D'Alene reservation.

The primary distributor of gasoline to the tribes was originally Goodman Oil Co. For several years, the state of Idaho imposed a 25 cent motor fuels tax on all motor fuel delivered to the tribes' retail gasoline stations within the borders of the tribes' reservations. The tribes' fuel distributor collected the motor fuels tax and remitted it to the Idaho State Tax Commission (Commission). On August 26, 1999, the Idaho District Court held that the Commission lacked the authority to collect the state motor fuel tax from distributors selling fuel to Indian reservations. On June 8, 2001, the Idaho Supreme Court affirmed that decision. Goodman Oil Co. v. Idaho State Tax Comm'n, 136 Idaho 53, 28 P.3d 996 (2001), cert. denied, 534 U.S. 1129, 122 S.Ct. 1068, 151 L.Ed.2d 971 (2002). The Idaho Supreme Court reached two critical conclusions in that case. First, the Hayden-Cartwright Act, 4 U.S.C. § 104,¹ did not confer on the state the authority to impose a gasoline tax on gasoline sold on Indian tribes. Goodman, 28 P.3d at 1002. Second, the incidence of the state motor fuels tax, Idaho Code §§ 63-2401 et seq. and 41-4901 et seq., fell on the Indian tribes.

After the Idaho Supreme Court's ruling, the tribes enacted fuel taxes on gas sold on the tribal reservations for use to improve and maintain roads on the tribal reservations.² On March 22, 2002, the Idaho state legislature passed a new motor fuel tax, which the Governor signed on March 23, 2002. The legislature declared that the purpose of the new law was to place the incidence of the tax on the fuel distributors, not the tribes, so as to circumvent the ruling in Goodman. The Commission then began requiring City Service, Inc. of Kalispell (City Service), the tribes' new gasoline distributor, to collect and remit the gasoline tax. The tribes brought this suit to enjoin Defendants, as members of the Commission, from collecting the motor fuel tax. Because of the identity of the issues, the Court consolidated these cases. Plaintiffs now move for partial summary judgment and for a permanent injunction. Defendants bring counter-motions to dismiss and for summary judgment. The entire case is now before the Court.

II. LEGAL STANDARDS

A. Summary Judgment

Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c).

The Court must view the facts and draw inferences in the manner most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). However, the existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; to defeat the motion, the non-moving party must affirmatively set forth facts showing there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact for trial. Id. at 256, 106 S.Ct. at 2514. When the non-moving party bears the burden of proving the claim or defense, the moving party can meet its burden by pointing out the absence of evidence of a genuine issue of material fact from the non-moving party. Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir.1990). The moving party need not disprove the other party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986).

When the moving party meets its burden, the "adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party." Fed.R.Civ.P. 56(e). "The mere existence of a scintilla of evidence ... will be insufficient; there must be evidence on which the jury could reasonably find for [the opposing party]." Anderson, 477 U.S. at 252, 106 S.Ct. at 2512.

B. Permanent Injunction

Generally, courts grant equitable relief in the event of irreparable injury and the inadequacy of legal remedies. See Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1320 (9th Cir.1994). When a plaintiff's constitutional rights are violated, there is a presumption of irreparable harm. An injunction is therefore the appropriate remedy for a constitutional violation.

III. DISCUSSION

"The Constitution vests the Federal Government with exclusive authority over relations with Indian tribes ..., and in recognition of the sovereignty retained by Indian tribes even after formation of the United States, Indian tribes and individuals generally are exempt from state taxation within their own territory." Montana v. Blackfeet Tribe, 471 U.S. 759, 764, 105 S.Ct. 2399, 2402, 85 L.Ed.2d 753 (1985). A state may not levy a tax on an Indian tribe or on members of a tribe inside Indian country without express approval of Congress. Oklahoma Tax Comm'n v. Chickasaw Nation, 515 U.S. 450, 458, 115 S.Ct. 2214, 2220, 132 L.Ed.2d 400 (1995). The critical question is therefore who bears the legal incidence of the tax. Id. "If the legal incidence of an excise tax rests on a tribe or tribal members for sales made inside Indian country, the tax cannot be enforced absent clear congressional authorization." Id.

The critical questions for the Court is whether there is a congressional authorization to impose a tax on Indians and whether Idaho's amended motor fuel tax places the incidence of the tax on the tribes.

A. Congressional Authority to Tax

Defendants argue that the Hayden-Cartwright Act provides authority for the state to impose a motor fuel tax on Indians. The United States Supreme Court has twice explicitly refused to address this question. In Oklahoma Tax Commission, 515 U.S. at 456-57, 115 S.Ct. at 2219, the Supreme Court was faced with the question of whether the state of Oklahoma could impose its motor fuels tax on Indians. Oklahoma asserted that the tax was specifically authorized by Congress in the Hayden-Cartwright Act. Id. The Supreme Court refused to entertain the argument because the state raised the issue for the first time in its brief on the merits. Id. The Supreme Court then went on to hold that the incidence of the Oklahoma tax fell on the Indians and it was therefore barred. Id. at 467, 115 S.Ct. at 2224.

In Goodman Oil, the issue was placed squarely before the Idaho Supreme Court, which determined that the Idaho tax was not authorized by the Hayden-Cartwright Act, and the state motor fuels tax which placed the incidence of the tax on Indians was barred by the federal Constitution. 28 P.3d at 996. The state sought a writ of certiorari from the United States Supreme Court, which the Court denied. Idaho State Tax Comm'n v. Goodman Oil Co., 534 U.S. 1129, 122 S.Ct. 1068, 151 L.Ed.2d 971 (2002). Thus, even though the issue was squarely before the Court, it declined to resolve the question. It therefore let stand the Idaho Supreme Court's decision that the state tax was unconstitutional as applied to Indians.

Because neither of these rulings bind this Court on the issue of whether the Hayden-Cartwright Act allows states to impose a motor fuels tax on Indians, the Court must examine the merits of the issue independently.³ Nevertheless, the Court holds that the Hayden-Cartwright Act is not a congressional authorization to impose a motor fuels tax on Indians.

Initially, the Court must recognize the unique trust relationship that exists between the United States and the Indian...