Cook v. Avi Casino Enterprises, Inc.

• Decision Date: 14 November 2008
• Docket Number: No. 07-15088.,07-15088.
• Citation: 548 F.3d 718
• Parties: Christopher COOK; Leidra Cook, Plaintiffs-Appellants, v. AVI CASINO ENTERPRISES, INC., a corporation; Ian Dodd; Juan Majias; Stephanie Shaik; Debra Purbaugh; Andrea Christensen, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

548 F.3d 718

Christopher COOK; Leidra Cook, Plaintiffs-Appellants, v. AVI CASINO ENTERPRISES, INC., a corporation; Ian Dodd; Juan Majias; Stephanie Shaik; Debra Purbaugh; Andrea Christensen, Defendants-Appellees.

No. 07-15088.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 9, 2008.

Filed November 14, 2008.

Bradley L. Booke, Moriarity Badaruddin & Booke, Las Vegas, NV, for the plaintiffs-appellants.

Theodore A. Julian, Jr., Burch & Cracchiolo, P.A., Phoenix, AZ, for the defendants-appellees.

Appeal from the United States District Court for the District of Arizona; Paul G. Rosenblatt, District Judge, Presiding. D.C. No. CV-04-01079-PGR.

Before: FERDINAND F. FERNANDEZ, RONALD M. GOULD, and CARLOS T. BEA, Circuit Judges.

Opinion by Judge GOULD; Concurrence by Judge GOULD; Partial Concurrence and Partial Dissent by Judge FERNANDEZ.

GOULD, Circuit Judge:

Plaintiff Christopher Cook ("Cook"), a California resident, seeks recovery for damages suffered as a result of a motor vehicle accident in which, while on a motorcycle, he was hit by a drunk driver. The driver was an employee of defendant Avi Casino Enterprises, Inc. ("ACE"), a tribal corporation, and she allegedly became intoxicated at an Avi Casino function. Cook sued the tribal corporation and several of its employees, alleging negligence and dram shop liability. Defendants asserted defenses based on federal Indian law. Defendants claim (1) that there is an absence of subject matter jurisdiction because the Indian tribe that owns ACE is, like Cook, a California citizen and (2) that tribal sovereign immunity shields ACE and its employees from suit.

We affirm the district court, in part on alternate grounds supported by the record. We agree with Cook that we have jurisdiction over ACE because there is diversity of citizenship. However, we affirm the dismissal of Cook's claims against ACE on the alternate ground of tribal sovereign immunity. We affirm the district court's dismissal of defendants Ian Dodd ("Dodd") and Debra Purbaugh ("Purbaugh") on the same ground and do not reach Defendants' other arguments for dismissal.

I

A

Christopher Cook seeks relief because employees of Avi Casino gave an intoxicated fellow employee free drinks, then drove her to her car; she drove her car into Cook minutes later.¹ Andrea Christensen ("Christensen"), a cocktail waitress at Avi Casino, attended a nighttime birthday party at the casino for another employee. Defendants Ian Dodd and Debra Purbaugh were among the casino employees at the party, during which Dodd, the on-duty manager, announced that drinks were "on the house." Christensen was off-duty, and Purbaugh served her alcoholic beverages after she was obviously intoxicated.

Defendants let Christensen board a casino-run shuttle bus to the employee parking lot so that she could drive home. Christensen headed north on Aztec Road, which was located within the Fort Mojave reservation. Leading to the tragic accident, Cook was driving his motorcycle southbound on the same road; he was heading home after visiting his mother-in-law. Minutes after leaving the parking lot, Christensen swerved across the center line and hit Cook's motorcycle.² Cook suffered catastrophic injuries, including the loss of his left leg, resulting in more than $1,000,000 in medical expenses. Christensen pled guilty to aggravated assault and driving under the influence and was sentenced to four years in Arizona prison. She is not a party to this appeal.

B

Avi Casino is owned and operated by Avi Casino Enterprises, Inc., a corporation organized under the Fort Mojave Business Corporation Ordinance, which is a tribal law of the Fort Mojave Indian Tribe (the "Tribe"). The Tribe is a federally recognized Indian tribe, and its reservation spans California, Nevada, and Arizona. The Tribe's seat of government is in Needles, California, but Avi Casino is located on reservation lands in Nevada, and ACE's headquarters is in Laughlin, Nevada. Avi Casino operates under an intergovernmental agreement between the Tribe and the state of Nevada that permits the Tribe to operate casinos on tribal lands within the state.

ACE is wholly owned and controlled by the Tribe. ACE shareholder functions are performed by the Fort Mojave Tribal Council on behalf of and for the benefit of the Tribe. A majority of ACE's board of directors must be Tribe members. ACE's articles of incorporation state that all capital surplus not used for corporate development must be deposited in the Tribe's general fund.

C

Cook sued ACE, Christensen, Dodd, Purbaugh, and other casino employees in Arizona federal district court. Cook sought compensatory and punitive damages for negligence and dram shop liability under Arizona's liquor liability statute and Fort Mojave tribal law.

All defendants but Christensen filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), claiming a lack of diversity jurisdiction. Cook argued that Dodd and Purbaugh were citizens of Arizona but conceded that the other employees named in the complaint were, like Cook, California citizens. On Cook's recommendation, the district court dismissed all claims against these other employees, as well as claims against 25 unnamed defendants. Defendants argued that ACE was a citizen of California because it was incorporated under tribal law and the Tribe's headquarters were in Needles, California. The district court agreed, applying traditional corporate citizenship analysis under 28 U.S.C. § 1332(a). The court determined that ACE was a citizen of Nevada because its principal place of business, the casino, was located there; the court also ruled that ACE was a California citizen because it was incorporated by the Tribe, and the Tribe's headquarters were in California.

Dodd and Purbaugh then filed a second motion to dismiss, alleging that as ACE employees they were shielded from liability by the Tribe's sovereign immunity, which should extend to ACE and Avi Casino. The district court granted the motion, concluding that the Tribe's sovereign immunity covered ACE because the corporation functioned as an arm of the Tribe. It further held that the tribal sovereign immunity covered Dodd and Purbaugh as tribal employees acting within the scope of their employment. Although Christensen remains a defendant in the action, the district court entered a separate judgment dismissing ACE, Dodd, and Purbaugh. Cook appealed.

II

We review de novo a district court's dismissal for lack of subject matter jurisdiction. Rattlesnake Coalition v. U.S. Envtl. Prot. Agency, 509 F.3d 1095, 1100 (9th Cir.2007). Factual findings relevant to subject matter jurisdiction are reviewed for clear error. Id. We also review de novo questions of tribal sovereign immunity. Linneen v. Gila River Indian Cmty., 276 F.3d 489, 492 (9th Cir.2002). We may affirm a district court's judgment of dismissal on any grounds supported by the record. Alvarado v. Table Mountain Rancheria, 509 F.3d 1008, 1019 (9th Cir. 2007). Here, we may affirm the district court's dismissal on diversity jurisdiction or tribal sovereign immunity grounds. We address both.

III

A

We have jurisdiction only if Cook, a resident of California, has citizenship which is diverse from that of every defendant. See Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996) (stating that diversity jurisdiction requires "complete diversity of citizenship"). As the party asserting jurisdiction, Cook has the burden of proving such diversity exists. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). The parties agree that defendants Dodd and Purbaugh have citizenship diverse from Cook. The key question is whether ACE, a tribal corporation, is like Cook a citizen of California.

An Indian tribe or an unincorporated arm of a tribe is not a citizen of any state. American Vantage Cos. v. Table Mountain Rancheria, 292 F.3d 1091, 1098 (9th Cir.2002). However, our case law offers little help in determining the citizenship of an Indian corporation created under tribal law. In Stock West, Inc. v. Confederated Tribes of the Colville Reservation, we asserted in dictum that "[t]here is authority for the proposition that for purposes of diversity jurisdiction, an Indian corporation is a citizen of the state in whose borders the reservation is located." 873 F.2d 1221, 1226 (9th Cir.1989). If so, then ACE would be a citizen of California, Arizona, and Nevada because the Fort Mojave reservation spans all three states. On closer inspection, however, we conclude that there is no such "authority" for this principle as so broadly stated. To support its reasoning, Stock West relied on three decisions of our circuit, all of which held that a tribal corporation is a citizen of the state where it has its principal place of business. See R.J. Williams Co. v. Fort Belknap Hous. Auth., 719 F.2d 979, 982 (stating that tribal corporation had its "principal place of business in Montana"); R.C. Hedreen Co. v. Crow Tribal Hous. Auth., 521 F.Supp. 599, 602-03 (D.Mont. 1981) (stating that tribal corporation "has its principal and only place of business in the state of Montana" and "[a]ccordingly, it is a citizen of the state for purposes of diversity jurisdiction"); Parker Drilling Co. v. Metlakatla Indian Cmty., 451 F.Supp. 1127, 1138 (D.Alaska 1978) ("As [tribal corporation's] only major business activities, and situs, are located in Alaska it is an Alaskan corporation for diversity purposes."). The tribal reservation in each of those cases was located in only one state, the same state as the tribal corporation's principal place of business. We agree with the district court's rejection of the dictum of Stock West. If Stock West stands for anything on this matter, it is that a tribal corporation is a citizen of the state where it has its principal place of business. See William C. Canby, Jr., American Indian Law 223 (...