E.E.O.C. v. Peabody Western Coal Co.

• Decision Date: 10 March 2005
• Docket Number: No. 02-17305.,02-17305.
• Citation: 400 F.3d 774
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. PEABODY WESTERN COAL COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

400 F.3d 774

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. PEABODY WESTERN COAL COMPANY, Defendant-Appellee.

No. 02-17305.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 12, 2004.

Submission Deferred February 13, 2004.

Resubmitted March 3, 2005.

Filed March 10, 2005.

Benjamin N. Gutman (Argued), EEOC, Washington, D.C., Ralph E. Chamness, Katherine Kruse, EEOC, Phoenix, AZ, for the plaintiff-appellant.

Lawrence Jay Rosenfeld, Mary E. Bruno, John F. Lomax, Jr., Greenberg Traurig, Phoenix, AZ, for the defendant-appellee.

Appeal from the United States District Court for the District of Arizona Mary H. Murguia, District Judge, Presiding. D.C. No. CV-01-01050-MHM.

Before HUG, ALARCON, and W. FLETCHER, Circuit Judges.

WILLIAM A. FLETCHER, Circuit Judge.

The Equal Employment Opportunity Commission ("EEOC") filed this action against Peabody Western Coal Company ("Peabody") for maintaining a Navajo hiring preference at the mines that Peabody leases from the Navajo Nation. The EEOC alleges that Peabody has discriminated against non-Navajo Native Americans, including two members of the Hopi Nation and one member of the Otoe tribe, in violation of Title VII, 42 U.S.C. § 2000e-2(a)(1).

On appeal, we are presented with three questions. The first is whether, under Federal Rule of Civil Procedure 19, it is feasible to join the Navajo Nation as a party. We hold that it is feasible to join the Nation in order to effect complete relief between the parties. Because the EEOC is an agency of the United States, the Navajo Nation cannot assert its sovereign immunity as a defense to joinder. The second is whether the EEOC's claim presents a nonjusticiable political question. We hold that it does not. The third is whether the district court erred in dismissing the EEOC's claim that Peabody failed to keep records as required by Title VII, 42 U.S.C. § 2000e-8(c). We hold that it did. We reverse and remand for further proceedings.

I. Background

Peabody mines coal at the Black Mesa Complex on the Navajo and Hopi reservations in northeastern Arizona. It does so pursuant to leases with the tribes entered into by Peabody's predecessor-in-interest, the Sentry Royal Company ("Sentry"). Sentry entered into two leases with the Navajo Nation: a 1964 lease allowing it to mine on the Navajo Nation's reservation (lease no. 8580), and a 1966 lease allowing it to mine on the Navajo portion of land set aside for joint use by the Navajo and Hopi Nations (lease no. 9910). Both leases contain provisions requiring that preference in employment be given to members of the Navajo Nation. The 1964 lease provides that Peabody "agrees to employ Navajo Indians when available in all positions for which, in the judgment of [Peabody], they are qualified," and that Peabody "shall make a special effort to work Navajo Indians into skilled, technical, and other higher jobs in connection with [Peabody's] operations under this lease." The 1966 lease contains a similar provision, but also specifies that Peabody may "at its option extend the benefits of this Article [containing the Navajo employment preference] to Hopi Indians." The record indicates that the language of the Navajo employment preferences remains unchanged and does not show that the preference has been extended to members of the Hopi Nation.

Pursuant to the Indian Mineral Leasing Act of 1938 ("IMLA"), the Department of Interior has approved both the leases, as well as subsequent amendments and extensions. See 25 U.S.C. §§ 396a, 396e; see also United States v. Navajo Nation, 537 U.S. 488, 493, 123 S.Ct. 1079, 155 L.Ed.2d 60 (2003) (explaining that the Department of the Interior's approval is necessary before the leases become effective). If the lease terms are violated, the Navajo Nation and the Department of the Interior ("DOI") retain the power to cancel the leases after a notice and cure period.

In June 2001, the EEOC filed this action in District Court for the District of Arizona, alleging that Peabody was unlawfully discriminating on the basis of national origin by implementing the Navajo employment preference. Specifically, the EEOC's complaint charged that Peabody had refused to hire non-Navajo Native Americans — two members of the Hopi and one now-deceased member of the Otoe tribe, as well as unspecified other non-Navajo Native Americans — for positions for which they were otherwise qualified. The EEOC argued that such conduct violated 42 U.S.C. § 2000e-2(a)(1), which prohibits employers from refusing to hire applicants because of their national origin. The complaint further alleged that Peabody had violated the record-keeping requirements of § 2000e-8(c).

Questions arising out of transactions, including coal mining leases, on the Navajo and Hopi reservations and on the tribes' joint land have been extensively litigated. See, e.g., Navajo Nation, 537 U.S. at 493-513, 123 S.Ct. 1079 (rejecting claim by Navajo Nation that the Secretary of the Interior breached fiduciary duties owed to the Nation by approving the coal leases); Peabody Coal Co. v. Navajo Nation, 373 F.3d 945, 946 (9th Cir.2004) (holding that the court lacked jurisdiction to enforce arbitration settlement agreement about lease royalty rates); see also Clinton v. Babbitt, 180 F.3d 1081, 1083-86 (9th Cir.1999) (describing the lengthy dispute between Navajo and Hopi Nations over joint use land in Arizona); Navajo Nation v. Peabody Holding Co., 209 F.Supp.2d 269, 275-76 (D.D.C.2002) (describing history of amendments to the leases in a RICO suit by the tribe against Peabody).

Navajo employment preference provisions also have been the subject of prior litigation. See Dawavendewa v. Salt River Project Agr. Imp. & Power Dist., 276 F.3d 1150, 1163 (9th Cir.2002) ("Dawavendewa II"); Dawavendewa v. Salt River Agr. Imp. & Power Dist., 154 F.3d 1117, 1124 (9th Cir.1998) ("Dawavendewa I"). In Dawavendewa I, we interpreted the Indian preference exception of Title VII, § 2000e-2(i), to permit discrimination in favor of Indians living on or near a reservation, but not to permit discrimination against Indians belonging to other tribes. Id. at 1124. On remand to the district court, the private contractor defendant moved to dismiss the case for failure to join the Navajo Nation as an indispensable party under Federal Rule of Civil Procedure 19(b).

In Dawavendewa II, 276 F.3d at 1153, we agreed with the district court that the Navajo Nation was an indispensable party. We held that "[a]s a signatory to the lease . . . the Nation is a necessary party that cannot be joined because it enjoys tribal sovereign immunity." Id. We noted when balancing the factors to determine whether the Nation was an indispensable party that the plaintiff

may have a viable alternative forum in which to seek redress. Sovereign immunity does not apply in a suit brought by the United States. Moreover, recently, in EEOC v. Karuk Tribe Hous [ing] Auth [ority], 260 F.3d 1071, 1075 (9th Cir.2001), we held that because no principle of law `differentiates a federal agency such as the EEOC from the United States itself,' tribal sovereign immunity does not apply in suits brought by the EEOC.

Id. at 1162-63. When the EEOC moved "[a]t the eleventh hour" to intervene, we denied the motion. We observed, however, "that nothing precludes Dawavendewa from refiling his suit in conjunction with the EEOC." Id. at 1163.

In June 2002, the EEOC brought the present action, alleging intertribal discrimination as in Dawavendewa I and Dawavendewa II. In February 2002, Peabody moved for summary judgment under Federal Rule of Civil Procedure 56 and for dismissal of the action under Federal Rules of Civil Procedure 12(b)(7) and 12(b)(1). Peabody neither admitted nor denied that it had discriminated against non-Navajo Native Americans in violation of Title VII. Instead, Peabody asserted that Rule 19 required dismissal because the Navajo Nation was a necessary and indispensable party. Peabody also asserted that the issue of the legality of this lease provision was a nonjusticiable political question, on the theory that because the DOI had approved the mining leases, the court would have to make an "initial policy choice" between the positions of the DOI and the EEOC.

The district court held that it was not feasible to join the Navajo Nation, and that the Nation was not only a necessary but also an indispensable party. In the alternative, it found the legality of the Navajo employment preference in the lease to be a nonjusticiable political question. The district court dismissed the entire action, including the EEOC's record-keeping claim. The EEOC timely appealed. We reverse and remand for further proceedings.

II. Discussion

A. Joining the Navajo Nation Under Rule 19

Rule 19 governs compulsory party joinder in federal district courts. The district court held that it was not feasible to join the Navajo Nation because, under Title VII, the EEOC cannot directly sue the Nation. See 42 U.S.C. § 2000e(b)(1) (exempting Indian tribes from the statutory definition of "employer"); see also Dawavendewa II, 276 F.3d at 1159 n. 9 (observing that "pursuant to § 2000e(b), Indian tribes are specifically exempt from the requirements of Title VII"). Although the district court decided the issue on a motion for summary judgment, we construe the motion as one to dismiss for failure to join an indispensable party under Rule 12(b)(7). See Dredge Corp. v. Penny, 338 F.2d 456, 463-64 (9th Cir.1964) (explaining that dismissal for failure to join a party must be decided on a motion to dismiss, not summary judgment). We review de novo the district court's legal conclusion that it is not feasible to join the Navajo Nation. United States v. Bowen, 172 F.3d 682, 688 (9th Cir.1999) (explaining that although "[g]enerally, we review a district court's decision regarding joinder for abuse of discretion[,]. . . . we review legal conclusions underlying that decision de novo") (...