Grand Canyon Skywalk Dev. LLC v. David John Cieslak, Nicholas Scutari & Scutari & Cieslak Pub. Relations, Inc.

• Decision Date: 13 August 2015
• Docket Number: Case No.: 2:15-cv-01189-JAD-GWF,Case No.: 2:13-cv-00596-JAD-GWF
• Parties: GRAND CANYON SKYWALK DEVELOPMENT LLC, et al., Plaintiffs, v. DAVID JOHN CIESLAK, NICHOLAS SCUTARI and SCUTARI & CIESLAK PUBLIC RELATIONS, INC. Defendants.
• Court: U.S. District Court — District of Nevada

GRAND CANYON SKYWALK DEVELOPMENT LLC, et al., Plaintiffs,
v.
DAVID JOHN CIESLAK, NICHOLAS SCUTARI
and SCUTARI & CIESLAK PUBLIC RELATIONS, INC. Defendants.

Case No.: 2:15-cv-01189-JAD-GWF
Case No.: 2:13-cv-00596-JAD-GWF

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

August 13, 2015

ORDER

This matter is before the Court on Gallagher & Kennedy, P.A. and The Hualapai Indian Tribe's (hereinafter "Gallagher & Kennedy") Motion to Quash Plaintiff's Subpoena to Glen Hallman (#1), filed on May 28, 2015. Plaintiffs filed their Opposition (#21) on June 29, 2015. Gallagher & Kennedy filed its Reply (#23) on July 17, 2015. The Court conducted a hearing in this matter on July 22, 2015.

BACKGROUND

This action arises out of a long-running dispute relating to the Grand Canyon Skywalk ("Skywalk"). See Order (#125) in Case No. 2:13-cv-00596-JAD-GWF. Plaintiffs allege that Defendants David John Cieslak, Nicholas Peter Scutari and Scutari & Cieslak Public Relations, Inc. (hereinafter collectively referred to as "Scutari & Cieslak"), together with individual members of the Hualapai Tribal Council, conspired to conduct a public relations/news media campaign to falsely accuse the Plaintiffs of having breached their contracts with the Hualapai Tribe. The alleged purpose of the conspiracy was to gain support for the Tribal Council's enactment of an

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eminent domain ordinance and the subsequent condemnation of Plaintiffs' contractual rights. Plaintiffs allege that the Tribe hired Scutari & Cieslak to formulate the public relations campaign against Plaintiffs. As part of this campaign, Scutari & Cieslak, or Tribal officials following scripts prepared by Scutari & Cieslak, falsely stated that Plaintiffs breached their contract "to complete certain critical elements of the Skywalk - including water, sewer and electricity" when, in fact, it was the Tribe's responsibility to provide these elements. Defendants also allegedly made other statements that impugned the honesty of Plaintiffs. Complaint (#1), ¶¶ 60-80. Scutari & Cieslak allege as an affirmative defense that they acted in good faith upon advice of counsel in making the allegedly defamatory statements. Answer to Complaint (#70), pg. 12. The counsel referred to in this affirmative defense were attorneys in the law firm of Gallagher & Kennedy who represented the Tribe and its officers in the various disputes and litigation with Plaintiffs.¹

This Court previously denied Gallagher & Kennedy's motion to quash a subpoena duces tecum served by Defendants Scutari & Cieslak which seeks documents relating to communications between Gallagher & Kennedy and Scutari & Cieslak. Order (#125). Gallagher & Kennedy filed an objection to the undersigned's order on June 19, 2015 which is currently pending before the District Judge. The instant motion to quash involves a deposition subpoena that Plaintiffs served on Glen Hallman, an attorney who was formerly employed by Gallagher & Kennedy. Mr. Hallman engaged in communication with Scutari & Cieslak with respect to the statements that were published about the Plaintiffs. Plaintiffs state that they seek only to question Mr. Hallman about his communications with Scutari & Cieslak. They do not seek to discover privileged communications between the Tribe and Mr. Hallman. Opposition (#21), pgs. 2, 6.

Gallagher & Kennedy states that as part of its representation of the Tribe, it recommended that the Tribe hire Scutari & Cieslak to manage media contacts in connection with the litigation. Motion (#1), pg. 2. It also states that Mr. Hallman was "an attorney assisting the Tribe in carrying

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out its fundamental sovereign and legislative powers, including the exercise of eminent domain. Because this role was in the nature of an official function involving matters of internal governance, the Tribe's immunity extends to him and this Court has no jurisdiction to compel compliance with the subpoena." Reply (#23), pg. 2. Gallagher & Kennedy also argues that Mr. Hallman's communications with Scutari & Cieslak are protected from disclosure by the Tribe's attorney-client privilege and by the attorney work-product doctrine.

DISCUSSION

A. Whether the Subpoena is Unenforceable Under the Doctrine of Tribal Sovereign Immunity.

Indian tribes are domestic dependent nations that exercise inherent sovereign authority. Michigan v. Bay Mills Indian Community, ___ U.S. ___, 134 S.Ct. 2024, 2030 (2014). As dependents, the tribes are subject to plenary control by Congress. The Constitution grants Congress power to legislate with respect to Indian tribes and yet they remain separate sovereigns pre-existing the Constitution. Thus, unless and until Congress acts, Indian tribes retain their historic sovereign immunity which includes the common law immunity from suit traditionally enjoyed by sovereign powers. Id. In Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., 523 U.S. 751, 118 S.Ct. 1700 (1998), the Court held that an Indian tribe's sovereign immunity applies to the tribe's commercial activities with non-tribal parties. The Court noted that while there were reasons to doubt the wisdom of perpetuating the doctrine of tribal sovereign immunity, it has become established and the Court declined to restrict it in deference to Congress's right to legislate in the area. Id., 523 U.S. at 758-760, 118 S.Ct. at 1705.

Tribal sovereign immunity "'extends to tribal officials when acting in their official capacity and within the scope of their authority.'" Cook v. AVI Casino Enterprises, Inc., 548 F.3d 718, 727 (9th Cir. 2008), quoting Linneen v. Gila River Indian Community, 276 F.3d 489, 492 (9th Cir. 2002). In such cases, the sovereign entity is the real party in interest and is entitled to invoke sovereign immunity even though individual officials are nominal defendants. Id., citing Regents of the University of California v. Doe, 519 U.S. 425, 429, 117 S.Ct. 900 (1997). Cook also held that tribal sovereign immunity extends beyond tribal officials to tribal employees when acting in their

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official capacity and within the scope of their authority. The court agreed with the Second Circuit's decision in Chayoon v. Chao, 355 F.3d 141, 143 (2d Cir. 2004) that "[t]he principles that motivate the immunizing of tribal officials from suit—protecting an Indian tribe's treasury and preventing a plaintiff from bypassing tribal immunity merely by naming a tribal official—apply just as much to tribal employees when they are sued in their official capacity." Id.

Tribal sovereign immunity does not, however, bar suits brought against tribal employees in their individual capacities. Maxwell v. County of San Diego, 708 F.3d 1075, 1087-88 (9th Cir. 2013). Maxwell notes that tribal sovereign immunity derives from the same common law immunity principles that shape state and federal sovereign immunity. A suit brought against federal, state or tribal officers or employees in their individual capacities does not implicate sovereign immunity because the plaintiff seeks money damage not from the government, state or tribal treasury but from the individual defendants personally. Due to the essential nature and effect of the relief sought, the sovereign is not the real, substantial party in interest in individual capacity lawsuits. The court further stated that it saw "no reason to give tribal officers broader sovereign immunity protections than state or federal officers given that tribal sovereign immunity is coextensive with other common law immunity principles." Id. at 1089.

An attorney acting in his official capacity as legal advisor to the tribe on matters of tribal governance and within the scope of his authority is entitled to the protection of tribal sovereign immunity. Davis v. Littell, 398 F.2d 83 (9th Cir. 1968). A tribal attorney, however, may be held liable in the same manner that other tribal officials or employees may be held liable in their individual capacities. Stock West Corp. v. Taylor, 942 F.2d 655, 666-67 (9th Cir. 1991). Plaintiffs have not brought an action against Gallagher & Kennedy or Mr. Hallman for the recovery of damages. Instead, Plaintiffs and Defendants have served subpoenas on Gallagher & Kennedy and Mr. Hallman to obtain documents and testimony relevant to the claims and defenses in Plaintiffs' lawsuit against Scutari & Cieslak. The only issue before this Court, therefore, is whether tribal sovereign immunity protects Mr. Hallman from being required to testify as a witness in this action.

The federal appeals courts that have addressed the issue, agree that a subpoena served on a non-party Indian tribe is barred by tribal sovereign immunity. There is disagreement, however,

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whether non-party tribal officers or employees are immune from compliance with subpoenas directed to them. United States v. James, 980 F.2d 1314, 1319 (9th Cir. 1992); Alltel Communications, LLC v. DeJordy, 675 F.3d 1100, 1105 (8th Cir. 2012); and Bonnet v. Harvest (U.S.) Holdings, Inc., 741 F.3d 1155 (10th Cir. 2014). In James, the Ninth Circuit held that an Indian tribe was not required to comply with a subpoena duces tecum served by a defendant in a federal criminal prosecution unless the tribe had waived its sovereign immunity. Although the subpoena was directed "toward Richard Martinez, Director of Social Services of the Quinault Indian Nation,"...