Knighton v. Cedarville Rancheria N. Paiute Indians

• Decision Date: 13 March 2019
• Docket Number: No. 17-15515,17-15515
• Parties: Duanna KNIGHTON, Plaintiff-Appellant, v. CEDARVILLE RANCHERIA OF NORTHERN PAIUTE INDIANS; Cedarville Rancheria Tribal Court; Patricia R. Lenzi, in her capacity as Chief Judge of the Cedarville Rancheria Tribal Court, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

918 F.3d 660

Duanna KNIGHTON, Plaintiff-Appellant,

v.CEDARVILLE RANCHERIA OF NORTHERN PAIUTE INDIANS; Cedarville Rancheria Tribal Court; Patricia R. Lenzi, in her capacity as Chief Judge of the Cedarville Rancheria Tribal Court, Defendants-Appellees.

No. 17-15515

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 16, 2018 San Francisco, California

Filed March 13, 2019

PIERSOL, Senior District Judge:

This case concerns the sources and scope of an Indian tribe's jurisdiction over tort claims brought by the tribe against a nonmember employed by the tribe. The tort claims arose from conduct committed by the nonmember on tribal lands during the scope of her employment. The question presented is whether the tribal court has jurisdiction to adjudicate tribal claims against its nonmember employee, where the tribe's personnel policies and procedures manual regulated the nonmember's conduct at issue and provided that the tribal council would address violations by the nonmember during the course of her employment, and the tribal court and tribal judicial code were established and enacted after the nonmember left her employment with the tribe.

We previously held that a tribe's inherent sovereign power to exclude non-members from tribal land is an independent source of regulatory power over non-member conduct on tribal land. See Water Wheel Camp Recreational Area, Inc. v. LaRance, 642 F.3d 802, 814 (9th Cir. 2011) (per curiam) (stating that where the non-member activity occurred on tribal land, and when there are no competing state interests at play, "the tribe's status as landowner is enough to support regulatory jurisdiction without considering Montana [v. United States, 450 U.S. 544, 101 S.Ct. 1245, 67 L.Ed.2d 493 (1981)]"). Today we also observe that a tribe's regulatory power over nonmembers on tribal land does not solely derive from an Indian tribe's exclusionary power, but also derives separately from its inherent sovereign power to protect self-government and control internal relations. See Montana, 450 U.S. at 564, 101 S.Ct. 1245 (stating that Indian tribes retain their inherent sovereign power to protect tribal self-government and to control internal relations); see also Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 144-45, 102 S.Ct. 894, 71 L.Ed.2d 21 (1982) (holding that the tribe's authority to tax nonmember mining and drilling on tribal land derived from its inherent power to govern and pay for the costs of self-government and stating that such regulations were also within the tribe's inherent power to condition the continued presence of nonmembers on tribal land).

Accordingly, we now hold that under the circumstances presented here, the tribe has authority to regulate the nonmember employee's conduct at issue pursuant to its inherent power to exclude nonmembers from tribal lands. We also hold, in the alternative, that the tribe has regulatory authority over the nonmember employee's conduct under both Montana exceptions. Given the existence of regulatory authority, the sovereign interests at stake, and the congressional interest in promoting tribal self-government, we conclude that the tribal court has jurisdiction over the tribe's claims in this case.

FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

A. The Cedarville Rancheria Tribe

The Cedarville Rancheria of Northern Paiute Indians ("the Tribe") is a federally recognized Indian tribe that has approximately twelve voting members and operates a 17-acre Rancheria in Cedarville, California ("the Rancheria"). The Rancheria is held in trust for the Tribe by the United States government. During the latter part of events at issue in this case, the Tribe's administrative offices were relocated from the Rancheria to land held in fee¹ by the Tribe in Alturas, California.

The Tribe's governing body is the Community Council, which is composed of all qualified voters of the Rancheria who are 18 years of age or older. Every three years, the Community Council elects three of its members to serve on the Executive Committee—the Tribal Chairperson, Vice Chairperson, and Secretary. The Executive Committee enforces the Community Council's ordinances and other enactments and represents the Tribe in negotiations with tribal, federal, state, and local governments.

B. Knighton's Employment with the Tribe

Duanna Knighton ("Knighton") was employed by the Tribe from July 1996 until she resigned in March 2013. Knighton is not a member of the Tribe and had never resided on or owned land within the Rancheria. At the time of her resignation, Knighton's position was that of Tribal Administrator. As Tribal Administrator, she oversaw the day-to-day management of the Rancheria, its personnel, and many aspects of its finances.

During Knighton's employment, the Tribe regulated its employees pursuant to the Cedarville Rancheria Personnel Policies and Procedures Manual ("the Personnel Manual"). The Personnel Manual regulated employee conduct including, but not limited to: misfeasance and malfeasance in the performance of duty, incompetency in the performance of job duties, theft, carelessness or negligence with the monies or property of the Rancheria, inducement of an employee to act in violation of Rancheria regulations, and violation of personnel rules. Disciplinary actions for an employee's breach of rules and standards of conduct in the course of employment specified in the Personnel Manual included a verbal warning, written reprimand, suspension without pay, demotion, and involuntary termination.

The Personnel Manual provided that where the Tribal Administrator was the subject of disciplinary action, the Community Council directly oversaw the disciplinary process.

C. Knighton's Employment with RISE

From 2009 until at least 2016, in addition to her position as Tribal Administrator, Knighton was also serving as an employee or officer of Resources for Student Education ("RISE"), a California nonprofit, that provides education services and programs to Indian children. RISE is not a tribally created or licensed business entity, and it receives the majority of its funding from state and federal grants and private donations.

D. The Tribe's Purchase of RISE Property

In mid-2009, Knighton, acting in her capacity as Tribal Administrator, negotiated the Tribe's purchase from RISE of a building in Alturas, California, where the Tribe's administrative offices are now located. During this time, Knighton was also an employee or agent of RISE.

Knighton initially recommended that the Tribe purchase the building for $350,000, allegedly representing that such a price was below market value even though she had not received a professional appraisal of the property. The Tribe later discovered that the $350,000 purchase price recommended by Knighton was $200,000 above market value. Knighton also represented to the Tribe that it could pay off its building loan within five years after the purchase and that RISE would pay rent to the Tribe for its occupancy until the note on the building was paid off.

The Tribe asserts that at no time during the purchase negotiations did Knighton disclose she had a conflict of interest representing both RISE and the Tribe in the sale, that RISE was close to insolvency, or that she had an agreement with RISE to split the proceeds of the building sale. The parties settled on a purchase price of $300,000. Within twelve months of the sale, RISE moved its business operations out of the building.

E. Knighton's Resignation

Before Knighton resigned in March 2013 as Tribal Administrator, she allegedly cashed out $29,925 in vacation and sick pay in violation of the Tribe's policies and procedures. The Tribe issued a check in the amount of $29,925, payable to RISE on Knighton's behalf. The Tribal Vice Chairman approved Knighton's request to cash out based on her representation that her request had been approved by the Tribal Chairperson, when in fact, the Tribal Chairperson had denied Knighton's request.

When Knighton resigned in March 2013, she took with her all files, including files belonging to the Tribe, room furnishings, and a computer, representing to the Tribe that the property removed belonged to RISE.

In late 2013, the Tribe wrote a letter to RISE demanding the return of the $29,925 and any and all tribal property, including the computer. Both RISE and Knighton refused through their counsel to return the funds or any of the property.

F. Creation of Constitution, Tribal Judicial Code, and Tribal Court

In February 2011, while Knighton was still employed by the Tribe, the Tribe's voting membership adopted the Constitution and Bylaws of the Cedarville Rancheria, which was approved by the Regional Director of the Bureau of Indian Affairs. Article II of the Tribe's Constitution provides that the "jurisdiction of [the Tribe] shall extend to the land now within the confines of the [] Rancheria and to such other lands as may thereafter be added thereto."

In December 2013, nine months after Knighton's resignation, the Tribe enacted the Cedarville Rancheria Judicial Code ("the Tribal Judicial Code") and established the Cedarville Rancheria Tribal Court, which consists of a tribal court ("the Tribal Court") and a tribal court of appeals ("the Tribal Court of Appeals"). All judges must be lawyers experienced in the practice of tribal and federal Indian law and licensed to practice in the highest court of any state. Judges cannot be the Tribal Administrator, Assistant Clerks, or members of the Executive Committee. The Tribal Judicial Code provides that the Tribal Court and Tribal Court of Appeals have jurisdiction over all civil causes of action that arise within the boundaries of the Rancheria. Pursuant to the Tribal Judicial Code, the Tribal Court has the power to issue orders and judgments and to award limited money damages.

G. The Tribe's Audit Findings

In early 2014, after Knighton resigned, the Tribe conducted a forensic accounting of the Tribe's...