Navajo Nation v. Peabody Holding Co., Inc., CIV.A. 99-469(EGS).

• Decision Date: 24 June 2002
• Docket Number: No. CIV.A. 99-469(EGS).,CIV.A. 99-469(EGS).
• Citation: 209 F.Supp.2d 269
• Parties: THE NAVAJO NATION, et al., Plaintiffs, v. PEABODY HOLDING COMPANY, INC., et al., Defendants.
• Court: U.S. District Court — District of Columbia

209 F.Supp.2d 269

THE NAVAJO NATION, et al., Plaintiffs, v. PEABODY HOLDING COMPANY, INC., et al., Defendants.

No. CIV.A. 99-469(EGS).

United States District Court, District of Columbia.

June 24, 2002.

COPYRIGHT MATERIAL OMITTED

Samuel J. Buffone, Kelly B. Kramer, William M. Carter, Jr., Ropes & Gray, Washington, DC, Britt E. Clapham, II, Levon Henry, John Rutherford, Navajo Nation Dept. of Justice, Window Rock, AZ, Paul E. Frye, Rothstein, Donatelli, Hughes, Dahlstrom, Schoenburg & Frye, Albuquerque, NM, for Navajo Nation.

Peter Buscemi, Brad Fagg, Morgan, Lewis & Bockius, Washington, D.C. Vernon Thomas Lankford, Jr., Lankford & Coffield, PLLC, Alexandria, VA. Terry Reed, Reed Law Firm, Alexandria, VA, for Peabody Holding Co., Inc., Peabody Coal Co., Peabody Western Coal Co., Gregory J. Leisse, Edward L. Sullivan.

Richard Harper Saltsman, William R. Sherman, Washington Lawyers' Committee, Washington, DC, James Francis Hibey, Howrey Simon Arnold & White, LLP, Washington, DC, for Salt River Project Agric. Improvement & Power Dist.

Antonia B. Ianniello, Reid Henry Weingarten, Paul Robert Hurst, Steptoe & Johnson, Washington, D.C., Shannen Wayne Coffin, Alexandria, VA, for Southern California Edison Co.

Irvin Bertram Nathan, Joel M. Gross, Arnold & Porter, Washington DC, James E. Scarboro, Michael A. Saul, Arnold & Porter, Denver, CO, Timothy R. Macdonald, Arnold and Porter, Denver, CO, for the Hopi Tribe.

MEMORANDUM OPINION AND ORDER

SULLIVAN, District Judge.

The parties to this action have been actively involved in its litigation for the past two and a half years. The case is in a unique procedural posture, as many of the claims asserted by Navajo Nation and the Hopi Tribe against the defendants are at issue in a lawsuit filed by the Navajo Nation in the Federal Circuit against the United States. The Supreme Court recently granted the United States' petition for writ of certiorari in the Federal Circuit case.

Three matters are presented to the Court for resolution. First, defendant Salt River Project ("SRP") asks the Court to enter final judgment in its favor. The Navajo Nation and the Hopi Tribe conversely seek to reinstate claims against SRP. Second, defendants Peabody Holding Co., Peabody Coal Co. and Peabody Western Coal ("Peabody defendants") move the Court to transfer this case to the District Court for the District of Arizona or, in the alternative, to stay this matter until litigation in that district has been resolved. Finally, the Peabody defendants and defendant Southern California Edison ("SCE") have filed motions for entry of a protective order that would stipulate that neither Peabody nor SCE waived privileges with respect to documents that were disclosed in the Court of Federal Claims case pursuant to a confidentiality agreement.

I. Procedural History

In December 1993, the Navajo Nation sued the federal government in the Court of Federal Claims for actions relating to coal leases on tribal land. Navajo Nation alleged that the government had breached its statutory and fiduciary duties by first delaying a decision on the disputed royalty rate, and then approving an inadequate rate. Specifically, the area director had recommended a 20% royalty rate, but Secretary of the Interior Donald Hodel delayed approving that rate. After the Navajo were allegedly pressured into accepting a 12.5% rate in negotiations with Peabody, Secretary Hodel approved that lower rate. The Court of Federal Claims issued an opinion highly critical of the government, but did not find a breach of fiduciary duty. See The Navajo Nation v. United States, 46 Fed. Cl. 217 (2000). The Federal Circuit reversed, holding that the United States breached its fiduciary duty by "suppressing and concealing" the Board of Indian Affairs' decision to the detriment of Navajo interests. 263 F.3d 1325, 1332 (Fed.Cir.2001). The Supreme Court recently granted the United States' petition for certiorari, ___ U.S. ___, 122 S.Ct. 2326, 153 L.Ed.2d 158 (Mem.) (2002), and scheduled the case for oral argument in tandem with White Mountain Apache Tribe v. United States, 249 F.3d 1364 (Fed.Cir.2001), cert. granted by ___ U.S. ___, 122 S.Ct. 1604, 152 L.Ed.2d 619 (Apr. 22, 2002).

The instant case was filed in February 1999 by Navajo Nation against the Peabody defendants, SCE and SRP. The suit claims that the defendants conspired to improperly influence the federal government's decisions regarding the coal leases. It alleges a violation of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., and related claims such as breach of contract, interference with fiduciary relationship, conspiracy and fraudulent concealment. The core of the complaint is the revelation stemming from discovery received in the Court of Federal Claims case that defendants hired a lobbyist, Stanley Hulett, who met with Secretary Hodel ex parte and allegedly persuaded him not to approve a recommendation by the area director to raise the royalty rate to 20%.

On June 17, 1999, Navajo Nation filed its first amended complaint, naming Peabody, SCE and SRP as defendants. On September 9, 1999, all defendants filed a joint motion to dismiss the amended complaint. On the same day, SRP also filed a supplemental motion to dismiss. The defendants' joint motion was denied by the Court on March 15, 2001. On May 15, 2001, the Court issued an order granting SRP's supplemental motion to dismiss the Navajo Nation's amended complaint.

The Hopi Tribe moved to intervene in February 2000. On March 15, 2001, the Court granted the Hopi Tribe's motion to intervene. On July 3, 2001, the Court granted SRP's motion to dismiss the Hopi Tribe's claims against SRP. Thus, all claims against SRP have been dismissed.

The Court denied the remaining defendants' joint motion to dismiss the Hopi Tribe's complaint for failure to state a claim. See Order, Oct. 31, 2001.

II. Plaintiffs' Motions for Restoration of Claims against SRP and SRP's Motion for Entry of Judgment

In its supplemental motions to dismiss, SRP argued that, as a municipal corporation and political subdivision of the State of Arizona, it could not be held liable under RICO or for punitive damages. SRP also argued that, as a governmental entity, it was protected by the Arizona notice of claims statute and had not received the requisite prior notice of the Navajo Nation's claims. On May 15, 2001, the Court issued an order granting SRP's motion to dismiss the claims against SRP in the Navajo Nation's amended complaint. On July 3, 2001, the Court also granted SRP's motion to dismiss the Hopi Tribe's claims against SRP.

Pursuant to Fed.R.Civ.P. 54(b), "[w]hen more than one claim for relief is presented in an action, ... or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment."

The Navajo Nation suggests that new Arizona case law should persuade the Court to reinstate the claims against SRP. Specifically, the Navajo Nation claims restoration of its claims against SRP is "appropriate because, as applied to the facts of this case, the notice of claims statute violates the equal protection and anti-abrogation clauses of the Arizona Constitution." Pl.'s Mot. for Restoration of Claims against SRP at 1. The Navajo Nation argues that the Arizona Supreme Court's decision in Clouse v. State, 199 Ariz. 196, 16 P.3d 757 (2001), and the "depublication" of Hendel v. Salt River Project Agric. Improvement & Power Dist., No. 1 CACV 97-0329, 1998 WL 404489 (Ariz.Ct. App. July 21, 1998), may be read to suggest that the notice of claims statute is unconstitutional when it is extended to cover claims arising out of proprietary conduct of a political subdivision of the State. However, the Navajo Nation argued these authorities to the Court at oral argument and in their briefs prior to the Court's decision to dismiss the Nation's claims against SRP. Thus, the Navajo Nation's motion to "restore" claims against SRP is, in essence, a motion for reconsideration.

Navajo Nation contends that the Court failed to address whether plaintiffs' complaints arose out of SRP's proprietary activities and whether application of the statute to actions arising out of proprietary activities would violate the Arizona Constitution. However, in granting SRP's motions to dismiss, the Court held that the notice of claims statute applied to SRP, citing Stulce v. Salt River Project Agric. Improvement & Power Dist., 197 Ariz. 87, 3 P.3d 1007 (App.1999). Stulce, in addition to recognizing SRP as a political subdivision of the State, held that "the Arizona Constitution specifically empowers the legislature to enact statutes of limitations and procedures that may treat lawsuits against the state differently from other lawsuits." Id. at 1013. The Arizona Constitution, Arizona statutes and case law all establish that municipal entities such as SRP are entitled to notice of claims in conformance with the statute prior to filing suit. See Ariz.Rev.Stat. § 12-821.01(C).

No court has suggested that the Arizona notice of claims requirement is unconstitutional, or may be dependent on the type of conduct that gives rise to suit. Navajo Nation relies on Clouse, a case that considered the constitutionality of governmental immunity statutes under the Arizona Constitution. In Clouse, the plaintiffs argued that a law granting immunity to public employees acting within the scope of their employment violated the State's constitutional provision of "open courts." 16 P.3d at 758; see Ariz. Const. art. IV, pt. 2, § 18 ("The Legislature shall direct by law in what manner and in what courts suits may be brought against the state."). Defendants argued that the so-called "immunity clause" of the State Constitution permitted the legislature to limit...