Niagara Mohawk Power Corp. v. Tonawanda Band of Seneca Indians

Decision Date23 August 1996
Docket NumberNo. 1300,D,1300
Citation94 F.3d 747
PartiesNIAGARA MOHAWK POWER CORPORATION, Plaintiff/Counter-Defendant/Appellant, v. TONAWANDA BAND OF SENECA INDIANS, Bernard Parker, Darwin Hill, Kervin Jonathan, James C. Logan, Emerson Webster, Darren Jimerson, Harley Gordon, Roy Poodry, and Frank Abrams, Defendants-Appellees, Stonehorse Lone Goeman, Susan LaFromboise, David C. Peters, Peter L. Poodry, and John A. Redeye, Defendants/Counter-Claimants/Appellees. ocket 95-9014.
CourtU.S. Court of Appeals — Second Circuit

Mark R. McNamara, Buffalo, New York (Samuel J. Burruano, Jr., Hiscock & Barclay), for plaintiff/counter-defendant/appellant Niagara Mohawk Power Corporation.

Harold M. Halpern, Buffalo, New York (Borins, Halpern, Stromberg & Paskowitz), for defendants-appellees Tonawanda Band of Seneca Indians, Bernard Parker, Darwin Hill, Kervin Jonathan, James Logan, Emerson Webster, Darren Jimerson, Harley Gordon, and Frank Abrams.

Joseph E. Zdarsky, Buffalo, New York (Gerald T. Walsh, Zdarsky, Sawicki & Agostinelli, of counsel), for defendants/counterclaimants/appellees Stonehorse Lone Goeman, Susan LaFromboise, David C. Peters, Peter L. Poodry, and John A. Redeye.

Before: FEINBERG, CABRANES, and PARKER, Circuit Judges.

JOSE A. CABRANES, Circuit Judge:

Plaintiff Niagara Mohawk Power Company ("Niagara Mohawk"), a public utility corporation organized under New York law, filed this action for declaratory relief on March 3, 1993. The plaintiff is the successor to the rights and obligations of the Niagara, Lockport & Ontario Power Company ("Niagara Lockport") under an April 27, 1936, franchise agreement with the Tonawanda Band of Seneca Indians ("Tonawanda Band"), a federally recognized Indian tribe. The plaintiff claims principally that the traditional governing body of the tribe, the Council of Chiefs, sought in late 1992 to prohibit it from providing new or changed electrical service to, among others, five applicants purportedly "banished" from the tribe. Unable to discern, inter alia, (1) whether the 1936 franchise agreement between Niagara Lockport and the Tonawanda Band is valid; and (2) whether the terms of the agreement require it to secure the approval of the Council of Chiefs before granting applications for electrical service, Niagara Mohawk filed suit against the tribe itself, the members of the tribal Council of Chiefs, and the five applicants for electrical service. The applicants asserted a counterclaim against Niagara Mohawk, seeking damages and injunctive relief based on the plaintiff's alleged failure to provide electrical service in a nondiscriminatory manner, as required by § 65(3) of the New York Public Service Law and the terms of its franchise agreement with the band.

Upon the motion of the tribe and members and clerk of the tribal Council of Chiefs, the U.S. District Court for the Western District of New York (Richard J. Arcara, Judge ) adopted the Report and Recommendation of Magistrate Judge Carol E. Heckman and granted summary judgment dismissing the plaintiff's complaint, concluding that the complaint failed to present a federal question. The court ruled in the alternative that the doctrine of sovereign immunity divested it of subject matter jurisdiction with respect to the plaintiff's claim against the tribe, and that the applicants' counterclaim against Niagara Mohawk must be dismissed under Rule 12(b)(7) of the Federal Rules of Civil Procedure for failure to join an indispensable party as required by Rule 19.

We hold that the district court properly determined that neither the complaint nor the counterclaim presents a federal question. In the absence of any other basis for federal subject matter jurisdiction, dismissal of the entire suit was proper, and we need not rule on the alternative ground for the district court's decision. We therefore affirm the district court's judgment insofar as it dismisses the action for lack of a federal question.

I. FACTS

The Tonawanda Band of Seneca Indians is a federally recognized Indian tribe occupying We have had a good relationship over the years. Our procedure of approval was followed and ... procedures were worked out to satisfaction.

                a reservation near Akron, New York.  On April 27, 1936, the tribe entered into a franchise agreement granting Niagara Lockport and its successors and assigns the right to construct, maintain, and operate electrical lines within the Tonawanda Reservation and to "furnish service to any applicant within said Tonawanda Reservation under the terms and provisions, rules and regulations of the schedules filed with and approved by the Public Service Commission of the State of New York."  The plaintiff, a successor to the franchise agreement, claims that, like Niagara Lockport, it has always provided electrical service under the agreement's terms to applicants residing on the Tonawanda Reservation without securing approval of each application for new or changed service from the tribal Council of Chiefs.  In late 1991, a political dispute arose on the Tonawanda Reservation.  As a result of their role in that dispute, defendants Stonehorse Lone Goeman, Susan LaFromboise, David C. Peters, Peter L. Poodry, and John A. Redeye were served with notices of "banishment" and ordered to leave the reservation in January 1992. 1  All five "banished" individuals, among others, have at some point since January 1992 applied for new or changed electrical service.  Niagara Mohawk, however, has refused to act upon their applications based on various letters from the Council of Chiefs and its attorney calling into question Niagara Mohawk's procedures.  First, the regional general manager of Niagara Mohawk received a letter dated September 24, 1992, from Bernard Parker, a member and purported chairman of the Council of Chiefs, expressing "concerns regarding utility policies and practices within our territories."   The letter stated in part as follows
                

There is, however, a concern about these recent policy changes regarding application for service and planned changes of power distribution in our territory. Any new utility right of way use, authorized by the [New York Public Service Commission], might not be legal. As you know, right[s] of way[ ] in Indian territories require approval by the Department of Interior, Bureau of Indian Affairs.

Niagara Mohawk received a second letter, dated December 30, 1992, this time from the attorney for the tribal Council of Chiefs, advising that "[a]ll new or changed customer services require approval of the Council of Chiefs," and seeking copies of all applications for customer service so that the Council could "determine whether or not it grants its approval for such applications." In a letter dated February 1, 1993, following a meeting with Niagara Mohawk's General Counsel, the tribe's attorney called to Niagara Mohawk's attention certain provisions of the franchise agreement requiring the utility company to secure the approval of record owners of allotted lands on the reservation prior to constructing electrical lines in front of such lands. According to that letter, Niagara Mohawk had failed to ascertain which, if any, applicants were record owners able to grant approval.

Since receiving this correspondence, Niagara Mohawk has apparently refused to grant any application for new or changed electrical service, but has maintained existing service on the reservation. Niagara Mohawk filed this suit for declaratory relief in March 1993, claiming that its correspondence with the tribal Council of Chiefs called into question both the validity of Niagara Mohawk's franchise agreement with the band and Niagara Mohawk's obligation to provide new or changed service to applicants on the reservation without securing prior approval of the Council of Chiefs. The company named as defendants the tribe, the members and clerk of the Council, and the five "banished" individuals, who had apparently threatened legal action against Niagara Mohawk for its alleged failure to adhere to the terms of its franchise agreement with the tribe.

The tribe and the members and clerk of the Council of Chiefs filed an answer on April 20, 1993, asserting, inter alia, that the tribe and its officials were immune from suit and Pursuant to 28 U.S.C. § 636(b)(1), the district court referred the case to Magistrate Judge Heckman. On August 2, 1993, the tribe and the members and clerk of the tribal Council of Chiefs (together, the "moving defendants") filed a motion for summary judgment, claiming that the district court lacked subject matter jurisdiction over the suit. In a Report and Recommendation filed November 22, 1993, Magistrate Judge Heckman recommended dismissal of the complaint and counterclaim on two independent grounds. First, she concluded that federal question jurisdiction was lacking as to Niagara Mohawk's claim, because the only question to be resolved was how the franchise agreement between Niagara Lockport and the tribe should be interpreted--a matter of state law. Similarly, because the counterclaim raised only Niagara Mohawk's alleged breach of the franchise agreement, there was no independent basis for subject matter jurisdiction over the counterclaim. Second, the magistrate judge concluded that the doctrine of sovereign immunity barred Niagara Mohawk's suit against the tribe and that subject matter jurisdiction was therefore lacking as to that defendant. The magistrate judge further concluded that the tribe was an indispensable party, under Rule 19(b) of the Federal Rules of Civil Procedure, to the applicants' counterclaim against Niagara Mohawk, and that dismissal of the counterclaim for failure to join an indispensable party was required. The plaintiff and the non-moving defendants filed objections to the magistrate judge's recommended ruling. By a Decision and Order filed August 4, 1994, the district court adopted the magistrate judge's ruling in full. The court thereafter entered...

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