Rockbridge v. Lincoln

Decision Date01 September 1971
Docket NumberNo. 25437.,25437.
Citation449 F.2d 567
PartiesJohn ROCKBRIDGE and Henry Zah, Individually and On Behalf of All Others Similarly Situated, Plaintiffs and Appellants, v. Anthony LINCOLN, Area Director, Bureau of Indian Affairs, et al., Defendants and Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Donald Juneau (argued), Theodore R. Mitchell, Window Rock, Ariz., for appellants.

George R. Hyde (argued), S. Billingsley Hill, Dept. of Justice; Shiro Kashiwa, Asst. Atty. Gen., Land & Nat. Resources Div., Washington, D. C.; Richard K. Burke, U. S. Atty., Michael Lasher, Asst. U. S. Atty., Phoenix, Ariz., for appellees.

Before MERRILL and ELY, Circuit Judges, and FERGUSON,* District Judge.

FERGUSON, District Judge:

The question presented is whether a system of unregulated trading post monopolies allegedly imposed upon the Navajo Indians by governmental officials can be challenged in court. The district court held that it lacks jurisdiction. We reverse.

This appeal, pursuant to 28 U.S.C. § 1291, is from a judgment dismissing appellants' action to require the Secretary of the Interior, the Commissioner of Indian Affairs, and the Area Director of the Navajo Indian Reservation to adopt and enforce certain rules and regulations governing traders doing business on the Navajo Indian Reservation. The appellants filed their complaint as a class action on their own behalf and on behalf of all Navajo Indians residing on the reservation.

Appellants claim that a duty to adopt and enforce such regulations arises out of 25 U.S.C. §§ 261 and 262. The appellees contend that the sections grant them such discretion within the meaning of the Administrative Procedure Act (5 U.S.C. § 701 et seq.) as to preclude litigation. These sections provide as follows:

"§ 261. Power to appoint traders with Indians
"The Commissioner of Indian Affairs shall have the sole power and authority to appoint traders to the Indian tribes and to make such rules and regulations as he may deem just and proper specifying the kind and quantity of goods and the prices at which such goods shall be sold to the Indians."
"§ 262. Persons permitted to trade with Indians
"Any person desiring to trade with the Indians on any Indian reservation shall, upon establishing the fact, to the satisfaction of the Commissioner of Indian Affairs, that he is a proper person to engage in such trade, be permitted to do so under such rules and regulations as the Commissioner of Indian Affairs may prescribe for the protection of said Indians."

By their motion to dismiss, the appellees concede for the purpose of this appeal the truthfulness of the allegations set forth in the complaint. Delesdernier v. O'Rourke & Warren Company, 305 F. 2d 929 (5th Cir. 1962). In summary, these allegations are:

1. The Navajo Reservation is approximately the size of West Virginia, and is occupied by 120,000 Navajos.
2. No one is allowed to conduct business on the reservation without the approval of the Commissioner of Indian Affairs. There are now approximately 100 traders, whose total gross receipts during the past six years averaged 14.5 million dollars per year.
3. Family income for the Navajos averages $1,500 per year. The effective unemployment rate is nearly 80%.
4. The trading post is the only area outlet for groceries and supplies. It is the only local buyer for livestock, wool and other Navajo products. It has the only telephone, gasoline pump and post office and is the only local source of credit by loans, pawns and open accounts.
5. The trader dominates the relationship between the Navajos and those outside the reservation to his own economic advantage. The trader frequently acts as liaison between state welfare agencies and the Navajo applicants and withholds proceeds of welfare checks or other checks sent to them until their loans are paid.
6. The United States Railroad Retirement Board employs traders to act as special claims agents. In this capacity, the trader disperses one of the few sources of wage income on the reservation. He is able to, and often does, favor the employment of those Navajos who have credit accounts owing to him.
7. Because of the licensing procedures of the Commissioner, each trader has an effective geographical monopoly of Navajo consumers and resources in his trading area, which works to the benefit of the trader and against the Navajos.
8. It is not possible for the Navajos to trade outside the reservation because the vast majority of roadways are unpaved and in winter months and during spring and fall rains, transportation is difficult to impossible.
9. The traders have a legal monopoly, since they have a captive market and need not worry about competition. They are not subject to the controls of the free enterprise system.
10. The unregulated trading post system permits the trader to exact unduly high prices for his goods; to sell inferior products; to charge any rate of interest; and to use dishonest weights and measures. The system permits the trader economically to manipulate the Navajo.
11. While the Commissioner leaves traders on the Navajo, Hopi and Zuni Reservations free from price regulation, he subjects traders on other Indian Reservations to price controls.
12. The Commissioner has issued a few regulations concerning relatively unimportant features of the trading post operation, such as, the issuance of pawn receipts, with no regulation of interest rates. He requires that prices be plainly marked, but places no restraint on prices, and he has provided no means whatsoever to enforce even the few regulations which have been adopted.

The appellants seek orders which would (1) require the appellees to adopt adequate rules and regulations which govern traders on the reservation for the protection of the Navajos, including specification of "the kind and quantity of goods and the prices at which such goods shall be sold"; and (2) require appellees to enforce those regulations and the regulations which are now in effect.

Appellants allege jurisdiction under a variety of statutes, treaties and constitutional provisions. They are 25 U.S.C. §§ 261-264; Article 1, Sec. 8, clause 3 of the Constitution; the Fifth Amendment; Treaty of 1849 between the Navajo Tribe and the United States (9 Stat. 974); Navajo Treaty of 1868 (15 Stat. 667); the Administrative Procedure Act, 5 U.S. C. § 701 et seq.; 28 U.S.C. § 1331, involving a federal question and $10,000; 28 U.S.C. § 1361, the Mandamus Statute; and 28 U.S.C. § 1651, the All Writs Statute.

The district court granted the appellees' motion to dismiss holding that the Administrative Procedure Act (5 U.S.C. § 701 et seq.) did not confer jurisdiction on the court. The court reasoned that 25 U.S.C. §§ 261 and 262 are purely discretionary and therefore specifically exempted from the Act. The district court further held that the Mandamus Statute (28 U.S.C. § 1361) was likewise inapplicable, and that since the appellees had not "acted" in violation of their statutory powers, the doctrine of sovereign immunity is a bar to the action.

We hold that the district court has jurisdiction under the Administrative Procedure Act, and that the doctrine of sovereign immunity is not a bar to this action.

Section 702 of the Administrative Procedure Act (5 U.S.C. § 702) provides that "a person suffering legal wrong because of agency action * * * is entitled to judicial review thereof". Section 703 sets forth that "the form of proceeding for judicial review is * * * any applicable form of legal action, including actions for declaratory judgments or writs of prohibitory or mandatory injunction. * * *" Section 706 (1) directs the reviewing court to "compel agency action unlawfully withheld". The Act has been interpreted to permit the relief sought. Mollohan v. Gray, 413 F.2d 349 (9th Cir. 1969); United States v. Walker, 409 F.2d 477 (9th Cir. 1969); Adams v. Witmer, 271 F.2d 29 (9th Cir. 1959). Appellees contend, however, that this is a case within 5 U.S.C. § 701(a) (2), which provides that the Act is not applicable when "agency action is committed to agency discretion by law". Whether agency action is "committed to agency discretion" depends upon whether Congress has manifested in the statutes governing the agency action in question an intent to cut off review. See 4 Davis, Administrative Law Treatise § 28.16; Jaffe, Judicial Control of Administrative Action 374-75 (1965). A permissive statutory term, like "as he may deem just and proper", 25 U.S.C. § 261, is not by itself to be read as a congressional command precluding judicial review. The question is whether nonreviewability can fairly be inferred from the over-all statutory scheme. Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970).

In order to properly determine whether inaction is "* * * committed to the Commissioner's discretion" by Sections 261 and 262, it is thus necessary first to focus upon the legal relationship between the United States and the Indians. In Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 8 L.Ed. 25 (1831), Chief Justice Marshall set forth that relationship. "The Indians are in a state of pupilage; their relationship to the United States resembles that of a ward to his guardian." 30 U.S. at 17. In United States v. Kagama, 118 U.S. 375, 6 S.Ct. 1109, 30 L.Ed. 228 (1886), the duty of the government was defined. "From their the Indians' very weakness and helplessness, so largely due to the course of dealing of the Federal Government with them and the treaties in which it has been promised, there arises the duty of protection, and with it the power." 118 U.S. at 384, 6 S.Ct. at 1114. See also Choctaw Nation v. United States, 119 U.S. 1, 75 S.Ct. 75, 30 L.Ed. 306 (1886).

In Seminole Nation v. United States, 316 U.S. 286, 62 S.Ct. 1049, 96 L.Ed. 561 (1942), the Court stated:

"In carrying out its treaty obligations with the Indian tribes, the Government is something more than a mere contracting party. Under a humane and self

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