Sac and Fox Nation of Missouri v. LaFaver, Civ. A. No. 95-4152-DES.

• Decision Date: 27 October 1995
• Docket Number: Civ. A. No. 95-4152-DES.
• Citation: 905 F. Supp. 904
• Parties: SAC AND FOX NATION OF MISSOURI, Iowa Tribe of Kansas and Nebraska, Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas, Plaintiffs, v. John D. LaFAVER, Secretary Kansas Department of Revenue, Defendant.
• Court: U.S. District Court — District of Kansas

905 F. Supp. 904

SAC AND FOX NATION OF MISSOURI, Iowa Tribe of Kansas and Nebraska, Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas, Plaintiffs, v. John D. LaFAVER, Secretary Kansas Department of Revenue, Defendant.

Civ. A. No. 95-4152-DES.

United States District Court, D. Kansas.

October 5, 1995.

Order Denying Remedial Relief and Denying Modification of Order October 27, 1995.

Stephen D. McGiffert, McDowell, Rice & Smith, P.C., Overland Park, KS, Mark S. Gunnison, McDowell, Rice & Smith, P.C., Kansas City, MO, George Forman, John R. Shordike, Patricia Prochaska, Berkeley, CA, Paul Alexander, Alexander & Karshmer, Washington, DC, for Sac and Fox Nation of Missouri.

Stephen D. McGiffert, McDowell, Rice & Smith, P.C., Overland Park, KS, Mark S. Gunnison, McDowell, Rice & Smith, P.C., Kansas City, MO, for Iowa Tribe of Kansas & Nebraska.

Lance W. Burr, Lawrence, KS, for The Kickapoo Tribe of Indians.

Lester N. Collier, Topeka, KS, John Michael Hale, Kansas Department of Revenue, Bureau of Legal Services, Topeka, KS, for John D. LaFaver.

MEMORANDUM AND ORDER

SAFFELS, District Judge.

This matter is before the court on the motion of the plaintiffs for a temporary restraining order and a preliminary injunction (Doc. 3). This action was filed September 25, 1995. The court heard arguments from all parties at a hearing on October 4, 1995. At the conclusion of the hearing, the court took the matter under advisement.

Having further reviewed the pleadings and the arguments of counsel, the court is now prepared to rule on the motion for a temporary restraining order.

This case is brought by three federally recognized Indian Tribes: The Sac and Fox Nation of Missouri ("Sac and Fox"); the Iowa Tribe of Kansas and Nebraska ("Iowa"); and the Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas ("Kickapoo") (collectively the "Tribes"). The Sac and Fox Tribe is the beneficial owner of and exercises jurisdiction over the Sac and Fox Indian Reservation, as well as land located at Reserve, Kansas, which land is held in trust for the Sac and Fox by the United States of America. The Iowa Tribe is owner of and exercises jurisdiction over the Iowa Tribe of Kansas and Nebraska Indian Reservation. A part of the land is held in trust for the Iowa by the United States of America. The Kickapoo Tribe is the beneficial owner of and exercises jurisdiction over land within the Kickapoo Nation federally recognized boundaries, which land is held in trust for the Kickapoo by the United States of America.

In this action, the Tribes challenge the imposition of a motor fuel tax by the Kansas Department of Revenue ("Department") on the retail sales of gasoline/diesel fuel on Indian lands. The imposition of the tax is a result of amendments to the state of Kansas' fuel tax laws passed by the Kansas Legislature on May 7, 1995, and May 17, 1995.

The Kansas Department of Revenue delayed collection of the tax for two months. However, on September 6, 1995, the Department began collecting taxes on motor fuels sold by Indians on Indian lands. All three Tribes operate gas stations on their trust land.

The Tribes raise numerous reasons why the imposition of the tax is in violation of the law. These include: (1) the Act for the Admission of Kansas Into the Union, § 1 excludes Indian land from the territorial boundaries and civil jurisdiction of the state of Kansas; (2) the Tribes have not subsequently consented to the civil jurisdiction over their respective Indian lands of the Kansas State courts; (3) unless Congress instructs otherwise, a state's excise tax is unenforceable if its legal incidence falls on an Indian tribe or its members for sales made within Indian country; and (4) all three Tribes have entered into Tax Compacts with the Department and the Governor of the state of Kansas.

The revenue generated from the sale of motor fuel is a primary revenue source for the Tribes. The imposition of the tax would severely diminish the capacity of the Tribes to fund necessary services and programs to the members of the Tribes. There is also every likelihood that Tribal employees and administrative staff in the Tribes' business offices will be laid off as a result of the lost revenue. The loss of revenue, therefore, has potentially devastating effects for people who are already impoverished. Consequently, the Tribes seek a temporary restraining order to bar the collection taxes by the Department.

The issuance of a temporary restraining order or other preliminary injunctive relief is within the sound discretion of the district court. Tri-State Generation & Transmission Ass'n, Inc. v. Shoshone River Power, Inc., 805 F.2d 351, 354 (10th Cir. 1986). When the opposing party has been notified and a hearing held prior to the issuance of a temporary restraining order, the specific requirements of Fed.R.Civ.P. 65(b), including the ten-day limitation on the duration of such an order, do not apply. See 11 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2951, at 500 (1973). In such a case the court, in addressing a motion seeking a temporary restraining order, follows the same procedure as for a preliminary injunction motion. Id. at 499.

To obtain a temporary restraining order or a preliminary injunction in federal court, the movant has the burden of establishing that:

(1) the party will suffer irreparable injury unless the injunction issues; (2) the threatened injury to the moving party outweighs whatever damage the proposed injunction may cause the opposing party; (3) the injunction, if issued, would not be adverse to the public interest; and (4) there is a substantial likelihood that the moving party will eventually prevail on the merits.

Resolution Trust Corp. v. Cruce, 972 F.2d 1195, 1198 (10th Cir.1992). If the moving party satisfies the first three elements, the standard for meeting the fourth requirement, likelihood of success on the merits, generally becomes more lenient. In such a case, the movant need only show that the issues are so serious, substantial, difficult, and doubtful as to make them a fair ground for litigation. See Franklin Savings Ass'n v. Office of Thrift Supervision, 732 F.Supp. 1123, 1124-25 (D.Kan.1990).

1. Irreparable Injury. The Tribes contend that they will be irreparably harmed if the tax collection continues because the loss of revenue will result in decreased services and programs to tribal members and the loss of employment for specific Tribal members. The Tribes further contend that such devastating losses of revenue may well mean the complete elimination of social service, medical and education payments to tribal members. Even such basic services as law enforcement and fire protection may be endangered by this loss of revenue. Furthermore, the Tribes argue that if the Department is not enjoined from collecting the taxes and the Tribes win on the merits, the loss of revenue in the interim may so devastate the Tribes that the ability to sustain themselves may be irretrievably lost.

Under normal circumstances, monetary loss may be remedied by an award of compensatory damages, and the risk of such loss is therefore not considered irreparable. See Holly Sugar Corp. v. Goshen County Coop. Beet Growers Ass'n, 725 F.2d 564, 570 (10th Cir.1984). Here, however, the court considers the consequences of such losses as extremely serious and potentially devastating to the Tribes. Such loss would indeed meet the irreparable harm test.

2. Harm to Opposing Party. At the hearing on this matter, and in their memorandum in support, the Tribes contend that the Department will suffer little if the restraining order issues. For years the state of Kansas made no attempt to impose fuel taxes on tribal retail sales on Indian lands and had even admitted that it had no authority to do so. The Tribes further assert that the collection of taxes, which began less than a month ago, has not resulted in a reliance on the revenue by the state.

The court also notes that the Department made no statement concerning any negative impact the loss of tax collection would have on the state's budget. In fact, in its argument, the Department alluded to the very minor role the Tribes' tax dollars would play in the state's funding scheme.

The court concludes the damage caused to the opposing party is negligible.

3. The Public Interest. The...