Sage v. Sicangu Oyate Ho, Inc., 17306

• Decision Date: 24 July 1991
• Docket Number: No. 17306,17306
• Citation: 473 N.W.2d 480,69 Ed.LawRep. 573
• Parties: 69 Ed. Law Rep. 573 Robert E. SAGE, Plaintiff and Appellant, v. SICANGU OYATE HO, INC., d/b/a St. Francis Indian School, Defendant and Appellee.
• Court: South Dakota Supreme Court

Page 480

473 N.W.2d 480

69 Ed. Law Rep. 573

Robert E. SAGE, Plaintiff and Appellant, v. SICANGU OYATE HO, INC., d/b/a St. Francis Indian School Defendant and Appellee.

No. 17306.

Supreme Court of South Dakota.

Argued April 22, 1991.

Decided July 24, 1991.

Donald E. Covey, Covey Law Office, Winner, for plaintiff and appellant.

Terry L. Pechota, Finch, Viken, Viken and Pechota, Rapid City, for defendant and appellee.

SABERS, Justice.

Non-Indian principal of school on Indian reservation appeals dismissal of his employment grievance by circuit court for lack of subject matter jurisdiction.

Facts

Sicangu Oyate Ho, Inc. ¹ is a nonprofit corporation which operates St. Francis Indian School (school) on the Rosebud Sioux Indian Reservation. Sage, a non-Indian, was employed under contract by school as teacher or high school principal continuously from 1979 to 1990. On February 13, 1990, school first notified Sage in writing of its intent not to renew his contract for the upcoming 1990-91 school year. Following further correspondence between school and Sage, school informed him on April 10, 1990 that its decision not to renew was final.

On May 30, 1990, Sage filed in state circuit court a notice of appeal of school's decision not to renew his contract pursuant to SDCL ch. 13-43 and 13-46. School filed a special appearance with motion to dismiss on grounds of lack of subject matter jurisdiction. Circuit court granted school's motion to dismiss on August 6, 1990, finding lack of jurisdiction under two theories:

(1) infringement of tribal sovereignty and

(2) federal preemption.

The sole issue is whether the circuit court erred in finding that it lacked subject matter jurisdiction over Sage's cause of action.

Infringement and Preemption

There are two distinct barriers to a state's assumption of jurisdiction over reservation Indians: "infringement" and "preemption." Although "either [barrier], standing alone, can be a sufficient basis for holding state law inapplicable to activity undertaken on the reservation or by tribal members," we consider them together because "[t]hey are related[.]" White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 143, 100 S.Ct. 2578, 2583, 65 L.Ed.2d 665 (1980).

Infringement refers to the original sovereignty of Indian tribes apart from the recognition of same by the federal government. "It must always be remembered that the various Indian tribes were once independent and sovereign nations, and that their claim to sovereignty long predates that of our own Government." McClanahan v. Arizona Tax Comm'n, 411 U.S. 164, 172, 93 S.Ct. 1257, 1262, 36 L.Ed.2d 129 (1973). Therefore, even when an assertion of state jurisdiction over reservation Indians is not expressly preempted by federal law to the contrary, "the question has always been whether the state action infringed on the right of reservation Indians to make their own laws and be ruled by them." Williams v. Lee, 358 U.S. 217, 220, 79 S.Ct. 269, 271, 3 L.Ed.2d 251 (1959).

Nevertheless, even though Indian sovereignty is prior to federal acknowledgment of Indian sovereignty historically and conceptually,

the trend has been away from the idea of inherent Indian sovereignty as a bar to state jurisdiction and toward reliance on federal pre-emption. See Mescalero Apache Tribe v. Jones, 411 U.S. 145, 93 S.Ct. 1267, 36 L.Ed.2d 114. The modern cases thus tend to avoid reliance on platonic notions of Indian sovereignty and to look instead to the applicable treaties and statutes which define the limits of state power.

McClanahan, supra. The preemption inquiry "is not dependent on mechanical or absolute conceptions of state or tribal sovereignty," but calls for "a particularized inquiry into the nature of the state, federal, and tribal interest at stake, an inquiry designed to determine whether, in the specific context, the exercise of state authority would violate federal law." White Mountain v. Bracker, 448 U.S. at 145, 100 S.Ct. at 2584.

In general, civil jurisdiction over disputes between reservation Indians lies exclusively in tribal court. See generally Williams v. Lee, supra. Although Congress provided a mechanism by which states could assume civil jurisdiction over reservation Indians, 25 U.S.C. Secs. 1322-1326 (1988), South Dakota has never effectively availed itself of this procedure. ² Rosebud Sioux Tribe v. South Dakota, 900 F.2d 1164, 1170-1171, 1174 (8th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 2009, 114 L.Ed.2d 98 (1991). See also State v. Spotted Horse, 462 N.W.2d 463, 467 (S.D.1990).

Civil jurisdiction over disputes between reservation Indians and opposing parties who are not reservation Indians requires a more exacting infringement and preemption analysis. For example, this court has found concurrent state and tribal jurisdiction over divorce-related litigation between reservation Indians and spouses domiciled off the reservation, whether the off-reservation spouse is Indian or non-Indian. Harris v. Young, 473 N.W.2d 141, 144-146 (S.D.1991); Wells v. Wells, 451 N.W.2d 402, 405-406 (S.D.1990).

In contrast, assertions of state subject matter jurisdiction over contracts between reservation Indians and outsiders have generally been found either to infringe tribal sovereignty or to be preempted by federal law. "It is well settled that civil jurisdiction over activities of non-Indians concerning transactions taking place on Indian lands 'presumptively lies in the tribal courts unless affirmatively limited by a specific treaty provision or federal statute.' " White Mountain Apache Tribe v. Smith Plumbing Co., 856 F.2d 1301, 1305 (9th Cir.1988) (quoting Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 18, 107 S.Ct. 971, 977, 94 L.Ed.2d 10 (1987)) (citations omitted). " 'A tribe may regulate ... the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements.' " Brendale v. Confederated Yakima Indian Nation, 492 U.S. 408, 428, 109 S.Ct. 2994, 3007, 106 L.Ed.2d 343, U.S. reh'g denied, 492 U.S. 937, 110 S.Ct. 22, 106 L.Ed.2d 635 (1989) (quoting Montana v. United States, 450 U.S. 544, 565, 101 S.Ct. 1245, 1258, 67 L.Ed.2d 493 (1981)). See also Babbitt Ford, Inc. v. Navajo Indian Tribe, 710 F.2d 587, 592 (9th Cir.1983), cert. denied, 466 U.S. 926, 104 S.Ct. 1707, 80 L.Ed.2d 180 (1984).

We agree with the circuit court that it lacked subject matter jurisdiction over this dispute between a reservation school operated by and for Indians and Sage, who, though non-Indian, chose to enter into employment contracts with school for over a decade. We need not reach the question of whether such state jurisdiction would infringe on the "right of reservation Indians to make their own laws and be ruled by them," because we find that state jurisdiction in this case is preempted by federal law. The federal government provides school with $2.3 million of its annual operating budget under the authority of the Indian Self-Determination and Education Assistance Act, 25 USC Secs. 450-450n (1988), the Tribally Controlled Schools Act of 1988, 25 U.S.C. Secs. 2501-2511 (1988), and other federal statutes. Only $100,000 of school's annual budget comes from private donations. School is not funded by the State of South Dakota.

Among the congressional findings incorporated in the Indian Self-Determination and Education Assistance Act are the observations that "the Indian people will never surrender their desire to control their relationships both among themselves and with non-Indian governments, organizations, and persons," and that "parental and community control of the educational process is of crucial importance to the Indian people." 25 U.S.C. Sec. 450(a)(2), (b)(3). The congressional declaration of policy at 25 U.S.C. Sec. 450a speaks repeatedly of "self-determination," "maximum Indian participation," "establishment of a meaningful Indian self-determination policy," "effective and meaningful participation by the Indian people in the planning, conduct, and administration of ... programs and services," and "the development of strong and stable tribal governments." In addition, the Act and its accompanying administrative regulations at 25 CFR Secs. 271.1-272.55, 274.1-275.4 (1990) set forth a comprehensive scheme for obtaining, disbursing and accounting for grants received by Indian schools through the Act. The United States Supreme Court examined the provisions of the Indian Self-Determination and Education Assistance Act in Ramah Navajo School Bd. v. New Mexico Bureau of Revenue, 458 U.S. 832, 102 S.Ct. 3394, 73 L.Ed.2d 1174 (1982), and concluded that "the comprehensive federal regulatory scheme and the express federal policy of encouraging tribal self-sufficiency in the area of education" precluded the imposition of a state tax on schools funded under the Act. 458 U.S. at 846-847, 102 S.Ct. at 3403. We find Ramah Navajo controlling and conclude under the same analysis that a suit in state court by a contract employee against a school receiving over 95% of its annual budget through the Indian Self-Determination and Education Assistance Act and other federal programs is preempted by federal law. See also Marty Indian School Bd., Inc. v. South Dakota, 824 F.2d 684 (8th Cir.1987).

Sage relies heavily on the fact that school is neither an individual Indian person nor an instrumentality of the tribal government, but a nonprofit organization incorporated under the laws of South Dakota. See SDCL ch. 47-22. Sage's main argument is that because of this fact school is no more an "Indian" than Sage himself and state court therefore has subject matter jurisdiction. This argument is unpersuasive for three reasons.

First, all 332 students of school are reservation Indians. Membership in the corporation is limited to enrolled members of the Rosebud Sioux Tribe with children in the school and any others they may elect. Members of the corporation democratically elect...