State of Alaska, ex rel. Yukon Flats School Dist. v. Native Village of Venetie

• Decision Date: 09 September 1988
• Docket Number: No. 87-4333,87-4333
• Parties: The STATE OF ALASKA, ex rel.; YUKON FLATS SCHOOL DISTRICT; Unalakleet/Neeser Construction JV; Unalakleet Native Corporation; Neeser Construction Company; and Gerald Neeser, Plaintiffs-Appellees, v. NATIVE VILLAGE OF VENETIE; Venetie Native Council; the Venetie Tax Court; the Venetie Tax Commission; Gideon James; Lawrence Roberts; Larry Williams; Ernest Erick; Lincoln Tritt; John Titus; and David Case, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1384

856 F.2d 1384

The STATE OF ALASKA, ex rel.; YUKON FLATS SCHOOL DISTRICT;

Unalakleet/Neeser Construction JV; Unalakleet

Native Corporation; Neeser Construction

Company; and Gerald Neeser, Plaintiffs-Appellees, v. NATIVE VILLAGE OF VENETIE; Venetie Native Council; the

Venetie Tax Court; the Venetie Tax Commission; Gideon

James; Lawrence Roberts; Larry Williams; Ernest Erick;

Lincoln Tritt; John Titus; and David Case, Defendants-Appellants.

No. 87-4333.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 7, 1988.

Decided Sept. 9, 1988.

Robert T. Anderson, Anchorage, Alaska, for defendants-appellants.

Douglas K. Mertz, Jack McGee and William F. Cummings, Asst. Attys. Gen., Juneau, Alaska, for plaintiffs-appellees.

James R. Atwood, Dwight C. Smith, III, Covington & Burling, Wash., D.C., Williams B. Rozell and Richard B. Brown, Faulkner, Banfield, Doogan & Holmes, Juneau, Alaska, for amici curiae.

Appeal from the United States District Court for the District of Alaska.

Before WRIGHT, FERGUSON and BRUNETTI, Circuit Judges.

BRUNETTI, Circuit Judge:

I

The Village of Venetie ("Venetie") and Arctic Village are communities located in north-central Alaska, primarily inhabited by Native Alaskans. In 1940, Venetie reorganized under the Indian Reorganization Act of 1934 ("IRA"), ch. 576, 48 Stat. 984 (codified as amended at 25 U.S.C. Sec. 461 et seq.), forming both a constitutional governing body and a corporate body. Arctic Village did not reorganize.

In 1943, the Secretary of the Interior created a reservation out of approximately 1.8 million acres of land surrounding these villages. Congress revoked the reservation in 1971 by enacting Sec. 19(a) of the Alaska Native Claims Settlement Act ("ANCSA"), Pub.L. No. 92-203, 85 Stat. 688, 710 (1971) (codified at 43 U.S.C. Sec. 1618(a)). However, pursuant to Sec. 19(b) of ANCSA, 43 U.S.C. Sec. 1618(b), each village incorporated and acquired fee simple title to a portion of the former reservation land. Then, in 1978, the villages transferred title to the land to a joint governing body known as the Native Village of Venetie Tribal Government ("Native Village").

In 1978, Native Village adopted a five percent gross receipts tax on businesses operating upon its land. Due to the lack of commercial activity in the area, there was no opportunity to enforce the ordinance. This changed in 1986 when the State of Alaska ("State"), through one of its regional school districts, decided to construct an addition to the public high school in Venetie. While the State was soliciting bids from contractors, Native Village announced that it would impose the gross receipts tax on the contractor ultimately selected for the construction project.

The contract was awarded in February 1986, and construction commenced that summer. During that same period, Native Village replaced its gross receipts tax ordinance with a business activity tax ordinance. The new tax was levied in December, at which time the contractor was notified that it had incurred a liability of approximately $160,000. Neither the contractor nor the State paid the tax.

After Native Village had unsuccessfully attempted to collect the tax, the State informed Native Village that, as the real party in interest, it would challenge the tax in federal court. Native Village then filed a complaint in the Venetie Tax Court ("Native Court") against the State, the school district and the contractor ("appellees"). Rather than answer the complaint, appellees brought an action in the District of Alaska for declaratory and injunctive relief against Native Village, Venetie, the Native Court, and others ("appellants"). Appellees claimed that neither Native Village nor Venetie is an Indian tribe empowered to exercise tribal sovereignty, that neither entity exists on an Indian reservation, and therefore, that neither entity has jurisdiction to impose a tax on non-members. Appellants responded with a motion to dismiss, arguing that they are immune from suit by virtue of their tribal status, and that appellees have failed to exhaust tribal remedies.

On October 30, 1987, the district court reserved decision on the motion to dismiss. It did, however, decide preliminarily to enjoin appellants from further enforcement proceedings. On appeal, appellants challenge the merits of the preliminary injunction ruling, and also renew the substance of their motion to dismiss (which is still pending before the district court).

A district court's decision to grant a preliminary injunction should be reversed "only when the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact." Colorado River Indian Tribes v. Town of Parker, 776 F.2d 846, 849 (9th Cir.1985).

II

Appellants first argue that the status of either Native Village or Venetie as an Indian tribe provides them with sovereign immunity, thereby depriving the district court of jurisdiction to entertain this action, even to the extent of granting a preliminary injunction.

Appellants accurately recognize that sovereign immunity is an incident of sovereign power, and that the sovereign power of an Indian community depends on its tribal status, see Santa Clara Pueblo v. Martinez, 436 U.S. 49, 55-59, 98 S.Ct. 1670, 1675-77, 56 L.Ed.2d 106 (1978); Bottomly v. Passamaquoddy Tribe, 599 F.2d 1061, 1062-63 (1st Cir.1979). Their argument in favor of sovereign immunity assumes that either Native Village or Venetie has attained tribal status. However, appellees vigorously contest that issue. Thus, before we can conclude as to appellants' immunity from this action, we must determine whether Native Village or Venetie is a tribe for legal purposes.

Contrary to appellants' contention, this court's decision in Price v. State of Hawaii, 764 F.2d 623 (9th Cir.1985), cert. denied, 474 U.S. 1055, 106 S.Ct. 793, 88 L.Ed.2d 771 (1986), did not hold that organization under the IRA is conclusive evidence of tribal status. In Price, the court merely stated that tribal status would be arguable in the event of IRA organization. Id. at 626. Also, amici have noted that the language of the IRA's Alaska amendment, 25 U.S.C. Sec. 473a, raises doubt as to whether IRA organization should be construed so conclusively in the case of Alaskan Natives. Furthermore, much uncertainty exists concerning the structure of Native Village, Venetie, and Arctic Village that may have an impact on the IRA analysis.

If the IRA does not settle the matter, the inquiry would shift to whether Native Village or Venetie has been otherwise recognized as a tribe by the federal government. See, e.g., Price, 764 F.2d at 626-28. Failing there, tribal status may still be based on conclusions drawn from careful scrutiny of various historical factors. See, e.g., Mashpee Tribe v. New Seabury Corp., 592 F.2d 575, 582-88 (1st Cir.), cert. denied, 444 U.S. 866, 100 S.Ct. 138, 62 L.Ed.2d 90 (1979).

Once tribal status is determined, other considerations arise. The sovereign immunity that naturally flows from tribal sovereignty will not be effective if it has been divested by Congress or otherwise lost by implication. See United States v. Wheeler, 435 U.S. 313, 322-26, 98 S.Ct. 1079, 1085-87, 55 L.Ed.2d 303 (1978); Bottomly, 599 F.2d at 1066. Nor will it be effective if it was waived during incorporation under the IRA. See W. Canby, American Indian Law 74-75 (1981). And even if the tribe and its instrumentalities are immune, the individual officers of the tribe will not be immune unless they were "acting in their representative capacity and within the scope of their authority." Hardin v. White Mountain Apache Tribe, 779 F.2d 476, 479 (9th Cir.1985).

The district court recognized the complexity of the sovereign immunity question, and accordingly withheld its ruling pending "more study and a more carefully drawn decision." We will not attempt to decide this issue in the first instance, especially given the incomplete record that now exists. Appellants maintain that it would be a tremendous waste of judicial resources if this panel defers to the district court and the district court incorrectly concludes that there is no sovereign immunity. This is because the district court's decision would not be an appealable interlocutory order. We disagree. Rather than a waste, we believe that in this case it would be a necessary investment of judicial resources to develop a record and allow the district court to reach a decision as to its own jurisdiction.

The pendency of appellants' claim of sovereign immunity does not itself represent a bar to the district court's ability to impose a preliminary injunction. The district court was intent upon preserving the status quo in the face of appellants' motion to dismiss and the difficult question raised by the merits of the action. The Supreme Court has stated, in United States v. United Mine Workers of America, 330 U.S. 258, 293, 67 S.Ct. 677, 695, 91 L.Ed. 884 (1947), that the district court "had the power to preserve existing conditions while it was determining its own authority to grant injunctive relief." See also 13 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure Sec. 3537 at 334 (1975). The Fifth (and later the Eleventh) Circuit has consistently echoed United Mine Workers. See Fernandez-Roque v. Smith, 671 F.2d 426, 431 (11th Cir.1982); Stewart v. Dunn, 363 F.2d 591, 598 (5th Cir.1966). We now do so as well.

Amici contend that a federal court should be barred from enjoining a parallel tribal court action just as it is barred from enjoining parallel state court actions. Even assuming that the Anti-Injunction Act pertains to tribal courts, the analogy made by amici is imperfect. There can be no question but that the fifty states of the Union are sovereign powers within our federalist system. But Indian communities can make no such claim. As we have outlined, not all Indian communities are considered tribes and...