Transcript

IN THE SUPREME COURT OF THE UNITED STATES

IOWA MUTUAL INSURANCE COMPANY, Petitioner, v. EDWARD M. LA PLANTE, ET AL.

No. 85-1589

December 1, 1986

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:02 o'clock a.m.

APPEARANCES:

MAXON R. DAVIS, ESQ., Great Falls, Montana; on behalf of the petitioner.

JOE R. BOTTOMLY, ESQ., Great Falls, Montana; on behalf of the respondent.

PROCEEDINGS

CHIEF JUSTICE REHNQUIST: We will hear argument next in No. 85-1598, Iowa Mutual Insurance Company versus Edward M. LaPlante.

You may proceed whenever you are ready, Mr. Davis.

ORAL ARGUMENT BY MAXON R. DAVIS, ESQ., ON BEHALF OF THE PETITIONER

MR. DAVIS: Mr. Chief Justice, and may it please this Court, we have today another Indian case from Montana. The last time that you had an opportunity to hear a case from our jurisdiction was another Indian case, National Farmers Union Insurance Company versus the Crow Tribe of Indians. That was way back in 1985.

At that time Justice Stevens, speaking for a unanimous Court, described the case as a kind of procedural nightmare. Of course, that was a Federal question case under Section 1331 of Title 28. In the intervening 12 or 13 months you have also had an opportunity to decide The Three Affiliated Tribes versus Wold case from North Dakota, which, of course, was a Public Law 280 case, and the interesting feature of that case was that it was kind of a jurisdictional yo-yo. You had it, I believe, two times, and now Iowa Mutual's case comes before this Court, a diversity case involving Indians.

It presents the problem of reconciling what we view as an unequivocal grant of Federal jurisdiction under Section 1332, constitutional in origin, reconciling that grant with the perceived limitations of Federal Indian policy. The solution suggested by the Ninth Circuit, go ask the tribal court. We do not feel that it is appropriate to go ask the tribal court the extent of your jurisdiction, nor is it necessary.

By placing this particular case, the one that we are arguing about this morning, in this limited historical context, I am simply trying to reinforce a conclusion that I guess I had been dealing with implicitly for the ten odd years that I have been practicing law in Montana, and that this case has served to crystallize, and the conclusion is this, quite simply.

Federal Indian law as it exists primarily based on court decisions from this tribunal for the most part it doesn't work.

QUESTION: That sounds like bad news.

MR. DAVIS: It is bad news. It is bad news for litigants like Iowa Mutual or National Farmers Union Insurance Company but it is also bad news for the reservation Indians to whom the Federal Government and certainly this Court has shown so much solicitude.

QUESTION: What is the good news, Mr. Davis?

MR. DAVIS: The good news, Justice Scalia, is that you have an opportunity to fix it, and I hope to -- we can take some small steps today towards fixing it, and I guess the point I want to stress is that certainly in dealing with theory and with concepts like Federal preemption and the retained sovereignty of Indian tribes with which this Court grapples, it is necessary to keep in mind that we foot soldiers like Mr. Bottomly and I out in the trenches in Great Falls or wherever, in Browning, Montana, have to apply these concepts in a workable framework.

QUESTION: Workable framework that you would be able to bring suit in Federal Court if you are an out of state insurance company, but if you are an in-state insurance company you can't bring suit in state court nor in Federal court, of course, because there is no diversity. Is that workable?

MR. DAVIS: I don't think so, Justice, and the solution I hasten to characterize is that I stumbled upon and that I have ultimately reached and I have suggested in the reply brief that I have filed with this Court is that it is necessary to avoid these kinds of jurisdiction -- these legalistic gymnastics, it is necessary to go back to the beginning and start rethinking these jurisdictional concepts and rework them, I think, from Williams versus Lee forward.

And the conclusion I reached, and it is one I find that certainly isn't foreclosed by any of the decisions from this Court, but certainly may have been assumed to be foreclosed, is that the tribal courts do not have jurisdiction over disputes between reservation members and outsiders, that that is not -- it is a conclusion that I think everyone else has reached, that if a lawsuit involves a reservation Indian and some other party off the reservation, that state court jurisdiction is automatically foreclosed.

And I look for the origin of that concept, and it is one that I had assumed existed, and you go back to the Williams case, to the Kennerly case, maybe the Santa Clara Pueblo versus Martinez case, and none of them say that. I guess you have to keep in mind the facts of each particular case. Of course, the Williams case involved, I believe, either Mr. Williams or Mr. Lee was running a trading post on the Navajo reservation, and the other party had a bill they didn't pay, and the proprietor of that trading post wanted to collect it, and he went to Arizona state court, and he was told ultimately no, you proprietor of a trading post on the reservation, you have to go to the tribal court back in 1959.

And from that principle, which is -- and I am not challenging the inherent equity or rightness of that principle. That the man who was operating the trading post on the reservation has to go to tribal court stems from this whole Indian jurisprudence that any civil litigation involving a reservation Indian must at least in the first instance go to tribal court.

QUESTION: Is there any line between this case and allowing the person who opens a trading post on an Indian reservation to sue in state courts?

MR. DAVIS: I don't understand your question.

QUESTION: You are asserting that so long as one of the parties is a non-Indian it doesn't go to tribal courts. That is the line you want to draw.

MR. DAVIS: I think so.

QUESTION: Even if the non-Indian -- even in Williams, even if it were a case where the non-Indian is running a trading post on the reservation.

MR. DAVIS: No, I misunderstood you. No, the line I would draw, Justice Scalia, is if it is between a reservation Indian on a reservation where Public Law 280 procedures have not been followed so that the state courts would have jurisdiction anyways, if we are dealing with that situation, such as on the Blackfeet Indian reservation in Montana, if it is a dispute between an Indian resident of that reservation and someone who resides off the reservation, outside the reservation, then no, the tribal court should not have jurisdiction over that matter.

If it is a matter that, as Williams versus Lee, involved a dispute between a reservation member on the reservation and someone else who is residing or conducting a business that is located on that reservation, fine, and we haven't gone through the Public Law 280 formalities so the state-can assume jurisdiction over that dispute. That is where I would draw the line.

QUESTION: What about the school district last year?

MR. DAVIS: well, fortunately it wasn't a diversity case so I can't answer that particular --

QUESTION: Well I know, but you would say that state courts have jurisdiction even if the person who resides off the reservation still resides in the state.

MR. DAVIS: Yes, the state court would have jurisdiction, Justice White, if --

QUESTION: How about the school district?

MR. DAVIS: The school district was located on the Crow reservation. I am aware of that. And the question is, and the one that this Court avoided at that time deciding, is whether the --

QUESTION: School district resides on a reservation?

MR. DAVIS: Well, it is physically located there. It is a public entity in the state of Montana.

QUESTION: Well, if the school district exists off the reservation and goes on the reservation to pick up Indian children and there gets to be a dispute about that --

MR. DAVIS: I would say that that type of dispute belongs in state court or if diversity exists it belongs in Federal court, and I am hard pressed to find any decision from this Court that says otherwise, that says -- and I think the important point in the Crow tribe case, you refrained from deciding that very pointedly. You said we will save that one for a later date.

But if you go to Williams, to Kennerly, to any of these cases, what this Court has said is that for internal matters affecting the relations of the tribe themselves, the tribal courts have jurisdiction, but this Court has never said in terms of the relationships between tribal members and persons, firms, or corporations located off the reservations, that the tribal court is the appropriate forum for the resolution of those sorts of disputes. It has gone on.

QUESTION: It is hard, isn't it, to distinguish some of what we said in the Farmer's Union case two terms ago from something very much like that. There didn't we say that the tribal court should be the first to pass on its own jurisdiction?

MR. DAVIS: Oh, I agree, Chief Justice Rehnquist, but I think the first critical distinction is the nature of the case that came before you in the Crow tribe case. The National Farmers case was a direct challenge to the tribal court's jurisdiction, and your determination as to whether that presented a Federal question.

Here we are talking about the Federal court's own jurisdiction over a controversy. It is jurisdiction very easily trace its origin back to the United States

QUESTION: Well, but certainly Federal question Jurisdiction, although perhaps -- it must be based in the Constitution in some way, though not granted until much later than diversity jurisdiction to the lower Federal courts, but if Federal question jurisdiction such as the jurisdiction of the tribal court, if that sort of a case filed in the District Court must be first referred to the tribal court can't you say that a diversity case should be no different?

MR. DAVIS: Yes, I can. I can say exactly that, Chief Justice, because of the nature of the different types of cases. The National Farmers Crow Tribe case was an inquiry into the nature and extent of tribal court jurisdiction, and of course you ultimately said that was a Federal question and we do have the right to determine that. It was the matter of how to go about doing that but you certainly haven't foreclosed the ultimate review by this tribunal, or go back, start in Judge Batton's court in Billings, and perhaps go back up the line again.

You said that is a Federal question, but we want to wait and see what you do with the tribal court. I think that is greatly different from the situation we have here where we have come into Federal court, instituted an action that would appear to me fits all the parameters of the statute, and what the Court of Appeals has said is, first, you, comparable to National Farmers Union, will apply the same procedure, will go to the tribal court and let it determine whether it -- I think the language used by the Court of Appeals is to see if the tribe would manifest any interest in this case.

And in effect the tribal court is determining the Federal court's jurisdiction rather than the Federal court determining the tribal court's jurisdiction.

QUESTION: You would agree that the tribal court would be the proper forum to try out the argument between the LaPlantes and the Wellmans?

MR. DAVIS: I have no argument with that at all, apart from any limitations imposed by the tribe itself on --

QUESTION: And it is just that the Wellmans had some insurance.

MR. DAVIS: Yes.

QUESTION: And that they had gotten through a broker off the reservation.

MR. DAVIS: well, yes.

QUESTION: And your client provided the insurance.

MR. DAVIS: That is correct Judge. I am not arguing, Justice White, that the dispute between the LaPlantes and the wellmans appears on its face to be one that is properly within the jurisdiction of the Black Feet tribal court.

QUESTION: Could the tribal court have ever gotten jurisdiction over the insurance company?

MR. DAVIS: I suppose if they were going to relocate from DeWitt, Iowa, to Browning, Montana, and set up shop there, I would concede in those circumstances, yes, but short of that state of affairs, that their place of business was on the reservation, no, and I don't think the necessary -- the corollary to that is, we start applying loss --

QUESTION: Well, suppose the insurance company has no existence on the reservation but it does have offices off the reservation and within the state. The tribal court still can't get jurisdiction over them, can they?

MR. DAVIS: I would agree not, that they should not be allowed to. I think what has happened up to now is that such jurisdiction has been presumed again by the Montana Supreme Court. The most recent example we cited was the Millbank Mutual versus Eagleman case that arose on the Fort Peck Indian reservation, the Federal courts, the Courts of Appeal.

But again, it is one that I find lacking in any substance from the decisions of this Court to say that those type of disputes necessarily have to go to tribal court. There doesn't seem to be any justification for it, and one can only go back to the rationale that the tribal court itself has espoused in this case, and that opinion and the underlying LaPlante versus Wellman and Iowa Mutual lawsuit appears in the joint appendix, and the tribal judge there went on at some length, he wrote a very lengthy opinion explaining why Iowa Mutual and Midland Claims, the adjusting firm, should not be dismissed from the case even though there was no bad faith insurance law in the Blackfeet Indian reservation or any comparable type of substantive law that would apply to the LaPlantes' claims.

The rationale espoused was that people like the Wellmans, Blackfeet Indians who reside on the reservation, do purchase Insurance and have an interest in having those disputes adjudicated. And therefore there is an interest in the Blackfeet tribal court system to have those type of disputes litigated in Blackfeet tribal court.

That is an invitation for general jurisdiction over just about any sort of claim. You could that if a Blackfeet Indian has purchased an IBM typewriter and thinks he has been overcharged, the Blackfeet tribal court has an Interest in pursuing antitrust claims against International Business Machines Corporation. It becomes kind of a bootstrapping argument, and that is, I think, one of the major defects in the Ninth Circuit's approach when they did say, and I have found the quotation, that the parties are to find out whether the tribe has not itself manifested an interest in adjudicating the dispute.

QUESTION: The Ninth Circuit dismissed the case, ordered the case dismissed, completely dismissed. Isn't that right?

MR. DAVIS: Well, it is a dismissal -- I have to read it as comparable to National Farmers, a dismissal without prejudice.

QUESTION: I thought it held that since the state courts wouldn't have jurisdiction, that there wasn't any diversity jurisdiction either.

MR. DAVIS: That's correct. I'm sorry, you're correct, Justice White.

QUESTION: And they ordered the case dismissed.

MR. DAVIS: Well, they have, but you go back to the R.J. Williams case and I guess there is that ultimate question, to see -- if, as I understand their rationale, If we ultimately determined that the Blackfeet tribal court doesn't have jurisdiction over this type of controversy, ipso facto the state court would be vested with jurisdiction perhaps and therefore the diversity jurisdiction would exist because we then get over the Woods versus Interstate Realty hurdle.

As I have suggested, I think the more logical way over the Woods versus Interstate Realty hurdle, and I think this case does boil down as the government in its amicus brief suggested, it boils down to an Erie Railroad-Tompkins problem of reconciling this, is to redefine or I should say more precisely define the limits of tribal court jurisdiction, and if one does define those limits in the manner I have suggested, that internal tribal disputes, matters arising on the reservation between persons residing there go to tribal court, and matters between tribal members on the reservation and those persons, firms; or corporations located off the reservation don't belong in tribal court but rather in state or Federal court, depending upon the existence of diversity or such other matters such as a Federal question that would grant jurisdiction, then the Erie Railroad versus Tompkins problem and the woods versus Interstate Reality doorclosing type problem evaporates.

QUESTION: Mr. Davis, let's assume we don't accept that broad invitation of yours, and we adhere to the proposition that the tribal court would have jurisdiction or at least arguably would have jurisdiction here. You have another string to your bow, I gather. You would say even in that event the mere fact that they might have jurisdiction does not preclude our accepting jurisdiction under the Federal diversity provision.

MR. DAVIS: Yes. That is the way I originally approached the case, Justice Scalia.

QUESTION: Right. Now, tell me why that ought to be so, not just in light of the National Farmers Home case, but also in light of the fact that Federal courts will often refrain from exercising diversity jurisdiction when state courts are entertaining the same suit. Even with respect to state courts we will sometimes stay our hand, although we technically have diversity jurisdiction. Why should we treat tribal courts in a more unfavorable fashion than we would treat state courts?

MR. DAVIS: First of all because they aren't state courts. And I think we do an injustice to the litigants when we treat them as the equal of state courts.

QUESTION: I mean, it is one thing to say that we should have accepted this case if it had walked in without any prior proceeding in the tribal courts, but here you have a proceeding already there.

MR. DAVIS: We have a different -- we have the underlying tort claims proceeding in tribal courts.

QUESTION: That's right.

MR. DAVIS: To that extent it is no different from any other, a typical declaratory judgment action for which, of course, there is an express grant of Federal jurisdiction.

QUESTION: Suppose that suit had been in state court and then this same diversity suit were attempted. Do you think the Federal court would go ahead with a separate diversity action duplicating the state court action.

MR. DAVIS: Well, I hope so. I have done it a number of times myself, Justice. Yes, if there is an underlying tort claim in state district court, it is something that is frequently done, at least out in the district of Montana, if there is a legitimate coverage questions, to institute a separate action either in state or Federal court to determine those coverage questions, and I think it is a type of procedure that is frequently employed throughout the country, so I don't have any problem with that.

I think you do ultimately, if you are not going to buy my argument to redraw or more precisely to find the jurisdictional arguments, we do get back to that Erie Railroad versus Tompkins problem as alluded to, that if it is a nondiverse party they be precluded from going into state court perhaps, and that action would have to proceed in tribal court, and gosh, the tribal court is going to be applying tribal customs and practices, or it has the right to, whereas in Federal court, the Federal court, at least, if we go by the Rules of Decision Act and Erie Railroad versus Tompkins, that Federal court will be applying state law, or should be, and so we have the prospect of different rules being applied to adjudicate basically the same controversy.

QUESTION: Mr. Davis, just to clarify, maybe it is covered in your briefs, but in your view what jurisdiction's substantive law governs the decision of the coverage question?

MR. DAVIS: I don't think there is any practical dispute that it is Montana law.

QUESTION: It would be Montana. Your opponent presumably would agree. And what substantive rule of law governs the negligence action?

MR. DAVIS: Well, again, that is an interesting matter, but again it is Montana law. I am amused and I will point you to this, and maybe Mr. Bottomly since he is here can answer this, but if you go. back and read the amended complaint that is in -- I think it is at Page 29 of the joint appendix, the amended complaint filed by the LaPlantes in Blackfeet tribal court in that they hold the Wellmans to be liable for Mr. LaPlante's injuries because of the Wellmans' failure to comply with Montana's workers' compensation law and failing to have workers' compensation coverage for him and therefore -- and they cite in the complaint, the amended complaint Section 3971.509 of Montana's workers compensation law and say that because of that it is kind of a strict liability situation.

QUESTION: Would it not be possible that the tribe could decide as a matter of its own law that the failure to get workman's compensation somehow establishes liability as a matter of tribal law or something like that?

MR. DAVIS: I suppose it could, but again, they are just adopting Montana law.

QUESTION: At least their complaint does. Whether the tribal court would do that we still don't know.

MR. DAVIS: We don't know at all what the tribal court is going to do. That is one of the great uncertainties that litigants have, and that, I guess, leads me to what I think is the ultimate point and why I believe it is important for this Court to redefine or more precisely define the jurisdictional boundaries, because I think ultimately it defeats the interests of both --

QUESTION: Well, on your suggestion that we start from scratch, in effect, and redefine the jurisdictional boundary, are you suggesting that the boundaries are mutually exclusive, that you are in the Indian camp, you can't come in state court, and vice versa?

MR. DAVIS: Are you asking what type of litigant? No, I don't think the state courts of Montana or the Federal court in the District of Montana from that point of view has ever been closed to Indian litigants who want to institute litigation there. I read, you know, you go back to whatever analysis you want to --

QUESTION: But you would say that if there is jurisdiction in the tribal court under your new definition of the boundary there would be no jurisdiction in either the state court or the federal court?

MR. DAVIS: If we have a Williams type Lee dispute, yes, I would say that the tribal court jurisdiction, the matters that belong in tribal court --

QUESTION: That is exclusive.

MR. DAVIS: Yes. Okay, and matters that --

QUESTION: You wouldn't allow the Indian --

MR. DAVIS: No, no, I am --

QUESTION: -- in Williams to bring that suit in state court if he wanted to?

MR. DAVIS: Well that was the store owner. That was the store owner. But let's switch things around.

QUESTION: Right, the Indian.

MR. DAVIS: The Indian --

QUESTION: Let's assume the Indian was suing the store owners.

MR. DAVIS: Yes, and I think that exists now, and I apologize for the confusion. I was trying to make that point with Justice Stevens, that the the Indian litigants, reservation members in Montana, any of the Indian reservations, I believe, have the right and have practiced it, and in my experience come into state district court, into federal district court and pursue their rights, it is a one-way street. We can't turn around or my clients as nonreservation members cannot go into state or federal court and as matters now sit pursue those claims.

So that is how -- I guess it is a one-way type operation, but the point that I want to leave you with is, I think it is ultimately to all the litigants' best interests that you redefine this jurisdiction, because I think that both the Indians and the non-Indian parties, citizens are ill-served by the present state of affairs, and it is one I can relate to in my own personal experience, because it happens to me and it happens to me on a frequent basis, that people come in and they want to talk to me about a prospective commercial or business dealing on the Indian reservations in Montana.

My experience in dealing with Indians is not limited to this case. And my advice to them is comparable to the advice that many of my colleagues in Montana give to such persons. Don't, because we can't help you, because we don't know what the rules are and the risks involved are too great.

You are going to be in tribal court if a dispute arises, and I can't advise you as to what your ultimate rights or remedies are, and the net effect is that all too often those types of commercial and social interactions are discouraged because of the uncertainty over the present state of affairs, and if we take this Court's admonitions or advice at face value in both Williams and in the Wold case, one of the rules of Federal Indian policy is to further the assimilation of reservation Indians into the mainstream of American life.

The extension of tribal court jurisdiction I think almost by default ill serves that goal, and I think if commercial and social interaction is to be encouraged it will be much more encouraged if the jurisdictional lines are drawn as I have suggested this morning.

I will reserve the balance of my time for rebuttal.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Davis.

We will hear now from you, Mr. Bottomly.

ORAL ARGUMENT OF JOE R. BOTTOMLY, ESQ., ON BEHALF OF THE RESPONDENT

MR. BOTTOMLY: Mr. Chief Justice, and may it please the Court, the Ninth Circuit and the District Court were correct in the dismissing of this case because to take diversity jurisdiction when there is a pending action in tribal court which involves the identical issues and disputes would contradict the firm federal policy to promote tribal self-government --

QUESTION: Mr. Bottomly, let me stop you right there, because is this the identical dispute? In the tribal court you have a negligence claim. Here you have a coverage claim. Aren't they quite different, and isn't your opponent right that that frequently is -- those two claims are adjudicated in different courts?

MR. BOTTOMLY: They are identical claims because Iowa Mutual as an affirmative defense raised the coverage question.

QUESTION: That aspect of it overlaps, but the negligence aspect doesn't overlap.

MR. BOTTOMLY: That's right, but the part of the declaratory in federal court that they want determined, that is the insurance contract issues.

QUESTION: Correct.

MR. BOTTOMLY: They are pending in tribal court in a motion for summary judgment.

QUESTION: By whom?

MR. BOTTOMLY: We moved for summary judgment on --

QUESTION: Was Iowa, the insurance company a party to the tribal court action?

MR. BOTTOMLY: Yes. Iowa Mutual -

QUESTION: How did you get jurisdiction?

MR. BOTTOMLY: There are two actions. There is a negligence auto accident which involves the Indian defendant, Indian plaintiff, and there is a bad faith insurance adjusting action which involves Iowa Mutual and their insurance adjustor, Midland Claims, so there are two counts in tribal court.

QUESTION: But how did you get jurisdiction over the insurance company?

MR. BOTTOMLY: The tribal court determined it had jurisdiction because Iowa Mutual came on the reservation and did business with the Wellmans. Now, it is true their office is located off, but their activities include actions on the reservation including coming on and cataloguing this ranching business.

QUESTION: So it is sort of a long-arm jurisdiction?

MR. BOTTOMLY: That is right.

QUESTION: And Iowa and the insurance company came in and didn't object to jurisdiction, I guess. Is that it?

MR. BOTTOMLY: They did move their tribal court to dismiss, but the tribal court has determined that it does have jurisdiction. The basis of the --

QUESTION: Yes, but they didn't object to personal jurisdiction.

MR. BOTTOMLY: I don't believe they did.

QUESTION: Subject matter.

MR. BOTTOMLY: That's right. The tribal court at the trial level has determined it does have jurisdiction over Iowa Mutual based on the Montana case. Now, the appeals council in the Blackfeet tribe hasn't had an opportunity to look at that yet. And they won't have the opportunity until a final judgment on the merits is reached in the tribal court.

QUESTION: Under Montana law, Mr. Bottomly, can a plaintiff sue a defendant and the sue a defendant for personal injury and at the same time before that suit is terminated sue the insurance company for bad faith refusal to settle? The first action doesn't have to be determined before you can sue the insurance company?

MR. BOTTOMLY: Well, the way that arose, at the time we filed this action the Montana Supreme Court appeared to say that you could do that, you could bring an action, a bad faith action at the same time. But subsequent to that the Montana Supreme Court has made it clear you can't. So Iowa Mutual has made a motion in Blackfeet tribe to sever, and that is pending in Blackfeet court.

QUESTION: Has the Blackfoot tribal court given any indication, does it follow Montana law on these sorts of issues?

MR. BOTTOMLY: Well, we don't know exactly. The code says this. The code says it follows the federal government, and then tribal custom and law, and then -- which isn't in conflict with federal law, and then it can look to the state law. It doesn't have to follow the state law but it can look to it.

So when we are drafting our complaint we often use state law because we don't find it in the tribal codes or we don't know what the common law of the tribe is at that point. Actually, any reservation or state that has a small population and doesn't have a big common law has the same problem. You don't know exactly what the common law is going to be until they rule.

QUESTION: Mr. Bottomly, educate me a little bit about the Blackfeet tribal courts. Do they sit as a single judge?

MR. BOTTOMLY: The appeals council or the trial level?

QUESTION: Well, the trial court.

MR. BOTTOMLY: The trial court acts very much like a state court. It has one judge and then it has a jury.

QUESTION: And who appoints him, or is he elected, or what?

MR. BOTTOMLY: He is appointed. In this case, he is a special judge coming over from another reservation. He is actually a judge coming from the Cootney Salick tribe.

QUESTION: Is he trained in the law?

MR. BOTTOMLY: Yes, although he doesn't have to be lawyer.

QUESTION: What do you mean then by trained in the law?

MR. BOTTOMLY: Well, they take a training course. In the Indian Civil Rights Act, in fact, it provides for the training of judges. But they don't have to be a lawyer. But they do receive some training. In fact, in Montana the Justice of the Peaces --

QUESTION: How many are on the appeals council?

MR. BOTTOMLY: I believe five.

QUESTION: Is the requirement that people who practice before tribal court be lawyers?

MR. BOTTOMLY: I am not sure. They have to be members of the bar unless they have an associate who is a member of the bar, and you have to take a bar exam.

QUESTION: By the bar, you don't mean the bar of Montana, you mean the tribal bar?

MR. BOTTOMLY: That's right.

QUESTION: Are you a member of that bar?

MR. BOTTOMLY: No, I am not. I was associated because one of the persons on this case is a member of the bar, so I was privileged to be able to practice with her through association.

QUESTION: Could you be admitted to it if you wanted to?

MR. BOTTOMLY: Yes.

QUESTION: How?

MR. BOTTOMLY: By taking the bar exam. Mr. Davis is a member.

It is important to note the evolution of tribal law has gone beyond the mere recognition of tribal sovereignty, which has been recognized, of course, since the mid-1800s, and has now, both Congress and the common law has actively promoted tribal sovereignty on the one hand and tribal development of institutions, and also offered some measure of protection for these fledgling institutions to develop, and this steps from the realization that tribal institutions have to participate in order to develop, and that there has to be some recognition of the distinct cultural and political situation they are in, they are isolated units.

Congress has shown this promotion by a number of statutes like the Indian Jurisdiction Act, the Indian Financing Act, the Indian Self-Determination and Education Act, all of which takes lets the tribes take the lead in developing their own policy and implementing, and have offered some measure of protection by the Indian Civil Rights Act which requires the consent of the tribes before the states can take jurisdiction over actions which arise on the reservation.

Now, the courts have followed that and implemented that policy and it has two results. One is a preemption of the states from exercising intrusive jurisdiction in those areas which are properly within the traditional retained sovereignty of the tribes, and secondly, there has been a limitation of federal courts as a matter of common law to exercise intrusive jurisdiction unless Congress has made it clear that it intended that to occur.

QUESTION: Mr. Bottomly, do you think that the Federal District Court actually had jurisdiction but just as a matter of comity it should or did dismiss or abstain from hearing it pending the resolution of the issue in the tribal court?

MR. BOTTOMLY: Well, that's the -- it is difficult to tell. Certainly the Ninth Circuit talked about jurisdiction.

QUESTION: What is your view?

MR. BOTTOMLY: My view is that they did not --

QUESTION: Don't you suppose the District Court actually had jurisdiction?

MR. BOTTOMLY: Our view is that they did not have jurisdiction, but if the tribal court is determined not to have jurisdiction, that they would. In other words, we take the view that Woods versus Interstate would preclude the tribal court from -- I mean, the District Court from jurisdiction.

QUESTION: Well, that certainly isn't the view expressed by the Solicitor General, is it?

MR. BOTTOMLY: No, it isn't. We agree with the Solicitor General's result but for different reasons. We agree with the Solicitor General's result in that we agree that the District Court would have jurisdiction but for different reasons. We would agree with the Ninth Circuit that the interference doctrine would be the doctrine which would come into play, and if the tribal court didn't have jurisdiction probably the state court would at that point and so the District Court, Federal Court would, too.

We would part company at that point with the tribal's amici.

QUESTION: Do you think that if the state courts don't have jurisdiction there is no diversity jurisdiction. Is that it?

MR. BOTTOMLY: That's right. That's our view, because I think that is the only way you can make a symmetrical result between the ability of the citizen of Montana to use -- go into tribal court -- he would have to go into tribal court.

QUESTION: So the tribal court decides it has jurisdiction. That decision is reviewable, isn't it, in the federal court somewhere?

MR. BOTTOMLY: That's right, there's no question.

QUESTION: Where?

MR. BOTTOMLY: Well, it is reviewable under 28.1331, under National Farmers Union, after the remedies in trial court.

QUESTION: In the Federal District Court.

MR. BOTTOMLY: That's right.

QUESTION: In a diversity case. Or is that a federal question?

MR. BOTTOMLY: Federal question.

QUESTION: And then if the Federal District Court on that sort of National Farmers Union Review were to decide that the tribal court didn't have jurisdiction, all of a sudden you have kind of a springing use. It turns out that he District Court did have diversity jurisdiction.

MR. BOTTOMLY: That's true.

QUESTION: That's kind of weird.

MR. BOTTOMLY: It is a little strange, but the reason why it would have diversity jurisdiction at that point is because the tribal court didn't.

QUESTION: Suppose the tribal court finds that it doesn't have jurisdiction?

MR. BOTTOMLY: Does not?

QUESTION: Does not. Is that reviewable in federal court?

MR. BOTTOMLY: No, I don't believe it is.

QUESTION: It is up to the tribal court. They can take jurisdiction. They can just decline jurisdiction where they sort of parcel it out to the federal courts, we don't want this one. It is very strange.

MR. BOTTOMLY: I think the review that the federal court would have is the outer boundaries of tribal court jurisdiction. Tribal courts, like state courts, would be the final arbiters within that boundary. They would be able to be the final arbiters of whether or not in fact they had jurisdiction or what their codes say or what their Constitution says, but the federal court can determine the outer boundary, did they exceed their jurisdiction as a tribe.

QUESTION: You mean kind of like a long arm statute that the federal Constitution says you can go so far and the federal court can say that with respect to the Indian tribe, but an Indian tribe might say, well, we don't think our own statute authorizes us to go as far as the federal constitution would allow us.

MR. BOTTOMLY: Exactly, Justice Rehnquist.

QUESTION: Well, it is not quite exactly, because the typical state long arm statute has the effect of extending that state's or restricting that state's jurisdiction but it does not simultaneously affect the jurisdiction of other states, much less of the federal government, but here you are asserting that the tribal court not only can determine its own jurisdiction but in that very act can determine the jurisdiction of the federal government and of other states.

MR. BOTTOMLY: To some extent, although it is only the outer boundaries. In other words, if the --

QUESTION: I understand but that is a strange -- that is a whole lot of power to give to the tribal courts.

MR. BOTTOMLY: The reason why we disagree with the Solicitor General on the reasoning is because if it wasn't so it would have a lot of can of worms in the conflict of law and equal protection area. As a general matter, in other words, if a citizen of Montana has to go into tribal court and apply tribal law, whereas a citizen who isn't a citizen of Montana, like Iowa Mutual, can take advantage of diversity and apparently apply Montana state law.

So to have some sort of uniformity the Ninth Circuit's argument seems to us to be the most realistic, and it also brings in the interference doctrine, which we think is the touchstone for the jurisdiction issue.

QUESTION: May I just ask you one question that runs through my mind as I listen to your argument? I believe I am correct in assuming that it the basic negligence action were in a state court rather than a tribal court it would be permissible to bring a federal diversity case to decide the coverage question. I don't think you challenge that, do you?

MR. BOTTOMLY: I think that's right, although as Justice --

QUESTION: So what you are in effect saying is that the tribal court has kind of a greater immunity from interference with its own procedures than a state court would have.

MR. BOTTOMLY: It does, because --

QUESTION: In a way it has sort of a greater degree of sovereignty, you might say.

MR. BOTTOMLY: Not a greater degree of sovereignty, but Congress has intended it to have a greater degree of protection from more developed institutions that might usurp that power. And the reason why is, they wanted them to develop, so it doesn't necessarily have more sovereignty.

QUESTION: You are not suggesting Congress has addressed this precise question.

MR. BOTTOMLY: No, it hasn't but its policy and the other statutes has indicated that it doesn't want actions which arise on the reservation to be brought in state court, and here is nothing in the statute or common law or surrounding circumstance which indicates Congress intended for the petitioner to go through federal court and do what it can't do in state court, and that is circumvent the tribal court.

QUESTION: Well, they can't do it in -- they may not be able to do it in state court because it doesn't have diversity -- well, there is always distinction in any diversity case. The plaintiff has a right that a resident plaintiff would not have. You have that differential always.

MR. BOTTOMLY: That is right. The difference, though, in this case would be at least in diversity cases, Erie versus Tompkins and the Rules of Decision Act would make the state law of the state applicable. There is no analogous statute which would make the tribal court law applicable in Federal District Court, so not only are you interfering with actual proceedings but you may have completely different results because tribal law may be different from the state law and the out of state resident can take advantage of that.

QUESTION: Well, except on the coverage question I suppose in the future the insurance companies may write in a clause in their contracts deciding what law applies, and I suppose the tribes would honor it. I am not sure.

MR. BOTTOMLY: That may be true.

QUESTION: But Congress has expressed its intent pretty clearly with respect to diversity jurisdiction. You say Congress hasn't addressed a specific question but it has in the sense that it has provided for diversity jurisdiction in federal courts.

MR. BOTTOMLY: That's true, but the statute was --

QUESTION: Why should the tribal courts, as Justice Stevens asked, get more deference than state courts?

MR. BOTTOMLY: Well, the diversity statute was written in 1789, long before Indians were citizens of the United States.

QUESTION: But if this diversity action -- ordinarily a diversity action in a federal court isn't stayed until you exhaust your remedies in a state court.

MR. BOTTOMLY: Not necessarily, no. The reason why it would be here is because of the unique relationship between tribal courts or tribes and the federal government, and Congress's intent to provide some measure of protection for the tribal courts to develop, so there is a difference between tribal courts.

QUESTION: Where do you find that. You said it hadn't really addressed this question expressly.

MR. BOTTOMLY: Well, in the Acts like the Indian Jurisdiction Act, the Self-Determination Act, the Indian Financing Act, they expressly state they want to promote tribal self-government. They expressly indicate they want the tribes to take the lead, and in the Indian Civil Rights Act they expressly prohibit the states from taking those actions, so yes, the diversity statute doesn't address that but the other policy statutes seem to talk about that issue.

QUESTION: Self-government doesn't necessarily include the exclusion of jurisdiction by other sovereigns over matters arising there. I mean, states have self-government and yet there are transitory causes of action that are tried in other states.

MR. BOTTOMLY: That's true, but Congress in Public Law 280 excluded states from taking causes of action which arise on the reservation.

QUESTION: I guess the difference is that the transitory cause of action from one state to another, it is still the first state's law that would continue to follow it, assuming anybody could agree on choice of law rules --

MR. BOTTOMLY: Right.

QUESTION: -- whereas you say when you oust the tribal council of adjudicative authority you are also ousting the tribe's substantive law.

MR. BOTTOMLY: That's right. You don't have the Rules of Decision Act, at least in federal court, although the general conflict of laws would seem to indicate that the tribal laws should apply.

QUESTION: What is the magic language that determines whether Mr. Davis's argument about the tribal court should only have jurisdiction between Indians and between an Indian and someone else resident on the reservation? What statutory language governs the scope of jurisdiction of the tribal courts?

MR. BOTTOMLY: Well, Public Law 280 talks about causes of action which arise on the reservation.

QUESTION: That is just all it says, arise on the reservation?

MR. BOTTOMLY: Arise on the reservation. And so it is like a long arm statute. If Iowa Mutual comes on the reservation and has voluntary commercial transactions there or if it does other things that directly affect the tribal council itself or tribal members, then maybe the tribe would have jurisdiction if it arose there.

Now, admittedly, though this Court doesn't have to address this here, if the tribal court doesn't have jurisdiction, we would say that the federal court could because there would be no interference, in this case there are some jurisdictional actions which take place off the reservation.

QUESTION: Even if there wasn't the second lawsuit pending in the tribal court, that if the insurance company brings this action in the federal court that you should be able to go in and say please dismiss or stay until I can bring a suit and exhaust my remedies before the tribal court.

MR. BOTTOMLY: That's right. The federal court at that time would have to --

QUESTION: Which you could never get done if it were -- if you were talking about just a state court.

MR. BOTTOMLY: That is true. At that point we would have to have the federal court determine where did this action arise, and if it arose on the reservation, then they would stay the proceeding or they would dismiss until that was determined in the tribal court, whether the tribal court had jurisdiction.

QUESTION: May I ask just one other question? Am I correct in assuming that if this happens, say the tribal court reviewed the matter and said, we think we have jurisdiction to decide coverage questions like this but we decide as a matter of discretion that we would rather have an experienced federal judge address this complicated question of interpreting insurance policies, so we will decline to exercise our jurisdiction as a matter of discretion.

I take it the federal court would then have jurisdiction.

MR. BOTTOMLY: In this case I would say yes. Kennerly might indicate and the Fisher cases might indicate that there are some types of issues which are so intrinsically bound up into tribal issues that the state court or the federal court wouldn't take jurisdiction, but in this case --

QUESTION: But the springing use, to use the Chief Justice's phrase, for federal jurisdiction would depend on either of two things, one, that the tribal court had no jurisdiction, or secondly, it declined to exercise it as a matter of discretion.

MR. BOTTOMLY: Yes, that is at least what the Three Affiliated Tribes case tells me, that if the tribal court doesn't exercise its jurisdiction in that area, there isn't interference with the tribal court to bring it in state or federal court.

Even if we assume there is technical diversity jurisdiction, National Farmers Union versus Crow Tribe seems to tell us that we should defer to the tribal court at least in the first instance to determine the issues and its own jurisdiction. Now, Iowa Mutual hasn't directly attacked the tribal court's jurisdiction in this action, although they have in another action.

That issue, as Iowa Mutual admits in its brief, is bound up because if the Federal District Court takes the issue it has got to to do one of two things. It has either got to take the issue away from the tribal court and in that case undermine its authority by taking the issue away, or it has got to create a risk of conflicting adjudications between the federal court and the tribal court, and that would also tend to undermine the authority of the tribal court because there would be some difficulty in enforcing the judgment.

QUESTION: But that is precisely the risk they take if there was a pending state proceeding, the risk of conflicting jurisdictions.

MR. BOTTOMLY: Yes. And also to accept diversity jurisdiction would undermine the lawmaking authority of the tribe because you apply state law, unlike state courts, but there is nothing in the statute itself or the surrounding circumstances that say Congress intended that to be so. They have been uniformly silent with regard to their intent on the diversity statute, and the implication from silence can be seen in many cases by this Court, and that is that when Congress is silent the tribal sovereignty or the tribal jurisdiction remains intact, as it said in Merrion versus Jicarilla Apache Tribe.

QUESTION: But of course that was tribal sovereignty as opposed to a state, I think. You are in little bit different ball park when you are talking about tribal sovereignty versus a federal court that has also received a grant of jurisdiction from Congress.

MR. BOTTOMLY: That's true, but Santa Clara Pueblo versus Martinez tells us that even when there is a statute which talks about Indian civil rights in that case, that federal courts will hesitate to imply an action there. That was a declaratory action for equal protection. And that they will hold back unless it is clear that Congress intended it to be so, but citizenship has never been a factor or criteria by which the extent of sovereignty or the abrogation of sovereignty of tribes has been judged.

In fact, in U.S. versus Neece, which was an early case, 1916, that involved U.S. citizenship earlier than the 1924 statute. The Court said, "Citizenship doesn't abrogate the unique relationship between the tribes and the federal government which give rise to the rules of statutory construction involving tribal court jurisdiction."

Further evidence of Congress's lack of intent to circumvent the tribal court through diversity is, of course, the conflict of laws problem which we discussed and the equal protection problems between the citizen of Montana and the citizen of another state that we talked about.

And finally, of course, while it is not binding on this Court, it should be noted that the basis of the petitioner's writ of certiorari, that is, the conflict between the Eighth and Ninth Circuit, has evaporated if not completely, to a great extent because the Eighth Circuit subsequent to the grant of writ of certiorari has adopted the Ninth Circuit's reasoning in R.J. Williams.

That is, the interference doctrine limiting courts, non-Indian courts from intruding on tribal jurisdiction, applies to both federal courts and state courts. And so there does not appear to be a conflict there as there was at least when this cert was granted.

That is all I have. If there are no further questions, I will sit down.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Bottomly.

Mr. Davis, would you like to say something more? You have three minutes left.

ORAL ARGUMENT OF MAXON R. DAVIS, ESQ., ON BEHALF OF THE PETITIONER - REBUTTAL

MR. DAVIS: Yes, Chief Justice. Thank you.

Replying directly to the question posed by Justice White, Iowa Mutual did contest the jurisdiction, contested the jurisdiction over the person, over the res, and contested jurisdiction based on insufficiency of service of process in the tribal court proceedings.

Interestingly, and I think it bears on this --

QUESTION: (Inaudible.)

MR. DAVIS: Yes. They were denied, except for the motion for insufficiency of service of process, they were directed to replead and reserve.

QUESTION: (Inaudible.)

MR. DAVIS: The tribal judge has said so. It has not gone up to this appellate court, that issue, so we are in this Crow Tribe type of framework. We haven't exhausted our tribal court remedies to contest, as was done in the National Farmers case.

QUESTION: Well, now, did I understand your opponent to say that this bad faith action cannot go forward in Montana courts any more?

MR. DAVIS: In Montana state court. What happened was --

QUESTION: Yes, that's what I mean.

MR. DAVIS: Well, it can go forward, but it has to await the resolution of the underlying tort claim. In 1982 the Montana Supreme Court decided a case called Clout versus Flink.

QUESTION: All right, I understand.

MR. DAVIS: All right. There is only one action in tribal court. There are different aspects and different defendants, but there is only that one case there. That should be clarified. Iowa Mutual, Midland Claims, and the Wellmans are all defendants in one proceeding in tribal court. As of yet it has not been bifurcated. I could spend all afternoon talking about that kind of lawsuit but it is not before this Court.

About Mr. Bottomly's suggestion that Congress does not want actions like this one brought in state court, I disagree wholeheartedly with that because I think Public Law 280 exists and this Court has recognized Public Law 280 as a procedure, as an expression of Congress's desire that such actions be assumed by state courts.

In Kennerly this Court admonished the states that the formalities of Public Law 280 have to be adhered to. However, it didn't abrogate Public Law 280. That exists as an expression that the states should ultimately assume jurisdiction over all matter of actions that otherwise would be within the jurisdiction of the tribal courts, and to respond particularly to Justice Scalia's comment, Public Law 280 does not define the nature or extent of that tribal court jurisdiction. It merely says for those types of actions the states can do this to assume it, but it hasn't said that Williams versus Lee is an appropriate expression of tribal court jurisdiction or what the Ninth Circuit views it to be in this case or anyone else's.

My understanding of what Public Law 280, it can easily be reconciled to the proposition which I have advanced this morning that for those limited matters the procedure exists for the states to assume jurisdiction over them, but ipso facto it does not mean that all these other matters that in this gray area where tribal courts have assumed jurisdiction by default that those can do so.

QUESTION: Your time has expired, Mr. Davis.

The case is submitted.

(Whereupon, at 11:57 o'clock a.m., the hearing in the above-entitled matter was submitted.)