OKLAHOMA TAX COMMISSION v. GRAHAM

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ORAL ARGUMENT OF DAVID ALLEN MILEY, ESQ. ON BEHALF OF THE PETITIONER

Chief Justice William H. Rehnquist: We'll hear argument now in Number 88-266, Oklahoma Tax Commission versus Jan Graham.

Mr. Miley, you may proceed whenever you're ready.

Mr. Miley: Mr. Chief Justice, and may it please the Court:

Today this Court is asked to decide whether an Indian tribe is answerable in state court for ignoring its obligation to collect and remit taxes to the State of Oklahoma despite this Court's sanction of state laws imposing such obligations.

The Tax Commission brought this action in state district court to enjoin the Chickasaw Nation from operating a motel business until all taxes were collected and remitted to the state in compliance with state tax laws.

The tribe removed this case to the federal court, and that court denied the state's motion to remand on the basis that a suit against an Indian tribe is a federal matter.

After assuming jurisdiction, the federal court then dismissed the state's case holding that an Indian tribe cannot be sued without its consent under the Indian sovereignty doctrine.

In affirming these decisions, the Tenth Circuit ruled that an Indian tribe enjoys absolute sovereign immunity within its territory and thereby foreclosed the state's right to have its valid taxes collected.

The first question we ask this Court to consider is whether removal jurisdiction exists in this case.

The state submits that federal removal jurisdiction does not exist because the state's lawsuit is not based on federal law to any extent, but only alleges violations of state law to which the Tax Commission requests relief provided by state law.

The respondent urges that its status as an Indian tribe creates a federal cause of action that is properly removable.

However, this Court has held in the Mescalero Apache Tribe opinion in 1973 that the federal government does not have exclusive jurisdiction over an Indian tribe for all purposes and that the encouragement for tribal economic development under the Indian Reorganization Act does not establish a tribal business as an arm of the government and, therefore, off reservation activity is within the reach of state law.

But the heart of the matter is that the Tax Commission's complaint properly pleads a cause of action to collect state taxes which is based exclusively on state law, as it must be.

The tribe may raise substantial federal questions in defense of the state's claim, but federal questions in a defensive argument cannot serve as a basis for federal removal jurisdiction.

Under the well pleaded complaint rule, a federal statute or a substantial question of federal law must be the basis of the plaintiff's claim rather than a basis of the defendant's defense.

And, therefore, this case should be remanded to the state district court.

But beyond the issue of removal jurisdiction, this case concerns whether the Indian sovereignty doctrine bars the state's lawsuit.

Unidentified Justice: I don't think... if this Court were to conclude that the case had been improperly removed from the state trial court to the Federal District Court, we wouldn't then get to the... the question of the sovereignty, would we?

Mr. Miley: You would not get to that question, and the state would have to decide if that was a proper defense to the state's actions.

The state district court would have to determine if that was a valid defense so that once the removal issue is... is decided in the state's favor, we would not have to determine whether the state's case should be dismissed based on Indian sovereign immunity.

Unidentified Justice: Well, the state court might have to make that decision.

Mr. Miley: The state court may have to make that decision, but the state court has already made that decision.

In another case the state supreme court has ruled in the State ex rel. May versus Seneca-Cayuga Tribe... the Oklahoma Supreme Court ruled that the Indian sovereignty doctrine does not bar the state's lawsuit.

So that if this case was remanded to the state court, the case would be tried on the merits.

Unidentified Justice: And the tribe would have a right to appeal again through the state courts and eventually to this court--

Mr. Miley: That--

Unidentified Justice: --on that point?

Mr. Miley: --That is correct.

So that the Indian sovereignty doctrine at this point only comes into play if the state loses on the removal jurisdiction argument.

And I feel that that is a fairly clear-cut argument in that the Indian tribe is not a part of the federal government.

The activity is off-reservation, and I feel that under the Mescalero case and under Moe versus the Confederated Tribes cons... under the Moe decision and the Colville decision, I believe, whether... whether the business activity is on or off of a reservation, this court has ruled that the state does have a right to have its... its valid taxes collected.

Unidentified Justice: May I interrupt you?

You said that this... this incident, this business is conducted off the reservation.

Mr. Miley: Yes.

Unidentified Justice: And the record in the case consists just of the complaint, doesn't it?

Mr. Miley: That is correct.

Unidentified Justice: And does the complaint allege that the... that the... this Murray... whatever it is... Sulphur, Oklahoma, is... is or is not within the reservation?

I don't think the complaint says one way or another.

Mr. Miley: No.

It... it alleges that the state laws were violated by this motel operation and sues the owners and operators of the motel.

Unidentified Justice: But what I mean is we cannot tell from the record whether the hotel is on the reservation or off the reservation, can we?

Mr. Miley: No, you cannot because... because that wasn't developed.

No evidence was developed in the case.

Unidentified Justice: Not... no allegation even one way or the other?

Don't we just have the complaint?

That's the whole--

Mr. Miley: That alleges that taxes are owed.

Unidentified Justice: --Yeah.

Mr. Miley: Yes.

Unidentified Justice: Is there a reservation?

Mr. Miley: No, there's no reservations in Oklahoma, so... I believe that was... that has been briefed throughout the case because many times it is necessary to--

Unidentified Justice: This is one of the assimilated tribes, is it?

Mr. Miley: --Yes.

We contend that is... that it is... the tribes in Oklahoma have been assimilated rather than operate under the reservation system.

Unidentified Justice: But isn't there any trust property, Indian trust property in Oklahoma?

Mr. Miley: Yes.

This--

Unidentified Justice: Well, is this... is this... is this establishment on Indian trust property or not?

Mr. Miley: --It... well, it is not on an allotment as defined in Title 18 United States Code 1151(c) because the Indian title to this particular piece of land was extinguished, and it did go into non-Indian ownership.

This tribe did purchase this particular motel property in 1972 and in 1985 under Title 25 U.S.C. Section 501, which allows transfer of lands acquired by tribes to the United States in trust for the benefit of the tribe, this land was placed in trust with the United States for the tribe's benefit.

However, as this Court has ruled in the Mescalero opinion, the transfer in trust does not create Indian country which... which many of the cases involving the allocation of jurisdiction between the state and a tribe consists of so that... so that this piece of property, although it is held in trust, that statute did not create any broad exemptions from taxes or regulation that all other businesses throughout the state are subject to.

Therefore... going on with my... I think I've fairly well said all I can about the... the removal question which... which may determine the outcome presently.

Unidentified Justice: Let me ask you, counsel, do the tribes have the authority to waive their immunity from suit?

Mr. Miley: I believe they do have authority to waive immunity from suit.

Unidentified Justice: Have we so helm or is there a case that establishes that?

Mr. Miley: I am not aware of a case that establishes their ability to waive, but they have not made a waiver in this case.

Unidentified Justice: Was there a disposition at that time?

Yes.

Mr. Miley: However, I don't think the waiver is necessary because their sovereignty does not extend that far, does not extend over the state's lawsuit.

Unidentified Justice: Well, I recognize you claim, of courser they don't have immunity anyway, but they claim they do.

Mr. Miley: Yes.

Unidentified Justice: But you also take a position that it can be waived if they do have it?

Mr. Miley: I... I'm assuming that it can be waive.

I didn't... I believe they do have sovereign immunity over their internal relations such that tribal rites, say, a tribal member or a person wanting to establish tribal membership was denied for some reason.

The tribe... that would be a relationship internal to the tribe, but they would have plenary authority over and a suit against the tribe on that issue may not be maintained because of the tribe's sovereign immunity.

However, when the tribe operates a business in the... it... it steps outside the reach or that... their internal... their sphere of internal jurisdiction or internal relations and steps into the reach of state law so that the tribe may properly allege a cause of action against them to collect taxes when the tribe chooses to enter the business community.

So that their sovereign immunity is not a question at that point.

It is raised in defense, but I contend that it's not a valid defense.

Unidentified Justice: Counsel, does the new Indian gaming Regulatory Act complete foreclose future efforts by Oklahoma to tax Indian bingo games?

Mr. Miley: I believe it does.

It completely occupies the field, and the Tenth Circuit has also held that the State of Oklahoma cannot tax Indian bingo operations, And, therefore, we are--

Unidentified Justice: But it's not retroactive, I take it?

Mr. Miley: --That it is not retroactive?

Unidentified Justice: This new act?

Does it cover your case so that this new act precludes this--

Mr. Miley: Well, this is a motel.

This is a motel business.

A bingo operation was... was operated there, plus a restaurant.

However, the state sales tax applies against the rental of motel rooms.

It applies against restaurant sales.

Unidentified Justice: --The state isn't trying to tax any of the bingo operation?

Mr. Miley: No, not at this point.

We did allege that taxes were owed on the bingo operation.

Unidentified Justice: I thought that was part of the complaint.

Mr. Miley: That was part of the complaint and now that is foreclosed, so when we do reach the merits of this case, bingo sales will not be a part of the effort to tax in this case.

Unidentified Justice: Why is that?

Mr. Miley: Because of the new Indian Gaming Regulatory Act.

Unidentified Justice: Does that say that it's retroactive, that it applies retroactively?

Mr. Miley: Not it doesn't, but we have not collected any taxes from the bingo operations thus far, and the Tenth Circuit in the Creek Nation... Oklahoma Tax Commission versus the Creek Nation... held that we could not tax bingo sales.

So--

Unidentified Justice: We have a line of decision that says you decide the case on the basis of current law, and that's the current law.

But we have another line of decision that says that laws are not normally to be interpreted to be retroactive.

And I'm just wondering which of the two lines you were using here.

Mr. Miley: --Well, I... I suppose I am interpreting the current law as it stands in that now we will not be able to assert that cause.

Unidentified Justice: You're not asserting.

That's out of this case?

Mr. Miley: Yes.

Yes, it is out of this case right now.

So, the... as far as the... these tribes' sovereign immunity, the state does recognize that the tribe does have a tribal government and can tax its own sales.

However, these taxes do not displace or preempt the state taxes, but the state aria the tribe can tax the same transactions, but that really goes more to the... the merits of the case, but really the... what the point is is that the Indian sovereignty doctrine does not bar the state's suit because that doctrine has been adjusted to accommodate the state's legitimate interest in taxing its citizens, and I do not feel that this... the state's interest... I feel that the state's interest could be fulfilled by the tribe's Business enterprise, and the tribe could fulfill their interests in the economic development of their business because the state tax will not prevent the tribe from sustaining their economic development, just as it does not prevent all other businesses from making a profit in the state.

But if the state cannot rely on the decisions of this Court which I feel recognize the state's right to have its taxes collected from its citizens, then the state's right to have this tribe collect the tax and remit it will be lost forever if the Tenth Circuit decision stands because the tribe has expressed that regardless of the merits of the case, they do not intend to collect the state's taxes, and if they can successfully avoid a lawsuit, by asserting sovereign immunity in a federal court, they do not feel compelled to... to abide by state law and collect the state's taxes.

So that in that case, whole areas of state taxation will be put beyond the reach of state jurisdiction, and the state taxing system will necessarily be restructured by the Tenth Circuit's opinion in that regard because we will not be--

Unidentified Justice: Well, that's not the issue before us, is it, the merits of whether--

Mr. Miley: --No, the merits... but the merits are bound up in the... the... the sovereign immunity of tribe, and I feel that if the state has its right... has a right, it must also have the ability to enforce that right against the tribe.

Unidentified Justice: --I just don't see why we have to address that at all.

Mr. Miley: Well, you wouldn't have to address it if... if the defense of sovereign immunity is not a valid defense, because it would have to go back down for trial at that point.

So that to... to conclude this argument, I... I think from reading the cases, the trend in this Court has been away from the idea of inherent Indian sovereignty and toward reliance on... on federal preemption or on infringement of tribal government.

So that when state action is not... is not preempted or infringed, that the... the requirements under state tax laws may validly be imposed against the tribe and necessarily since taxes are... are enforced, are complied with voluntarily, but are enforced principally, the only... the only avenue we have to enforce is... is the state courts because, of course, the federal government does not enforce state laws.

And without that... without enforcement we... we see that we cannot... if we cannot come to court to... to have our rights vindicated, then the state will have lost its... lost its rights.

If the Court doesn't have any further questions.

Unidentified Justice: Thank you, Mr. Miley.

We'll hear now from you, Mr. Rabon.

ORAL ARGUMENT OF BOB RABON ON BEHALF OF RESPONDENTS

Mr. Rabon: Mr. Chief Justice, and may it please the Court:

If I might, I would like to respond to a question that Justice Kennedy asked, I believe, regarding whether or not the tribe had waived its sovereign immunity or whether it can waive its sovereign immunity and whether or not this Court has held whether it can.

The tribe here has not waived its sovereign immunity from suit.

I know of no decision of this Court that holds that a tribe can waive its sovereign immunity absent some act of Congress.

Unidentified Justice: Nor that it can't.

Mr. Rabon: Nor that it can't.

I think there's... I don't recall the citation, but I think there's a Ninth Circuit court case that says that they can.

I'm not sure about that, and don't have the citation.

Unidentified Justice: Well, some of the cases are ones in which the tribe brings suit, and it's usually a concomitant of bringing suit that waivers implied to that extent, but if we assume that tribal immunity can be waived, then that issue is particularly speculative at this time, and it would seem to me to more like defense than an element of the complaint.

Mr. Rabon: Well, we don't view it in that light.

We see the... the fact that a complaint is filed in state court against an Indian tribe asserting the right to apply state tax laws, asserting coercive state civil jurisdiction, impliedly asserting an abrogation of sovereign immunity, we see those as affirmative matters and not necessarily matters that should be raised on... by defense.

Unidentified Justice: Well, what if the suit... there were a state brought against a state anti the state wanted to assert 11th Amendment immunity?

That's no more than a defense, isn't it?

Wouldn't you have to get into federal court or to be removed into federal court?

Wouldn't you have to have some other basis under federal law to get there other than the 11th immunity defense?

Why isn't this exactly the same?

Mr. Rabon: I think that the... I think that it would be incumbent upon the plaintiff in that case to allege... when you have a state as a party defendant--

Unidentified Justice: Right.

Mr. Rabon: --to allege the authority to... and that's happening in this case.

Unidentified Justice: There's no case for that proposition that, I know of.

Can you cite me one?

Mr. Rabon: No, Your Honor.

Unidentified Justice: The general rule surely is under the well pleaded complaint doctrine that the plaintiff sets forth its basis for recovery.

And if that involves only state law, then it's not removable.

Mr. Rabon: That is one test.

Unidentified Justice: Well, what other test is there?

Mr. Rabon: Well, in the case of Gulley versus First National Bank, the Court, Justice Cardoza, said that there were other criteria, standards for removal of Jurisdiction that you look to, such as the probable course of the trial, the real substance of the case.

He said that while a suit to enforce a right or rights with origins under... with their origins in federal law may not necessarily be federal unless it really and substantially involves a dispute or controversy respecting the validity, construction or effect of such law upon which the determination of which the result depends.

Unidentified Justice: Well, Gulley was decided in 1936, and in cases as recently as our Caterpillar, which are maybe one or two years old, certainly we've talked and talked only really about the well pleaded complaint doctrine.

Mr. Rabon: That assumes that the state can create a cause of action against an Indian tribe, and we don't think that they can.

in Caterpillar--

Unidentified Justice: Well, but the... under the well pleaded complaint doctrine, you don't decide on how good a cause of action a complaint states.

That's for the court in which the plaintiff sues to decide.

All you decide under the well pleaded complaint doctrine is whether there's something in the complaint that shows you that the plaintiff is relying on federal law to establish his case, And you... you're... this just doesn't meet that.

You agree that if the well pleaded complaint rule governs here the Tenth Circuit was wrong, don't you?

Mr. Rabon: --If the well pleaded complaint rule governs and... and the well pleaded complaint does not raise or present substantial federal questions, and I believe that's what he Court said in Franchise Tax Board and Caterpillar versus Williams.

Unidentified Justice: Well, are you saying that the state's complaint here rested on federal law?

Mr. Rabon: Yes.

I say... I say that... I say that the state's... the very right to assert the claims that the state asserts are vested in... are bottomed in federal law.

Unidentified Justice: And what federal law is that?

Mr. Rabon: Federal common law.

Unidentified Justice: But what is the substance of the federal law?

What does the federal law that you're talking about say?

Mr. Rabon: Well, in Oneida in the--

Unidentified Justice: I mean tell me just what the summarize what the federal law say that you're talking about.

Mr. Rabon: --Well, the power of Congress with regard to... with regard to whether or not an Indian tribe may be sued in the first instance is plenary.

Unidentified Justice: Well, the power of Congress to legislate in that area undoubtedly is plenary, but this doesn't mean that whenever... whenever someone sues an Indian tribe in the state court and simply sets forth a state ground of action, the Oklahoma tax law that says you're liable for sales tax, it... it becomes removable to federal court.

Mr. Rabon: Well, if the well pleaded complaint rule were to... were to apply in this particular case, we still submit that the case is completely preempted by... by federal law and the areas that are raised by... inherently in the complaint are completely preempted by federal law.

We--

Unidentified Justice: The problem is--

Mr. Rabon: --as I recall--

Unidentified Justice: --The problem is that it... that it isn't just the areas raised in the complaint that have to be preempted.

I mean, the complaint may on its face suggest a particular defense.

It has to be the claim that has to be a federal claim.

And that's what I find it hard to see in this complaint.

How is there a federal claim?

The only federal claim you're suggesting is that well, the state claim would not exist if the federal congress chose to eliminate it.

But, gee, you could say that about almost any state complaint.

Congress could preempt almost any state action in the world.

So, in a way, it's a condition to any state cause of action that Congress has chosen not to preempt it.

But we don't say that every state cause of action is thereby a federal cause of action because it's only by the good will of Congress that the state action continues to exist.

Why is that different from what you're arguing here?

Mr. Rabon: --We think that when you name an Indian tribe a federally recognized and protected Indian tribe and a state asserts the right to apply its... its laws and to... to assert coercive state civil jurisdiction over it, that the complaint inherently presents federal questions, substantial federal questions.

The state cannot... I've said this before, but we just don't see how the state can create the right in itself to assert these claims.

And in the Onelda case, the court said that you look to the underlying right, the underlying right asserted.

In this case we believe that the petition inherently asserts the right to limit aspects of the Chickasaw Nation's sovereignty.

In National Farmers Insurance Company versus Crow Tribe, the court said in that case where the complaint asserts the right to curtail or limit a tribe's or aspects of a tribe's sovereignty, that it arises out of federal law for purposes of 13... Section 1331.

And, of course, the test for 1331 and the removal test under 1441 are the same.

But, in any event, we contend that... that the complete preemption rule applies here because the... the... the Congress has completely dominated and indicated its intent to govern the field of tribal sovereign immunity and state civil jurisdiction.

With regard to the area of state civil jurisdiction the Congress has allowed the states to have jurisdiction with great care and selectivity.

In 1953 the... and incidentally, the Congress has shown that it knows how to grant the states civil jurisdiction.

In 1953 an example would be Public Law 280 and its 1968 amendments.

In Wold Engineering versus Three Tribes the... this Court described Public Law 280 as a comprehensive and detailed scheme, the primary expression of federal policy and that it preempts incompatible state action.

Oklahoma is not a Public Law 280 state.

Certainly the attempt by the Oklahoma Tax Commission to assert state court civil jurisdiction over an Indian tribe in that... in that state is incompatible with Public Law 280.

Another example of... when Congress has allowed civil jurisdiction over Indian tribes is the Termination Acts of 1954, making certain tribes subject to the laws of the states at the time they terminated those tribes' federal status.

Congress has also exhibited a... a... its domination in the area of whether or not tribal sovereign immunity is abrogated.

It has shown that it will only abrogate tribal sovereign immunity, again, with great care and very infrequently.

As it relates to the Chickasaw Nation, we know of only three times that it specifically has abrogated the Chickasaw Nation's sovereign immunity, and that would be in the Curtis Act of 1898... there was a limited abrogation there... the Five Tribes Act of 1906, where it allowed certain counterclaims and actions that were... that were pending where the tribes were... were plaintiffs.

In Public law 93-195 in 1975 when the Choctaw and Chickasaw Nations and the Cherokee Nations were allowed to sue each other to determine the respective ownerships of the Arkansas River beds, as related to the Indian tribes generally, the Indian Civil Rights Act of 1968 allows for habeas corpus relief only.

Recently in the Indian Gaming Regulatory Act of 1988 the Congress allowed certain actions arising out of the compacts that... that states and tribes might enter into to be the subject of suits against tribes.

Moreover, Congress has reemphasized its commitment to tribal sovereign immunity in the Indian Self-determination Act of 1975 where it said that there was nothing in that act should be construed as affecting, modifying, diminishing, or otherwise impairing the sovereign immunity from suit enjoyed by Indian tribes.

Another federal area in which state law is completely displaced is the treaties that the United States government has entered into with the Chickasaw Nation.

In 1832 the preamble of the... of that treaty with the Chickasaw Nation showed that the principal consideration for removal was to escape state laws which oppressed the Chickasaw Nation.

In 1834 when the Chickasaw Nation finally did agree to remove, the principal consideration that the tribe advanced in that matter was, again, to escape state laws, and the federal government promised to protect them from inroads from the whites.

In 1837 the Choc... the Chickasaws acquired their present reservation from the Choctaws.

That treaty provided that the Chickasaws would hold that reservation on the same terms and conditions as the Choctaws held it.

The Choctaws acquired that reservation under the Treaty to Dancing Rabbit Creek in 1830, and when they acquired those lands, the United States government promised them that they would not allow any state to pass laws for the tribe or its descendants.

Here the state is clearly invoking its laws against the tribe.

Unidentified Justice: Counsel, there is no reservation today, is there?

Mr. Rabon: We take the position that the reservation boundaries in Oklahoma have, with the exception of two Indian tribes that we know of, have never been abolished by Congress.

But even if they had been, Indian country within areas where the reservation boundaries had been abolished or the reservation has been diminished continues to be under federal and tribal jurisdiction.

Finally, Oklahoma's Enabling Act conditioned its becoming a state on its disclaiming any jurisdiction to limit the rights of persons or property pertaining to the Indians of said territory.

We think that the decisions of this Court, the active involvement of the Congress, and these treaty rights completely preempt the state law cause of action asserted by the State of Oklahoma here, and that this case was properly removed.

Of course, the trial court dismissed this case because there was no affirmative showing of a waiver of the tribe's sovereign immunity, but... and we think that the court was correct.

Perhaps it would have been more correctly decided had it determined what the state court's jurisdiction was for purposes of determining whether or not there was derivative jurisdiction that was necessary at the time this case was removed, prior to the 1986 amendment of the removal statute.

And had it done that, we feel that it would have determined that the state court did not have jurisdiction and that dismissal, as was mandated by Lambert Run Coal Company versus Baltimore & Ohio Railroad mandated dismissal as opposed to remand.

We think that under either theory the result was correct.

We... I would like to take issue with... with one question that counsel... one statement that counsel made that... that it is the tribe's assertion that it does not have to collect any cigarette taxes in this case.

You only have to look at the complaint.

The complaint seeks... it makes no distinction between tribal members and non-tribal members.

And as I understand the decision in Colville and Moe and Chamenuevi that this Court has only held that the tribes are required to collect those taxes as they relate to non-tribal members, certainly my client does not believe that it has a right to... to defy this Court's decision in that regard.

But that's not what the state is asking for here.

The state is asking for much broader relief.

And as you see, as you read into their... read their... their briefs and the position that they've taken that no Indian tribe in Oklahoma has any immunities left.

Unidentified Justice: Well, presumably the Oklahoma courts are competent to deal with that question, at least initially, and subject to ultimately being reviewed here?

Mr. Rabon: Yes, and if this case was improperly removed and it is remanded back to the state court, the state court would get that opportunity.

But we feel that... that because of the complete preemption doctrine that we had the prerogative and that to remove this case to federal court.

Quite frankly we removed this case to federal court because of the case cited by the Tax Commission, which was decided only about three months before this case was pass... was filed, and that is May ex rel. Oklahoma Tax Commission versus Seneca-Cayuga Tribe, where the Oklahoma Supreme Court held that the state courts had the right to regulate bingo gaming on Indian country in Oklahoma--

Unidentified Justice: Presumably the federal statute that's been enacted speaks to that question.

Mr. Rabon: --The Court also held in that case that the tribe did not have sovereign immunity from suit in spite of the fact that there was nothing in the record that indicated that the tribe had waived sovereign immunity or that Congress has waived the tribe's sovereign immunity from suit.

That case subsequently was sent back to the state court for trial and was enjoined by the Federal District Court in the Northern District of Oklahoma from proceeding further.

Unidentified Justice: Was there any appeal from that?

Mr. Rabon: That case, I believe, is on appeal to the Tenth Circuit at this time.

Unidentified Justice: Well, I can understand why you wanted to be out of the Oklahoma state courts, but just because you see an opinion of the Oklahoma state courts that you don't like and you figure well, it's useless litigating... useless litigating here, that doesn't necessarily give you a right to go into federal court.

I mean some--

Mr. Rabon: No, I'm not... I'm not contending that.

We continue to take the position that... that the issues presented when the state asserts the rights that it asserted here against an Indian tribe in state court inherently present substantial federal questions and are completely preempted.

Unidentified Justice: --It's a federal claim, is that what you're contending--

Mr. Rabon: Yes.

Unidentified Justice: --that it is a federal claim, not the issues presented, but it is a federal claim that--

Mr. Rabon: That the right, the--

Unidentified Justice: --Oklahoma was asserting a federal claim when it sought to collect state taxes is what you're telling us.

Mr. Rabon: --It's asserting a federal claim to to assert its tax laws against the tribe is what I'm saying.

Unidentified Justice: I mean, what we said in Onelda, which... which you quote to us, is that it was a federal claim that was being asserted, and that's what you have to establish here, it seems to me, that the attempt to collect state taxes is a federal claim.

That's a pretty hard thing to establish, I think.

Mr. Rabon: In Onelda, I believe the Court found that the complaint only alleged a state law cause of action in ejectment, but that the underlying right to assert that... that cause of action had its origins in federal law.

Unidentified Justice: I think what we said is that enough has been said to indicate that the complaint in this case asserts a present right to possession under federal law.

We found a federal claim being asserted there.

Mr. Rabon: Perhaps... perhaps I've misinterpreted what the Court has said there, but the way I interpreted that decision was that in that case, in spite of the fact that the complaint only alleged a state law cause of action... and that's what the Court said there, that it only alleged a state law cause of action in ejectment... the underlying right to assert that was based on federal law.

Unidentified Justice: We said elsewhere accepting the premise of the Court of Appeals that the case was essentially a possessory action, we are of the view that the complaint asserted a current right to possession conferred by federal law, wholly independent of state law.

Is that the case in which the complaint alleged a violation of the Non-Intercourse Act, the federal statute?

That was the basis for--

--I believe that's correct.

So, they're affirmatively relying on a federal statute.

Mr. Rabon: Yes.

Unidentified Justice: But you don't have a parallel to that here, I don't think?

Mr. Rabon: No, I don't.

Except in that case the Court said that there was no federal statute which made New York's statutory or decisional law applicable to an Indian tribe and, therefore, the governing rule of law would be fashioned in the mode of the federal common law, as I understand.

I think I have correctly quote that from the decision.

But we still submit that... that anytime the state sues a federally recognized Indian tribe asserting these rights that it... that's been asserted here, that it... it raises issues that are completely preempted by federal law.

I might... in closing, I would like to... to address one other statement that was made by... counsel cited to... to Mescalero Apache versus Jones.

In that case sovereign immunity from suit was not at issue, and the tribe submitted itself to the jurisdiction of the court.

If there are no further questions, I will conclude my argument at this time.

Chief Justice William H. Rehnquist: Thank you, Mr. Rabon.

Mr. Miley, do you have rebuttal?

REBUTTAL ARGUMENT OF DAVID A. MILEY ON BEHALF OF THE PETITIONER

Mr. Miley: Thank you, Mr. Chief Justice.

All I would want to say is to sum up that I believe the Caterpillar case is controlling on the well pleaded complaint rule, and this should dispose of the issues, but in the Mescalero case it was ruled there on... which was here on cert. from the state court of New Mexico... that the federal law... the federal government does not have exclusive jurisdiction over the tribe for all purposes and, therefore, the state's revenue laws can be properly applied against the tribal enterprise which is... and I believe that that case is controlling because it is indistinguishable in terms of the status of the land involved and the business being operated.

And I would... if the Court has no other questions, I'm through.

Chief Justice William H. Rehnquist: Thank you, Mr. Miley.

The case is submitted.

Print this transcript Transcript: 

Argument of Speaker

Mr. Speaker: No. 88-266, Oklahoma Tax Commission versus Jan Graham.

In this case, the Court of Appeals for the Tenth Circuit held that an action originally brought by the Oklahoma Tax Commission against members of an Indian tribe to recover state sales taxes could properly removed be from State to Federal Court.

In an opinion filed today with the Clerk, we reverse the Court of Appeals concluding that under our well-pleaded complaint doctrine, as a spouse in a number of our cases, its holding was an error.