OKLAHOMA TAX COMM'N v. POTAWATOMI TRIBE
Argument of David Allen Miley
Chief Justice Rehnquist: We'll hear argument next in No. 89-1322, Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe of Oklahoma.
Mr. Miley, you may proceed.
Mr. Miley: Mr. Chief Justice, and may it please the Court:
This case involves a convenience store operated by the tribe on land held in trust by the United States Government for the benefit of the tribe.
The tribe sells untaxed cigarettes and other convenience store items from its store to the general public at large without collecting the State taxes.
The issues in this case are whether the State taxes are applicable to this tribal business and whether the doctrine of sovereign immunity prevents the State from collecting its taxes.
Oklahoma law requires the vendor to collect these taxes.
These taxes are validly imposed upon the citizens of this State.
The vendor in this case is the tribe.
Under the cases of Moe and Colville... Moe is a 1976 case and Colville from 1980... this Court required tribal sellers on a reservation in those cases to collect the State taxes against... on sales to nontribal members.
Unknown Speaker: Well, now, you don't assert any right to collect taxes for sale to tribal members, I trust?
Mr. Miley: Yes, we do.
Unknown Speaker: You assert that you can do that as well?
Yes, I believe this case is on--
Mr. Miley: And what authority do you cite for that proposition?
Unknown Speaker: --Well, I think this case is on point with the Mescalero Apache Tribe v. Jones decision of 1973, and there we had an off-reservation business operated by the tribe that was found to be reliable for $26,000 in gross receipts taxes on its sales and that it... and that that tribe--
--Well, if we think that this is on what amounts to Indian land, do you take that position?
Mr. Miley: Well, I think the McClanahan case and the Colville case find that the tribal members in those cases were not taxable because they... the sales occurred on the reservation or, in the McClanahan case, the individual earned her income on the reservation.
And because the State taxation would infringe upon the tribe's right to govern itself within that reservation, those taxes were not allowed.
Here we don't have a reservation situation, as this Court has found in the Oklahoma Tax Commission v. United States.
The situation in Oklahoma is much different.
There are no reservations as such as are found in other States.
And the facts of this case show that in 1891 there was a sum certain session agreement that this Court held in the DeCoteau case... found that those... that... this specific session agreement which was mentioned in the case did disestablish the reservations that were involved in that agreement.
Unknown Speaker: But the land on which this store is located is held in trust by the United States for the tribe, is that correct?
Mr. Miley: That is correct.
The land... the particular land in this case was conveyed back to the... from the United States in 1961 and 1964 to the tribe in unrestricted status, in nontrust status, because the Federal Government did not want to maintain any supervision over the land because that would be too much trouble and expense for the Federal Government.
So they did not want to maintain the land in any way.
In 1976, though, the tribe did want to build some public buildings and a community center, and they wanted to apply for loans.
The Federal... the Economic Development Administration for their protection wanted this land to be held in trust by the United States rather than in the tribe's own name.
So in 1975 that land was transferred in trust under Section 501, but that section... Title 25, Section 501 of the United States code.
But that section doesn't set up any reservation status for the land, and it is my position that the... in order to create a reservation, the Congress or the President of the United States must act to do that, and I don't think that's been done in this case.
Unknown Speaker: Well, doesn't our McGowan case say that lands held in trust by the United States for the Indians have much the same status as reservation lands?
Mr. Miley: Well, I think the... there are cases that hold that trust land in the... for instance in the John decision, the trust land is a... has reservation status, but I believe in those cases there was a resident tribal population in those cases where the Government was supervising that land.
Unknown Speaker: Here there's no resident tribal population?
Mr. Miley: Not... these are lands that are for the tribal headquarters and a golf course and public buildings here.
But at any rate, even on a reservation the tax laws of the State of Oklahoma would apply to the transactions.
And I think as we have seen in the population statistics that were located in our brief, we can see the assimilation of this tribe into the general community, and it's safe to say that most of the sales from this tribal store are not to tribal members.
But I think the cases of Moe and Colville clearly stand for the State's rights.
And I think the Mescalero point... the Mescalero case goes on to say that tribal businesses that are located off the reservation are subject to the same State laws as all other businesses.
And I think in that Mescalero case, in note 11, the Solicitor argued in that case that that land was virtually held in trust for the tribe in that situation, although it was a lease from the Department of Interior I believe.
However, it would have been useless to transfer the land in that situation, so that was in effect trust land in that case.
So I believe this case is on point when you look at the cases of Oklahoma Tax Commission v. United States along with the Mescalero case.
I believe that the Federal intent in Oklahoma was not to create this kind of situation, and clearly Congress did not want to go back to the reservation situation when they were passing the Indian Reorganization Act.
They wanted to exclude Oklahoma from that and pass a separate act for Oklahoma because Oklahoma has gone past the reservation system, and I think that was... yes?
Unknown Speaker: I'm not sure what your... I'm not sure what your... are you arguing there has to be a declaration of reservation status before the Indian tribe would have sovereign powers in the area?
Mr. Miley: Well--
Unknown Speaker: Because I don't think our cases support that.
I think we've clearly said to the contrary.
I think we said in Johns that the test is simply whether the land has been validly set apart for the use of the Indians as such under the superintendence of the Government.
Mr. Miley: --Correct and--
Unknown Speaker: And we've held in other cases, haven't we, that it doesn't have to be a formal declaration of reservation status.
Mr. Miley: --Correct.
But I believe in this case when... the McClanahan case, specifically states, and also in Williams v. Lee in a footnote, that when they were talking about the Arizona situation, the Navaho reservation and that situation, they say these notions of Indian sovereignty are not applicable in cases such as where Indians have left or never inhabited reservations, such as Oklahoma Tax Commission v. United States.
Unknown Speaker: Not applicable when Indians have left?
You mean when the tribe is not in residence?
Is that the key that you say makes the difference here?
Mr. Miley: --Well, yes.
Well, in the situation of these Indians in this State, in Oklahoma, there is not that reservation status as that status is recognized in other States.
Unknown Speaker: Why?
If the test is whether the land has been validly set apart for the use of the Indians as such under superintendence of the Government, that test would certainly apply here.
Mr. Miley: Well, it would apply to a certain extent, but it's not... the land was transferred in trust in 1975 in order for the tribe to qualify for loans.
Before that time the Federal Government has no interest in ever supervising this piece of land.
So I think there is a difference in this case.
But you are correct in other situations this Court has held differently.
But I don't think we have these facts, and I don't think Congress really intended for reservation status to be developed again in Oklahoma because of the failure of that system in... previously.
Unknown Speaker: Well, the Solicitor General doesn't agree with you on this point I take it?
Mr. Miley: I don't believe the Solicitor General does.
Unknown Speaker: No.
Mr. Miley: No.
At any rate our position is that whether it is a reservation or not, and even if it is held to be a reservation, the sales are still taxable.
However, what we are experiencing in this case is that although this Court has found that in 1976 in Moe, in 1980 in Colville, in 1985 in the Chemehuevi decision out of California that tribal stores just like this one should collect the State's taxes--
Unknown Speaker: On sales to nonmembers.
Mr. Miley: --On sales to nonmembers which--
Unknown Speaker: Now, would you claim they should collect it on sales to members, too?
Mr. Miley: --Well, yes, I do.
Unknown Speaker: xxx.
Mr. Miley: But if they collected sales against nonmembers in this situation, they would be collecting taxes on 99 percent of their sales.
Unknown Speaker: But the SG says the court of appeals was wrong in enjoining you from collecting the tax.
Mr. Miley: --Collecting the tax.
Unknown Speaker: To nonmembers.
Mr. Miley: Well, the Tenth Circuit--
Unknown Speaker: No, the SG, the Solicitor General, says that the court of appeals was in error in enjoining you from collecting the tax.
Mr. Miley: --Correct.
Unknown Speaker: All right.
Then how would... let's just assume that the SG is right that there was there that that injunction should be vacated... the injunction enjoining you from collecting the tax.
How would you collect it?
Mr. Miley: Well, in this case we have issued an assessment--
Unknown Speaker: You can't... you can't... under the SG's view the tribe is immune from suit.
You couldn't sue them.
How would you collect it?
Mr. Miley: --Well, that is the problem we are faced.
We cannot collect it unless the tribe cooperates.
Unknown Speaker: Could you sue the store manager?
Mr. Miley: Well, we have--
Unknown Speaker: To require the manager to set aside the money and do what's necessary?
Mr. Miley: --Well, under Oklahoma law the owner of the store is responsible rather than employees.
We could not hold an employee liable even though it might be their duty.
We have to go against the owner, and the owner in this case--
Unknown Speaker: You don't think you would have jurisdiction to go after the employee not to hold him liable but to require by way of an injunction or other court order that the employee set aside this money for the taxes?
Mr. Miley: --Well, we have had in another case in the Chickasaw Nation case that was up here a few years ago, we did try to sue the manager of the store but the Tenth Circuit opinion, which was vacated in that case, is now before the Oklahoma Supreme Court.
But the Tenth Circuit had held in that case that we could not get around tribal sovereign immunity by assessing tribal employees for the tax.
Unknown Speaker: Well, but this Court isn't bound by any ruling of the Tenth Circuit--
Mr. Miley: Correct.
Unknown Speaker: --as witness to the fact we've got this case here on certiorari.
Mr. Miley: Correct.
I was just merely stating that we've been unsuccessful thus far in that tact.
Unknown Speaker: Could you require the wholesaler to affix the stamps on 100 percent of the cigarettes and then just rebate the tribe for those that were sold to Indians?
Mr. Miley: Well, that's what... we do require the wholesaler to do that, however, when the tribes in Oklahoma purchased their cigarettes from as far away as Tennessee or Nebraska from wholesalers who have no nexus with the State of Oklahoma, they will then ship those in on common carrier or otherwise, basically bootleg them into the State and--
Unknown Speaker: They're not doing business in the State of Oklahoma by the end sale?
Mr. Miley: --No, no.
If they don't have a presence within the State... if they merely ship on common carrier to a certain location, they have... there's no sufficient nexus if they don't have any trucks or warehouse or anything in Oklahoma, we can't make those other wholesalers pay the tax.
So, at that point, although it is perfectly fine for someone to buy cigarettes from an out-of-state wholesaler... that's not disallowed, but at that point the retailer is then obligated to purchase the stamps because the retailer is located in Oklahoma.
We do have jurisdiction over the retailer.
And in that case the retailer would be responsible.
If those taxes were not properly paid, then the retailer would be responsible for the delinquent liabilities.
And that puts us back facing the tribe again, and the only other way to enforce that would be seizures of the shiploads of cigarettes coming in.
And that is--
Unknown Speaker: We can pursue it some other time.
But I don't see how you would have authority to seize and not authority to require that the tax stamp be affixed.
Mr. Miley: --Well, we do not have the authority for... to require a wholesaler in another State to comply with our laws.
If they are not themselves coming into this State to make the deliveries or if we do not have any evidence that they are coming into this State to make those deliveries.
And so we kind of have to catch them in the act and then we would have to hold their property, like a truck, in order to enforce that.
So we have trouble enforcing the laws across State lines.
That's why we look to the people that are located in Oklahoma to enforce this law against.
And so that brings us to the examination of tribal sovereign immunity and of course, as this Court has held in the United States Fidelity and Guaranty case in 1932 and again in the Puyallup case in 1977, this tribe is immune from suit.
However, it is my position that circumstances have changed such that this doctrine should be reexamined.
Back in 1932 that case involved a lawsuit by the United States to protect tribal coal royalties that were owed to the tribe and the tribe was held to be immune from a counterclaim in that suit because the United States Government was trying to protect the fragile existence of the tribal ward, and it was necessary in that circumstance.
I think, however, the scope of the tribal entity has increased greatly from those days and they are not reaching into the community of the State where State laws do apply.
I think this is quite a drastic change and requires us to look again at the sovereign immunity doctrine.
Now I'm not saying that sovereign immunity of an Indian tribe should be abandoned for all purposes or that it would be... should be absolutely abrogated in any way.
I'm just trying to accommodate the interest of the State and the interest in collecting the taxes from the State citizens who are properly taxable.
The sovereign immunity, I believe, is a limited sovereign immunity for an Indian tribe which should be limited to, properly, the tribal courts and the internal and social relations of the tribe certainly, and in the tribe's commercial area, where they are dealing with people who stand on maybe a different footing in the State of Oklahoma, I can see where they could assert sovereign immunity in that case.
But here we don't... we aren't dealing with a consensual relationship as such and we are faced with a situation where we are trying to get the tribe to cooperate with the tax laws of Oklahoma, which we feel, under previous decisions of this Court, that we have a right to have them administrate on our behalf.
I think this Court has found that that administration is such a burden on the tribe that it would infringe tribal self-government, and we certainly recognize the government of the tribe.
But I believe that the sovereign immunity of this tribe does not go so far as to displace these valid State laws.
And I believe that that's what the tribe, as differentiated from how the sovereign immunity doctrine has been used in the past, this tribe is using the sovereign immunity doctrine to evade valid law enforcement.
I will reserve the balance of my time.
Unknown Speaker: Very well, Mr. Miley.
Mr. Kneedler, we'll hear now from you.
Argument of Edwin S. Kneedler
Mr. Kneedler: Thank you, Mr. Chief Justice, and may it please the Court:
It is the position of the United States in this case that the Court may dispose of the case by application of three settled principles.
First that Federal law affords Indian tribes immunity from all suits except where Congress has expressly consented to such suits or the tribe waives its immunity.
Second, that States may not tax sales of goods on an Indian reservation to members of a tribe.
And third, that States may tax non-Indians who purchase goods from an Indian tribe or member of a tribe on an Indian reservation.
The first of these points arises in connection with the Tax Commission's counterclaim against the tribe in this case.
The tribe concedes that that counterclaim is barred under existing law, under the existing rule of Federal sovereign immunity.
But it urges the Court to modify that rule or to abandon that rule in the context of this case.
But this Court has said on several occasions that it is up to Congress to modify... excuse me... tribal sovereign immunity where Congress believes that that is wise.
And it is Congress that could best take into account the various competing considerations: the infringements on tribal sovereign that might be implicated, the economic consequences for a tribe in exposing it to not only the cost of litigation but adverse judgments.
Unknown Speaker: Mr. Kneedler--
--Well, Mr. Kneedler, it's a pretty empty right to be able to tax the sales if there's no way for the State to enforce it.
What can the State do--
Mr. Kneedler: Well, there are--
Unknown Speaker: --really as a practical matter?
Mr. Kneedler: --Well, there are a number of--
Unknown Speaker: Can they sue and get some kind of affirmative injunction against the manager of the store to require the taxes to be--
Mr. Kneedler: --There are several possible remedies.
Now, the Court made clear in Santa Clara Pueblo v. Martinez that tribal sovereign immunity extends only to the tribe.
It does not protect... under a rational analogous to Ex parte Young, does not protect tribal officers from suit.
So in this case the manager of the tribal store or other persons responsible for operating it would not be protected by sovereign immunity.
Now there may be a question as to what forum such a suit could be brought in.
But as the... as we read the tribal code, the tribal court, for example, would be available.
But in any event the Tax Commission has not tried that.
Also, although the Tax Commission argues here that it has no ability to enforce its law against wholesalers shipped from out of State even though it concedes it's coming from instate, that just happens to be the arrangement of Oklahoma law at the present time.
It's possible that Oklahoma may be able to amend its law to impose a duty on wholesalers who ship from out of State or consign shipments to shippers who bring them into State to impose the tax stamps on the cigarettes in the same manner that it currently requires of wholesalers who have a place of business in the State.
Unknown Speaker: --Mr. Kneedler, it might... in your view should this Court be deciding that anyway?
Mr. Kneedler: No, it should not.
In our view the proper course for the Court to follow would be to affirm the tribe's own immunity from suit and to vacate that... and therefore affirm the dismissal of the counterclaim.
But with respect to the tribe's suit for affirmative injunctive relief, we think that all the Court really needs to do here is to vacate the injunction that the court of appeals ordered, premised on the view that it's a substantive matter.
The tribe did not have to collect the tax on the sales to non-Indians or Indians.
As we explained in our brief the court sought to distinguish this Court's holdings in Moe, Colville, and Chemehuevi that the State may collect taxes on the sales to the non-Indians on the ground that Oklahoma has not accepted jurisdiction under Public Law 280.
As we explained in our brief, however, Bryan v. Itasca County held that Public Law 280 does not confer taxing jurisdiction on States that accept jurisdiction under that law.
We think it follows that Oklahoma's refusal to accept jurisdiction under Public Law 280 does not withhold taxing jurisdiction from the State.
In other words, Public Law 280 is simply put to one side on the question of the State's authority to tax.
Unknown Speaker: So the administrative court of appeals erred in entering the injunction against collecting the sales... sales tax on sales to nonmembers?
Mr. Kneedler: Right.
And for that reason we think the Court should vacate the injunction that the court of appeals... or vacate the judgment below to the extent the court ordered that--
Unknown Speaker: I guess we left the States in that same position before.
Mr. Kneedler: --That's correct.
In both Chemehuevi and in Colville there was a sovereign immunity claim against counter claims by tribes in essentially identical situations as this.
And in Chemehuevi, although the court granted review and summarily reversed on the substantive tax question, it left standing the lower court's ruling on the sovereign immunity question.
This is an arrangement that has been in existence for sometime, that the State has the substantive right to tax but cannot sue the tribe.
Unknown Speaker: Mr. Kneedler, even before the passage of the Foreign Sovereign Immunities Act my recollection is that at least some courts had adopted what most... what has been adopted internationally in exception to sovereign immunity in the case where the supposed sovereign is not acting in a governmental capacity but in a commercial capacity.
Now if one applied the commercial exception to sovereign immunity here, would the result be different?
Mr. Kneedler: The result might be different, but we think that would not be within the Court's authority and even prior to the Foreign Sovereign Immunities Act, the Court did not take it upon itself to modify that rule.
At that point--
Unknown Speaker: With respect to foreign countries, hadn't some of the courts of appeals done so in--
Mr. Kneedler: --I believe not until the Tate letter of 1953.
In other words, it was... whichever political branch was responsible in the area of foreign sovereign immunity, the executive branch, prior to the Foreign Sovereign Immunities Act, made sovereign immunity determinations with respect to foreign countries.
The court did not, in other words, take it upon itself.
With respect to this aspect of travel sovereign immunity like all others, this Court has said that the occasions for when a tribe should be brought out from under the usual Federal rules that that's the responsibility of the political branches, because there is a political judgment.
Unknown Speaker: --But it was this Court that first created tribal sovereign immunity, wasn't it?
It wasn't an act of Congress.
Mr. Kneedler: It was not an act of Congress, but I don't think it's entirely fair to say that the Court created.
I think the Court recognized it, looking to the status of Indian tribes within the constitutional scheme.
The Constitution refers to Indian nations under the Commerce Clause and gives to Congress the authority to regulate commerce with the Indians.
That's exactly... with the Indian nations, which is exactly what we have here: commerce with an Indian nation.
Unknown Speaker: Mr. Kneedler, what is your understanding of the source of the Indian tribal immunity?
Where did it come from?
Mr. Kneedler: It derives from the status of Indian nations as sovereign entities that predate the Constitution in fact and that are recognized in the Constitution.
Just like the Federal rule barring sale of Indian lands without the consent of the Federal Government, it stems from--
Unknown Speaker: Well, that's statutory.
Mr. Kneedler: --Well, but it predated the Constitution and, you know, neither the Court recognized it as a common law rule in additional to a statutory rule.
But in any event as to both rules, the Court said that until Congress consents, the established rule, in that case against alienation of land and in this case against sovereign immunity, prevails until Congress creates an exception.
And Congress has in fact acted on that assumption in numerous occasions, as we pointed out in our brief.
Unknown Speaker: Mr. Kneedler, your brief says the question of what remedies the State might have should be left in the first instance to the court of appeals.
Mr. Kneedler: If necessary.
I mean, I--
Unknown Speaker: Well, how would that ever be... how would the question of remedy ever be up in the courtroom?
Mr. Kneedler: --Well, it depends--
Unknown Speaker: They would be passing on... the tribe brought the suit, wanted the injunction, and you say, well, they shouldn't have gotten an injunction.
Mr. Kneedler: --Well, they shouldn't have gotten--
Unknown Speaker: Is that the end of the case?
Mr. Kneedler: --Well, they shouldn't have gotten as broad an injunction as they did.
The injunction the court of appeals held applied even to sales to nonmembers.
Unknown Speaker: xxx set aside that injunction.
Mr. Kneedler: Right.
First of all if the tribe, recognizing that this Court will have held that it must collect taxes on sales to nonmembers, we think that the tribe should be given an opportunity to do so and that we should not assume that once the tribe and the court of appeals are disabused of the notion that Moe and Colville don't apply, perhaps the tribe will voluntarily proceed.
But then there's the other possibility of a suit and also the possibility of seizing cigarettes.
Unknown Speaker: Well, but the court of appeals wouldn't necessarily get into anything about remedy.
Mr. Kneedler: No, what we--
Unknown Speaker: They would leave the State exactly where we put them before, wouldn't they?
Mr. Kneedler: --Well, more completely I think the court of appeals could address that if necessary.
We think that this is something best left to the tribe and the State to work out on remand.
Unknown Speaker: Mr. Kneedler, why is there difficulty in suing the tribal store manager in an Oklahoma State court?
Just because they can't physically get the jurisdiction?
Mr. Kneedler: No, because Oklahoma has not accepted jurisdiction under Public Law 280, civil adjudicatory jurisdiction at least with respect to an Indian on... in Indian country in Oklahoma would not reside in the State courts.
But that simply follows from Oklahoma's decision not to assume jurisdiction under Public Law 280.
With respect to the reservation status of this land, I'd like to point out that the Tenth Circuit's decision in this case follows not only from John and McGowan, where the Court said that a formal designation of reservation status is not necessary.
But also decisions of the Fifth, Ninth, and Tenth Circuits, other circuits with Indian... considerable Indian country which have also held that tribal trust land such as this enjoys reservation status.
And most recently Congress has affirmed that principle in the Indian Gaming statute which basically codifies the preemption principles this Court applied in Cabazon and specifically held that those preemption principles apply to tribal trust land, not just formal... formally designated reservation and specifically with respect to Oklahoma.
And in fact this tribe has a bingo parlor on this very parcel of land and is protected by similar immunities.
Unknown Speaker: Thank you, Mr. Kneedler.
Mr. Minnis, we'll hear now from you.
Argument of Michael Minnis
Mr. Minnis: Mr. Chief Justice, and may it please the Court:
The tribe has an entirely fundamentally different perspective on this case and how it arose.
This case did not arose under any fact similarities to Moe v. Colville or any of the other cases.
This case was a simple case in the court below, at least it began that way.
It was a proposed tax assessment.
This is not a case of collection.
It's a case of a direct, proposed tax assessment against the tribe.
The tribe sought... in filing suit sought one remedy and one remedy only and that was to enjoin that proposed tax assessment.
And to this date, and we haven't heard it here today because they've been all talking about Moe v. Colville.
We have no authority for the proposition that the State may tax an Indian tribe and they have no authority then what they were proposing to do was to take an action that was clearly illegal.
Unknown Speaker: I know, but the assessment was for sales tax that should have been withheld and wasn't.
Mr. Minnis: Your Honor, I don't think that makes any different.
If you're immune from tax, it doesn't make any difference whether or not--
Unknown Speaker: No.
Well, you think we haven't held that the State may insist on the tribe withholding sales tax on sales to nonmembers?
Mr. Minnis: --Yes, sir, you have held in certain cases that in certain States that the State may require Indian tribes to cooperate, and if they don't cooperate they're not entitled to injunctive relief.
But you have never held, at least as far as I can tell, that an Indian tribe can be directly taxed by the State.
In this case, there was no evidence of any prior collection or what have you.
It was simply a raw, direct tax assessment, $2.6 million, that would have had to have been paid by the tribe, not from any precollection or any prior... arrangement.
Unknown Speaker: What does the... what do you mean an assessment?
All they did was write them a letter, didn't they?
What did they do?
Mr. Minnis: Your Honor, the writing of that letter is a very critical--
Unknown Speaker: Well, I know, but I hear you say an assessment--
Mr. Minnis: --I proposed assessment.
Unknown Speaker: --they just said, please pay us this tax.
Mr. Minnis: And in 30 days if we had not filed a protest with the State, the tax would have been filed.
Unknown Speaker: Well, and then what would have happened?
Mr. Minnis: Then they would have done whatever else it was that they could have done.
Unknown Speaker: Well, I know, but they... what would they have... what would... wouldn't have... if your tribe is immune, I don't know how they could have sued them or do anything else.
But come on the land and attach the store or what?
Mr. Minnis: Well, it's a little bit hypothetical to talk about what we might have done had they directly proposed assessment against the tribe.
This case arose when they proposed the $2.6 million assessment against the tribal chairman who, in 30 days, he would have been personally liable.
And given that situation, we felt that they had... we had no... we had no... we had to take action to protect this individual or he personally would have been liable for the $2.6 million.
It was after we filed suit that the Tax Commission then said that they were proposing their assessment against the tribe.
Unknown Speaker: Well, I'm not sure it's an assessment against the tribe, that the State's taking a position that they're taxing a transaction and the transaction is taxable.
Mr. Minnis: Yes, Your Honor, that's what they're contending, but what I'm saying is that's not related to the action that they took.
They did not take action to try and get us to collect it.
They never came to us and said you ought to be licensed.
They never came to us and said start collecting this.
One day after we'd been doing... had been selling on the tribe's land for centuries... not centuries, however long we've been there... suddenly we get a $2.6 million letter.
Unknown Speaker: You know... the tribe knows what the law is about what the sales tax law is and you've never been withholding and returning the tax.
Mr. Minnis: Well, I'm not sure--
Unknown Speaker: Isn't that right?
Mr. Minnis: --I'm not sure it would be fair to say the tribe knows what the law is.
Well, Your Honor, whether they do or not, I think this Court has said many times that you're bound by whether you know about it or not.
I mean, I'm just saying I don't think it's necessarily true that they knew what the law was.
Unknown Speaker: Well, Mr. Minnis, let's say that we follow the Colville case and the Solicitor General's position and that we agree that Oklahoma is entitled to tax the transaction of sale of cigarettes to nonmembers of the tribe... that that's a taxable event and the tribe... the State can require the tribe collect the tax and pay it over.
Now is the tribe willing to do that?
Mr. Minnis: I can't speak for the tribe in the sense that I'm not their business committee, but I would suggest that they have acted with... I think that they have acted consistent with what they perceive the law to be, even... Justice White asked me about whether or not... surely they knew what the law was.
But we have taken the position in response to Moe v. Colville analogy that Oklahoma and this particular tribe is in a different situation than the tribes were in Colville and that different situation arises from the fact that the specific land that was involved here is land that the United States Government promised would never be part of the jurisdiction of any State, and we contend that that promise was codified in the Constitution.
Unknown Speaker: Well, I asked though suppose we take the view that the Solicitor General has urged here that these transactions, at least as to sales to nonmembers, are taxable.
Mr. Minnis: Yes.
Unknown Speaker: Where does that leave us?
Mr. Minnis: Well--
Unknown Speaker: There have been sales to nonmembers, apparently substantial sales to nonmembers and that continues to this day I understand.
Mr. Minnis: --That's correct.
Unknown Speaker: Now let's say that we think those are perfectly taxable.
Mr. Minnis: Well, then I would--
Unknown Speaker: What's to be done?
Mr. Minnis: --and I'm just assuming because it's a hypothetical--
Unknown Speaker: Well, it's not very hypothetical.
Mr. Minnis: --that they would either quit selling cigarettes or they would collect the tax.
Unknown Speaker: But your contention is that neither this Court nor the courts that have heard the case previously has the authority to make that decision in this case because it's not an issue of this property before us?
Mr. Minnis: That's correct, Your Honor.
Unknown Speaker: As we view the case, the case is simply an assessment case.
We're being assessed for failure to collect for a period of time from 1981, I think, to 1986.
But they reversed the district court.
The district court prospectively indicated that the tribe should collect the sales tax.
Mr. Minnis: In response to the counterclaim by the State.
Unknown Speaker: Well, I know, but the court of appeals reversed them.
Mr. Minnis: They reversed them on the basis that the tribe had sovereign immunity and that the court, the district court, should never have heard the case.
Unknown Speaker: Well... it couldn't even tax sales to nonmembers and if we say they were wrong in that, I suppose we would reverse them.
Mr. Minnis: The relief that the Tenth Circuit granted was simply a reverse remanded for entry of order as prayed for, and the order that was prayed for by the tribe was simply an injunction against the proposed assessment.
Unknown Speaker: But the court of appeals in its opinion certainly went further--
Mr. Minnis: Yes, Your Honor.
Unknown Speaker: --and said the injunction should cover not merely the sale of cigarettes to tribal members but to nonmembers because of its analysis of Public Law 280.
Mr. Minnis: I don't think that they said that the injunction that would be entered after remand was supposed to be broad enough to cover that.
I think what they said in dicta was we say that the Colville case is not... we noticed that the Colville case took place in a Public Law 280 State, and hence the arguments being made by the State are not valid.
But when you get to the end of the opinion, all they say in the opinion is not to enter an injunction consistent with what we've said, but rather with the prayer.
Unknown Speaker: I take, then, it wouldn't bother you if we said there is no existing injunction against the State from collecting sales tax?
That's what you say.
The court of appeals didn't enjoin the State from collecting sales tax on sales to nonmembers.
Mr. Minnis: That's correct.
All that we're suggesting is that the relief we've sought is all we're asking for is to enjoin them from assessing this tax against the tribe.
That's the only relief we ask for.
Unknown Speaker: From assessing the tax on sales to nonmembers or to members or to both?
Mr. Minnis: In this case assessing the tribe, the proposed assessment against the tribe.
We didn't ask them to future... to tell us that we could in the future not have to collect it.
We didn't ask that we be given a declaratory--
Unknown Speaker: Well, we're playing with words to a certain extent.
Do you agree on behalf of your client with the court of appeals position that Public Law 280 means that the Colville and Moe cases and their doctrines do not apply in this situation?
Mr. Minnis: --Yes, Your Honor, we're arguing that as an alternative in response to their counterclaim, that their counterclaim was not valid because in Oklahoma there's a situation that's different from Montana, Washington, and California, which were Public Law 286.
Unknown Speaker: Well, when you invoke the jurisdiction of the Court to ask for its equitable powers to be exercised on your behalf in a situation as complex as this, why isn't appropriate for the Court to make an announcement that perhaps the tribe cannot be assessed directly but that the tribe has the duty and the responsibility to remit the taxes to the State?
Mr. Minnis: Well, for one thing I think that there's no factual foundation for that in the sense that the factual dispute that caused the filing of the lawsuit in the first place.
They've never asked us to collect this.
They've never attempted to license us or what have you.
The only thing that precipitated this lawsuit and the only fact that's in the case in this... in the case below is simply the proposed tax letter.
In fact there's not even any factual dispute.
Because of an anomaly there's really not any facts in the record concerning the counterclaim, because at the time that the matter was submitted to the court on briefs, the stipulations all went to the tribe's part of the action, because the parties erroneously thought that the motion to dismiss the counterclaim was still pending and it wasn't.
It had already been ruled on.
And it was only later that they found out that the counterclaim... the motion to dismiss the counterclaim had been overruled, so there's no factual record even on the counterclaim part of it.
But that brings me to the second issue which I think is before the Court.
The first issue is whether or not the tax assessment is proper, and the second is the counterclaim.
And I would suggest that there is not a particularized reason now for doing away with the sovereign immunity and certainly not in this case.
If, as we've argued, the proposed tax assessment is unlawful, then what this Court would be condoning would be condoning the State taking clearly unlawful action and using it as a way to bootstrap themselves to litigate issues that concern them.
If the State was truly concerned about litigating the issue of collection, there are other ways that they could have brought this issue to court besides the issue of direct tax assessment for which they have yet to survive... provide this Court with any authority to what action that they took.
If they wanted the Moe case or the Colville case, they could have taken actions that this Court has recognized in those cases that they could take since it's seizing cigarettes bound for the tribal reservation or what have you.
And then they would have had the factual foundation to raise all the issues they would have raised had the tribe then gone in and sought relief.
But here they went a route that I think has been at least implicitly indicated... even all those cases is not the proper route to take, which is to assess the tribe of the tax.
Unknown Speaker: May I ask you on that, supposing the State had seized a shipment of cigarettes destined for the tribe and presumably owned by the tribe, because they would shipped by a common carrier and... the property would presumably pass at the time of shipment.
And the tribe brought suit and said, give us back our cigarettes.
We have sovereign immunity and, therefore, our property is immune from seizure of this kind.
How would you decide that case?
Mr. Minnis: In favor of the tribe.
Unknown Speaker: Well, then what remedy does the State have?
How can they collect their tax?
I thought you said they could seize cigarettes, but now you say they can't.
Mr. Minnis: Well, I... no, I'm suggesting that if they wanted to raise the issue of the propriety of seizing the cigarettes that that's the way they should have proceeded.
Unknown Speaker: But they'll still lose is that what's you're saying.
Mr. Minnis: Well, we'd still defend that lawsuit.
We wouldn't be defending another lawsuit.
Unknown Speaker: Yes.
Mr. Minnis: That's the argument we're making here is that we're being asked to defend the lawsuit that they didn't bring that they could have brought and the one that they have brought is whether or not... the one that they solely define by the actions they took was the tax assessment.
That's the way they brought this law... I mean, that's what caused this lawsuit to be brought, not some of these other things that perhaps they could have done.
Unknown Speaker: But they could have done with the same result is the problem I suppose.
Mr. Minnis: But we would argue... we would argue this... the same result.
In this case, of course, they did, as we later learned, they did assess the wholesaler for the same taxes that they are attempting to collect from us.
Unknown Speaker: Well, let's assume that we hold that the State is entitled to collect sales taxes on the sales by nonmembers and that the tribe should have been withholding those taxes and, of course, if they... and if they... of course, if they should from now on withhold, they should have withheld it in past.
Now what's wrong with the State saying, writing a letter and saying, look you should be withholding and you haven't been withholding.
Now pay us what you haven't withheld.
Is that so insulting?
Mr. Minnis: Well, I would think... well, if you... it is insulting if you contend that you are a sovereign and that you are immune from suit and you're immune from tax.
The idea that they would have to directly renew, yes.
Unknown Speaker: No, but the State says, your immunity doesn't cover sales to nonmembers and cites these cases.
Just because it's called a tax assessment doesn't... it may be a demand to pay, because you haven't been withholding.
That's all it was, wasn't it?
Mr. Minnis: Well, yes, Your Honor, but I mean, it's not as if they said, start collecting taxes--
Unknown Speaker: Well, the tribe owns the store.
The tribe's the one that should have been withholding taxes, and they didn't withhold.
Mr. Minnis: --Yes, Your Honor, but you still end up with who pays the money and the money would be paid by the tribe under a direct tax assessment.
Unknown Speaker: Well, but perhaps the tribe is liable.
If it should have been collecting a sales tax on sales to nonmembers.
Mr. Minnis: Your Honor, that would presuppose that the Oklahoma State tax laws are applicable to the tribe, and if they are applicable to the tribe, are just those laws or are all State laws?
Unknown Speaker: Well, certainly Moe and Colville said that Montana and Washington State tax laws were applicable to the tribes who were involved in those lawsuits.
Mr. Minnis: In those cases the Court was clear to point out that the incidence of the tax was not on a tribe as it is in this case and that the collection of the tax was something that the tribe... those cases arose when the tribe sought declaratory and injunctive relief, and what this Court did was say, you're not entitled to the injunctive relief because you should have been collecting the tax and since you didn't collect the tax we're not going to give you the injunctive relief you've asked for to stop the trucks from coming into your reservation.
For the reasons that have been expressed here and are further articulated in our brief, we would urge this Court to affirm the decision of the Tenth Circuit Court of Appeals.
Unknown Speaker: Thank you, Mr. Minnis.
Mr. Miley, you have 3 minutes remaining.
Rebuttal of David Allen Miley
Mr. Miley: Thank you, Mr. Chief Justice.
I would just like to conclude by staying that first of all the State has the authority under State law to require this taxation.
The tax assessment was made to enforce this tax collection.
We... under the Moe and Colville decision, we believe we have the right to these taxes.
We found no other way to enforce these taxes than by tax assessment in this case.
It is my position that you cannot properly separate the collection of a tax from the enforcement of the tax, because as we have seen in this case the tribe will not collect if the only consequences of that is getting away with it.
So they have operated for many years without collecting with our... likewise with the State's inability to ever enforce those laws.
Unknown Speaker: Has the State of Oklahoma or any other State as far as you know requested Congress to waive tribal sovereign immunity where the tribe has refused to pay... to collect sales taxes and to turn them over--
Mr. Miley: No, we have not requested Congress to do that.
I think Congress is not in a position to do that, and I think--
Unknown Speaker: --What do you mean it isn't in a position to do that?
Mr. Miley: --Well, I believe Congress could do that if it wanted to.
It just doesn't want to.
They are not properly the tax collection agents for the State of Oklahoma.
They are not concerned with collecting Oklahoma taxes, so the Congressmen don't--
Unknown Speaker: But they're concerned with the status of Indian tribes.
Mr. Miley: --That's correct, and they would be concerned and they have passed several laws like the bingo laws to encoarage economic development, but I think what we have here is an area where we do not need to go to Congress to ask Congress if the State of Oklahoma can collect its taxes.
I believe we have--
Unknown Speaker: It's an area where that's exactly what you ought to do.
I think it's amazing that the States haven't gone to Congress and said, look, we have a problem collecting these taxes.
We're entitled to get them, no we need relief from you to waive sovereign immunity to that extent.
I would suggest that that's a perfectly valid position for the States.
Mr. Miley: --We could take that position, although Congress... that would be a political decision that I don't think many Congressmen want to be put in a position faced with constituents who maybe feel differently about the issue than the State does.
That is all I have.
Chief Justice Rehnquist: Thank you, Mr. Miley.
The case is submitted.
Argument of Chief Justice Rehnquist
Mr. Kneedler: I have the opinions of the Court to announce in two cases.
The first of them is 89-1322, Oklahoma Tax Commission versus the Citizen Band of Potawatomi Indian Tribe of Oklahoma.
The case comes to us from the Court of Appeals for the Tenth Circuit.
It arose out of a dispute between the State and the Tribe over the latter's obligation to collect taxes on cigarettes sold on the reservation.
The Court of Appeals held that the Tribe was immune from suit under this Court's doctrine of sovereign immunity.
Therefore, it ruled that Oklahoma's counterclaims were properly dismissed, and that Oklahoma could not require the Tribe to collect and remit taxes on cigarette sales that occur on the reservation.
In a decision filed today with the Clerk, we affirm in part and reverse in part.
We find that the Tribe did not wave its sovereign immunity from suit merely by seeking an injunction against the proposed assessment.
We affirm that part of the Court of Appeals' decision.
However, as we have stated in several prior cases, sovereign immunity does not deprive a state of the authority to tax cigarette sales to non-members of a tribe at a tribal store.
In two prior decisions, we have held that the tribe has an obligation to assist in the collection of validly imposed state taxes on such sales.
We, therefore, reverse that portion of the Court of Appeals' opinion that enjoins Oklahoma from collecting taxes on sales to non-members of the Tribe.
Justice Stevens has filed a concurring opinion.